DRAFT RED HERRING PROSPECTUS Please read Section 60B of the Companies Act, 1956 Dated May 1, 2007 (The Draft Red Herring Prospectus will be updated upon RoC filing) 100% Book Build Issue
BRAHAMPUTRA CONSORTIUM LIMITED (Our Company was incorporated as a Public Limited Company on September 02,1998 under the Companies Act, 1956 with the Registrar of Companies, National Capital Territory of Delhi and Haryana and obtained the certificate of commencement of business on September 25, 1998) Registered & Corporate Office: Brahamputra House, A-7, Main Mahipalpur Road, New Delhi-110037, India (Our registered office was shifted from C-1\1622, Vasant Kunj, New Delhi - 110070 to C-5\61, Grand Vasant, Vasant Kunj, New Delhi – 110070 with effect from December 1, 2000 by a resolution of our Board and from C-5\61, Grand Vasant, Vasant Kunj, New Delhi – 110070 to Brahamputra House, A-7, Main Mahipalpur Road, New Delhi-110037 with effect from April 1, 2003 by a resolution of our Board) Company Secretary and Compliance Officer: Mr. Narendra Nath Batabyal Tel: 91-11-42290200 (50 Lines), Fax: 91-11-41687880, 26787068, Email: [email protected], Website: www.brahamputra.com
PUBLIC ISSUE OF 4,200,000 EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PRICE OF RS. [●] PER EQUITY SHARE INCLUDING A SHARE PREMIUM OF RS. [●] PER EQUITY SHARE AGGREGATING TO RS. [●] LACS (THE “ISSUE”) BY BRAHAMPUTRA CONSORTIUM LIMITED (THE “COMPANY” OR “THE ISSUER”). THE ISSUE COMPRISES A NET ISSUE TO THE PUBLIC OF 4,000,000 EQUITY SHARES OF RS. 10 EACH (THE “NET ISSUE’) AND A RESERVATION OF UP TO 200,000 EQUITY SHARES OF RS. 10 EACH FOR THE PERMANENT EMPLOYEES OF THE COMPANY (THE “EMPLOYEE RESERVATION PORTION”). THE ISSUE WOULD CONSTITUTE 25.93% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THE COMPANY. PRICE BAND: RS. [●] TO RS. [●] PER EQUITY SHARE OF FACE VALUE OF RS. 10 THE FACE VALUE OF THE EQUITY SHARES IS RS. 10 AND THE FLOOR PRICE IS [●] TIMES OF THE FACE VALUE AND THE CAP PRICE IS [●] TIMES OF THE FACE VALUE In case of revision in the Price Band, the Bidding Period will be extended for three additional working days after revision of the Price Band, subject to the Bidding/ Issue Period not exceeding ten working days. Any revision in the Price Band and the revised Bidding/ Issue Period, if applicable, will be widely disseminated by notification to Bombay Stock Exchange Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”), by issuing a press release, and also by indicating the change on the websites of the Book Running Lead Managers and at the terminals of the Syndicate.
The Issue is being made through the 100% Book Building Process wherein upto 50% of the Net Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs”), out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB portion shall be available for allocation on a proportionate basis to QIBs including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Further, up to 200,000 Equity Shares shall be available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received at or above the Issue Price.
RISK IN RELATION TO THE FIRST ISSUE This being the first public issue of Equity Shares of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the Shares is Rs. 10 and the Issue price is [●] times of the face value. The Issue Price (as determined by the Company in consultation with the Book Running Lead Managers, on the basis of assessment of market demand for the Equity Shares offered by way of book building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in the Equity Shares of the Company or regarding the price at which the Equity Shares will be traded after listing. 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 Equity Shares offered in the Issue have not been recommended or approved by Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the section titled “Risk Factors” beginning on Page 10 of this Draft Red Herring Prospectus. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING ARRANGEMENT The Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on the NSE and BSE. We have received in-principle approval from NSE and BSE for the listing of our Equity Shares pursuant to letters dated [●] and [●], respectively. For the purposes of the Issue, the Designated Stock Exchange is BSE. IPO GRADING The Company has opted for IPO Grading. ICRA has assigned [●] Grade to the Initial Public Offering of the Company. For more information on IPO Grading, please refer to Section “General Information” beginning on page 34 of this Draft Red Herring Prospectus. BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE
A.K. CAPITAL SERVICES LIMITED PUNJAB NATIONAL BANK INTIME SPECTRUM REGISTRY LIMITED Flat No. N, Sagar Apartments, Capital Market Services Branch, C-13, Pannalal Silk Mills Compound, L.B.S. Marg, 6, Tilak Marg, 5, Sansad Marg, Bhandup (West), New Delhi- 110 001 New Delhi-110001 Mumbai-400078. Tel: 91-11-23385704, 23388235 Tel : 91-11-23737531 Tel: 91-22-25960320-28 Fax: 91-11-23385189 Fax: 91-11-23737528 Fax: 91-22-25960329 Email: [email protected] Email: [email protected] Email: [email protected] Website: www.akcapindia.com Website: www.pnbindia.com Website: www.intimespectrum.com BID/ ISSUE PROGRAMME BID/ ISSUE OPENS ON [●] BID/ ISSUE CLOSES ON [●]
TABLE OF CONTENTS
SECTION I: DEFINITIONS AND ABBREVIATIONS..…………………………………………………………………… 1 CONVENTIONAL/ GENERAL TERMS..……………………………………………………………………………………………………………………… 1 ISSUE RELATED TERMS………………………………………………………………………………………………………………………………………….. 2 COMPANY/ INDUSTRY RELATED TERMS………………………………………………………………………………………………………………… 5 ABBREVIATIONS……………………………………………………………………………………………………………………………………………………… 5 SECTION II: RISK FACTORS………………………………………………………………………………………………….. 8 CERTAIN CONVENTIONS; PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA………………………………. 8 FORWARD-LOOKING STATEMENTS………………………………………………………………………………………………………………………… 9 RISK FACTORS 10 SECTION III: INTRODUCTION……………………………………………………………………………………………….. 26 SUMMARY OF OUR BUSINESS, STRENGTHS AND STRATEGY………………………………………………………………………………. 26 SUMMARY FINANCIAL INFORMATION……………………………………………………………………………………………………………………. 31 THE ISSUE………………………………………………………………………………………………………………………………………………………………. 33 GENERAL INFORMATION………………………………………………………………………………………………………………………………………… 34 CAPITAL STRUCTURE……………………………………………………………………………………………………………………………………………… 42 OBJECTS OF THE ISSUE…………………………………………………………………………………………………………………………………………. 50 BASIS FOR ISSUE PRICE………………………………………………………………………………………………………………………………………… 55 STATEMENT OF TAX BENEFITS………………………………………………………………………………………………………………………………. 57 SECTION IV: ABOUT US……………….……………………………………………………………………………………….. 65 INDUSTRY OVERVIEW.…………………………………………………………………………………………………………………………………………… 65 OUR BUSINESS……………………………………………………………………………………………………………………………………………………….. 76 FINANCIAL INDEBTEDNESS…………………………………………………………………………………………………………………………………… 107 REGULATIONS AND POLICIES………………………………………………………………………………………………………………………………… 117 HISTORY AND CORPORATE STRUCTURE………………………………………………………………………………………………………………. 123 OUR MANAGEMENT…………………………………………………………………………………………………………………………………………………. 136 OUR POMOTERS AND PROMOTER GROUP……………………………………………………………………………………………………………… 149 DIVIDEND POLICY…………………………………………………………………………………………………………………………………………………… 167 SECTION V: FINANCIAL STATEMENTS……………………………………………………………………………………. 168 UNCONSOLIDATED FINANCIAL INFORMATION OF BRAHAMPUTRA CONSORTIUM LIMITED………………………………. 168 CONSOLIDATED FINANCIAL INFORMATION OF BRAHAMPUTRA CONSORTIUM LIMITED……………………………………. 202 MANAGEMENT ‘S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS….. 219 SECTION VI: LEGAL AND OTHER INFORMATION……………………………………………………………………… 234 OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS……………………………………………………………………………… 234 GOVERNMENT APPROVALS……………………………………………………………………………………………………………………………………… 239 OTHER REGULATORY AND STATUTORY DISCLOSURES………………………………………………………………………………………… 245 SECTION VII: ISSUE INFORMATION………………………………………………………………………………………. 252 TERMS OF THE ISSUE……………………………………………………………………………………………………………………………………………… 252 ISSUE STRUCTURE…………………………………………………………………………………………………………………………………………………. 255 ISSUE PROCEDURE…………………………………………………………………………………………………………………………………………………. 258 SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION…………………………………….. 287 SECTION IX: OTHER INFORMATION………………………………………………………………………………………. 306 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION………………………………………………………………………………. 306 DECLARATION…………………………………………………………………………………………………………………………………………………………. 308
SECTION I: DEFINITIONS AND ABBREVIATIONS
Term Description “Brahamputra Consortium Unless the context requires, refers to Brahamputra Consortium Limited, Limited”, “BCL”, “we”, ‘us”, a public limited company incorporated under the Companies Act, 1956 “our”, “Issuer”, “the Company” and “our Company” Promoters Unless the context otherwise requires, refers to Mr. Siw Prasad Agarwalla, Mr. Suresh Kumar Prithani, Mr. Ramesh Kumar Prithani, Mr. Manoj Kumar Prithani and Mr. Sanjeev Kumar Prithani Promoter Group As defined in explanation II of Clause 6.8.3.2 of SEBI (Disclosure and Investor Protection) Guidelines, 2000 and amendments thereof “Subsidiaries”, “Our Unless the context otherwise requires, refers to our Subsidiaries, Subsidiaries” Brahmaputra Infrastructure Limited, Brahmaputra Concrete Private Limited and Brahamputra Consortium Pte. Limited.
CONVENTIONAL/ GENERAL TERMS
Term Description Articles/ Articles of Association Articles of Association of our Company Auditors Statutory Auditors of our Company, A. B. Bansal & Co., Chartered Accountants Board of Directors/ Board Board of Directors of our Company unless otherwise specified Companies Act/ Act The Companies Act, 1956, as amended from time to time Corporate Office/ Corporate Brahamputra House, A-7, Main Mahipalpur Road, New Delhi-110037, Office of our Company India Depositories Act Depositories Act, 1996, as amended from time to time Depository A depository registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996 DP/ Depository Participant A depository participant as defined under the Depositories Act, 1996 Director(s) Directors of our Company unless otherwise specified Financial Year/ Fiscal/ FY Period of twelve months ended March 31 of that particular year unless otherwise specified in the context thereof Memorandum/ Memorandum of Memorandum of Association of our Company Association Non-Resident A person who is not an NRI, and FII and is not a person resident in India NRI/ Non-Resident Indian A person resident outside India, as defined under FEMA and who is a citizen of India or a person of Indian origin, each such term as defined under the FEMA (Deposit) Regulations, 2000, as amended Registered Office of the Brahamputra House, A-7, Main Mahipalpur Road, New Delhi-110037, Company/ Registered Office of India our Company/ Registered Office SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time SEBI Guidelines/ SEBI DIP SEBI (Disclosure and Investor Protection) Guidelines, 2000, as amended Guidelines from time to time, including instructions, guidelines and clarifications issued by SEBI from time to time SEBI Insider Trading SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended Regulations from time to time, including instructions and clarifications issued by SEBI from time to time Takeover Regulations/ Securities and Exchange Board of India (Substantial Acquisition of Takeover Code Shares and Takeovers) Regulations, 1997
1 ISSUE RELATED TERMS
Term Description Allotment/ Allotment of Equity Unless the context otherwise requires, the issue and allotment of Equity Shares Shares, pursuant to the Issue Allottee The successful Bidder to whom the Equity Shares are/ have been issued Banker(s) to the Issue [●] Bid An indication to make an offer during the Bidding Period by a prospective investor to subscribe to the Equity Shares of our Company at a price within the Price Band, including all revisions and modifications thereto Bid Amount/ Bid Price The highest value of the optional Bids indicated in the Bid cum Application Form and payable by the Bidder on submission of the Bid in the Issue Bid/ Issue Closing Date The date after which the Syndicate will not accept any Bids for the Issue, which shall be notified in a widely circulated English national newspaper and a Hindi national newspaper Bid/ Issue Opening Date The date on which the Syndicate shall start accepting Bids for the Issue, which shall be the date notified in a widely circulated English national newspaper and a Hindi national newspaper Bid cum Application Form The form in terms of which the Bidder shall make an offer to purchase Equity Shares of our Company in terms of this Draft Red Herring Prospectus and the Bid cum Application Form Bidder Any prospective investor who makes a Bid pursuant to the terms of this Draft Red Herring Prospectus and the Bid cum Application Form Bidding/ Issue Period The period between the Bid/ Issue Opening Date and the Bid/ Issue Closing Date inclusive of both days and during which prospective Bidders can submit their Bids Book Building Process/ Method Book building route as provided in Chapter XI of the SEBI DIP Guidelines, in terms of which this Issue is being made BRLMs Book Running Lead Managers to the Issue, in this case being A. K. Capital Services Limited and Punjab National Bank CAN/ Confirmation of Allocation The note or advice or intimation of allocation of Equity Shares sent to Note the Bidders who have been allocated Equity Shares after discovery of the Issue Price in accordance with the Book Building Process Cap Price The higher end of the Price Band, above which the Issue Price will not be finalized and above which no Bids will be accepted Cut-off Price The Issue Price finalized by our Company in consultation with the BRLMs and it shall be any price within the Price Band. A Bid submitted at the Cut-off Price by a Retail Individual Bidder is a valid Bid at all price levels within the Price Band Designated Date The date on which funds are transferred from the Escrow Account to the Public Issue Account after the Prospectus is filed with the RoC, following which the Board of Directors shall allot Equity Shares to successful Bidders Designated Stock Exchange BSE DP ID Depository Participant’s Identity DRHP/ Draft Red Herring The Draft Red Herring Prospectus issued in accordance with Section 60B Prospectus of the Companies Act, which does not contain complete particulars on the price at which the Equity Shares are offered and the size (in terms of value) of the Issue ECS Electronic Clearing Service Eligible NRI(s) NRI(s) from such jurisdiction outside India where it is not unlawful to make an offer or invitation under the Issue Employee/ Employees/ Eligible All or any of the following: Employee (in the Employee a permanent employee of our Company and our Subsidiary as of [●] Reservation Portion) and based, working and present in India as on the date of submission of the Bid cum Application Form; and
2 a Director of the Company, whether a whole time Director, part time Director or otherwise, except any Promoters or members of the Promoter Group as of [●] and based and present in India as on the date of submission of the Bid cum Application Form Employee Reservation Portion The portion of Issue being up to 200,000 Equity Shares available for allocation to Eligible Employees Equity Shares Equity Shares of our Company of Rs. 10 each unless specified in the context thereof Escrow Account Account opened with the Escrow Collection Bank(s) for the Issue and in whose favour the Bidder will issue cheques or drafts in respect of the Bid Amount when submitting a Bid Escrow Agreement Agreement to be entered into by our Company, the Registrar, BRLMs, the Syndicate Member(s) and the Escrow Collection Bank(s) for the collection of the Bid Amounts and where applicable, refunds of the amounts collected to the Bidders on the terms and conditions thereof Escrow Collection Bank(s) The banks which are clearing members and registered with SEBI as Banker to the Issue with whom the Escrow Account will be opened and in this case being [●] First Bidder The Bidder whose name appears first in the Bid cum Application Form or Revision Form Floor Price The lower end of the Price Band, above which the Issue Price will be finalized and below which no Bids will be accepted Indian GAAP Generally accepted accounting principles in India Issue The issue of 4,200,000 Equity Shares of Rs. 10 each at a price of [●] each for cash, aggregating [●] by the Company under the RHP and the Prospectus. The Issue comprises a Net Issue to the Public of 4,000,000 Equity Shares and the Employees Reservation Portion of 200,000 Equity Shares Issue Account/ Public Issue Account opened with the Bankers to the Issue to receive monies from Account the Escrow Account on the Designated Date Issue Price The final price at which Equity Shares will be issued and allotted in terms of the Red Herring Prospectus or the Prospectus. The Issue Price will be decided by the Company in consultation with the BRLMs on the Pricing Date Listing Agreement(s) The listing agreements between the Company and the Stock Exchanges Margin Amount The amount paid by the Bidder at the time of submission of his/her Bid, being 10% to 100% of the Bid Amount Monitoring Agency Centurion Bank of Punjab Limited Mutual Funds A mutual fund registered with SEBI under the SEBI (Mutual Funds) Regulations, 1996 Mutual Funds Portion 5% of QIB Portion or 100,000 Equity Shares (assuming QIB portion is 50% of the Net Issue to the Public) available for allocation to Mutual Funds only NEFT National Electronic Funds Transfer Net Issue/ Net Issue to the The Issue less the Employee Reservation Portion Public Non Institutional Bidders All Bidders that are not QIBs or Retail Individual Bidders and who have Bid for Equity Shares for an amount more than Rs. 100,000 Non Institutional Portion/ Non The portion of the Issue being at least 15% of the Net Issue consisting Institutional Bidders Portion of 600,000 Equity Shares of Rs. 10 each available for allocation to Non Institutional Bidders Pay-in Date Bid/ Issue Closing Date or the last date specified in the CAN sent to the Bidders, as applicable Pay-in-Period (a) With respect to Bidders whose Margin Amount is 100% of the Bid Amount, the period commencing on the Bid/ Issue Opening Date and extending until the Bid/ Issue Closing Date; and (b) With respect to Bidders whose Margin Amount is less than 100% of the Bid Amount, the period commencing on the Bid/ Issue Opening Date
3 and extending until the closure of the Pay-in Date Price Band Price band of a minimum price (floor of the price band) of Rs. [●] and the maximum price (cap of the price band) of Rs. [●] and includes revisions thereof Pricing Date The date on which our Company in consultation with the BRLMs finalize the Issue Price Prospectus The Prospectus to be filed with the RoC in terms of Section 60 of the Companies Act, containing, inter alia, the Issue Price that is determined at the end of the Book Building Process, the size of the Issue and certain other information QIB Margin Amount An amount representing at least 10% of the Bid Amount QIB Portion The portion of the Issue being up to 50% of the Net Issue consisting of 2,000,000 Equity Shares of Rs. 10 each available for allocation to QIBs out of which 5% shall be allocated to Mutual Funds only Qualified Institutional Buyers/ Public financial institutions as specified in Section 4A of the Companies QIBs Act, FIIs, scheduled commercial banks, mutual funds registered with SEBI, venture capital funds registered with SEBI, state industrial development corporations, insurance companies registered with Insurance Regulatory and Development Authority, provident funds (subject to applicable law) with minimum corpus of Rs. 250 million and pension funds with minimum corpus of Rs. 250 million Refunds through electronic Refunds through electronic transfer of funds means refunds through transfer of funds ECS, Direct Credit or RTGS as applicable Registrar/ Registrar to the Registrar to the Issue, in this case being Intime Spectrum Registry Issue Limited having its registered office as indicated on the cover page Retail Individual Bidders Individual Bidders (including HUFs applying through their Karta and Eligible NRIs) who have Bid for Equity Shares for an amount less than or equal to Rs. 100,000, in any of the Bidding options in the Issue Retail Portion The portion of the Issue being at least 35% of the Net Issue consisting of 1,400,000 Equity Shares of Rs. 10 each available for allocation to Retail Individual Bidders Revision Form The form used by the Bidders to modify the quantity of Equity Shares or the Bid Price in any of their Bid cum Application Forms or any previous Revision Form(s) RHP/ Red Herring Prospectus The Red Herring Prospectus which will be filed with RoC in terms of Section 60B of the Companies Act, at least 3 days before the Bid/ Issue Opening Date RTGS Real Time Gross Settlement Syndicate/ members of the The BRLMs and the Syndicate Member(s) Syndicate Syndicate Agreement Agreement between the Syndicate and the Company in relation to the collection of Bids in the Issue Syndicate Member(s) [●] TRS/ Transaction Registration The slip or document issued by the Syndicate to the Bidder as proof of Slip registration of the Bid Underwriters The BRLMs and the Syndicate Member(s) Underwriting Agreement The Agreement between the members of the Syndicate and our Company to be entered into on or after the Pricing Date U.S. GAAP Generally accepted accounting principles in the United States of America
4 COMPANY/ INDUSTRY RELATED TERMS
Term Description AAI Airports Authority of India AOP Association of Persons BOLT Build Operate Lease Transfer BOOT Build Own Operate Transfer BOT Build Operate Transfer DMRC Delhi Metro Rail Corporation EMD Earnest Money Deposit EPC Engineering Procurement and Construction IRCON/ IRCON International IRCON International Limited JV Joint Venture L&T Larsen & Turbo Limited MMRDA Mumbai Metropolitan Region Development Authority NF Railway/ N F Railway Northeast Frontier Railway NHAI National Highways Authority of India NHDP National Highway Development Program NHPC National Hydroelectric Power Corporation Limited NTPC National Thermal Power Corporation Limited PIDB Punjab Infrastructure Development Board PPP Public Private Partnership PWD Public Works Department PRBDB Punjab Roads & Bridges Development Board SAIL Steel Authority of India Limited SPV Special Purpose Vehicle WBHIDC West Bengal Housing Infrastructure Development Corporation Limited
ABBREVIATIONS
Abbreviation Full Form A/c Account AGM Annual General Meeting AK Caps A.K. Capital Services Limited AS Accounting Standards issued by the Institute of Chartered Accountants of India ASCARD Bank Assam State Co-operative Agricultural & Rural Development Bank Ltd. AY Assessment Year BIL Brahmaputra Infrastructure Limited, our wholly owned subsidiary BPO Business Process Outsourcing BSE Bombay Stock Exchange Limited CAGR Compounded Annual Growth Rate CDSL Central Depository Services (India) Limited CPM Critical Path Method DIPP Department of Industrial Policy and Promotion Distt. District DP Depository Participant EBITDA Earning Before Interest, Tax, Depreciation and Amortization EGM Extraordinary General Meeting EPS Earnings per Equity Share FCCB Foreign Currency Convertible Bonds FCNR Account Foreign Currency Non Resident Account FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 read with rules and regulations thereunder, as amended from time to time FEMA Regulations FEMA (Transfer or Issue of Security by a Person Resident Outside India)
5 Regulations 2000, as amended from time to time FII (s) Foreign Institutional Investors as defined under SEBI (Foreign Investor) Regulations, 1995, as amended from time to time, registered with SEBI under applicable laws in India FIPB Foreign Investment Promotion Board FIs Financial Institutions FVCI Foreign Venture Capital Investors registered with SEBI under the SEBI (Foreign Venture Capital Investor) Regulations, 2000 GDP Gross Domestic Product GDR Global Depository Receipt GIR Number General Index Registry Number GoI/ Government Government of India HNI High Networth Individual HUF Hindu Undivided Family ICAI Institute of Chartered Accountants of India ICRA ICRA Limited, Credit Rating Agency IFRS International Financial Reporting Standards INR Indian Rupee IT Information Technology I.T. Act The Income Tax Act, 1961, as amended from time to time I.T. Rules The Income Tax Rules, 1962, as amended from time to time IPO Initial Public Offering Kg Kilograms KW Kilo Watt Mn/mn Million Mn. Sq. mt. Million Square Meters MOU Memorandum of Understanding MTPA/ M.T. p.a. Metric Tonnes Per Annum MW Mega Watts NA/ N.A. Not Applicable NAV Net Asset Value NBFC Non-Banking Finance Companies NOC No Objection Certificate NR Non-resident NRE Account Non Resident External Account NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited NSE The National Stock Exchange of India Limited OCB A company, partnership, society or other corporate body owned directly or indirectly to the extent of at least 60% by NRIs including overseas trusts, in which not less than 60% of beneficial interest is irrevocable held by NRIs directly or indirectly as defined under Foreign Exchange Management (Transfer or Issue of Foreign Security by a Person Resident Outside India) Regulations, 2000 P/E Ratio Price/ Earnings Ratio PAN Permanent Account Number allotted under the Income Tax Act, 1961 PERT Program Evaluation and Review Technique PIO Persons of Indian Origin PLR Prime Lending Rate PNB Punjab National Bank QIB Qualified Institutional Buyer R&D Research and Development RBI The Reserve Bank of India RBI Act The Reserve Bank of India Act, 1934,a s amended from time to time RoC/ Registrar of Companies The Registrar of Companies, National Capital Territory of Delhi & Haryana, at Delhi located at Pariyavaran Bhawan, Block B, 2nd Floor, CGO Complex, Lodhi Road, New Delhi-11003, India
6 RONW Return on Net Worth Rs./ Rupees Indian Rupees, the legal currency of the Republic of India SBI State Bank of India SCRA Securities Contract (Regulation) Act, 1956, as amended from time to time SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992 SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time Sec. Section SEZ Special Economic Zone SIA Secretariat for Industrial Assistance SICA Sick Industrial Companies (Special Provisions) Act, 1985, as amended from time to time Sq. Mtrs./ sq. mtrs. Square Meters SSI Small Scale Industries Stamp Act The Indian Stamp Act, 1899 Stock Exchange(s) BSE and/or NSE as the context may refer to UIN Unique Identification Number issued in terms of SEBI (Central Database of Market Participants) Regulations, 2003, as amended from time to time UoI Union of India US/ USA United Stated of America USD/ $/ US$ The United States Dollar, the legal currency of the United States of America w.e.f. with effect from WTD Whole Time Director
Notwithstanding the foregoing, in the section titled “Main Provisions of the Articles of Association”, “Statement of Tax Benefits”, “Financial Statements” and “Disclaimer Clause of BSE & NSE” beginning on page 306, 57, 168 and 248 respectively of this Draft Red Herring Prospectus, defined terms have the meaning given to such terms in the Articles of Association of our Company, Statement of Tax Benefits, Financial Statements and Disclaimer Clause of BSE & NSE respectively.
7 SECTION II: RISK FACTORS
CERTAIN CONVENTIONS: PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA
Unless stated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our restated unconsolidated financial statements prepared in accordance with Indian GAAP and the SEBI Guidelines, which are included in this Draft Red Herring Prospectus. Our fiscal year commences on April 1 and ends on March 31 of the next year. So all references to a particular fiscal year are to the twelve-month period ended on March 31 of that year and all references to December 31, 2006 are to the nine month period from April 1, 2006 to December 31, 2006.
All references to “Rupees” or “Rs.” are to Indian Rupees, the official currency of the Republic of India. All references to “US$” or “US Dollars” or “USD” are to United States Dollars, the official currency of the United States of America.
There are significant differences between Indian GAAP, IFRS and U.S. GAAP. 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. Accordingly, the degree to which the Indian GAAP financial statements included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practices. Any reliance by Persons not familiar with Indian accounting practices on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited.
In this Draft Red Herring Prospectus, any discrepancies in any table between the totals and the sums of the amounts listed are due to rounding off.
Market and industry data used in this Draft Red Herring Prospectus has generally be obtained or derived from industry publications and sources. These publications state that the information contained therein has been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be assured. Accordingly, no investment decision should be made based on such information. Although we believe that industry data used in this Draft Red Herring Prospectus is reliable, it has not been verified. Similarly, we believe that the internal Company reports are reliable; however, they have not been verified by any independent sources.
The extent to which the market and industry data used in this Draft Red Herring Prospectus is meaningful depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data. There are no standard data gathering methodologies in the infrastructure industry in India and methodologies and assumptions may vary widely among different industry sources.
8 FORWARD-LOOKING STATEMENTS
This Draft Red Herring Prospectus contains certain “forward-looking statements”. These forward-looking statements generally can be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. Similarly, statements that describe our strategies, objectives, plans or goals are also forward-looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant statement.
Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following:
• General economic and business conditions in the markets in which Company operates and in the local, regional and national economies; • Changes in laws and regulations relating to the industry in which Company operate; • Increased competition in this industry; • Change in Government policy with respect to spending on infrastructure in the future; • The ability to successfully implement the growth strategy and expansion plans, and to successfully launch and implement various projects and business plans for which funds are being raised through this Issue; • The ability to meet the capital expenditure requirements; • Fluctuations in operating costs; • The ability to attract and retain qualified personnel; • Changes in technology; • Changes in political and social conditions in India or in countries that Company may enter, the monetary and interest rate policies of India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices; • The performance of the financial markets in India and globally; and • Any adverse outcome in the legal proceedings in which Company are involved.
For further discussion of factors that could cause our actual results to differ, see the section titled “Risk Factors” and “Management’s Discussion of Financial Condition and Results of Operations” beginning on page 10 and 219 respectively of this Draft Red Herring Prospectus. Neither our Company, our directors and officers, any member of Issue Management team nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, our Company and the BRLMs 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.
9 RISK FACTORS
An investment in Equity Shares involves a high degree of risk. You should carefully consider all of the information in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before making an investment in our Equity Shares. If any of the following risks actually occur, our business, results of operations and financial condition could suffer, the trading price of our Equity Shares could decline, and you may lose all or part of your investment.
These risks are not the only ones that we face. Our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations. Unless otherwise mentioned we are not in a position to quantify the extent of the risks specified herein. The numbering of risk factors has been done to facilitate ease of reading and reference and does not in any manner indicate the importance of one risk factor over another.
Risk in relation to our Business or Internal Risks
There is a criminal proceeding pending against our directors which if determined against them could adversely affect our business.
M/s Brahmaputra Consortium (erstwhile partnership firm in which two of our directors Mr. Manoj Kumar Prithani and Mr. Sanjeev Kumar Prithani were partners) had done a work of making deep tube-wells for ASCARD Bank in the year 1995-96. On account of some financial irregularities found in the Bank’s affairs, Government of Assam through EOW, CBI had alleged that few contractors who had done some work for ASCARD Bank at that time including M/s Brahmaputra Consortium were co-conspirators in such financial irregularities. CBI instituted criminal proceeding primarily against three officers of M/s ASCARD Bank alongwith two of our directors in relation to alleged excess payment of Rs. 96,924 made by the bank to Brahmaputra Consortium. The charges made in the two FIRs’ being FIR No RC 5/E/01 and RC 6/E/01 pertain to charges under Sections 13(2) and 13(i)(c) of the Prevention of Corruption Act for offences committed by public servants and charge of misappropriation of funds under sections 409 and 120B of IPC. The proceedings are in progress in the court of Special Judge CBI, Guwahati. Our directors namely Mr. Manoj Kumar Prithani and Mr. Sanjeev Kumar Prithani have since been granted bail by the Court.
For more information, see the section titled "Outstanding Litigation and Material Developments" beginning on page 234 of this Draft Red Herring Prospectus.
We are involved in certain legal and other proceedings, which may result in liabilities.
We are involved in certain legal proceedings and claims. These legal proceedings are pending at different levels of adjudication before various authorities. We cannot assure that these legal proceedings will be decided in our favour. Any adverse decision may have a significant effect on our business and results of operations. a) There are two disputes relating to imposition of penalty by Income Tax Assessing Officer pending against our Company. The disputed amount of penalty in aggregate is Rs. 29.69 Lacs. b) There is one dispute relating to additional demand of Income Tax amounting to Rs. 1.11 Lacs against our Company along with equivalent amount of penalty imposed by the Income Tax Department. c) There is one dispute pertaining to compensation payable to legal heirs of two deceased workmen pending against our Company. The disputed amount is not ascertainable at present. d) There is one writ petition filed by us against Eastern Coalfields India Limited in Kolkata High Court challenging disqualification of our Company at first stage of bidding. e) There is one petition filed by us in High Court of Delhi for appointment of arbitrator to decide the claims raised by us against IRCON. The amount in dispute aggregates to Rs. 151.00 Lacs.
The amount involved is the amount expressly claimed, being the liability and financial impact, which may be incurred if we are unsuccessful in legal proceedings. However, it does not include those penalties, interests
10 and costs, if any, which may be imposed which may have been pleaded but not quantified in the course of legal proceedings, or which the Court/Tribunal otherwise has the discretion to impose. The imposition and amount of such penalties /interest/costs are at the discretion of the Court/Tribunal where the case is pending. Such liability, if any, would crystallize only on the order of the authorities where the case is pending.
For more information regarding legal proceedings, see the section titled "Outstanding Litigation and Material Developments" beginning on page 234 of this Draft Red Herring Prospectus.
We have applied for, but have not yet received, confirmation from the GoI that we can offer the Equity Shares to registered FIIs investing under the portfolio investment scheme notified under the FEMA Regulations.
We have sought confirmation from the Department of Industrial Policy & Promotion of the GoI that investment by FIIs registered with the SEBI in Equity Shares offered as part of this Issue would not fall within the ambit of Press Note 2 (2005 Series) issued by GoI and will therefore not be subject to the conditions specified therein. We cannot assure you that we will get this confirmation in time or at all. Any delay in getting this confirmation may cause us to delay this Issue. Any failure in securing the confirmation may cause us to not offer our Equity Shares in this Issue to FIIs, which may result in reduced liquidity of our Equity Shares after the Issue.
Our objects of the issue are not fully appraised.
We intend to the use the net proceeds of the Issue for investment in capital equipment, investment in BOT/ BOOT projects and for our working capital requirements. . Requirement for working capital funds has been appraised by Punjab National Bank. However, our capital expenditure plans have not been appraised by bank or financial institution. In addition, our plans are subject to a number of variables, including possible cost overrun and changes in the management's views of desirability of current plans, amongst others. The Company has appointed Centurion Bank of Punjab Limited as the Monitoring Agency, who will monitor and report the deployment of funds.
For details, please see the section titled "Objects of the Issue" beginning on page 50 of this Draft Red Herring Prospectus.
We have issued Equity Shares to Promoter Group in the last one year prior to the date of this Draft Red Herring Prospectus at a price which may be at variance with the Issue price to be determined though the book building process.
Our Company has allotted 535,930 Equity Shares for a cash consideration at a premium of Rs. 20.00 per Equity Share to the Promoter Group in the last one year prior to the filing of this Draft Red Herring Prospectus. For more details please refer to section titled "Capital Structure" beginning on page 42 of this Draft Red Herring Prospectus. The price at which the above Equity Shares have been issued prior to the filing of this Draft Red Herring Prospectus may be at variance with the Issue Price that will be determined pursuant to the book building process.
We have not executed BOT project in the past.
We intend to bid for BOT projects. We have not executed any BOT project in the past. In a BOT project, we will be required to arrange for the financing and incur all expenditure related to the project. We will be required to maintain and manage the project assets for a stipulated period during which we will derive income from such project. Any delay in completion of the project may affect our results of operations. The risks associated with undertaking BOT projects can be substantial, including the risk of incorrect forecasts at the bid stage concerning revenues to be derived from the use of the constructed facility and the risk of extended exposure to fluctuating economic conditions. BOT projects typically have long gestation periods and we may incur substantial capital expenditure before we derive expected benefits or returns on our investment, which can adversely impact on our business, result of operations and financial condition.
11 We have not identified any definitive BOT project for Investment.
The Company has allocated a sum of Rs. 1000.00 Lacs for investment in BOT/BOOT projects out of the net proceeds of the Issue. We propose to apportion this sum in the form of seed capital to strengthen our capability to quote for BOT/BOOT projects as and when awarded to us. We foresee tremendous opportunity in this area. The specific projects for which the funds are raised have not yet been identified by the Company. There can be no assurance that we will be able to conclude definitive agreements for investments in BOT/ BOOT projects anticipated by us.
Pending utilization for the purposes described above, we intend to invest the funds in high quality interest bearing liquid instruments including money market mutual funds and deposits with banks for the necessary duration. Such investments would be in accordance with the investment policies or investment limits approved by our Board from time to time.
We have not placed orders for all the plants and machineries required in terms of our objects for the Issue.
We have not placed orders aggregating to Rs. 2091.66 Lacs for the plant and machinery to be financed from the proceeds of this Issue. We have received the quotations from vendors and the same is being evaluated, Necessary orders will be placed in due course of time.
We have high debt equity ratio of 3.08 as on December 31, 2006.
We are at present executing orders worth Rs. 73093.79 Lacs. To meet various completion deadlines of these projects, we have to mobilize large amount of resources in terms of increased value of inventories, increased investment in equipments, maintaining security deposit with clients, enhanced amount of EMDs and retention of money by clients on completion of the projects. This all results in drain on our financial resources and we have to increasingly realy on additionally borrowed funds. Funds raised through IPO will have a certain positive affect on our debt equity ratio.
We could not appoint a Company Secretary intermittently for some period.
We could not find a suitable candidate for the post of Company Secretary as required by section 383A of the Companies Act, 1956 for the period from March 31, 2003 to January 19, 2004, from February 29, 2005 to March 9, 2005 and again from June 18, 2005 to September 10, 2006. However, we have, effective September 11, 2006 appointed a full time Company Secretary. We have moved a petition before the Company Law Board (CLB) for Composition and Compounding of offence. We are hopeful of getting requisite order from the Competent Authority.
We could not file certain charges with Registrar of Companies within stipulated time.
In normal course of our business, we are frequently required to purchase certain equipments as a part of our plant and machinery for which we seek finance from term lenders including banks, institutions and other body corporates. As charge is required to be created on the assets being financed and we are required to file the charges with Registrar of Companies under section 125/ 138 of Companies Act, 1956 within stipulated time. In some cases, we find it difficult to file the charge within time on account of time delay in getting digital signatures of the authorized officials of the Banks/Institutions and non availability of duly signed loan documents.
There are cases where we have failed to file the charges within the stipulated time. In all such cases we filed petition before the Company Law Board (CLB) for Composition and Compounding of offence and received necessary orders from the CLB except in seven cases wherein in respect of four cases, we have filed petitions before the CLB for Composition and Compounding of offence, and the same is pending for necessary award and in respect of three cases, we are taking steps to file necessary petitions before CLB. For further details, please refer to section, “Financial Indebtness” beginning on page 107 of this Draft Red Herring Prospectus.
12 We require certain regulatory approvals in the ordinary course of our business, and the failure to obtain them in a timely manner or at all may adversely affect our operations.
We require certain regulatory approvals, sanctions, licenses, registrations and permissions for operating our businesses. In connection with our business, we may require such approvals or their renewal from time to time. We may not receive such approvals or renewals in the time frames anticipated by us or at all, which could adversely affect our business. For further details, please refer to section titled “Government Approvals” beginning on page 239 of this Draft Red Herring Prospectus.
We are exposed to unspecified amount of liability in respect of our Joint Ventures.
In normal course of business, we enter into joint ventures with other entities to bid for certain projects requiring higher financial and technical qualifications. These joint ventures are association of persons (AOPs) and are essentially in the nature of partnership. The liability of joint venture partners is unlimited and exposes us to unspecified amount of risk equivalent to our share in joint venture. The joint ventures are normally dissolved on completion of the projects on expiry of defect liability period.
The Company has not executed any contracts for construction of real estate properties in the past and does not possess the experience in such line of activity.
At present we are executing two projects in real estate segment. The first relates to development, construction & marketing of Private Industrial Park at Guwahati and the other relates to development, construction & marketing of residential flats and commercial space at Guwahati. The Company has in the past been executing contracts in the infrastructure sector relating to roads, tunnels etc. and the construction of real estate is a new line of activity for the Company. The Company shall be vulnerable to risks associated with such ventures like price escalation, delay in completion of the contract and deficiency in the quality of construction. For further details, please refer to section titled “Our Business” beginning on page 76 of this Draft Red Herring Prospectus.
Substantial portion of our Sales is dependent upon few customers.
Our top seven customers contributed approximately 77% of our contract receipts during financial year 2005- 06 and 97% of our contract receipts during the nine months period ended December 31, 2006. Any decline in our quality standards and growing competition and any change in the demand for our product by these customers may adversely impair our ability to retain these customers. The loss of our major customers may adversely affect our revenues and profitability. We cannot assure you that we shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect our operations and profitability. Over the past years, we have diversified into different segments of operations, viz., roads, tunnels, mining, real estate etc. so as to reduce the reliance on one segment/ customer.
Our insurance coverage may not adequately protect us against all material hazards and this may have a material adverse effect on our business.
Our Company has covered itself against certain risks. Our significant insurance policies consist of coverage for risks relating to physical loss or damage. In addition, we have obtained separate insurance coverage for personnel related risks, motor vehicle risks and loss of movable assets risks. Under certain of our contracts and sub-contracts, we are required to obtain insurance for the project undertaken by us, which, in some cases, we have not obtained or we permitted such insurance policies to lapse prior to the completion of the project. While we believe that the insurance coverage we maintain would reasonably be adequate to cover all normal risks associated with the operation of our business, there can be no assurance that any claim under the insurance policies maintained by us will be honoured fully, in part or on time, nor that we have taken out sufficient insurance to cover all material losses. Further, we may not have obtained insurance cover for some of our projects that do not require us to maintain insurance. To the extent that we suffer loss or damage for which we did not obtain or maintain insurance, that is not covered by insurance or exceeds our insurance coverage, the loss would have to be borne by us and our results of operations and financial performance could be adversely affected. For details of insurance coverages taken by us please refer to section “Our Business” under the heading ‘Insurance’ beginning on page 76 of this Draft Red Herring Prospectus.
13
There are certain contingent liabilities which could adversely affect our financial condition. The Contingent liabilities not provided for as on December 31, 2006 are listed below. If these Contingent liabilities materialize, fully or partly, the financial condition could be adversely affected. a) Contingent liabilities in respect of bank guarantees given amounting to Rs. 8739.48 Lacs. b) Corporate guarantee given on behalf of BIL, wholly owned subsidiary amounting to Rs. 1325.00 Lacs. c) Contingent liability in respect of additional demand and penalties imposed by Income Tax Department amounting to Rs. 30.73 Lacs.
Some of our Promoter group companies have incurred losses.
Some of our Promoter group companies have incurred losses within the last three Fiscals and for the nine months period ended December 31, 2006. For details of these losses, please refer to the section titled “Our Promoters and Promoter Group” beginning on page 149 of this Draft Red Herring Prospectus.
Upon completion of the Issue, our Promoters Group may continue to retain significant control in our Company, which will allow them to influence the outcome of matters submitted to shareholders for approval.
Upon completion of this Issue, our Promoters Group will continue to own 74.07% of our Equity Shares on a fully diluted basis. As a result, our Promoters Group will have the ability to exercise significant influence over all matters requiring shareholders’ approval, including the election of directors and approval of significant corporate transactions. Our Promoters Group will also be in a position to influence any shareholder action or approval requiring a majority vote, except where it is required by applicable laws to abstain from voting. Such a concentration of ownership may also have the effect of delaying, preventing or deterring a change in control.
Some of our immovable properties may be subject to irregularities in title and some of our agreements may be inadequately stamped, as a result of which our operations may be impaired.
A portion of our existing land reserves and planned land acquisitions consist of agricultural lands for development purposes. The title to these lands is often fragmented and the land may, in many cases, have multiple owners. Some of our lands may have irregularities of title, such as non-execution or non- registration of conveyance deeds, and may be subject to encumbrances that we may not be aware of. While we conduct due diligence and assessment exercises prior to acquiring land and undertaking a project, we may not be able to assess or identify all risks and liabilities associated with the land, such as faulty or disputed title, unregistered encumbrances or adverse possession rights. As a result, some of our lands do not have guaranteed title and title has not been independently verified. Thus, we face uncertainty of title to our lands and may continue to do so in the future. We have not obtained mutation entries in respect of some of our land forming part of our land reserves. The uncertainty of title to land makes the acquisition process more complicated, may impede the transfer of title, expose us to legal disputes and adversely affect our land valuations. Legal disputes in respect of land title can take several years and considerable expense to resolve if they become the subject of court proceedings. The failure to obtain good title to a particular plot of land may materially prejudice the success of a development for which that plot is a critical part, and may require us to write off expenditures in respect of the development. Some of the properties we have taken on lease for residential and commercial purposes may not be adequately stamped or registered. In addition, lands for which we have entered into agreements to acquire but have not yet acquired form a significant part of our growth strategy and the failure to obtain good title to these lands could adversely impact our property valuations and prospects.
We have not complied with certain provisions of the Companies Act, 1956.
We failed to comply with certain provisions of the Companies Act, 1956 in respect of some related party transactions. As a consequence, we, our Directors or officers in default may face prosecution and may also be held liable to pay fines to the extent provided in the Companies Act, 1956 for non compliance of provisions under the same. In the event such fines are imposed on us, our business, financial conditions and results of operations could be adversely affected.
14 We have not obtained trademark registration of our logo, it may adversely affect our goodwill and business.
We have applied for but not yet obtained registration of our logo from the trademark registry under the provisions of the Trade Marks Act, 1999. Until such registration is obtained for by us, we may not be able to prohibit other persons from using the logo, which may adversely affect our goodwill and business.
Our Promoters may have a conflict of interest as some of our Promoter group companies are in the same line of business.
Some of our Promoter group companies are in the same line of business as we are and our Promoters may favour the interest of our Promoter group companies over our Company. Our Promoters also hold key managerial roles in most of these Promoter group companies, which may require their time and efforts. Therefore our Promoters may not be able to devote their full time and attention on their managerial duties in relation to our Company. In addition, there may be a conflict of interest between the business of our Promoter group companies and our business. For further information on Promoter group companies, please refer to “Our Promoters and Promoter Group” beginning on page 149 of this Draft Red Herring Prospectus.
We have negative cash flow for the fiscal year 2005, 2006 and for the nine months period ended December 31, 2006. Any negative cash flow in the future may affect our liquidity and financial condition.
We have negative net cash flow of Rs. 31.66 Lacs for the nine months period ended December 31, 2006. For the year ended March 31, 2006 and 2005, the negative cash flow amounted to Rs. 0.91 Lacs and Rs. 221.15 Lacs respectively. Our net cash flow was negative on account of increase in inventory levels. As on December 31, 2006, our inventory level has gone up to Rs. 3924.96 Lacs. The increased inventory indicates unbilled amount in respect of works we have already executed, the billing towards this inventory will be done in quarter ending March 31, 2007. In the event that we report negative cash flows in the future, our results from operations may be adversely impacted. For further details on our cash flows, please refer to section titled “Financial Statements” beginning on page 168 of this Draft Red Herring Prospectus.
Loss due to non-performance of Sub Contractors.
The projects sub-contracted by the Company could get delayed on account of the sub-contractors performance, resulting in loss of revenue. For the period ending December 31, 2006, the sub-contracted work amounts to approximately 20.25% of our total contract receipts.
We employ a very strict policy in terms of sub contracting our contracts and sub contract only a portion of the entire project and that too, to more than one party. Moreover the project management team regularly monitors the performance of all the projects that have been sub contracted to various parties and ensures that our company does not loose any revenue due to their non-performance.
Dependence on contracts awarded by the Government and its agencies.
The business of the Company is dependant on the implementation of the central and state budget allocations to the infrastructure sector. The Company derives the bulk of its revenue from contracts awarded by the central and state governments and their agencies. It is possible that in certain cases implementation of budgetary allocation (including external funding) may get delayed and consequently the Company would receive payments against running account bills in a delayed manner, rather than specified payment conditions. The delay in payment could be on account of a change in the government, changes in any policies impacting the public at large and/or changes in external budgetary allocation or delay due to insufficiency of funds.
However, we are well versed with the working parameters of the various government departments since we have been dealing with them for over a decade. Our experienced tendering team carries out detailed investigations in terms of the financial health of the Client before taking any project. Moreover a substantial portion of our projects is either Central Government or World Bank funded, which further mitigates our risk towards payment of dues. In case of a large project the contract conditions provide for the payment of interest on delayed payments so as to compensate us suitably.
15
Dependence on joint ventures to qualify for the bidding process.
To bid for certain infrastructure projects, which require higher capital adequacy or technical expertise, the Company has to enter into joint ventures / memorandum of understanding with other companies. In case we are unable to forge an alliance with other companies to meet the pre-qualification requirements, it may lose out on the opportunity to bid. Further, since the liability of the joint venture partners is joint and several, implying thereby that in case the joint venture partner fails to discharge his obligation under the contract, the Company is liable to get the entire contract performed to the satisfaction of the client.
The Company has entered into joint ventures and strategically partnered with other players based on their track record and position in the market. The completion of project through a joint venture will add to our credentials and would make us eligible to independently bid for similar projects in future. Moreover, with the present resource raising the Company’s ability to bid for large value contracts independently would increase significantly.
Substantial fund based and non fund based working capital requirement.
The Company’s business needs substantial funds in the form of working capital requirement and bank guarantee from Banks and Financial Institutions. Any delay in disbursement of funds from these institutions could adversely affect the performance of the Company. Generally, payments from clients are linked to completion milestones/monthly payments, which are spread out over the execution period of the contract. Consequently, there could be situations where the total funds available may not be sufficient to fulfill our commitments. In which case, additional funding can be raised through commercial borrowings, vendor financing or issue of fresh capital. In this event, the interest obligations would increase and the Company may be subject to additional covenants.
Competitive Bidding Process.
The contracts are awarded following competitive bidding processes and satisfaction of other prescribed pre- qualification criteria. We face intense competition from big players who operate at the national level, to numerous smaller localized contractors /companies. Once the prospective bidders clear the technical requirements of the tender, the contract is usually awarded based on price of the contract quoted by the prospective bidder. The nature of this process may cause us and other prospective bidders to lower prices for award of the contract, so as to maintain the respective market share of the Company. As a result of this competition, we face margin pressure. Consequently, this could have a material negative effect on our financial condition and prospects.
We have been a key player in the construction industry for over a decade and posses substantial experience in bidding for contracts and applying right strategies to achieve the desired objectives. We also operate in diversified geographies and different infrastructure sectors which provide us with a rightful mix of projects allowing us to maintain the reasonable level of operating margins.
The business of our Company is seasonal.
Our operations are adversely affected by difficult working conditions and extreme high temperatures during summer months and during monsoons which restrict our ability to carry on construction activities and fully utilize our resources.
We record revenues on the percentage of completion method. Since revenues are not recognized until they are in a reasonable progress on a contract, revenues recorded in the first half of our financial year between April and September are traditionally lower compared to revenues recorded during the second half of our financial year. During periods of curtailed activity due to adverse weather conditions, we may continue to incur operational expenses, but our revenues from operations may be delayed or reduced.
16 On fixed price or turnkey contracts, we are exposed to construction risks including risks on account of fluctuation in prices of our major raw materials that could cause us to incur losses.
We enter into both fixed price and turnkey contracts. Under the terms and conditions of such fixed price or lumpsum contracts, we generally agree for a fixed price for providing engineering, procurement and construction services for the part of the project contracted to use or, in the case of turnkey contracts, completed facilities which are delivered in a ready to operate condition, subject, however, to contract variations pursuant to changes in the client's project requirements. The actual expense to us for executing a fixed price or lump-sum turnkey contract may vary substantially from the assumptions underlying our bid for several reasons, including:
• unanticipated changes in engineering design of the project; • unanticipated increases in the cost of equipment, material or manpower; • delays associated with the delivery of equipment and materials to the project site; • unanticipated adverse fluctuations in the prices of our major raw materials which we may not be able to pass on to our clients; • unforeseen construction conditions, including liability of the client to obtain requisite environmental and other approvals, resulting in delays and increased costs; and • delays caused by local weather conditions.
Unanticipated costs or delays in performing part of the contract can have compounding effects by increasing costs of performing other parts of the contract. These variations and the risks general inherent to the construction industry may result in our profits being different from those originally estimated and may result in our experiencing reduced profitability or losses on projects. Depending on the size of the project, these variations from estimated contract performance could have an effect on our results of operations.
Changes in the scope of work may result in disputes, which could have a material adverse impact on the profits from that project.
In certain cases, we may be required to perform additional work on a project that is beyond the stated scope of the contract. We may not receive any remuneration for the same, or payments in respect of the same may be delayed or inadequate, which may have a material adverse effect on our profits.
Further, in certain contracts we are required to execute extra or change order work as directed by the client even if the scope or price of the work to be performed is not settled at the time of execution of the contract. This process may result in disputes and may result in delayed or inadequate payments, or in payments not being made at all. This could have an adverse effect on our profits.
Projects included in our backlog may be delayed or cancelled which could materially harm our cash flow position, revenues and earnings.
As of December 31, 2006, our EPC order backlog was approximately Rs. 45729.52 Lacs. Our backlog does not necessarily indicate future earnings related to the performance of that work. Backlog refers to the expected future revenues under signed contracts or contracts where letters of intent have been received. Backlog projects represent only business that is considered firm, although cancellations or scope adjustments may occur. Due to changes in project scope and schedule, we cannot predict with certainty when or if backlog will be performed. In addition, even where a project proceeds as scheduled, it is possible that contracting parties may default and fail to pay amount owed. Any delay, cancellation or payment default could materially harm our cash flow position, revenues and/or earnings.
We have completed certain projects, which are awaiting the issuance of completion certificate by the relevant government agency, without which they shall not be deemed to be complete and we shall be required to maintain the same till such issuance of the completion certificate. We have executed certain work contracts and are awaiting the issuance of the requisite completion certificate by the relevant government agencies. These projects shall not be deemed to have been completed projects till the issuance of these completion certificates. Although we have performed all our obligations as under the terms and conditions of the work contract, the relevant government agency can dispute this and require us to perform certain other tasks, without which they may not issue a completion
17 certificate. We shall be solely liable for the maintenance of these completed works till the issuance of the completion certificate which shall in some cases be independent of the contractually agreed defect liability period and maintenance period, as in some case the tender documents stipulate that the date of completion of the works/ project shall be deemed to the date of issuance of the completion certificate. Any damage to these completed works/ projects during this period shall have to be repaired by us at our own cost. Any costs incurred for any such repair shall not be refundable by the relevant government agency and hence, our profit margins may be impacted in such a scenario.
Our operations are subject to hazards and other risks and could expose us to material liabilities, loss in revenues and increased expenses. Besides, we are also subject to defect-liability covenants, which may result in subsequent claims.
Our operations are subject to hazards inherent in providing engineering and construction services, such as risk of equipment failure, work accidents, fire or explosion, including hazards that may cause injury and loss of life, severe damage to and destruction of property and equipment and environmental damage. We may also be subject to claims resulting from defects arising from engineering, procurement and/or construction services provided by us within the warranty periods extended by us, which range for a period of 12 months and extends in some case upto five years from the date of completion of Project. Actual or claimed defects in equipment procured and/or construction quality could give rise to claims, liabilities, costs and expenses, relating to loss of life, personal injury, damage to property, damage to equipment and facilities, etc. We also do not have insurance coverage for any losses that may be incurred during the defects liability period. Failure to effectively cover ourselves against engineering and construction industry risks for any of these reasons could expose us to substantial costs and potentially lead to material losses. These liabilities and costs could have a material adverse effect on our business, results of operations and financial condition.
Penalties for Time Overrun
The Company executes construction contracts primarily in sectors such as Roads and infrastructure developments. The Company typically enters into high value contracts for the aforesaid activities, which provide for levy of penalty normally for time-overrun cases. In case we are unable to meet the performance criteria as prescribed by the respective client and if penalties are levied, our financial performance may be adversely affected.
However, our project management team is experienced and employs its diligence right from choosing the project and monitoring it at every step of its implementation. Owing to our strong and unblemished project management skills, we have been able to complete projects successfully in the past and we expect to continue the same in the future.
There are restrictive covenants under the Loan agreements.
We have entered into agreements with Banks and Institutions for short term loans and long term borrowings. For details of borrowings, please refer to section “Financial Indebtedness” beginning on page 107 of this Draft Red Herring Prospectus. Loan agreements with the lenders contain certain restrictive covenants relating to disbursement of loan and carrying out of certain activities, which require the prior written permission of these lenders in the event our Company is desirous of indulging in the said activities. Non availability of all requisite sanctions/permissions/ approvals will delay the disbursement and thereby implementation of the proposed project(s)/ contracts(s). The restrictive covenants in general relate:
• Not to incur capital expenditure for expansion/diversification/modernization. • Not to allow promoters to disinvest/transfer their shareholdings. • Not to effect any merger, amalgamation or reconstitution. • Not to pay any dividend otherwise then out of the current year’s earnings after making due provisions. • Not to create any charge on any or all of the assets or properties of the Company. • Not to change or in any way alter the capital structure of the Company.
The restrictive covenants mentioned in the agreements are as per the usual practices of the lenders. We do not foresee any difficulty in getting the requisite permissions as and when required.
18 The operations of the Company are subject to employee health and safety laws and regulations.
We are subject to laws and regulations governing (a) relationships with employees in such areas overtime, working conditions, hiring and terminating of employees, contract labour and work permits, (b) environmental, health and safety legislations. The success of our strategy to modernize and optimize our existing operations, in various divisions, is contingent upon, among other things, receipt of all required licenses, permits and authorizations, including local land use permits, building and zoning permits and environmental, health and safety permits.
We build necessary sanitation arrangements including proper drainage, drinking water arrangements, health checkups, first aid provisions at all locations. All the health norms stipulated by the local authorities are followed. In addition to this necessary vaccination and other preventive measures are taken. Our company has taken adequate safety measures including training to the staff and workmen. This is also an essential condition in most of the contracts. All the environmental norms are followed.
Our project management teams’ logistic department looks after the local land use permit etc and other formalities as maybe required.
The Company’s operations may suffer a temporary setback if any of the key managerial personnel were to leave.
Successful performance of the business operations depends on the trained key managerial personnel of the Company and any sudden disruption in the services of these personnel may have an adverse impact temporarily affecting the smooth operation of the business.
Our top management has wide experience in the construction industry which will reduce the impact of sudden change in the key managerial personnel, if any. Over the years our company has been able to build up and develop a professional team of people who have gained expertise in their respective fields.
The Company’s clients may have the right to unilaterally terminate the contracts for convenience.
One of the conditions in contracts awarded by the Government (Client) may be that the Client has the right to terminate the contract for convenience, without any reason, at any time after providing the Company with notice that may vary from a period of 30-90 days. In the event that a contract is so terminated for convenience, the Company’s revenues may be adversely affected.
Most of our projects are item rate contracts and we receive part payment at the completion of milestones/quantities on the basis of the quantum of work certified by the engineer. Moreover, we also receive mobilization advance from the client for the initial expenses of the contract. The contract conditions provide for compensation to the contractor in the event of such unilateral termination by the employer or any termination taken for which the employer is responsible. There are dispute settlement clauses in the contracts referring such eventualities to Dispute Review Board, Adjudicator and finally the Arbitrator who are independent bodies and in such event they settle the issues.
Any termination of the contract by the client would definitely have a temporary adverse impact on the cash flows of the Company but the degree of the impact is significantly low due to the above reasons. Moreover, we are finally able to recover such losses.
The Company is smaller in size compared to the market leaders, which acts as deterrent for very large projects.
We have bidded for large projects in the past and bagged a few large projects in spite of competition from companies like Gammon, L&T, HCC, Simplex etc. due to our track record and execution skills, we have already crossed the initial pre-qualification barriers for projects of reasonable size and after the proposed issue once our net worth is enhanced suitably we will be eligible for even bigger projects.
19 Delay in acquiring the land clearances by the Client.
The Company is handling various projects in the road and infrastructure segment. Majority of contracts expressly mention that the responsibility for getting the Right of Way lies with the respective client. While these Clients may have obtained land clearances on which these projects are being constructed, the Company may not have copies of supporting documentation for the land acquisition. In the event that these landowners make claims, such claims would lie only against the client and it is possible that the landowners may also make claims against the Company or join the Company as parties to these proceedings. In case of such claims, while the Company is not liable to pay any compensation (as right of way is to be provided by the Client), the company faces a risk of delay in project implementation.
The land owners can not make any claim on the company as the responsibility for providing right access lies with the employer. However in case of any delay due to certain land acquisition issues, the contract provides compensation clauses for such eventualities, which are decided by Dispute Review Board, Adjudicators etc.
We have in the past entered into related party transactions and may continue to do so in the future.
We have entered into transactions with certain promoter and promoter group companies and affiliates. While we believe that all such transactions have been conducted on an arm's length basis, there can be no assurance that we could not have achieved more favorable terms had such transactions not been entered into with related parties. Furthermore, it is likely that we may enter into related party transactions in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on our financial condition and results of operations.
Our results of operation could be adversely affected by any disputes with our employees.
As on date we employ directly or through our joint ventures, a work force of approximately 436 full-time employees. In addition, we employ casual and temporary workmen through contractors on our project sites.
We have been enjoying very good labour relations for the last decade and never had any disruption of work due to labour unrest and do not foresee the same in future also. While we believe that we maintain good relationship with our employees, there can be no assurance that we will not experience future disruptions to our operations due to disputes or other problems with our work force, which may adversely affect our business and results of operations. The number of contract labourers varies from time to time based on the nature and extent of work contracted to independent contractors. We enter into contracts with independent labour contractors to complete specified assignments.
Our inability to follow our business or growth strategy could have an adverse impact on our results of operations.
We have experienced high growth in recent years and expect our business to grow in our operations in India. We expect this growth to place substantial demands on us and require us to continuously evolve and improve our operational, financial and internal controls across the organization. In particular, continued expansion increases the challenges involved in:
• our ability to identify and take advantage of opportunities; • maintaining high level of client satisfaction; • recruiting, training and retraining sufficient skilled management, technical and marketing personnel; • adhering to health, safety and environment and quality and process execution standards that meet client expectations; • developing and improving our internal administrative infrastructure, particularly our financial, operational, communications and other internal systems
In the event that we are unable to implement our growth plans it could lead to delays and cost overrun and affect our results of operations.
20 Equity infusion for net worth prequalification and investing in BOT projects could lead to further dilution.
Over the past two years, construction companies have either accessed the capital markets for funds or raised private equity financing to increase their net worth, a prequalification criteria for bidding and to absorb the long working capital cycles, which is a characteristic of the construction industry. The next phase of orders, particularly for the roads, water, hydroelectric power and ports sectors are expected to be BOT projects, which are even more capital intensive than cash contracts. Consequently, construction companies are raising either GDRs or FCCBs to fund growth.
We may also have to access the capital markets in the future or seek further infusion of capital from other sources to keep bolstering our networth to meet the prequalification and other such criteria for award of BOT projects. This in turn, would further dilute the rights of the existing equity shareholders.
External Risks
Competition in the Indian Infrastructure Industry
The Indian infrastructure industry especially roads sector is facing competition from large number of players encompassing both international companies and major domestic construction companies who operate at the national level. To add on, numerous smaller localized contractors / companies are also competing in the respective region. We bid for contracts based on bidding process and the one who quotes the lowest is awarded the contract. With very limited entry barriers in the infrastructure industry, several players small and big make the industry very competitive. There are many smaller companies / contractors who operate on thin margins and since the contracts are based on bidding process the company which quotes the lowest is awarded the contract. However, with continuous up gradation of skills and strengthening of finances, we do not foresee any major threat in securing contracts. The company believes in quality execution and maintenance.
Our operations are sensitive to weather conditions.
We have business activities that could be materially and adversely affected by severe weather. Severe weather conditions may require us to evacuate personnel or curtail services and may result in damage to a portion of our fleet of equipment or to our facilities, resulting in the suspension of operations, and may further prevent us from delivering materials to our project sites in accordance with contract schedules or generally reduce our productivity.
Our operations are also adversely affected by difficult working conditions and extremely high temperatures during summer months and during monsoon, which restrict our ability to carry on construction activities and fully utilize our resources. We record contract revenues for those stages of a project that we complete, after we receive certification from the client that such stage has been successfully completed. Since revenues are not recognized until we make progress on a contract and receive such certification from our clients, revenues recorded in the first half of our financial year between April and September are traditionally substantially lower compared to revenues recorded during the second half of our financial year. During periods of curtailed activity due to adverse weather conditions, we may continue to incur operating expenses, but our revenues from operations may be delayed or reduced. We have been operating successfully in diverse conditions and terrains over the last decade and have gained significant experience in handling adverse conditions. Our Project Execution team posses significant insight of the local environment and climate during the implementation of the project and accordingly plan their schedule of implementation.
Government Policy on Infrastructure
Our business is dependent on the implementation of the central and state budget allocations to the infrastructure sector. The liberalization policy of the Government and incentives offered by it has spurred the growth of opportunities in the field of Infrastructure and particularly road sector. Adverse changes if any, in the Government policy could thus affect our business prospects.
The Government of India has accorded development of Infrastructure a "thrust area status". The total outlay for development of roads in the 10th plan (2002-2007) has shown marked increase. We recognize the
21 tremendous potential of the infrastructure construction industry in India – specially given the high impetus given by the Government of India to making up deficits in infrastructure rapidly. This gives us an access to continued growth opportunity.
Restrictions on foreign direct investment in the real estate development may hamper the ability to raise additional capital.
The Government of India has permitted foreign direct investment of up to 100% under the automatic route in townships, housing, built-up infrastructure and construction-development projects (“Real Estate Sector”), subject to the conditions enumerated in Press Note No. 2 (2005 series). In the event the Company is unable to raise additional capital as a result of these or other restrictions, it could materially and adversely affect the Company’s business, prospects, financial condition and results of operations. For further details of these restrictions, see the section titled “Regulations and Policies” beginning on page 73.
We are subject to adverse impact of economic and political conditions.
Global economic and political factors that are beyond our control, influence forecasts and directly affect performance. These factors include interest rates, rates of economic growth, fiscal and monetary policies of governments, inflation, deflation, consumer credit availability, consumer debt levels, tax rates and policy, unemployment trends, terrorist threats and activities, worldwide military and domestic disturbances and conflicts, and other matters that influence consumer confidence, spending and tourism. Increasing volatility in financial markets may cause these factors to change with a greater degree of frequency and magnitude. The taxation system within the country still remains complex. Changes in local taxes and levies can impact our performance adversely. Further, any slowdown in the Indian economy or future volatility in global commodity prices, in particular steel, cement and prices of other construction material, could adversely affect our business.
We are subject to risks arising from interest rate fluctuations, which could adversely affect our business, financial conditions and results of operations.
Changes in interest rates could affect our financial condition and results of operations. Our loans are denominated in Indian Rupees and we are exposed to fluctuations in domestic interest rates.
The interest rate that we will be able to secure in future debt financing that we may require for capital and other expenditures associated with our future requirements will depend on market conditions prevailing at that time and may differ from the rates of our existing debt. This may adversely impact results of our operations, planned capital expenditures and cash flows.
The Issue price of our Equity Shares may not be indicative of the market price of our Equity Shares after the Issue.
The Issue price of our Equity Shares will be determined by the Book Building Process. This price will be based on numerous factors (discussed in the section “Basis for Issue Price” beginning on page 55 of this Draft Red Herring Prospectus) and may not be indicative of the market price for our Equity Shares after the Issue. The market price of our Equity Shares could be subject to significant fluctuations after the Issue, and may decline below the Issue price. No assurance can be given that an active trading market for the Equity Shares will develop or as to the liquidity or sustainability of any such market, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which shareholders will be able to sell their Equity Shares. If an active market for the Equity Shares fails to develop or be sustained, the trading price of the Equity Shares could fall. If an active trading market were to develop, the Equity Shares could trade at prices that may be lower than their initial offering price. We cannot assure you that you will be able to resell your shares at or above the Issue price. Among the factors that could affect our share price are: a) quarterly variations in the rate of growth of our financial indicators, such as earnings per share, net income and revenues; b) changes in revenue or earnings estimates or publication of research reports by analysts; c) speculation in the press or investment community; d) general market conditions; and
22 e) domestic and international economic, legal and regulatory factors unrelated to our performance
The price of the Equity Shares may be highly volatile.
Prior to the Issue, there has been no public market for the Equity Shares, and an active trading market on the Indian Stock Exchanges may not develop or be sustained after the Issue. The prices of our Company’s Equity Shares on the Indian Stock Exchanges may fluctuate after this Issue as a result of several factors including: a) Volatility in Indian and global securities market; b) Results of operations and performance; c) Performance of the competitors and perception in the Indian market about investment in the infrastructure sector; d) Adverse media reports on our Company or the industry; e) Changes in the estimates of the performance or recommendations by financial analysts; f) Significant development in India’s economics liberalization and de-regulation policies; and g) Significant development in India’s fiscal and environmental regulations.
There can be no assurance to the prices at which our Equity Shares will trade in the market subsequent to this Issue. Future sales by current shareholders could cause the price of the shares to decline.
If the existing shareholders sell a substantial number of Equity Shares in the public market, the market price of our Company’s Equity Shares could fall. Sale or distribution of substantial number of shares by existing holders, or the perception that such sale or distribution could occur, could adversely affect prevailing market prices for the shares.
Future issues or sales of our Equity Shares may affect the trading price of the Equity Shares.
Future issue of Equity Shares /convertible instruments by us or the disposal of Equity Shares by any of the major shareholders or the perception that such issues or sales may occur may affect trading price of the Equity Shares.
Other than the lock-in of pre-issue capital as prescribed under SEBI Guidelines, none of our shareholders are subject to any lock-in arrangements restricting their ability to issue Equity Shares or the Shareholders' ability to dispose of their Equity Shares, and there can be no assurance that any shareholder will not dispose of, encumber, or pledge, its shares. For details of lock in of pre-issue Equity Share capital and Promoters' contribution please see the section titled "Capital Structure" beginning on page 42 of this Draft Red Herring Prospectus.
You will not be able to sell or transfer any of our Equity Shares till the date of listing of our Equity Shares.
Under the SEBI Guidelines, we are required to allot Equity Shares within 15 days of the Bid/Issue Closing Date. Consequently, Equity Shares purchased in the Issue will not be credited to your demat account until approximately 15 days after the Bid/Issue Closing Date. Further, you will not be able to sell or otherwise transfer such Equity Shares till the date of listing of our Equity Shares on the Stock Exchanges.
We shall be liable to pay interest at 15% per annum, if Allotment is not made, refund orders are not dispatched and/ or demat credits are not made to investors within the 15 day time prescribed above.
Natural calamities could have a negative impact on the Indian economy and cause our business to suffer.
India has experienced natural calamities such as earthquakes, a tsunami, floods and drought in the past few years. The extent and severity of these natural disasters determines their impact on the Indian economy. For example, as a result of drought conditions in the country during fiscal 2003, the agriculture sector recorded a negative growth of 5.2%. The erratic progress of the monsoon in 2004 has also adversely affected the sowing operations of certain crops. Further prolonged spells of rainfall below normal levels or
23 other natural calamities could have a negative impact on the Indian economy, adversely affecting our business and results of operations.
Notes to Risk Factors
1. Public Issue of 4,200,000 Equity Shares of Rs. 10 each for cash at a price of Rs. [•] per Equity Share aggregating Rs. [•] Lacs. The Issue would constitute 25.93% of the fully diluted post issue paid-up capital of the Company. The Issue comprises a Net Issue to the public of 4,000,000 Equity Shares of Rs. 10/- each and a reservation of up to 200,000 Equity shares of Rs. 10/- each for the permanent employees of the Company.
2. Not more than 50% of the Net Issue shall be available for allocation on a proportionate basis to QIB Bidders. 5% of the QIB Portion shall be available to Mutual Funds only. Mutual Funds participating in the 5% share in the QIB Portion will also be eligible for allocation in the remaining QIB Portion. Further, not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Further, up to 200,000 Equity Shares shall be available for allocation on a proportionate basis to Eligible Employees, subject to valid bids being received at or above the Issue Price. If the aggregate demand by Mutual Funds is less than 100,000 Equity Shares, the balance Equity Shares available for allocation in the Mutual Funds reservation will first be added to the QIB Portion and be allocated proportionately to the QIB Bidders in proportion to their Bids. Under-subscription, if any, in any category, would be met with spill over from other categories at the sole discretion of our Company in consultation with the BRLMs and the Designated Stock Exchange.
3. Under-subscription, if any, in the Employee Reservation Portion would be added back to the Net Issue to Public. In case of under-subscription in the Net Issue, spill over to the extent of under- subscription shall be permitted from the Employee Reservation Portion.
4. The net worth of our Company as of December 31, 2006 was Rs. 3094.68 Lacs as per our restated unconsolidated financial statements included in this Draft Red Herring Prospectus.
5. The net asset value per Equity Share of Rs. 10 each was Rs. 26.54 as of December 31, 2006 as per our restated unconsolidated financial statements included in this Draft Red Herring Prospectus.
6. The average cost of acquisition of Equity Shares by our Promoters is given below:
S. No. Name of the Promoter Average Cost of Acquisition (Rs.) 1 Siw Prasad Agarwalla 4.51 2 Suresh Kumar Prithani 6.00 3 Ramesh Kumar Prithani 5.48 4 Manoj Kumar Prithani 10.36 5 Sanjeev Kumar Prithani 9.59
7. None of the persons listed in our Promoter or Promoter group, or our Directors have purchased or sold any Equity Shares, during a period of six months preceding the date on which this Draft Red Herring Prospectus is filed with SEBI.
8. Except as disclosed in the sections titled "Our Management" and "Our Promoters and Promoter Group " beginning on pages 136 and 149 of this Draft Red Herring Prospectus, none of our Promoters, Directors or key managerial personnel have any interest, other than reimbursement of expenses incurred or normal remuneration or benefits.
9. Except, as disclosed in the section titled "Financial Statements" beginning on page 168 of this Draft Red Herring Prospectus, there are no subsisting loans or advances that have been extended by our Company to any persons, firms or companies in which our Directors are interested.
24
10. For details of our related party transactions, please refer to section titled "Financial Statements- Related Party Transactions" beginning on page 168 of this Draft Red Herring Prospectus.
11. Investors are advised to refer to the section titled “Basis of Issue Price” beginning on page 55 of this Draft Red Herring Prospectus before making an investment in this Issue.
12. Trading in Equity Shares of our Company for all investors shall be in dematerialized form only.
13. Investors may note that in case of over-subscription in the Issue, allotment to Qualified Institutional Bidders, Non-Institutional Bidders, Retail Bidders and Bidders in the Employee Reservation Portion shall be on a proportionate basis. For more information, please refer to the section titled “Issue Procedure-Basis of Allotment” beginning on page 258 of this Draft Red Herring Prospectus.
14. Investors are free to contact the BRLMs for any complaints/ information/ clarification pertaining to this Issue. For contact details of the BRLMs, please refer to the cover page of this Draft Red Herring Prospectus.
15. All information shall be made available by the BRLMs and our Company to the public and investors at large and no selective or additional information would be available only to a section of the investors in any manner whatsoever.
25 SECTION III: INTRODUCTION
SUMMARY OF OUR BUSINESS, STRENGTHS AND STRATEGY
Industry Overview
Construction industry is an integral part of a country’s infrastructure and industrial development. With the present emphasis on creating physical infrastructure, massive investment is planned during the Tenth Plan. Key reforms have been initiated in several sectors with the objective of augmenting country’s infrastructure. The construction industry has played a crucial role in this regard. Real GDP from construction sector has increased at a 3 year compounded average growth rate (CAGR) of 11.8% between FY2004 – 06. For the fiscal year 2006, construction industry contributes 6.8% of GDP. (Source: ICRA)
Responsibility for the development and maintenance of National Highways rests with the Central Government, while all other roads are the responsibility of concerned State Governments and local bodies. While traffic on the National Highways has been growing at a rapid pace, it has not been possible for the Government to provide matching funds due to competing demand from other priority sectors. Recognizing the present deficiencies in road network, the Government of India has assigned high priority to National Highway Development Programme (NHDP) with a total investment of Rs. 2,200,000 million up to the year 2012. NHAI has been entrusted with the job of constructing a total of 23,456 Kms of road having following components in the initial Phase I, II & III of the Programme: a. Golden Quadrilateral b. North-East-South-West (NESW) Corridor c. Port Connectivity Corridors d. Four laning of 10000 Kms of high density National Highways
However, to obtain the inflow of resources for the development, maintenance and management of National Highways and to bring in a competitive environment, the Government of India, in line with its liberalization policy, has initiated steps to get private investment in the sector. Besides investment in roads, the Government has formulated specific plans to improve infrastructure in water supply, sanitation, irrigation and power transmission.
The construction industry is highly fragmented on account of low entry barriers resulting from less fixed capital requirements. The fragmentation is lesser in the industrial/infrastructure industry than in housing entities since this sector requires far more technical expertise. Although, the construction sector is not fixed capital intensive, it is working capital intensive in terms of gross working capital requirements (typically 130 days, due to high levels of receivables and long project gestation periods). In addition, a delay in payments from government agencies results in a high level of receivables.
With favorable policy framework in place and specific measures by the Government to augment finance, the construction sector presents attractive business and investment opportunities.
Business Overview
We are an infrastructure project development company and provide engineering, procurement and construction services for infrastructure projects in India. We are also executing two real estate development projects. Our project expertise is primarily in transportation engineering projects including roads, bridges flyovers, tunnels, mining, hydroelectric projects, land development/ embankment and airport runways.
We have a strong presence in the eastern and north-eastern parts of India such as Assam and Arunachal Pradesh. These areas are relatively less penetrated in terms of infrastructure development and hold potential for more business. The Union Budget also increased allocation for the North Eastern sector and state governments has also focus on building infrastructure facilities on priority basis. With a presence in these areas, the Company holds an edge over its peers for future projects.
26 We execute infrastructure projects independently and in joint ventures. To meet technical and pre qualification requirements, we enter into strategic alliances / Joint Ventures with entities operating same segment of business.
Over the years, BCL has built a reputation of being a competent and trusted company in the Construction Industry. The company has built a strong organizational base, with vital infrastructure set-up and executes projects by adopting modern techniques. The minute details are taken into consideration at BCL from the bidding stage right up to successful timely completion of the Project.
In the recent years, we have executed and commenced upon a number of praiseworthy projects in the state of Delhi, Uttar Pradesh, Assam, Jammu & Kashmir and other Northern-Eastern states. The list of our satisfied clients includes:
• National Highway Authority of India (NHAI) • Northeast Frontier Railways • Coal India limited • Larsen & Turbo Limited for NHPC • Mumbai Metropolitan Region Development Authority (MMRDA) • Indian Institute of Technology, Guwahati (IIT), • IRCON International Limited • West Bengal Housing Infrastructure Development Corporation Limited (WBHIDC) • Public Works Department (PWD) • Airports Authority of India • Punjab Infrastructure Development Board (PIDB) • Jammu & Kashmir Economic Re-construction Agency.
Our Strengths
• Strong Order Book
We are currently executing projects amounting to Rs. 73093.79 Lacs. The EPC contracts constitute approximately 87.62% of our order book. The real estate segment constitutes 12.38% of our order book. EPC contracts relating to road, highway & runway sector constitute 23.19%, tunnel sector constitute 23.95% and hydro, mining and other civil/ miscellaneous sector constitute 7.27%, 7.58% and 25.63% respectively of our order book. The order composition is well diversified over various segments such as Roads and highways, Airports, Tunnels, ROBs, Mining, Hydroelectric Power Projects and Real Estate. This is likely to mitigate the risk of slow down in revenues from any segment due to unforeseen circumstances. Further, our major revenue comes from the contracts received from Government, Public Sector Undertaking and other Government agencies which substantially reduce the risk of default and delayed payment.
• Continuous growth in our bid capacity and pre qualification capability
Our business and growth are dependent on our ability to bid for and secure larger and more varied projects. Bidding for infrastructure projects is dependent on various criteria, including, bid capacity and pre qualification capability. Bid capacity represents the aggregate value of the contracts that can be awarded to us, and is computed based on pre defined formulae of agencies such as NHAI, ADB, World Bank, USAID, etc. Bid capacity also includes the highest possible value of a single project that can be awarded to us. In addition to meeting bid capacity requirements, we may also be required to pre qualify for the projects. This includes various factors such as the technical capability and experience of having executed similar projects. Hence, it is imperative to enhance our bid capacity and pre qualification capability. We have focused on increasing both these parameters and have continuously increased our bid capacity and the largest order that we can bid for; the same has been illustrated below:
27 Rs. in Lacs Date of Assessment Bid capacity April 1, 2002 7331.35 April 1, 2003 9424.98 April 1, 2004 19886.85 April 1, 2005 38358.80 April 1, 2006 41314.92 Note: The computation is based on NHAI formulae and have been computed based on audited financials for the preceding financial year, i.e. computation as on April 1 is based on audited financials of the immediately preceding financial year ended March 31.
• Large fleet of construction Equipments
Our Company owns a fleet of construction equipments amounting to Rs. 8820.74 Lacs comprising of Excavator (Crawler), Tippers, Water Tanker, Excavator cum Loader (JCB), Dozer, Motor Grader, Crushing Plant, Hot Mix Plant, Paver Finisher, Concrete Batching Plant, Rock Breaker, Vibratory Compactor, Wet Mix Plant, Air Compressor, Drilling Equipments, Generators, Transit Mixture, Crane, Wheel Loader and other miscellaneous equipments. Ownership of such high-end equipments enables quick mobilization besides ensuring continuous availability of critical equipments at different sites.
• Quality Certifications
We have been awarded ISO 9001:2000 Quality Management System Standard Certificate by DET NORSKE VERITAS, Netherlands, issued and valid up to 20th February 2010 for “Provision of Civil Construction Works Including Infrastructure Development”
• Highly qualified and motivated employees base and a proven management team.
Our promoters have nearly two decades of expertise and experience in road construction sector. We believe that a well-trained, motivated and satisfied employee base is fundamental to our competitive advantage. As on January 31, 2007, the total employees strength on the rolls of our Company is 436, out of which 175 are technical, 238 are non-technical staff and 23 are managerial staff. Additionally, we engaged 1031 contract labourers. The skill sets of our employees give us the flexibility to adapt to the needs of our clients and the technical requirements of the various projects that we undertake. The experience gathered over the years by our management team enables taking quick decisions thereby ensuring that projects are executed within the contracted timelines. This also enables us to meet required standards of quality and efficiency.
• Ability to execute projects in difficult operating conditions in timely manner
We have been successfully operating in difficult operating terrains and in adverse weather conditions besides facing unavailability of key resources like personnel, material, machinery in the vicinity of our project sites and security challenges, etc. We have been able to mobilize resources including equipment, raw material and personnel to our project sites at short notice. We have a track record of completing every single contract since our inception to the complete satisfaction of the client.
• Scalable Execution Model
We seek to address all principal activities relating to the execution and implementation of our construction services. Under this model, we follow a two tier structure, which consists of (i) centralized planning and co-ordination, and (ii) de-centralized project management, execution and quality assurance.
We believe that our execution model provides us with the support structure necessary to manage and execute both small and large complex projects within strict scheduling, budgetary constraints and in accordance with the design and specifications provided to us. We have successfully completed a number of our projects prior to schedule. This also enables us to scale our operations by better utilization of resources
28 Business Strategy
We recognize the importance of the construction industry in India, especially the importance given by the Government of India to make up deficits in infrastructure rapidly. At the same time, we recognize that the “Construction” industry is very broad in its scope covering construction of various sub-types of infrastructure – including, Road / Highways, Airports, Tunnels, Mining, Hydroelectric Power Projects, Industrial structures, Institutional Buildings & Real Estate etc., and there is a need for specialization in order to develop real depth of expertise in any of these sub-areas. Our strategic objective is to continue to improve and consolidate our position as a leading construction Company and we aim to achieve this by implementing the following strategies:
Maintain performance and competitiveness of existing business
We believe that infrastructure will be a major driver for growth in the Indian construction industry in the foreseeable future due to increased levels of government and private sector investment in infrastructure. Additionally, the government has taken steps to encourage additional investments in infrastructure, and providing economic benefits to private sector participants for projects executed on a BOT or annuity basis. Thus, there will be numerous opportunities for infrastructure creation. In anticipation of the trend toward increased infrastructure investment, we are developing skill sets across a diverse portfolio of infrastructure projects including roads, bridges and flyovers and tunnels. We have also continually focused on increasing our bid capacity and prequalification ability to enable us to bid for larger projects. A key element of our growth strategy is to, besides committing to grow through expansion, seek to improve the performance and competitiveness of existing activities, i.e. in the construction of roads, bridges, flyovers and airport runways.
Develop and maintain strong relationships with our clients and strategic partners
Our services are dependent on winning construction projects undertaken by large government agencies and companies, and infrastructure projects undertaken by governmental authorities and others and funded by governments. Our business is also dependent on developing and maintaining strategic alliances with other contractors with whom we may want to enter into project-specific joint ventures or sub-contracting relationships for specific purposes. We will continue to develop and maintain these relationships and alliances. We intend to establish strategic alliances and share risks with companies whose resources, skills and strategies are complementary to our business and are likely to enhance our opportunities. We will continue to jointly bid for projects with other companies to build good working relationships which would enable us to leverage their strengths and to build competencies.
Leverage our experience in the infrastructure sector to further our real estate development business.
Through our construction business, we have acquired skills and experience, as well as business relationships, many of which we believe can be applied to the development of projects in the same and other sectors. For instance, we have acquired substantial experience in construction risk allocation and mitigation, as well as raising debt financing for our business from financial institutions and commercial banks on competitive terms. We intend to apply these skills and experience to the development of projects in the same and other sectors, including real estate sector where we propose to develop the Private Industrial Park project and High-end Condominium – “Spanish Garden” at Guwahati.
Focus on BOT Contracts
The Government has planned for a number of BOT projects across the road sector. We believe that such projects will increasingly become more prevalent in coming years because of the Government reliance on PPP model. Besides road sector, the BOT contracts cover other sectors including hydropower, rail bridges, power transmission, telecom towers etc. We intend to initially focus on executing different BOT projects in road sector on annuity basis. As such these contracts have relatively low risk compared to tolling contracts. BOT or annuity projects generally provide better operating margins because of the added overall control of project costs that can be exerted by the contractor. Additionally, BOT projects offer the possibility of higher revenues to the contractor by virtue of better than anticipated use of the asset. We intend to increase our focus on BOT and annuity projects by leveraging our technical and financial credentials, which we believe will be improved by the strengthened balance sheet that we expect to have following the Issue. Such a balance
29 sheet should allow us to take on more projects, including BOT and annuity projects on our own or in alliance with other construction companies. We analyze that the future will be of BOT projects.
Focus on International Operations
While we are primarily focused on the Indian market, we have started prospecting for opportunities in overseas markets also. With the worldwide thrust on infrastructure development, opportunities in the highways sector are expected to grow in South Asia / South East Asia (new ASEAN countries – Laos, Vietnam, Cambodia, and Myanmar) / Commonwealth of Independent States / Central Asia and Africa.
Funding of such projects is generally done by the World Bank / Asian Development Bank/ African Development Bank etc. and hence realization of dues is not at risk. These markets may provide considerable opportunities for high value and higher margin projects in future. We have recently set up a wholly owned subsidiary in Singapore to study the dynamics of such projects and opportunities the projects offers.
BCL has also recently entered into a MOU with M/s Al Mobty Co., Saudi Arabia and M/s HANSHIN Engineering & Construction Co. Ltd., Korea to utilize the collective expertise, resources and experience of both the Companies for the purpose of participation and execution of bids for infrastructure projects in India, Saudi Arabia and other countries.
30 SUMMARY FINANCIAL INFORMATION
The following table sets forth our selected historical financial information derived from audited and restated financial statements for the nine months period ended December 31, 2006 and for the fiscal years ended March 31, 2006, 2005, 2004, 2003 and 2002 prepared in accordance with the Indian GAAP, the Companies Act and the SEBI Guidelines, and as described in the Auditors' Report of A.B. Bansal & Company, included in the section titled "Financial Statements" beginning on page 168 of this Draft Red Herring Prospectus and should be read in conjunction with those financial statements and the notes thereto.
Statement of Assets and Liabilities Rs. in Lacs Particulars As at December March March March March March 31, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 FIXED ASSETS Gross Block 9492.78 8149.53 3876.92 2528.12 1993.81 1710.26 Less: Depreciation 1946.75 1247.75 699.84 623.69 432.82 245.38 Net Block 7546.03 6901.78 3177.08 1904.43 1560.99 1464.88 Less: Revaluation Reserve ------Net Block after adjustment for 7546.03 6901.78 3177.08 1904.43 1560.99 1464.88 Revaluation Reserve Capital Work in Progress 131.86 265.48 - - 157.95 33.48 Total (A) 7677.89 7167.26 3177.08 1904.43 1718.94 1498.36 INVESTMENTS (B) 251.82 525.18 99.26 100.37 24.63 9.63 CURRENT ASSETS, LOANS AND ADVANCES Inventories 3924.96 1434.25 557.24 129.02 28.13 93.26 Sundry Debtors 626.94 1296.18 1070.54 524.08 237.56 276.17 Cash and bank Balance 1438.11 1092.52 877.59 336.75 230.46 191.02 Loans and Advance 2482.99 1766.61 705.52 369.15 403.76 238.57 Total (C) 8473.00 5589.56 3210.89 1359.00 899.91 799.02 LIABILITIES AND PROVISIONS Secured Loans 9023.05 7779.88 2763.39 568.20 488.86 629.21 Unsecured Loans 520.33 - 105.74 147.81 20.00 - Current Liabilities 2822.35 2140.64 1581.08 1257.11 976.50 843.84 Share Application Money - - - - 73.50 21.61 Provisions 266.59 314.81 158.21 101.86 76.57 36.86 Deferred Tax liability 675.71 512.43 372.47 256.65 240.98 194.99 Total (D) 13308.03 10747.76 4980.89 2331.63 1876.41 1726.51 NET WORTH (A+B+C-D) 3094.68 2534.24 1506.34 1032.17 767.07 580.50 REPRESENTED BY: Share Capital (E) 1200.00 1146.41 779.93 705.53 673.52 168.38 Total Reserves and Surplus 1902.65 1397.20 730.86 332.07 99.96 415.10 Less Revaluation Reserves ------Net Reserve and Surplus (F) 1902.65 1397.20 730.86 332.07 99.96 415.10 Miscellaneous Expenditure 7.97 9.37 4.45 5.43 6.41 2.98 (G) NET WORTH (E+F-G) 3094.68 2534.24 1506.34 1032.17 767.07 580.50
31 Statement of Profit & Loss Account Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 INCOME Contract Receipt 8215.37 9308.91 5556.70 3891.15 2684.52 2037.65 Increase/ (Decrease) in 1905.66 773.70 389.15 17.05 (78.50) (6.10) stocks Other Income 19.94 22.82 15.36 12.41 0.28 0.05 Total 10140.97 10105.43 5961.21 3920.61 2606.30 2031.60 EXPENDITURE Material, Stores & Operating 7795.30 7679.79 4826.10 3266.91 1892.55 1397.71 Expenses Personnel Expenses 244.98 229.53 150.27 76.83 60.28 42.14 Administrative Expenses 223.40 234.79 136.16 96.08 95.33 57.70 Misc. and Deferred Revenue 1.40 1.87 0.98 0.98 0.98 0.50 Exp. W/Off Total 8265.08 8145.98 5113.51 3440.80 2049.14 1498.05 Profit before Interest, 1875.89 1959.45 847.70 479.81 557.16 533.55 Depreciation and Tax Depreciation 699.00 561.96 320.37 220.12 190.23 155.90 Profit before Interest and Tax 1176.89 1397.49 527.33 259.69 366.93 377.65 Interest & Finance Charges 539.34 614.92 125.41 79.95 71.07 64.82 Loss on sale of - 11.69 (1.68) (18.23) 7.20 13.80 Investment/Assets Net Profit Before Tax 637.55 770.88 403.60 197.97 288.66 299.03 Provision For Taxation Current Tax 76.01 161.30 31.68 46.22 52.67 22.94 Deferred Tax 163.28 139.96 115.83 15.66 45.99 78.43 Net Profit After Tax 398.26 469.62 256.09 136.09 190.00 197.66 Proposed Dividend - 122.81 80.49 - - - Prior Period Item ------Net profit after tax after 398.26 346.81 175.60 136.09 190.00 197.66 adjusting prior period item Profit and Loss Account at the 8.46 161.65 236.05 99.96 306.92 109.26 beginning of the year Transferred to General - 500.00 250.00 - - - Reserve Balance Carried to Balance 406.72 8.46 161.65 236.05 496.92 306.92 Sheet
32 THE ISSUE
Public Issue of our Equity Shares:
Issue by our Company 4,200,000 Equity Shares of face value of Rs. 10 each Of which A) Employee Reservation Portion(1) Up to 200,000 Equity Shares of face value of Rs. 10 each (Allocation on a proportionate basis) Therefore, Net Issue to the Public 4,000,000 Equity Shares of face value of Rs. 10 each
Of which A) Qualified Institutional Buyers (QIBs) Up to 2,000,000 Equity Shares of face value of Rs. 10 each Portion(1) (Allocation on a proportionate basis) Of which Available for allocation to Mutual Funds 100,000 Equity Shares of face value of Rs. 10 each only(1) (Allocation on a proportionate basis) Balance for all QIBs including Mutual 1,900,000 Equity Shares of face value of Rs. 10 each Funds(1) (Allocation on a proportionate basis)
B) Non Institutional Portion(1) At least 600,000 Equity Shares of face value of Rs. 10 each (Allocation on a proportionate basis)
C) Retail Portion(1) At least 1,400,000 Equity Shares of face value of Rs. 10 each (Allocation on a proportionate basis)
Equity Shares outstanding prior to the 12,000,000 Equity Shares of face value of Rs. 10 each Issue
Equity Shares outstanding after the 16,200,000 Equity Shares of face value of Rs. 10 each Issue
Use of Issue Proceeds See the section titled “Objects of the Issue” beginning on page 50 of this Draft Red Herring Prospectus.
(1) Under-subscription, if any, in any category, would be met with spill over from other categories at the sole discretion of our Company in consultation with the BRLMs. Under-subscription in the Employee Reservation Portion would first be allowed to be met with spill over from the Retail Portion and thereafter from any of the other categories, at our discretion, in consultation with the BRLMs. However, if the aggregate demand by Mutual Funds is less than 100,000 Equity Shares (assuming QIB Portion is 50% of the Net Issue to the Public, i.e. 2,000,000 Equity Shares), the balance Equity Shares available for allocation in the Mutual Fund Portion will first be added to the QIB Portion and be allocated proportionately to the QIB Bidders.
33 GENERAL INFORMATION
Our Company was incorporated as a Public Limited Company on September 2, 1998 under the Companies Act, 1956 with the Registrar of Companies, National Capital Territory of Delhi and Haryana and obtained the certificate of commencement of business on September 25, 1998
Registered Office of our Company
Brahamputra Consortium Limited Brahamputra House, A-7, Main Mahipalpur Road, New Delhi-110037, India Tel: 91-11-42290200 Fax: 91-11-41687880, 26787068 Email: [email protected] Website: www.brahamputra.com
Our registered office was shifted from C-1\1622, Vasant Kunj, New Delhi - 110070 to C-5\61, Grand Vasant, Vasant Kunj, New Delhi – 110070 with effect from December 1, 2000 by a resolution of our Board and from C-5\61, Grand Vasant, Vasant Kunj, New Delhi – 110070 to Brahamputra House, A-7, Main Mahipalpur Road, New Delhi-110037 with effect from April 1, 2003 by a resolution of our Board.
Registration Number
55-95933
Corporate Identification Number
U74899DL1998PLC095933
Address of Registrar of Companies
The Registrar of Companies, National Capital Territory of Delhi and Haryana Pariyavaran Bhawan, Block B, 2nd Floor, CGO Complex, Lodhi Road, New Delhi-11003, India
Board of Directors
Our Board of Directors consists of following:
Sr. Name Designation Status Directors No. Identification Number 1 Mr. Suresh Kumar Prithani Chairman cum Managing Director Non-Independent 00003275 2 Mr. Ramesh Kumar Prithani Whole Time Director Non-Independent 00003876 3 Mr. Manoj Kumar Prithani Whole Time Director Non-Independent 00003863 4 Mr. Sanjeev Kumar Prithani Whole Time Director Non-Independent 00003647 5 Mr. Surinder Kumar Soni Independent Director Independent 00046856# 6 Mr. Om Kumar Independent Director Independent 00888640 7 Mr. Om Prakash Kejriwal Independent Director Independent 00004178 8 Mr. Deo Chandra Hirawat Independent Director Independent 00455786 # Provisional
For further details of our Board of Directors, please refer to the section titled “Our Management” beginning on page 136 of this Draft Red Herring Prospectus.
34
Company Secretary and Compliance Officer
Mr. Narendra Nath Batabyal Brahamputra House, A-7, Main Mahipalpur Road, New Delhi-110037, India Tel: 91-11-42290200 Fax: 91-11-41687880, 26787068 Email: [email protected]
The investors’ are requested to contact the Compliance Officer or the Registrar in case of any pre- Issue or post-Issue related problems such as non-receipt of letters of allotment, credit of allotted Shares in the respective beneficiary accounts and refund orders.
Book Running Lead Managers A.K. Capital Services Limited Punjab National Bank Flat No. N, Sagar Apartments, Capital Market Services Branch, 6, Tilak Marg, 5, Sansad Marg, New Delhi- 110 001 New Delhi-110001 Tel: 91-11-23385704, 23388235 Tel: 91-11-23737531 Fax: 91-11-23385189 Fax: 91-11-23737528 Email: [email protected] Email: [email protected] Website: www.akcapindia.com Website: www.pnbindia.com Contact Person: Mr. Sanjay Jain Contact Person: Mr. Ajay Malhotra
Syndicate Member
[●]
Legal Advisors to the Issue Vaish Associates, Advocates A-803, Signature Tower, South City-I, NH-8, Gurgaon-122001 Tel: 91-124-4541000 Fax: 91-124-4541010 Email:[email protected] Contact Person: Mr. Hitender Mehta
Registrar to the Issue Intime Spectrum Registry Limited C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai-400078. Tel: 91-22-2596 0320-28 Fax: 91-22-25960329 Email: [email protected] Website: www.intimespectrum.com Contact Person: Mr. Sachin Achar
Bankers to the Issue and Escrow Collection Banks
[●]
35
Bankers to the Company Punjab National Bank Indian Overseas Bank Large Corporate Branch, 5, Netaji Subhash Marg, A-9, Connaught Circus, Darya Ganj, New Delhi - 110 001. New Delhi - 110 002 Tel: 91-11 23721373 / 23315661 Tel: 91-11-23278280, 23275861 Fax: 91-11- 2372518 Fax: 91-11- 23278044 Email: [email protected] Email: [email protected] Centurion Bank of Punjab Limited Oriental Bank of Commerce M-39, Connaught Circus, A-2/40, Safdarjung Enclave, New Delhi - 110 001 New Delhi - 110 029 Tel: 91-11- 41536052, 41536053 Tel: 91-11- 26103833, 26176037 Fax: 91-11- 41536051 Fax: 91-11- 26166486 Email: [email protected] Email: [email protected] Development Credit Bank Limited HDFC Bank Limited 4th Floor, Hansalaya Building, Site No. 2, OCF Pocket, Sector - C, Barakhamba Road, Vasant Kunj, New Delhi - 110 001 New Delhi - 110 070 Tel: 91-11- 42499949 Tel: 91-11- 41514332 Fax: 91-11- 42499934 Fax: 91-11- 26135079 Email: [email protected] Email: [email protected] ICICI Bank Limited Citibank N.A. C-17, Local Shopping Centre, Upper Ground Floor, Paschimi Marg, Vasant Vihar, Himalaya House, 23, Kasturba Gandhi Marg, New Delhi - 110 057 New Delhi - 110 001 Tel: 91-11- 41662830, 41662833 Tel: 91-11- 23321885 Fax: 91-11- 41662836 Fax: 91-11- 23730945 Email: [email protected] Email: [email protected] Kotak Mahindra Bank Limited State Bank of India UGF, Ambadeep Building, NHPC Project, 14, Kasturba Gandhi Marg, Gerukamukh Branch, P.O. Gerukamukh, New Delhi - 110 001 Distt. Dhemaji, Tel: 91-11- 4179000 Assam - 787 035 Fax: 91-11- 23351803 Tel: 91-3752-269252 Email: [email protected] Fax: 91-3752- 269252 Standard Chartered Bank The Jammu and Kashmir Bank Limited H-2, Connaught Circus, 63-D, Basant Lok, Vasant Vihar, New Delhi - 110 001 New Delhi- 110057 Tel: 91-11- 23406798, 23406841 Tel: 91-11-26154044, 26142571 Fax: 91-11- 23719515, 23355544 Fax: 91-11-26155231 Email:[email protected] Email: [email protected] ABN Amro Bank 9th Floor, Tower C, Cyber Greens, DLF Cyber City, Sector - 25A, Gurgaon - 122 002 (Haryana) Tel: 91-124-4181748, 4181818 Fax: 91-124-4181748, 4181240 Email: [email protected]
Auditors A.B. Bansal & Co. Chartered Accountants 218-220, Durga Chambers, 1335, D. B. Gupta Road, Karol Bagh, New Delhi-110005 Tel : 91-11-28755235 Fax: 91-11-28752325 Email: [email protected]
36 Statement of Inter se Allocation of Responsibilities among the BRLMs
The following table sets forth the inter-se allocation of responsibilities for various activities between A.K. Capital Services Limited (‘AK Caps”) and Punjab National Bank (“PNB”) as Book Running Lead Managers for the Issue:
Sr. Activities Responsibility Co-ordinator No. 1 Capital structuring with the relative components and AK Caps/ PNB AK Caps formalities. 2 Due diligence of Company’s operations/ management/ AK Caps/ PNB AK Caps business plans/ legal etc. Drafting and design of Draft Red Herring Prospectus and of statutory advertisement including memorandum containing salient features of the Prospectus. The BRLMs shall ensure compliance with stipulated requirements and completion of prescribed formalities with the Stock Exchanges, RoC and SEBI including finalization of Prospectus and RoC filing. 3 Drafting and approval of all publicity material other than AK Caps/ PNB PNB statutory advertisement as mentioned in (2) above including corporate advertisement, brochure, road show presentations, FAQs, corporate films etc. 4 Appointment of other intermediaries viz. Registrar, Printers, AK Caps/ PNB PNB Advertising Agency and Escrow Collection Banks to the Issue. 5 Institutional Marketing of the Issue, which will cover, among AK Caps/ PNB AK Caps other things, • Finalize the list and division of investors for one to one meetings; and • Finalize road show schedule and investor meeting schedules 6 Retail/ HNI marketing strategy which will cover, among other AK Caps/ PNB AK Caps things, • Finalizing centers for holding conferences for brokers, etc • Formulating media, marketing and Public Relations strategy; • Follow-up on distribution of publicity and Issuer material including form, prospectus and deciding on the quantum of the Issue material; and • Finalize collection centers. 7 Co-ordination with stock exchanges for book building AK Caps AK Caps software, bidding terminals and mock trading 8 Managing the book and finalization of Pricing in consultation AK Caps/ PNB AK Caps with the Company 9 Post bidding activities including management of Escrow AK Caps/ PNB AK Caps Accounts, co-ordination of allocation and intimation of allocation with Registrar and Banks, Refund to Bidders, etc. The post Issue activities of the Issue will involve essential follow up steps, which must include the finalization of listing and trading of instruments, demat and delivery of shares and refunds, with the various agencies connected with the work such as the Registrar to the Issue, Bankers to the Issue and the Bank handling refund business. The BRLMs shall be responsible for ensuring that these agencies fulfill their functions and enable it to discharge this responsibility through suitable agreements with our Company.
37 Credit Rating
As this is an Issue of Equity Shares, there is no credit rating for the Issue.
IPO Grading
We have opted for IPO Grading and appointed ICRA for grading of proposed IPO of our Company. ICRA has assigned [●] Grade to the Initial Public Offering of the Company.
The rationale/ description of the grading shall be included in the Red Herring Prospectus prior to the filing with RoC.
Trustees
As this is an Issue of Equity Shares, the appointment of Trustees is not required.
Monitoring Agency
In terms of Clause 8.17 of the SEBI (DIP) Guidelines, there is no requirement for appointing a monitoring agency since the Issue is less than Rs. 50,000 Lacs. However, we have appointed Centurion Bank of Punjab Limited as the monitoring agency to monitor the use of Issue proceeds. The relevant details of monitoring agency are as mentioned hereunder:
Centurion Bank of Punjab Limited M-39, Outer Circle, Opp. Super Bazar, Connaught Circus, New Delhi-110001 Tel: 91-11 41536010-13 Fax: 91-11- 23413421 Email: [email protected] Website: centurionbop.co.in
Appraising Entity
Punjab National Bank has appraised the working capital requirements of our Company vide appraisal report dated April 23, 2007. The relevant details of appraising entity are as mentioned hereunder:
Punjab National Bank Large Corporate Branch, A-9, Connaught Circus, New Delhi - 110 001. Tel: 91-11 23721373 / 23315661 Fax: 91-11- 2372518 Email: [email protected] Website: www.pnbindia.com
Book Building Process
Book Building, with reference to the Issue, refers to the process of collection of Bids on the basis of the Red Herring Prospectus within the price band. The Issue Price is finalized after the Bid/ Issue Closing Date. The principal parties involved in the Book Building Process are: 1. The Company;
2. The BRLMs;
3. Syndicate Members who are intermediaries registered with SEBI or registered as brokers with BSE/NSE and eligible to act as underwriters. The Syndicate Members are appointed by the BRLMs; and
38 4. Registrar to the Issue. SEBI Guidelines have permitted an issue of securities to the public through 100% Book Building Process, wherein upto 50% of the Net Issue shall be allocated on a proportionate basis to QIBs, out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB portion shall be available for allocation on a proportionate basis to QIBs including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Further, up to 200,000 Equity Shares shall be available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received at or above the Issue Price. Pursuant to recent amendments to SEBI Guidelines, QIBs are not allowed to withdraw their Bids after the Bid/ Issue Closing Date. Please refer to the section titled “Issue Procedure” beginning on page 258 of this Draft Red Herring Prospectus. We will comply with the SEBI Guidelines and any other ancillary directions issued by SEBI for this Issue. In this regard, we have appointed the BRLMs to manage the Issue and procure subscription to the Issue. While the process of Book Building under the SEBI Guidelines is not new, investors are advised to make their own judgment about investment through this process prior to making a Bid or Application in the Issue. Illustration of Book Building and Price Discovery Process (Investors should note that this example is solely for illustrative purposes and is not specific to the Issue) Bidders can Bid at any price within the price band. For instance, assume a price band of Rs. 20 to Rs. 24 per share, issue size of 3,000 Equity Shares and receipt of five Bids from Bidders, details of which are shown in the table below. A graphical representation of the consolidated demand and price would be made available at the websites of the BSE (www.bseindia.com) and NSE (www.nseindia.com) during the Bidding Period. The illustrative Book as shown below, shows the demand for the Shares of Company at various prices and is collated from Bids from various investors. Bid Quantity Bid Price (Rs.) Cumulative Quantity Subscription 500 24 500 16.67% 1,000 23 1,500 50.00% 1,500 22 3,000 100.00% 2,000 21 5,000 166.67% 2,500 20 7,500 250.00% The price discovery is a function of demand at various prices. The highest price at which the Issuer is able to issue the desired number of Shares is the price at which the Book cuts off i.e. Rs. 22 in the above example. The Issuer, in consultation with the BRLMs, will finalize the issue price at or below such cut-off price i.e. at or below Rs. 22. All Bids at or above this Issue Price and cut-off Bids are valid Bids and are considered for allocation in respective categories. Steps to be taken by the Bidders for bidding: 1. Check eligibility for making a Bid (see section titled “Issue Procedure” beginning on page 258 of this Draft Red Herring Prospectus); 2. Ensure that you have a demat account and the demat account details are correctly mentioned in Bid cum Application Form; 3. If your Bid is for Rs. 50,000 or more, ensure that you have mentioned your PAN and attached copies of your PAN card to the Bid cum Application Form (see section titled “Issue Procedure” beginning on Page 258 of this Draft Red Herring Prospectus); 4. Ensure that the Bid cum Application Form is duly completed as per instructions given in this Draft Red Herring Prospectus and in the Bid cum Application Form; and 5. You should ensure the correctness of your Demographic details (as defined in the section titled “Issue Procedure” beginning on page 258 of this Draft Red Herring Prospectus) given in the Bid cum Application Form vis-à-vis those with your Depository Participant.
39 Withdrawal of the Issue
Our Company in consultation with the BRLMs reserves the right not to proceed with the Issue at anytime including after the Bid/ Issue Opening Date but before Allotment, without assigning any reason thereof. In the event of withdrawal of the Issue anytime after the Bid/ Issue Opening Date, our Company will forthwith repay, without interest, all monies received from the applicants in pursuance of the Red Herring Prospectus and the Bid cum Application Form. If such money is not repaid within 8 days after our Company become liable to repay it, i.e. from the date of withdrawal, then our Company, and every Director of our Company who is an officer in default shall, on and from such expiry of 8 days, be liable to repay the money, with interest at the rate of 15% per annum on application money.
Bid/ Issue Programme
Bidding Period/ Issue Period
BID/ ISSUE OPENES ON [●] BID/ ISSUE CLOSES ON [●]
Bids and any revision in Bids shall be accepted only between 10 a.m. and 3 p.m. (Indian Standard Time) during the Bidding Period as mentioned above at the bidding centers mentioned on the Bid cum Application Form except that on the Bid/ Issue Closing Date, the Bids shall be accepted only between 10 a.m. and 3 p.m. (Indian Standard Time) and uploaded until such time as prescribed by the BSE and the NSE on the Bid/ Issue Closing Date.
Investors please note that as per letter no. List/smd/sm/2006 dated July 3, 2006 and letter no. NSE/IPO/25101-6 dated July 6, 2006 issued by BSE and NSE respectively, bids and any revision in Bids shall not be accepted on Saturdays and Holidays as declared by the Exchanges.
The Company reserves the right to revise the Price Band during the Bidding Period in accordance with the SEBI Guidelines. The cap on the Price Band would not be more than 20% of the floor Price Band. Subject to the compliance with the immediately preceding sentence, the floor of the Price Band can move up or down to the extent of 20% of the floor of the Price Band advertised at least one day prior to the Bid/ Issue Opening Date.
In case of revision in the Price Band, the Issue Period will be extended for three additional days after revision of the Price Band, subject to the Bidding Period/ Issue Period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding Period/ Issue Period, if applicable, will be widely disseminated by notification to the BSE and the NSE, by issuing a press release, and also by indicating the change on the websites of the BRLMs and at the terminals of the Syndicate.
Underwriting Agreement
After the determination of the Issue Price and allocation of our Equity Shares but prior to the filing of the Prospectus with the RoC, we will enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be offered through the Issue. It is proposed that pursuant to the terms of the Underwriting Agreement, the BRLMs shall be responsible for bringing in the amount devolved in the event the Syndicate Members do not fulfill its underwriting obligations. Pursuant to the terms of the Underwriting Agreement, the obligations of the Underwriters are several and not joint, and are subject to certain conditions to closing, as specified therein. The Underwriting Agreement is dated [●].
The Underwriters have indicated their intention to underwrite the following number of Equity Shares.
40 (This portion has been intentionally left blank and will be filled in before filing of the Prospectus with the RoC)
Name and Address of the Indicative Number of Equity Amount Underwritten Underwriters Shares to be Underwritten (Rs. In Lacs) [●] [●] [●] [●] [●] [●] Total [●] [●]
The above mentioned is indicative underwriting and this would be finalized after the pricing and actual allocation. In the opinion of our Board of Directors (based on a certificates given by the Underwriters), the resources of the above mentioned Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full. The above mentioned Underwriters are registered with SEBI under Section 12(1) of the SEBI Act or registered as brokers with the stock exchange (s). Allocation among Underwriters may not necessarily be in proportion to their underwriting commitments. Notwithstanding the above table, the BRLMs and the Syndicate Members shall be responsible for ensuring payment with respect to the Equity Shares allocated to investors procured by them. In the event of any default in payment, the respective Underwriter, in addition to other obligations to be defined in the Underwriting Agreement, will also be required to procure / subscribe to Equity Shares to the extent of the defaulted amount.
41 CAPITAL STRUCTURE
Our share capital as at the date of this Draft Red Herring Prospectus (before and after the Issue) is set forth below: (Rs. except share data) Particulars Aggregate Aggregate Value Nominal Value at Issue Price A. Authorized Capital 20,000,000 Equity shares of Rs 10/-each 200,000,000 B. Issued, Subscribed And Paid-Up Equity Capital before the Issue 12,000,000 Equity Shares of Rs 10/- each fully paid up 120,000,000 224,903,880 C. Present Issue in terms of this Draft Red Herring Prospectus 4,200,000 Equity Shares of Rs 10/- each 42,000,000 [●] Of which a) Employees Reservation Portion 200,000 Equity Shares of Rs 10/- each 2,000,000 [●]
b) Net Issue to the Public 4,000,000 Equity Shares of Rs 10/- each 40,000,000 [●]
Of which i) QIB portion of up to 2,000,000 Equity Shares of Rs. 10/- each. 20,000,000 [●] Out of which up to 5%, i.e., 100,000 Equity Shares of Rs. 10/- each shall be available for allocation on a proportionate basis to Mutual Funds only, and balance Equity Shares shall be available for allocation to all QIBs, including Mutual Funds ii) Non-Institutional portion of not less than 600,000 Equity 6,000,000 [●] Shares of Rs. 10/- each iii) Retail portion of not less than 1,400,000 Equity Shares of Rs. 14,000,000 [●] 10/- each E. Issued, Subscribed And Paid-Up Equity Capital after the Issue 16,200,000 Equity Shares of Rs 10/- each fully paid up 162,000,000 [●]
F. Share Premium Account Before the Issue 104,903,880 After the Issue* [●] * The share premium account will be determined after Book Building Process.
Details of Increase in Authorized Share Capital
Date of Meeting No. of Shares Particulars of Increase Nature of Meeting Since Incorporation 500,000 Rs. 5,000,000 - April 24, 2000 1,000,000 From Rs. 5,000,000 to 15,000,000 EGM March 30, 2001 1,000,000 From Rs. 15,000,000 to 25,000,000 EGM March 27, 2002 1,000,000 From Rs. 25,000,000 to 35,000,000 EGM October 15, 2002 4,500,000 From Rs. 35,000,000 to 80,000,000 EGM March 31, 2005 7,000,000 From Rs. 80,000,000 to 150,000,000 EGM January 27, 2007 5,000,000 From Rs. 150,000,000 to 200,000,000 EGM
42 Notes to Capital Structure
1. Paid-up Share Capital History of our Company
Date of No. of Face Issue Nature of Reasons for Cumulative Cumulative Cumulative Allotment Shares value Price Consideration Allotment No. of Paid-Up Share per per Shares Share Premium Share Share Capital (Rs.) (Rs.) (Rs.) (Rs.)
September 800 10 10 Cash Subscribers 800 8,000 Nil 2, 1998 to Memorandum
April 1, 267,600 10 10 Consideration Allotment to 268,400 2,684,000 Nil 1999 other than erstwhile cash partners of firm Brahmaputra Consortium$ December 40,000 10 10 Cash Further 308,400 3,084,000 Nil 24, 1999 allotment March 30, 191,600 10 10 Cash Further 500,000 5,000,000 Nil 2000 allotment April 28, 536,060 10 10 Cash Further 1,036,060 10,360,600 Nil 2000 allotment March 31, 377,400 10 10 Cash Further 1,413,460 14,134,600 Nil 2001 allotment March 30, 270,340 10 50 Cash Further 1,683,800 16,838,000 10,813,600 2002 allotment March 31, 5,051,400 10 Nil Bonus Shares Bonus Issue 6,735,200 67,352,000 Nil 2003* in the ratio of 3:1# November 320,085 10 40 Cash Further 7,055,285 70,552,850 20,416,150 1, 2003 allotment March 30, 743,971 10 40 Cash Further 7,799,256 77,992,560 42,735,280 2005 allotment
October 1,949,814 10 Nil Bonus Shares Bonus Issue 9,749,070 97,490,700 Nil 31, 2005** in the ratio of 1:4# March 31, 1,715,000 10 40 Cash Further 11,464,070 114,640,700 94,185,280 2006 allotment September 535,930 10 30 Cash Further 12,000,000 120,000,000 104,903,880 23, 2006 allotment $ One of the main object of our Company on incorporation was to takeover the running business of the partnership firm, M/s Brahmaputra Consortium situated at Rehman Road, Jorhat (Assam) along with its assets and liabilities. The shares were allotted to erstwhile partners of the firm Mr. Suresh Kumar Prithani, Mr. Ramesh Kumar Prithani, Mr. Manoj Kumar Prithani and Mr. Sanjeev Kumar Prithani, who are our promoter directors.
43 * The shareholders of our Company has approved Issue of Bonus Shares in the EGM held on March 29, 2003 in the ratio of 3 Equity Shares for every 1 Equity Share held by the shareholders by capitalizing Reserves and allotment was made on March 31, 2003.
** The shareholders of our Company has approved Issue of Bonus Shares in the EGM held on October 31, 2005 in the ratio of 1 Equity Share for every 4 Equity Shares held by the shareholders by capitalizing Reserves and allotment was made on October 31, 2005
# Our Auditors have vide their certificate dated April 25, 2007 certified that issuance of bonus shares which are being locked-in are not made out of revaluation reserves or reserves without accrual of cash resources.
2. Promoters’ Contribution and Lock-in
(a) Share Capital Locked-in for Three Years
The Equity Shares, which are being locked in for three years, are as follows:
Name of the Date of Nature of Nature of Number Face Issue % of Promoters Allotment/ allotment/ consideration of Equity Value Price/ post- acquisition acquisition (Cash, Bonus, Shares per Purchase Issue and when Kind etc.) locked in* share Price per paid up made fully (Rs.) share capital paid-up (Rs.) Siw Prasad March 31, Further allotment Cash 41,875 10 40 0.26 Agarwalla 2006 Sub Total 41,875 0.26 Suresh Kumar February 10, Transfer Cash 18,480 10 10 0.11 Prithani 2003 March 31, Bonus Bonus 461,640 10 Nil 2.85 2003 November 1, Further allotment Cash 2,300 10 40 0.01 2003 October 31, Bonus Bonus 154,455 10 Nil 0.95 2005 March 31, Further allotment Cash 105,625 10 40 0.65 2006 Sub Total 742,500 4.57 Ramesh Kumar February 10, Transfer Cash 29,480 10 10 0.18 Prithani 2003 March 31, Bonus Bonus 586,170 10 Nil 3.62 2003 November 1, Further allotment Cash 30 10 40 0.00# 2003 October 31, Bonus Bonus 195,397 10 Nil 1.21 2005 March 31, Further allotment Cash 113,125 10 40 0.70 2006 Sub Total 924,202 5.71 Manoj Kumar March 31, Bonus Bonus 499,470 10 Nil 3.08 Prithani 2003 November 1, Further allotment Cash 30 10 40 0.00# 2003 October 31, Bonus Bonus 166,498 10 Nil 1.03 2005 March 31, Further allotment Cash 246,250 10 40 1.52 2006 Sub Total 912,248 5.63
44 Sanjeev Kumar March 31, Bonus Bonus 350,340 10 Nil 2.16 Prithani 2003 November 1, Further allotment Cash 16,200 10 40 0.10 2003 October 31, Bonus Bonus 120,830 10 Nil 0.75 2005 March 31, Further allotment Cash 135,000 10 40 0.83 2006 Sub Total 622,370 3.84 Total 3,243,195 20.01
* The Equity Shares being locked-in for three years from the date of allotment of Equity Shares in the Issue and which have been issued for consideration other than cash have been issued through a bonus issue and not from a bonus issue out of revaluation reserves or reserves without accrual of cash resources.
All Equity Shares, which are being locked-in, are not ineligible for computation of Promoters’ contribution and lock-in under clause 4.6 of the SEBI Guidelines.
# Less than 0.01%
(b) Additional Share Capital Locked-in for Three Years
As per clause 4.11.1 of SEBI Guidelines, the minimum Promoters Contribution of 20% of post issue capital is required to be locked in for three years. In addition to the 3,243,195 Equity Shares being 20.01% of post issue capital locked in for three years as per Clause 4.11.1 of SEBI Guidelines as detailed above, the additional Equity Shares voluntarily offered by our Promoters and Promoters Group for three years lock-in are as under:
Name of the Shareholders Number of Equity Face Value % of post- Shares locked in* per share Issue paid (Rs.) up capital Siw Prasad Agarwalla 810,750 10 5.01 Suresh Kumar Prithani 135,400 10 0.84 Ramesh Kumar Prithani 165,910 10 1.02 Manoj Kumar Prithani 166,490 10 1.03 Sanjeev Kumar Prithani 116,780 10 0.72 Sobhna Prithani 183,250 10 1.13 Anshu Prithani 188,500 10 1.16 Anita Prithani 226,000 10 1.40 Kiran Prithani 261,000 10 1.61 Geeta Devi Agarwalla 496,300 10 3.06 Sanjay Kumar Mozika 203,000 10 1.25 Siw Prasad Agarwalla & Sons (HUF) 665,000 10 4.11 Ramesh Kumar Prithani (HUF) 160,250 10 0.99 Sanjeev Kumar Prithani (HUF) 150,000 10 0.93 Suresh Kumar Prithani (HUF) 439,500 10 2.71 Manoj Kumar Prithani (HUF) 240,000 10 1.48 Total 4,608,130 28.45 * The Equity Shares being locked-in for three years from the date of allotment of Equity Shares in the Issue
(c) Share Capital Locked-in for One Year
In addition to the lock-in of the Promoters’ contribution and additional shares capital locked-in for three years as detailed in point (a) & (b) above, our entire Pre-Issue Equity Share capital will be locked-in for a period of one year from the date of allotment of Equity Shares in the Issue. The total number of Equity Shares, which are locked-in for one year, is 4,148,675 Equity Shares.
45 (d) Other Requirements in respect of Lock-in
In terms of clause 4.15 of the SEBI Guidelines, the locked-in Equity Shares held by the Promoters can be pledged only with banks or financial institutions as collateral security for loans granted by such banks or financial institutions, provided the pledge of shares is one of the terms of sanction of loan.
In terms of Clause 4.16.1 (a) of the SEBI Guidelines, the Equity Shares held by persons other than Promoters, prior to the Issue may be transferred to any other person holding the Equity Shares which are locked-in as per Clause 4.14 of the SEBI Guidelines, subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable.
Further, in terms of Clause 4.16.1 (b) of the SEBI Guidelines, the Equity Shares held by the Promoter may be transferred to and amongst the Promoter Group or to new Promoter or persons in control of the Company subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable.
In addition, the Equity Shares subject to lock-in will be transferable subject to compliance with the SEBI Guidelines, as amended from time to time.
3. Shareholding Pattern of our Company Before and After the Issue
Shareholder Category Pre Issue Post Issue* No. of Equity No. of Equity % Holding % Holding Shares Shares Promoters Siw Prasad Agarwalla 852,625 7.10 852,625 5.26 Suresh Kumar Prithani 877,900 7.32 877,900 5.42 Ramesh Kumar Prithani 1,090,112 9.08 1,090,112 6.73 Manoj Kumar Prithani 1,078,738 8.99 1,078,738 6.66 Sanjeev Kumar Prithani 739,150 6.16 739,150 4.56 Sub Total 4,638,525 38.65 4,638,525 28.63 Promoter Group Sobhna Prithani 183,250 1.53 183,250 1.13 Anshu Prithani 188,500 1.57 188,500 1.16 Anita Prithani 226,000 1.88 226,000 1.40 Kiran Prithani 261,000 2.18 261,000 1.61 Geeta Devi Agarwalla 496,300 4.14 496,300 3.06 Sanjay Kumar Mozika 203,000 1.69 203,000 1.25 Siw Prasad Agarwalla & Sons (HUF) 665,000 5.54 665,000 4.11 Ramesh Kumar Prithani (HUF) 160,250 1.34 160,250 0.99 Sanjeev Kumar Prithani (HUF) 150,000 1.25 150,000 0.93 Suresh Kumar Prithani (HUF) 439,500 3.66 439,500 2.71 Manoj Kumar Prithani (HUF) 240,000 2.00 240,000 1.48 Brahmaputra Projects Limited 442,500 3.69 442,500 2.73 M.L. Singhi & Associates Private Limited 1,384,169 11.53 1,384,169 8.54 Karnani Finlease Private Limited 1,241,725 10.35 1,241,725 7.67 Brahmaputra Holdings Private Limited 1,080,281 9.00 1,080,281 6.67 Sub Total 7,361,475 61.35 7,361,475 45.44 Total Promoter and Promoter Group 12,000,000 100.00 12,000,000 74.07 Public including Employees Nil Nil 4,200,000 25.93 (pursuant to the Issue) Total 12,000,000 100.00 16,200,000 100.00 * Post Issue Shareholding pattern may change if Promoters or any person in the Promoter Group may subscribe for and are allotted Equity Shares in the Issue.
46 4. List of shareholders of our Company and the number of Equity Shares held by them
(a) Our top ten shareholders and the number of Equity Shares of Rs. 10 each held by them as of the date of filing this Draft Red Herring Prospectus is as under:
S. No. Name of the Shareholder No. of Equity % Holding Shares held 1 M.L. Singhi & Associates Private Limited 1384169 11.53 2 Karnani Finlease Private Limited 1241725 10.35 3 Ramesh Kumar Prithani 1090112 9.08 4 Brahmaputra Holdings Private Limited 1080281 9.00 5 Manoj Kumar Prithani 1078738 8.99 6 Suresh Kumar Prithani 877900 7.32 7 Siw Prasad Agarwalla 852625 7.11 8 Sanjeev Kumar Prithani 739150 6.16 9 Siw Prasad Agarwalla & Sons (HUF) 665000 5.54 10 Geeta Devi Agarwalla 496300 4.14
(b) Our top ten shareholders and the number of Equity Shares of Rs. 10 each held by them ten days prior to the date of filing this Draft Red Herring Prospectus is as under:
S. No. Name of the Shareholder No. of Equity % Holding Shares held 1 M.L. Singhi & Associates Private Limited 1384169 11.53 2 Karnani Finlease Private Limited 1241725 10.35 3 Ramesh Kumar Prithani 1090112 9.08 4 Brahmaputra Holdings Private Limited 1080281 9.00 5 Manoj Kumar Prithani 1078738 8.99 6 Suresh Kumar Prithani 877900 7.32 7 Siw Prasad Agarwalla 852625 7.11 8 Sanjeev Kumar Prithani 739150 6.16 9 Siw Prasad Agarwalla & Sons (HUF) 665000 5.54 10 Geeta Devi Agarwalla 496300 4.14
(c) Our top ten shareholders and the number of Equity Shares of Rs. 10 each held by them two years prior to the date of filing this Draft Red Herring Prospectus is as under:
S. No. Name of the Shareholder No. of Equity % Holding Shares held 1 Indotech Tubewells Private Limited 864225 11.08 2 Ramesh Kumar Prithani 781590 10.02 3 Manoj Kumar Prithani 665990 8.54 4 Siw Prasad Agarwalla 648600 8.32 5 Suresh Kumar Prithani 617820 7.92 6 Karnani Finlease Private Limited 532880 6.83 7 Siw Prasad Agarwalla & Sons (HUF) 532000 6.82 8 Sanjeev Kumar Prithani 483320 6.20 9 M.L. Singhi & Associates Private Limited 402591 5.16 10 Geeta Devi Agarwalla 397040 5.09
5. Our Company, our Directors and the BRLMs have not entered into any buy-back and/or standby arrangements for the purchase of Equity Shares of our Company from any person.
6. In the case of over-subscription in all categories, upto 50% of the Net Issue shall be allocated on a proportionate basis to QIBs, out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB portion shall be available for allocation on a proportionate basis to QIBs including Mutual Funds, subject to valid Bids being received at or
47 above the Issue Price. Further, not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Further, up to 200,000 Equity Shares shall be available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received at or above the Issue Price. Under-subscription, if any, in any category, would be met with spill over from other categories at our sole discretion in consultation with the BRLMs.
7. A total of 5% of the Issue size, i.e. up to 200,000 Equity Shares, has been reserved for allocation to the Eligible Employees on a proportionate basis, subject to valid Bids being received at or above the Issue Price. Only Eligible Employees, as defined, who are Indian nationals based in India and are physically present in India on the date of submission of the Bid cum Application Form, would be eligible to apply in this issue under the Employee Reservation Portion. Employees, other than as defined, are not eligible to participate in the Employee Reservation Portion. If the aggregate demand in the Employee Reservation Portion is greater than 200,000 Equity Shares at or above the Issue Price, allocation shall be made on a proportionate basis. Eligible Employees may bid in the Net Issue to the Public portion as well and such Bids shall not be treated as multiple Bids. Any under subscription in the Employee Reservation Portion would be treated as part of the Net Issue.
8. An oversubscription to the extent of 10% of the Issue can be retained for the purposes of rounding off while finalizing the Basis of Allotment.
9. Our Promoters, Directors and our Promoter Group have not purchased or sold any Equity Shares within the last six months preceding the date of filing of this Draft Red Herring Prospectus with SEBI.
10. Our Company does not have any ESOS/ESPS scheme for our employees and we do not intend to allot any shares to our employees under ESOS/ESPS scheme from the proposed Issue.
11. An investor cannot make a Bid for more than the number of Equity Shares offered through the Issue, subject to the maximum limit of investment prescribed under relevant laws applicable to each category of Bidder.
12. There would be no further issue of equity capital whether by way of issue of bonus shares, preferential allotment, rights issue or in any other manner during the period commencing from the submission of this Draft Red Herring Prospectus to SEBI until the Equity Shares issued/to be issue pursuant to the Issue have been listed.
13. We presently do not intend or propose to alter our capital structure for a period of six months from the date of filing of this Draft Red Herring Prospectus, by way of split or consolidation of the denomination of Equity Shares or further issue of Equity Shares (including issue of securities convertible into or exchangeable, directly or indirectly for Equity Shares) whether preferential or otherwise. However, during such period or at a later date, we may, subject to necessary approvals, undertake an issue of Equity Shares or securities linked to Equity Shares to finance an acquisition, merger or joint venture by us, or as consideration for such acquisition, merger or joint venture, or to capitalize upon any business opportunities, or for regulatory compliance if an opportunity of such nature is determined by our Board to be in our interest.
14. There shall be only one denomination of the Equity Shares, unless otherwise permitted by law. We shall comply with such disclosure and accounting norms as may be specified by SEBI from time to time.
15. The Equity Shares held by the Promoters are not subject to any pledge.
16. We have not raised any bridge loan against the proceeds of the Issue.
17. Our Company has not revalued its assets since inception and has not issued any shares our of the revaluation reserves or for consideration other than cash except for bonus shares out of free reserves.
48 18. There are no outstanding warrants, options or rights to convert debentures, loans or other instruments into our Equity Shares.
19. As on the date of filing of this Draft Red Herring Prospectus, the total number of holders of Equity Shares is 20.
49 OBJECTS OF THE ISSUE
The objects of the Issue are to achieve the benefits of listing on the Stock Exchanges and the raising of funds for our capital expansion plans. We believe that listing will enhance the Company’s visibility and brand name among our existing and potential customers and investors. We intend to use the proceeds of the Issue after deducting underwriting and management fees, selling commissions and other expenses associated with the Issue (the “Net Proceeds”) for the following purposes:
• Purchase of capital equipment; ● Investment in BOT projects; • Augmenting working capital requirements;
Punjab National Bank has appraised working capital requirements of our Company vide its appraisal report dated April 23, 2007. Other fund requirements are based on our current business plan and are based on management estimates. In view of the dynamic nature of our industry, we may have to revise our business plans from time to time and consequently our fund requirements may also change. This may include rescheduling of our capital expenditure programmes and /or reducing or increasing the amount for augmenting our working capital resources.
Requirements of Funds The funds requirement is estimated as under: Rs. in Lacs Sr. Particulars Total No. 1. Investment in Capital equipment 2091.66 2. Investment in BOT projects 1000.00 3. Margin for working capital requirements# 1800.00 4 Issue Expenses* [●] Total [●]
# PNB appraisal envisaged additional margin for working capital requirements of Rs. 2248.81 Lacs.
* Will be incorporated at the time of filing of the Prospectus.
In the event of a shortfall in raising the requisite capital from the proceeds of the present Issue, towards meeting the objects of the Issue, the extent of the shortfall will be met by internal accruals and/or from debt. In case of any surplus of monies received in relation to the present Issue, we may use such surplus towards general corporate purposes including repayment of debt, if any.
The main objects clause and the objects incidental and ancillary to the main objects clause of our Memorandum of Association, enable us to undertake our existing activities as well as activities for which the funds are being raised by us in the Issue.
Means of finance
The stated objects of the Issue are proposed to be financed out of the proceeds of this Issue. In the event of a shortfall in raising the requisite capital from the proceeds of the present Issue, towards meeting the objects of the Issue, the extent of the shortfall will be met by internal accruals and/or from debt. As per last audited financial statements as on December 31, 2006, our free reserves stand at Rs. 1902.65 Lacs and our cash profit (net profit after tax plus depreciation) for the nine months period ended December 31, 2006 stand at Rs. 1097.26. Further cash and bank balance as at December 31, 2006 amounts to Rs. 1438.11 Lacs
50 Appraisal
Punjab National Bank has appraised working capital requirements of our Company vide its appraisal report dated April 23, 2007. The above mentioned appraisal report has been used as the basis for working capital requirements for this Draft Red Herring Prospectus wherever required.
Details of Use of Proceeds
1. Investment in Capital Equipment
We are required to make investments in capital equipment on a recurring basis due to the nature of the industry we operate in. We intend to use Rs. 2091.66 Lacs from the Net Proceeds for the purchase of capital equipment to meet the requirements of our various projects based on our order book as of January 1, 2007 and future requirements as estimated by the management.
The details of the equipments we intend to purchase and their estimated cost including the estimated cost of their spares, attachments and other accessories are specified in the following table:
Rs. in Lacs S.No. Particulars Qty Amount Model Supplier Date of Quotation 1 Excavator - 1.6 CUM EC 290 U.D.Hydaulics February 17, Bucket 2 Nos. 154.00 BLC Private Limited 2007 2 Excavator - 3.0 CUM EC 460 U.D.Hydaulics February 17, Bucket 2 Nos. 246.00 BLC Private Limited 2007 FM 400- Volvo India February 21, 3 Tipper - 35 MT 8 Nos. 518.00 8x4 Private Limited 2007 February 17, 4 Dozer 160 HP 2 Nos. 184.00 D6G TIL Limited 2007 Atlas Copco (I) February 21, 5 Boomer 2 Nos. 640.00 L2D Limited 2007 Tata Motors March 20, 6 Tata Tipper- 10 T 20 Nos. 211.68 1613/ TC Limited 2007 Tata Motors March 20, 7 Transit Mixer-CuM 6 Nos. 137.98 LKP 2516 Limited 2007 Total 2091.66
We purchase the equipments set out above on a regular basis in the course of our business. The prices for the equipments proposed to be purchased as set out above are as per quotations received from regular suppliers. We do not propose to buy any second hand plant and machineries out of the Issue proceeds.
We are yet to place orders for above equipments. The expected date of supply of these equipment and machinery is within four months from the date of placement of orders. The schedule related to placement of orders and procurement of the above mentioned equipment and machinery is as under:
Particulars Date of Date of completion commencement Placement of orders June 2007 August 2007 Procurement August 2007 December 2007
The figures in our capital expenditure plans are based on management estimates and have not been appraised by an independent agency/organization. In addition, our capital expenditure plans are subject to a number of variables, including possible cost overruns, delays in supply or defects and changes in the management's views of the desirability of current plans, among others.
51
2. Investments in BOT projects
The Government has framed policies and ways to channelize private investment in infrastructure development projects. To ensure a long-term partnership between the Government and private players in the infrastructure development of the country, the Government has started floating tenders inviting public private partnership (PPP), which is typically an arrangement between the government and private sector entities for the purpose of providing public infrastructure facilities and related services. The Government is encouraging private sector participation in road projects through BOT/BOOT which are implemented by a SPV. It is a relatively new approach which enables direct private sector investment in large-scale projects such as roads, bridges and power.
The Government, through agencies such as NHAI, offers several projects on a BOT/ BOOT basis. These projects aim at private sector investment in the form of capital infusion with the autonomy to operate and generate revenue over the concession period. Although, we have not executed BOT/BOOT projects till date, we have vast experience in the road construction activity and have successfully implemented various road projects in India.
We intend to bid for various projects on BOT/ BOOT basis and invest in joint ventures within and outside India. To be able to undertake and execute such projects, we will be required to form SPVs. Typically, these projects involve contracts with concession periods of about 20 years. The funds raised through this Issue would strengthen the capability of our Company to quote for BOT projects. We intend to use up to Rs. 1000.00 Lacs from the proceeds of the Issue for equity investments in SPVs and joint ventures in FY 2008, which shall be set up for such projects.
We have not identified any BOT Project/ SPVs or joint ventures in which we will invest and are not assured of any future dividends from such SPVs, wholly owned subsidiaries and joint ventures. It cannot be assured that we will be able to identify SPVs, wholly owned subsidiaries and joint ventures in which we wish or are able to invest. The management, in accordance with the policies established by the Board, will have flexibility in applying the portion of the net proceeds allocated for equity investments in BOT Project/ SPVs and joint ventures for other objects as stated above.
3. Augmenting Working Capital requirements
We have been presently sanctioned working capital limits of Rs. 18400.00 Lacs by our bankers consisting of fund based limits of Rs. 4500.00 Lacs and non fund-based limits of Rs. 13900.00 Lacs. For details of our loans, refer the section titled "Financial Indebtedness" beginning on page 107 of this Draft Red Herring Prospectus. The details of fund based and non-fund based limits are given below:
(Rs. in Lacs) Name of Bank Fund Based Non Fund based Total Limits Indian Overseas Bank 1700.00 5400.00 7100.00 Punjab National Bank* 1300.00 7500.00 8800.00 Centurion Bank 500.00 1000.00 1500.00 Development Credit Bank 1000.00 - 1000.00 Total 4500.00 13900.00 18400.00
* Punjab National Bank has additionally sanctioned Cash Credit (EMD) facility of Rs. 2000.00 Lacs for submission of (Bid Bond) Earnest Money Deposit in form of FDRs.
52 Margin Money for Long Term Working Capital We need additional working capital in consonance with the expanding scope of our business and our current order book position. As per appraisal made by Punjab National Bank, our long term working capital requirement for fiscal 2008 is as under: (Rs. in Lacs) S. Particulars 31.03.06 31.03.07 31.03.08 No. Audited Estimated Estimated 1 Total Current Assets (A)* 5271.59 9406.62 18401.85 2 Current Liabilities (B)* 2182.93 3181.49 4292.19 3 Working Capital Gap (C) (A-B) 3088.66 6225.13 14109.66 (1) (2) (3) 4 Minimum Sipulated Margin 1317.90 2351.66 4600.46 (25% of Total current assets) (D) 5 Working Capital Requirement 1770.76 3873.48 9509.20 (C-D) (2-1) (3-2) Requirement of additional 1033.76 2248.81 margin based on Minimum Stipulated Margin * Total Current Assets and Current Liabilities figures are after netting of ‘Provision of Tax’ and ‘Advance Payment of Tax’.
In order to avail the enhanced limits as proposed by us for the financial year 2007-08, the additional margin to be contributed by us is Rs. 2248.81 Lacs. We will however apportion Rs. 1800.00 Lacs from public issue proceeds towards additional margin for working capital and balance will be funded through internal accruals.
4. Issue Related Expenses
The Issue related expenses consist of underwriting fees, selling commission, fees payable to BRLMs to the Issue, legal counsels, Bankers to the Issue and Escrow Bankers and Registrars to the Issue, printing and stationery expenses, advertising and marketing expenses and all other incidental and miscellaneous expenses for listing the Equity Shares on the Stock Exchanges. We intend to use about Rs. [●] Lacs towards these expenses for the Issue. All expenses with respect to the Issue will be borne out of Issue proceeds. For further details, please refer to section “Other Regulatory and Statutory Disclosures” beginning on page 245 of this Draft Red Herring Prospectus.
Schedule of Implementation
The year wise break-up of the proposed deployment of funds is mentioned hereunder:
(Rs. in Lacs) Particulars Already deployed up During Fiscal Total to March 31, 2007 2008 Investment in Capital equipment - 2091.66 2091.66 Investment in BOT projects - 1000.00 1000.00 Augmenting working capital - 1800.00 1800.00 requirements Issue Expenses 20.55 [●] [●] Total 20.55 [●] [●]
53 Deployment of Funds
We have incurred the following expenditure towards the various objects of the Issue. The same has been certified by M/s A.B. Bansal & Company, Chartered Accountants vide their certificate April 25, 2007.
Deployment of Funds Amount (Rs. in Lacs) Investment in Capital equipment - Investment in BOT projects - Augmenting working capital requirements - Issue Expenses 20.55 Total 20.55 Sources of Funds Internal Accruals 20.55 Total 20.55
Interim use of proceeds of the issue
Pending any use as described above, we intend to invest the proceeds of this issue in high quality, interest / dividend bearing short-term / long-term liquid instruments including deposits with banks for the necessary duration and no investments will be made in equity markets. Such investments would be in accordance with the investment policies as approved by our Board of Directors from time to time.
No part of the Issue proceeds will be paid by us as consideration to our Promoter, Directors, key management personnel, associate or Promoter Group Companies.
54 BASIS FOR ISSUE PRICE
The Issue Price of Rs. [●] has been determined by us in consultation with the BRLMs on the basis of the demand from the investors for the offered Equity Shares through the Book Building Process. The face value of Equity Shares is Rs. 10 and the Issue Price is [●] times the face value.
Qualitative Factors:
Factors External to our Company
The Government is focused on building infrastructure such as roads, highways, bridges, airports, waterways etc.
Factors Internal to our Company
• A profit making Company since inception. • Strong Order book amounting to Rs. 73093.79 Lacs as on January 1, 2007. • Expertise in transportation engineering projects including roads, bridges flyovers, tunnels, mining, hydroelectric projects, land development/ embankment and airport runways. • Ability to execute projects in difficult operating conditions in timely manner. • Continuous growth in our bid capacity and pre qualification capability. • Large fleet of construction Equipments. • ISO 9001:2000 Certified Company. • Our Clients comprise of NHAI, Public Works Departments, Airport Authority of India, Northeast Frontier Railways, Coal India Limited, Mumbai Metropolitan Region Development Authority, L & T etc. • Highly qualified and motivated employees base and a proven management team.
For detailed discussion on above factors, see the sections titled "Industry Overview" and "Our Business" beginning on pages 65 and 76 respectively of this Draft Red Herring Prospectus.
Quantitative Factors
Information presented in this section is derived from our standalone restated financial statements prepared in accordance with Indian GAAP.
1. Adjusted Earnings Per Equity Share (Basic & Diluted)
Year/ Period Ended EPS (Rs.) Weight March 31, 2004 1.98 1 March 31, 2005 3.63 2 March 31, 2006 4.81 3 December 31, 2006 (Not Annualised) 3.42 4 Weighted Average 3.74
2. Price/Earning Ration (P/E) in relation to Issue Price of Rs. [●] per Equity Share
Particulars P/E (No. of times) Based on EPS for the year ended March 31, 2006 of Rs. 3.42 [●] Based on weighted average EPS of Rs. 3.74 [●] Industry P/E* a) Highest – Mahindra Gesco 113.3 b) Lowest – Lok Housing (except those that are NIL) 1.7 c) Industry Composite 27.3
* Source: Capital Markets Volume XXII/03, Apr 09-22, 2007, Industry classification: Construction
55 3. Average Return on Networth
Year/ Period Ended RONW (%) Weight March 31, 2004 13.18 1 March 31, 2005 17.00 2 March 31, 2006 18.53 3 December 31, 2006 12.87 4 Weighted Average 15.43
4. Minimum Return on total Networth after issue needed to maintain Pre-Issue EPS for the year ended March 31, 2006 is [●]
5. Net Asset Value
Particulars NAV (Rs. per Equity Share) As at March 31, 2006 25.98 As at December 31, 2006 26.54 After the Issue [●]
The face value of Equity Shares is Rs. 10 each and the Issue Price of Rs. [●] is [●] times of the face value of Equity Shares.
6. Comparison with other listed companies in the same Industry group
EPS P/E RONW NAV Face (Rs.) (%) (Rs.) Value (Rs.) JMC Projects 1.5 30.6 7.2 60.9 10.00 MSK Projects 4.8 10.2 13.1 53.1 10.00 Pratibha Industries 8.6 10.9 24.4 57.6 10.00 Tantia Constructions 5.3 14.0 57.4 47.7 10.00 Valecha Engineering 12.2 10.4 11.6 170.4 10.00 Brahamputra Consortium Limited 4.81 - 18.53 25.98 10.00
Note: The EPS, RONW and NAV figures are based on the latest audited results for the year ended March 31, 2006 and P/E is based on EPS of trailing twelve months (TTM) and Market data.
Source: Capital Markets Volume XXII/03, Apr 09-22, 2007, Industry classification: Construction
7. The Issue Price of Rs. [●] has been determined by us, in consultation with the BRLMs on the basis of the demand from investors for the Equity Shares through the Book Building Process and is justified based on the above qualitative and quantitative parameters. For further details, see the section titled "Risk Factors", "Our Business" and "Financial Statements" beginning on page 10, 76 and 168 of this Draft Red Herring Prospectus respectively to have a more informed view.
56 STATEMENT OF TAX BENEFITS
The Board of Directors Brahamputra Consortium Limited A-7, Mahipalpur, NH-8 Mahipalpur Crossing, New Delhi – 110037.
We, the auditors of Brahamputra Consortium Limited hereby confirm that the attached annexure details the generally available tax benefits to the Company and its shareholders under the Income Tax Act, 1961 and Wealth Tax Act,1957. The tax benefits available to the “Company” and its Shareholders are as under the current tax law 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 based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill. The benefits discussed in the Annexure 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 the professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her 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: i. The Company or its shareholders will continue to obtain these benefits in future; or ii. The conditions prescribed for availing of these benefits have been / would be met with.
The contents of this Annexure are based on the information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company and interpretations of the current tax laws.
For A.B. BANSAL AND COMPANY CHARTERED ACCOUNTANTS
(A.B.BANSAL) Partner M. No. 84628
Date: 25/04/2007 Place: New Delhi
57
ANNEXURE TO THE STATEMENT OF TAX BENEFITS
The Company is advised that under the current provisions of the Income tax Act, 1961 (hereinafter referred to as “The Act”) and existing laws for the time being in force, the following benefits are available to the Company and to its Shareholders.
A. Benefits Available to the Company under the Income-Tax Act, 1961 ('the Act')
1. Certain infrastructure facility if undertaken by the Company which fall under the provisions of sec. 80IA(4)(i)(a) & (b) of the Income Tax Act, 1961, the Company shall be entitled to the deduction @100% of profits for 10 consecutive years starting from Initial Assessment year (as defined under this section) in tax computation, which will reduce the Tax Burden, accordingly.
2. As per the provision of sec. 80IA(4)(iii), any undertaking which develops, develops and operates or maintains a notified Industrial Park is eligible for 100% deduction U/s 80IA(1) for 10 consecutive assessment years out of 15 initial assessment years, subject to the conditions that the period of commencement of operation is on or after 01.04.1997 but before 31st day of March, 2009. After getting notified its Industrial Park project with in the said specified period and subject to other conditions, the Company may reduce its tax burden accordingly.
3. As per the provisions of section 10(34) of the Act, dividends referred to in Section 115O of the Act (i.e. dividends declared, distributed or paid on or after 1 April 2003) received on the shares of a domestic company is exempt from tax.
4. As per the provisions of section 10(38) of the Act, any long term capital gains arising to a shareholder from transfer of long term capital asset being equity shares in a Company would not be liable to tax in the hands of the shareholder if the following conditions are satisfied:
i. the transaction of sale of such equity share is entered into on or after 10th September 2004 ii. the transaction is chargeable to such securities transaction tax under that chapter.
5. In accordance with and subject to the conditions specified in section 35D of the Income Tax Act, the Company is entitled to amortization, over a period of five years, of all expenditure in connection with the proposed Public Issue subject to the overall limit prescribed in the said section as the Public Issue is for the extension of the business.
6. Under section 48 of the Act, if the investments in shares are sold after being held for more than twelve months, the gains (in cases not covered under section 10(38) of the Act), if any, will be treated as long term capital gains and the gains shall be calculated by deducting from the gross consideration, the indexed cost of acquisition.
58 7. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of investment in shares will be exempt from capital gains tax if the capital gain are invested within a period of 6 months after the date of such transfer for a period of at least 3 years in bonds issued by;
i. National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988; ii. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956;
8. Under section 112 of the Act and other relevant provisions of the Act, Long term capital gains, (i.e. if shares are held for a period exceeding 12 months) (in cases not covered under section 10(38) of the Act), arising on transfer of investment in shares, shall be taxed at a rate of 20% (plus applicable surcharge & cess) after indexation as provided in the second proviso to section 48. The amount of such tax should however be limited to 10% (plus applicable surcharge & cess) without indexation, at the option of the shareholder.
9. Under section 111A of the Act and other relevant provisions of the Act, short-term capital gains (i.e., if shares are held for a period not exceeding 12 months), arising on transfer of investment in shares on a recognized stock exchange, shall be taxed at a rate of 10% (plus applicable surcharge & cess).
B. Benefits Available to Resident Shareholders under the Income-Tax Act, 1961 ('the Act')
1. As per the provisions of section 10(34) of the Act, dividends referred to in Section 115O of the Act (i.e. dividends declared, distributed or paid on or after 1 April 2003) received on the shares of the Company is exempt from tax.
2. As per the provisions of section 10(38) of the Act, any long term capital gains arising to a shareholder from transfer of long term capital asset being equity shares in a Company would not be liable to tax in the hands of the shareholder if the following conditions are satisfied:
(i) the transaction of sale of such equity share is entered into on or after 10th September 2004 (ii) the transaction is chargeable to such securities transaction tax under that chapter.
3. In terms of section 88E of the Act, the securities transaction tax paid by the shareholder in respect of the taxable securities transactions entered into in the course of his business would be eligible for rebate from the amount of income-tax on the income chargeable under the head “Profit and gains of business or profession” arising from taxable securities transactions. As such, no deduction will be allowed in computing the income chargeable to tax as capital gains, such amount paid on account of securities transaction tax.
4. Under section 48 of the Act, if the company’s in shares are sold after being held for more than twelve months, the gains (in cases not covered under section 10(38) of the Act), if any, will be treated as
59 long term capital gains and the gains shall be calculated by deducting from the gross consideration, the indexed cost of acquisition.
5. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of investment in shares will be exempt from capital gains tax if the capital gain are invested within a period of 6 months after the date of such transfer for a period of at least 3 years in bonds issued by;
i. National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988; ii. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956;
6. Under section 54F of the Act, long term capital gains (in cases not covered under section 10(38) of the Act) arising to an individual or Hindu Undivided Family (HUF) on transfer of shares of the company will be exempt from capital gain tax subject to other conditions, if the net consideration from such shares are used for purchase of residential house property within a period of one year before and two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer.
7. Under section 112 of the Act and other relevant provisions of the Act, Long term capital gains, (i.e. if shares are held for a period exceeding 12 months) (in cases not covered under section 10(38) of the Act), arising on transfer of investment in shares, shall be taxed at a rate of 20% (plus applicable surcharge & cess) after indexation as provided in the second proviso to section 48. The amount of such tax should however be limited to 10% (plus applicable surcharge & cess) without indexation, at the option of the shareholder.
8. Under section 111A of the Act and other relevant provisions of the Act, short-term capital gains (i.e., if shares are held for a period not exceeding 12 months), arising on transfer of investment in shares on a recognized stock exchange, shall be taxed at a rate of 10% (plus applicable surcharge & cess).
C. Benefits Available to Non-Resident Indians / Non-Resident Shareholders under the Income-Tax Act, 1961 ('the Act')
1. As per the provisions of section 10(34) of the Act, dividends referred to in Section 115O of the Act (ie dividends declared, distributed or paid on or after 1 April 2003) received by a non-resident Indian shareholder (ie an individual being a citizen of India or person of Indian origin who is not a 'resident') on the shares of the Company is exempt from tax.
2. As per the provisions of section 10(38) of the Act, any long term capital gains arising to a shareholder from transfer of long term capital asset being equity shares in a Company would not be liable to tax in the hands of the shareholder if the following conditions are satisfied:
i. the transaction of sale of such equity share is entered into on or after 10th September 2004
60 ii the transaction is chargeable to such securities transaction tax under that chapter.
3. In terms of section 88E of the Act, the securities transaction tax paid by the shareholder in respect of the taxable securities transactions entered into in the course of his business would be eligible for rebate from the amount of income-tax on the income chargeable under the head “Profit and gains of business or profession” arising from taxable securities transactions. As such, no deduction will be allowed in computing the income chargeable to tax as capital gains, such amount paid on account of securities transaction tax.
4. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of investment in shares will be exempt from capital gains tax if the capital gain are invested within a period of 6 months after the date of such transfer for a period of at least 3 years in bonds issued by;
i. National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988; ii. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956;
5. Under section 54F of the Act, long term capital gains (in cases not covered under section 10(38) of the Act) arising to an individual or Hindu Undivided Family (HUF) on transfer of shares of the company will be exempt from capital gain tax subject to other conditions, if the net consideration from such shares are used for purchase of residential house property within a period of one year before and two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer.
6. Under section 112 of the Act and other relevant provisions of the Act, Long term capital gains, (i.e. if shares are held for a period exceeding 12 months) (in cases not covered under section 10(38) of the Act), arising on transfer of investment in shares, shall be taxed at a rate of 20% (plus applicable surcharge & cess) after indexation as provided in the second proviso to section 48. The amount of such tax should however be limited to 10% (plus applicable surcharge & cess) without indexation, at the option of the shareholder.
7. Under section 115-I of the Act, the non-resident Indian shareholder has an option to be governed by the provisions of Chapter XIIA of the Income Tax Act, 1961 viz. “Special Provisions Relating to Certain Incomes of Non-Residents” which are as follows:
a) Under section 115E of the Act, where shares in the company are acquired or subscribed to in convertible Foreign Exchange by a Non-Resident Indian, capital gains arising to the non-resident on transfer of shares held for a period exceeding 12 months, shall (in case not covered under section 10(38) of the Act) be concessionally taxed at the flat rate of 10% (plus applicable surcharge & cess) (without indexation benefit but with protection against foreign exchange fluctuation). b) Under provisions of section 115F of the Act, long-term capital gains (in cases not covered under section 10(38) of the Act) arising to a non-resident Indian from the transfer of shares of the
61 company subscribed to the convertible Foreign Exchange shall be exempt from Income tax, if the net consideration is reinvested in specified assets within six months of the date of transfer. If only part of the net consideration is so reinvested, the exemption shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted into money within three years from the date of their acquisition. c) Under provisions of section 115G of the Act, Non-Resident Indians are not required to file a return of income under section 139(1) of the Act, if their only income is income from forex asset investments or long-term capital gains in respect of those assets or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act. d) Under section 115H of the Act, where the Non-Resident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for the year under Section 139 of the Act to the effect that the provisions of the Chapter XIIA shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money.
D. Benefits Available to Foreign Institutional Investors ('FIIs')
1. As per the provisions of section 10(34) of the Act, dividends referred to in Section 115O of the Act (ie dividends declared, distributed or paid on or after 1 April 2003) received on the shares of the Company is exempt from tax.
2. As per the provisions of section 10(38) of the Act, any long term capital gains arising to a shareholder from transfer of long term capital asset being equity shares in a Company would not be liable to tax in the hands of the shareholder if the following conditions are satisfied:
(i) the transaction of sale of such equity share is entered into on or after 10th September 2004. (ii) the transaction is chargeable to such securities transaction tax under that chapter.
3. In terms of section 88E of the Act, the securities transaction tax paid by the shareholder in respect of the taxable securities transactions entered into in the course of his business would be eligible for rebate from the amount of income-tax on the income chargeable under the head “Profit and gains of business or profession” arising from taxable securities transactions. As such, no deduction will be allowed in computing the income chargeable to tax as capital gains, such amount paid on account of securities transaction tax.
4. The income by way of short term capital gains or long term capital gains (in cases not covered under section 10(38) of the Act) realized by FIIs on sale of shares in the company would be taxed @ 10% as per section 115AD of the Act. However in case of such long term capital gains, the tax is levied on the capital gains computed without considering the cost indexation and protection against foreign exchange fluctuation.
62 5. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of investment in shares will be exempt from capital gains tax if the capital gain are invested within a period of 6 months after the date of such transfer for a period of at least 3 years in bonds issued by;
i. National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988; ii. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956;
E. Benefits Available to Venture Capital Companies/Funds
In terms of Section 10(23FB) of the Act, all venture capital companies/funds registered with Securities & Exchange Board of India, subject to the conditions specified, are eligible for exemption from income tax on all their income, including dividend from and income from sale of shares of the Company.
F. Benefits Available to Mutual Funds
As per the provisions of Section 10(23D) of the Act, all Mutual Funds set up by Public Sector Banks or Public Financial Institutions of Mutual Funds registered under the Securities and Board of India Act/regulation thereunder or Mutual Funds authorized by the Reserve Bank of India, subject to the conditions specified, are eligible for exemption from income tax on all their income, including income from investment in the shares of the Company.
G. Benefits Available to Shareholders under the Wealth Tax Act, 1957
Assets 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.
Notes:
All the above tax benefits will be available only to the sole / first named holder in case the shares are held by joint holders. Legislation, its judicial interpretation and the policies of the regulatory authorities are subject to change from time to time and these may have a bearing on the advice that we have given. Accordingly, any change or amendment in the law or relevant regulations would necessitate a review of the above. Unless specifically requested, we have no responsibility to carry out any review of our comments for changes in laws or regulations occurring after the date of issue of this Note.
In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to any benefits available under the Double Taxation Avoidance Agreements, if any, between India and country in which the nonresident has fiscal domicile.
63 The above Statement of Possible Direct Tax Benefits sets out the provisions of law in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of ordinary shares. The statements made above are based on the tax laws in force and as interpreted by the relevant taxation authorities as of date. The Investors in your Company are advised to consult their tax advisors with respect of the tax consequences of their holdings based on their residential status and the relevant double taxation conventions.
64 SECTION IV: ABOUT US
INDUSTRY OVERVIEW
Construction industry is an integral part of a country’s infrastructure and industrial development. With the present emphasis on creating physical infrastructure, massive investment is planned during the Tenth Plan. Key reforms have been initiated in several sectors with the objective of augmenting country’s infrastructure. The construction industry has played a crucial role in this regard. Construction becomes the basic input for socio-economic development. Besides, the construction industry generates substantial employment and provides a growth to other sectors through backward and forward linkages. Real GDP from construction sector has increased at a 3 year compounded average growth rate (CAGR) of 11.8% between FY2004 – 06. For the fiscal year 2006, construction industry contributed 6.8% of GDP. (Source: ICRA)
The construction business is a conspicuous and increasingly large segment of the Indian economy. The gross domestic product (GDP) from construction activity at constant (1999-2000) prices has increased from Rs. 1,052 billion in FY2000 to Rs. 1,747 billion in FY2006. The GDP growth from construction has increased at a faster rate than the overall growth in real GDP. As a result, the share of construction in real GDP has increased from 5.9% in FY2000 to 6.8% in FY2006.
Growth in Construction Sector and GDP GDP at factor cost and constant prices
GDP from Construction 16% Total GDP
12%
8%
4%
0% 2001 2002 2003 2004 2005 2006
In recent years, high growth in the construction sector has been one of the important factors behind the acceleration in GDP growth. During Q1FY2007, the services sector in general and the construction sector in particular remained the key driver of economic activity, with a contribution of around 71% to overall real GDP growth. The construction sector is the second largest employer in India (after agriculture) with an estimated employment of around 32 million. Civil Construction is considered as an Engine for Economic Growth. It supports core sector industry having a multiplier effect of 1.8 i.e., every one rupee invested in construction adds an incremental eighty paisa to the economy. The Government has also significantly increased the central plan expenditure on various infrastructure segments that could have a positive impact on civil construction activities in the country.
65 GDP from Construction Rs. billion at constant prices FY Quarter GDP from YoY Growth % of GDP Construction GDP Construction (%) growth contribution to GDP Growth 2005 Q1 359.37 8.9% 6.5% 7.2% Q2 370.28 6.8% 6.8% 6.9% Q3 414.76 20.8% 6.4% 17.0% Q4 414.80 13.5% 6.4% 9.7% 2006 Q1 404.02 12.4% 6.7% 9.4% Q2 415.92 12.3% 7.0% 10.0% Q3 462.56 11.5% 6.7% 9.9% Q4 464.63 12.0% 6.6% 8.3% 2007 Q1 442.49 9.5% 6.7% 7.2%
As indicated above, the construction industry has an important role in the Indian economy. The development of country’s infrastructure including roads and highways, ports, railways, power, irrigation and urban infrastructure holds the key to its economic development and civil construction activities form an integral part of augmenting and improving the country’s infrastructure facilities. Construction activities also have strong backward linkages for core sector industries like steel, cement and other construction materials.
Majority of the construction companies has come up with revenue and earnings growth in recent past. Given the focus on fast-track implementation of highway projects and the improving trends in industrial growth and investment, the growth prospects for the construction sector appear to be bright. The thrust given for implementation of an additional 10,000 km. of roads on other highways besides Golden Quadrilateral and E- W & N-S corridors, physical infrastructure works in areas such as roads, railways, airports, seaports are likely to give an impetus to construction activities. Construction companies have never before enjoyed such strong investor fancy, stocks from the sector now figure prominently in the portfolios of domestic mutual funds and foreign institutional investors. The grant of industry status and expression of interest by foreign investors seem to have triggered re-rating of construction companies. Most of the prominent players in the field have order books to support robust revenue growth for the next three years on short term projection with a promising future in the long run. Based on the current orders and order accretion expected in the next three / five years, any dramatic improvements in operating profit margins are unlikely despite the huge order-book positions. But the order books and cost escalation clauses now built into most contracts may ensure that the margins improve gradually over time. There is also a strong support cast. The current order backlogs and imminent order flows are likely to lead to a revenue growth of 25 / 35 percent per annum over the next couple of years for the companies. The following factors could keep the orders flowing: o Revenues and earnings from the ongoing highway projects do not come to a standstill with the completion of construction work. Once the infrastructure is in place, the focus is likely to shift from construction to "corridor management", meaning managing the highways built. This further throws up ample opportunities in the form of improvement and road maintenance contracts. o Mounting infrastructure bottlenecks in roads, water supply, transport and sewerage in major cities has prompted the government to give a facelift to urban infrastructure projects through the "National Urban Renewal Mission". o Apart from funding through budget allocation and special purpose vehicles, several of the State-level projects are now being funded by multilateral agencies such as the Word Bank and the Asian Development Bank. o The announcement of 100 per cent foreign direct investment in construction and realty is likely to facilitate increased investment flows. In the current situation it appears that the foreign players are testing the waters in the Indian market through joint ventures. The local players benefit from the
66 technical knowledge through such joint ventures and get a foothold to qualify independently for successive projects.
The Government Foray
Policymakers became increasingly cognizant of the gap in the infrastructure sector. The government implemented a select set of measures to increase spending in various infrastructure segments. For instance, it extended the National Highway Development Plan to seven phases, covering 65,000 Kms of national highways, from two phases involving 13,000 Kms previously. The government has also taken up the restructuring and privatization of Delhi and Mumbai airports, and the construction of Greenfield airports at six metros. Further the Govt. has also decided to develop 35 non-metro airports in the country. In the rail sector, a Greenfield railway network dedicated to freight traffic (freight corridor) is also planned, along with additions to Greenfield metro projects at three cities.
With the construction industry witnessing robust growth and enhanced public investment in infrastructure, the order book position of major construction companies (most of them being at their historical highs) also confirms the sector’s testimony to future growth.
ROADS & HIGHWAYS
Innovative Methodology
The government is boosting infrastructure by bringing in new styles of execution. The emphasis is on public- private-partnership in infrastructure projects to a large extent. The new road development program by the National Highway Authority of India (NHAI) to build the golden quadrilateral (GQ road network) connecting four major metros is a good example to follow. Under public-private-partnership, contracts are awarded to private players at agreed terms. The NHAI operates largely as an independent supervisory authority. Although the NHAI is facing hurdles ensuring the completion of these projects on time due to delays in land acquisition, removal of encroachments and environmental issues, overall progress under this new structure has been much better than that achieved traditionally.
Government Investment provides the impetus for Growth
The focus of successive Governments on improving the road connectivity across the country has brought about significant investments in road development. Government expenditure on roads in India is significant – 12% of capital and 3% of total expenditure, however, road maintenance is grossly under-funded with only one third of needs being met. Recognizing the present deficiencies in the road network, the Government of India has sought to address these through the Tenth National Plan (2002 – 2007), which has assigned a high priority to the National Highway Development Program (NHDP).
One of the most important programs under NHAI is the National Highway Development Program (NHDP). The National Highway Development Program (NHDP) involves a total investment of Rs.2, 200,000 million up to the year 2012.The NHDP has the following components and divided into the following phases:
Four laning of the Golden Quadrilateral and NS-EW Corridors (NHDP I & II)
The NHDP Phase I and Phase II comprises of the Golden Quadrilateral (GQ) linking the four metropolitan cities metropolitan cities in India i.e. Delhi-Mumbai-Chennai-Kolkata & the North-South corridor connecting Srinagar to Kanyakumari, and the East-West corridor connecting Silchar to Porbandar. The contracts for projects forming part of NSEW corridors are being awarded rapidly for completion by December 2009-2010.
Four-laning of 10,000 Kms (NHDP-III)
The Union Cabinet has approved the four-laning of 10,000 Kms of high density national highways, through the Build, Operate and Transfer (BOT) mode.
67
Two laning of 20,000 Kms (NHDP-IV)
NHDP-IV envisages up gradation of 20,000 Kms of such highways into two-lane highways, at an indicative cost of Rs. 250,000 million. This will ensure that their capacity, speed and safety match minimum benchmarks for national highways.
Six-laning of 6,500 Kms (NHDP-V)
Under NHDP-V, the Committee on Infrastructure has approved the six-laning of the four-lane highways comprising the Golden Quadrilateral and certain high density stretches, through PPPs on BOT basis, to be completed by 2010.
Development of 1000 Kms of expressway (NHDP-VI)
The committee on Infrastructure has approved 1000 Kms of expressways to be developed on a BOT basis, at an indicative cost of Rs. 150,000 million. These expressways would be constructed on new alignments.
Other Highway Projects (NHDP-VII)
The development of ring roads, bye-passes, grade separators and service road is considered necessary for full utilization of highway capacity as well as for enhance safety and efficiency. For this, a program for development of such features at an indicative cost of Rs. 150,000 million has been mandated.
(Source: www.infrastructure.gov.in) Non-NHDP Projects
The key projects are detailed below:
MORTH Projects
The erstwhile Ministry of Shipping was merged in September 2004 into a single Ministry of Shipping, Road Transport and Highways, with Two Departments (1) Department of Shipping and (2) Department of Road Transport and Highways. The ministry is currently developing 10,000 Kms of national highways (non-NHDP) over the next 4-5 years. These will all be BOT projects with grants; the grant will be one of the bidding variables, and will not exceed 25% of the BOT operator’s project cost. (Source: www.morth.nic.in) State Highway Projects
Road and highway development by states has been funded by contributions from the central reserve funds (CRF), loans from multilateral lending agencies such as the World Bank and Asian Development Bank, and State funds.
68 STATUS OF NHDP & OTHER NHAI PROJECTS AS ON 28.02.2007
NHDP Port Others Total By GQ NS – NHDP NHDP NHDP Connec- NHAI EW Phase Phase V Total tivity Ph. I & IIIA II Total Length 5,846 7,300+ 4000 6500 23,646 380 945^ 24,971 (Km.) Already 4- 5,540** 1080 30 - 6,650 145 287 7082 Laned (Km.) Under 306 5,150 1404 148 7,008 214 638 7,860 Implementa tion (Km.) Contracts 35 146+ 22 2 205 7 16 228 Under Implementa tion (No.) Balance - 908^ 2566^ 6,352 9,826 21 20 9,867 length for award (Km.)
** Out of 5,540 km, 5208 km includes BC layer and 332 km upto DBM. ^ The difference in length is because of change in length after award of works +Out of 7300 Km, 981 Km length is in Phase-I and remaining length is in Phase-II. Against 981 km, 853km length was 4 laned and 227 km against phase-II including 160 km upto DBM level. Actual length at present excluding 442 km common length with GQ is 7,274 km. However, this may again change after preparation of DPRs. The original approved length of Corridors is 7,300 km
(Source: www.nhai.org)
ROAD MAP TO THE FUTURE – BOT EMERGING OPPORTUNITY
Build-Operate-Transfer (BOT) emerging as significant opportunity o In order to promote involvement of the private sector in construction and maintenance of roads of the Government has now decided to offer projects on a Build-Operate-Transfer (BOT) basis. o There is a significant opportunity for BOT in the national highways segment as they carry more than 40 per cent of the traffic even though they constitute just about 2 per cent of the total road network in the country. The key Government program that present a significant opportunity for BOT include: Pradhan Mantri Bharat Jodo Pariyojana (PMBJP) North – South and East-West (NSEW) Corridor Golden Quadrilateral (GQ) project o For NHDP in particular, the private sector has responded enthusiastically. Under this program, projects valued at over US$ 1.33 billion are being implemented. The NHDP has been extended to cover a 50,000 km road network, and these future works will be undertaken on a BOT basis (through toll or annuity).
69 The table below shows the opportunity available in road construction:
Scheme Period 2001-2011 Period 2011-2021 Length Amount Length Amount (Km) (Rs. (Km) (Rs. Million) Million) A Expressways 3,000 300,000 7,000 700,000 B National Highways i) Four laning / Six Laning 16,000 640,000 19,000 760,000 ii) Two-Laning with hard shoulders 15,000 187,500 7,000 87,500 iii) Strengthening Weak Pavements 20,000 150,000 24,000 180,000 iv) Bye passes, bridges, over bridges, safety Lump sum 72,500 Lump sum 92,000 and drainage measures v) Expansion of NH system 10,000 150000 12,000 180,000 Total for National Highways 12,00,000 1,30,000 C State Highways i) Four laning / Six Laning 3,000 100,000 7,000 250,000 ii) Two-Laning with hard shoulders 35,000 280,000 60,000 500,000 iii) Strengthening Weak Pavements 30,000 220,000 40,000 300,000 iv) Bye passes, bridges, over bridges, safety Lump sum 100,000 Lump sum 100,000 and drainage measures 20,000 v) Expansion of SH system 10,000 50,000 100,000 Total for States Highways 750,000 12,50,000 (Source: World Bank)
The Government of India’s focus and sustained increased budgetary allocation and increased funding by international and multilateral development finance institutions for infrastructure development in India have resulted in or are expected to result in several large infrastructure projects in this region. The Government has developed various alternate sources of raising funding for infrastructure projects, including the levy of cess on petrol and diesel, which is being used to fund the road projects such as the Golden Quadrilateral and the North –South – East – West corridors. With a total length of approximately 3.3 million kilometers, India has the second largest road network in the world. The Government of India spends about Rs. 18000 crores (US$ 4 billion) annually on road development. (www.infrastructure.gov.in)
Outlook
Going by the initiatives being continued to be taken by the central government, as well as various state government bodies for upgrading Indian infrastructure including roads & highways (which has been a significant demand driver in the past few years), the high level of demand for construction activities is likely to remain sustained in the short to medium term spanning across various sectors. This would provide ample opportunities to Indian construction to strengthen their order book position.
HYDROELECTRIC PROJECTS
India is endowed with enormous economically exploitable and viable hydro potential assessed to be about 84,000 MW at 60% load factor (1,48,700 MW installed capacity). In addition, 6781.81 MW in terms of installed capacity from small, mini and micro hydel schemes have been assessed. However, only 15% of the hydroelectric potential has been harnessed so far and 7% is under various stages of development. Thus, 78% of the potential remains without any plan for exploitation. Despite hydroelectric projects being recognized as the most economic and preferred source of electricity, share of hydropower has been declining steadily since 1963. The hydro share has declined from 44 per cent in 1970 to 25 percent in 1998.
Government Initiatives
The Government of India has set the following objectives for accelerating the pace of Hydro Power Development:
70 (i) Exploitation of vast hydroelectric potential at a faster pace: The Government would initiate advance action for taking up new hydro projects since the ongoing projects will contribute a very small percentage of the desired capacity addition envisioned for 10th Plan and beyond.
(ii) Promoting small and mini hydel projects
(iii) Strengthening the role of PSUs/SEBs for taking up new hydel projects
(iv) Increasing private investment: A greater private investment through IPPs and joint ventures would be encouraged in the coming years and required atmosphere, incentives and relief would be provided to stimulate and maintain a trend in this direction.
NHPC has drawn an ambitious plan in XI (2007 to 2012) and XII (2012 to 2017) Five Year Plans to achieve 5837 MW and 7420 MW respectively.
Promoting Hydel Projects with Joint Ventures
With a view to bring in additional private investment in the hydel sector there would be a greater emphasis to take up schemes through the joint ventures between the PSUs/SEBs and the domestic and foreign private enterprises. The joint venture company will be an independent legal entity to be registered under the Companies Act and would act as an independent developer. (Source: NHPC)
AIRPORTS
Current Scenario
- There are 449 Airports / Airstrips in the Country out of which 92 airports & 28 Civil enclaves at Defence airfields provide air traffic services over the entire Indian airspace and adjoining oceanic areas. - The Indian civil aviation sector is showing a phenomenal uptrend with double digit growth rate. Passenger traffic rose by 25-30% in 2005-06 and is expected to grow by 25% year –on-year over the next five years. During the next 20 years, passenger traffic is expected to increase by 400 percent domestically and 600 percent for Cargo traffic. - The Aviation Sector in India has the potential to grow by 25% annually in the next 10 years. In 2006 alone, the growth was 50% - The Government is expecting an investment of $50-70 billion in the Airport Sector in the next 10 years. - Smaller cities will outpace the industry growth in the next three years.
Govt. Initiative
- The Government has proposed to hike the Foreign Direct Investment (FDI) cap to 100% in helicopter and sea plane operations, charters, air cargo and non-scheduled air operations and in maintenance, repair and overhaul facilities - To revamp the airport infrastructure, the Government has envisaged a modernization plan with an investment of Rs. 400,000 million to Rs. 500,000 million by 2009. It has appointed advisors to assist in raising Rs.40,000 million over the next three years. This is expected to fund the modernization of select 35 non-metro airports. - The civil aviation ministry has identified clusters of 5 to 6 non-metro airports that will be part of each bunch. In the first phase, the ministry has identified 35 non-metro airports to private parties for city-side development and modernization of these facilities is expected to involve investment to the tune Rs.70,000 million. Phase I, which involve an investment of Rs. 11,100 million, is expected to be completed by 2008. - Airport Authority of India will take up the task of modernizing the airside of the airports and private companies shall be roped in to develop the city-side: investment in parking based technical facilities would cost Rs. 55,000 million while the city-side would attract investment of Rs. 15,000 million.
71 - The Govt. has also recommended to setup regulatory control over civil aviation sector. The Bill for Airport Economic Regulatory Authority is likely to be placed in parliament Budget section.
Opportunity
- Out of total 449 Airports / Airstrips Civil Aviation Ministry is proposing to offer 300 airstrips and airports to Private players for development (Build and run). These may be offered in blocks, as single airstrip would not be attractive to the investor. These will be “Merchant Green-field Airports” that are completely built and operated by private developers on land acquired by them and run within the permissible air-traffic management regime. - The Government has already decided to develop 35 non-metro airports through the public- private partnership (PPP) model. - Due to unprecedented growth in civil aviation there would be a need to build secondary airports in non-metros in the next 5 to 10 years. - All 449 of India’s airports are in urgent need of modernization in equipment and service, terminal technologies and transport facilities. This represents significant opportunities for foreign-based companies with expertise in these technologies. - The government has made and efforts to facilities private and foreign investment in the airport development sector, including the establishment of a regulatory body to ensure investor confidence. As well, automatic approval will be granted for foreign direct investment (FDI) in airport development up to 74 percent. - The scenario is set for major change with the civil aviation ministry working out a new policy that will allow corporate and other private parties to develop their own airports if they have adequate land at their disposal. Location advantages and commercial viability would be the only other requirements and the government will provide critical support such as navigation for aircraft without seeking equity participation. - The public-private participation model in developing and operating airports – like Athens, Manila, Vienna, Zurich, Copenhagen, Singapore – has been successful across the world.
(Source: www.cargonewsasia.com, www.financialexpress.com, Economic Times, Hindustan Times)
COAL MINING
India now ranks 3rd amongst the coal producing countries in the world. Through a sustained program of investment and greater thrust on application of modern technologies, it has been possible to raise the production of Coal from a level of about 70 million tonnes at the time of nationalization in early 1970's to 355 million tonnes (provisional - excluding Meghalaya) in 2003-04. Most of the coal production in India comes from open pit mines contributing over 81% of the total production. A number of large open pit mines of over 10 million tonnes per annum capacity are in operation. Underground mining currently accounts for around 19% of national output. Most of the production is achieved by conventional Bord and Pillar mining methods. Coal is the dominant energy source in India, accounting for more than half of the country's requirements. 70% of India's coal production is used for power generation, with the remainder being used by heavy industry and public use. Domestic supplies satisfy most of India's coal demand. Unfortunately most of India's coal is characterized by high ash content, but has other useful qualities such as low sulphur content (generally 0.5%), low iron content in ash, low refractory nature of ash, low chlorine content and low trace element concentration. India’s coal demand is expected to increase manifold within the next 5 to 10 years due to the completion of on-going coal based power projects, and demand from metallurgical and other industries. Demand for coal has been rising at an annual rate of 6 percent since 1992-93 and Coal India Limited (CIL) and its subsidiaries will be unable to meet the projected demand alone. The investment needed to bridge the gap of 400 million tones, between the level of production in the public sector (290 million tones in 1995-96) and the projected demand of 690 million tones (2009-10) is estimated to be US$ 18 billion. The public sector corporations are expected to increase their production by about 250 million tones by 2009-10, subject to their making an additional investment of US$ 8-10 billion. The balance requirement of 150 million tones will have to be met by imports in the short run and by new investments in the long run.
72 About 88% of the total coal production in the country is produced by various subsidiaries (a total of 390 mines) of Coal India Ltd., which is the largest supplier of coal in the country. At present all private mines are allowed to operate only if they are producing coal to supply a specific industry (e.g. power station, industry). Although Coal India is currently State controlled, efforts are being made to open the industry to Indian private investors. In a bid to break the public sector monopoly over coal, the government is seeking to introduce legislative changes allowing for private mining, whilst liberalizing norms for the allocation of captive blocks permitting trading of coal. The government is contemplating the allocation of captive blocks for setting up washeries in the private sector. Captive block holders would also be permitted to sell their coal in the open market. As many as 143 blocks could be allocated, containing total estimated reserves of 30,000 Mt. The current legislative requirements permit private-sector investment only for the limited purpose of setting up coal washeries and captive mining for specified end-uses, including setting up power plants, fertilizer and steel units. Opportunities Available to Private Participation
After success in Road and Port projects, Government is all set to introduce Public – Private Partnership (PPP) model for the development of infrastructure facilities required by small and medium enterprises in mining sector. To boost the coal production the private sector companies will gain entry through outsourcing contracts. (Source: www.infomine.com, www.mbendi.co.za) REAL ESTATE
Real Estate sector in India can be broadly divided into Residential/ Housing and Commercial Sector. Commercial Real Estate includes Retail space as well as institutional space.
Following the liberalisation of the Indian economy and the economic reform programmes, the sector has been witnessing rapid changes. The gross domestic product (GDP) from real estate, ownership of dwelling and business services at constant (1999-2000) prices has increased from Rs. 1,271 billion in FY2000 to Rs. 1,810 billion in FY2005. The GDP growth from the real estate has increased at a faster rate than the overall growth in real GDP. As a result, the share of output from real estate in real GDP has increased from 7.1% in FY2000 to 7.6% in FY2005.
Real estate is a cyclical industry that is affected by both local and national economic conditions. Major factors that have a significant impact on real estate development include growth in population and employment, consumer spending, interest rates, and inflation. While macroeconomic conditions are important factors affecting the overall state of the real estate industry, local supply and demand conditions are by far the more important factors affecting real estate markets. Residential and commercial real estate markets have their individual distinct characteristics in terms of demand/ supply scenario and growth potential.
Real GDP from real estate, ownership of dwellings and business services has increased at a 3-year compounded average growth rate (CAGR) of 7.2% between FY2003-05.
2500 GDP Rs. Billion Growth 10%
2100 8%
1700 6%
1300 4%
900 2%
500 0% 2001 2002 2003 2004 2005
73 India’s Real Estate Sector GDP and Growth
In the last 4 years, growth in housing activities in the country has been considerably high, which is reflected by the high growth in bank loans towards housing and real estate sector. Bank credit to these two sectors increased from Rs. 157.44 billion in March 2000 to Rs. 1,907 billion in January 2006. Government Policies
Traditionally real estate sector in India has been driven significantly by government policies. The Central Government, realising the importance of real estate development and its backward linkages with other economic activities, has provided incentives to individual home buyers as well as developers in the form of tax incentives. Tax exemptions have been provided to multiplexes and convention centres as well, which have facilitated development of such projects. Major policies that have generated demand for real estate development in the country include:
Tax benefits for individuals for interest and principal payable on housing loans in successive budgets. Tax exemption to developers on income from specified housing projects Increased depreciation benefits on new dwelling units purchased by corporates for their employees. Allowing scheduled commercial banks to lend 3% of incremental deposits for housing. The developments under the FDI route may be through joint ventures or through wholly owned subsidiaries of foreign investors. While in the case of a wholly owned subsidiary, the foreign investor will have to bring in a minimum capital of $10 million, in case of joint ventures with an Indian partner, the minimum amount of capital would be $5 million. The investor would be permitted to sell only developed plots having infrastructure facilities including roads, water supply, street lighting, drainage, sewerage, and other conveniences. This is expected to lead to a holistic development of townships and increase the overall construction activities associated with such mass housing projects. Growth Potential
One industry that has been significantly influenced by the positive changes in India’s economic and demographic structure is real estate. India’s real estate industry is witnessing an unprecedented high. The industry has witnessed a significant change in its structure; scale of operations and growth over a period of time and the future state seems highly optimistic.
The Tenth Five-Year Plan (2002-07) estimated the urban housing shortage at 8.9 million dwelling units in 2002. Further the total number of houses that would be required cumulatively during the Tenth Plan period is estimated at 22.4 million dwelling units. It is estimated that the investment requirement from public sector institutions would be around Rs. 4150 billion. Apart from this, substantial contribution from private players would be required to tackle the growing housing shortage.
Residential Market
With 35 cities of more than one million residents, totaling 128 million people and a projected urbanization rate of 45.7% by 2051, India offers many potential investment locations. Real estate investment till date has focused on a few major cities, which follow their own economic and real estate agenda. The most important investment locations include Delhi (the political center), Mumbai (the financial capital) and Bangalore (9th major IT Hub). However, the population projects reveal that much of the growth is expected to be concentrated in tier II and tier III cities including Surat, Ahmedabad, and Kanpur. Hence, the investors are now looking forward to investing in such locations in spite of an average three-year-lock-in period for any high-end residential investment.
There are only 179 million houses for 192 millions families in the country. There is thus a significant gap of 13 million in availability of dwellings. Close to 50% of the households live in non-permanent constructions. Therefore, the assessed gap in requirement and availability of housing in fact severally under estimated the real gap if bare minimum standards for space and amenities are specified.
In addition to the housing sector, the hotel, retail and office real estate sectors are also underdeveloped, relative to the size of the economy. It is therefore strongly recognized that the real estate industry can play
74 the role of a core sector for decades to come and serve as an engine of growth for the economy. There are early signs of this already. The housing as well as the commercial markets have witnessed a boom owing to the state-of-art developments by the private sector.
SEZs and Industrial Parks.
The SEZ act of government of India, 2005 has presented a lucrative development alterative for all the reality players. SEZs are specifically delineated, duty free enclaves outside the customs territory of India. SEZs are approved by the ministry of Commerce and can be set up by private developers or by central/state government or jointly by any two or more of these. Out of the 150 SEZ approvals all across the country, only about four of them are operational currently. SEZs can be multi product or for a single industry, such as IT, Pharmaceutical or textile. Multi product SEZs must be at least 1,000 Hectares. (Source: FICCI)
In recent years, the growth in the sector has also been driven by increased bank credit to the sector. Credit to the commercial real estate has increased sharply, although it still constitutes only a small part, around 2% of outstanding non-food bank credit and 4.3% of incremental non-food credit. Demand for housing loan, particularly for big ticket ones, is likely to go up. The home loan rates, though they inched up 1-2% over the last one year, are still ruling lower than what they were five years ago. Property prices, meanwhile, have climbed up steeply resulting in a decline in rental income return to 5-6% per annum at present. However, capital appreciation at 10-15% per annum still looks strong on the back of a buoyant market.
Outlook
A major concern in the real estate sector is the cyclicality associated with it, which constrains the earnings stability of real estate developers. The demand-supply dynamics in the real estate sector is largely a regional phenomenon and considerable variations are also observed geographically that impacts the earnings stability of developers as most of the real estate developers operate in specific states. However, the favourable policies of the central government towards the real estate sector in the last 3-4 years have resulted in a positive impact on the earnings of real estate developers across the country. (Source: ICRA)
75 OUR BUSINESS
Overview
We are an infrastructure project development company and provide engineering, procurement and construction services for infrastructure projects in India. We are also executing two real estate development projects. Our project expertise is primarily in transportation engineering projects including roads, bridges flyovers, tunnels, land development/ embankment and airport runways, mining and hydroelectric projects.
Our Company was incorporated on September 2, 1998 with the Registrar of Companies, National Capital Territory of Delhi & Haryana and we received the certificate of Commencement of Business on September 25, 1998.
We have a strong presence in the eastern and north-eastern parts of India such as Assam and Arunachal Pradesh. These areas are relatively less penetrated in terms of infrastructure development and hold potential for more business. The Union Budget also increased allocation for the North Eastern sector and state governments has also focus on building infrastructure facilities on priority basis. With a presence in these areas, the Company holds an edge over its peers for future projects.
We execute infrastructure projects independently and in joint ventures. To meet technical and pre qualification requirements, we enter into Joint Ventures/ strategic alliances with entities operating same segment of business.
Over the years, BCL has built a reputation of being a competent and trusted company in the Construction Industry. The company has built a strong organizational base, with vital infrastructure set-up and executes projects by adopting modern techniques. The minute details are taken into consideration at BCL from the bidding stage right up to successful timely completion of the Project.
BCL has a strong order book position of Rs. 73093.79 Lacs as on January 1, 2007. The healthy order book will ensure a steady revenue growth over the next couple of years. The order composition is well diversified over various segments such as Roads and highways, Airports, Tunnels, ROBs, Mining, Hydroelectric Power Projects and Real Estate.
BCL has a track record of completing every single assignment. In the recent years, we have executed and commenced upon a number of praiseworthy projects in the state of Delhi, Punjab, West Bengal, Uttar Pradesh, Assam, Jammu & Kashmir and other Northern-Eastern states. The list of our satisfied clients includes:
• National Highway Authority of India (NHAI) • North Frontier Railways • Coal India limited • Larsen & Turbo Limited for NHPC • Mumbai Metropolitan Region Development Authority (MMRDA) • Indian Institute of Technology, Guwahati (IIT) • IRCON International Limited • West Bengal Housing Infrastructure Development Corporation Limited (WBHIDC) • Public Works Department (PWD) • Airports Authority of India • Punjab Infrastructure Development Board (PIDB) • Jammu & Kashmir Economic Re-construction Agency.
76 Our Business Segments/ Thrust Areas
BCL has identified roads & highways, tunnels, airports, hydropower, mining, bridges, real estate and other heavy civil construction works as a potential growth segment. In the near future the Company is desirous of gradually improving its penetration and resources to these sectors. Such diversification in different sectors enables us to reduce dependence on any one sector or nature of the project. To enhance its in-house expertise, so as to be at par with the other eminent players in the construction industry and to broaden its operational base in specialized construction field, BCL is entering into joint venture/s with the companies/entities having requisite experience.
A. EPC Contracts
I. Roads, Highway & Runway Sector a. Roads & Highways
With the vehicle population in the country increasing at a fast pace, a well organized road network has become imperative for the smooth flow of traffic. Even though the government of India spends about US$4 billion per annum on road development, a lot needs to be done. In an attempt to support the 8% economic growth it is imperative to have a sound road structure. Keeping this in mind the government has undertaken a number of schemes for the improvement of the road network. BCL is all geared up to cash in the enormous opportunity being offered by this sector. We actively bid for various infrastructure projects being undertaken by NHAI, PWD and other Government, Semi Government and Public Sector Undertakings. Since 1998 we are into this sector and at present, projects under execution are for Rs 6573.49 Lacs.
Further, one of the major projects under execution in joint venture for NHAI is widening and strengthening of existing National Highway from 2 Lane to 4 Lane from Km 1065 to 1040.3 of Nalbari to Bijni section of NH-31 in Assam on East West Corridor Package EW-II (AS-6). The contract value of the project is Rs. 18248.27 Lacs. b. Road Over Bridge (ROB) & Bridges
At present, we are undertaking execution of road over bridge projects worth Rs. 5952.19 Lacs. Some of the projects under execution are as under: i) Construction of Approaches to Road Over Bridge (excluding Railway Portion):
a) 4 lane approaches on level crossing No. A-61 on Jalandhar-Amritsar Railway line at Maqsoodan in Jalandhar City. b) On level crossing No. C-11 on Jalandhar-Pathnakot Railway line at Succhi Pind on Jalandhar- Hoshiarpur road. ii) Construction of 4 lane approaches (excluding Railway Portion) on Chandigarh-Ludhiana new BG Railway Line crossing Morinda Bye pass at Morinda (Distt. Ropar) c. Airports and Runways
At present for Airport Authority of India, we are undertaking a project involving construction of new apron with link taxiway, extension of runway of 360m, drainage, box culvert and perimeter road at Guwahati airport. The contract value of the projects under execution is for Rs. 4425.15 Lacs.
II. Tunnels
With the growing need, to accelerate the development of infrastructure for water resources; hydropower development, rail network, road projects, construction of large number of tunnels in practically every type of strata is necessity of the time. In order to provide desired linkages to the remotely located areas and for exploitation of the hydro potential of the country, particularly in Himalayan ranges, extensive underground
77 activities for road, railways and hydroelectric projects is being undertaken. Many such projects are under construction and many more are under consideration.
Since 2003 we are into this sector and at present, Projects under execution are for Rs 17506.31 Lacs. One of the major projects we are executing in JV for Indian Railway/ IRCON International is a tunnel work between Udhampur-Srinagar-Baramulla section (Km 128.600-134.360). The contract value of the project is Rs. 15719.06 Lacs. The Indian Railways has taken up the herculean task of connecting Kashmir valley with the rest of the country with broad guage railway line. The railway line would connect Jammu Tawi with Baramulla passing through Udhampur – Katra – Quazigund and Srinagar. The total length of tunneling between Jammu to Quazigund is approximately 99 Kms. Jammu – Udhampur is the first leg (Approximately 53 Kms) on this railway link. There are 21 tunnels measuring approximately 10 Kms between Jammu to Udhampur.
III. Hydro Sector
One of the Government of India’s top priorities is to boost economic growth by providing all its citizens with reliable access to electricity by 2012. To reach this goal, the government estimates that the country will need to install an additional 100,000 MW of generating capacity by 2012. There is a broad consensus in the government to expand power generation by developing the country’s hydropower potential, of which only 30 percent has been harnessed so far. Although the past two decades have seen an increase in the number and capacity of coal-based power plants, hydropower’s share in the generation mix has declined. At present, hydropower constitutes only 25 percent of India’s generating capacity.
The government has set the target for India’s optimum power system mix at 40 percent from hydropower and 60 percent from thermal/nuclear power. The present ratio – at 25:75 – falls far short of this optimum, causing severe power shortages particularly during peak periods and technical and economic problems in grid operations. The country, therefore, plans to increase hydropower’s share in power generation to 28 percent by fiscal 2007, and to reach the target of 40 percent over the longer term.
We are currently executing project for ECC division of L&T for construction of Power House & Tail Race Channel in Lower Subhansiri Project – Assam Hydroelectric Power Project under NHPC. The total value of the project under execution is for Rs 5314.18 Lacs.
IV. Mining Sector
India has huge untapped potential for underground mining with extractable reserves up to a depth of 600 meters. Currently mining is done predominantly by open cast methods to exploit the 64 billion tonnes of proven reserves situated within a depth of 300 meters. Lower operating and production costs, greater percentage recovery and a higher output per manshift compared with underground mining are some of the advantages presently associated with open cast mining in India.
Recognizing the expertise of BCL in excavation work the company was awarded a project of Rs. 5538.99 Lacs from Coal India Limited for Production of CS & removal of HS at Tikak-West in the state of Assam near Margarita.
V. Other Civil/ Miscellaneous Construction
In the Civil Construction Sector we have been executing challenging and varied Projects like railway Embankments measuring up to 16 meters in height, Earthwork in Township Development (Rajarhat in Kolkata), River Protection Work and other miscellaneous works like culverts, strengthening, extension and rebuilding of Minor Bridges. Currently we are executing projects for the Government/ Semi-Government/ or its agencies worth Rs. 18730.68 Lacs.
B. Real Estate
In our real estate division, we are executing two projects worth Rs. 9052.81 Lacs (Approx). The first project relates to development of private industrial park at Guwahati, Assam on 586.67 Bighas [122.50 acre (approx.)] of land involving capital outlay of Rs. 4000 Lacs. The other project relates to development of
78 residential and commercial complex at Guwahati worth Rs. 5052.81 Lacs. The project will consist of 200 residential apartments and development of commercial space. The other details of the projects are as under:
I. Private Industrial Park
a. BCL has acquired 586.67 Bighas of land, (out of which 280 Bighas have been allotted by Assam Government) in Guwahati situated at NH-31, a premium industrial location, in state capital, to develop private industrial park. b. State Government is very enthusiastic about the project and all necessary clearances have been given to company. c. Phase-I development already started and booking of industrial plots has already commenced.
II. Condominium – Spanish Garden Project
a. Development of residential cum commercial complex on a plot of 13,890 sq. mt., situated at prime location of Zoo Road at Guwahati. b. Total area of construction is 4.5 Lacs sq. ft comprising of Residential & Commercial complex c. The Architect of the project is Hafeez Contractor of Mumbai.
Major Projects Executed By Us
We have executed several construction projects during the last 9 years. The details of some of major projects executed by us are as under:
National/State Highways:
Sr. Description Contract Value No. (Rs. in Lacs)
1 Noida-Greater Noida Expressway from Km 10.000 to Km 12.500 (Pkg VIA) 1448.70 and from Km 13.250 to Km 13.820 and Km14.100 to Km 14.500, (IRCON)
2 Engineering & Land filling work of approx. 72.5 Hectare of land for A-A-IC 3885.60 under Rajarhat Development Project. (WBHIDC)
3 Construction of Flyash embankment at Shastri Park, New Delhi (DMRC) 1300.00
4 Excavation of Approach channel & Power House for Koldam Hydro Electric 1635.80 Power Project. (NTPC)
5 Quarrying & supplying man size river boulders weighing 40-70 km on 1331.50 south bank of river Brahmaputra near Dibrugarh for Bogibeel Bridge. (N F Railway)
6 Construction of 60 units of D-type qtrs. in 10 blocks at IITG, North 668.20 Guwahati (IIT)
7 Construction of 119 units of B-type qtrs. in 17 blocks at IITG, North 1004.40 Guwahati (IIT)
8 Construction of Girls Hostel Building at IITG North Guwahati (IIT) 591.90
9 Construction 36 units of D-type and 24 units of A type qtrs. in 10 blocks at 834.70 IITG North Guwahati (IIT)
79 Order Book as on January 1, 2007
Our order book comprises the unfinished and uncertified portion of projects that we have undertaken and includes the value of sub-contracting agreements that we enter into with our joint ventures for work to be performed by us. In our industry, the order book is considered an indicator of potential future performance since it represents a portion of the likely future revenue stream. Our strategy is not focused solely on adding contracts to the order book but instead is focused on capturing quality contracts with potentially high margins. The orders in our order book are subject to cancellation and modification provisions contained in the various contracts and other relevant documentation. Our order book also consists real estate projects being undertaken by us. The following table sets forth the value of our order book as of January 1, 2007:
I. EPC Contracts
A. Work Orders directly awarded to us
S. Description of Project Principle Client Total Work Outstan- No. Contract Executed ding work Value till to be done (Rs. Lacs) December (Rs. Lacs) 31, 2006 1 Construction of Power House & Tail Race L&T Ltd. 5314.18 2478.81 2835.37 Channel in Lower Subhansiri Project - Assam (ECC Div.) Hydroelectric Power Project under NHPC 2 Earthwork in filling to form embankment and N.F. Railway, 1095.34 632.09 463.25 formation including mechanical compaction Maligaon and construction of minor bridges and other ancillary works in between from Ch. 0.00 Km to 5.00 Km of rail approach from chalkhowa station to Bogibeel bridge at South Bank of river Brahmaputra (including New Dibrugarh station yard and diversion line from New Dibrugarh to Dibrugarh) in connection with construction of Bogibeel Bridge Project. 3 Quarrying & supplying blasted stone N.F. Railway, 3408.00 1370.20 2037.80 boulders 40 to 70 kg in weight from hill Maligaon quarries in and around Behora loading into Railway wagons at Baruabamangaon/ Badulipara yard booking at public rate to Moranhat and unloading from Railway wagons and loading into trucks etc at Moranghat Rly station, carriage and stacking at Bogibeel Bridge site in connection with Bogibeel Project 4 Quarrying of 70000 cum stones of 40 kg to N F Railways 1287.50 1264.72 22.78 70 Kg in size by blasting, loading, carrying and stacking at zone 3 of nominated yards on south bank of river Brahmaputra near Bogibeel in connection with Bogibeel Bridge Project 5 Land Development work for 246.00 Ha (in West Bengal Housing 1354.18 155.48 1198.70 groups) in Action Area III under New Town Infrastructure Project, Kolkata with carried earth and Development compaction to desired level (group-I) Corporation Ltd 6 Construction of Tunnel No 15 (III/12) at km N.F. Railway, 2175.04 58.00 2117.04 119/595 to km 119/800 in between Jatingra Maligaon Lumpur - New Haragajao station and single line BG tunnel no 16 (III/13) at km 122/020 to km 122/585 in between Harangajao -
80 Ditokcherra station on diverted alignment including earthwork in filling and cutting for making formation as per BG profile at approaches of tunnels, construction of side drains and other protection work as per BG standard in connection with Lumding - Silchar gauge conversion project (Total Length = 770 RM) 7 Construction of tunnel no III/11 (14) from N.F. Railway, 1103.62 36.25 1067.37 km 118/442 to km 118/790 (L=298 RM) Maligaon new chainage, including BPB approach in between Jatinga Lumpur - New Harangajao station for single line BG tunnel, including earthwork in cutting and filling side drains and other protection work as per BG standard on diverted alignment in connection with Lumding - Silchar Gauge conversion project 8 Manufacturing and Supplying of 50 mm size N.F. Railway, 707.32 75.81 631.51 stone Ballast on cess along the railway Maligaon alignment from Ch 71 km to Ch 84 km in between Teliamura - Bhrigudaspara station in connection with construction of new railway line from Kumarghat - Agartala Project 9 Construction of Single Line BG Tunnel No 1 N.F. Railway, 875.32 - 875.32 between km 29.940 to 30.210 from face 1 Maligaon Kumarghat end in between station S K Para to Jawaharnagar in connection with construction of New BG Line between Kumarghat & Agartala 10 Manufacturing Supplying and stacking 50 N.F. Railway, 741.66 - 741.66 mm size stone ballast on cess along the Maligaon railway alignment from Ch 61 km to Ch 71 km including Teliamara yard in between Mungiakarmi - Teliamura station in connection with construction of new Railway line from Kumarghat to Agartala 11 Construction of Tunnel No 37 (App Length N F Railways 1444.37 - 1444.37 225 Rm) at Km 147.218 to 148.110 in between Chandranthpur - Damcherra Station diverted alignment including Rebuilding of minor bridge no 559, cut & cover in approaches of tunnel, construction of side drains and other protection work as per BG standard in connection with Lumding - Silchar guage conversion 12 Land Development for about 175.5 Ha (in West Bengal Housing 1020.60 - 1020.60 groups) in Central Business District (CBD in Infrastructure New Town, Kolkata (Group – CBD/C) Development Corporation Ltd 13 Land Development for about 175.5 Ha (in West Bengal Housing 1126.76 - 1126.76 groups) in Central Business District (CBD in Infrastructure New Town, Kolkata (Group – CBD/E) Development Corporation Ltd 14 Other Miscellaneous Works (Total No. of - 7989.33 4074.32 3915.01 Projects -17) Total (A) 29643.21 10145.68 19497.53
81
B. Work Orders awarded to our Joint Ventures
S. Description of Project Principle Total Work to Work Outstanding No. Client Contract be Executed work to be Value executed by BCL for done by (Rs. Lacs) by BCL for JV till BCL JV December (Rs. Lacs) (Rs. Lacs) 31, 2006 1 Widening and Construction of MMRDA* 615.00 602.70 363.66 239.04 Andheri Kurla Link Road from Sakinaka to LBS including JariMari Road 2 Widening and construction of MMRDA 2627.53 2574.98 2358.54 216.44 Western Express Highway from Aarey Flyover North End to Times of India Flyover North End. 3 Widening and strengthening of NHAI** 18248.27 - - - existing National Highways from 2 Lane to 4 Lane from 1065.00 to Km.1040.30 of Nalbari to Bijni Section of NH-31 Assam on East West Corridor under Phase II 4 Widening and strengthening of Jammu and 2487.63 1243.82 - 1243.82 Humhama-Budgam-Raithon-Arizol Kashmir Road (Budgam District (Contract Economic Re- Package No. Transport construction Srinagar/Road/03 Agency 5 Construction of approaches to Road Chief Engg. 2585.00 2533.30 - 2533.33 Over Bridge (excluding railway (IP), Pb PWD portion): (i) 4 Lane approaches on B& R Branch, level crossing no A-61 Jalandhar - Chandigarh Amritsar Railway line at Maqsoodan in Jalandhar City. (ii) On level crossing no C-11 on Jalandhar- Pathankot Railway Line at Succhi Pind on Jalandhar- Hoshiarpur road 6 Construction of 4 lane approaches to Chief Engg. 1429.00 1400.42 - 1400.42 Road Over Bridge (excluding railway (IP), Pb PWD portion) on Chandigarh-Ludhiana- B& R Branch, New BG Railway Line crossing Chandigarh Morinda Bye Pass at Morinda (Dist: Ropar) 7 Rehabilitation of Chandigarh- Ex. Engg., 4391.82 2151.99 - 2151.99 Landran-Chuni- Sirhind (Pkg Central PSR/WB/RH/NCB Works Div, PWD B&R Mohali, Punjab 8 Construction of new apron with link Airports 4658.05 4425.15 - 4425.15 taxiway, extension of runway by 360 Authority of m, drainage, box culvert and India perimeter road at Guwahati Airport 9 Production of CS & Removal of HS at Coal India 5681.02 5538.99 2174.26 3364.73 Tilak West mine or NEC at Ltd Margherita Area 10 Construction of single line BG Tunnel N.F. Railway, 2939.00 2762.66 1843.86 918.80 No. 3 between Km. 87.390 - 88.302 Maligaon
82 between stations Jirania & Teliamura in connection with Kumarghat - Agartala new line project 11 Construction of single line BG Tunnel N.F. Railway, 1535.06 1442.96 1425.46 17.50 No 17 between Km 131/756 - Maligaon 132/185 in between stations Ditockcheraa & Bandarkhal in connection with Lumding - Silchar gauge conversion project 12 Construction of Civil Works including Ircon 15719.06 7702.34 - 7702.34 Tunnels, Bridges, Earthwork etc. in International Zone-II (Km. 128.600-Km. 134.360) Ltd on Laole-Qazigund Section of Udhampur-Sirnagar-Baramulla New BG Railway Line Project 13 Construction of foundation, N.F. Railway, 2059.66 2018.47 - 2018.47 substructure and super-structure Maligaon (PSC Box Girder) of major bridge No. 543 (proposed span 20x25.00m on pile foundations) at Chainage 143/600 KM and minor Br. No. 541 at Chainage 143/750 KM in between Damcherra-Chandranathpur stations, on permanent 143/180.00 KM to 144/208.00 KM and all other ancillary works in connection with Lumding-Silchar Gauge Conversion Project Total (B) 64976.10 34397.78 8165.78 26232.00
* Original Contract value awarded was Rs. 14.93 Crores. Subsequently the same was reduced to Rs. 6.15 Crores by MMRDA on account of non availability of site.
** Work being executing by “DRA-BLA-BCL JV” itself.
II. Real Estate Projects
S. Description of Project Principle Total Work Outstanding No. Client Contract Executed work to be Value till done (Rs. Lacs) December (Rs. Lacs) 31, 2006 1 Company is developing a Commercial and Owned 5052.81 - 5052.81 Residential space uner the brand ‘Spanish Garden’ at Guwahati. 2 Company is developing Industrial park on Owned 4000.00 130.45 3869.55 586.67 Bighas of land at Guwahati Total (C) 9052.81 130.45 8922.36
83 Composition of Order Book as on January 1, 2007
The EPC contracts constitute approximately 87.62% of our order book. Road, highway & runway sector constitute 23.19%, tunnel sector constitute 23.95% and hydro, mining and other civil/ miscellaneous sector constitute 7.27%, 7.58% and 25.63% respectively. The real estate segment contributes 12.38% of our order book. The composition of our order book as on January 1, 2007 is as under:
S. Segment Total Contract Work Outstanding Total Contract No. Value* Executed till work to be Value as a % (Rs. Lacs) December 31, done of Total Order 2006 (Rs. Lacs) Book I EPC Contracts A. Road, Highway & Runway 16950.82 2722.20 14228.62 23.19 Projects B. Tunnel Projects 17506.31 3363.57 14142.74 23.95 C. Hydro Projects 5314.18 2478.81 2835.37 7.27 D. Mining Projects 5538.99 2174.26 3364.73 7.58 E. Other Civil/ Miscellaneous 18730.68 7572.62 11158.06 25.63 Constructions Sub Total 64040.98 18311.46 45729.52 87.62 II Real Estate Projects 9052.81 130.45 8922.36 12.38 Total 73093.79 18441.91 54651.88 100.00
* The total contract value includes work to be executed by us for our Joint Ventures.
Project under Execution by our Subsidiary – Brahmaputra Infrastructure Limited
S. Description of Project Principle Total Work Outstanding No. Client Contract Executed work to be Value till done (Rs. Lacs) December (Rs. Lacs) 31, 2006 1 Construction of New Secretariat Complex at PWD, Assam 8292.32 7934.58 357.74 Dispur (BIL) (through sub-contract from Unity Infra- projects Ltd
Total 8292.32 7934.58 357.74
Project under Execution by our Joint Venture – DRA-BLA-BCL JV
S. Description of Project Principle Total % Sharing Work Outstanding No. Client Contract in JV Executed work to be Value till done by JV (Rs. Lacs) December (Rs. Lacs) 31, 2006 by JV 1 Widening and strengthening of NHAI 18248.27 DRA – 50 383.00 17865.27 existing National Highways from 2 BLA – 25 Lane to 4 Lane from 1065.00 to BCL - 25 Km.1040.30 of Nalbari to Bijni Section of NH-31 Assam on East West Corridor under Phase II
Total 18248.27 383.00 17865.27
84
Our Subsidiaries
1. Brahmaputra Infrastructure Limited (BIL) is a wholly owned Subsidiary of BCL since 01.11.2003. BIL mainly undertakes construction of institutional buildings and residential complexes. BIL has independently completed several building works including following projects:
a) Indian Institute of Technology, Guwahati for Rs. 2507.00 Lacs
b) Assam Secretariat Complex at Guwahati, Govt. of Assam for Rs. 8916 Lacs (approx.). This project was initially awarded to M/s Unity Infraprojects Limited which has sub-contracted the same to our subsidiary, BIL. The contract is under execution at present.
2. Brahmaputra Concrete Private Limited
Brahmaputra Concrete Private Limited became the subsidiary of BCL effective from March 30, 2007. The Company was incorporated on October 31, 2006 and is mainly carrying on the business of manufacturing of ready mix concrete.
3. Brahamputra Consortium Pte. Limited - BCL’s Overseas Foray
BCL has set up a wholly owned Subsidiary in Singapore – Brahamputra Consortium Pte. Limited for carrying out international operations.
While BCL has primarily focused on the Indian market, it has started prospecting for opportunities in overseas markets also. With the worldwide thrust on infrastructure development, opportunities in the highways sector are expected to grow in South Asia / South East Asia (new ASEAN countries – Laos, Vietnam, Cambodia, and Myanmar) / Commonwealth of Independent States / Central Asia and Africa.
Funding of such projects is generally done by the World Bank / Asian Development Bank/ African Development Bank etc. and hence realization of dues is not at risk. These markets may provide considerable opportunities for high value and higher margin projects in future.
For further details about our subsidiaries, please refer to section titled “History and Corporate Structure” beginning on page 123 of this Draft Red Herring Prospectus.
Project-Specific Joint Ventures/ Strategic Alliances
In normal course of our business, to enable us to obtain larger projects that require resources beyond those we may have available, such as financial strength, equipment, manpower or local content resources, we may enter into joint ventures while bidding for certain projects.
In a project-specific joint venture, each member of the joint venture shares the risks and revenues of the project according to a predetermined agreement. The profits and losses of the joint venture are shared among the members according to a predetermined ratio. The agreements also set forth the manner in which any disputes among the members will be resolved. The construction contracts that the joint ventures enter into, or the joint ventures themselves, typically impose joint and several liability on the members. Thus, should the other member(s) of our joint ventures default on its or their duties to perform, we would remain liable for the completion of the project. The project-specific joint venture typically terminates at the completion of the defect liability period, at which point the project-specific joint venture liquidates and dissolves. In certain cases, the joint venture sub-contracts a part of the contract to us for execution.
For further details, please refer to the section titled “History and Corporate Matters” beginning on page 123 of this Draft Red Herring Prospectus.
85 Types of contracts
Generally, contracts fall within the following categories:
Lump Sum contracts - Lump Sum contracts provide for a single price for the total amount of work, subject to variations pursuant to changes in the client's project requirements. In Lump Sum contracts, the client supplies all the information relating to the project, such as designs and drawings. Based on such information, we are required to estimate the quantities of various items, such as raw materials, and the amount of work that would be needed to complete the project, and then prepare our own bill of quantities ("BOQ") to arrive at the price to be quoted. We are responsible for the execution of the project based on the information provided and technical stipulations laid down by the client at our quoted price.
Design and Build contracts - Design and Build contracts provide for a single price for the total amount of work, subject to variations pursuant to changes in the client's project requirements. In Design and Build contracts, the client supplies conceptual information pertaining to the project and spells out the project requirements and specifications. We are required to (i) appoint consultants to design the proposed structure, (ii) estimate the quantities of various items that would be needed to complete the project based on the designs and drawings prepared by our consultants and (iii) prepare our own BOQ to arrive at the price to be quoted. We are responsible for the execution of all aspects of the project based on the above at our quoted price.
Item rate contracts are contracts where we need to quote the price of each item presented in a BOQ furnished by the client. In item rate contracts the client supplies all the information such as design, drawings and BOQ. We are responsible for the execution of the project based on the information provided and technical stipulations laid down by the client at our quoted rates for each respective item.
Percentage rate contracts require us to quote a percentage above, below or at par with the estimated cost furnished by the client. In percentage rate contracts, the client supplies all the information such as design, drawings and BOQ with the estimated rates for each item of the BOQ. We are responsible for the execution of the project based on the information provided and technical stipulations laid down by the client at our quoted rates, which are arrived at by adding or subtracting the percentage quoted by us above or below the estimated cost furnished by the client.
Depending on the nature of the project and the project requirements, contracts may also contain a combination of aspects of any of the contract types discussed above.
BOT / BOOT Projects
It is a relatively new approach taken by the Government, which enables direct private sector investment in large scale projects such as roads, bridges, ports, airports, power and such other infrastructure projects. These contracts are granted by the Government on Build Operate and Transfer basis (BOT), or on BOOT i.e. (Build Own Operate Transfer), BOLT (Build Operate Lease Transfer) and OOT (Own Operate Transfer).
Build: The contractor (or consortium) agrees with a government body to invest in large-scale projects (such as a road or bridge). The company then secures their own financing either in the form of debt or equity to construct the project.
Own: The contractor (or consortium) is awarded the ownership of the asset during the agreed concessionary period during which time the company receives payment towards the cost of the project.
Operate: The contractor (or consortium) then operates and maintains the asset during the concessionary period and earns revenue through tolls, charges or advertisement.
Transfer: After the expiry of the concessionary period the asset is transferred back to the organization that had commissioned the project.
BOT contracts are a relatively recent phenomenon developed to attract private sector investments in the development of projects in various sectors such as water supply, roads, bridges and power. Typically, BOT contracts involve the construction of an asset as required by the client, with partial or total financing
86 arrangements provided by the bidders/contractors. BOT contracts require the successful bidder to construct, operate and maintain the asset over a pre-defined period (known as the "Concession Period") at its own expense. In return, the bidder is granted a right to collect revenues from the end users of the asset during the Concession Period through a pre-defined mechanism. For example, for road projects executed on a BOT basis, the bidder is permitted to collect and keep tolls received from vehicles that use that road during the Concession Period. The bidder is required to transfer ownership of the asset back to the client at the end of the Concession Period. BOT contracts may provide for a "take or pay clause" (i.e., even if the client does not utilize the constructed facility during the period of operation and maintenance, a predetermined amount of revenue is paid to the contractor by the client).
Annuity contracts - Annuity contracts typically provide for the facility to be constructed, maintained and financed by the bidder. The client agrees to pay the successful bidder annuity payments in predetermined amounts at predefined intervals over the course of the Concession Period. However, the client retains ownership of the asset and collects revenues, if applicable, during the entire life of the project.
Contracts, irrespective of their type (i.e., Lump Sum, item rate, percentage rate design-build), typically contain price variation or escalation clauses that provide for either reimbursement by the client in the event of a variation in the prices of key raw materials (e.g., steel and cement) or a formula that splits the contract into pre-defined components for materials, labour and fuel and links the escalation in amounts payable by the client to pre-defined price indices published periodically by the RBI or the Government. Some contracts do not include such price variation or escalation clauses. Thus, in those instances, we face the risk that the price of key raw materials and other inputs will increase during the project execution period and are unable to pass on the increases in such costs to the client.
For additional information regarding our current contract types, please refer to the section entitled "Order Book" in the Business section.
87 Project Cycle The construction projects go through a series of events right from the Expression of Interest by the client till the handing over of the project to the client and the end of the Defect Liability Period. A schematic representation of the events is given below:
Project Management Business Development Finance
Project Identification
Pre Qualification
Tender Preparation
Submission of Bid EMD
Result Not Return of Awarded EMD
Letter of intent Work Awarded
Signing of Agreement Performance Guarantee
Execution Plan Return of EMD Execution
Mobilization Advance/Guarantee/ Completion Funds
Defect Liability Project Completion
Obtaining Experience Return of MABG Certificate Receipt of Retention Money Return of Funds
Return of PG
88 Business Development
We enter into contracts primarily through a competitive bidding process. Government and other clients typically advertise potential projects in leading national newspapers or on their websites. Our tendering department regularly reviews newspapers and websites to identify projects that could be of interest to us. The head of the tendering department evaluates bid opportunities and discusses internally with the senior management on whether we should pursue a particular project based on various factors, including the client's reputation and financial strength, the geographic location of the project and the degree of difficulty in executing the project in such location, our current and projected workload, the likelihood of additional work, the project's cost and profitability estimates and our competitive advantage relative to other likely bidders. Once we have identified projects that meet our criteria, we submit an application to the client according to the procedures set forth in the advertisement.
Tendering
The Company has a centralized tender department headed by General Manager- Business Development, which is responsible for applying for all pre-qualifications and tenders. The tender department evaluates the credentials of the Company vis-à-vis the stipulated eligibility criteria. We endeavor to qualify on our own for projects in which we propose to bid. In the event that we do not qualify for a project in which we are interested due to eligibility requirements relating to the size of the project or other reasons, we may seek to form project-specific joint ventures with other relevant experienced and qualified contractors, using the combined credentials of the cooperating companies to strengthen our chances of pre-qualifying and winning the bid for the project.
A notice inviting bids may either involve pre-qualification, or shortlisting of contractors, or a post- qualification process. In a pre-qualification or shortlisting process, the client stipulates technical and financial eligibility criteria to be met by the potential applicants. Pre-qualification applications generally require us to submit details about our organizational set-up, financial parameters (such as turnover, net worth and profit and loss history), employee information, plant and equipment owned, portfolio of executed and ongoing projects and details in respect of litigations and arbitrations in which we are involved. In selecting contractors for major projects, clients generally limit the issue of tender to contractors they have pre- qualified based on several criteria, including experience, technical ability and performance, reputation for quality, safety record, financial strength, bonding capacity and size of previous contracts in similar projects, although the price competitiveness of the bid is usually a selection criterion. Prequalification is key to our winning major projects and we continue to develop our pre-qualification status by executing a diverse range of projects and building our financial strength.
If we pre-qualify for a project, the next step is to submit a financial bid. Prior to submitting a financial bid, the Company carries out a detailed study of the proposed project, including performing a detailed study of the technical and commercial conditions and requirements of the tender followed by a site visit. Our tendering department determines the bidding strategy depending upon the type of contract. For example, in the event of bid for a design-build project, we would appoint a competent consultant to design the project and provide us with drawings to enable further analysis of the various aspects of the project. This allows us to make a more informed bid. Similarly, a lump sum tender would entail quantity take-offs from the drawings supplied by the clients.
A site visit enables us to determine the site conditions by studying the terrain and access to the site. Thereafter, a local market survey is conducted to assess the availability, rates and prices of key construction materials and the availability of labour and specialist sub-contractors in that particular region. Sources of key natural construction materials, such as quarries for aggregates, are also visited to assess the availability, leads and quality of such material. The site visit also allows us to determine the incidence and rates of local taxes and levies, such as sales tax or value added tax, octroi and cess.
Our representatives attend the pre-bid meetings convened by the clients, during which we raise any queries or requests for amendments to certain conditions of the proposed contract. Any ambiguities or inconsistencies in the document issued by the client are brought to the attention of the client for further clarification. The tendering department invites quotations from vendors, sub-contractors and specialist agencies for various items or activities in respect of the tender. This data supplements the data gathered by the market
89 survey. The gathered information is then analyzed to arrive at the cost of items included in the Bill of Quantities (BOQ). The estimated cost of items is then marked up to arrive at the selling price to the client. The basis of determination of the mark-up is based in part on the evaluation of the conditions of the contract.
Alternatively, the client may choose to invite bids through a post-qualification process wherein the contractor is required to submit the financial bid along with the information mentioned above in two separate envelopes. In such a situation, the client typically evaluates the technical bid or pre-qualification application initially and then opens the financial bids only of those contractors who meet the stipulated criteria.
Pre qualification parameters
Typically a project owner/client conceives of a specific project and follows it up with the appointment of a consultant who prepares a detailed project report (DPR). This report addresses various aspects of project implementation commencing from obtaining clearances, right of ways, scope of work, technical parameters, etc., to related costs which define the approximate estimated cost of the project.
At the next level the project owner invites pre-qualifications from prospective bidders to assess and identify contractors who are capable of bidding for the project and subsequently implementing the same, if awarded. The detailed project report data is utilized to define the pre-qualification criteria by the project owner. For projects across the various sectors, the project owner /client normally specify the qualifying criteria, which include:
Technical Capability: The Company should have the experience of having implemented projects of similar nature, necessary manpower with a relevant profile to suit the project and the experience to execute it. Depending on the project, relevant machinery as specified by the client should be available with the company. This may be owned or outsourced / hired from a third party.
Financial Strength: This includes the minimum annual turnover, net worth requirement as well as working capital requirements.
Joint Venture Participation: In the event the project allows for association of more than one company to participate in the contract to enable the partners to pool in their resources, thereby meeting the threshold pre-qualifying criteria, such a method of invitation is known as joint venture participation. Joint Venture participation allows the individual partners of the proposed project to pool in their own resources for pre- qualification as well as submission of the techno-commercial bid. Joint Venture may happen at the time of RFQ (request for qualification) or at tender stage in case of two bid process. Normally a joint venture memorandum of understanding is signed by the partners, which is in line with the guidelines provided by the client. This Joint Venture agreement could be either project specific or generic.
1) Project Specific JVs/MOUs which are in existence till such time as the outcome of pre qualification or if awarded till the completion of the project.
2) Generic MOUs /JVs- In these cases the JVs /MOUs are not formed for any specific project rather it is a partnership wherein the JV can submit their prequalification and bid for the projects. No technology transfer is involved and both the parties will be limited to their respective scope of work derived out of their expertise.
For further details of our joint ventures, please refer to section “History and Corporate Structure” beginning on page 123 of this Draft Red Herring Prospectus.
90 A brief flow chart for tendering is given hereunder:
START
Direct Enquiry 1. Daily Review of leading Newspapers from Clients 2. Daily collection of Tender Related information 3. Daily browsing of Tenders through Internet 4. Review of forthcoming projects
Identify Tenders Advt. in
which Company is interested
Put-up Note with remarks to General Manager (Business Development) for approval
Approved from NO Tender Review STOP Steering Committee
YES
Put-up Note to Finance Dept. through GM for purchase of Tender Document
NO Approved STOP ?
YES
Purchase Tender Documents
T1
91 T1
Seeking clarifications Prepare Salient Site from the employer Features (Tender Data) Investigation
Sr. Manager Manager (Contract) Sr. Manager/ (Contract) Manager (Contracts) Compilation & review with Tender checklist
Participate Director / Tender Steering NO STOP in Tender? Committee
YES
Prepare the Prepare Cost Arrange for
Document Estimate EMD
Sr. Manager/ Finance Officer (Doc.) Manager (Contracts) Department Check & Scrutiny HOD (BD & Tender)
Final Cost Director STOP NO Approval
YES
Fill up the BOQ with Rate and Manager Complete Tender Document (Tenders)
Dispatch of Tender Officer (Doc.) Document
Note: Document means a) Application for Registration Enrollment b) Pre-qualification (PQ) END c) Tenders d) PQ-Cum-Tenders 92 Execution Process
Once the project is awarded to us, we prepare a detailed design in accordance with the project requirements. We are required to prepare detailed architectural and/or structural designs based on the conceptual requirements of the client and also conform to various statutory and other requirements. This may be done at our own or in collaboration with consultant appointed by client. Construction activity typically commences once the client approves working designs and issues drawings. The sequence of construction activities largely follows the construction schedule that was prepared initially, subject to changes in scope requested by the client.
On finalization of design, the process of execution starts subject to execution of necessary documentation as required by the client. An execution team is constituted under the leadership of project manager. The team selects the labour agencies, employs direct labour, plans purchasing of material, arranges for deployment of labour, and makes necessary arrangements for machines, power and water. Projects generally commence with excavation and earthmoving activities. Other major components of a typical construction project include concreting and reinforcement. Heavy earthmoving equipment, such as excavators, dumpers, loaders, dozers, graders and rock drilling tools, are used for excavation, whereas batching plants, transit mixers, tower cranes and concrete pumps, among other equipment, are used for concreting. Each stage of the construction activity is closely monitored for quality and timely execution of work. For this purpose, we prepare CPM and PERT Charts. The company also has a separate quality control department that supervises and ensures the quality of work done and to meet demands of Project Management / Employer.
Defect Liability Period
Our construction contracts often stipulate a defect liability period of between 6 and 18 months from the date of hand over certificate. The contractor is responsible for rectifying and defects that may arise during this defect liability period as a consequence of the construction services provided by the contractor. At the end of this defect liability period, any sum of money (as adjusted for any defects) retained by the client at completion is transferred to the contractor without interest.
Key Processes and technology
There are no key processes, technology and collaboration agreements with any parties for technology. Our clients normally specify proven conventional technologies and methods for their projects; therefore, it does not entail the need for any collaboration agreements for technology to be used. The client specifies the same in the tender conditions. For us to pre-qualify, we should have implemented contracts using the similar technology in the past. We don’t require owning this technology however we can access the same, as they are available domestically. In case, certain specialized projects call for similar technology with higher capacities we may identify international sources and establish necessary tie-ups. However, one can not rule out the possibility of going for collaboration to enable access new technologies in the future. Based on the project requirements, we are required to tie up from time to time with JV partners who possess experience in implementing projects with alternate technologies specified in the tender document.
Raw materials
Our major raw materials required are good earth, Granular sub base (GSB), bitumen, diesel, shuttering material, river sand, bricks & block masonry and miscellaneous hardware and electrical items. We also use steel, cement and reinforcement steel in our tunnel and real estate projects.
We follow a centralized purchase system for cement, steel, diesel, and bitumen through our purchase department. In case of cement, GSB and Good Earth our requirements are seasonal and we procure directly from manufacturing units / Borrow Areas located near the project site. We have got an effective system to take the material at competitive rates and to maintain minimum inventory, so the supplies are made on a just-in-time basis. In case of steel, diesel and bitumen our requirements are project specific. We procure steel from major steel suppliers to ensure availability and timely delivery to meet our project schedule needs.
The Company has over the years developed relationships with a number of vendors for key material, services and equipment. The Company has also developed an extensive vendor database for various
93 materials and services. Most of our other raw materials/consumables are easily available and hence we face no monopoly from suppliers. The requirement is processed through negotiations with the suppliers keeping in view the logistics of location of project and timing of supply. However there are certain consumables which are required at various sites and are available locally at project sites and we have not faced any difficulty in the past in procuring them.
Plant and Machinery
For our projects, we are required to purchase specific equipments and components, which are key inputs for project implementation and are also procured by the centralized purchase department. Certain equipments are purchased with a pre-planning and as per the needs in the execution process. The methodical approach ensures a cost saving factor by identifying the quality manufacturers / suppliers and timely delivery of such equipments with favorable financial terms and conditions.
Our Company has acquired latest equipments and machineries, to improve productivity and quality. This allows our Company to execute large projects within the stipulated time frame while maintaining the desired quality. Our Company owns a fleet of construction equipments worth Rs. 8820.74 Lacs as on December 31, 2006. The list of equipments owned by our Company is as under:
S. No. Equipment Description Model/Capacity QTY Amount in Lacs 1 Excavator (Crawler) Samsung SE 280LC-2(1.6 1 52.00 Cum) L&T Komatsu PC-200(0.90 2 83.30 cum) Volvo BLC-290(1.60 CUM) 7 467.60 CAT-320 (1 cum) 1 40.98 L&T CK-72 (0.60 cum) 2 52.90 Volvo BLC-210 (0.90 cum) 6 293.22 Volvo BLC-360 (2 cum) 1 83.13 Volvo BLC-460 (3 cum) 4 454.06 Komatsu Excavator PC-130-7 3 111.68 Volvo Excavator EC-140 2 81.76 Tata Hitachi - EX-100BH 2 54.42 Total 31 1775.05 2 Tippers Volvo FM7 (16 cum) 23 675.20 Tatra (16 cum) 9 370.18 Volvo FM9 (16 cum) 52 2742.86 Ashok Leyland Alco Comet (8.5 36 306.37 cum) Ashok Leyland Alco-Taurus- 25 305.64 2516 (12 cum) Tata SK-1613 (8 cum) 14 139.86 Total 159 4540.11 3 Water Tanker Tata SK-1613 6 34.65 Ashok Leyland 4 31.00 Truck 2 12.67 Total 12 78.32 4 RIG Machines Ashok Leyland - Tusker 13C47 2 9.65 Total 2 9.65 5 Excavator cum Loader 3 D Super (0.3 cum) 17 295.07 (JCB) Total 17 295.07
94 6 Concreting Pump Concrete Pump - Greaves- 1 18.79 BP350D Concrete Pump - Schwing 1 18.27 Stetter-BP350D Total 2 37.06 7 Dozer Komatsu D41E-6 (10 HP) 3 141.45 BEML BD-155 1 114.39 BEML BD-65 (169 H.P) 2 108.79 Shantui Dozer-SD16 2 99.95 Total 8 464.57 8 Motor Grader Champion 710A 1 60.00 Komatsu GD-511A-1 1 56.60 Volvo Motor Grader G710B 1 66.94 Total 3 183.54 9 Hot Mix Plant / Asphalt DM-45 2 48.91 Plant Spot Mix 1 3.12 Total 3 52.03 10 Paver Finisher Mekaster Concrete Paver - 1 8.52 C650 Apollo - Sensor Paver-AP-550 1 29.03 Apollo - WM-6 2 16.53 Apollo - Asphalt Paver Finisher 2 18.57 Total 6 72.66 11 Concrete Batching Plant Macons BMPE-3040 (30m3/hr) 1 28.60 Maxocrete - Concrete Batching 1 21.17 Plant Macons - Mini Batching Plant 2 36.90 Gamzen - Mini Batching Plant 2 6.14 Total 6 92.80 12 Rock Breaker Furukawa - F-22LN 3 40.55 Total 3 40.55 13 Vibratory Compactor Escorts - HAMM HD85 1 20.00 Escorts - EC-5250 8 146.41 IR-DD-90 1 24.65 Dynapac - Plate Compactor - 2 1.98 LF-82 IR-ISD-100 1 15.91 Total 13 208.95 14 Wet Mix Plant 120 TPH Capacity 3 35.00 Total 3 35.00 15 Air Compressor Chicago Pneumatic - CPS-600 2 15.46 (600 cfm 100 psi) Atlas Copco - GA-90 (600cfm 1 9.29 100psi) Atlas Copco - XA-280 (600cfm 2 16.86 100psi) IR - HP-450 (450cm/150psi) 6 50.84 Atlas Copco - XA-175 (175 1 6.35 cfm) Total 12 98.80
95 16 Drilling Equipments BVB-25-10 2 16.17 CM 341 4 73.86 ROC-203 1 15.30 Total 7 105.33 17 Generators 125 KVA 3 14.37 82.5 KVA 4 18.60 500 KVA 1 23.90 320 KVA 1 16.42 Others 8 23.54 Total 17 96.83 18 Transit Mixture Greaves - RHS-45 - 4 Cum. 2 37.02 Transit Mix. Tata - LPK2516 - Transit Mixer 2 47.28 (6 Cum) Greaves - RHS-65XL - 6 Cum 2 42.45 Total 6 126.75 19 Crane Escort Hydra Crane 1 13.09 Total 1 13.09 20 Wheel Loader Hindustan 2021 Wheel Loader 1 28.13 Total 1 28.13 21 Crusher Sandvik Crusher 1 264.13 Total 1 264.13 22 Others Sokkia/ Misc. Survey 27 27.58 Instruments Mahindra Arjun Tractor 3 15.34 Electronic Weighing Bridge 4 19.05 Kerb Laying Machine 1 26.61 Piling Winch Machine 3 20.58 Misc. Equipments 95 93.15 Total 133 202.31 Grand Total 446 8820.74
Performance Guarantees
Our Company is required to issue performance guarantees varying from 5-10% of the contract value at the time of commencement of the contract, pursuant to the award of the contract. These performance guarantees are typically valid up to twelve months post the completion of the contract.
Capacity & Capacity Utilization
The company is operating into construction industry, which can be termed as service sector. The nature of construction industry prohibits it from reasonably ascertaining installed capacity and therefore capacity utilization.
Human Resources
The total employees strength on the rolls of our Company as on January 31, 2007 is 436, out of which 175 are technical, 238 are non-technical staff and 23 are managerial staff. Additionally, we engaged 1031 contract labourers. The details of employees of our Company and break-up thereof as on January 31, 2007 is given below:
96
S. No. Category No. of Employees 1 Managerial 23 2 Project Engineers/Other Engineers 58 3 Technical Staff 117 4 Supervisory Staff 129 5 Administration /Accounts Personnel 109 Sub Total 436 6 Contract Labour 1031 Grand Total 1467
Marketing
Normally in the construction sector major portion of the work is awarded by Government sector. A contract offered by Central or State government is backed by budgetary support or financial support or grants from various institutions and agencies both Indian and International. As such, the normal course for awarding these contracts by the Government or their agency is through the process of tendering. In view of the nature of our market, the major sources of information of ensuing tenders for construction contracts are Newspapers and Government gazettes.
In order to ensure that we can effectively bid for these contracts we have a separate department which is headed by General Manager - Business Development, which keeps track of these tender notifications or advertisements and prepares the tender document. As per the requirements of the tender and our bidding capacity, we take decision of forming Joint Venture with suitable partner(s) or sometimes, as a strategic decision we bid in consortium with other reputed companies. The Company has consciously planned to move up the value chain by forming strategic Joint Ventures and bidding and securing high value projects and widening business segments.
Apart from the normal tendering process, we are always vigilant about maintaining a strong relationship not only with our present clientele but also to the opportunities foreseeable around the construction industry. Now substantial amount of contracts from private sector are also being offered. To diversify our portfolio, we have undertaken two projects in real estate segment. The first project involves development of the Private Industrial Park, spread over 200 Acres. The other project relates to development of a High-end Condominium – “Spanish Garden” –a Real Estate Project having 200 residential units designed by reputed Architect Mr. Hafeez Contractor.
Competition
The construction industry is highly fragmented with large number of players operating in an unorganized sector and a few of them in the organized sector. Some of key players in the construction industry are C & C Constructions, Atlanta, Tantia Constructions, Subhash Projects, Mudhucon Projects, Pratibha Industries etc. With the works coming up all over country, the number of agencies has increased enormously. This compelled most of the key players to limit their bidding to Mega Projects where few agencies get pre- qualified. To meet this tough competition, we are planning to introduce cost effective measures and fiscal discipline through newly appointed professionals.
Insurance
The Company’s operations are subject to hazards inherent in providing engineering and construction services, such as risk of equipment failure, land mine blasts and other work accidents, fire, earthquake, flood and other force majour events, acts of terrorism and explosions including hazards that may cause injury and loss of life, destruction of property and equipment and environmental damage. We may also be subject to claims resulting from defects arising from engineering, procurement or construction services provided by us. We obtain specialized insurance for construction risks, third party liabilities for projects, as required and specified by our clients, for the duration of the project and the defect liability period. We maintain comprehensive insurance covering our assets and operations at levels which we believe to be appropriate. Loss or damage to our materials, property and/or materials used in the project, including contract works,
97 whether permanent or temporary, and materials or equipment whether supplied by us or supplied to us by the client, are generally covered by “Contractors’ All Risks Policy” insurance against material damage to property. Under the all risk insurance policy we are also provided cover for price escalation, debris removal and surrounding properties. The aggregate coverage under the policies currently is Rs. 9217.00 Lacs for the assets. We have taken following insurance policies as on December 31, 2006: (a) Contractor's all risk insurance amounting to Rs. 2628.00 Lacs; (b) Contractor Plant & Machinery and Motor Vehicle insurance amounting to Rs. 6522.00 Lacs; (c) Workmen's Compensation insurance amounting to Rs. 26.00 Lacs; (d) Group Personal Accident Insurance amounting to Rs. 41.00 Lacs.
Environmental Matters
Our constructions and operations are subject to governmental, state and municipal laws and regulations relating to the protection of the environment, including requirements for water discharges, air emissions, the use, management and disposal of solid or hazardous materials or wastes and the cleanup of contamination. However, all the necessary approvals and environmental clearances, as may be required for the project are generally to be procured by the owner/ undertakings.
Our Properties
Properties owned by the Company
New Delhi
We, jointly, along with our group company, M/s Brahmaputra Promoters and Planners Private Limited (BPPL) own our registered office located at A-7, Brahmaputra House, Mahipalpur, New Delhi 110037 on land admeasuring 1 Bigha, 2 Biswa bearing Khasra No.336 in Mahipalpur, New Delhi. The total consideration paid for the property was Rs. 50.00 Lacs. We further entered into a Memorandum of Understanding (MOU) with BPPL dated May 25, 2002 for development and construction of a building on the property. We constructed building consisting of basement measuring 588 sq. mtrs. ground floor measuring 637 sq. mtrs. first floor measuring 609 sq. mtrs. and second floor measuring 758 sq. mtrs. including part construction on roof, involving a capital expenditure of Rs. 1.69 Crores. The division of built up area is as follows: Basement – BCL (495 sq. mtrs.) BPPL (93 sq. mtrs.), Ground Floor – BCL (318 sq. mtrs.) BPPL (319 sq. mtrs.), First Floor – BCL, Second Floor – BCL, Roof – BCL. We have further entered into a rent agreement dated November 8, 2006 with BPPL for use of basement and ground floor for commercial use by BCL on a monthly rental of Rs. 12,100 per month. The agreement is valid for eleven months. We have further entered into a rent agreement dated April 7, 2007 with one of our group company, M/s Brahmaputra Overseas Limited (BOL) allowing them to use first and second floor for commercial activities on a monthly rental of Rs. 133,100 per month to be paid by BOL to BCL. The agreement is valid for eleven months starting from March 1, 2007. Guwahati, Assam
We own the II Floor admeasuring 66.64 Square meters in Hem Raj Bora Market Complex including undivided and proportionate 1/10th share of the total land admeasuring 3440 square feet (1 Katha 4 Leahcs approx.) being covered by Dag No. 1846 in K.P. Patta No. 1238 of Village Sahar Ulubari, 2nd Part (G.S. Road) under Beltola Mouza, District Kamrup, Guwahati with proportionate share in common area and land underneath for use of the premises for commercial purposes. The consideration paid by us for the property is Rs. 70,000.
98 Silla Sinduri Ghopa, Assam
We own land admeasuring 586.67 Bighas, approx., comprised in Village Silla, Mouza Silla Sinduri Ghopa, Post Office- Gauripur, District: Kamrup, Assam for development of agricultural lands as an industrial park. The land has been acquired by us in different tranches during the period April 2001 to December 2006 as detailed below:
S No. Particulars Area (bighas) Consideration (Rs.) 1. Various individual sellers 306.67 74,13,964 2. From the Government 280.00 42,00,000 Total 586.67 1,16,13,964
Kolkata, West Bengal We own Office Space No. 2, Office Block admeasuring 1784 sq. ft. with an open terrace area measuring 745 sq. ft., situated at 4th floor, Municipal Premises No. 83, Topsia Road (South), Kolkata-700046 along with one covered car parking space in basement and one open car parking space in the Ground Floor with proportionate share in common area, the property is for commercial use. The consideration paid by us for the property is Rs. 3,598,472.
Properties taken on license / lease by the Company We have taken following properties on license/ lease:
Mumbai, Maharashtra (a) We have entered into a Leave and License Agreement dated April 1, 2006 for Shop No. 1, admeasuring 345 sq. fts. situated at Ground Floor, Sun Srishti Complex, Sakivihar Road, Next to Santogen Mill, Andheri (East), Mumbai – 400 072, Village Tungwa, C.T.S. No. 184. for commercial purposes on monthly fees of Rs. 15,000. The agreement is valid for 22 months starting from February 21, 2006. (b) We have entered into a Leave and License Deed dated June 7, 2005 for Flat No. 2-B, admeasuring 988 sq. ft. situated at 2nd Floor, Vishal Co-operative Housing Society Limited, Yeshodham, Gen. A.K. Vaidya Road, Goregoan (East), Mumbai-400063 meant for the occupation of the Company’s executives and their families on monthly fees of Rs. 16,000. The agreement was initially valid for 11 months starting from June 1, 2005. We continue to occupy the premises and making the payment of Rs. 16000 per month as rent, however, the agreement was not formally renewed. (c) We have entered into a Leave and License Deed dated August 5, 2006 for Flat No.C-703, Building No. A-2, ‘Velentine Apartment-I’, situated at Velentine Apartment-I, Co-operative Housing Society Limited, Gen. A. K. Vaidya Marg, Pinpri Pada, Malad (East), Mumbai meant for the Company’s executives and their families on a monthly fees of Rs. 10,000. The agreement is valid for 11 months starting from June 10, 2006 (d) We have entered into a Leave and License Agreement dated July 4, 2006 for Room No.3, Danjiwadi, Rani Sati Marg, Malad (East) Mumbai-400097 meant for residential use on a monthly fees of Rs. 2,000. The agreement is valid 11 months starting from July 4, 2006.
Banihal, Jammu and Kashmir (a) We have entered into a Leave and License Agreement dated August 1, 2006 for three rooms of Property at ground floor, Main Bazar, Banihal, Jammu & Kashmir for residential/ commercial purposes of the Company on monthly fees of Rs. 4,000. The agreement is valid for 11 months starting from August 1, 2006
99 (b) We have entered into a Leave and License Agreement dated August 1, 2006 for eight rooms of Property at ground floor, Main Bazar, Banihal, Jammu & Kashmir for residential/ commercial purposes of the Company on monthly fees of Rs. 8,000. The agreement is valid for 11 months starting from August 1, 2006
Chandigarh We have entered into a Lease Agreement dated December 19, 2006 for S.C.O No. 317-318, Sector 35B, Second Floor (Half), Chandigarh for commercial purpose of the Company on a monthly rental of Rs. 35,000. The agreement is valid for 4 years and 11 months starting from April 7, 2006 with renewal after every 12 months with an increase of 7% in the rent amount.
Mohali, Punjab (a) We have entered into a Rent Agreement dated October 16, 2006 Flat No.404, Rishi Apartments, Sector-70, SAS Nagar, Mohali, Punjab for residential purposes on a monthly rental of Rs. 8,000. The Agreement is valid for 11 months starting from November 1, 2006 and is renewal with an increase of 10% in the rent amount. (b) We have entered into a lease agreement dated January 12, 2007 for land situated at Mastil No. 33, Kila No. 15, Mastil No.34, Kila No. 11and 12/1 total area of 2 Acre 1Bigha situated in Village Majat, H.B. No. 60, Tehsil Kharar, District S.A.S Nagar, Mohali, Punjab for the commercial purposes of installation of earthmoving equipment, trucks, other type of machinery etc. on a yearly rent of Rs. 58,000 paid in advance. The agreement is valid for 1 year starting from January 12, 2007 and is renewal with an increase of 5% in the rent amount.
(c) We have entered into a lease agreement dated January 12, 2007 for land situated at Mastil No. 33, Kila No. 6, Kila No. 7, Kila No. 8 total area of 2Acre 1Bigha situated in Village Majat, H.B. No. 60, Tehsil Kharar, District S.A.S Nagar, Mohali, Punjab for the commercial purposes of installation of earthmoving equipment, trucks, other type of machinery etc. on a yearly rent of Rs. 100,000 paid in advance. The agreement is valid for 1 year starting from January 12, 2007 and is renewal with an increase of 6% in the rent amount.
Kolkata, West Bengal (a) We have entered into a lease agreement dated November 8, 2006 for one half of the of the building situated at 12, Mayfair Road, Kolkatta – 700019, West Bengal for residential purposes on a monthly rent of Rs. 30,000. The same has been provided to Mr. Manoj Kumar Prithani, Whole Time Director as rent-free accommodation. The agreement is valid for 5 years starting from December 1, 2006 with rent escalation clause of 10% after every year.
New Delhi (a) We have entered into a lease deed dated November 1, 2006 for C - 5/61, Vasant Kunj, New Delhi for residential purposes on a monthly rental of Rs. 82,500. The same has been provided to Mr. Suresh Kumar Prithani, Chairman cum Managing Director as rent-free accommodation. The agreement is valid for 11 months starting from November 1, 2006. (b) We have entered into a lease agreement dated July 4, 2006 for ground floor of the premises No. C- 5/5 Vasant Kunj, New Delhi for residential purposes on a monthly rental of Rs. 50,000. The same has been provided to Mr. Sanjeev Kumar Prithani, Whole Time Director as rent-free accommodation. The agreement is valid for 2 years starting from July 1, 2006 with rent escalation clause of 10% in the rent amount from April month of every year.
100 Other Agreements We have entered into a Land Development Agreement dated May 18, 2005 with M/s Kumar Iron & Steel Private Limited having its registered office at R.G. Baruah Road, Dispur, Guwahati and M/s Somani Swiss Industries Limited having its registered office at 15A, Everest House, 46C, Chowringhee Road, Kolkatta- 700071 (Confirming Party), being the tenant of the land, for development of residential flats and commercial space at Guwahati. For further details please refer to section “History and Corporate Structure” beginning on page 123 of this Draft Red Herring Prospectus. Location
Our registered office is located in the National Capital Territory of Delhi at:
Brahamputra Consortium Limited Brahamputra House, A-7, Main Mahipalpur Road, New Delhi-110037, India Tel: 91-11-42290200 Fax: 91-11-41687880, 26787068 Email: [email protected] Website: www.brahamputra.com
We operate from the following branch and site offices at present:
Location Address
Guwahati Branch Office 2nd Floor, Hem Raj Bora Complex, G.S. Road, Ulubari, Guwahati Ph: - 0361-2450486, 2455008, 2451092
Kolkata Branch Office Trinity Tower, 4th & 6th Floors, 83 Topasia Road (South), Kolkatta-700046 Ph: - 033-22852403, 24802363 Chandigarh Branch Office SCO 317-318, IInd Floor Sector-35B, Chandigarh Ph: - 0172-4167000, 4167001, 4167002 Mumbai – Project Site Office Sunsrishti Complex, Saki Vihar Road, Powai, Mumbai Ph: - 022-28578009, 28578010
Business Strategy
We recognize the importance of the construction industry in India, especially the importance given by the Government of India to make up deficits in infrastructure rapidly. At the same time, we recognize that the “Construction” industry is very broad in its scope covering construction of various sub-types of infrastructure – including, Road / Highways, Airports, Tunnels, Mining, Hydroelectric Power Projects, Industrial structures, Institutional Buildings & Real Estate etc., and there is a need for specialization in order to develop real depth of expertise in any of these sub-areas. Our strategic objective is to continue to improve and consolidate our position as a leading construction Company and we aim to achieve this by implementing the following strategies:
Maintain performance and competitiveness of existing business
We believe that infrastructure will be a major driver for growth in the Indian construction industry in the foreseeable future due to increased levels of government and private sector investment in infrastructure. Additionally, the government has taken steps to encourage additional investments in infrastructure, and providing economic benefits to private sector participants for projects executed on a BOT or annuity basis. Thus, there will be numerous opportunities for infrastructure creation. In anticipation of the trend toward increased infrastructure investment, we are developing skill sets across a diverse portfolio of infrastructure projects including roads, bridges and flyovers and tunnels. We have also continually focused on increasing our bid capacity and prequalification ability to enable us to bid for larger projects. A key element of our
101 growth strategy is to, besides committing to grow through expansion, seek to improve the performance and competitiveness of existing activities, i.e. in the construction of roads, bridges, flyovers and airport runways.
Develop and maintain strong relationships with our clients and strategic partners
Our services are dependent on winning construction projects undertaken by large government agencies and companies, and infrastructure projects undertaken by governmental authorities and others and funded by governments. Our business is also dependent on developing and maintaining strategic alliances with other contractors with whom we may want to enter into project-specific joint ventures or subcontracting relationships for specific purposes. We will continue to develop and maintain these relationships and alliances. We intend to establish strategic alliances and share risks with companies whose resources, skills and strategies are complementary to our business and are likely to enhance our opportunities. We will continue to jointly bid for projects with other companies to build good working relationships, which would enable us to leverage their strengths and to build competencies.
Leverage our experience in the infrastructure sector to further our real estate development business.
Through our construction business, we have acquired skills and experience, as well as business relationships, many of which we believe can be applied to the development of projects in the same and other sectors. For instance, we have acquired substantial experience in construction risk allocation and mitigation, as well as raising debt financing for our business from financial institutions and commercial banks on competitive terms. We intend to apply these skills and experience to the development of projects in the same and other sectors, including real estate sector where we propose to develop the Private Industrial Park project and High-end Condominium – “Spanish Garden” at Guwahati.
Focus on BOT Contracts
The Government has planned for a number of BOT projects across the road sector. We believe that such projects will increasingly become more prevalent in coming years because of the Government reliance on PPP model. Besides road sector, the BOT contracts cover other sectors including hydropower, rail bridges, power transmission, telecom towers etc. We intend to initially focus on executing different BOT projects in road sector on annuity basis. As such these contracts have relatively low risk compared to tolling contracts. BOT or annuity projects generally provide better operating margins because of the added overall control of project costs that can be exerted by the contractor. Additionally, BOT projects offer the possibility of higher revenues to the contractor by virtue of better than anticipated use of the asset. We intend to increase our focus on BOT and annuity projects by leveraging our technical and financial credentials, which we believe will be improved by the strengthened balance sheet that we expect to have following the Issue. Such a balance sheet should allow us to take on more projects, including BOT and annuity projects on our own or in alliance with other construction companies. We analyze that the future will be of BOT projects.
Focus on International Operations
While we are primarily focused on the Indian market, we have started prospecting for opportunities in overseas markets also. With the worldwide thrust on infrastructure development, opportunities in the highways sector are expected to grow in South Asia / South East Asia (new ASEAN countries – Laos, Vietnam, Cambodia, and Myanmar) / Commonwealth of Independent States / Central Asia and Africa.
Funding of such projects is generally done by the World Bank / Asian Development Bank/ African Development Bank etc. and hence realization of dues is not at risk. These markets may provide considerable opportunities for high value and higher margin projects in future. We have recently set up a wholly owned subsidiary in Singapore to study the dynamics of such projects and opportunities the projects offers.
BCL has also recently entered into MOUs with M/s Al Mobty Co., Saudi Arabia and M/s HANSHIN Engineering & Construction Co. Ltd., Korea to utilize the collective expertise, resources and experience of both the Companies for the purpose of participation and execution of bids for infrastructure projects in India, Saudi Arabia and other countries.
102 Our Strengths
• Strong Order Book
We are currently executing projects amounting to Rs. 73093.79 Lacs. The EPC contracts constitute approximately 87.62% of our order book. The real estate segment constitutes 12.38% of our order book. EPC contracts relating to road, highway & runway sector constitute 23.19%, tunnel sector constitute 23.95% and hydro, mining and other civil/ miscellaneous sector constitute 7.27%, 7.58% and 25.63% respectively of our order book. The order composition is well diversified over various segments such as Roads and highways, Airports, Tunnels, ROBs, Mining, Hydroelectric Power Projects and Real Estate. This is likely to mitigate the risk of slow down in revenues from any segment due to unforeseen circumstances. Further, our major revenue comes from the contracts received from Government, Public Sector Undertaking and other Government agencies which substantially reduce the risk of default and delayed payment.
• Continuous growth in our bid capacity and pre qualification capability
Our business and growth are dependent on our ability to bid for and secure larger and more varied projects. Bidding for infrastructure projects is dependent on various criteria, including, bid capacity and pre qualification capability. Bid capacity represents the aggregate value of the contracts that can be awarded to us, and is computed based on pre defined formulae of agencies such as NHAI, ADB, World Bank, USAID, etc. Bid capacity also includes the highest possible value of a single project that can be awarded to us. In addition to meeting bid capacity requirements, we may also be required to pre qualify for the projects. This includes various factors such as the technical capability and experience of having executed similar projects. Hence, it is imperative to enhance our bid capacity and pre qualification capability. We have focused on increasing both these parameters and have continuously increased our bid capacity and the largest order that we can bid for; the same has been illustrated below: Rs. in Lacs Date of Assessment Bid capacity April 1, 2002 7331.35 April 1, 2003 9424.98 April 1, 2004 19886.85 April 1, 2005 38358.80 April 1, 2006 41314.92 Note: The computation is based on NHAI formulae and have been computed based on audited financials for the preceding financial year, i.e. computation as on April 1 is based on audited financials of the immediately preceding financial year ended March 31.
• Large fleet of construction Equipments
Our Company owns a fleet of construction equipments amounting to Rs. 8820.74 Lacs comprising of Excavator (Crawler), Tippers, Water Tanker, Excavator cum Loader (JCB), Dozer, Motor Grader, Crushing Plant, Hot Mix Plant, Paver Finisher, Concrete Batching Plant, Rock Breaker, Vibratory Compactor, Wet Mix Plant, Air Compressor, Drilling Equipments, Generators, Transit Mixture, Crane, Wheel Loader and other miscellaneous equipments. Ownership of such high-end equipments enables quick mobilization besides ensuring continuous availability of critical equipments at different sites.
• Quality Certifications
We have been awarded ISO 9001:2000 Quality Management System Standard Certificate by DET NORSKE VERITAS, Netherlands, issued and valid up to 20th February 2010 for “Provision of Civil Construction Works Including Infrastructure Development”
• Highly qualified and motivated employees base and a proven management team.
Our promoters have nearly two decades of expertise and experience in road construction sector. We believe that a well-trained, motivated and satisfied employee base is fundamental to our competitive
103 advantage. As on January 31, 2007, the total employees strength on the rolls of our Company is 436, out of which 175 are technical, 238 are non-technical staff and 23 are managerial staff. Additionally, we engaged 1031 contract labourers. The skill sets of our employees give us the flexibility to adapt to the needs of our clients and the technical requirements of the various projects that we undertake. The experience gathered over the years by our management team enables taking quick decisions thereby ensuring that projects are executed within the contracted timelines. This also enables us to meet required standards of quality and efficiency.
• Ability to execute projects in difficult operating conditions in timely manner
We have been successfully operating in difficult operating terrains and in adverse weather conditions besides facing unavailability of key resources like personnel, material, machinery in the vicinity of our project sites and security challenges, etc. We have been able to mobilize resources including equipment, raw material and personnel to our project sites at short notice. We have a track record of completing every single contract since our inception to the complete satisfaction of the client.
• Scalable Execution Model
We seek to address all principal activities relating to the execution and implementation of our construction services. Under this model, we follow a two tier structure, which consists of (i) centralized planning and co-ordination, and (ii) de-centralized project management, execution and quality assurance.
We believe that our execution model provides us with the support structure necessary to manage and execute both small and large complex projects within strict scheduling, budgetary constraints and in accordance with the design and specifications provided to us. We have successfully completed a number of our projects prior to schedule. This also enables us to scale our operations by better utilization of resources.
Our Business Risks and their Mitigations
The key risks and sensitivities that exists with regard to our Company’s business are as follows:
• Input Risk
The availability of the right quality and quantity of resources (raw material and finances) is critical for the timely completion of infrastructure projects. Besides, cost escalation could affect profitability.
Our Company controls very minutely different stages of the project which enables it to ascertain when material would be required in what quantity and where. It procures key raw materials directly from leading manufacturers for a more timely access. Moreover, most of our Company’s contracts are protected with input escalation clauses, which protect profitability.
• Business Model Risk:
In new business models like built-operate-transfer (BOT), revenues accrue to the contractor at a later date in the form of user-fees or toll. It is risky if the toll collected is insufficient to compensate the contractor with reasonable profits.
In order to mitigate this risk we are focusing on BOT projects on annuity basis ensuring timely returns over a period of time, instead of BOT projects based on toll collection model.
• Equipment risk
Sophisticated equipment represents the heart of an infrastructure company leading to quality and timely project completion; an inability to mobilize the same at the right time at the right site could dent profitability.
104 Our Company possesses the capability to deploy resources in a timely manner across remote project sites - often inaccessible by road or rail – through captive ownership (excavators, crushers, pavers, tippers, concrete batching plants, tower cranes, excavators among others), project documentation and equipment mapping covering operational characteristics, maintenance schedules, cross-site logistical management and equipment upgradation plans.
• Manpower risk
People represent the most valuable asset in the business; any attrition could lead to a valuable loss of competitive edge.
Over the years, we have accelerated its recruitment of specialized professionals with an increasing regional flavor for a strong regional understanding leading to a better understanding of local terrains. Our Company has strengthened its delegation with a view to enhancing authority and responsibility at every level in the organization. This approach has been reinforced through training – functional and attitudinal – resulting in low attrition.
• Financial closure risk
An inability of the customer to raise adequate funds could result in project delay or even abandonment of the project.
The government is increasingly looking at stake divestments, adopting different infrastructure operation models, which seek private participation that protect project progress. As a policy, we work mostly on government-sanctioned projects or those funded by leading international funding agencies like World Bank/ Asian Development Bank, resulting in completion certainty.
• Cost and Time Overrun Risk
In any project, if the manpower and material resources are not appropriately allocated, or if immediate requirements for the same are not met, it could lead to time and cost overrun, which could impact our results of operations.
In order to mitigate this risk, we have a central project monitoring team which has the responsibility of ensuring proper allocation of resources in an optimal manner. This team works directly under the Director responsible for execution of the respective project.
• Safety and health risk
The use of heavy machinery carries safety risks, which could endanger worker well-being and project progress.
Our Company is committed to adequate worker safety, its disaster management framework incorporates prevention measures and best practices to be adopted during the different phases of construction activity coupled with a provision for prudent crisis management. Its on-site members are mandated to wear protection equipment while working on site. To further safeguard, we have taken appropriate insurance coverage as are deemed fit for various risks.
CORPORATE VALUES • We are committed to actions to restore and preserve the environment. • We are committed to developing safe and clean technologies using the best environmental practices. • We are committed to minimizing waste/ pollutants and conserving resources. • We will continue to work with customers and public authorities, vigorously pursuing the development, and implementation of improved technologies and products by minimizing their impact on the environment.
105 • We will develop effective methods and procedures, and will promote a culture in which all employees share commitment. We aim to have an environmental friendly approach we can be proud of, to earn the confidence and respect of customers, shareholders and society at large and to contribute to sustain development.
CORPORATE SOCIAL RESPONSIBILITY
A good team creates a good corporation. We fully realize this fact and therefore provide the team with the best working and social environment. From a highly creative office atmosphere to an eco-friendly production infrastructure, our business philosophy is finely guided by protecting the environment and the interest of our people, customers, business associates and stakeholders. From healthcare to social compliance, we treat every issue as a means to higher efficiency of our social responsibility.
IN THE COMMUNITY
We take our responsibility seriously to contribute to the community in which we operate. We make every effort to support our staff in improving conditions in local community. We have always taken an active role in local communities in which we operate by supporting many worthy causes.
106 FINANCIAL INDEBTEDNESS
A break-up of salient terms of our Term Loans as on December 31, 2006 is as follows:
I. Secured Loans
A. Fund Based
Lender Loan Loan Amount Interest Security Created Documentation Amount Outstanding Rate as on December 31, 2006 Indian 1. Sanction Letter Cash 1626.20 BPLR Primary Security Overseas dated 21.01.2006 Credit (At present Paid Stocks and books debts (O/s less than Bank Limit of 11.50%) 90 days) representing genuine trade (Earlier sanction Rs. 1,700 transactions on pari passu with PNB. letter dated 12.07.04 Lacs Collateral Security & 03.10.03) (1) Equitable Mortgage of Land & Building at A-7, Mahipalpur, Delhi. The Property is in 2. (Earlier the joint names of the Company and M/s. Hypothecation Brahmaputra Promoters and Planners Pvt. Agreement dated Ltd. 29.08.05) (2) Floating Charge on Plant & Machinery (present & future) not encumbered to any term lenders and available exclusively to us having WDV of Rs. 0.57 Crores (as on 31.03.2005). (3) Furniture & Fixtures, Computers, Office Equipments valued at Rs. 0.53 Crores (WDV as on 31.03.2005). (4) Industrial land situated at Sila under mouza-Sila Sinduri Gopa, Distt. Kamrup, Assam measuring 25.07 bigha in the name of the Company valued at Rs. 3.25 Crores. (5) Personal & Corporate Guarantees of: a. Mr. Suresh Kumar Prithani b. Mr. Ramesh Kumar Prithani c. Mr. Manoj Kumar Prithani d. Mr. Sanjeev Kumar Prithani e. Mr. Siw Prasad Agrawalla f. M/s Brahmaputra Promoters & Planner Ltd. Punjab 1. Sanction letter no. Cash 930.55 BPLR + Primary Security National LCB/BCL/AKG dated Credit 0.50% at Ist pari passu charge on the current assets Bank 30.09.05 Limits monthly of the company incl. Stocks & Book Debts of Rs. rests. ranking pari passu with IOB. At present, (The Cash Credit 1,000 (Presently UCO Bank also has charge on the assets Limit of Rs. 1000 Lacs BPLR and their charge shall be vacated after Lacs enhanced to Rs. 11.50%) adjustment of their Bank Guarantees. 1300 Lacs and a Collateral Security fresh Sanction of (1) Exclusive charge on vacant industrial Cash Credit (EMD) of plots allotted by Assam Govt., land Rs. 2000 Lacs vide measuring 69.11 bighas having M.V. of Rs. Sanction Letter No. 500 Lacs. LCB/ND/HJ/BCL (2) Ist pari passu charge on fixed assets of dated 02.01.2007 the company excluding those charged to term lenders along with IOB. At present the
107 2. General Counter charge is pari passu between IOB & UCO Indemnity Dated Bank. The charge of UCO bank will be 05.12.05 vacated after the Bank Guarantees are adjusted/ reversed. 3. Hypothecation of (3) Ist pari passu charge along with IOB on Movable Assets Office cum Showroom of the company Forming Part of situated at A-7, Mahipalpur, New Delhi Fixed/Block Assets standing in the joint names of the company Dated 05.12.05 and its associates M/s Choice Promoters and Planners Ltd. The properties already 4. Hypothecation of mortgaged for the advance to M/s Current Assets dated Brahmaputra Overseas Ltd. and M/s 05.12.2005 Brahmaputra Infrastructure Ltd. and shall be shared for their facilities as well. (4) Ist pari passu charge of the company at 5. Cash Credit 2nd floor, GS Road, Hen Ram Bora Market Facility dated Complex, Guwahati. 05.12.2005 (5) Hypothecation of construction equipment with value equivalent to 10% of 6. Supplementary the limit i.e. Rs. 100 Lacs. Agreement dated (6) Exclusive first charge on P&M valued at 12.12.2005 Rs. 407 Lacs. (7) Lien of FDR valued at Rs. 15 Lacs. (8) Personal Guarantees of the following Directors: i. Mr. Suresh Kumar Prithani ii. Mr. Ramesh Kumar Prithani iii. Mr. Manoj Kumar Prithani iv. Mr. Sanjeev Kumar Prithani v. Corporate Guarantee of M/s Choice Promoters & Planners Ltd. (New name M/s Brahmaputra Promoters & Planners Ltd.) Centurion 1. Sanction Letter Cash 482.69 BPLR Primary Security: Bank of No. Credit less Ist pari passu charge on the current assets Punjab CBOP/BCL/CC/2006- Limits 2.5% of the company incl. Stocks & Book Debts Limited 07 dated 07.10.2006 of Rs. with ranking pari passu with IOB. At present, 500 monthly UCO Bank also has charge on the assets 2. Agreement of Lacs. rest and their charge shall be vacated after Hypothecation dated (Presently adjustment of their Bank Guarantees. 19.10.06 BPLR is 13.00%) 3. Deed of Guarantee dated 19.10.06 Collateral Security : 4. Master credit (1) Exclusive charge on vacant industrial Facility Agreement plots allotted by Assam Govt., land dated 19.10.06 measuring 69.11 bighas having M.V. of Rs. 500 Lakhs. 5. Power of Attorney (2) Ist pari passu charge on fixed assets of dated 19.10.06 the company excluding those charged to term lenders along with IOB. At present the charge is pari passu between IOB & UCO Bank. The charge of UCO bank will be vacated after the Bank Guarantees are adjusted/reversed.
(3) Ist pari passu charge along with IOB on Office cum Showroom of the company
108 situated at A-7, Mahipalpur, New Delhi standing in the joint names of the company and its associates M/s Choice Promoters & and Planners Ltd. The properties already mortgaged for the advance to M/s Brahmaputra Overseas Ltd. and M/s Brahmaputra Infrastructure Ltd. and shall be shared for their facilities as well.
(4) Ist pari passu charge of the company at 2nd floor, GS Road, Hen Ram Bora Market Complex, Guwahati.
(5) Hypothecation of construction equipment with value equivalent to 10% of the limit i.e. Rs. 100 Lacs. (6) Exclusive first charge on P&M valued at Rs. 407 Lacs. (7) Lien of FDR valued at Rs. 15 Lacs. (8) Personal Guarantees of the following Directors: i. Mr. Suresh Kumar Prithani ii. Mr. Ramesh Kumar Prithani iii. Mr. Manoj Kumar Prithani
iv. Mr. Sanjeev Kumar Prithani
v. Corporate Guarantee of M/s Choice
Promoters & Planners Ltd. (New name M/s
Brahmaputra Promoters &
Planners Ltd.)
Developm1. Sanction Letter Cash 490.36 BPLR less Ist Pari Passu Charge on Current Assets of ent Credit No. CAD/Delhi/2006- Credit 5% subject the Company. Bank 07 dated 23.11.2006 Limit of to 1. First Pari Passu Charge with PNB for Limited Rs. 1,000 minimum Industrial land at Dispur, approx. of Rs. 500 2. Working Capital Lacs 9.75% p.a. Lacs. Agreement dated (Present 2. Second Charge on the Fixed Assets 27th Nov, 2006 BPLR already charged to the term lenders. 15.50%) 3. Ist charge on the Equipments / Plant & 3. Deed of Machinery / Other Fixed Assets not Hypothecation dated encumbered to any term lender with th 27 Nov, 2006 minimum value of Rs. 25 Lacs. (4) Personal Guarantees of: 4. DP Note Delivery (a) Mr. Suresh Kumar Prithani cum Lien and Set off (b) Mr. Ramesh Kumar Prithani Letter dated (c) Mr. Manoj Kumar Prithani 27.11.06 (d) Mr. Sanjeev Kumar Prithani
5. Letter of Guarantee dated 27.11.06
Total 3529.80
109 B. Non Fund Based
Lender Loan Loan Amount Interest/ Security Created Documentation Amount Outstand- Commissi ing as on on December 31, 2006 (Rs. Lacs) Indian 1. Sanction Letter Letter of 4336.96 (a) 0.50% Primary Security: Oversea dated 21.01.2006 Guarante for bid Counter guarantee of the company. s Bank e of Rs. bond with Collateral Security: (Earlier sanction 5,400 minimum (1) Equitable Mortgage of Land & letter dated Lacs of one Building at A-7, Mahipalpur, Delhi in the 12.07.04 & (Perform month for joint names of the company and M/s. 03.10.03) ance/Bid bid Brahmaputra Promoters and Planners Bond) guarantee Pvt. Ltd. 2. (Earlier (Sub of below (2) Floating Charge on Plant & Hypothecation Limit for one month Machinery (present & future) not Agreement dated Financial validity. encumbered to any term lenders and 29.08.05) Guarante available exclusively to us having WDV e of Rs. (b) 0.75% of Rs. 0.57 Crores (as on 31.03.2005). 2000 for all Lacs Other (3) Furniture & Fixtures, Computers, guarantees Office Equipments valued at Rs. 0.53 Crores (WDV as on 31.03.2005). (4) Industrial land situated at Sila under mouza-Sila Sinduri Gopa, Distt. Kamrup, Assam measuring 25.07 bigha in the name of the Company valued at Rs. 3.25 Crores. (5) Margin: 5% for Bid Bond Agreement and 10% for all other guarantees. (6) Personal & Corporate Guarantees of a. Mr. Suresh Kumar Prithani b. Mr. Ramesh Kumar Prithani c. Mr. Manoj Kumar Prithani d. Mr. Sanjeev Kumar Prithani e. Mr. Siw Prasad Agarwalla f. M/s Brahmaputra Promoters & Planner Ltd. Punjab 1. Sanction letter LG 4001.82 (a) 0.50% (1) Ist pari passu charge on the current National no. facility of for Bid assets of the company incl. Stocks & Bank LCB/BCL/AKG Rs. Bond book debts ranking pari passu with IOB. dated 30.09.05 5,000 Guarantees Lacs. (2) Margin: 5% for Bid Bond Agreement (The Letter of (b) 0.75% and 10% for all other guarantees. Guarantee Limit for all of Rs. 5000 Lacs other (3) General Counter Indemnity of the enhanced to Rs. Guarantees company. 7500 Lacs vides Sanction Letter No. LCB/ND/HJ/BCL dated 02.01.2007
2. General Counter
110 Indemnity Dated 05.12.05
3. Hypothecation of Movable Assets Forming Part of Fixed/Block Assets Dated 05.12.05
4. Hypothecation of Current Assets dated 05.12.2005
5. Cash Credit Facility dated 05.12.2005
6. Supplementary Agreement dated 12.12.2005
Centurio 1. Sanction Bank 400.70 a. Bid Bond (1) Counter Guarantee and extension of n Bank Letter No. Guarante - 0.50% charge on stocks and Book Debts. of CBOP/BCL/CC/20 e of Rs. p.a. (2) Document of title to goods under LC Punjab 06-07 dated 1,000 and extension of charge on stocks and Limited 07.10.2006 Lacs b. Others - Book Debts. 0.75% p.a. (3) Margin: 5% for Bid Bond Agreement 2. Agreement of Max. and 10% for all other guarantees. Hypothecation Tenure 50% of the dated 19.10.06 of Bid FEDAI (4) Personal Guarantees of: Bond: 6 Charges. Mr. Suresh Kumar Prithani 3. Deed of Month Mr. Ramesh Kumar Prithani
Guarantee dated Mr. Manoj Kumar Prithani 19.10.06 Letter of Mr. Sanjeev Kumar Prithani Credit - 4. Master credit of Rs. Facility 500 Lacs Agreement dated 19.10.06 Max. Tenure 5. Power of of Attorney dated ILC/FLC: 19.10.06 180 days
111 C. Term Loan (Equipment Finance)
Lender Loan Date of Loan Amt. Rate Repayment Schedule Security Documentation Agreement Amt. Outsta- of Int. Created (Rs. nding as (%) Lacs) on Dec. 31, 2006 (Rs. Lacs) No. EMI Last Date of Amt. of EMI EMI (Rs. Lacs) ABN Amro Facility cum 16-Sep-04 62.80 13.38 2.82 35 1.95 16-Jul-07 1. Bank Hypothecation 11-Dec-04 41.31 13.77 3.08 35 1.29 1-Nov-07 Hypothecatio Agreement n of Plant & 16-Sep-04 16.33 3.47 2.82 35 0.51 1-Jul-07 Machinery 1-Sep-04 16.33 3.48 2.67 35 0.51 16-Jul-07 Financed 19-Feb-05 26.13 10.24 3.09 35 0.82 16-Jan-08 30-Apr-05 8.00 3.63 7.00 35 0.25 16-Mar-08 2. Personal Guarantees 28-Nov-06 33.65 31.21 8.60 47 0.85 17-Jul-10 of Promoter 28-Nov-06 33.64 31.19 8.60 47 0.85 17-Jul-10 Director(s) Total 238.19 110.37 Centurion Loan cum 28-Apr-06 8.46 14.77 9.00 47 0.21 2-Apr-10 1. Bank of Hypothecation Hypothecatio 28-Apr-06 8.46 9.00 47 0.21 2-Apr-10 Punjab Agreement n of Plant & Limited 5-May-06 18.00 15.70 9.01 47 0.46 5-Apr-10 Machinery Financed 5-May-06 10.68 9.32 9.00 47 0.27 5-Apr-10
5-May-06 7.67 6.69 9.00 47 0.19 5-Apr-10 2. Personal Guarantees 11-May-06 17.35 14.92 9.00 47 0.43 11-Apr-10 of Promoter 18-Feb-06 16.33 13.16 7.23 47 0.40 17-Jan-10 Director(s) Total 86.95 74.56 Citibank N.A. 1. Loan cum 13-Jan-05 125.86 45.67 6.05 35 3.93 13-Dec-07 1. Hypothecation & Hypothecatio Guarantee n of Plant & Agreement Machinery Financed 2. Irrevocable Power of Attorney 14-Dec-04 116.60 38.84 5.95 35 3.64 14-Nov-07 2. Personal Guarantees of Promoter Director(s)
Total 242.46 84.51 GE Capital 1. Master Security 30-Jun-05 150.00 41.45 3.80 23 7.07 1-Jun-07 1. TFS Limited and Loan 29-Aug-05 278.10 157.56 3.01 35 8.76 20-Jul-08 Hypothecatio Agreement 30-Nov-05 185.40 120.56 3.48 35 5.85 20-Oct-08 n of Plant & Machinery 2. Irrevocable Financed Power of Attorney 2. Personal Guarantees of Promoter Director(s) Total 613.50 319.57
112 HDFC Bank 1. Agreement for 16-Dec-04 16.33 4.45 5.85 35 0.51 1-Sep-07 1. Limited equipment loan 13-Mar-05 11.05 0.51 7.00 23 0.51 1-Jan-07 Hypothecatio and guarantee 27-Aug-04 19.00 10.77 5.83 60 0.36 2-Aug-09 n of Plant & 7-Feb-06 3.59 5.87 12.60 36 0.11 2-May-09 Machinery 2. Irrevocable 26-May-06* 3.59 7.50 36 0.11 2-May-09 Financed Power of Attorney 16-Dec-04 41.31 35.15 5.65 35 1.28 5-Oct-07 30-Nov-04 74.82 2.90 35 2.32 5-Oct-07 2. Personal 12-Dec-05 152.64 75.92 8.00 23 7.18 5-Nov-07 Guarantees 10-Jan-06 6.15 14.76 6.25 36 0.19 7-Nov-08 of Promoter Director(s) 28-Oct-05 4.06 6.00 36 0.12 7-Nov-08 28-Oct-05 4.06 6.00 36 0.12 7-Nov-08 28-Oct-05 4.06 6.00 36 0.12 7-Nov-08 28-Oct-05 4.06 6.00 36 0.12 7-Nov-08 2-Nov-05 110.16 68.64 6.65 35 3.48 15-Sep-08 3-Dec-05 185.40 120.60 6.75 35 5.83 20-Oct-08 28-Sep-05 198.74 136.14 6.50 47 4.80 20-Jul-09 29-Aug-04 124.95 26.40 4.76 35 3.83 20-Jul-07 5-Nov-05 21.99 13.59 5.22 35 0.68 20-Sep-08 28-Oct-05 131.65 97.89 5.75 47 3.10 01-Oct-09 Total 1117.61 610.69 ICICI Bank 1. Commercial 30-Jul-04 33.77 6.18 2.80 35 1.05 1-Jun-07 1. Limited Vehicle Credit 29-Jul-04 66.00 14.06 2.80 35 2.04 1-Jul-07 Hypothecatio Facility Application 14-Feb-06 208.50 164.51 3.52 47 5.06 1-Dec-09 n of Plant & form 13-Sep-04 16.30 7.87 2.75 35 0.50 7-Aug-07 Machinery 17-Sep-04 16.30 2.75 35 0.50 15-Aug-07 Financed 2. Deed of 15-Sep-06 48.15 44.98 7.50 41 1.39 10-Feb-10 Guarantee 16-Jun-04 33.77 5.12 2.90 35 1.05 15-May-07 2. Personal 26-Aug-04 124.84 30.21 5.65 35 3.87 15-Aug-07 Guarantees 25-Sep-05 278.10 157.32 3.48 35 8.78 22-Jul-08 of Promoter Director(s) 25-Aug-04 18.04 3.81 2.60 35 0.56 22-Jul-07 25-Aug-04 7.08 1.49 2.60 35 0.22 22-Jul-07 6-Jan-06$ 6.39 5.03 7.01 47 0.16 22-Dec-09 29-Apr-06 31.09 24.24 7.81 35 0.99 22-Mar-09 14-Jun-06 108.75 73.79 11.00 15 7.79 22-Oct-07 22-Aug-06 72.18 65.81 8.75 41 2.04 22-Jan-10 25-Nov-06 25.31 23.14 9.40 35 0.82 22-Aug-09 31-Aug-06 93.64 85.38 8.74 41 2.65 29-Jan-10 11-Dec-06 9.19 9.19 8.58 36 0.29 5-Jan-10 Total 1197.40 722.13 Kotak 1. Loan cum 30-Jul-05 37.00 21.02 3.62 35 1.16 1-Jul-08 1. Mahindra Guarantee 30-Jul-05 15.40 8.72 3.62 35 0.48 1-Jul-08 Hypothecatio Bank Limited Agreement 30-Jul-05 51.21 30.44 3.62 35 1.60 1-Jul-08 n of Plant & 29-Nov-06 42.55 40.93 4.95 47 1.08 1-Sep-10 Machinery 2.Deed of 29-Nov-06 8.06 7.64 4.95 35 0.26 1-Sep-09 Financed Hypothecation 29-Nov-06 16.44 15.81 4.95 47 0.42 1-Sep-10 29-Nov-06 17.42 16.88 3.16 35 0.55 1-Oct-09 2. Personal 21-Jul-05 32.66 17.56 3.33 35 1.03 20-Jun-08 Guarantees 29-Nov-05 16.22 10.55 3.48 35 0.51 20-Oct-08 of Promoter Director(s) 29-Nov-05 110.16 71.67 3.48 35 3.48 20-Oct-08 Total 347.12 241.22 L&T Finance Loan cum 7-Mar-06 234.50 188.07 3.94 41 6.50 7-Aug-09 1. Limited Hypothecation & 28-Oct-05 139.05 82.78 6.75 35 4.39 15-Aug-08 Hypothecatio Guarantee 21-Dec-05 11.35 4.62 7.00 23 0.53 21-Sep-07 n of Plant & Agreement 16-Nov-05 32.66 19.40 6.81 35 1.03 28-Aug-08 Machinery 21-Dec-05 24.30 9.90 7.00 23 1.13 28-Sep-07 Financed
113 22-Nov-06$ 67.29 67.29 4.90 35 2.21 26-Nov-09 2. Personal Guarantees of Promoter Director(s) Total 509.15 372.06 Magma 1. Hire Purchase 28-Feb-06 45.90 35.10 8.00 35 1.47 1-Feb-09 1. Leasing Finance cum 31-Dec-05 8.10 5.16 8.00 34 0.26 15-Sep-08 Hypothecatio Limited Guarantee 15-Oct-05 16.33 9.70 3.30 35 0.51 15-Aug-08 n of Plant & Agreement 16-Feb-06 417.00 306.58 7.50 35 13.24 15-Jan-09 Machinery 16-Feb-06 36.29 26.68 7.50 35 1.15 15-Jan-09 Financed 2. Deed of 10-May-06 24.28 20.19 8.31 34 0.87 15-Nov-08 Hypothecation 20-Jun-06* 16.10 13.00 9.71 34 0.53 15-Jan-09 2. Personal Guarantees 3. Irrevocable of Promoter Power of Attorney Director(s)
4.Deed of assignment Total 562.41 416.41 SREI 1. Loan/Hire 20-Nov-04 185.00 111.84 6.50 34 5.73 1-Oct-07 1. Infrastructure Purchase 20-Nov-04 185.00 6.50 34 5.73 1-Oct-07 Hypothecatio Finance Agreement 20-Nov-04 125.62 36.33 - 35 3.65 1-Oct-07 n of Plant & Limited 21-Jul-05 8.98 5.10 7.00 35 0.28 7-Aug-08 Machinery 2. Deed of 22-Jul-05 231.72 152.84 6.50 41 6.32 2-Aug-09 Financed Hypothecation 8-Dec-05 65.79 44.03 4.07 35 1.99 11-Aug-08 10-Jan-06 562.95 445.78 7.00 47 13.68 15-Jan-10 2. Personal 14-Jan-06 11.32 8.98 7.00 47 0.28 15-Jan-10 Guarantees 13-Feb-06 30.61 24.90 7.80 47 0.75 15-Jan-10 of Promoter Director(s) 14-Nov-06 98.10 96.05 8.88 41 2.81 15-Apr-10 19-Jul-05 220.32 134.61 6.50 41 5.98 22-Dec-08 12-Dec-05 16.33 10.85 3.22 35 0.48 22-Nov-08 22-Jan-06 17.05 13.53 7.43 46 0.42 22-Dec-09 22-Nov-06 104.04 99.85 9.50 35 3.39 22-Oct-99 15-Aug-05 24.49 14.57 7.00 35 0.78 15-Jul-08 29-Nov-06 7.82 7.82 9.49 41 0.22 1-May-10 Total 1895.14 1207.08 TML Financial 1. Sanction Letter 3-Oct-06$ 23.95 23.54 9.50 47 0.61 2-Oct-10 1. Services 3-Oct-06* 16.75 16.75 9.50 35 0.55 2-Dec-09 Hypothecatio Limited 2. Loan Agreement 3-Oct-06$ 33.21 33.21 9.50 35 1.09 11-Nov-09 n of Plant & Machinery 3. Agreement of Financed Guarantee 2. Personal 4. Hypothecation Guarantees Agreement of Promoter Director(s) Total 73.91 73.50 Grand Total 6883.40 4232.12
* Charges for the same are delayed filed with the Registrar of Companies. $ Petition for condonation of delay in registration of charge has been filed and pending before the CLB.
114 D. Mobilization Advances
S. No. Name of the Party Amount Rate of Date of Amount (Rs. Lacs) Interest Receiving Outstanding as (%) on December 31, 2006 (Rs. Lacs) 1 Larsen & Tourbo Ltd (ECC Div) 531.42 10.00 16-Dec-04 451.25 265.71 10.00 3-Apr-05 2 PWD Dhola 28.13 Interest 10-Dec-06 23.94 Free 3 BTS-BCL (JV) 785.95 PLR 09-Sep-06 785.95 (SBI)+1% Total 1611.21 1261.15
II. Unsecured Loans
S. No. Name of the Party Rate of Amount Interest Outstanding as (%) on December 31, 2006 (Rs. Lacs) 1 Karnani Finlease (P) Ltd 14.00 168.58 2 M L Singhi & Associates (P) Ltd 14.00 281.30 3 Milith Kara Engg. & Trading (P) Ltd Interest Free 50.00 4 Centurion Bank of Punjab Limited 9.50 20.45 Total 520.33
Material Covenants
The material covenants in respect of the loans are as follows:
Development Credit Bank Limited
1. The company to give an undertaking that it will not provide any support to SPVs by way of corporate office or funding other than 75% equity stake. (Approx. Rs. 1900 Lacs)
2. The company to give an undertaking that fresh equity of Rs. 1500 Lacs will be brought before 31.03.2007.
3. TOL: TNW not to exceed 2.75 during the currency of the facilities.
4. The Company should not without the prior approval of the Bank effect any major change in the shareholding pattern, management control, or make investments in Fixed Assets, in associates/group companies except to the extent projected in the data submitted to the Bank.
5. During the currency of the Bank’s facilities, the Company shall not, without the prior permission of the Bank:
(i) Effect any change in the Borrower’s capital structure, which will result in change of management/ control of the Company; (ii) Formulate any scheme of amalgamation or reconstitution; (iii) Implement any major scheme of expansion/ diversification/modernization except in the ordinary course of business. (iv) Declare dividends for any year out of profits relating to the year if any of the financial commitments to the bank have not been duly met. (iv) Enter into long term contractual obligation(s) directly aversely affecting the financial position of the Company.
115
6. The Company shall inform the bank prior to entering into additional borrowing arrangements, either secured or unsecured, with any bank, financial institutions, company/firm or otherwise other than the limits disclosed to bank. The Company shall obtain NOC from the bank to create/extend charge on the assets charged to the bank for the additional borrowing arrangement within a period of 90 days.
Centurion Bank of Punjab Limited
1. The Company shall not without the consent of the Bank make any financial commitment to third parties prejudicially affecting Bank’s interest.
2. The Company shall not initiate any proceedings for merger or amalgamation without the consent of the Bank.
Indian Overseas Bank
1. Change if any, in the constitution of organization or changes in Constitution/Directors proposals for merger/takeover etc. should be advised immediately to Bank in writing. The Bank has the sole discretion to accept or reject such reconstitution/conversion/change and until such time, the same will have the right to suspend the operation of the limits and in the event, the Bank does not accept/recognize such reconstitution/conversion/changes, the Bank will have the right to recall the entire loans, in addition to the right to withdraw the un drawn limits.
Punjab National Bank
1. The Company will not create any subsequent charge on the securities hypothecated to us without our prior consent.
116 REGULATIONS AND POLICIES
Our Company is in the business of undertaking and executing infrastructure projects in the construction industry in India. We also enter into joint ventures for bidding and execution of such infrastructure projects and both, our Company and its joint ventures, are subject to certain statutory regulations in India.
The following are certain key laws and regulations that govern the field of our Company’s business. The information detailed in this chapter has been obtained from publications available in the public domain. The regulations set out below are not exhaustive, and is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional legal advice.
Construction Industry
National Highways Act, 1956 (“NH Act”)
The Central Government is responsible for the development and maintenance of national highways. The NH Act empowers the Central Government to enter into agreement with any person for development and maintenance of national highways. The person may be an individual, partnership firm, company, joint venture, consortium or any other form of legal entity, Indian or foreign, capable of financing from own resources or funds raised from financial institutions, banks, open market etc., designing and building the project and operating and maintaining it, collecting fee from users during an agreed period which together with construction period is termed as concession period. Upon expiry of the concession period, the right of the person to collect the fee and his obligation to operate and maintain the project will cease and the facility will stand transferred to the Central Government.
The Central Government may declare a highway as a national highway and acquire land for such purpose. The Central Government may, by notification declare its intention to acquire any land when it is satisfied, that for a public purpose the building, maintenance, management or operation of a national highway, on such land, should be undertaken. The NH Act prescribes the procedure for the same.
The National Highways (Collection of Fees by any Person for the use of Section of National Highways/ Permanent Bridge/ Temporary Bridge on National Highways) Rules, 1997 provides for the Central Government to enter into agreements with persons for development and maintenance of the whole or part of a national highway/permanent bridge/ temporary bridge on a national highway. Such person may invest his own funds for development or maintenance and is in turn allowed to collect and retain fees, from users of the new facilities so created, at agreed rates for an agreed period of time. The rates of fees and the period of collection are decided by the Central Government and various factors are taken into account to decide the same. Once the period of collection of fees by the person is completed, all rights pertaining to such facility created would be deemed to have been taken over by the Central Government.
National Highways Authority of India Act, 1988 (“NHAI Act”)
The NHAI Act constituted the National Highways Authority of India (“NHAI”). The NHAI, an autonomous body, is responsible for the development, maintenance and management of national highways and for matters connected or incidental thereto. The NHAI became operational in February 1995 with the appointment of full time Chairman and other Members. The NHAI has the power to enter into and perform any contract necessary for the discharge of its functions under the NHAI Act. In an effort to provide for additional financing of its projects, the NHAI has taken measures to attract both foreign and domestic private investments, by offering to enter into BOT contracts for construction and maintenance of national highways for a period not exceeding 30 years.
The bidding for the projects takes place in two stages as per the process provided below:
1. In the pre-qualification stage, NHAI selects certain bidders on the basis of technical and financial expertise, prior experience in implementing similar projects and previous track record; and
117 2. In the second stage, NHAI invites commercial bids from the pre-qualified bidders on the basis of which the right to develop the project is awarded.
Where projects are funded by multilateral funding agencies such as the World Bank or the Asian Development Bank, the selection process takes place in consultation and concurrence with the funding organization. Wide publicity is given to NHAI tenders so as to attract attention of leading contractors and consultants. Notice inviting tenders is posted on the web site of the NHAI and published in leading newspapers. Private sector participation in the road sector is encouraged by the government by undertaking the following initiatives:
1. The government ensures that all preparatory work including land acquisition and utility removal is completed before awarding of the project;
2. Land acquired is made available free from all encumbrances;
3. NHAI / government may provide a grant up to 40% of project cost to enhance viability on a case to case basis;
4. The government also provides tax breaks in the form of 100% tax exemptions for a period of 5 (five) years from the start of operations of the project and 30% relief for next 5 (five) years thereafter. This tax concession is normally available for a period of 20 years from the date of sanction of the project; and
5. Duty free import of specified modern high capacity equipment for highway construction.
Environmental Regulations
Infrastructure projects must also ensure compliance with environmental legislation such as the Water (Prevention and Control of Pollution) Act 1974 (“Water Act”), the Air (Prevention and Control of Pollution) Act, 1981 (“Air Act”) and the Environment Protection Act, 1986 (“Environment Act’).
The Water Act establishes an institutional structure for preventing and abating water pollution and provides for the constitution of a Central Pollution Control Board (“CPCB”) and State Pollution Control Boards ("SPCB"). The Water Act debars any person from establishing any industry, operation or process or any treatment and disposal system, which is likely to discharge trade effluent into a stream, well or sewer without taking prior consent of the CPCB and the SPCB.
The Air Act provides for the control and abatement of air pollution. The Air Act mandates that no person can, without the previous consent of the SPCB, establish or operate any industrial plant in an air pollution control area. The SPCB and CPCB constituted under the Water Pollution Act are also to perform functions as per the Air Act for the prevention and control of air pollution.
The Environment Act empowers the Central Government to take all such measures in order to protect and improve the environment and reduce pollution from all sources, and prohibit or restrict the setting and /or operation of any industrial facility on environmental grounds, by laying down standards for emission or discharge of pollutants, providing for restrictions regarding areas where industries may operate and also framing rules for regulating emission of pollutants into the environment.
In addition, the Ministry of Environment and Forests mandates that an Environment Impact Assessment be undertaken to assess the environmental impact of a project before granting clearances to the projects. The Forest (Conservation) Act, 1980 prevents state governments from issuing any directive towards conversion of forest land, in any manner, for non-forest purposes without the approval of the Central Government.
Labour Legislations
The primary central labour-related legislations with which compliance is required include the Payment of Wages Act, 1956, the Minimum Wages Act, 1948, the Employees Provident Funds & Miscellaneous Provisions
118 Act, 1952, Workmen’s Compensation Act, 1923, Inter State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979, and the Contract Labour (Regulation and Abolition) Act, 1970.
Foreign Investment Regime
The new industrial policy was formulated in 1991 to implement the Government's liberalization programme and consequently, the industrial policy reforms relaxed industrial licensing requirements and restrictions on foreign investment. In subsequent years, the Government has further liberalized the foreign investment regime. At present, investments in companies engaged in projects for construction and maintenance of highways, roads, vehicular tunnels, ports and harbors fall under the RBI automatic approval route for Foreign Direct Investment up to 100%.
Foreign Ownership
Under the Industrial Policy and FEMA, FDI up to 100% is permitted in construction and related engineering services. Further, the Industrial Policy now also permits foreign direct investment under the automatic route in projects for construction and maintenance of roads, highways, vehicular bridges, toll roads, vehicular bridges and ports and harbors.
In respect of the companies in infrastructure/ service sector, where there is a prescribed cap for foreign investment, only the direct investment is considered for the prescribed cap and foreign investment in an investing company may not be set off against this cap provided the foreign direct investment in such investing company does not exceed 49% and the management of the investing company is with the Indian owners.
The RBI vide A.P. (DIR Series) circular No. 16 dated October 4, 2004 granted general permission for the transfer of shares of an Indian company by Non-Residents to residents and residents to Non-Residents, subject to the terms and conditions, including pricing guidelines, specified in such circular.
Investment by Foreign Institutional Investors
Foreign Institutional Investors (FIIs) including institutions such as pension funds, investment trusts, asset management companies, nominee companies and incorporated, institutional portfolio managers can invest in all the securities traded on the primary and secondary markets in India. FIIs are required to obtain an initial registration from the SEBI and a general permission from the RBI to engage in transactions regulated under FEMA. FIIs must also comply with the provisions of the SEBI (Foreign Institutional Investors) Regulations, 1995, as amended from time to time. The initial registration and the RBI's general permission together enable the registered FII to buy (subject to the ownership restrictions discussed below) and sell freely securities issued by Indian companies, to realize capital gains or investments made through the initial amount invested in India, to subscribe or renounce rights issues for shares, to appoint a domestic custodian for custody of investments held and to repatriate the capital, capital gains, dividends, income received by way of interest and any compensation received towards sale or renunciation of rights issues of shares.
Ownership restrictions of FIIs
Under the portfolio investment scheme, the overall issue of equity shares to FIIs on a repatriation basis should not exceed 24% of post-issue paid-up capital of a company. However, the limit of 24% can be raised up to the permitted sectoral cap for that company after approval of the Board of Directors and shareholders of the company. The total holding of a single FII should not exceed 10% of the post-issue paid-up capital of the company or 5% of the total paid-up capital in case such sub-account is a foreign corporate or an individual. In respect of an FII investing in equity shares of a company on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of the total issued capital of that company.
119 Real Estate Sector
Regulations governing foreign investment in India:
Press Note No. 2 (2005 Series) (“Press Note 2”) issued by the Department of Industrial Policy and Promotion, Government of India permits foreign direct investment (“FDI”) of up to 100% under the automatic route in townships, housing, built-up infrastructure and construction-development projects subject to guidelines as detailed in Press Note 2. A short summary of the guidelines is as follows:
a) Minimum area developed: In case of serviced housing plots a minimum land area of 10 hectares would need to be developed and in case of construction development projects the minimum area to be developed is 50,000 square meters. Where the development project is a combination of the above, minimum area that needs to be developed may be either 10 hectares or 50,000 square meters.
b) Minimum capitalization: In case a project is undertaken through a wholly owned subsidiary, there is a minimum capitalization requirement of USD 10 million and in case a project is undertaken through a joint venture with an Indian partner, minimum capitalization requirement is of USD 5 million. The said funds are required to be brought in within six months of commencement of business of the company. The original investment made may not be repatriated before three years of achieving minimum capitalization, except where prior permission of the FIPB has been obtained.
c) Development criteria: At least 50% of the project must be developed within a period of five years from the date of obtaining all statutory clearances. The foreign investor is prohibited from selling any plot that is an ‘undeveloped plot’ (as defined in Press Note 2).
d) Compliance: A project must conform to the norms and standards, including land use requirements and provisions for community amenities and common facilities as specified in applicable rules, regulations and bye-laws of state government, municipal and local body. An investor will also be responsible for obtaining all necessary approvals and complying with all other requirements prescribed under applicable rules, regulations and bye-laws of the state government, municipal and local body concerned.
The Government and the Reserve Bank of India has, on case to case basis, allowed investments in equity shares in public issues by FIIs under Portfolio Investment Scheme.
We have sought a confirmation from the Department of Industrial Policy and Promotion, Ministry of Commerce, GoI, by way of a letter dated March 6, 2007 that investment by FIIs registered with SEBI in the Equity Shares offered as part of this Issue would not fall within the ambit of Press Note 2(2005 Series) issued by the GoI and will therefore not be subject to the conditions specified therein.
Laws Regulating Transfer of Property:
Transfer of Property Act, 1882
The transfer of property, including immovable property, between living persons, as opposed to the transfer of property by the operation of law, is governed by the Transfer of Property Act, 1882. The Act establishes the general principles relating to the transfer of property including among other things identifying the categories of property that are capable of being transferred, the persons competent to transfer property, the validity of restrictions and conditions imposed on the transfer and the creation of contingent and vested interest in the property.
120 Registration Act, 1908.
The Registration Act, 1908 (“Registration Act”) has been enacted with the object of providing public notice of the execution of documents affecting a transfer of interest in immoveable property. The purpose of the Registration Act is the conservation of evidence, assurances, title, publication of documents and prevention of fraud. It details the formalities for registering an instrument. Section 17 of the Registration Act identifies documents for which registration is compulsory and includes, among other things, any non-testamentary instrument which purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, in immovable property of the value of one hundred rupees or more, and a lease of immovable property for any term exceeding one year or reserving a yearly rent. An unregistered document will not affect the property comprised in it, nor be treated as evidence of any transaction affecting such property (except as evidence of a contract in a suit for specific performance or as evidence of part performance under the T.P. Act or as collateral), unless it has been registered.
The Indian Stamp Act, 1899.
There is a direct link between the Registration Act and the Indian Stamp Act, 1899 (“Stamp Act”). Stamp duty needs to be paid on all documents which are registered and the rate varies from state to state. The Stamp Act provides for the imposition of stamp duty at the specified rates on instruments listed in Schedule I of the said Act. The applicable rates for stamp duty on these instruments, including those relating to conveyance, are prescribed by state legislation. Instruments chargeable to duty under the Stamp Act which are not duly stamped are incapable of being admitted in court as evidence of the transaction contained therein.
The Easements Act, 1882.
The law relating to easements is governed by the Easements Act, 1882 (“Easements Act”). The right of easement is derived from the ownership of property and has been defined under the Easements Act to mean a right which the owner or occupier of land possesses for the beneficial enjoyment of that land and which permits him to do or to prevent something from being done in respect of certain other land not his own. Under this law an easement may be acquired by the owner of immovable property, i.e. the dominant owner, or on his behalf by the person in possession of the property. Such a right may also arise out of necessity or by virtue of a local custom.
STATE LAWS:
Urban Development Laws
State legislations provide for the planned development of urban areas and the establishment of regional and local development authorities charged with the responsibility of planning and development of urban areas within their jurisdiction. Real estate projects have to be planned and developed in conformity with the norms established in these laws and regulations made thereunder and require sanctions from the government departments and developmental authorities at various stages. For instance in certain states such as Haryana, a group housing licence is required for development of a set of residential structures.
Where projects are undertaken on lands which form part of the approved layout plans and/or fall within municipal limits of a town, generally the building plans of the projects have to be approved from concerned municipal or developmental authority. Building plans are required to be approved for individual buildings. Clearances with respect to other aspects of development such as fire, civil aviation and pollution control are required from appropriate authorities, depending on the nature, size and height of the projects. The approvals granted by the authorities generally prescribe a time limit for completion of the projects. These time limits are renewable upon payment of a prescribed fee. The regulations provide for obtaining a completion/ occupancy certificate upon completion of the project.
121 Agricultural Development Laws
The acquisition of land is regulated by state land reform laws which prescribe limits up to which an entity may acquire agricultural land. Any transfer of land which results in the aggregate land holdings of the acquirer in the state to exceed this ceiling is void, and the surplus land is deemed, from the date of the transfer, to have been vested in the state government free of all encumbrances. When local authorities declare certain agricultural areas as earmarked for townships, lands are acquired by different entities. After obtaining a conversion certificate from the appropriate authority with respect to a change in use of the land from agricultural to non-agricultural for development into townships, commercial complexes etc. such ceilings are not applicable. While granting licences for development of townships, the authorities generally levy development/external development charges for provision of peripheral services. Such licences require approvals of layout plans for development and building plans for construction activities.
The licences are transferable on permission of the appropriate authority. Similar to urban development laws, approvals of the layout plans and building plans, if applicable, need to be obtained.
Recent Announcements
The Finance Bill 2007 clarifies that construction contractors cannot claim benefits under Section 80 of the I.T. Act on works contracts from infrastructure projects and such benefits are available to infrastructure developers. This clarification does not affect the Company’s infrastructure projects since the Company has not claimed any benefits under Section 80 of the I.T. Act on works contracts in relation to the infrastructure projects that it has executed.
122 HISTORY AND CORPORATE STRUCTURE
Our History
Our Company was incorporated on September 2, 1998 with the Registrar of Companies, National Capital Territory of Delhi & Haryana. Our Company received the certificate of Commencement of Business on September 25, 1998.
Our Company was promoted by Mr. Suresh Kumar Prithani, Mr. Ramesh Kumar Prithani, Mr. Manoj Kumar Prithani and Mr. Sanjeev Kumar Prithani. One of the objects on incorporation was to takeover the running business of partnership firm under the name M/s Brahmaputra Consortium having four partners, viz., Mr. Suresh Kumar Prithani, Mr. Ramesh Kumar Prithani, Mr. Manoj Kumar Prithani and Mr. Sanjeev Kumar Prithani. The partnership firm was converted from proprietorship firm, which was established in the year 1987 to carry on and deal in the business of construction and undertake work on contract basis. We took over the running business of partnership firm vide an agreement dated April 1, 1999.
Changes in Registered Office
Our registered office was shifted from C-1\1622, Vasant Kunj, New Delhi - 110070 to C-5\61, Grand Vasant, Vasant Kunj, New Delhi – 110070 with effect from December 1, 2000 by a resolution of our Board and from C-5\61, Grand Vasant, Vasant Kunj, New Delhi – 110070 to Brahamputra House, A-7, Main Mahipalpur Road, New Delhi-110037 with effect from April 1, 2003 by a resolution of our Board.
Key Events, Milestones and Achievements
Year Key Events, Milestones and Achievements 1998-99 Incorporation of the Company on September 02, 1998. 1998-99 Received certificate of Commencement of Business on 25th September 1998 1998-99 Delhi Metro Road Corporation (DMRC) - BCL secured the work for Shastri Park Depot under sub-contract from PCL for Rs.130 Million. The stipulated time for completion was 13 months but the project was successfully completed ahead of its schedule in 11 months. The work involved transportation of about 2000 trucks of soil & fly ash, on daily basis, on busy roads of Delhi. Inspite of thick fog for almost a month, resulting in delay in drying up of soil / fly ash layers to optimum moisture content; the work was completed ahead of schedule. 2000-01 Noida – Greater Noida Expressway - For the first time in India, fly ash technology was used in compaction / development of the Road. The fly ash was arranged & procured form Badarpur Thermal Power Station of NTPC. It was a prestigious Expressway and BCL was awarded the contract by IRCON worth Rs.145 Million. BCL, because of its track record, was also given the responsibility of completing the unfinished section of another Contractor, who had abandoned the work. 2003-04 Bagged the order for BG Tunnels of N F Railway in JV worth Rs.1008.50 Million. It marked BCL’s foray into Tunneling Work. All the existing railway tunnels in this region were constructed by British during pre-Independence era. It was the first time in India that an Indian Company – BCL, was awarded the work of construction of tunnels in North-Eastern part of India. The terrain is extremely difficult and sites were un-approachable resulting in various logistical difficulties like most of the material had to be carried on Head-Load during rainy season. In spite of all the above, we have successfully completed two tunnels & three are in advanced state of completion. 2003-04 BCL receives the ISO 9001: 2000 certification, to keep pace with International Practices and Competition. The certification is valid till 20th February 2010. 2004-05 BCL made a breakthrough with NHAI by bagging an order in JV worth Rs.1824.80 Million for widening and strengthening NH 31 from 2 lane to 4 lane under East – West Corridor. It’s the first time that NHAI has awarded a concrete road to any party in the North-East region. For the first time BCL is using sophisticated expensive equipment like “Sensor Paver” to pave the roads in North-East to cater to “Banking of Roads” due to the hilly terrain. 2004-05 Brahmaputra Infrastructure Limited, a wholly owned subsidiary of BCL got the Order for Construction of the prestigious New State Secretariat Complex at Dispur, Assam worth Rs.853 Million. This is the “seat of power” of Assam Government. The complex is now
123 complete and is a treat to the eyes attracting tourist interest (especially in the evenings) due to its unique design and proportions. 2005-06 Hydro Electric Power Project at Subansiri – This is the largest Hydel Power House with an installed capacity of 2000 MW, being built by L & T. BCL is executing a part of the project as a Sub contractor with approval from NHPC. The work involved excavation of rock by excavating hill from a height of 200 meters to zero level with 15 numbers of benches and extensive drilling and blasting. The final formation level was 30 Meters below the level of the river. 2005-06 BCL was successful in securing an Order from North-Eastern Coalfields, Coal India Limited for mining of Coal. The total value of the order is Rs. 568.10 Million. This marked BCL’s foray in the Mining Sector. 2005-06 BCL is developing a Private Industrial Park as per International Standard on 586.67 Bighas [122.50 acre (approx.)] acquired by it near NH31, Guwahati. “Brahmaputra Industrial Park” is the first and only private Industrial Park to be developed in North-East. The Park is being developed as per International Standards and when completed, will boast of: - Providing a world class Industrial Enclave with Roads, Civic Amenities, Power with reliability & facilitation center for production & other business outlets of different sizes. - It would be an Industrial Hub and ultimate destination for the entrepreneurs for the State of Assam & its neighbouring states. 2006-07 BCL successfully bagged a contract of Railway tunnel in J & K from IRCON in JV with a Russian Company - BTS. The total length of the Tunnel is 5.5 Kms and value of the Contract is Rs.1572 Million. 2006-07 BCL makes a foray in the Airport Sector by bagging Guwahati Airport Project from Airport Authority of India. The work is worth Rs.466 Million and involves construction of new Apron, Taxiway and extension of Runway. 2006-07 BCL launched its first High-end Luxurious Condominium – “SPANISH GARDEN” at Guwahati, designed by renowned Architect Mr. Hafeez Contractor. 2006-07 BCL has taken steps to connect its remote project sites, Branch Offices with Head Office through VSAT link to improve and make the communication real time and effective.
Our Main Objects
Our main objects as contained in our Memorandum of Association are as follows:
1. To take over the running business of Brahmaputra Consortium situated at Rehman Road, Jorhat (Assam) along with all its assets and liabilities on such terms and conditions as may be mutually agreed upon. The said firm shall cease to exist after such takeover by the company after incorporation thereof.
2. To carry on the business of Earth Moving, Side Grading, Rock Excavation, Rock Breaking, Drilling for Blasting, Mining, Hiring of Earth Moving Equipment and undertake work on Contract basis.
3. To carry on the business of ground water survey, tubewell constructions, installation, development water treatment plant, erection and contractor for underground water exploration.
4. To develop, build, rebuild, pull down, demolish, erect, enlarge, purchase, own contract, hold, exchange, improve, alter, repair, replace, acquire, divide, consolidate, furnish, sell, mortgage houses, flats including multistoreyed flats, bungalows, offices apartments, sell, hire out of otherwise dispose off all kinds estate of immovable property and to carry on all or any of the business of merchants, dealers in stone, sand, cement, bricks, timbers, iron and steel, hardwares and other, building requisites and as land, property, material.
5. To build, construct, alter, maintain, enlarge, pull down, remove or replace and to work, manage and control factories, mills, shops, machinery engines, roadways, tramways, railways, branches or sidings, bridges, reserviors, watercourses, wharves, hydro electric projects and other works and conveniences which are calculated directly or indirectly to advance to interest of the company and to join with any person in doing of these thing.
124 6. To carry on the business of housing, land agents, advertisement for sale or purchase, assist in selling or purchasing and find out of introduce purchase, vendors and to manage lands, buildings and other property, to collect rents and income and to supply to tenants and occupiers and other refreshments, clubs, public halls, messengers, lights, waiting rooms, reading rooms, meeting rooms, lavatories, laundry, conveniences, garages and other facilities.
7. To manufacture deal in and carry on the business of pipes, slotted pipes, pump set, drilling rigs, motor engines and other equipments and accessories necessary for the installation of tubewells, laying of canals, water tunnels reserviours and other works connected with supply or water.
Amendments to our Memorandum of Association
Since our incorporation, the following changes have been made to our Memorandum of Association:
Date of Amendment Nature of Amendment April 24, 2000 Authorized share capital of our Company was increased from Rs. 5,000, 000 divided into 500,000 Equity Shares of Rs. 10 each to Rs. 15, 000, 000 divided into 1,500,000 Equity Shares of Rs. 10 each. March 30, 2001 Authorized share capital of our Company was increased from Rs. 15, 000, 000 divided into 1,500,000 Equity Shares of Rs. 10 each to Rs. 25, 000, 000 divided into 2,500,000 Equity Shares of Rs. 10 each. March 27, 2002 Authorized share capital of our Company was increased from Rs. 25, 000, 000 divided into 2,500,000 Equity Shares of Rs. 10 each to Rs. 35, 000, 000 divided into 3,500,000 Equity Shares of Rs. 10 each. October 15, 2002 Authorized share capital of our Company was increased from Rs. 35, 000, 000 divided into 3,500,000 Equity Shares of Rs. 10 each to Rs. 80, 000, 000 divided into 8,000,000 Equity Shares of Rs. 10 each. May 6, 2004 Changes in the objects clause of our Company by substitution of clause 5 of the main object. The new clause 5 states as follows: “To build, construct, alter, maintain, enlarge, pull down, remove or replace and to work, manage and control factories, mills, shops, machinery engines, roadways, tramways, railways, branches or sidings, bridges, reserviors, watercourses, wharves, hydro electric projects and other works and conveniences which are calculated directly or indirectly to advance to interest of the company and to join with any person in doing of these thing”. March 31, 2005 Authorized share capital of our Company was increased from Rs. 80, 000, 000 divided into 8,000,000 Equity Shares of Rs. 10 each to Rs. 150, 000, 000 divided into 15,000,000 Equity Shares of Rs. 10 each. January 27, 2007 Authorized share capital of our Company was increased from Rs. 150, 000, 000 divided into 15,000,000 Equity Shares of Rs. 10 each to Rs. 200, 000, 000 divided into 20,000,000 Equity Shares of Rs. 10 each.
Our Subsidiaries
1. Brahmaputra Infrastructure Limited
Corporate Information
Brahmaputra Infrastructure Limited was incorporated under the Companies Act on April 5, 2000 with the Registrar of Companies, National Capital Territory of Delhi & Haryana. It received its certificate of commencement of business on April 19, 2000. Brahmaputra Infrastructure Limited became the wholly owned subsidiary of BCL effective from November 1, 2003. Its registered office is located at A-7, Main Mahipalpur Road, New Delhi-110037, India. It is engaged in the business of construction, undertake and develop infrastructure facilities in various fields. BIL mainly undertakes construction of institutional buildings and residential complexes. BIL has independently completed building works including following projects: a) Indian Institute of Technology, Guwahati for Rs. 2507.00 Lacs b) Assam Secretariat Complex at Guwahati, Govt. of Assam for Rs. 8916 Lacs (approx.). This project
125 was initially awarded to M/s Unity Infraprojects Limited which has sub-contracted the same to our subsidiary, BIL. The contract is under execution at present.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Percentage of Shares Held Issued Equity Share Capital 1 Suresh Kumar Prithani 1 0.00 2 Shobna Prithani 1 0.00 3 Ramesh Kumar Prithani 1 0.00 4 Manoj Kumar Prithani (HUF) 1 0.00 5 Sanjeev Kumar Prithani 1 0.00 6 Sanjay Kumar Mozika 1 0.00 7 Brahamputra Consortium Limited 743,294 100.00 Total 743,300 100.00
Board of Directors
As of December 31, 2006, the board of directors of Brahmaputra Infrastructure Limited consists of:
1. Mr. Siw Prasad Agarwalla 2. Mr. Suresh Kumar Prithani 3. Mr. Ramesh Kumar Prithani 4. Mr. Manoj Kumar Prithani 5. Mr. Sanjeev Kumar Prithani 6. Mr. Kamakhya Prasad Mozika 7. Ms. Durga Devi Mozika 8. Mr. Sanjay Kumar Mozika 9. Mr. Ajay Kumar Mozika
Financial Performance
The audited financial results of Brahmaputra Infrastructure Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 2006 2005 2004 31, 2006 Equity capital (face value of Rs. 10) 74.33 74.33 74.33 74.33 Reserves and Surplus 139.70 126.67 90.32 46.56 Sales and Other Income 855.69 2045.56 4202.54 1725.79 Profit/ (Loss) after tax 22.62 44.82 52.23 20.73 Earnings/ (Loss) per share (Rs.) 3.04 6.03 7.03 2.79 Book Value per share (Rs.) 28.77 27.00 22.09 16.18
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
2. Brahmaputra Concrete Private Limited
Corporate Information
Brahmaputra Concrete Private Limited was incorporated under the Companies Act on October 31, 2006 with the Registrar of Companies, Assam, Tripura, Manipur, Nagaland, Meghalaya, Arunachal Pradesh and Mizoram. Brahmaputra Concrete Private Limited became the subsidiary of BCL effective from March 30,
126 2007. Its registered office is located at 2nd Floor, Hem Ram Bora Complex, Guwahati-781007, Assam, India. The Company was incorporated for carrying on the business of manufacturing of ready mix concrete and other related business.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Manoj Kumar Prithani 5,000 50.00 2 Sanjay Kumar Mozika 5,000 50.00 Total 10,000 100.00
Board of Directors
As of December 31, 2006, the board of directors of Brahmaputra Concrete Private Limited consists of:
1. Mr. Manoj Kumar Prithani 2. Mr. Sanjay Kumar Mozika
Financial Performance
The audited financial results of Brahmaputra Concrete Private Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Period Ended Year ended December 31, March 31, March 31, March 31, 2006 2006 2005 2004 Equity capital (face value of Rs. 10) 1.00 NA NA NA Reserves and Surplus (0.27) NA NA NA Sales and Other Income 0.00 NA NA NA Profit/ (Loss) after tax (0.27) NA NA NA Earnings/ (Loss) per share (Rs.) (2.70) NA NA NA Book Value per share (Rs.) 0.20 NA NA NA
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
3. Brahamputra Consortium Pte. Limited
Brahamputra Consortium Pte. Limited is incorporated in Singapore under the Companies Act, (CAP.50) vide registration number 200610782D dated July 24, 2006. The registered office of the Company is located at 10E Lorong G Telok Kurau Eunos, Singapore-426175. The principal activities of the Company upon incorporation are to carry on the business of constructions and Turnkey projects.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Brahamputra Consortium Limited 1# 100.00 Total 1 100.00 # The value of one share equals to one Singapore Dollar.
Board of Directors/ Officer
As of December 31, 2006, the board of directors/ officers of Brahamputra Consortium Pte. Limited consists of:
1. Mr. Suresh Kumar Prithani 2. Manjit Kumar Sinha
127
Financial Performance
The Company has not yet started any operations; therefore no financial information is available.
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
Previous Subsidiaries
1. Brahmaputra Hoshiarpur-Phagwara Toll Roads Limited
The Company was formed as a Special Purpose Vehicle (SPV) for the purpose of execution of Joint venture between BCL and Gayatri Projects Limited. The joint venture was awarded BOT Project for upgradation, strengthening, operation and maintenance of Hoshairpur-Phagwara road in the state of Punjab covering length of 35.50 Km. The project could not be undertaken by the JV, since vacant possession of the land was not handed over to JV within the stipulated time by the client, PIDB. In view of this, the Joint venture surrendered/ withdrew from the project. PIDB has taken the request of joint venture to withdraw from the project on record; however, it is yet to issue communication/ letter, discharging the joint venture from all obligations under the contract. On issuance of such discharge letter, PIDB will proceed to release the performance guarantees namely, bank guarantee of Rs. 18,300,000 dated March 21, 2006 and bank guarantee of Rs. 4,600,000 dated March 21, 2006. Further, since the company (SPV) was promoted for specific purpose, and in view of non- fulfillment of this specific project, we sold the shares in the Company to our group companies and others so as to liquidate our investment in the Company. For further details regarding the company, please refer to section “Our Promoters and Promoter Group” beginning on page 149 of this Draft Red Herring Prospectus.
2. Brahmaputra Sirhind-Morinda-Ropar Toll Roads Limited
The Company was formed as a Special Purpose Vehicle (SPV) for the purpose of execution of Joint venture between BCL and Gayatri Projects Limited. The joint venture was awarded BOT Project for upgradation, strengthening, operation and maintenance of Sirhind-Morinda-Ropar road in the state of Punjab covering length of 43.22 Km. The project could not be undertaken by the JV, since vacant possession of the land was not handed over to JV within the stipulated time by the client, PIDB. In view of this, the Joint venture surrendered/ withdrew from the project. PIDB has taken the request of joint venture to withdraw from the project on record; however, it is yet to issue communication/ letter, discharging the joint venture from all obligations under the contract. On issuance of such discharge letter, PIDB will proceed to release the performance guarantees namely, bank guarantee of Rs. 26,300,000 dated March 21, 2006 and bank guarantee of Rs. 6,600,000 dated March 21, 2006. Further, since the company (SPV) was promoted for specific purpose, and in view of non- fulfillment of this specific project, we sold the shares in the Company to our group companies and others so as to liquidate our investment in the Company. For further details regarding the company, please refer to section “Our Promoters and Promoter Group” beginning on page 149 of this Draft Red Herring Prospectus.
Our Joint Ventures
We enter into project specific joint ventures with third parties to combine expertise and resources to enable us to obtain larger projects. We, along with our joint venture partners, bid and tender for projects in the name of the joint venture. Joint venture agreements typically terminate in the event the joint venture is not awarded the project, or in the event the joint venture does not obtain permission to tender for the project or on cancellation of the project. Additionally, Joint venture agreements remain valid until the project is completed and automatically terminate once all work in relation to execution of the project is complete.
The joint venture agreements set forth the terms and conditions governing the relationship between our Company and our joint venture partner(s). The joint venture agreement provides that the parties have joint and several responsibilities for the execution of the contract, once awarded. The financial responsibility and
128 participation of each party with respect to finances, planning, construction equipment, key personnel and execution of works is in the ratio mutually agreed and spelled out in the JV agreement. The joint venture operates under the instructions of a management board which comprises of a chairman, nominated by the lead partner and a vice-chairman, nominated by the other partner and one director appointed by each party. These joint ventures are in the nature of association of persons. In some cases, the JV partners have relinquished their right in the JV in favour of our Company and in all such cases we carry out the contract entirely at our own.
A brief summary of all our joint venture agreements subsisting currently is set forth below.
I. Details of Joint Venture formed as of February 28, 2007 and contracts awarded to Joint Venture
1. Joint Venture Agreement(s) with M/s Progressive Construction Limited
(a) We have entered into a joint venture agreement with M/s. Progressive Construction Limited having its office at 7th Floor, Raghavan Block, Raghavan Ratna Towers, Chirag Ali Lane Abids, Hyderabad, Andhra Pradesh-500001 on January 17, 2003 and a joint venture under the name “PCL- Brahmaputra Consortium Limited (JV)#” was formed to execute construction of single line BG tunnel No. 3 between Km. 87/390 – 89/302 in between stations Jirania and Teliamura in connection with Kumarghat – Agartala New Line Project. The total value of contract awarded is Rs. 2939 Lacs. As per Joint Venture agreement, the financial interests of the parties will be in the following proportions:
Brahamputra Consortium Limited - 49% Progressive Construction Limited - 51%
(b) We have entered into a joint venture agreement with M/s. Progressive Construction Limited having its office at 7th Floor, Raghavan Block, Raghavan Ratna Towers, Chirag Ali Lane Abids, Hyderabad, Andhra Pradesh-500001 on January 25, 2002 and a joint venture under the name “PCL-Brahmaputra Consortium Limited (JV)#” was formed to execute construction of single line BG tunnel No. 17 between Km. 131/756 – 132/185 in between stations Ditockeherra and Bandarkhal in connection with Lumding-Silchar gauge conversion project. The total value of contract awarded is Rs. 1535.06 Lacs. As per Joint Venture agreement, the financial interests of the parties will be in the following proportions:
Brahamputra Consortium Limited - 50% Progressive Construction Limited - 50%
2. Joint Venture Agreement(s) with M/s Kamal Builders
(a) We have entered into a joint venture agreement with M/s. Kamal Builders having its office at 156-A, Lanin Strret, Kolkata-700013 on June 2, 2004 and a joint venture under the name “KB-Brahmaputra Consortium Limited (JV)#” was formed to execute widening and construction of western express highway from Aarey Flyover North End to Times of India Flyover North End Chainage: Km 513.200 to Km. 510.350 under Mumbai Metropolitan Region Development Authority (MMRDA). The total value of contract awarded is Rs. 2627.53 Lacs. As per Joint Venture agreement, the financial interests of the parties will be in the following proportions:
Brahamputra Consortium Limited - 40% Kamal Builders - 60%
(b) We have entered into a joint venture agreement with M/s. Kamal Builders having its office at 156-A, Lanin Strret, Kolkata-700013 on March 5, 2004 and a joint venture under the name “KB- Brahmaputra Consortium Limited (JV)#” was formed to execute widening and construction of Andheri Kurla Road (Sakinaka to L.B.S. Road and Jari Mari Road) under Mumbai Metropolitan Region Development Authority. The total value of contract awarded was Rs. 1492.56 Lacs. The value of the contract was subsequently reduced to Rs. 615 Lacs by MMRDA on account of non availability of site. As per Joint Venture agreement, the financial interests of the parties will be in the following
129 proportions:
Brahamputra Consortium Limited - 35% Kamal Builders - 65%
3. Joint Venture Agreement with M/s National Construction Company
We have entered into a joint venture agreement with M/s. National Construction Company having its office at Sahjanand Bhawan, Station Road, BHUJ- Kachchh-370001, Gujarat on March 6, 2005 and a joint venture under the name “Brahmaputra Consortium Limited (JV)#” was formed for production of carbonaceous shale (CS) & removal of Hard Shale (HS) in accordance with requirement of safety regulations and transportation of coal to the railway siding as per schedule. The total value of contract awarded is Rs. 5681.02 Lacs. As per Joint Venture agreement, the financial interests of the parties will be in the following proportions:
Brahamputra Consortium Limited - 49% National Construction Company - 51%
4. Joint Venture Agreement with M/s Dineshchandra R. Agarwal Infracon Private Limited and M/s Banowari Lal Agarwalla Private Limited
We have entered into a joint venture agreement with M/s Dineshchandra R. Agarwal Infracon Private Limited having its principal place of business at Agarwal Complex, Near Lions Hall, Disa-385535, Gujarat and M/s Banowari Lal Agarwalla Private Limited having its registered office at AFMC Fortuna, 3rd Floor, Unit- A-7, 234/3A, A.J.C. Bose Road, Kolkata-700020 on December 21, 2004 and a joint venture under the name “DRA-BLA-BCL JV#” was formed to execute widening to 4 laning and strengthening of existing 2 lane carriageway from Km. 1065.00 to Km. 1040.30 of Guwahati to Nalbari section of NH-31 in Assam, Contract Package No. EW-II (AS-6). The total value of contract awarded is Rs. 18248.27 Lacs. As per Joint Venture agreement, the financial interests of the parties will be in the following proportions:
Brahamputra Consortium Limited - 25% Dineshchandra R. Agarwal Infracon Private Limited - 50% Banowari Lal Agarwalla Private Limited - 25%
5. Joint Venture Agreement with M/s OAO Bamtonnestroy
We have entered into a joint venture agreement with M/s OAO Bamtonnestroy, a company registered in Russia under the Russian laws having its registered office at 660021, Russis, Krasnoyarsk, Bograda Strret 132 on March 28, 2006 and a joint venture under the name “BTS- Brahmaputra Consortium Limited (JV)#” was formed to execute construction of civil works including Tunnels, Bridges, Earthwork etc. in Zone-II (Km. 128.600 – 134.360) on Laole-Quzigund section of Udhampur-Srinagar-Baramulla New BG Railway Line Project. The total value of contract awarded is Rs. 15719.06 Lacs. As per Joint Venture agreement, the financial interests of the parties will be in the following proportions:
Brahamputra Consortium Limited - 49% OAO Bamtonnestroy - 51
6. Joint Venture Agreement with M/s Gayatri Projects Limited
We have entered into a joint venture agreement with M/s Gayatri Projects Limited having its registered office at G2, Mangal Adesh Society, 4th Road, TPS III, Santa Cruz (E), Mumbai-400055 on September 19, 2006 and a joint venture under the name “GPL-Brahamputra Consortium Limited (JV)#” was formed to execute rehabitation of Chandigarh-Landran-Chuni-Sirhind Road. The total value of contract awarded is Rs. 4391.82 Lacs. As per Joint Venture agreement, the financial interests of the parties will be in the following proportions:
Brahamputra Consortium Limited - 49% Gayatri Projects Limited - 51
130
7. Joint Venture Agreement with M/s Dineshchandra R. Agarwal Infracon Private Limited
We have entered into a joint venture agreement with M/s Dineshchandra R. Agarwal Infracon Private Limited having its registered office at Agarwal Complex, Near Lions Hall, DISA-385535, Gujarat on August 22, 2006 and a joint venture under the name “DRA-Brahamputra Consortium Limited (JV)#” was formed to execute construction of new apron with link taxiway, extension of runway by 360m, drainage, box culvert and perimeter road at Guwahati Airport. The total value of contract awarded is Rs. 4658.05 Lacs. As per Joint Venture agreement, the financial interests of the parties will be in the following proportions:
Brahamputra Consortium Limited - 49% Dineshchandra R. Agarwal Infracon Private Limited - 51
8. Joint Venture Agreement with M/s Banowari Lal Agarwalla Private Limited
We have entered into a joint venture agreement with M/s Banowari Lal Agarwalla Private Limited having its registered office at AFMC Fortuna, 3rd Floor, Unit- A-7, 234/3A, A.J.C. Bose Road, Kolkata- 700020 on January 30, 2006 and a joint venture under the name “BLA-Brahmaputra Consortium Limited (JV)#” was formed to execute widening & strengthening of Humhama-Budgam-Raithan- Arizol Road (Budgam District). The total value of contract awarded is Rs. 2487.63 Lacs. As per Joint Venture agreement, the financial interests of the parties will be in the following proportions:
Brahamputra Consortium Limited - 50% Banowari Lal Agarwalla Private Limited - 50%
9. Joint Venture Agreement(s) with M/s Madhava Hytech Engineers Private Limited
(a) We have entered into a joint venture agreement with M/s Madhava Hytech Engineers Private Limited having its registered office at Flat No. 501, Panorama Mansion, Renuka Enclave, Raj Bahavan Road, Somajiguda, Hyderabad-500082 on June 16, 2006 and a joint venture under the name “Madhava- Brahmaputra Consortium Limited (JV)#” was formed and awarded the following:
1. Construction of approaches to Road Over Bridges (excluding Railway Portion):
(i) 4-lane approaches on level crossing No. A-61 on Jalandhar-Amritsar Railway line at Maqsoodan in Jalandhar City. (ii) On level crossing No.C-11 on Jalandhar-Pathankot Railway line at Suchhipind on Jalandhar-Hoshiarpur Road.
2. Construction of 4-lane approaches of ROB No. 2 (excluding Railway Portion) on Chandigarh- Ludhiana new B.G. Rail line at Morinda Byepass.
The total value of contracts awarded for project no. 1 is Rs. 2585 Lacs & for project no. 2 is Rs. 1429 Lacs. As per Joint Venture agreement, the financial interests of the parties will be in the following proportions:
Brahamputra Consortium Limited - 49% Madhava Hytech Engineers Private Limited - 51%
(b) We have entered into a joint venture agreement with M/s Madhava Hytech Engineers Private Limited having its registered office at Flat No. 501, Panorama Mansion, Renuka Enclave, Raj Bahavan Road, Somajiguda, Hyderabad-500082 on April 11, 2006 and a joint venture under the name “Madhava- Brahmaputra Consortium Limited (JV)#” was formed to execute construction of foundation, substructure and super structure (PSC Box Girder) of major bridge No. 543 (span 20 x 25.00 m on pile foundations) at Chainage 143/600 Km and minor Br. No. 541 at Chainage 143/750 Km in between Damchera- Chandranathpur stations on permanent diversion including earthwork in filling / cutting behind abutments for making formation for stretch from formation for stretch form Chainage 143/180 Km to 144/208 Km and all other ancillary works in connection with Lumding-Silchar Gauge
131 Conversion work. The total value of contract awarded is Rs. 2059.66 Lacs. As per Joint Venture agreement, the financial interests of the parties will be in the following proportions:
Brahamputra Consortium Limited - 49% Madhava Hytech Engineers Private Limited - 51%
II. Details of Joint Venture(s)/ MOU(s) formed/ entered as of February 28, 2007 for the purpose of joint bidding where no contract has so far been awarded
S. Nature of Work Principal Name of Parties to Joint Estimated Bid No. Client Joint Venture / MOU Cost Submissi- Venture/ and respective (Rs. Lacs) on Date Consortium % share 1 Construction of Punjab Madhava- 1. Brahamputra 7400.00 December (a) approaches to Road Over Infrastructure Brahamput Consortium 27, 2006 Bridges (excluding Railway Development ra Limited (49%) Portion) on Level Crossing Board (PIDB) Consortium 2. Madhava Hytech No. B-48/A on Bathinda- and Public Ltd. (JV)# Engineers Private Sriganga Nagar Railway Works Limited (51%) Line at Abohar. Department (b) Construction of 4-lane (B&R), Govt. of approaches to Road Over Punjab Bridges (excluding Railway Portion) on Level Crossing No. B-30 on Sriganga Nagar Railway Line at Malout. (c) Construction of approaches to Road Over Bridge (excluding Railway Portion) on Level Crossing No. 155-B on Ambala - Ludhiana Railway Line at Khanna. 2 Design, Engineering, National SPML-SREI- 1. Brahamputra 48600.00 February Finance, Construction, Highway DRA-BCL Consortium 28, 2007 Operation and Authority of Limited (16%) Maintenance of Delhi- India 2. Subhash Haryana Border to Rohtak Projects and Section of NH-10 from Km Marketing Limited 29.70 to Km 87.00 (51%) including construction of Bahadurgarh and Rohtak 3. SREI Bypass in the State of Infrastructure Haryana on BOT Basis Finance Limited (17%)
4. Dineshchandra R. Agarwal Infracon Private Limited (16%) # The JVs have been formed with the word “Limited” in their name, however, these are not limited liability companies and are in the nature of association of persons (AOP) wherein the liability of joint venture partners remain unlimited since these AOPs are in nature of partnership. The AOPs are normally dissolved on completion of the respective joint venture contracts.
Shareholders’ Agreement
There are no Shareholders Agreements between our Company and any other person at present.
132
Other Agreements
Except the contracts/ agreements entered in the ordinary course of business carried on or intended to be carried on by our Company, we have not entered in to any other Agreement/ Contract.
Strategic Partners
Apart from Joint Venture Agreements described above, we have entered into following agreements:
A. We (hereinafter referred to as Second Party) have entered into a Land Development Agreement dated May 18, 2005 with M/s Kumar Iron & Steel Private Limited having its registered office at R.G. Baruah Road, Dispur, Guwahati (First Party) and M/s Somani Swiss Industries Limited having its registered office at 15A, Everest House, 46C, Chowringhee Road, Kolkatta-700071 (Confirming Party), being the tenant of the land, for development of residential flats and commercial space at Guwahati. The important terms of agreement are as under:
a. The first party is absolute owner of the a plot of land measuring about 52 Kathas covered by Dag no. 673 (N)/753 (O), 623 (N)/762(O) and Dag No. 622(N)/761(O) comprised in Patta no. 6(N)/12(O) and patta no. 112(N)/74(O) at ZOO Road, Guwahati together with buildings, outhouses, warehouse and other structures situated thereon (herein after refereed to as Schedule A property).
b. The confirming party have availed various financioal assistance from State Bank of India, at MRD Road, Bamunimaidan, Guwahati-21 and a one time settlement has been reached with the bank to settle all the dues at Rs. 270 Lacs.
c. The first, second and confirming part has executed an MOU on September 10, 2004, wherein the second party has agreed to clear the dues of confirming party as per the settlement arrived at with the bank. It was further agreed in the MOU dated September 10, 2004 to appoint second party for developing the property and construction and erection of new complex comprising of residential complex and shopping mall on turn key basis in accordance with plan duly sanctioned by Guwahati Municipal Corporation and other authorities.
d. The agreement while superceding the MOU agreed to the terms of MOU and further agreed as follows:
1. Development
1.1 The first party agrees and entrusts the second party exclusive and irrevocable right for the construction and development of new complex hereinafter referred to as project on Schedule A property consisting of 82% of total constructed area as residential and 18% as shopping mall. Both first and second party shall be free to own/sell/market their share of the developed property in the ratio decided. 1.2 The first and second party agrees to share the constructed area in vertical manner in the ratio of 73% (to the second party) and 27% (to the first party).
2. Consideration
2.1 The first party and second party mutually agrees that in consideration of first party having agreed to entrust the rights in Schedule A property to second party for development purposes, the second party agrees to pay a interest free deposit limited to Rs. 400 Lacs (Rupees Four Hundred Lacs) to first party to pay the outstanding to labour, electricity board, bank, excise etc. in the manner agreed. The said deposit shall be repaid by the first party to the second party in the manner mutually agreed in terms of the agreement.
133 2.2 The second party shall not create any charge, interest, transfer or right in favour of any third party and will keep the property free from all encumbrances once the Schedule A property is handed over to the second party. 2.3 The parties mutually agreed that the first party on release of land title deeds from bank on payment/ settlement of bank shall provide the land as collateral to facilitate the second party to borrow from financial institution upto a maximum amount of Rs. 5 crores for the purpose of funding of development of land. The interest of loan and principal shall be paid by second party to bank in the manner agreed.
3. Rights and Obligations of Second Party
3.1 The second party shall get the building plans and specifications duly approved by authorities and shall carry out the development of project at its own cost as per specifications mutually agreed as specified in Annexure A and B to the agreement and in conformity with the plans approved. 3.2 The second party covenants that the said project shall be completed in three to four phases within a period of 48 months from the date of sanction of plans unless prevented by FORCE MEAJURE. 3.3 The second party covenants with the first party to give personal guarantee of at least two directors namely Mr. Suresh Kumar Prithani and Mr. Sanjeev Kumar Prithani for availing finance for the project against mortgaged/ hypothecation of the land by the first party.
4. Rights and Obligations of First Party
4.1 The first party covenants to deliver marketable title of the Schedule A property free from all encumbrances and charges to the second party. 4.2 The first party further covenants and undertakes not to create any third party interest in respect of Schedule A property.
5. The second party shall be entitled to carry out development/ construction on Schedule A property either independently or by appointing other agencies.
6. The second party shall insure the Schedule A property and shall be entitled to receive insurance claims if any.
7. In the event the project is not completed on Schedule A property within the stipulated time, the second party pay a penalty of Rs. 10 per square feet per month for the unfinished and undeveloped premises. However, the first party covenants to give a grace period of twelve months from the scheduled completion time to the second party and in the event of second party is unable to complete the project in the said grace period, the first party shall be at liberty to terminate this agreement and thereafter take over the project and the second party in happening of such an event, shall be entitled to possess only its share of allocation of the completed area of the project.
8. The cost of marketing/ advertising for selling the constructed project shall be borne by both the parties in the proportion of their allocated area, i.e., 73% by the second party and 27% by the first party.
9. Any dispute or differences arising out of the agreement shall be settled at first instance amicably and in the event of failure the matter shall be referred to a common arbitrator to be mutually appointed by first and second party.
B. We have entered into an MOU with Al Mobty Co. for contracting, Riyadh, Saudi Arabia, P.O. Box 7705, Riyadh 11472- K.S.A. on January 20, 2007 for the purpose of joining together, of both parties, collective expertise, resources and experience for the purpose of participation, submission and execution of bids for infrastructure projects in India, Saudi Arabia and other countries. Some of the important terms of agreement agreed upon by the parties are as under:
134 (i) To start co-operation in specialized general contracting business in the projects currently available for both parties or those to be found in future. (ii) The Second Party wishes to co-operate with the First Party on projects available in India to bid jointly for those projects and then in case any projects is awarded, the execution will be done by the Second Party. (iii) The first party will introduce and invite the second party to participate in some chosen projects to be executed in Saudi Arabia and other countries and also the second party will introduce some projects available in India.
C. We have entered into an MOU with M/s HANSHIN Engineering & Construction Co. Limited, 65-32, Jamwon-domg, Seocho-ku, Seoul 137907, Korea on April 10, 2006. The second party is keen to establish themselves in India to carry out infrastructure and other allied works. The important terms of agreement agreed upon by the parties are as under:
(i) The final participation, the manner required and equity holding of the each company can be decided for each work on mutual agreed terms, as and when the occasion arises. (ii) The documents if necessary shall be procured in the name of joint venture, i.e. M/s Brahamputra Consortium Limited – Hanshin Engineering & Construction Co. Limited (JV). (iii) Any other information pertaining to the works in India/ abroad and as felt necessary shall also be shared in order to promote the joint business.
D. We have entered into an MOU with Corporacion America Sociedad Anonima, a Company registered in Argentina under the Argentinean laws and having its registered office at Honduras 5663 (C1414BNE), City of Buenos Aires, Argentina on April 16, 2007 for the purposes of exploring, analyzing and to bid in the projects relating to Engineering and/ or contract works on Build Own and Transfer (BOT), Build Own Operate Transfer (BOOT), Build Operate Lease Transfer (BOLT) basis, in connection with Modernization/ Development and Management of Airports in India. The important terms of agreement agreed upon by the parties are as under:
(i) Both parties agree to put its best efforts to carry on together a feasibility analysis of the projects related to Engineering and/ or contract works on Build Own and Transfer (BOT), Build Own Operate Transfer (BOOT), Build Operate Lease Transfer (BOLT) basis, in connection with Modernization/ Development and Management of Airports in India and other works that may be mentioned in Notice of Invitation of the Bids by Ministry of Cvili Aviation in India or Airport Authority of India. (ii) In case the parties consider that some projects are interesting and feasible, then both will work together to define the more convenient association model to participate in this kind of process, including for example a consortium, joint venture, or other commercial alliances including a technical assistance’s agreement. (iii) All commercial aspects relate to equity, profit & loss, share of responsibilities, formation of Special Purpose Vehicle etc. shall be agreed upon later and be part of the specific Association Model’s Final Agreement. (iv) This agreement shall commence on the date hereof and unless terminated earlier continue in force and effect for a period of at least 12 months. Either of the two parties can decide not to participate in the bidding of various packages or tenders.
Financial Partners
Presently, our Company does not have any financial partners.
135 OUR MANAGEMENT
Under our Articles of Association, we are required to have not less than three directors and not more than twelve directors. We currently have eight directors on our Board.
The following table sets forth details regarding our Board of Directors as on the date of this Draft Red Herring Prospectus:
Name, Father’s Name, Designation Nationality Age Directorship in Other Address, Occupation (Years) Companies Mr. Suresh Kumar Prithani Chairman Indian 44 a Brahmaputra S/o Mr. Siw Prasad Agarwalla cum Infrastructure Limited R/o C-5/61, Grand Vasant, Managing b Brahmaputra Promoters Vasant Kunj, New Delhi-110070, Director and Planners Private Delhi Limited Business c Brahmaputra Projects Limited d Brahmaputra Enterprises Private Limited e Brahmaputra Holdings Private Limited f Brahmaputra Realtors Private Limited g Brahmaputra Property & Management Services Private Limited h Satluj Infrastructure Limited i Brahmaputra Sirhind- Morinda-Ropar Toll Roads Limited j Brahmaputra Hoshiarpur- Phagwara Toll Roads Limited k Brahamputra Consortium Pte. Limited Mr. Ramesh Kumar Prithani Whole-time Indian 43 a Brahmaputra S/o Mr. Siw Prasad Agarwalla Director Infrastructure Limited R/o 20- Mandeville Gardens, b Brahmaputra Sirhind- Flat No. 1B, Kolkatta-700019, Morinda-Ropar Toll Roads West Bengal Limited Business c Brahmaputra Hoshiarpur- Phagwara Toll Roads Limited Mr. Manoj Kumar Prithani Whole-time Indian 40 a Brahmaputra S/o Mr. Siw Prasad Agarwalla Director Infrastructure Limited R/o 4th Bye Lane, Tarun Nagar, b Brahmaputra Projects Guwahati-781005, Assam Limited Business c Brahmaputra Sirhind- Morinda-Ropar Toll Roads Limited d Brahmaputra Hoshiarpur- Phagwara Toll Roads Limited e Indotech Tubewells Private Limited f Brahmaputra Concrete Private Limited
136 Mr. Sanjeev Kumar Prithani Whole-time Indian 37 a Brahmaputra S/o Mr. Siw Prasad Agarwalla Director Infrastructure Limited R/o C-5/5, Vasant Kunj, b Brahmaputra Projects New Delhi-110070, Delhi Limited Business c Brahmaputra Sirhind- Morinda-Ropar Toll Roads Limited d Brahmaputra Hoshiarpur- Phagwara Toll Roads Limited e Indotech Tubewells Private Limited Mr. Surinder Kumar Soni Independent Indian 70 a Centurion Bank of Punjab S/o Mr. Chint Ram Soni Director Limited R/o D-15, Greater Kailash b Wisec Global Limited Enclave-II, New Delhi-110048, c PNB Gilts Limited Delhi d Cashpor Financial Services Management Consultant Limited e ASP Research Service Private Limited f Housing Development & Infrastructure Limited Mr. Om Kumar Independent Indian 62 a Tedmag Engineering and S/o Mr. H. K. Das Director Management Consultants R/o C-5/32, Grand Vasant, Private Limited Vasant Kunj, New Delhi-110070, Delhi Management Consultant Mr. Om Prakash Kejriwal Independent Indian 61 Nil S/o Mr. R. L. Kejriwal Director R/o LP-11B, Pitampura, New Delhi-110088, Delhi Advocate Mr. Deo Chandra Hirawat Independent Indian 55 a Divya Texfab (India) S/o Mr. Mohan Lal Hirawat Director Limited R/o Kalpatra Habitat Tower, A- b Suam Overseas Private 112, Dr. S.S. Road, Parel, Limited Mumbai-400012, Maharashtra c Wallfort Financial Services Management Consultant Limited
Brief Biographies of our Directors
Mr. Suresh Kumar Prithani
Mr. Suresh Kumar Prithani, aged 44 years is the Chairman & Managing Director of our Company. A symbol of hard work, integrity, discipline and self-reliance, Mr. Prithani started the construction business in a modest way in the late 80’s and built up the Company gradually.. From those early days of facing ups and downs, the Company has come a long way, driven by the sheer strength of his untiring efforts, pioneering vision and impeccable leadership. He is the beacon of inspiration and motivation for the Company.
He personally overseas each project undertaken by the Company , paying minute attention to the key factors like mechanization, quality control, human resource management, systematic planning and timely completion. Due to his untiring efforts and sharp negotiating skills coupled with his in-depth understanding of the banking norms, purchasing and project management he has managed to obtain best possible terms from the Financial Institutions, vendors and earn satisfaction from principal employers. He has over twenty years of experience in the filed of Infrastructure development works, Highways and Roads, Tunnels, Airports,
137 Mining, Institutional Buildings and Hydroelectric Power Projects. He lays a strong emphasis on team work, synergy, and professionalism and pursues excellence on all fronts and at all levels of the organization.
Mr. Ramesh Kumar Prithani
Mr. Ramesh Kumar Prithani, aged 43 years is the Whole-time Director of our Company. He has 16 years of rich experience in the field of Civil Engineering and land development works. He is looking after the operations at North – East and is responsible for optimum utilization, maintenance, productivity and road worthiness of all the plant and machinery deployed in various projects under execution. In his position as Director, Mr. Ramesh Kumar Prithani has developed good relations with the prominent names in Construction Industry in West Bengal. He enjoys good rapport with the State Government Agencies and other authorities which give him an unmistakable edge in ensuring smooth execution and operation of the projects.
Mr. Manoj Kumar Prithani
Mr. Manoj Kumar Prithani, aged 40 years is the Whole-time Director of our Company. He is looking after the operations at North - East and is responsible for looking after the Financial Management of all Projects under execution at various locations in North – East region covering Assam, Arunachal Pradesh, Agartala and West Bengal. He has 14 years of rich experience in the field of Financial Management & Accounts and applies modern Financial Techniques in the Projects to further enhance profitability in the Company. A commerce graduate by qualification, he has been continuously making concerted efforts to enhance functional and procedural efficiency in the management of all major works under execution.
Mr. Sanjeev Kumar Prithani
Mr. Sanjeev Kumar Prithani, aged 37 years is the Whole-time Director of our Company. A graduate in Mechanical Engineering with over 10 years of rich experience. Mr. Sanjeev Kumar Prithani is responsible for all the technical matters related to the contracts and projects under execution. He is a known perfectionist in the field and stickler for quality. After completing his graduation in Mechanical Engineering, he put his special skills to practice at all prominent work sites of the company. He enjoys an in-depth understanding of the contracting scenario in the construction environment and is responsible for carrying out realistic cost analysis and evaluation of financial model in the finalization of all tender documents for competing in new projects for the company. Mr. Sanjeev Kumar Prithani is also responsible for ensuring that the technical skill is available to the company constantly updated, to keep pace with the fast changing technology in the construction industry.
Mr. Surinder Kumar Soni
Mr. Surinder Kumar Soni, aged 70 years is the Independent Director of our Company. He is Ex-Chairman & Managing Director of Oriental Bank of Commerce. He is an eminent banker having a vast experience from grass root to the level of CMD. During his tenure as CMD of Oriental Bank of Commerce, the bank attended glorious heights, be it multifold increase in deposit of the bank or the share of Oriental Bank of Commerce in banking industry rising from 1.3% to 2% and of course the net profit soaring from Rs. 205 million in 1992 - 93 to Rs. 1758 million in 1995-96. He has rich academic & professional background. He is B.Sc., L.L.B., CAIIB (I) & has held positions as Deputy Chairman of the Managing Committee of the Indian Bank’s Association, Bombay (1994-95), Chairman of the Systems & Procedures Committee of the Indian Bank’s Association, Bombay, Alternative Chairman of the Committee of Public Sector Banks (COPSEB). He was also the Chairman of the Legal Committee of the Indian Bank’s Association (1992-93). He was also Banking Ombudsman for State of Delhi, Haryana and Jammu and Kashmir from July 11, 1998 to July 10, 2001. He is presently on the Board of Centurion Bank of Punjab Ltd and P N B Gilts Ltd., besides being on board of other Companies.
Mr. Om Kumar
Mr. Om Kumar, IAS (Retd.), aged 62 years with an excellence, dynamism and record of achievements, is a professional having 41 years of successful track in every job/field undertaken by him. A B.Sc., AMIS (Associate Member of Institution of Surveyors), FIS fellow of Institution of Surveyors, Msc. Economic (University of Wales U.K.) and MBA (University of Madras), he earned numerous landmarks, skills & personal
138 decoration. He was awarded Raksha Medal in 1965 (Indo-Pak war). He has received various felicitation / awards. During 41 years of professional experience, he held several positions, starting with 7 years stint with Indian Army as 2nd lieutenant in 1964 & moving on to join Indian Administrative Services in 1971. Ever since then, it has been a long journey for Mr. Om Kumar with milestones crossed from the status of Collector, Secretary, Managing Director, Vice Chairman, Chairman with many State Govt. Departments & PSUs to Principal Resident Commissioner Tamilnadu.
Mr. Om Prakash Kejriwal
Mr. OM Prakash Kejriwal, aged 61 years is the Independent Director of our Company. He is an Advocate by profession. He was rank holder in Law from Dibrugarh University in the year 1968. Bar council of Assam awarded him certificate of practice in February 1969, since then he is practicing Law. He has specialization in Taxation and Consumer Law. He is a Consumer Activist and Social Worker.
Mr. Deo Chandra Hirawat
Mr. Deo Chandra Hirawat, aged 55 years is the Independent Director of our Company. He is season management consultant having varied exposure with focus on Debt syndication & has a very rich experience in Merchant Banking, Leasing, Mutual Funds & Security Market. He possess an in depth knowledge of Equity issue marketing, Debt / Debenture Issue & Private Placement, External Commercial Borrowings, Re- Structuring of Business, Merger / De-merger. He has dealt with Financial / Banking Institution, Mutual Funds & other Govt. and foreign agencies at different levels.
Borrowing Powers of the Board
Our Articles, subject to the provisions of the Act, authorize our Board to raise or borrow or secure the payment of any sum or sums of money for the purposes of the Company. Pursuant to a resolution passed by our shareholders on November 4, 2005 in accordance with provisions of the Companies Act, our Board has been authorized to borrow sums of money for the purpose of our Company upon such terms and conditions and with or without security as the Board of Directors may think fit, provided that the money or money's to be borrowed together with the money's already borrowed by our Company shall not exceed, at any time, a sum of Rs. 50000 Lacs.
Terms of Appointment & Compensation to our Directors
Name of Director Contract/ Details of Remuneration Term Appointment Letter/ Resolution Mr. Suresh Kumar Re-appointed as Salary: Five years Prithani Managing Director of the Rs. 60,000 per month. with effect Company vide from January Commission: shareholders resolution 1, 2004. Maximum of 1% of the net profit of dated January 12, 2004. the company for a financial year as Remuneration may be decided by the Board from revised with time to time. effect from Perquisites: April 1, 2006. Rent free accommodation and other perks. Mr. Ramesh Kumar Re-appointed as Whole- Salary: Five years Prithani time Director of the Rs. 30,000 per month. with effect Company vide from January shareholders resolution Commission: 1, 2004. dated January 12, 2004. Maximum of 1% of the net profit of the company for a financial year as Liable to may be decided by the Board from retire by time to time. rotation
139 Perquisites: Rent free accommodation and Remuneration other perks. revised with effect from April 1, 2006. Mr. Manoj Kumar Re-appointed as Whole- Salary: Five years Prithani time of the Company vide Rs. 30,000 per month. with effect shareholders resolution from January dated January 12, 2004. Commission: 1, 2004. Maximum of 1% of the net profit of the company for a financial year as Liable to may be decided by the Board from retire by time to time. rotation
Perquisites: Remuneration Rent free accommodation and revised with other perks. effect from April 1, 2006 Mr. Sanjeev Kumar Re-appointed as Whole- Salary: Five years Prithani time of the Company vide Rs. 30,000 per month. with effect shareholders resolution from January dated January 12, 2004. Commission: 1, 2004. Maximum of 1% of the net profit of the company for a financial year as Liable to may be decided by the Board from retire by time to time. rotation
Perquisites: Remuneration Rent free accommodation and revised with other perks. effect from April 1, 2006 Mr. Surinder Kumar Appointed as an No remuneration except sitting fees Liable to Soni Independent Director retire by vide resolution of the rotation Board of Directors of the Company dated February 12, 2007. Mr. Om Kumar Appointed as an No remuneration except sitting fees Liable to Independent Director retire by vide resolution of the rotation Board of Directors of the Company dated February 12, 2007. Mr. Om Prakash Appointed as an No remuneration except sitting fees Liable to Kejriwal Independent Director retire by vide resolution of the rotation Board of Directors of the Company dated May 11, 2005 and resolution of shareholders of the Company dated September 28, 2005. Mr. Deo Chandra Appointed as an No remuneration except sitting fees Liable to Hirawat Independent Director retire by vide resolution of the rotation Board of Directors of the Company dated February 12, 2007.
140 Corporate Governance
We stand committed to good corporate governance practices. We have set up internal policies to ensure best practices in corporate governance. The corporate governance philosophy is dedicated to the attainment of the highest levels of accountability and transparency in dealings with our stakeholders. The corporate governance policies lay emphasis on communication (both internal and external) and reporting. These vital initiatives extend beyond mandatory corporate governance requirements and are in accordance with ours aim of establishing voluntary best practices for good corporate governance practices
Our Company is in compliance of the provisions for corporate governance as stipulated in the listing agreements with the Stock Exchanges, including with respect to broad basing of our Board to appoint independent Directors to our Board and the constitution of the audit committee, investor grievance committee and compensation committee.
We have constituted the following committees of our Board of Directors for compliance with corporate governance requirements:
(a) Audit Committee; (b) Shareholders'/ Investors' Grievance Committee; (c) Remuneration Committee;
Audit Committee
The Audit Committee was re-constituted on February 12, 2007. The Committee currently consists of following members:
Name of Director Chairman/ Member Designation Mr. Surinder Kumar Soni Chairman Independent Director Mr. Om Kumar Member Independent Director Mr. Om Prakash Kejriwal Member Independent Director Mr. Deo Chandra Hirawat Member Independent Director Mr. Sanjeev Kumar Prithani Member Whole-time Director
The Company Secretary of the Company shall be the secretary of this Committee.
The terms of the Audit Committee is to comply with the requirements of section 292A of the Companies Act and Clause 49 of the listing agreement to be entered into with the stock exchange (s). The scope of Audit Committee shall include but shall not be restricted to the following:
• Overseeing our financial reporting process and the disclosure of our financial information to ensure that the financial statements are correct, sufficient and credible;
• Recommending the appointment and removal of external auditors, fixation of audit fee and also approval for payment for any other services;
• Reviewing with management the annual financial statements before submission to the Board, focusing primarily on:
¾ Any changes in accounting policies and practices ¾ Major accounting entries based on exercise of judgement by management ¾ Qualifications in draft audit report ¾ Significant adjustments arising out of audit ¾ The going concern assumption ¾ Compliance with accounting standards ¾ Compliance with stock exchange and legal requirements concerning financial statements
141 • Any related party transactions i.e. transactions of our Company of material nature, with our Promoters or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of our Company at large;
• Reviewing with the management, external and internal auditors, the adequacy of internal control systems;
• Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;
• Discussing with internal auditors any significant findings and follow up there on;
• Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;
• Discussing with external auditors before the audit commences on the nature and scope of audit and after the audit to ascertain any area of concern;
• Reviewing our Company's financial and risk management policies;
• To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors;
• To monitor the utilization of funds to be raised pursuant to the Issue.
Shareholders’/Investors' Grievance Committee
The Shareholders’/Investors' Grievance Committee was constituted on February 12, 2007. The Committee currently consists of following members:
Name of Director Chairman/ Member Designation Mr. Om Prakash Kejriwal Chairman Independent Director Mr. Om Kumar Member Independent Director Mr. Sanjeev Kumar Prithani Member Whole-time Director
The Company Secretary of the Company shall be the secretary of this Committee.
The terms of reference of the investor grievance committee includes:
• Approving/authenticating all Equity Share transfers/transposition/transmission requests received from shareholders/ investors in our Company;
• Resolving all the complaints received from the investors/shareholders;
• Placing before the Board the status of various complaints received by the committee.
Remuneration Committee
The Remuneration Committee was constituted on February 12, 2007. The Committee currently consists of following members:
Name of Director Chairman/ Member Designation Mr. Om Prakash Kejriwal Chairman Independent Director Mr. Surinder Kumar Soni Member Independent Director Mr. Om Kumar Member Independent Director
The Company Secretary of the Company shall be the secretary of this Committee.
142
The remuneration committee shall have powers to decide, inter alia, the following:
• Remuneration payable to our Managing Director/whole time Directors;
• Sitting fee payable to our non executive Directors;
• Our remuneration policy covering policies on remuneration payable to our senior executives.
Shareholding of Directors in our Company
S. Name of Director No. of Equity Shares Pre-Issue Post-Issue No. Percentage Percentage Shareholding Shareholding 1 Mr. Suresh Kumar Prithani 877900 7.32 5.42 2 Mr. Ramesh Kumar Prithani 1090112 9.08 6.73 3 Mr. Manoj Kumar Prithani 1078738 8.99 6.66 4 Mr. Sanjeev Kumar Prithani 739150 6.16 4.56
Interest of our Directors
All of our Directors may be deemed to be interested to the extent of fees payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them under our Articles of Association, and to the extent of remuneration paid to them for services rendered as an officer or employee of our Company.
Our Directors may also be regarded as interested in the Equity Shares, if any, held by them or that may be subscribed by or allotted to the companies, firms, trusts, in which they are interested as directors, members, partners, trustees and promoters, pursuant to this Issue. All of our Directors may also be deemed to be interested to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares.
Except as stated in the “Related Party Transactions” appearing under the section titled ‘Financial Statements” beginning on page 168 of this Draft Red Herring Prospectus, and to the extent of shareholding in our Company, our Directors do not have any other interest in our business.
Our Directors have no interest in any property acquired by our Company within two years of the date of filing of this Draft Red Herring Prospectus.
Changes in our Board of Directors during the last three years
The changes in our Board of Directors during the last three years are as follows:
Name Date of Appointment Date of Cessation Reason Mr. Ajay Ambani March 10, 2004 May 19, 2005 Resignation Mr. Suneet Todi October 24, 2003 May 11, 2005 Resignation Mr. Siw Prasad Agarwalla September 1, 2001 May 31, 2005 Resignation Mr. Sobhna Prithani December 1, 2000 July 31, 2004 Resignation Mr. Om Prakash Kejriwal May 11, 2005 - Appointment Mr. Murari Lal Agarwalla May 19, 2005 - Appointment Mr. Siw Prasad Agarwalla June 8, 2005 - Appointment Mr. Surinder Kumar Soni February 12, 2007 - Appointment Mr. Deo Chandra Hirawat February 12, 2007 - Appointment Mr. Dhirendra Nath Buragohain February 12, 2007 - Appointment Mr. Om Kumar February 12, 2007 - Appointment Mr. Dhirendra Nath Buragohain February 12, 2007 February 27, 2007 Resignation Mr. Siw Prasad Agarwalla June 8, 2005 March 5, 2007 Resignation Mr. Murari Lal Agarwalla May 19, 2005 March 5, 2007 Resignation
143 Management Organization Structure
.
Prj. Egr. Ast. Egr. SUPVR SUPVR
Prj. Mgr
DIRECTOR
WHOLE TIME .
Assistant nt. LBR
Prj. Egr. SUPVR SUPVR o C Ast. Egr. DGM Projects Projects DGM
Prj. Mgr
GM – Business Development
SUPVR SUPVR
Ast. Egr. Ast. Egr. Prj. Egr. DIRECTOR DIRECTOR Prj. Mgr. WHOLE TIME
. LBR
p
SUPVR Executive Tem
Lab Asst. Qty Sur.
CMD
Development Executive
GM – Corporate & Business Board of Directors COMPANY SECRETARY SECRETARY nt a
ASSITANT(S) ASSITANT(S) DGM DGM Assist Purchase Purchase AGM
GM-Business CEO - Real DIRECTOR Development Mining
Estate Div. & EXECUTIVE(S) EXECUTIVE(S) WHOLE TIME Industrial Park
Assistant
Finance Asst. Mgr. ASSITANT(S)
G M
& FIN. ACCTS
Executive Accounts Asst. Mgr. GM – Human Resources Manager Manager Accounts EXECUTIVE(S) EXECUTIVE(S)
144 Key Managerial Personnel
The details of our key managerial personnel are as follows:
S. Name of Designation Age Qualification Experie- Date of Previous No. Employee (in nce (in Joining Employment Years) Years) 1 Dhirender Nath CEO 61 Ph.D (IIT) Post 38 October 1, Founder Director Buragohain (Real Estate Doctoral Research 2005 (IIT-Guwahati) Division) from University of Wales 2 A.K.Duggal GM (Business 56 B.Tech (Mining) 34 November General Manager- Development - Indian school of 14, 2005 Gulf Oil Limited Mining) Mines 3 Gopal Bachani GM (Business 48 B.Com from Delhi 30 May 9, General Manager Development) University 2001 (Marketing) - HBN Diaries & Allied Limited 4 Raminder Singh GM (HR & 54 PG Diploma in 39 January 8, GM (HR & Admin) Sahota Legal) Business 2007 - Sahota Impex Management & (India) Pvt. Ltd. Industrial Administration, CAIIB & LLB 5 Rajesh Singh GM (Business 42 BE (Electrical) & 20 August 8, GM (Projects)- Development) MBA (Marketing) 2005 Coinma India (P) Ltd. 6 Abhaya Kumar DGM 50 M.Sc, MBA 28 August 25, Manager (S & P) - (Purchase) (Materials 2006 Continental Management) Construction Ltd. 7 Narendra Nath Company 49 FCS, LLB & 23 November CEO-Dalton Batabyal Secretary Certificate in 1, 2006 Chemicals Pvt. Financial & Ltd. Personnel Management 8 G.S.Kapoor AGM 44 Diploma in 25 July 10, Sr. Manager - (Purchase) Mechanical 2006 Samho Gun Young Engineering, Construction Pvt. Graduate Diploma Ltd. in Materials Management 9 S K Bittharia DGM (Projects) 39 B.E (Civil) 16 December Manager (Projects) 1, 2005 - Punj Llyod Limited
Brief details of the Key Managerial Personnel
Mr. Dhirendra Nath Buragohain, CEO (Real Estate Divison & Industrial Park)
Mr. Dhirendra Nath Buragohian, aged 61 years, is B. Tech (Hons.), I.I.T. Bombay, M.Tech (Structures) I.I.T. Bombay, PHD I.I.T Bombay with a Post Doctoral Research, University of Wales. With all these qualifications behind him he has been a guide to Students at I.I.T for excellence in education. He has been a consultant to PWD, Bhabha Atomic Research Centre, DRDO, BHEL, Post & Telegraph, Space Application Centre, Hindustan Construction Company Limited, Gammon India Limited, Larsen & Toubro Limited, Gherzi Eastern, Crompton Greaves Limited etc. He was member of Scientific Advisory committee to the Cabinet, Govt. of India; Executive Council, North East Hill University; Board of Governors, Rural Electrification Corporation, Silchar; Board of Management, Tejpur University; Mizoram University; Assam University; Nagaland University; University Court, Banaras Hindu University. He is CEO of our Real Estate Division & Industrial Park Project
145 and is presently looking after Condominium Project “Spanish Garden” and Industrial Park Project at Guwahati.
Mr. A.K. Duggal, GM (Business Development - Mining)
Mr. A.K. Duggal, aged 56 years has experience of working in various managerial capacities in Public Sector Undertakings and Private Sector enterprises in the field of Coal for more than three decades in Planning, Production, Sales & Marketing. He is a Mining Engineer graduated from Indian School of Mines in 1973. He is heading our mining division. This assignment, in short, requires intensive interaction with various Government authorities for different aspects like allotment of Coal Blocks, Preparation of Mine Plans, Environmental Clearance, Obtaining Mine Lease, Preparation of Project Reports, Financial Closures, and opening of the mine etc. He has worked from January 1981 to October 2005 with M/s. Gulf Oil Corporation Ltd. His last assignment with Gulf Oil was as General Manager (Sales & Marketing) for explosives. Earlier in July 1973 to Dec 1980 he had worked in Bharat Cooking Coal Ltd. a subsidiary of Coal India as Junior and Middle lever Manager at Kendwadih, Bhagaband and Khaskusunda Collieries.
Mr. Gopal Bachani, G M (Business Development)
Mr. Gopal Bachani, aged 48 years has a rich and varied experience of 30 years. He started his own building and construction busniess in 1976 with an emphasis on finishing, designing & execution and continued the same for a period of about 12 years. After this he took various assignments in the functional areas- Accounts & Finance, Marketing and Business development with different private sector enterprises.
Mr. Raminder Singh Sahota, GM (HR & Legal)
Mr. Raminder Singh Sahota, aged 54 years has over 38 years of multi – faceted experience with different organizations namely, Indian Navy, Reserve Bank of India, Kirloskar Brothers Limited etc. He has experience of appearing before Taxation authorities, Courts, MRTP Tribunals and Arbitrators in various corporate and miscellaneous cases. He is law graduate with additional qualifications of CAIIB, PG Diploma in Business Management & Industrial Administration, Diploma in Computer Hardware Maintenance and Software Applications. He is member of Indian Council of Arbitration and a Trustee of Disputes Settlement Trust. He is located at corporate office of our Company at New Delhi.
Mr. Rajesh Singh, GM (Business Development)
Mr. Singh, aged 42 years is BE (Electrical) and MBA (Marketing) and having over 20 years of experience of working in India and abroad in the field of Sales & Marketing, Business Development and handling Key Accounts. He has exposure of working in industries engaged in Heavy Engineering, Consumer Durables and Civil Construction. He has worked with Companies like Kirloskar Electric Co. Ltd. and Bahwan Engineering Co, Muscat etc. He has traveled widely across Europe and South East Asia on professional assignments for Business Development. He is located at our corporate office at New Delhi.
Mr. Abhay Kumar, DGM (Purchase)
Mr. Abhay Kumar, aged 50 years has experience of about 25 years in Procurement Section of organizations such as Orient Ceramics & Industries Ltd, Sarvodaya Paper Mills Ltd, Coral Newsprints Ltd., etc. He is M. Sc. (Chemistry) and PG Diploma in Business Management with specialization in Material Management. He is located at corporate Office at New Delhi.
Mr. Narendra Nath Batabyal, Company Secretary
Mr. Narendra Nath Batabyal, aged 49 years is a fellow member of Institute of Company Secretaries of India, LL.B. from Calcutta University, Certificate in Finance Management & Personnel Management from Jadavpur University is having more than 22 years experience in corporate sector. He has worked in various capacities including GM (Corporate Planning)- Haryana Leather Chemical Limited, Director in Labotron Instruments Ltd, Country Manager of an Italian Company. He has handled two public issues and one right issue other than project implementation, Term Loan funding etc. He has extensively traveled abroad, to Italy, Germany, Holland, Belgium, Bangladesh, South Africa, Ethopia etc in relation to various assignments.
146 Mr. G.S. Kapoor, AGM (Purchase)
Mr. Gauri Shankar Kapoor, aged 44 years has experience of about 25 years in purchase function with specialization in the Cost Reduction and Vendor development area. He has worked with M/s Samsung Corporation (E & C Group), M/s Samhogun Young Construction Pvt. Ltd., M/s Usha Telehoist Ltd., & M/s U.T. Ltd. etc. He is Diploma in Mechanical Engineering with Graduation in Material Management.
Mr. S K Bittharia – DGM (Projects)
Mr. S. K. Bittharia, aged 39 years is B.E (Civil) and has served various construction companies namely, Progressive Construction Ltd., Continental Construction Ltd. & Punj Lloyd Ltd. in various managerial capacities during execution of projects for Sardar Sarovar Nigam Ltd., MP Water Resource Department, NHPC, Himachal Pradesh State Electricity Board etc. He has 16 years experience, in the field of Tendering, Project Planning, Monitoring & Execution, Billing etc. with regard to Hydro Power Projects, Tunnels, Roads / Highways and Irrigation Projects. He is working with us as Dy. General Manager (Projects).
All our key managerial personnel are permanent employees of our Company and none of our Directors and our key managerial personnel are related to each other.
Shareholding of the Key Managerial Personnel
None of our key managerial personnel hold any Equity Shares of our Company.
Bonus or Profit Sharing Plan for our Key Managerial Personnel
There is no bonus or profit sharing plan for our key managerial personnel.
Interest of Key Managerial Personnel
The key managerial personnel of our Company do not have any interest in our Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business.
None of our key managerial personnel have been paid any consideration of any nature from the Company, other than their remuneration.
Changes in our Key Managerial Personnel
The changes in our key managerial personnel in the last one year are as follows:
Name of the Key Designation Date of Date of Reason for Managerial Person Joining Leaving Change N. K. Gupta GM (HR & Admin.) January 12, June 5, 2006 Resignation 2006 Atul Agarwal Company Secretary March 11, June 17, Resignation 2005 2006 Mr. G.S. Kapoor Assistant General July 10, 2006 - Appointment Manager (Purchase) Mr. Abhay Kumar Deputy General August 25, - Appointment Manager (Purchase) 2006 Mr. Rajan Mittal Company Secretary September 11, - Appointment 2006 Mr. Rajan Mittal Company Secretary September 11, October 31, Resignation 2006 2006 Mr. Narendra Nath Batabyal Company Secretary November 1, - Appointment 2006 Rajeev Gupta General Manager September 8, December 12, Resignation (F&A) 2004 2006
147 Mr. Raminder Singh Sahota General Manager January 8, - Appointment (Human Resource & 2007 Legal) Mr. Narayan Murthy D S General Manager February 20, - Appointment (Finance & 2007 Accounts) Mr. Narayan Murthy D S General Manager February 20, April 6, Resignation (Finance & 2007 2007 Accounts)
Employees Share Purchase Scheme/Employee Stock Option Scheme
We do not have any stock option scheme or stock purchase scheme for the employees of our Company.
Payment or benefit to officers of our Company
Except statutory benefits upon termination of their employment in our Company or superannuation, no officer of our Company is entitled to any benefit upon termination of his employment in our Company.
148
OUR PROMOTERS AND PROMOTER GROUP
Our Promoters
Following are the Promoters of our Company:
1. Mr. Siw Prasad Agarwalla 2. Mr. Suresh Kumar Prithani 3. Mr. Ramesh Kumar Prithani 4. Mr. Manoj Kumar Prithani 5. Mrs. Sanjeev Kumar Prithani
Mr. Siw Prasad Agarwalla Age 67 Years Father’s Name Lt. Mr. Jodh Raj Agarwalla Residential Address 4th Bye Lane, Tarun Nagar, Guwahati-781005 Educational Qualification LL.B Voter I. Card Number Not Available PAN AFGPA2908G Driving License Number Not Available Passport Number E6345971 Bank Account Number 19638, Indian Overseas Bank, Daryaganj, Delhi Mr. Suresh Kumar Prithani Age 44 Years Father’s Name Mr. Siw Prasad Agarwalla Residential Address C-5/61, Vasant Kunj, New Delhi-110070 Educational Qualification Pre University Voter I. Card Number Not Available PAN AFOPP4816Q Driving License Number P09082002266580 Passport Number E7314734 Bank Account Number 19229, Indian Overseas Bank, Daryaganj, Delhi Mr. Ramesh Kumar Prithani Age 43 Years Father’s Name Mr. Siw Prasad Agarwalla Residential Address 20, Mandeville Gardens, Flat No. 1B, Kolkata-700019 Educational Qualification Pre University Voter I. Card Number Not Available PAN AFOPP4817R Driving License Number D/L No. F/16, 508/Siv/Pro Passport Number E4333947 Bank Account Number 18947, Indian Overseas Bank, Daryaganj, Delhi Mr. Manoj Kumar Prithani Age 40 Years Father’s Name Mr. Siw Prasad Agarwalla Residential Address 4th Bye Lane, Tarun Nagar, Guwahati-781005 Educational Qualification B. Com Voter I. Card Number Not Available PAN AFOPP4820Q Driving License Number 2727/95/K (W/Z) Passport Number E5950296 Bank Account Number 19332, Indian Overseas Bank, Daryaganj, Delhi
149 Mr. Sanjeev Kumar Prithani Age 37 Years Father’s Name Mr. Siw Prasad Agarwalla Residential Address C-5/5, Vasant Kunj, New Delhi-110070 Educational Qualification B.E. Voter I. Card Number Not Available PAN AFOPP4818A Driving License Number Not Available Passport Number B5289071 Bank Account Number 19303, Indian Overseas Bank, Daryaganj, Delhi
Mr. Siw Prasad Agarwalla
Mr. Siw Prasad Agarwalla, aged 67 years is a Masters in Commerce and also a Law graduate from Assam University. His name is enrolled as an Advocate in Bar Council of Assam and he practices as an advocate, in the Jorhat District Court as a member of the Jorhat Bar Association, Jorhat Assam
Mr. Suresh Kumar Prithani
Mr. Suresh Kumar Prithani, aged 44 years is the Chairman & Managing Director of our Company. A symbol of hard work, integrity, discipline and self-reliance, Mr. Prithani started the construction business in a modest way in the late 80’s and built up the Company gradually.. From those early days of facing ups and downs, the Company has come a long way, driven by the sheer strength of his untiring efforts, pioneering vision and impeccable leadership. He is the beacon of inspiration and motivation for the Company.
He personally overseas each project undertaken by the Company , paying minute attention to the key factors like mechanization, quality control, human resource management, systematic planning and timely completion. Due to his untiring efforts and sharp negotiating skills coupled with his in-depth understanding of the banking norms, purchasing and project management he has managed to obtain best possible terms from the Financial Institutions, vendors and earn satisfaction from principal employers. He has over twenty years of experience in the filed of Infrastructure development works, Highways and Roads, Tunnels, Airports, Mining, Institutional Buildings and Hydroelectric Power Projects. He lays a strong emphasis on team work, synergy, and professionalism and pursues excellence on all fronts and at all levels of the organization.
Mr. Ramesh Kumar Prithani
Mr. Ramesh Kumar Prithani, aged 43 years is the Whole-time Director of our Company. He has 16 years of rich experience in the field of Civil Engineering and land development works. He is looking after the operations at North – East and is responsible for optimum utilization, maintenance, productivity and road worthiness of all the plant and machinery deployed in various projects under execution. In his position as Director, Mr. Ramesh Kumar Prithani has developed good relations with the prominent names in Construction Industry in West Bengal. He enjoys good rapport with the State Government Agencies and other authorities which give him an unmistakable edge in ensuring smooth execution and operation of the projects.
Mr. Manoj Kumar Prithani
Mr. Manoj Kumar Prithani, aged 40 years is the Whole-time Director of our Company. He is looking after the operations at North - East and is responsible for looking after the Financial Management of all Projects under execution at various locations in North – East region covering Assam, Arunachal Pradesh, Agartala and West Bengal. He has 14 years of rich experience in the field of Financial Management & Accounts and applies modern Financial Techniques in the Projects to further enhance profitability in the Company. A commerce graduate by qualification, he has been continuously making concerted efforts to enhance functional and procedural efficiency in the management of all major works under execution.
150 Mr. Sanjeev Kumar Prithani
Mr. Sanjeev Kumar Prithani, aged 37 years is the Whole-time Director of our Company. A graduate in Mechanical Engineering with over 10 years of rich experience. Mr. Sanjeev Kumar Prithani is responsible for all the technical matters related to the contracts and projects under execution. He is a known perfectionist in the field and stickler for quality. After completing his graduation in Mechanical Engineering, he put his special skills to practice at all prominent work sites of the company. He enjoys an in-depth understanding of the contracting scenario in the construction environment and is responsible for carrying out realistic cost analysis and evaluation of financial model in the finalization of all tender documents for competing in new projects for the company. Mr. Sanjeev Kumar Prithani is also responsible for ensuring that the technical skill is available to the company constantly updated, to keep pace with the fast changing technology in the construction industry.
Interest of our Promoters
Our Promoters are interested in our Company to the extent that they have promoted our Company, their shareholding in our Company and to the extent of them being directors of our Company. For further interest, of our Promoters/ Directors, please refer to section titled “Our Management” beginning on page 136 of this Draft Red Herring Prospectus.
Interest in any property acquired by our Company within two years or proposed to be acquired by it
The Promoters and the Promoter Group have no interest in any property acquired in the past two years or proposed to be acquired by our Company, except that we have taken some properties on lease from entities falling in Promoter Group as details below:
Leasing of Properties owned by Promoter Group a. We have taken on lease a residential flat owned by Mrs. Shobna Prithani, wife of Mr. Suresh Kumar Prithani, one of the promoters of the Company on a monthly rental of Rs. 75,000. The same has been provided to Mr. Suresh Kumar Prithani as rent-free accommodation. b. We have taken on lease a residential flat owned by Mrs. Anita Prithani, wife of Mr. Manoj Kumar Prithani, one of the promoters of the Company on a monthly rental of Rs. 30,000. The same has been provided to Mr. Manoj Kumar Prithani as rent-free accommodation.
Sale of Immovable Property to Promoter Group
Further, we have sold one of our immovable property located at Kolkata to one of the relative of our Promoters as detailed below:
Our Company has sold a residential flat situated at Kolkata to Mrs. Anshu Prithani, wife of Mr. Ramesh Kumar Prithani, one of the promoters of the Company at price of Rs. 8,550,000 against cost price of Rs. 7,342,712 appearing in our books of accounts.
For further details, please refer to the “Related Party Transactions” appearing under the section titled “Financial Statements” beginning on page 168 of this Draft Red Herring Prospectus.
Payment or benefits to our Promoters during the last two years
Except as stated in the “Related Party Transactions” appearing under the section titled “Financial Statements” beginning on page 168 of this Draft Red Herring Prospectus, there has been no payment or benefits to our Promoters during the last two years from the date of filing of this Draft Red Herring Prospectus.
151 Common Pursuits
Brahmaputra Projects Limited, Brahmaputra Promoters & Planners Private Limited, Indotech Tubewells Private Limited, Brahmaputra Realtors Private Limited, Satluj Infrastructure Limited, Brahmaputra Hoshiarpur-Phagwara Toll Roads Limited and Brahmaputra Sirhind-Morinda-Ropar Toll Roads Limited are in a line of business that is similar to ours. However, we shall adopt the necessary procedures and practices as permitted by law to address any conflict situations, as and when they may arise. For further details on the related party transactions, to the extent, which our Company is involved, please refer to the “Related Party Transactions” appearing under the section titled “Financial Statements” beginning on page 168 of this Draft Red Herring Prospectus.
Related Party Transactions
For details of the related party transactions, please refer to section titled “Financial Statements” beginning on page 168 of this Draft Red Herring Prospectus.
Other Confirmations
We confirm that the PAN, bank account number and passport number of our promoters are being submitted to BSE and NSE at the time of filing of this Draft Red Herring Prospectus with them.
Further, our Promoters have confirmed that they have not been detained as willful defaulters by the Reserve Bank of India or any other governmental authority and there are no violations of securities laws committed by them in the past or are pending against them.
None of our Promoters have been restricted from accessing the capital markets.
Promoter Group
In addition to the Promoters named above, the following natural persons, HUFs and companies shall form part of our Promoter group.
The natural persons who are part of our Promoter Group, other than the Promoters named above are as follows: -
S. No. Name Relation to Promoter 1 Mrs. Geeta Devi Agarwalla Wife of Mr. Siw Prasad Agarwalla Mother of Mr. Suresh Kumar Prithani, Mr. Ramesh Kumar Prithani, Mr. Manoj Kumar Prithani and Mr. Sanjeev Kumar Prithani 2 Mrs. Sobhna Prithani Wife of Mr. Suresh Kumar Prithani 3 Mrs. Anshu Prithani Wife of Mr. Ramesh Kumar Prithani 4 Mrs. Anita Prithani Wife of Mr. Manoj Kumar Prithani 5 Mrs. Kiran Prithani Wife of Mr. Sanjeev Kumar Prithani 6 Mr. Sanjay Kumar Mozika Cousin brother of Mr. Suresh Kumar Prithani, Mr. Ramesh Kumar Prithani, Mr. Manoj Kumar Prithani and Mr. Sanjeev Kumar Prithani
The companies which form part of our Promoter Group are as follows:
1. Brahmaputra Infrastructure Limited (Wholly Owned Subsidiary Company) 2. Brahamputra Consortium Pte. Limited (Wholly Owned Subsidiary Company) 3. Brahmaputra Concrete Private Limited (Subsidiary Company) 4. Brahmaputra Projects Limited 5. Brahmaputra Overseas Limited 6. Brahmaputra Enterprises Private Limited 7. Brahmaputra Promoters & Planners Private Limited
152 8. Indotech Tubewells Private Limited 9. Brahmaputra Property Management Services Private Limited 10. M.L. Singhi & Associates Private Limited 11. Karnani Finlease Private Limited 12. Yoyo Distillers & Bottlers Private Limited 13. Brahmaputra Holdings Private Limited 14. Brahmaputra Realtors Private Limited 15. Satluj Infrastructure Limited 16. Brahmaputra Hoshiarpur-Phagwara Toll Roads Limited 17. Brahmaputra Sirhind-Morinda-Ropar Toll Roads Limited
The HUFs that form part of our Promoter Group are as follows:
1. Siw Prasad Agarwalla & Sons (HUF) 2. Suresh Kumar Prithani (HUF) 3. Ramesh Kumar Prithani (HUF) 4. Manoj Kumar Prithani (HUF) 5. Sanjeev Kumar Prithani (HUF)
The details of the companies which are part of our Promoter Group, other than Our Subsidiaries (For details of Our Subsidiaries, please refer to section titled “History and Corporate Structure” beginning on page 123 of this Draft Red Herring Prospectus) are as follows:
1. Brahmaputra Projects Limited
Corporate Information
Brahmaputra Projects Limited was incorporated under the Companies Act on January 15, 1992 as a private limited company under the name Indotech Commercial Private Limited with the Registrar of Companies, National Capital Territory of Delhi & Haryana. It changed its name to Brahmaputra Projects Private Limited and received a fresh certificate of incorporation on August 22, 2003. Subsequently, it converted into a public limited company and received a fresh certificate of incorporation on March 11, 2004 and its name was changed to Brahmaputra Projects Limited. Its registered office is located at A-7, Main Mahipalpur Road, New Delhi-110037, India. The Company was incorporated for carrying on the business of construction and undertaking work on contract basis. However, the Company has not started any commercial activity. The Company has invested its funds in residential and commercial spaces.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Percentage of Shares Held Issued Equity Share Capital 1 Suresh Kumar Prithani 14,990 17.22 2 Shobna Prithani 12,375 14.21 3 Suresh Kumar Prithani (HUF) 11,135 12.79 4 Ramesh Kumar Prithani 325 0.37 5 Anshu Prithani 585 0.67 6 Ramesh Kumar Prithani (HUF) 5,750 6.60 7 Manoj Kumar Prithani (HUF) 3,825 4.40 8 Anita Prithani 8,330 9.57 9 Manoj Kumar Prithani (HUF) 5,750 6.60 10 Sanjeev Kumar Prithani 2,160 2.48 11 Kiran Prithani 4,085 4.70 12 Sanjeev Kumar Prithani (HUF) 5,750 6.60 13 M. L. Singhi & Associates Private Limited 11,125 12.78 14 Brahmaputra Promoters & Planners Private Limited 875 1.01 Total 87,060 100.00
153 Board of Directors
As of December 31, 2006, the board of directors of Brahmaputra Projects Limited consists of:
1. Mr. Siw Prasad Agarwalla 2. Mr. Suresh Kumar Prithani 3. Mr. Manoj Kumar Prithani 2. Mr. Sanjeev Kumar Prithani
Financial Performance
The audited financial results of Brahmaputra Projects Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Nine Months Year Ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 100) 87.06 87.06 80.06 45.53 Reserves and Surplus 133.70 129.18 105.01 1.66 Sales and Other Income 4.89 4.39 4.46 21.40 Profit/ (Loss) after tax 4.52 3.16 0.23 0.81 Earnings/ (Loss) per share (Rs.) 5.19 3.63 0.29 1.77 Book Value per share (Rs.) 253.15 247.96 230.59 103.65
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
2. Brahmaputra Overseas Limited
Corporate Information
Brahmaputra Overseas Limited was incorporated under the Companies Act on May 31, 1994 under the name Indotech Agro Industries Limited with the Registrar of Companies, National Capital Territory of Delhi & Haryana. It received its certificate for commencement of business on June 22, 1994. It changed its name to Brahmaputra Overseas Limited and received a fresh certificate of incorporation on February 20, 2002. Its registered office is located at A-7, Main Mahipalpur Road, New Delhi-110037, India. It is engaged in the business of trading of imported furniture, accessories, artifacts, lights etc.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Suresh Kumar Prithani 80,100 9.04 2 Shobna Prithani 55,200 6.24 3 Ramesh Kumar Prithani 100 0.01 4 Manoj Kumar Prithani 100 0.01 5 Sanjeev Kumar Prithani 100 0.01 6 Siw Prasad Agarwalla 100 0.01 7 Brahmaputra Projects Limited 280,000 31.61 8 M.L. Singhi & Associated Private Limited 470,000 53.07 Total 885,700 100.00
154 Board of Directors
As of December 31, 2006, the board of directors of Brahmaputra Overseas Limited consists of:
1. Mr. Surender Gulia 2. Mr. Satyanarain Sharma 3. Mr. Sampat Kumar Sharma
Financial Performance
The audited financial results of Brahmaputra Overseas Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 10) 88.57 88.57 88.57 88.57 Reserves and Surplus (34.63) (28.87) (44.57) (54.83) Sales and Other Income 36.32 90.13 117.27 68.15 Profit/ (Loss) after tax (6.21) 15.70 10.30 (35.37) Earnings/ (Loss) per share (Rs.) (0.70) 1.77 1.16 (3.99) Book Value per share (Rs.) 5.96 6.61 4.79 3.37
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
3. Brahmaputra Enterprises Private Limited
Corporate Information
Brahmaputra Enterprises Private Limited was incorporated under the Companies Act on July 9, 1992 under the name Indotech Leasing and Finance Private Limited with the Registrar of Companies, National Capital Territory of Delhi & Haryana. It changed its name to Brahmaputra Enterprises Private Limited and received a fresh certificate of incorporation on December 17, 2004. Its registered office is located at A-7, Main Mahipalpur Road, New Delhi-110037, India. The Company was incorporated for carrying on the business of lease of all kinds of industrial and office plants and machineries, equipments, vehicles etc. However, the Company has not started any commercial activity. The Company has invested its funds in office space in Kolkatta.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Suresh Kumar Prithani 10,450 28.78 2 Shobna Prithani 450 1.24 3 Sanjeev Kumar Prithani 100 0.28 4 Karnani Finlease Private Limited 22,650 62.40 5 Sampat Kumar Sharma 2,650 7.30 Total 36,300 100.00
Board of Directors
As of December 31, 2006, the board of directors of Brahmaputra Enterprises Private Limited consists of:
1. Mr. Siw Prasad Agarwalla 2. Mr. Suresh Kumar Prithani 3. Mrs. Shobna Prithani
155
Financial Performance
The audited financial results of Brahmaputra Enterprises Private Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 100) 36.30 36.30 35.65 1.00 Reserves and Surplus 0.10 0.08 (0.15) 0.01 Sales and Other Income 0.74 0.90 0.00 0.60 Profit/ (Loss) after tax 0.02 0.23 (0.16) 0.26 Earnings/ (Loss) per share (Rs.) 0.06 0.63 (0.45) 26.00 Book Value per share (Rs.) 99.75 99.70 99.05 82.00
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
4. Brahmaputra Promoters & Planners Private Limited
Corporate Information
Brahmaputra Promoters & Planners Private Limited was incorporated under the Companies Act on March 20, 1998 under the name Choice Promoters & Planners Private Limited with the Registrar of Companies, National Capital Territory of Delhi & Haryana. It changed its name to Brahmaputra Promoters & Planners Private Limited and received a fresh certificate of incorporation on July 18, 2003. Its registered office is located at A- 7, Main Mahipalpur Road, New Delhi-110037, India. The Company was incorporated for carrying on the business of construction and undertaking work on contract basis. However, the Company has not started any commercial activity. The Company has invested its funds in office building in Delhi.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Suresh Kumar Prithani 11,000 33.37 2 Shobna Prithani 7,260 22.02 3 Suresh Kumar Prithani (HUF) 3,800 11.53 4 Manoj Kumar Prithani 500 1.52 5 Anita Prithani 2,000 6.07 6 Kiran Prithani 8,400 25.49 Total 32,960 100.00
Board of Directors
As of December 31, 2006, the board of directors of Brahmaputra Promoters & Planners Private Limited consists of:
1. Mr. Suresh Kumar Prithani 2. Mrs. Shobna Prithani
Financial Performance
The audited financial results of Brahmaputra Promoters & Planners Private Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
156 (Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 10) 3.30 3.30 3.18 1.02 Reserves and Surplus 55.92 55.55 52.19 (0.14) Sales and Other Income 1.09 1.33 4.08 0.00 Profit/ (Loss) after tax 0.37 0.48 0.59 (0.05) Earnings/ (Loss) per share (Rs.) 1.12 1.45 1.86 (0.49) Book Value per share (Rs.) 177.94 176.33 171.38 8.33
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
5. Indotech Tubewells Private Limited
Corporate Information
Indotech Tubewells Private Limited was incorporated under the Companies Act on March 3, 1992 with the Registrar of Companies, National Capital Territory of Delhi & Haryana. Its registered office is located at A-7, Main Mahipalpur Road, New Delhi-110037, India. The Company was incorporated for carrying on the business of tubewell constructions, installation, development and of general contractor in all branches of hydraulic and general engineering. Presently, the Company is doing the retail vending of liquor.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Suresh Kumar Prithani 31,943 44.03 2 Shobna Prithani 2,530 3.49 3 Suresh Kumar Prithani (HUF) 1,800 2.48 4 Raja Som Sehrawat 20,000 27.57 5 Raja Som Sehrawat & Sons (HUF) 10,273 14.16 6 Suresh Sehrawat 4,000 5.51 7 Poonam Sehrawat 2,000 2.76 Total 72,546 100.00
Board of Directors
As of December 31, 2006, the board of directors of Indotech Tubewells Private Limited consists of:
1. Mr. Siw Prasad Agarwalla 2. Mr. Manoj Kumar Prithani 3. Mr. Sanjeev Kumar Prithani 4. Mr. Yashdeep Gupta
Financial Performance
The audited financial results of Indotech Tubewells Private Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
157 (Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 100) 72.55 72.55 72.55 72.55 Reserves and Surplus 64.95 49.07 36.08 33.66 Sales and Other Income 432.66 567.61 790.92 488.88 Profit/ (Loss) after tax 15.88 12.99 2.42 3.17 Earnings/ (Loss) per share (Rs.) 21.89 17.90 3.34 4.37 Book Value per share (Rs.) 187.10 164.80 146.48 142.72
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
6. Brahmaputra Property Management Services Private Limited
Corporate Information
Brahmaputra Property Management Services Private Limited was incorporated under the Companies Act on December 17, 2003 under the name Brahmaputra Wine Private Limited with the Registrar of Companies, National Capital Territory of Delhi & Haryana. It changed its name to Brahmaputra Property Management Services Private Limited and received a fresh certificate of incorporation on February 20, 2006. Its registered office is located at A-7, Main Mahipalpur Road, New Delhi-110037, India. The Company was incorporated for carrying on the business of operating, maintaining, managing and developing assets, properties and industrial parks. However, the Company has not started any commercial activity.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Nikita Prithani 5,000 50.00 2 Suresh Kumar Prithani (HUF) 5,000 50.00 Total 10,000 100.00
Board of Directors
As of December 31, 2006, the board of directors of Brahmaputra Property Management Services Private Limited consists of:
1. Mr. Suresh Kumar Prithani 2. Mr. Sanjeev Kumar Prithani
Financial Performance
The audited financial results of Brahmaputra Property Management Services Private Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 10) 1.00 1.00 1.00 1.00 Reserves and Surplus (0.17) (0.13) (0.06) (0.02) Sales and Other Income 0.00 0.00 0.00 0.00 Profit/ (Loss) after tax (0.05) (0.07) (0.04) (0.02) Earnings/ (Loss) per share (Rs.) (0.50) (0.70) (0.40) (0.20) Book Value per share (Rs.) 7.10 7.50 8.30 8.70
158
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
7. M.L. Singhi & Associates Private Limited
Corporate Information
M.L. Singhi & Associates Private Limited was incorporated under the Companies Act on December 8, 1994 with the Registrar of Companies, National Capital Territory of Delhi & Haryana. Its registered office is located at A-7, Main Mahipalpur Road, New Delhi-110037, India. The company is a registered NBFC company with RBI vides Certificate of registration no. B41.02447. It is engaged in the business of lending money and negotiable loans of every description and to transact business as financiers, monetary agents etc.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Manoj Kumar Prithani (HUF) 451,510 15.11 2 Sanjeev Kumar Prithani (HUF) 301,500 10.09 3 Suresh Kumar Prithani 60,000 2.01 4 Suresh Kumar Prithani (HUF) 1,381,990 46.24 5 Ramesh Kumar Prithani (HUF) 40,000 1.34 6 Shobna Prithani 324,000 10.84 7 Kiran Prithani 114,000 3.81 8 Kavita Sharma 50,000 1.67 9 Anita Prithani 59,000 1.97 10 Sampat Kumar Sharma (HUF) 55,000 1.84 11 Gita Devi Agarwalla 90,000 3.01 12 Anshu Prithani 17,000 0.57 13 Sampat Kumar Sharma 45,000 1.51 Total 2,989,000 100.00
Board of Directors
As of December 31, 2006, the board of directors of M.L. Singhi & Associates Private Limited consists of:
1. Mr. Sampat Kumar Sharma 2. Mrs. Kavita Sharma
Financial Performance
The audited financial results of M.L. Singhi & Associates Private Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 10) 298.90 298.90 176.20 176.20 Reserves and Surplus 133.34 132.32 130.01 127.26 Sales and Other Income 28.80 45.79 53.11 67.35 Profit/ (Loss) after tax 1.02 2.31 2.75 (0.25) Earnings/ (Loss) per share (Rs.) 0.03 0.08 0.16 (0.01) Book Value per share (Rs.) 14.46 14.43 17.38 17.22
159 This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
8. Karnani Finlease Private Limited
Corporate Information
Karnani Finlease Private Limited was incorporated under the Companies Act on December 14, 1994 with the Registrar of Companies, National Capital Territory of Delhi & Haryana. Its registered office is located at A-7, Main Mahipalpur Road, New Delhi-110037, India. The company is a registered NBFC company with RBI vides Certificate of registration no. B41.02446. It is engaged in the business of lending money and negotiable loans of every description and to transact business as promoters, financiers and monetary agents.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Suresh Kumar Prithani 365,000 24.67 2 Shobna Prithani 140,010 9.46 3 Suresh Kumar Prithani (HUF) 153,500 10.38 4 Ramesh Kumar Prithani 155,380 10.50 5 Ramesh Kumar Prithani (HUF) 137,500 9.30 6 Manoj Kumar Prithani 140,000 9.46 7 Anita Prithani 32,500 2.20 8 Manoj Kumar Prithani (HUF) 33,000 2.23 9 Sanjeev Kumar Prithani 160,010 10.82 10 Kiran Prithani 40,000 2.70 11 Geeta Devi Agarwalla 7,500 0.51 12 Sampat Kumar Sharma 15,000 1.01 13 Brahmaputra Promoters & Planners Private Limited 100,000 6.76 Total 1,479,400 100.00
Board of Directors
As of December 31, 2006, the board of directors of Karnani Finlease Private Limited consists of:
1. Mr. Sampat Kumar Sharma 2. Mrs. Kavita Sharma
Financial Performance
The audited financial results of Karnani Finlease Private Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 10) 147.94 147.94 97.04 97.04 Reserves and Surplus 214.14 212.77 215.02 209.37 Sales and Other Income 36.47 40.77 84.54 73.82 Profit/ (Loss) after tax 1.37 (2.25) 5.65 0.26 Earnings/ (Loss) per share (Rs.) 0.09 (0.15) 0.58 0.03 Book Value per share (Rs.) 24.47 24.38 32.16 31.58
160 This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
9. Yoyo Distillers & Bottlers Private Limited
Corporate Information
Yoyo Distillers & Bottlers Private Limited was incorporated under the Companies Act on May 19, 1987 under the name Sanjay Sales Private Limited with the Registrar of Companies, National Capital Territory of Delhi & Haryana. It changed its name to Yoyo Distillers & Bottlers Private Limited and received a fresh certificate of incorporation on June 17, 2004. Its registered office is located at House No. 70, Village Bamnoli P.O. Palam Enclave, New Delhi-110045, India. The Company was incorporated for carrying on the business as buyers, sellers, importers, exporters and dealers of all types of plastics, PVC materials, acrylic materials and allied products. Presently, the Company is doing the retail vending of liquor.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Suresh Sehrawat 3,920 11.53 2 Hanmat Singh 3,850 11.32 3 Karnani Finlease Private Limited 9,500 27.95 4 M.L. Singhi & Associates Private Limited 6,500 19.12 5 Sehrawat & Associates Private Limited 8,300 24.41 6 Poonam Sehrawat 500 1.47 7 Ramesh Kumar Prithani 1,000 2.94 8 R.S. Sehrawat & Sons 430 1.26 Total 34,000 100.00
Board of Directors
As of December 31, 2006, the board of directors of Yoyo Distillers & Bottlers Private Limited consists of:
1. Mr. Vinod Singh 2. Mr. Rajan Siddiqui
Financial Performance
The audited financial results of Yoyo Distillers & Bottlers Private Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 100) 34.00 34.00 29.27 4.97 Reserves and Surplus (12.85) (2.48) (1.82) 0.08 Sales and Other Income 136.99 117.91 22.01 0.35 Profit/ (Loss) after tax (10.37) (0.61) (1.90) (0.01) Earnings/ (Loss) per share (Rs.) (30.50) (1.79) (6.49) (0.20) Book Value per share (Rs.) 60.62 91.12 91.32 101.61
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
161 10. Brahmaputra Holdings Private Limited
Corporate Information
Brahmaputra Holdings Private Limited was incorporated under the Companies Act on February 4, 2005 with the Registrar of Companies, National Capital Territory of Delhi & Haryana. Its registered office is located at C-2054, A Sushant Lok-I, Gurgaon, Haryana, India. The Company was incorporated for acting as advisors, underwriters, consultants, registrar, manager to the Public Issue of the companies. However, the Company has not started any commercial activity. The Company has invested its funds in share capital of various Companies.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Suresh Kumar Prithani 5,000 50.00 2 Shobna Prithani 5,000 50.00 Total 10,000 100.00
Board of Directors
As of December 31, 2006, the board of directors of Brahmaputra Holdings Private Limited consists of:
1. Mr. Suresh Kumar Prithani 2. Mrs. Shobna Prithani 3. Ms. Nikita Prithani
Financial Performance
The audited financial results of Brahmaputra Holdings Private Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows: (Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 10) 1.00 1.00 1.00 NA Reserves and Surplus (0.06) (0.03) (0.02) NA Sales and Other Income 0.00 0.00 0.00 NA Profit/ (Loss) after tax (0.03) (0.01) (0.02) NA Earnings/ (Loss) per share (Rs.) (0.30) (0.10) (0.20) NA Book Value per share (Rs.) 6.30 6.60 6.70 NA
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
11. Brahmaputra Realtors Private Limited
Corporate Information
Brahmaputra Realtors Private Limited was incorporated under the Companies Act on February 4, 2005 with the Registrar of Companies, National Capital Territory of Delhi & Haryana. Its registered office is located at C-2054, A Sushant Lok-I, Gurgaon, Haryana, India. The Company was incorporated for carrying on the business of construction and dealing in all kinds of immovable properties. However, the Company has not started any commercial activity. The Company has invested its funds in share capital of various Companies.
162 Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Suresh Kumar Prithani 5,000 50.00 2 Shobna Prithani 5,000 50.00 Total 10,000 100.00
Board of Directors
As of December 31, 2006, the board of directors of Brahmaputra Realtors Private Limited consists of:
1. Mr. Suresh Kumar Prithani 2. Mrs. Shobna Prithani 3. Ms. Nikita Prithani
Financial Performance
The audited financial results of Brahmaputra Realtors Private Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 10) 1.00 1.00 1.00 NA Reserves and Surplus (0.06) (0.03) (0.02) NA Sales and Other Income 0.00 0.00 0.00 NA Profit/ (Loss) after tax (0.03) (0.01) (0.02) NA Earnings/ (Loss) per share (Rs.) (0.30) (0.10) (0.20) NA Book Value per share (Rs.) 8.60 8.90 9.00 NA
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
12. Satluj Infrastructure Limited
Corporate Information
Satluj Infrastructure Limited was incorporated under the Companies Act on November 21, 2005 with the Registrar of Companies, National Capital Territory of Delhi & Haryana. It received its certificate for commencement of business on January 16, 2006. Its registered office is located at A-7, Main Mahipalpur Road, New Delhi-110037, India. The Company was incorporated for carrying on the business of developing infrastructure facilities. However, the Company has not started any commercial activity.
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Suresh Kumar Prithani 10000 20.00 2 Sanjay Agarwal 2500 5.00 3 Lila Dhar Agarwalla 15000 30.00 4 Sarita Devi Agarwal 7500 15.00 5 Manoj Kumar Prithani 2500 5.00 6 Shobna Prithani 10000 20.00 7 Nikita Prithani 2500 5.00 Total 50000 100.00
163
Board of Directors
As of December 31, 2006, the board of directors of Satluj Infrastructure Limited consists of:
1. Mr. Suresh Kumar Prithani 2. Mr. Manoj Kumar Prithani 3. Mrs. Shobna Prithani 4. Ms. Nikita Prithani 5. Mr. Sanjay Agarwal 6. Mr. Lila Dhar Agarwalla 7. Mrs. Sarita Devi Agarwal
Financial Performance
The audited financial results of Satluj Infrastructure Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Nine Months Year ended Ended March 31, March 31, March 31, December 31, 2006 2005 2004 2006 Equity capital (face value of Rs. 10) 5.00 5.00 NA NA Reserves and Surplus (0.10) (0.07) NA NA Sales and Other Income 0.00 0.00 NA NA Profit/ (Loss) after tax (0.03) (0.07) NA NA Earnings/ (Loss) per share (Rs.) (0.06) (0.14) NA NA Book Value per share (Rs.) 9.42 9.48 NA NA
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
13. Brahmaputra Hoshiarpur-Phagwara Toll Roads Limited
Corporate Information
Brahmaputra Hoshiarpur-Phagwara Toll Roads Limited was incorporated under the Companies Act on March 21, 2006 with the Registrar of Companies, National Capital Territory of Delhi & Haryana as a wholly owned subsidiary of Brahamputra Consortium Limited. It received its certificate for commencement of business on May 12, 2006. Its registered office is located at A-7, Main Mahipalpur Road, New Delhi-110037, India. The Company was incorporated for carrying on the business of developing, establishing, designing, constructing, operating and maintaining the toll roads and bridges on a Build-Operate-Transfer basis. The Company was formed as a Special Purpose Vehicle (SPV) for the purpose of execution of Joint venture between BCL and Gayatri Projects Limited. The joint venture was awarded BOT Project for upgradation, strengthening, operation and maintenance of Hoshairpur-Phagwara road in the state of Punjab covering length of 35.50 Km. The project could not be undertaken by the JV, since vacant possession of the land was not handed over to JV within the stipulated time by the client, PIDB. In view of this, the Joint venture surrendered/ withdrew from the project. PIDB has taken the request of joint venture to withdraw from the project on record; however, it is yet to issue communication/ letter, discharging the joint venture from all obligations under the contract. On issuance of such discharge letter, PIDB will proceed to release the performance guarantees namely, bank guarantee of Rs. 18,300,000 dated March 21, 2006 and bank guarantee of Rs. 4,600,000 dated March 21, 2006.
164 Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Brahmaputra Holders Private Limited 18,595 37.19 2 Brahmaputra Realtors Private Limited 18,400 36.80 3 Sampat Kumar Sharma 13,005 26.01 Total 50,000 100.00
Board of Directors
As of December 31, 2006, the board of directors of Brahmaputra Hoshiarpur-Phagwara Toll Roads Limited consists of:
1. Mr. Suresh Kumar Prithani 2. Mr. Ramesh Kumar Prithani 2. Mr. Manoj Kumar Prithani 4. Mr. Sanjeev Kumar Prithani
Financial Performance
The audited financial results of Brahmaputra Hoshiarpur-Phagwara Toll Roads Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Period Ended Year ended December 31, March 31, March 31, March 31, 2006 2006 2005 2004 Equity capital (face value of Rs. 10) 5.00 NA NA NA Reserves and Surplus (2.10) NA NA NA Sales and Other Income 0.00 NA NA NA Profit/ (Loss) after tax (2.10) NA NA NA Earnings/ (Loss) per share (Rs.) (4.20) NA NA NA Book Value per share (Rs.) 5.34 NA NA NA
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
14. Brahmaputra Sirhind-Morinda-Ropar Toll Roads Limited
Corporate Information
Brahmaputra Sirhind-Morinda-Ropar Toll Roads Limited was incorporated under the Companies Act on March 21, 2006 with the Registrar of Companies, National Capital Territory of Delhi & Haryana as a wholly owned subsidiary of Brahamputra Consortium Limited. It received its certificate for commencement of business on May 12, 2006. Its registered office is located at A-7, Main Mahipalpur Road, New Delhi-110037, India. The Company was incorporated for carrying on the business of developing, establishing, designing, constructing, operating and maintaining the toll roads and bridges on a Build-Operate-Transfer basis. The Company was formed as a Special Purpose Vehicle (SPV) for the purpose of execution of Joint venture between BCL and Gayatri Projects Limited. The joint venture was awarded BOT Project for upgradation, strengthening, operation and maintenance of Sirhind-Morinda-Ropar road in the state of Punjab covering length of 43.22 Km. The project could not be undertaken by the JV, since vacant possession of the land was not handed over to JV within the stipulated time by the client, PIDB. In view of this, the Joint venture surrendered/ withdrew from the project. PIDB has taken the request of joint venture to withdraw from the project on record; however, it is yet to issue communication/ letter, discharging the joint venture from all obligations under the contract. On issuance of such discharge letter, PIDB will proceed to release the performance guarantees namely, bank guarantee of Rs. 26,300,000 dated March 21, 2006 and bank guarantee of Rs. 6,600,000 dated March 21, 2006.
165
Shareholding Pattern as on December 31, 2006
S. No. Name of Shareholder No. of Equity Shares Percentage of Issued Held Equity Share Capital 1 Brahmaputra Holders Private Limited 18,595 37.19 2 Brahmaputra Realtors Private Limited 18,400 36.80 3 Sampat Kumar Sharma 13,005 26.01 Total 50,000 100.00
Board of Directors
As of December 31, 2006, the board of directors of Brahmaputra Sirhind-Morinda-Ropar Toll Roads Limited consists of:
1. Mr. Suresh Kumar Prithani 2. Mr. Ramesh Kumar Prithani 2. Mr. Manoj Kumar Prithani 4. Mr. Sanjeev Kumar Prithani
Financial Performance
The audited financial results of Brahmaputra Sirhind-Morinda-Ropar Toll Roads Limited for the last three financial years and for the nine months ended December 31, 2006 are as follows:
(Rupees in Lacs, except per share data) Particulars Period Ended Year ended December 31, March 31, March 31, March 31, 2006 2006 2005 2004 Equity capital (face value of Rs. 10) 5.00 NA NA NA Reserves and Surplus (3.12) NA NA NA Sales and Other Income 0.00 NA NA NA Profit/ (Loss) after tax (3.12) NA NA NA Earnings/ (Loss) per share (Rs.) (6.24) NA NA NA Book Value per share (Rs.) 3.30 NA NA NA
This company is an unlisted company and it has not made any public or rights issue in the preceding three years. It has not become a sick company under the meaning of SICA and it is not under winding up.
Companies/ Firms/ Ventures with which the Promoters have disassociated in the last three years
There is no Company/ firm or venture with which the promoter(s) has disassociated themselves in the last three years.
166 DIVIDEND POLICY
The declaration and payment of dividends will be recommended by our Board of Directors and approved by our shareholders, at their discretion, and will depend on a number of factors, including but not limited to our profits, capital requirements and overall financial condition. The Board may also from time to time pay interim dividends. All dividend payments are made in cash to the shareholders of the Company. The dividend declared by our Company during the last five fiscal years and for the nine months ended December 31, 2006 is presented below:
Particulars Nine For the year ended Months March 31, March March March March Ended 2006 31, 2005 31, 31, 31, December 2004 2003 2002 31, 2006 Face Value of Equity Share 10 10 10 10 10 10 (per share) Rate of Dividend (%) 12.50 12.50 10 Nil Nil Nil Amount of Dividend on Equity 15000001* 10,769,915 7,059,362 Nil Nil Nil Shares (Rs.) Dividend Tax for Equity Shares 2103751* 1,510,481 990,076 Nil Nil Nil (Rs.) * The Board of Directors of the Company in their meeting held on March 28, 2007 declared interim dividend @12.50% for the financial year ending March 31, 2007 and paid the same on March 30, 2007 to the shareholders.
The amounts paid as dividends in the past are not necessarily indicative of our dividend policy or dividend amounts, if any, in the future.
167 SECTION V: FINANCIAL STATEMENTS
UNCONSOLIDATED FINANCIAL INFORMATION OF BRAHAMPUTRA CONSORTIUM LIMITED
AUDITORS’ REPORT
The Board of Directors, Brahamputra Consortium Ltd A-7 Main Mahipalpur Road, New Delhi 110 037
Dear Sirs,
We have examined the Financial Information of Brahamputra Consortium Limited (‘the Company’) annexed to this report for the purpose of inclusion in the offer documents and initialed by us for identification. The Financial Information has been prepared by the management and approved by the Board of Directors of the Company which has been prepared in terms of the requirements of: a) Paragraph B, Part II of Schedule II of the Companies Act, 1956 (‘the Act’); b) the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (‘DIP Guidelines’) as amended from time to time and related clarifications and; c) terms of reference received from the company requesting us to carry out work in connection with the offer document being issued by the company in connection with the proposed initial public offer (‘IPO’) of equity shares of the Company.
A. Financial Information as per Audited Financial Statements:
We have examined the attached ‘Restated Summary Statement of Assets and Liabilities’ of the Company as at 31st December, 2006, 31 March 2006, 2005, 2004, 2003 and 2002 (Annexure I) and the attached ‘Restated Summary Statement of Profits and Losses’ (Annexure II) and the attached ‘Restated Statement of Cash Flows’ (Annexure III) for nine months period ended 31st December 2006 & each of the years ended 31st March 2006, 2005, 2004, 2003 and 2002 together referred to as ‘Restated Summary Statements’. These Summary Statements have been extracted from the financial statements of the years ended 31st March, 2002, 2003, 2004, 2005 and 2006 audited by Singal Bros. & Associates, Chartered Accountants, being the auditors of the Company for those years, and have been adopted by the Board of Directors / Members for those respective years. The financial statements for the nine months period ended 31st December, 2006 have been adopted by the Board of Directors and audited by us. Based on our examination of these summary statements, we state that:
I. The restated profits have been arrived at after charging all expenses including depreciation and after making such adjustments and regroupings as in our opinion are appropriate in the year / period to which they are related as described in Para 3 of the ‘Notes Forming Parts of the Restated Summary Statements’ appearing in Annexure IV.
II. The ‘Restated Summary Statements’ of the Company have been restated with retrospective effect to reflect the significant accounting policies being adopted by the Company as at 31st December 2006, as stated in the Notes forming part of the restated Summary Statements vide Annexure IV to this report.
III. Qualifications in the Auditors’ Report which do not require any corrective adjustments in the financial statements are disclosed in Note 4 of Annexure IV.
IV. The ‘Restated Summary Statements’ have to be read in conjunction with the notes given in Annexure IV to this report.
168 B. Other Financial Information
We have examined the following information in respect of the nine months period ended 31 December 2006 and the years ended 31 March 2006, 2005, 2004, 2003 and 2002 of the Company, proposed to be included in the Offer Document, as approved by the Board of Directors and annexed to this report:
1. Statement of Dividend paid in Annexure V to this report. 2. Performance Ratios as appearing in Annexure VI to this report 3. Capitalization Statement as at 31st December 2006 as appearing in Annexure VII to this report 4. Statement of tax shelters as appearing in Annexure VIII to this report 5. Details of other income as appearing in Annexure IX to this report 6. Details of sundry debtors as appearing in Annexure X to this report 7. Details of unsecured loans as appearing in Annexure XI to this report 8. Details of secured loans as appearing in Annexure XII to this report 9. Details of transactions with related parties as appearing in Annexure XIII to this report 10. Details of aggregate value and market value of quoted investments as appearing in Annexure XIV to this report 11. Details of expenditure incurred on the project as appearing in Annexure XV to this report 12. Details of qualifications appearing in the audit Report as given in Annexure XVI to this report 13. Details of changes in Significant Accounting Policies as given in Annexure XVII to this report
In our opinion the above financial information of the Company read with Significant Accounting Policies and Notes on Account attached in Annexure III & IV respectively to this report, after making adjustments and regroupings as considered appropriate has been prepared in accordance with paragraph B (1) Part II of Schedule II of the Act and the SEBI Guidelines.
This report is intended solely for your information and for inclusion in the Offer document in connection with the specific Public Offer of equity shares of the Company and is not to be used, referred to or distributed for any other purpose without our written consent.
For A.B.BANSAL AND COMPANY CHARTERED ACCOUNTANTS
(A.B. BANSAL) Partner Membership No. 84628 Date: 25/04/2007 Place: New Delhi
169 Annexure – I
Statement of Assets and Liabilities (Rs. in Lacs) Particulars As at December March March March March March 31, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 FIXED ASSETS Gross Block 9492.78 8149.53 3876.92 2528.12 1993.81 1710.26 Less: Depreciation 1946.75 1247.75 699.84 623.69 432.82 245.38 Net Block 7546.03 6901.78 3177.08 1904.43 1560.99 1464.88 Less: Revaluation Reserve ------Net Block after adjustment for 7546.03 6901.78 3177.08 1904.43 1560.99 1464.88 Revaluation Reserve Capital Work in Progress 131.86 265.48 - - 157.95 33.48 Total (A) 7677.89 7167.26 3177.08 1904.43 1718.94 1498.36 INVESTMENTS (B) 251.82 525.18 99.26 100.37 24.63 9.63 CURRENT ASSETS, LOANS AND ADVANCES Inventories 3924.96 1434.25 557.24 129.02 28.13 93.26 Sundry Debtors 626.94 1296.18 1070.54 524.08 237.56 276.17 Cash and bank Balance 1438.11 1092.52 877.59 336.75 230.46 191.02 Loans and Advance 2482.99 1766.61 705.52 369.15 403.76 238.57 Total (C) 8473.00 5589.56 3210.89 1359.00 899.91 799.02 LIABILITIES AND PROVISIONS Secured Loans 9023.05 7779.88 2763.39 568.20 488.86 629.21 Unsecured Loans 520.33 - 105.74 147.81 20.00 - Current Liabilities 2822.35 2140.64 1581.08 1257.11 976.50 843.84 Share Application Money - - - - 73.50 21.61 Provisions 266.59 314.81 158.21 101.86 76.57 36.86 Deferred Tax liability 675.71 512.43 372.47 256.65 240.98 194.99 Total (D) 13308.03 10747.76 4980.89 2331.63 1876.41 1726.51 NET WORTH (A+B+C-D) 3094.68 2534.24 1506.34 1032.17 767.07 580.50 REPRESENTED BY: Share Capital (E) 1200.00 1146.41 779.93 705.53 673.52 168.38 Total Reserves and Surplus 1902.65 1397.20 730.86 332.07 99.96 415.10 Less Revaluation Reserves ------Net Reserve and Surplus (F) 1902.65 1397.20 730.86 332.07 99.96 415.10 Miscellaneous Expenditure (G) 7.97 9.37 4.45 5.43 6.41 2.98 NET WORTH (E+F-G) 3094.68 2534.24 1506.34 1032.17 767.07 580.50
The accompanying significant accounting policies and notes (Annexure IV) are integral part of the accounts.
170 Annexure – II Statement of Profit & Loss Account (Rs. in Lacs) Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 INCOME Receipts from Operations 8215.37 9308.91 5556.70 3891.15 2684.52 2037.65 Increase/ (Decrease) in 1905.66 773.70 389.15 17.05 (78.50) (6.10) stocks Other Income 19.94 22.82 15.36 12.41 0.28 0.05 Total 10140.97 10105.43 5961.21 3920.61 2606.30 2031.60 EXPENDITURE Material, Stores & Operating 7795.30 7679.79 4826.10 3266.91 1892.55 1397.71 Expenses Personnel Expenses 244.98 229.53 150.27 76.83 60.28 42.14 Administrative Expenses 223.40 234.79 136.16 96.08 95.33 57.70 Misc. and Deferred Revenue 1.40 1.87 0.98 0.98 0.98 0.50 Exp. W/Off Total 8265.08 8145.98 5113.51 3440.80 2049.14 1498.05 Profit before Interest, 1875.89 1959.45 847.70 479.81 557.16 533.55 Depreciation and Tax Depreciation 699.00 561.96 320.37 220.12 190.23 155.90 Profit before Interest and Tax 1176.89 1397.49 527.33 259.69 366.93 377.65 Interest & Finance Charges 539.34 614.92 125.41 79.95 71.07 64.82 Loss on sale of - 11.69 (1.68) (18.23) 7.20 13.80 Investment/Assets Net Profit Before Tax 637.55 770.88 403.60 197.97 288.66 299.03 Provision For Taxation Current Tax 76.01 161.30 31.68 46.22 52.67 22.94 Deferred Tax 163.28 139.96 115.83 15.66 45.99 78.43 Net Profit After Tax 398.26 469.62 256.09 136.09 190.00 197.66 Proposed Dividend - 122.81 80.49 - - - Prior Period Item ------Net profit after tax after 398.26 346.81 175.60 136.09 190.00 197.66 adjusting prior period item Profit and Loss Account at the 8.46 161.65 236.05 99.96 306.92 109.26 beginning of the year Transferred to General - 500.00 250.00 - - - Reserve Balance Carried to Balance 406.72 8.46 161.65 236.05 496.92 306.92 Sheet
The accompanying significant accounting policies and notes (Annexure IV) are integral part of the accounts.
171 Annexure – III Cash Flow Statement (Rs. in Lacs) Particulars Nine For the year ended Months March 31, March 31, March 31 March March Ended 2006 2005 2004 31, 2003 31, 2002 December 31, 2006 CASH FLOW FROM OPERATING ACTIVITIES Net Profit Before Tax & Extraordinary 637.55 770.88 403.60 197.97 288.67 299.03 Items Adjustments for: Depreciation 699.00 561.96 320.37 220.12 190.23 155.90 Other Income (7.43) (7.43) - - - - Interest Expenses 495.38 311.30 100.54 52.65 58.01 58.72 Loss / (Profit) on Sale of Assets - 11.70 (1.68) (18.23) 7.20 13.80 Loss / (Profit) on Sale of Shares - - (2.06) - - - Miscellaneous expenses written off 1.40 1.87 0.98 0.98 0.98 0.50 Operating profits before working capital 1825.90 1650.28 821.75 453.49 545.09 527.95 changes Adjustments for: Inventories (2490.71) (877.01) (428.21) (100.89) 65.12 (8.66) Trade & Other Receivables (47.14) (1286.73) (882.83) (251.91) (126.57) (319.92) Trade Payable & Other Liabilities 686.14 560.88 324.79 282.61 133.34 155.52 (1851.71) (1602.86) (986.25) (70.19) 71.89 (173.06) Cash generated from operations (25.81) 47.42 (164.50) 383.30 616.98 354.89 Income tax paid (5.85) (48.33) (56.65) (22.93) (13.64) (8.58) Cash Flow Before Extraordinary Items (31.66) (0.91) (221.15) 360.37 603.34 346.31 Extraordinary items (Prior Year Adjustment) ------Net cash from Operating Activities (A) (31.66) (0.91) (221.15) 360.37 603.34 346.31 CASH FLOW FROM INVESTING ACTIVITIES Capital work in progress 133.61 (265.48) - 157.94 (124.46) (33.48) Purchase of fixed assets (net) (1343.25) (4298.36) (1591.33) (545.34) (293.53) (358.87) Sale/(Purchase) of Investment 273.36 (425.92) 1.10 (75.73) (15.00) (2.25) Profit on Sale of Shares - - 2.06 - - - Other Income 7.43 7.43 - - - - Deferred revenue expenditure ------Net cash used for Investing Activities (928.85) (4982.33) (1588.17) (463.13) (432.99)(394.60) (B) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Issue of Share Capital/Share 160.78 686.00 297.59 54.54 51.88 126.82 Premium Net Proceeds/Repayments of loans/ term 1763.50 4910.75 2153.12 207.16 (120.36) (106.30) loans Dividend including dividend tax (122.80) (80.49) - - - - (Increase)/Decrease in Miscellaneous - (6.79) - - (4.42) (1.72) Expenditures Interest Paid (495.38) (311.30) (100.54) (52.65) (58.01) (58.72) Net cash from Financing Activities (C) 1306.10 5198.17 2350.16 209.05 (130.91) (39.92) Net Increase in cash and cash 345.59 214.93 540.84 106.29 39.44 (88.21) equivalents (A+B+C) Cash and Cash equivalents at beginning of 1092.52 877.59 336.75 230.46 191.02 279.23 the year Cash and Cash equivalents at end of the year 1438.11 1092.52 877.59 336.75 230.46 191.02 Note: Figures in () denotes cash outflow
172 Annexure - IV
Notes forming part of restated summary statements:
A. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of accounting
The financial statements have been prepared to comply with the requirements of the Companies Act, 1956, under the historical cost convention on the accrual basis of accounting and in accordance with the standards on accounting issued by the Institute of Chartered Accountants of India referred to in section 211(3C) of the Companies Act, 1956.
2. Use of estimates
The preparation of financial statements in conformity with generally accepted accounting policies requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported accounts of revenues and expenses for the years presented.
3. Revenue recognition
i. Income from construction contracts is recognized by reference to the stage of completion of the contract activity as certified by the client. ii. Revenue from real estate projects is recognized on the basis of percentage of completion method of accounting iii. Income from industrial park project is recognized on the time of execution of sale contract, in relation to sold areas only.
4. Employee benefit
During the period under review the company has provided Bonus, Gratuity and Leave encashment on accrual basis. Provident fund has been provided on actual liability basis and Gratuity is provided based on actuarial valuation.
5. Investment
Long term investments are stated at cost.
6. Inventory
All inventories consisting of Work in Progress (Contract), Industrial Park and Real-estate (Housing) has been valued at cost.
7. Foreign currency transactions
a) Transactions in foreign currencies are accounted for at exchange rate prevailing as on date of transaction. b) All assets and liabilities in foreign currencies existing at balance sheet date are translated at the rate of balance sheet date. 8. Misc. expenditure.
a) Preliminary expenses are amortized over a period of 10 years. b) Increases in share capital are amortized over a period of 10 years. c) All expenditure exceeding Rs 5000/- incurred on any kind of software and its development termed as “Software Expenses” are amortized over a period of 5 years.
173 9. Fixed assets.
Fixed Assets has been stated at cost less accumulated depreciation. Cost includes purchase price and all other attributable cost of bringing the assets to working condition for intended use.
10. Depreciation
Depreciation is provided on straight line method as per rates specified in Schedule XIV to the Companies Act, 1956.
11. Contingent liabilities
Contingent Liabilities not admitted by the company are not provided for in the accounts but are disclosed by way of Notes to Accounts.
12. Taxation
Income Tax comprises current tax, deferred tax and fringe benefit tax. Deferred tax assets and liabilities are recognized for the future tax consequences of timing differences subject to consideration of prudence. Deferred tax assets and liabilities are measured using the tax rates enacted or substantively enacted by the balance sheet date.
13. Earning per share
The earnings considered in ascertaining company’s EPS comprises the net profit after tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year
14. Borrowing cost
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are considered as part of the cost of that asset. Other borrowing costs are recognized as an expense in the year in which they are incurred.
15. Impairment of assets
Pursuant to Accounting Standard (AS-28) on – Impairment of assets issued by the Institute of Chartered Accountant of India, the company assessed its fixed assets for impairment as at the year end and concluded that there has been no significant impaired fixed assets that needs to be recognized in the books of accounts.
174 B. NOTES TO THE ACCOUNTS
1. Contingent Liabilities
a) Bank Guarantees/ Corporate guarantees given are listed as under:
Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 1) Guarantees given by 8739.48 4705.86 3633.46 698.13 275.00 174.00 banks towards performance, financial and contractual commitments 2) Corporate Guarantees 1325.00 950.00 950.00 950.00 - - given to wholly owned subsidiary 3) Corporate Guarantees - - 90.00 150.00 - - given to associates
b) The Income Tax Department has imposed penalty u/s 271(1)(c) of Rs. 26,29,147/- for the Assessment Year 2001-02 which was not confirmed by ITAT New Delhi vide their order no. ITA NO. 725/D/2005 dated 19th August 2005. But the Income Tax Department has filed the case with High Court against the order from ITAT, New Delhi. No provision has been made for same.
c) The Income Tax Department has imposed penalty u/s 271(1)(c) of the Income Tax Act, 1961 of Rs. 3,33,000/- for the Assessment Year 2002-03 by the DCIT and the same was confirmed by CIT (Appeal). However the said penalty has been adjusted against the refund vide R.V No 057744 dt 27/11/2005 and the Company has appealed against the order of CIT (Appeal) with ITAT, New Delhi. No provision has been made for same.
2. The Balance of Security Deposit, Earnest Money, Withheld Money, Sundry Debtors, Loans & Advances and Sundry Creditors are subject to their confirmation.
3. During the period under review, the Company has recalculated its service tax liability on works contract of production on carbonaceous shale & removal of hard shale of coal from NECL under a sub contract from one of company’s Joint Ventures effective from August 2005 which was not provided earlier in view of expert opinion taken by the Company. However after clarificatory statement from finance ministry appearing in the Economics times dated 03/08/2006, the said liability has been recalculated since start of the order i.e August 2005 and accordingly a sum of Rs 63,64,241.93 (after net of CENVAT credit of Rs 45,51,995.59) pertaining to the period ending 31st March 2006 has been made in the accounts on 3rd August 2006.Moreover the company also provided current period liability Rs 75,02,097.14 (net of CENAVAT Rs 56,89,643.79) making the total liability as on 31/12/2006 at Rs 1,38,66,339.07 out of which the company has deposited Rs 1,21,50,300 on 30/03/2007.
4. The Company is maintaining three Regional Offices at Kolkata, Guwahati and Mumbai.
5. Notes on adjustments for restated summary statements.
a. The Company adopted Accounting Standard 22 (AS-22) accounting for taxes on income issues by the Institute of Chartered Accountants of India in preparing the financial statement for the year ended 31st March 2003 when it became mandatory and also provided deferred tax impact for earlier years. However the Company has now in restated statement provided the deferred tax impact on account of timing difference for the year ended March 31, 2002 in
175 the same year and deferred tax impact of earlier years adjusted with brought forwarded profit as on April 01, 2001. b. Interest received on FDR and others previously shown under “Other Income” has been regrouped with “Interest & Finance Charges” in the restated statements. c. Similarly receipts from Machine Hiring shown previously under “Other Income” have now been netted with Machine Hiring Charges paid a/c grouped in “Material, Stores and Operating Expenses”. d. Summary of adjustments on account of changes in accounting policies and its impact on profits and losses of the company is as under: Rs. in Lacs Particulars For the year ended March March March March March 31, 31, 2006 31, 2005 31, 2004 31, 2003 2002 PAT as per audited accounts 665.99 259.59 147.87 192.35 276.79 Adjustments for Provision for Bonus 16.87 - - - - Provision for Gratuity 1.32 0.82 2.00 0.68 0.76 Income from operations 109.16 Depreciation (4.96) Prior period items 1.67 (0.41) 0.73 0.14 - Sub-Total 124.06 0.41 2.73 0.82 0.76 Current Tax Impact (provision) (9.53) (69.91) (8.46) 21.52 (0.06) Deferred Tax impact 81.84 73.00 17.50 (19.99) 78.43 Sub-Total 72.31 3.09 9.04 1.53 78.37 Total charged/ (credit) 196.37 3.50 11.77 2.35 79.13 PAT as per restated accounts 469.62 256.09 136.09 190.00 197.66 e. Other Adjustments
i) Current tax & deferred tax impact (provision):
The restated statement of profit and loss has been adjusted for respective years in respect of short/excess provision for income tax/ deferred tax as compared to the tax payable as per income tax returns and timing difference due to retention money leading to deferred tax adjustment filed by the company for these years.
ii) Deferred Tax Liabilities: Rs in Lakh Particulars For the year ended March March March March March 31, 31, 2006 31, 2005 31, 2004 31, 2003 2002 Deferred Tax liabilityas per 360.08 301.96 259.14 260.97 - audited accounts Adjustments during the year 81.84 73.00 17.50 (19.99) 78.43 carried forwared effect of 70.51 (2.49) (19.99) - 116.56 adjustments 152.35 70.51 (2.49) (19.99) 194.99 Deferred Tax Liability as per 512.43 372.47 256.65 240.98 194.99 restated accounts
176
iii) Fixed Assets: Rs in Lakh Particulars For the year ended March March March March March 31, 31, 2006 31, 2005 31, 2004 31, 2003 2002 Gross Block as per audited 8240.57 3879.92 2528.12 1993.81 1710.26 accounts Adjustments for CENVAT (91.04) - - - - Gross Block as per restated 8149.53 3879.92 2528.12 1993.81 1710.26 accounts Accumulated depreciation as 1252.71 699.84 623.69 432.82 245.38 per audited accounts Adjustments for CENVAT (4.96) - - - - Accumulated depreciation as 1247.75 699.84 623.69 432.82 245.38 per restated accounts Net Block as per restaed 6901.78 3177.08 1904.43 1560.99 1464.88 accounts
iv) Loans and advances Rs in Lakh Particulars For the year ended March March March March March 31, 31, 2006 31, 2005 31, 2004 31, 2003 2002 Loans & Advances as per 1721.09 705.52 369.15 403.76 248.57 audited accounts Adjustments for CENVAT & Others 45.52 - - - 10.00 Loans & Advances as per 1766.61 705.52 369.15 403.76 238.57 restated accounts f. Provision for gratuity for the year ended March 31, 2002, 2003, 2004, 2005, 2006 has been made on the basis of actuarial valuation report in compliance with AS-15 issued by the Institute of Chartered Accountants of India. g. Profit and Loss Accounts as on April 01, 2001 (restated) Rs. in Lacs Profit and Loss Account as on April 01, 2001 227.42 Prior period adjustments (1.16) Current Tax impact on adjustment 0.42 Deferred tax adjustments (116.56) Provision for Gratuity (0.86) Profit and Loss Account as on April 01, 2001(restated) 109.26 h. Restated adjustments in brought forward profits as on 31/12/2006: Rs. in Lacs Carried forward profits as per audited accounts as on 203.12 31-03-2006 (A) Gratuity Payable (6.45) Bonus Payable (16.87) Deferred tax liability (152.35) Provision for Income Tax 66.44 Depreciation 4.96 Contract receipts (109.16) Others 18.77 (Charged)/ Credited in profit & loss accounts (B) (194.66) Carried forward profit as per restated accounts as on 8.46 31-03-2006 (A+B)
177
i. Out of Secured loan, a sum of Rs 131.65 lacs from HDFC Bank given under equipment financed scheme to the company for Hydrocon Crusher which was purchased by one of the joint venture of the company.
6. The Company has entered into following Joint Ventures:
S. Name of Joint Description on Job Share in Contract No. Venture Joint Value Venture (Rs. in Crore) 1 PCL-Brahmaputra (i) Construction of BG Tunnels at Agartala. 49% 29.39 Consortium Ltd (JV) (ii) Construction of single line BG tunnel between stations Ditockeherra and Bandarkhal (Silchar). 50% 15.35 2 DRA-BLA-BCL (JV) Widening and strengthening of existing National 25% 182.48 Highways from 2 Lane to 4 Lane NH-31, Nalbari Section, Assam 3 KB- Brahmaputra (i) Widening and Construction of Andheri Kurla Link 35% 6.15 Consortium Ltd Road from Sakinaka to LBS including JariMari Road (JV) (ii) Widening and construction of Western Express Highway from Aarey Flyover North End to Times of 40% 26.27 India Flyover North End. 4 Brahmaputra Production of carbonaceous shale (CS) & removal of 49 % 56.81 Consortium Ltd Hard Shale (HS) and transportation of coal to the (JV) railway siding. 5 GPL- Brahamputra Rehabilitation of Chandigarh- Landran-Chuni- Sirhind 49 % 43.92 Consortium Ltd (Pkg PSR/WB/RH/NCB (JV) 6 Madhava- (i) Construction of 4 lane approaches to Road Over 49 % 14.29 Brahmaputra Bridge (excluding railway portion) on Chandigarh- Consortium Ltd Ludhiana-New BG Railway Line crossing Morinda Bye (JV) Pass at Morinda (Dist: Ropar) (ii) Construction of approaches to Road Over Bridge (excluding railway portion): (i) 4 Lane approaches on level crossing no A-61 Jalandhar -Amritsar Railway line at Maqsoodan in Jalandhar City. (ii) On level 49 % 25.85 crossing no C-11 on Jalandhar-Pathankot Railway Line at Succhi Pind on Jalandhar- Hoshiarpur road (iii) Construction of foundation, substructure and super- structure (PSC Box Girder) of major bridge No. 543 (proposed span 20x25.00m on pile foundations) at Chainage 143/600 KM and minor Br. No. 541 at Chainage 143/750 KM in between Damcherra- Chandranathpur stations, on permanent 143/180.00 KM to 144/208.00 KM and all other ancillary works in connection with Lumding-Silchar Gauge Conversion Project. 49 % 20.60 7 BTS Brahmaputra Construction of Civil Works including Tunnels, Bridges, 49 % 157.19 Consortium Ltd Earthwork etc. in Zone-II (Km. 128.600-Km. 134.360) (JV) on Laole-Qazigund Section of Udhampur-Sirnagar- Baramulla New BG Railway Line Project. 8 DRA Brahamputra Construction of new apron with link taxiway, extension 49 % 46.58 Consortium Ltd of runway by 360 m, drainage, box culvert and (JV) perimeter road at Guwahati Airport 9 BLA Brahmaputra Widening and strengthening of Humhama-Budgam- 50 % 24.88 Consortium Ltd Raithon-Arizol Road (Budgam District (Contract Package (JV) No. Transport Srinagar/Road/03
178 7. a) The Company is holding 100% Equity of M/s. Brahmaputra Infrastructure Limited i.e. 7,43,300 No. of shares at the cost price of Rs.13/- per share thereby making M/s Brahmaputra Infrastructure a 100 % subsidiary of the Company. All the shares are held in the name of the Company except 6 no. of equity shares which are held in the name of 6 Nominees of the Company in order to maintain the minimum number of shareholders required for a Public Limited Company as per the Company Act, 1956.
b) During the period under review the Company has sold entire equity shares of M/s Brahmaputra Hoshiarpur-Phagwara Toll Roads Ltd (SPV) i.e. 49895 equity shares. On account of said sale of equity, M/s Brahmaputra Hoshiarpur-Phagwara Toll Roads Ltd is now not a subsidiary of the Company.
c) During the period under review the Company has sold entire equity share of M/s Brahmaputra Sirhind-Morinda-Ropar Toll Roads Ltd (SPV) i.e. 49895 equity shares. On account of sale of equity, M/s Brahmaputra Sirhind-Morinda-Ropar Toll Roads Ltd is now not a subsidiary of the Company.
d) During the period under review the company has promoted and subscribed to one equity share in M/s Brahamputra Consortium Pte. Ltd, Singapore, making it a wholly owned subsidiary of the company.
8. Investment in the equity shares of Brahmaputra Infrastructure Limited (Wholly owned Subsidiary) is considered as long term investment and therefore no provision is required for decrease, if any, in diminution in the value of investment.
9. Accounting for Tax on Income:
Current Tax (including Fringe Benefit Tax) is determined based on the provision of the Income Tax Act 1961 including treatment of Retention Money amount as contingent amount taxable in the year of its accrual/ receivable. Deferred tax has been provided for all timing difference as required under the provisions of the Accounting Standard -22 issued by the Institute of Chartered Accountants of India.
10. Hire Charges paid on assets purchased on hire purchase agreement basis, has been clubbed under the heading of “Interest and Finance Charges”.
11. Remuneration to Managing Director & Whole time Director:
Particulars Nine Months Ended December 31, 2006 (Rs.) Salary 1350000 Value of other Perks 772500 TOTAL 2122500
12. Related Party Disclosure pursuant to Accounting Standard (AS) 18 is as follows:
List of Related Party:
a) Subsidiaries: Brahmaputra Infrastructure Ltd Brahamputra Consortium Pte. Limited
b) Joint Ventures: PCL- Brahmaputra Consortium Ltd (JV) KB- Brahmaputra Consortium Ltd (JV) DRA-BCL-BCL (JV) Brahmaputra Consortium Ltd (JV) GPL- Brahamputra Consortium Ltd (JV) Madhava- Brahmaputra Consortium Ltd (JV)
179 BTS Brahmaputra Consortium Ltd (JV) DRA Brahamputra Consortium Ltd (JV) BLA Brahmaputra Consortium Ltd (JV)
c) Associates: Brahmaputra Overseas Ltd Brahmaputra Projects Ltd Brahmaputra Promoters and Planners (P) Ltd Brahmaputra Enterprises (P) Ltd. Brahmaputra Holding (P) Ltd Brahmaputra Realtors (P) Ltd Brahmaputra Property Management Services (P) Ltd Brahmaputra Concrete (P) Ltd Brahmaputra Hoshiarpur-Phagwara Toll Road Ltd Brahmaputra Sirhind-Morinda-Ropar Toll Roads Ltd Indotech Tubewells (P) Ltd Yoyo Distillers & Bottlers (P) Ltd M L Singhi & Associates (P) Ltd Karnani Finlease (P) Ltd Satluj Infrastructure Ltd
d) Key Managerial Personnel & their relatives: Suresh Kumar Prithani, Chairman cum Managing Director Ramesh Kumar Prithani, Whole time Director Manoj Kumar Prithani, Whole time Director Sanjeev Kumar Prithani, Whole time Director Om Prakash Kejriwal, Director Siw Prasad Agarwalla, Relative Shobna Prithani, Relative Anita Prithani, Relative
The following transactions were carried out with the related parties in ordinary course of business for the period ending December 31, 2006: Rs. in Lacs S. Nature of Transactions Subsidiaries Joint Associates Key No Ventures Managerial Personnel & their relatives i) Purchase of Material/ - - 8.12 10.09 Services/Fixed Assets ii) Sale of Material/ Services/ Fixed - 3279.28 11.98 - Assets iii) Managerial Remuneration - - - 13.50 iv) Advance/Loan given during the - - 0.36 - year v) Advance/Loan received during the - - 2556.58 - year vi) Share Application Money Received - - 210.78 - vii) Investments (9.98) (163.09) 19.50 - viii) Outstanding as at period ended Payables - - 457.99 6.44 Receivables - 620.79 14.95 - Inter Corporate Deposit Received - - - - Guarantees & Collateral given 1325 - - -
13. In the opinion of the Directors, the Current Assets, Loan & Advances have a value on realization in ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.
180
14. There is no small-scale industrial undertaking to whom, the Company owns any sum, which is outstanding for more than 30 days.
15. The Company has not employed any employee whose salary exceed the limit specified U/s 217 (2A) of the Companies Act 1956.
16. Segment Reporting
The Company has three segments – Heavy Civil Construction Division, Industrial Park Division and Housing Projects Division. Individual reporting is given below:
Primary Segment (Business Segment) Rupees in Lacs Particulars Heavy Civil Industrial Housing Total Construction Park Division Projects Division Division A. Revenue External 8084.92 130.45 - 8215.37 Inter Segment - - - - B. Results Profit Before Tax 599.81 37.74 - 637.55 Provision for Income Tax 66.52 4.18 - 70.70 Provision for Deferred 163.28 - - 163.28 Tax Provision for FBT 5.31 - - 5.31 Profit after Tax 364.70 33.56 - 398.26 C. Other Information Segment Assets 15189.06 230.95 990.69 16410.70 Segment Liability 12375.85 50.36 206.12 12632.33 Capital Expenditure 1118.60 - - 1118.60 Depreciation 699.00 - 699.00 Non cash expenditure 1.40 - - 1.40 other than depreciation
17. There is no impairment loss on fixed assets is recognized or reversed during the year pursuant to Accounting Standard (AS) 28.
18. Information pursuant to provision of part II of Schedule VI of the Companies Act, 1956 wherever applicable is as follows: Rs. in Lacs Nine Months Ended December 31, 2006 I.A. Income from Operations 8215.37 B. Other Income 19.94 C. Profit Before Tax 637.55 D. Profit After Tax 398.26 E. Dividend - II.A. Value of Import on CIF basis - B. Expenses in Foreign Currency - C. Earning in Foreign Currency -
181
Annexure – V Statement of Dividend Paid Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 On Equity share capital Paid up share capital 1200 1146.41 779.93 705.53 673.52 168.38 Face value (Rs.) 10 10 10 10 10 10 Rate of Dividend % 12.50* 12.50 10 - - - Amount of Dividend 150.00* 107.70 70.59 - - - Corporate Dividend Tax 21.04* 15.10 9.90 - - - * The Board of Directors of the Company in their meeting held on March 28, 2007 declared interim dividend @12.50% for the financial year ending March 31, 2007 and paid the same on March 30, 2007 to the shareholders.
Annexure – VI Performance Ratios
Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 Earning Per Shares (EPS) Profit after Tax (Rs. in Lacs) 398.26 469.62 256.09 136.09 190.00 197.66 Weighted Average No of 11658954 9753769 7059362 6867619 6735200 1414941 Shares outstanding EPS (in Rupees) 3.42 4.81 3.63 1.98 2.82 13.97 RETURN ON NETWORTH Profit after Tax (Rs. In Lacs) 398.26 469.62 256.09 136.09 190.00 197.66 Net Worth (Rs. In Lacs) 3094.68 2534.24 1506.34 1032.17 767.07 580.50 RETURN ON NETWORTH 12.87 18.53 17.00 13.18 24.77 34.05 (%) NET ASSETS VALUE PER SHARE Total Assets (a) 16402.71 13282.00 6487.23 3363.80 2643.48 2307.01 (Rs. in Lacs) Total Liabilities (b) 13308.03 10747.76 4980.89 2331.63 1876.41 1726.51 (Rs. in Lacs) Net Assets (a)-(b) 3094.68 2534.24 1506.34 1032.17 767.07 580.50 (Rs. in Lacs) Weighted Average No of 11658954 9753769 7059362 6867619 6735200 1414941 Shares outstanding No of Shares outstanding at 12000000 11464070 7799256 7055285 6735200 1683800 the end of the year Net Assets Value Per 26.54 25.98 21.34 15.03 11.39 41.03 Share (Rs.)
182 Notes:
The above ratios have been computed as below:
Earnings per Share Profit after Tax Weighted average number of Equity Shares outstanding during the year
Return on Net Worth Profit after Tax (%) Net Worth at the end of the year
Net Asset Value per Net Worth at the end of the year share (Rs.) Weighted average number of Equity Shares outstanding at the end of the year
1. Weighted average number of Equity Shares is the number of Equity Shares outstanding at the beginning of the year, adjusted by the number of Equity Shares issued during the year multiplied by the time-weighting factor. The time-weighting factor is the number of days for which the specific shares are outstanding as a proportion of the total number of days during the year. 2. Profit after Tax, as appearing in the statement of Profit & Loss of the respective years as restated has been considered for the purpose of computing the above ratios. These ratios are computed on the basis of unconsolidated financial statements of the Company. 3. Earnings per Share calculation are done in accordance with Accounting Standard 20 “Earnings per Share” issued by the Institute of Chartered Accountants of India. 4. During the year ended March 31st 2006, the Company has made allotment of 1949814 Equity Shares as bonus shares. 5. Net Worth means Equity Share Capital + Reserves & Surplus (excluding asset revaluation reserve) - Misc. Expenditure not written off or adjusted
Annexure – VII Capitalization Statement Rs. in Lacs Particulars For the year ended Post Issue Nine March 31, March 31, March 31, Months 2006 2005 2004 Ended December 31, 2006 Total Debt: 9543.39 7779.89 2869.13 716.01 [●] Short Term Debt 7427.83 4931.87 2006.43 497.64 [●] Long Term Debt 2115.56 2848.02 862.70 218.37 [●] Shareholders Funds: Share Capital 1200.00 1146.41 779.93 705.53 [●] Reserves & surplus 1902.65 1397.20 730.86 332.07 [●] Less: Misc. expenditure 7.97 9.37 4.45 5.43 [●] Total Shareholders Funds 3094.68 2534.24 1506.34 1032.17 [●] Long Term Debt/ 0.68 1.12 0.57 0.21 [●] Shareholders funds Note: Long Term debts exclude installments payable with in one year.
183 Annexure – VIII Statement of Tax Shelters Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 Profit before current and 637.55 770.88 403.60 197.97 288.66 299.03 deferred taxes, as restated (A) Tax rate, % 33.66 33.66 36.59 35.88 36.75 35.70 Tax impact 214.60 296.23 147.69 71.02 106.08 106.75 Adjustments Permanent differences Other adjustments ------Total (B) ------Temporary differences Difference between book (306.12) (167.13) (127.23) (42.80) (128.20) (213.41) depreciation and tax depreciation Retention Money & Others (270.92) (141.95) (212.22) (26.33) (17.14) (21.35) Total (C) (577.04) (309.08) (339.45) (69.13) (145.34) (234.76) Net Adjustment (B+C) (577.04) (309.08) (339.45) (69.13) (145.34) (234.76) Tax saving thereon (194.23) (104.04) (124.21) (24.80) (53.41) (83.81) Net tax payable as per 70.70 155.45 31.68 46.22 52.67 22.94 income tax returns (D=A- B-C) MAT MAT
Annexure – IX Details of Other Income Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 Rent Received 11.98 14.52 13.20 12.00 - - Dividend Received 7.43 7.43 - - - - Profit on sale of Shares - - 2.06 - - - Miscellaneous Income - 0.84 0.10 0.41 0.28 0.05 (Loss) / Profit from Joint 0.53 0.03 - - - - Venture Total 19.94 22.82 15.36 12.41 0.28 0.05
184 Annexure – X Sundry Debtors Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 Debtors outstanding for a 0.18 - 50.10 80.46 - 10.42 period exceeding six months Others 626.76 1296.18 1020.44 443.62 237.56 265.75 Total 626.94 1296.18 1070.54 524.08 237.56 276.17
Annexure – XI Unsecured Loans
Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 From bodies corporate 520.33 - 105.74 147.81 20.00 - Total 520.33 - 105.74 147.81 20.00 -
Annexure – XII Secured Loans
Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 Term loan 4232.11 4758.77 1690.16 554.24 488.86 629.21 Mobilization Advance 1261.15 621.84 949.44 - - - Working Capital Loan 3529.79 2399.28 123.79 13.96 - - Total 9023.05 7779.89 2763.39 568.20 488.86 629.21
185 A break-up of salient terms of Term Loans as on December 31, 2006 is as follows:
I. Secured Loans A. Fund Based
Lender Loan Loan Amount Interest Security Created Documentation Amount Outstanding Rate as on December 31, 2006 Indian 1. Sanction Letter Cash 1626.20 BPLR Primary Security Overseas dated 21.01.2006 Credit (At present Paid Stocks and books debts (O/s less than Bank Limit of 11.50%) 90 days) representing genuine trade (Earlier sanction Rs. 1,700 transactions on pari passu with PNB. letter dated 12.07.04 Lacs Collateral Security & 03.10.03) (1) Equitable Mortgage of Land & Building at A-7, Mahipalpur, Delhi. The Property is in the 2. (Earlier joint names of the Company and M/s. Hypothecation Brahmaputra Promoters and Planners Pvt. Agreement dated Ltd. 29.08.05) (2) Floating Charge on Plant & Machinery (present & future) not encumbered to any term lenders and available exclusively to us having WDV of Rs. 0.57 Crores (as on 31.03.2005). (3) Furniture & Fixtures, Computers, Office Equipments valued at Rs. 0.53 Crores (WDV as on 31.03.2005). (4) Industrial land situated at Sila under mouza-Sila Sinduri Gopa, Distt. Kamrup, Assam measuring 25.07 bigha in the name of the Company valued at Rs. 3.25 Crores. (5) Personal & Corporate Guarantees of: a. Mr. Suresh Kumar Prithani b. Mr. Ramesh Kumar Prithani c. Mr. Manoj Kumar Prithani d. Mr. Sanjeev Kumar Prithani e. Mr. Siw Prasad Agrawalla f. M/s Brahmaputra Promoters & Planner Ltd. Punjab 1. Sanction letter no. Cash 930.55 BPLR + Primary Security National LCB/BCL/AKG dated Credit 0.50% at Ist pari passu charge on the current assets of Bank 30.09.05 Limits monthly the company incl. Stocks & Book Debts of Rs. rests. ranking pari passu with IOB. At present, UCO (The Cash Credit 1,000 (Presently Bank also has charge on the assets and their Limit of Rs. 1000 Lacs BPLR charge shall be vacated after adjustment of Lacs enhanced to Rs. 11.50%) their Bank Guarantees. 1300 Lacs and a Collateral Security fresh Sanction of (1) Exclusive charge on vacant industrial Cash Credit (EMD) of plots allotted by Assam Govt., land Rs. 2000 Lacs vide measuring 69.11 bighas having M.V. of Rs. Sanction Letter No. 500 Lacs. LCB/ND/HJ/BCL (2) Ist pari passu charge on fixed assets of dated 02.01.2007 the company excluding those charged to term lenders along with IOB. At present the 2. General Counter charge is pari passu between IOB & UCO Indemnity Dated Bank. The charge of UCO bank will be 05.12.05 vacated after the Bank Guarantees are adjusted/ reversed.
186 3. Hypothecation of (3) Ist pari passu charge along with IOB on Movable Assets Office cum Showroom of the company Forming Part of situated at A-7, Mahipalpur, New Delhi Fixed/Block Assets standing in the joint names of the company Dated 05.12.05 and its associates M/s Choice Promoters and Planners Ltd. The properties already 4. Hypothecation of mortgaged for the advance to M/s Current Assets dated Brahmaputra Overseas Ltd. and M/s 05.12.2005 Brahmaputra Infrastructure Ltd. and shall be shared for their facilities as well. (4) Ist pari passu charge of the company at 5. Cash Credit 2nd floor, GS Road, Hen Ram Bora Market Facility dated Complex, Guwahati. 05.12.2005 (5) Hypothecation of construction equipment with value equivalent to 10% of the limit i.e. 6. Supplementary Rs. 100 Lacs. Agreement dated (6) Exclusive first charge on P&M valued at 12.12.2005 Rs. 407 Lacs. (7) Lien of FDR valued at Rs. 15 Lacs. (8) Personal Guarantees of the following Directors: i. Mr. Suresh Kumar Prithani ii. Mr. Ramesh Kumar Prithani iii. Mr. Manoj Kumar Prithani iv. Mr. Sanjeev Kumar Prithani v. Corporate Guarantee of M/s Choice Promoters & Planners Ltd. (New name M/s Brahmaputra Promoters & Planners Ltd.) Centurion 1. Sanction Letter Cash 482.69 BPLR Primary Security: Bank of No. Credit less Ist pari passu charge on the current assets of Punjab CBOP/BCL/CC/2006- Limits 2.5% the company incl. Stocks & Book Debts Limited 07 dated 07.10.2006 of Rs. with ranking pari passu with IOB. At present, UCO 500 monthly Bank also has charge on the assets and their 2. Agreement of Lacs. rest charge shall be vacated after adjustment of Hypothecation dated (Presently their Bank Guarantees. 19.10.06 BPLR is 13.00%) 3. Deed of Guarantee dated 19.10.06 Collateral Security : 4. Master credit (1) Exclusive charge on vacant industrial Facility Agreement plots allotted by Assam Govt., land dated 19.10.06 measuring 69.11 bighas having M.V. of Rs. 500 Lakhs. 5. Power of Attorney (2) Ist pari passu charge on fixed assets of dated 19.10.06 the company excluding those charged to term lenders along with IOB. At present the charge is pari passu between IOB & UCO Bank. The charge of UCO bank will be vacated after the Bank Guarantees are adjusted/reversed.
187 (3) Ist pari passu charge along with IOB on Office cum Showroom of the company situated at A-7, Mahipalpur, New Delhi standing in the joint names of the company and its associates M/s Choice Promoters & and Planners Ltd. The properties already mortgaged for the advance to M/s Brahmaputra Overseas Ltd. and M/s Brahmaputra Infrastructure Ltd. and shall be shared for their facilities as well.
(4) Ist pari passu charge of the company at 2nd floor, GS Road, Hen Ram Bora Market Complex, Guwahati.
(5) Hypothecation of construction equipment with value equivalent to 10% of the limit i.e. Rs. 100 Lacs. (6) Exclusive first charge on P&M valued at Rs. 407 Lacs. (7) Lien of FDR valued at Rs. 15 Lacs. (8) Personal Guarantees of the following Directors: i. Mr. Suresh Kumar Prithani ii. Mr. Ramesh Kumar Prithani iii. Mr. Manoj Kumar Prithani iv. Mr. Sanjeev Kumar Prithani v. Corporate Guarantee of M/s Choice Promoters & Planners Ltd. (New name M/s Brahmaputra Promoters & Planners Ltd.) Developm1. Sanction Letter Cash 490.36 BPLR less Ist Pari Passu Charge on Current Assets of ent Credit No. CAD/Delhi/2006- Credit 5% subject the Company. Bank 07 dated 23.11.2006 Limit of to 1. First Pari Passu Charge with PNB for Limited Rs. 1,000 minimum Industrial land at Dispur, approx. of Rs. 500 2. Working Capital Lacs 9.75% p.a. Lacs. Agreement dated (Present 2. Second Charge on the Fixed Assets 27th Nov, 2006 BPLR already charged to the term lenders. 15.50%) 3. Ist charge on the Equipments / Plant & 3. Deed of Machinery / Other Fixed Assets not Hypothecation dated encumbered to any term lender with th 27 Nov, 2006 minimum value of Rs. 25 Lacs. (4) Personal Guarantees of: 4. DP Note Delivery (a) Mr. Suresh Kumar Prithani cum Lien and Set off (b) Mr. Ramesh Kumar Prithani Letter dated (c) Mr. Manoj Kumar Prithani 27.11.06 (d) Mr. Sanjeev Kumar Prithani
5. Letter of Guarantee dated 27.11.06
Total 3529.80
188
B. Non Fund Based
Lender Loan Loan Amount Interest/ Security Created Documentation Amount Outstand- Commissi ing as on on December 31, 2006 (Rs. Lacs) Indian 1. Sanction Letter Letter of 4336.96 (a) 0.50% Primary Security: Oversea dated 21.01.2006 Guarante for bid Counter guarantee of the company. s Bank e of Rs. bond with Collateral Security: (Earlier sanction 5,400 minimum (1) Equitable Mortgage of Land & letter dated Lacs of one Building at A-7, Mahipalpur, Delhi in the 12.07.04 & (Perform month for joint names of the company and M/s. 03.10.03) ance/Bid bid Brahmaputra Promoters and Planners Bond) guarantee Pvt. Ltd. 2. (Earlier (Sub of below (2) Floating Charge on Plant & Hypothecation Limit for one month Machinery (present & future) not Agreement dated Financial validity. encumbered to any term lenders and 29.08.05) Guarante available exclusively to us having WDV e of Rs. (b) 0.75% of Rs. 0.57 Crores (as on 31.03.2005). 2000 for all Lacs Other (3) Furniture & Fixtures, Computers, guarantees Office Equipments valued at Rs. 0.53 Crores (WDV as on 31.03.2005). (4) Industrial land situated at Sila under mouza-Sila Sinduri Gopa, Distt. Kamrup, Assam measuring 25.07 bigha in the name of the Company valued at Rs. 3.25 Crores. (5) Margin: 5% for Bid Bond Agreement and 10% for all other guarantees. (6) Personal & Corporate Guarantees of a. Mr. Suresh Kumar Prithani b. Mr. Ramesh Kumar Prithani c. Mr. Manoj Kumar Prithani d. Mr. Sanjeev Kumar Prithani e. Mr. Siw Prasad Agarwalla f. M/s Brahmaputra Promoters & Planner Ltd. Punjab 1. Sanction letter LG 4001.82 (a) 0.50% (1) Ist pari passu charge on the current National no. facility of for Bid assets of the company incl. Stocks & Bank LCB/BCL/AKG Rs. Bond book debts ranking pari passu with IOB. dated 30.09.05 5,000 Guarantees Lacs. (2) Margin: 5% for Bid Bond Agreement (The Letter of (b) 0.75% and 10% for all other guarantees. Guarantee Limit for all of Rs. 5000 Lacs other (3) General Counter Indemnity of the enhanced to Rs. Guarantees company. 7500 Lacs vides Sanction Letter No. LCB/ND/HJ/BCL dated 02.01.2007
2. General
189 Counter Indemnity Dated 05.12.05
3. Hypothecation of Movable Assets Forming Part of Fixed/Block Assets Dated 05.12.05
4. Hypothecation of Current Assets dated 05.12.2005
5. Cash Credit Facility dated 05.12.2005
6. Supplementary Agreement dated 12.12.2005
Centurio 1. Sanction Bank 400.70 a. Bid Bond (1) Counter Guarantee and extension of n Bank Letter No. Guarante - 0.50% charge on stocks and Book Debts. of CBOP/BCL/CC/20 e of Rs. p.a. (2) Document of title to goods under LC Punjab 06-07 dated 1,000 and extension of charge on stocks and Limited 07.10.2006 Lacs b. Others - Book Debts. 0.75% p.a. (3) Margin: 5% for Bid Bond Agreement 2. Agreement of Max. and 10% for all other guarantees. Hypothecation Tenure 50% of the dated 19.10.06 of Bid FEDAI (4) Personal Guarantees of: Bond: 6 Charges. Mr. Suresh Kumar Prithani 3. Deed of Month Mr. Ramesh Kumar Prithani Guarantee dated Mr. Manoj Kumar Prithani 19.10.06 Letter of Mr. Sanjeev Kumar Prithani Credit - 4. Master credit of Rs. Facility 500 Lacs Agreement dated 19.10.06 Max. Tenure 5. Power of of Attorney dated ILC/FLC: 19.10.06 180 days
190 C. Term Loan (Equipment Finance)
Lender Loan Date of Loan Amt. Rate Repayment Schedule Security Documentation Agreement Amt. Outsta- of Int. Created (Rs. nding as (%) Lacs) on Dec. 31, 2006 (Rs. Lacs) No. EMI Last Date of Amt. of EMI EMI (Rs. Lacs) ABN Amro Facility cum 16-Sep-04 62.80 13.38 2.82 35 1.95 16-Jul-07 1. Bank Hypothecation 11-Dec-04 41.31 13.77 3.08 35 1.29 1-Nov-07 Hypothecatio Agreement n of Plant & 16-Sep-04 16.33 3.47 2.82 35 0.51 1-Jul-07 Machinery 1-Sep-04 16.33 3.48 2.67 35 0.51 16-Jul-07 Financed 19-Feb-05 26.13 10.24 3.09 35 0.82 16-Jan-08 30-Apr-05 8.00 3.63 7.00 35 0.25 16-Mar-08 2. Personal Guarantees 28-Nov-06 33.65 31.21 8.60 47 0.85 17-Jul-10 of Promoter 28-Nov-06 33.64 31.19 8.60 47 0.85 17-Jul-10 Director(s) Total 238.19 110.37 Centurion Loan cum 28-Apr-06 8.46 14.77 9.00 47 0.21 2-Apr-10 1. Bank of Hypothecation Hypothecatio 28-Apr-06 8.46 9.00 47 0.21 2-Apr-10 Punjab Agreement n of Plant & Limited 5-May-06 18.00 15.70 9.01 47 0.46 5-Apr-10 Machinery Financed 5-May-06 10.68 9.32 9.00 47 0.27 5-Apr-10
5-May-06 7.67 6.69 9.00 47 0.19 5-Apr-10 2. Personal Guarantees 11-May-06 17.35 14.92 9.00 47 0.43 11-Apr-10 of Promoter 18-Feb-06 16.33 13.16 7.23 47 0.40 17-Jan-10 Director(s) Total 86.95 74.56 Citibank N.A. 1. Loan cum 13-Jan-05 125.86 45.67 6.05 35 3.93 13-Dec-07 1. Hypothecation & Hypothecatio Guarantee n of Plant & Agreement Machinery Financed 2. Irrevocable Power of Attorney 14-Dec-04 116.60 38.84 5.95 35 3.64 14-Nov-07 2. Personal Guarantees of Promoter Director(s)
Total 242.46 84.51 GE Capital 1. Master Security 30-Jun-05 150.00 41.45 3.80 23 7.07 1-Jun-07 1. TFS Limited and Loan 29-Aug-05 278.10 157.56 3.01 35 8.76 20-Jul-08 Hypothecatio Agreement 30-Nov-05 185.40 120.56 3.48 35 5.85 20-Oct-08 n of Plant & Machinery 2. Irrevocable Financed Power of Attorney 2. Personal Guarantees of Promoter Director(s) Total 613.50 319.57
191 HDFC Bank 1. Agreement for 16-Dec-04 16.33 4.45 5.85 35 0.51 1-Sep-07 1. Limited equipment loan 13-Mar-05 11.05 0.51 7.00 23 0.51 1-Jan-07 Hypothecatio and guarantee 27-Aug-04 19.00 10.77 5.83 60 0.36 2-Aug-09 n of Plant & 7-Feb-06 3.59 5.87 12.60 36 0.11 2-May-09 Machinery 2. Irrevocable 7-Feb-06* 3.59 7.50 36 0.11 2-May-09 Financed Power Of Attorney 16-Dec-04 41.31 35.15 5.65 35 1.28 5-Oct-07 30-Nov-04 74.82 2.90 35 2.32 5-Oct-07 2. Personal 12-Dec-05 152.64 75.92 8.00 23 7.18 5-Nov-07 Guarantees 10-Jan-06 6.15 14.76 6.25 36 0.19 7-Nov-08 of Promoter Director(s) 28-Oct-05 4.06 6.00 36 0.12 7-Nov-08 28-Oct-05 4.06 6.00 36 0.12 7-Nov-08 28-Oct-05 4.06 6.00 36 0.12 7-Nov-08 28-Oct-05 4.06 6.00 36 0.12 7-Nov-08 2-Nov-05 110.16 68.64 6.65 35 3.48 15-Sep-08 3-Dec-05 185.40 120.60 6.75 35 5.83 20-Oct-08 28-Sep-05 198.74 136.14 6.50 47 4.80 20-Jul-09 29-Aug-04 124.95 26.40 4.76 35 3.83 20-Jul-07 5-Nov-05 21.99 13.59 5.22 35 0.68 20-Sep-08 28-Oct-05 131.65 97.89 5.75 47 3.10 01-Oct-09 Total 1117.61 610.69 ICICI Bank 1. Commercial 30-Jul-04 33.77 6.18 2.80 35 1.05 1-Jun-07 1. Limited Vehicle Credit 29-Jul-04 66.00 14.06 2.80 35 2.04 1-Jul-07 Hypothecatio Facility Application 14-Feb-06 208.50 164.51 3.52 47 5.06 1-Dec-09 n of Plant & form 13-Sep-04 16.30 7.87 2.75 35 0.50 7-Aug-07 Machinery 17-Sep-04 16.30 2.75 35 0.50 15-Aug-07 Financed 2. Deed of 15-Sep-06 48.15 44.98 7.50 41 1.39 10-Feb-10 Guarantee 16-Jun-04 33.77 5.12 2.90 35 1.05 15-May-07 2. Personal 26-Aug-04 124.84 30.21 5.65 35 3.87 15-Aug-07 Guarantees 25-Sep-05 278.10 157.32 3.48 35 8.78 22-Jul-08 of Promoter Director(s) 25-Aug-04 18.04 3.81 2.60 35 0.56 22-Jul-07 25-Aug-04 7.08 1.49 2.60 35 0.22 22-Jul-07 6-Jan-06$ 6.39 5.03 7.01 47 0.16 22-Dec-09 29-Apr-06 31.09 24.24 7.81 35 0.99 22-Mar-09 14-Jun-06$ 108.75 73.79 11.00 15 7.79 22-Oct-07 22-Aug-06 72.18 65.81 8.75 41 2.04 22-Jan-10 25-Nov-06 25.31 23.14 9.40 35 0.82 22-Aug-09 31-Aug-06 93.64 85.38 8.74 41 2.65 29-Jan-10 11-Dec-06 9.19 9.19 8.58 36 0.29 5-Jan-10 Total 1197.40 722.13 Kotak 1. Loan cum 30-Jul-05 37.00 21.02 3.62 35 1.16 1-Jul-08 1. Mahindra Guarantee 30-Jul-05 15.40 8.72 3.62 35 0.48 1-Jul-08 Hypothecatio Bank Limited Agreement 30-Jul-05 51.21 30.44 3.62 35 1.60 1-Jul-08 n of Plant & 29-Nov-06 42.55 40.93 4.95 47 1.08 1-Sep-10 Machinery 2.Deed of 29-Nov-06 8.06 7.64 4.95 35 0.26 1-Sep-09 Financed Hypothecation 29-Nov-06 16.44 15.81 4.95 47 0.42 1-Sep-10 29-Nov-06 17.42 16.88 3.16 35 0.55 1-Oct-09 2. Personal 21-Jul-05 32.66 17.56 3.33 35 1.03 20-Jun-08 Guarantees 29-Nov-05 16.22 10.55 3.48 35 0.51 20-Oct-08 of Promoter Director(s) 29-Nov-05 110.16 71.67 3.48 35 3.48 20-Oct-08 Total 347.12 241.22 L&T Finance Loan cum 7-Mar-06 234.50 188.07 3.94 41 6.50 7-Aug-09 1. Limited Hypothecation & 28-Oct-05 139.05 82.78 6.75 35 4.39 15-Aug-08 Hypothecatio Guarantee 21-Dec-05 11.35 4.62 7.00 23 0.53 21-Sep-07 n of Plant & Agreement 16-Nov-05 32.66 19.40 6.81 35 1.03 28-Aug-08 Machinery 21-Dec-05 24.30 9.90 7.00 23 1.13 28-Sep-07 Financed
192 22-Nov-06$ 67.29 67.29 4.90 35 2.21 26-Nov-09 2. Personal Guarantees of Promoter Director(s) Total 509.15 372.06 Magma 1. Hire Purchase 28-Feb-06 45.90 35.10 8.00 35 1.47 1-Feb-09 1. Leasing Finance cum 31-Dec-05 8.10 5.16 8.00 34 0.26 15-Sep-08 Hypothecatio Limited Guarantee 15-Oct-05 16.33 9.70 3.30 35 0.51 15-Aug-08 n of Plant & Agreement 16-Feb-06 417.00 306.58 7.50 35 13.24 15-Jan-09 Machinery 16-Feb-06 36.29 26.68 7.50 35 1.15 15-Jan-09 Financed 2. Deed of 10-May-06 24.28 20.19 8.31 34 0.87 15-Nov-08 Hypothecation 20-Jun-06* 16.10 13.00 9.71 34 0.53 15-Jan-09 2. Personal Guarantees 3. Irrevocable of Promoter Power of Attorney Director(s)
4.Deed of assignment Total 562.41 416.41 SREI 1. Loan/Hire 20-Nov-04 185.00 111.84 6.50 34 5.73 1-Oct-07 1. Infrastructure Purchase 20-Nov-04 185.00 6.50 34 5.73 1-Oct-07 Hypothecatio Finance Agreement 20-Nov-04 125.62 36.33 - 35 3.65 1-Oct-07 n of Plant & Limited 21-Jul-05 8.98 5.10 7.00 35 0.28 7-Aug-08 Machinery 2. Deed of 22-Jul-05 231.72 152.84 6.50 41 6.32 2-Aug-09 Financed Hypothecation 8-Dec-05 65.79 44.03 4.07 35 1.99 11-Aug-08 10-Jan-06 562.95 445.78 7.00 47 13.68 15-Jan-10 2. Personal 14-Jan-06 11.32 8.98 7.00 47 0.28 15-Jan-10 Guarantees 13-Feb-06 30.61 24.90 7.80 47 0.75 15-Jan-10 of Promoter Director(s) 14-Nov-06 98.10 96.05 8.88 41 2.81 15-Apr-10 19-Jul-05 220.32 134.61 6.50 41 5.98 22-Dec-08 12-Dec-05 16.33 10.85 3.22 35 0.48 22-Nov-08 22-Jan-06 17.05 13.53 7.43 46 0.42 22-Dec-09 22-Nov-06 104.04 99.85 9.50 35 3.39 22-Oct-99 15-Aug-05 24.49 14.57 7.00 35 0.78 15-Jul-08 29-Nov-06 7.82 7.82 9.49 41 0.22 1-May-10 Total 1895.14 1207.08 TML Financial 1. Sanction Letter 3-Oct-06$ 23.95 23.54 9.50 47 0.61 2-Oct-10 1. Services 3-Oct-06* 16.75 16.75 9.50 35 0.55 2-Dec-09 Hypothecatio Limited 2. Loan Agreement 3-Oct-06$ 33.21 33.21 9.50 35 1.09 11-Nov-09 n of Plant & Machinery 3. Agreement of Financed Guarantee 2. Personal 4. Hypothecation Guarantees Agreement of Promoter Director(s) Total 73.91 73.50 Grand Total 6883.40 4232.12
* Charges for the same are not filed/ delayed filed with the Registrar of Companies. $ Petition for condonation of delay in registration of charge has been filed and pending before the CLB.
193 D. Mobilization Advances
S. No. Name of the Party Amount Rate of Date of Amount (Rs. Lacs) Interest Receiving Outstanding as (%) on December 31, 2006 (Rs. Lacs) 1 Larsen & Toubro Ltd (ECC Div) 531.42 10.00 16-Dec-04 451.25 265.71 10.00 3-Apr-05 2 PWD Dhola 28.13 Interest 10-Dec-06 23.94 Free 3 BTS-BCL (JV) 785.95 PLR 09-Sep-06 785.95 (SBI)+1% Total 1611.21 1261.15
II. Unsecured Loans
S. No. Name of the Party Rate of Amount Interest Outstanding as (%) on December 31, 2006 (Rs. Lacs) 1 Karnani Finlease (P) Ltd 14.00 168.58 2 M L Singhi & Associates (P) Ltd 14.00 281.30 3 Milith Kara Engg. & Trading (P) Ltd Interest Free 50.00 4 Centurion Bank of Punjab Limited 9.50 20.45 Total 520.33
Annexure – XIII Related Party Transactions
I. List if Related Parties
Name of the Related Party Relationship Siw Prasad Agarwalla Key Managerial Personnel / Relative Suresh Kumar Prithani Key Managerial Personnel / Relative Ramesh Kumar Prithani Key Managerial Personnel / Relative Manoj Kumar Prithani Key Managerial Personnel / Relative Sanjeev Kumar Prithani Key Managerial Personnel / Relative Surinder Kumar Soni Key Managerial Personnel / Relative Om Kumar Key Managerial Personnel / Relative Om Prakash Kejriwal Key Managerial Personnel / Relative Deo Chandra Hirawat Key Managerial Personnel / Relative Geeta Devi Agarwalla Key Managerial Personnel / Relative Shobna Prithani Key Managerial Personnel / Relative Anshu Prithani Key Managerial Personnel / Relative Anita Prithani Key Managerial Personnel / Relative Kiran Prithani Key Managerial Personnel / Relative Siw Prasad Agarwalla & Sons (HUF) HUF of Key Managerial Personnel Suresh Kumar Prithani (HUF) HUF of Key Managerial Personnel Ramesh Kumar Prithani (HUF) HUF of Key Managerial Personnel Manoj Kumar Prithani (HUF) HUF of Key Managerial Personnel
194 Sanjeev Kumar Prithani (HUF) HUF of Key Managerial Personnel Brahmaputra Concrete Pvt. Ltd. Associate Company Brahmaputra Enterprises Pvt. Ltd. Associate Company Brahmaputra Hosiarpur-Phagwara Toll Roads Ltd. Associate Company Brahmaputra Sirhind-Morinda Ropar Toll Roads Ltd. Associate Company Brahmaputra Overseas Ltd. Associate Company Brahmaputra Projects Ltd. Associate Company Brahmaputra Promoters & Planners Pvt. Ltd Associate Company Brahmaputra Holdings Pvt Ltd Associate Company Brahmaputra Realtors Pvt Ltd Associate Company Brahmaputra Property Management Services Pvt. Ltd Associate Company Indotech Tubewells Pvt. Ltd. Associate Company Satluj Infrastructure Ltd. Associate Company Karnani Finlease (P) Ltd Associate Company M L Singhi & Associates (P) Ltd Associate Company BCL (JV) Joint Venture BLA-BCL JV Joint Venture BTS-BCL JV Joint Venture DRA-BCL JV Joint Venture DRA-BLA-BCL JV Joint Venture GPL-BCL JV Joint Venture KB-Brahmaputra Consortium Ltd (JV) Joint Venture Madhva-BCL (JV) Joint Venture PCL-Brahmaputra Consortium Ltd.(JV) Joint Venture Brahmaputra Infrastructure Ltd Subsidiary Brahamputra Consortium Pte. Limited Subsidiary
II. Transactions with Related Parties
Rs. In Lacs Name of Nature of Nine For the year ended Related Party Transaction Months March March March March March Ended 31, 31, 31, 31, 31, Decemb 2006 2005 2004 2003 2002 er 31, 2006 Anita Prithani Share Application - - - - - 2.00 Money Rent 2.10 - - - - -
Security Deposit 0.90 - - - - - (Rent) Advance against 0.90 - - - - - Rent Anshu Prithani Share Application - - - - - 1.00 Money BCL (JV) Contract Receipts 1345.13 1179.38 - - - - Investment - 0.10 - - - - BLA-BCL JV Investment 0.01 - - - - - Brahmaputra Share Application 19.50 - - - - - Concrete Pvt Ltd Money Paid
195 Brahmaputra Share Application - - - - 17.00 - Enterprises (P) Money Ltd Rent 0.74 1.48 - - - -
Brahmaputra Advance given 0.06 23.58 - - - - Hosiarpur- Phagwara Toll Investment (4.99) 4.99 - - - - Roads Ltd Brahmaputra Contract Receipts - 248.50 - 169.07 159.47 30.00 Infrastructure Ltd. Machine Hiring - - - - - 22.74 Receipts/ other reimbursements Sub-Contract - - - 156.48 - - payments
Advance given - 100.00 1.00 - - -
Investment - - - 96.63 - -
Brahmaputra Furniture 6.29 10.49 2.94 5.87 - - Overseas Ltd Purchased Rent Received 11.98 14.52 13.20 12.00 - -
Advance given - - - - 65.55 7.68
Reimbursements of - - 2.40 - - - expenses Investment - - - (22.00) 20.00 2.00
Brahmaputra Advances/Rent - - - - 36.02 - Projects Ltd Paid Share Application - - 23.00 - 15.49 42.95 Money Rent - - - 1.14 1.13 -
Sub-Contract - - 4.46 18.94 - - payments Brahmaputra Share Application - - 3.00 - - - Promoters & Money Planners (P) Ltd Rent 1.09 1.32 1.32 - - -
Sub-Contract - - 2.76 - - - payments Building - - 6.00 - - - Mahipalpur A/c Advance given - - - 1.65 - 27.00
Brahmaputra Advance given 0.31 24.64 - - - - Sirhind-Morinda Ropar Toll Investment (4.99) 4.99 - - - - Roads Ltd BTS-BCL JV Investment 0.10 - - - - - DRA-BCL JV Investment 0.10 - - - - -
196 DRA-BLA-BCL Investment (163.50) 415.79 - - - - (JV) GPL-BCL JV Investment 0.10 - - - - - Indotech Share Application - - 24.00 - - - Tubewells Pvt. Money Ltd. Machine Hiring - - - - - 8.75 Receipts/ other reimbursements Machinery rental - - - 8.80 - - charges
Assets Purchased - 12.67 - - - -
Karnani Finlease Advance/ Loan 1212.48 543.40 345.33 - - - (P) Ltd received Share Application 60.00 150.25 - - - - Money KB- Contract Receipts 1181.11 1002.13 538.96 - - - Brahmaputra Consortium Ltd (JV) Investment - 0.05 - - - -
M L Singhi & Advance/ Loan 1344.11 233.17 241.83 - - - Associates (P) received Ltd Share Application 150.78 218.00 - - - - Money Sub-Contract - - - 180.21 132.51 - payments
Madhva-BCL JV Investment 0.10 - - - - - Manoj Kumar Director’s 2.70 2.40 2.40 1.80 1.80 1.80 Prithani Remuneration Share Application - 98.50 - - - 4.00 Money PCL- Contract Receipts 753.05 1218.57 903.77 - 835.97 - Brahmaputra Consortium Investment - - - - (5.00) 0.25 Ltd.(JV) Ramesh Kumar Director’s 2.70 2.40 2.40 1.80 1.80 1.80 Prithani Remuneration Share Application - 45.25 - - - - Money Sanjeev Kumar Director’s 2.70 2.40 2.40 1.80 1.80 1.80 Prithani Remuneration Share Application - 54.00 - - - - Money Shobna Prithani Share Application - 50.00 - - - - Money Rent 7.43 9.00 - - - -
Secuity Depost - - 2.25 - - - (Rent) Advance against - - 2.25 - - - Rent
197 Siw Prasad Share Application - 16.75 - - - - Agarwalla Money Rent 0.56 0.75 0.75 0.60 0.60 -
Suresh Kumar Director's 5.40 5.40 5.40 2.55 1.80 1.80 Prithani Remuneration Share Application - 45.25 - - - - Money Computer - 1.02 - - - - purchased Suresh Kumar Share Application - 11.00 - - - - Prithani (HUF) Money
III. Balance Outstanding with Related Parties Rs. In Lacs Name of the Relationship Nine For the year ended Party Months Ended March March March March March December 31, 31, 31, 31, 31, 31, 2006 2006 2005 2004 2003 2002 Anita Prithani Advance against 0.90 - - - - - Rent Rent (0.96) - - - - -
Secuity Depost 0.90 - - - - - (Rent) BCL (JV) Contract Receipts 274.15 338.82 - - - - Investment 0.10 0.10 - - - - BLA-BCL JV Investment 0.01 - - - - - Brahmaputra Share Application 19.50 - - - - - Concrete Pvt Ltd Money Paid Brahmaputra Rent (0.97) (0.23) - - - - Enterprises (P) Ltd Share Application - - - - (17.00) - Money Brahmaputra Advance given 2.32 23.58 - - - - Hosiarpur- Phagwara Toll Investment - 4.99 - - - - Roads Ltd Brahmaputra Contract Receipts - 246.29 - - 68.74 - Infrastructure Investment 96.63 96.63 96.63 96.63 - - Ltd. Brahmaputra Advance given - - - - 65.04 6.84 Overseas Ltd Furniture (6.29) - - - - - Purchased Rent Received 9.29 0.94 - - - -
Investment - - - - 22.00 2.00
Brahmaputra Advances/Rent - - - - 34.89 - Projects Ltd Paid Share Application - - - - (15.49) - Money Brahmaputra Advance given - - - - - 27.00 Promoters & Rent (0.84) (0.09) (0.09) - - - Planners (P) Ltd
198 Brahmaputra Advance given 3.34 24.64 - - - - Sirhind-Morinda Ropar Toll Investment - 4.99 - - - - Roads Ltd BTS-BCL JV Investment 0.10 - - - - - DRA-BCL JV Investment 0.10 - - - - - DRA-BLA-BCL Investment 132.50 415.79 - - - - (JV) GPL-BCL JV Investment 0.10 - - - - - Indotech Share Application - - - - (21.61) (21.61) Tubewells Pvt. Money Ltd. Karnani Finlease Advance/ Loan (168.58) - (39.05) - - - (P) Ltd received KB- Contract Receipts 170.86 201.07 404.05 - - - Brahmaputra Consortium Ltd Investment 0.05 0.05 - - - - (JV) M L Singhi & Advance/ Loan (281.30) - (41.69) - - - Associates (P) received Ltd Madhva-BCL JV Investment 0.10 - - - - - Manoj Kumar Director’s (1.02) (0.20) (0.04) (0.17) (1.76) (0.57) Prithani Remuneration PCL- Contract Receipts 43.28 164.60 242.44 - 154.06 - Brahmaputra Consortium Investment 2.63 2.63 2.63 2.63 2.63 7.63 Ltd.(JV) Ramesh Kumar Director’s (1.06) (0.15) (0.04) - (4.96) (3.45) Prithani Remuneration Sanjeev Kumar Director’s (0.88) (0.21) (0.01) (0.21) (2.28) (0.59) Prithani Remuneration
Shobna Prithani Advance against 2.25 2.25 2.25 - - - Rent Rent (0.69) (0.62) - - - -
Secuity Depost 2.25 2.25 2.25 - - - (Rent) Siw Prasad Rent (0.56) - (0.75) (1.20) (0.60) - Agarwalla Suresh Kumar Director's (1.28) (0.31) (0.05) (0.30) (1.02) (0.30) Prithani Remuneration
Note: Figures in brackets represent credit balances.
199 Annexure – XIV Investments Rs. in Lacs Long-term investments
Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 Trade (Quoted) - - - 1.10 - - Trade (Unquoted) In Associates 19.50 - - - 22.00 2.00 In subsidiary 96.63 106.61 96.63 96.63 - - In Joint Venture 135.69 418.57 2.63 2.64 2.63 7.63
Total 251.82 525.18 99.26 100.37 24.63 9.63
Annexure – XV
The Company had incurred expenditure on the Proposed Project up to 31.03.2007 as depicted below.
Deployment of Funds Rs in Lacs Public issue expenses 20.55 Total 20.55
Sources of Funds Rs in Lacs Internal Accruals 20.55 Total 20.55
Annexure – XVI
Remarks of auditors included in their report under companies (Auditor’s Report) Order, 2003(CARO) which do not affect Statement of Restated Assets and Liabilities or Statement of Restated Profit and Loss Account.
In respect of the Company
The Statutory auditors of the company have included remark in their report under CARO on the accounts. Year wise remarks are reproduced below:
For the year ended March 31, 2004
“According to information and explanation given to us and on an overall examination of the Balance Sheet of the company, we report that the company has used the funds raised on short term basis to the extent of Rs 13,67,23,957/- for long term purposes. The company has invested the money for the procurement of construction plant and machinery and long term investment.”
For the year ended March 31, 2006
According to information and explanation given to us and on an overall examination of the Balance Sheet of the company, we report that the company has used the funds raised on short term basis amounting to Rs 1811.00 Lacs for acquisition of fixed assets. The short term funds have been raised from term loan repayable with in one year amounting to Rs 1811.00 Lacs.
Since above remarks pertains to use of funds raised on short term basis to long term purpose, hence there is no need for any restatement.
200 Annexure - XVII Changes in the Significant Accounting Policies
There have been no changes in accounting polices during the preceding five years except during the year ended 31st December 2006 in respect of liability for leave encashment, Gratuity and bonus payable to employees which has been provided at the year end in compliance with AS-15 issued by the Institute of Chartered Accountants of India.
For A.B.BANSAL AND COMPANY CHARTERED ACCOUNTANTS
(A.B. BANSAL) Partner Membership No. 84628 Date: 25/04/2007 Place: New Delhi
201 CONSOLIDATED FINANCIAL INFORMATION OF BRAHAMPUTRA CONSORTIUM LIMITED
FINANCIAL INFORMATION
Auditors Report on Consolidated Financial Statements
The Board of Directors, Brahamputra Consortium Ltd Brahamputra House A-7 Mahipalpur, New Delhi 110 037
Dear Sirs,
We have examined the consolidated Financial Information of Brahamputra Consortium Limited (‘the Company’), its subsidiary Brahmaputra Infrastructure Limited and Its Joint Venture DRA-BLA-BCL JV annexed to this report for the purpose of inclusion in the offer documents and initialed by us for identification. The Consolidated Financial Information has been prepared by the management and approved by the Board of Directors of the Company which has been prepared in terms of the requirements of: a) Paragraph B, Part II of Schedule II of the Companies Act, 1956 (‘the Act’); b) the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (‘DIP Guidelines’) as amended from time to time and related clarifications and; c) terms of reference received from the company requesting us to carry out work in connection with the offer document being issued by the company in connection with the proposed initial public offer (‘IPO’) of equity shares of the Company.
A. Financial Information as per Audited Financial Statements:
We have examined the attached ‘Restated Consolidated Summary Statement of Assets and Liabilities’ of the Company as at 31 December, 2006, 31 March 2006, 2005, 2004, 2003, 2002 (Annexure I) and the attached ‘Restated Consolidated Summary Statement of Profits and Losses’ (Annexure II) and the attached ‘Restated Consolidated Statement of Cash Flows’ (Annexure III) for nine months period ended 30 December 2006 & each of the years ended 31 March 2006, 2005, 2004, 2003, 2002 together referred to as ‘Restated Summary Statements’. These Summary Statements have been extracted from the financial statements of the years ended 31 March, 2002, 2003, 2004, 2005 and 2006 audited by Singal Bros. & Associates, Chartered Accountants, being the auditors of the Company for those years, and have been adopted by the Board of Directors / Members for those respective years. The financial statements for the nine months period ended 31 December 2006 have been adopted by the Board of Directors and audited by us. Based on our examination of these summary statements, we state that:
I. The restated profits have been arrived at after charging all expenses including depreciation and after making such adjustments and regroupings as in our opinion are appropriate in the year / period to which they are related as described in Para 3 of the ‘Notes Forming Parts of the Restated Summary Statements’ appearing in Annexure IV.
II. The ‘Restated Summary Statements’ of the Company have been restated with retrospective effect to reflect the significant accounting policies being adopted by the Company as at 31 December 2006, as stated in the Notes forming part of the restated Summary Statements vide Annexure IV to this report.
III. Qualifications in the Auditors’ Report which do not require any corrective adjustments in the financial statements are disclosed in Note 4 of Annexure IV.
IV. The ‘Restated Summary Statements’ have to be read in conjunction with the notes given in Annexure IV to this report.
202 B. Other Financial Information:
We have examined the following information in respect of the nine months period ended 31 December 2006 and the years ended 31 March 2006, 2005, 2004, 2003, 2002 of the Company, proposed to be included in the Offer Document, as approved by the Board of Directors and annexed to this report:
1. Performance Ratios as appearing in Annexure V to this report.
2. Capitalization Statement as at 31st December 2006 as appearing in Annexure VI to this report.
3. Details of other income as appearing in Annexure VII to this report.
4. Details of sundry debtors as appearing in Annexure VIII to this report.
5. Details of unsecured loans as appearing in Annexure IX to this report.
6. Details of secured loans as appearing in Annexure X to this report.
7. Details of transactions with related parties as appearing in Annexure XI to this report.
8. Details of aggregate value of investments as appearing in Annexure XII to this report.
9. Details of changes in Significant Accounting Policies as given in Annexure XIII to this report
In our opinion the above financial information of the Company, its subsidiary and its Join Venture read with Significant Accounting Policies and Notes on Account attached in Annexure IV respectively to this report, after making adjustments and regroupings as considered appropriate has been prepared in accordance with paragraph B (1) Part II of Schedule II of the Act and the SEBI Guidelines.
This report is intended solely for your information and for inclusion in the Offer document in connection with the specific Public Offer of equity shares of the Company and is not to be used, referred to or distributed for any other purpose without our written consent.
For A.B.BANSAL AND COMPANY CHARTERED ACCOUNTANTS
A.B. BANSAL Partner Membership No. 84628 Date: 25/04/2007 Place: New Delhi
203 Annexure – I
Consolidated Statement of Assets and Liabilities (Rs. in Lacs) Particulars As at December March March March March March 31, 2006 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 FIXED ASSETS Gross Block 9582.73 8243.52 3930.31 2577.26 1993.81 1710.26 Less: Depreciation 1969.65 1264.68 711.13 630.30 432.82 245.38 Net Block 7613.08 6978.84 3219.18 1946.96 1560.99 1464.88 Less: Revaluation Reserve ------Net Block after adjustment for 7613.08 6978.84 3219.18 1946.96 1560.99 1464.88 Revaluation Reserve Capital Work in Progress 370.63 336.56 - - 157.95 33.48 Total (A) 7983.71 7315.40 3219.18 1946.96 1718.94 1498.36 INVESTMENTS (B) 22.89 12.95 2.82 3.93 24.63 9.63 CURRENT ASSETS, LOANS AND ADVANCES Inventories 4219.71 1643.26 618.29 180.80 28.13 93.26 Sundry Debtors 658.81 1496.65 1474.36 823.32 237.56 276.17 Cash and Bank Balance 1495.99 1418.84 1199.24 443.15 230.46 191.02 Loans and Advance 3489.46 2151.22 785.98 574.74 403.76 238.57 Total (C) 9863.97 6709.97 4077.87 2022.01 899.91 799.02 LIABILITIES AND PROVISIONS Secured Loans 9671.05 7837.52 2755.38 579.53 488.86 629.21 Unsecured Loans 520.33 - 105.74 238.21 20.00 - Current Liabilities 3500.79 2709.12 2293.03 1728.29 976.50 843.84 Share Application Money - - - - 73.50 21.61 Provisions 280.80 341.34 197.53 113.46 76.57 36.86 Deferred Tax liability 685.71 521.63 376.53 259.09 240.98 194.99 Total (D) 14658.68 11409.61 5728.21 2918.58 1876.41 1726.51 NET WORTH (A+B+C-D) 3211.89 2628.71 1571.66 1054.32 767.07 580.50 REPRESENTED BY: Share Capital (E) 1200.00 1146.41 779.93 705.53 673.52 168.38 Total Reserves and Surplus 2042.35 1514.28 818.95 377.16 99.96 415.10 Less Revaluation Reserves ------Net Reserve and Surplus (F) 2042.35 1514.28 818.95 377.16 99.96 415.10 Miscellaneous Expenditure (G) 8.16 9.68 4.92 6.07 6.41 2.98 Goodwill (H) 22.30 22.30 22.30 22.30 - - NET WORTH (E+F-G-H) 3211.89 2628.71 1571.66 1054.32 767.07 580.50
The accompanying significant accounting policies and notes (Annexure IV) are integral part of the accounts.
204 Annexure - II
Consolidated Statement of Profit & Loss Account (Rs. in Lacs) Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 INCOME Receipts from Operations 9071.02 11105.96 9759.21 5283.82 2684.52 2037.65 Increase/ (Decrease) in 1875.41 866.82 398.04 7.03 (78.50) (6.10) stocks Other Income 19.98 22.84 15.39 12.45 0.28 0.05 Total 10966.41 11995.62 10172.64 5303.30 2606.30 2031.60 EXPENDITURE Material, Stores & Operating 8565.27 9460.38 8872.95 4559.69 1892.55 1397.71 Expenses Personnel Expenses 264.64 257.15 182.85 96.11 60.28 42.14 Administrative Expenses 233.68 254.08 174.19 125.51 95.33 57.70 Misc. and Deferred Revenue 1.52 2.03 1.14 1.14 0.98 0.50 Exp. W/Off Total 9065.11 9973.64 9231.13 4782.45 2049.14 1498.05 Profit before Interest, 1901.30 2021.98 941.51 520.85 557.16 533.55 Depreciation and Tax Depreciation 703.50 567.31 325.05 223.22 190.23 155.90 Profit before Interest and Tax 1197.80 1454.67 616.46 297.63 366.93 377.65 Interest & Finance Charges 525.61 614.04 132.84 86.20 71.07 64.82 Loss on sale of - 11.70 (1.68) (18.23) 7.20 13.80 Investment/Assets Net Profit Before Tax 672.19 828.93 485.30 229.66 288.66 299.03 Provision For Taxation Current Tax 88.03 176.74 60.30 56.34 52.67 22.94 Deferred Tax 163.28 145.10 117.43 17.18 45.99 78.43 Net Profit After Tax 420.88 507.09 307.57 156.14 190.00 197.66 Proposed Dividend - 131.28 88.97 - - - Prior Period Item ------Net profit after tax after 420.88 375.81 218.60 156.14 190.00 197.66 adjusting prior period item Profit and Loss Account at the 125.54 249.73 281.13 124.99 306.92 109.26 beginning of the year Transferred to General - 500.00 250.00 - - - Reserve Balance Carried to Balance 546.42 125.54 249.73 281.13 496.92 306.92 Sheet
The accompanying significant accounting policies and notes (Annexure IV) are integral part of the accounts.
205 Annexure – III Cash Flow Statement (Rs. in Lacs) Particulars Nine For the year ended Months March 31, March 31, March 31 March March 31, Ended 2006 2005 2004 31, 2003 2002 December 31, 2006 CASH FLOW FROM OPERATING ACTIVITIES Net Profit Before Tax & Extraordinary 672.19 828.92 485.30 229.66 288.67 299.03 Items Adjustments for: Depreciation 704.96 567.31 325.05 223.22 190.23 155.90 Dividend Income Received (7.47) (7.45) - - - - Interest Expenses 480.15 304.45 102.76 45.44 58.01 58.72 Loss / (Profit) on Sale of Assets - 11.70 (1.68) (18.23) 7.20 13.80 Loss / (Profit) on Sale of Shares - - (2.06) - - - Miscellaneous expenses written off 1.52 2.03 1.14 1.14 0.98 0.50 Operating profits before working capital 1851.35 1706.96 910.51 481.23 545.09 527.95 changes Adjustments for: Inventories (2576.46) (1024.96) (437.48) (152.67) 65.12 (8.66) Trade & Other Receivables (500.40) (1387.53) (862.27) (756.72) (126.57) (319.92) Trade Payable & Other Liabilities 796.16 417.78 566.31 755.27 133.34 155.52 (2280.70) (1994.71) (733.44) (154.12) 71.89 (173.06) Cash generated from operations (429.35) (287.75) 177.07 327.11 616.98 354.89 Income tax paid (20.98) (76.93) (66.77) (22.93) (13.64) (8.58) Cash Flow Before Extraordinary Items (450.33) (364.68) 110.30 304.18 603.34 346.31 Extraordinary items (Prior Year Adjustment) ------Net cash from Operating Activities (A) (450.33) (364.68) 110.30 304.18 603.34 346.31 CASH FLOW FROM INVESTING ACTIVITIES Capital work in progress (34.07) (336.56) - 157.95 (124.46) (33.48) Purchase of fixed assets (net) (1339.20) (4338.67) (1595.58) (565.22) (293.53) (358.87) Sale/(Purchase) of Investment (9.93) (10.13) 1.10 (1.40) (15.00) (2.25) Profit on Sale of Shares - - 2.06 - - - Dividend Received 7.47 7.45 - - - - Deferred revenue expenditure ------Net cash used for Investing Activities (1375.73) (4677.91) (1592.42) (408.67) (432.99) (394.60) (B) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Issue of Share Capital/Share 160.78 686.00 297.59 54.54 51.88 126.82 Premium Net Proceeds from / (Repayment of) Term 2353.86 4976.40 2043.38 308.88 (120.36) (106.30) Borrowing, Unsecured Loans Dividend including dividend tax (131.28) (88.97) - - - - (Increase)/Decrease in Miscellaneous - (6.79) - (0.80) (4.42) (1.72) Expenditures Interest Paid (480.15) (304.45) (102.76) (45.44) (58.01) (58.72) Net cash from Financing Activities (C) 1903.21 5262.19 2238.21 317.18 (130.91) (39.92) Net Increase in cash and cash 77.15 219.60 756.09 212.69 39.44 (88.21) equivalents (A+B+C) Cash and Cash equivalents at beginning of 1418.84 1199.24 443.15 230.46 191.02 279.23 the year Cash and Cash equivalents at end of the year 1495.99 1418.84 1199.24 443.15 230.46 191.02 Note: Figures in () denotes cash outflow
206 Annexure - IV
Notes Forming Part of Restated Consolidated Summary Statements
1. Principles of Consolidation
a) The consolidated financial statement pertain to Brahamputra Consortium Limited, its subsidiary and Joint Venture as details below:
Name of the Company / JV Country of % of Voting power / Incorporation Share in JV held as on 31/12/2006 Brahmaputra Infrastructure Ltd India 100 DRA-BLA-BCL (JV) India 25
b) I) The financial statements of Brahamputra Consortium Limited and its subsidiaries have been compiled by adding together on a line by line basis the book value of like items of assets, liabilities, income and expenses, after eliminating intra group balances and intragroup transactions. II) The financial statements of Brahamputra Consortium Limited and its Joint Venture have been compiled by adding together on a line by line basis the book value of like items of assets, liabilities and profit in JV after eliminating intra group balances and intragroup transactions. III) The Excess of the cost of the Company and its investments over its share in the equity of the subsidiaries company as on the date (or as near to the date as practicable) of takeover is recognized in the consolidated financial statements as goodwill. IV) The lower of the cost of the Company and its investments over its share in the joint venture as on the date (or as near to the date as practicable) of takeover is recognized in the consolidated financial statements as Capital Reserve on Consolidation.
c) The consolidated financial statements have been prepared using the same accounting policies as that of Brahamputra Consortium Limited except depreciation provided on fixed assets in the Joint Venture at the rate provided in the Income Tax Rate.
d) Accounting Policies and Notes to Accounts of the financial statement of the Company, its Subsidiary and Joint Venture are set out in their respective financial statements.
e) Accounting of Joint Ventures:
Jointly controlled operations: Company’s share of income, assets and liabilities in the joint venture are included in the income, assets and liabilities respectively in the financial statements.
2. Miscellaneous Expenditure (to the extent not written off or adjusted) represents:
31st Dec, 2006 (Rupees) (i) Preliminary Expenses 21,556/- (ii) Increase of Authorized Capital 6, 75,275/- (iii) Software Expenses 1, 18,968/-
8, 15,799/-
3. Inventories of Raw-materials, Land & Work-in-progress are valued at lower of the cost and net realizable value. Cost of work-in-progress includes materials, labours and operational overheads and other cost incurred in bringing the inventories to the present location.
207 4. Expenses are accounted for on accrual basis and provision is made for all known potential losses/claim and liabilities on a conservative & consistent basis. 5. Current tax (including Fringe Benefit Tax) is determined based on the provisions of the Income Tax Act, 1961 including treatment of Retention Money amount as a contingent amount taxable in the year of its accrual/ receivable. Deferred tax has been provided for all timing differences as required under the provisions of the Accounting Standard – 22 issued by the Institute of Chartered Accountants of India. 6. During the period under review, the Company has recalculated its service tax liability on works contract of production on carbonaceous shale & removal of hard shale of coal from NECL under a sub contract from company’s Joint Venture effective from August 2005 which was not provided earlier in view of expert opinion taken by the Company. However after clarificatory statement from finance ministry appearing in the Economics times dated 03/08/2006, the said liability has been recalculated since start of the order i.e August 2005 and accordingly a sum of Rs 63,64,241.93 (after net of CENVAT credit of Rs 45,51,995.59) pertaining to the period ending 31st March 2006 has been made in the accounts on 3rd August 2006.Moreover the company also provided current period liability Rs 75,02,097.14 (net of CENAVAT Rs 56,89,643.79) making the total liability as on 31/12/2006 at Rs 1,38,66,339.07 out of which the company has deposited Rs 1,21,50,300 on 30/03/2007.
7. Contingent liabilities a) Guarantee given by banks on behalf of the Company and its subsidiary Rs 8739.48 Lac and Rs. 133.00 Lacs respectively.
b) The Company has given Corporate Guarantee for and on behalf of Brahmaputra Infrastructure Limited (Wholly owned Subsidiary) towards following Credit facility granted by Indian Overseas Bank, Daryaganj, New Delhi: Name of the Company Fund Based Non-fund Based Brahmaputra Infrastructure Ltd 3.25 Cr. 10.00 Cr
c) The Income Tax Department has imposed penalty u/s 271(1)(C) of Rs. 26,29,147/- for the Assessment Year 2001-02 which was not confirmed by ITAT New Delhi vide their order no. ITA NO. 725/D/2005 dated 19th August 2005. But the Income Tax Department has filed the case with High Court against the order from ITAT, New Delhi. No provision has been made for same.
d) The Income Tax Department has imposed penalty u/s 271(1) (C) of the Income Tax Act, 1961 of Rs. 3,33,000/- for the Assessment Year 2002-03 and the same was confirmed by CIT (Appeal). However the said penalty has been adjusted against the refund vide R.V No 057744 dt 27/11/2005 and the Company has appealed against the order of CIT (Appeal) with ITAT, New Delhi. No provision has been made for same.
e) The Income Tax Department has issued notice u/s 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2004-05 due to addition of Rs 270509/- in income on account of disallowance of expenses at the time of assessment u/s 143(3).
f) During the period under review the company has provided Bonus, Gratuity and Leave encashment on accrual basis, Provident fund has been provided on actual liability basis and Gratuity provided based on actuarial valuation.
g) Notes on adjusted for consolidated restated financial statements: Below mentioned in the summary of results of restatements made in the audited accounts for the respective years and its impact on the profits/ losses of the Company, its subsidiary and its joint venture.
208 Rs. in Lacs Particulars For the year ended March March March March March 31, 31, 2006 31, 2005 31, 2004 31, 2003 2002 PAT as per audited accounts 710.81 311.82 168.58 192.35 276.79 Adjustments for Provision for Bonus 18.73 - - - - Provision for Gratuity 1.68 1.57 2.67 0.68 0.76 Income from Operations 109.16 Depreciation (4.96) Prior period items 1.67 (0.41) 0.73 0.14 - Sub-Total 126.28 1.16 3.40 0.82 0.76 Current Tax Impact (9.53) (69.91) (8.46) 21.52 (0.06) Deferred Tax 86.97 73.00 17.50 (19.99) 78.43 Sub-Total 77.44 3.09 9.04 1.53 78.37 Total charged/ (credit) 203.72 4.25 12.44 2.35 79.13 PAT as per restated accounts 507.09 307.57 156.14 190.00 197.66
Annexure – V
Performance Ratios
Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 Earning Per Shares (EPS) Profit after Tax (Rs. in Lacs) 420.88 507.09 307.57 156.14 190.00 197.66 Weighted Average No of 11658954 9753769 7059362 6867619 6735200 1414941 Shares outstanding EPS (in Rupees) 3.61 5.20 4.36 2.27 2.82 13.97 RETURN ON NETWORTH Profit after Tax (Rs. In Lacs) 420.88 507.09 307.57 156.14 190.00 197.66 Net Worth (Rs. In Lacs) 3211.89 2628.71 1571.66 1054.32 767.07 580.50 RETURN ON NETWORTH 13.10 19.29 19.57 14.81 24.77 34.05 (%) NET ASSETS VALUE PER SHARE Total Assets (a) 17870.57 14038.32 7299.87 3972.90 2643.48 2307.01 (Rs. in Lacs) Total Liabilities (b) 14658.68 11409.61 5728.21 2918.58 1876.41 1726.51 (Rs. in Lacs) Net Assets (a)-(b) 3211.89 2628.71 1571.66 1054.32 767.07 580.50 (Rs. in Lacs) Weighted Average No of 11658954 9753769 7059362 6867619 6735200 1414941 Shares outstanding No of Shares outstanding at 12000000 11464070 7799256 7055285 6735200 1683800 the end of the year Net Assets Value Per 27.55 26.95 22.26 15.35 11.39 41.03 Share (Rs.)
209 Notes:
The above ratios have been computed as below:
Earnings per Share Profit after Tax Weighted average number of Equity Shares outstanding during the year
Return on Net Worth Profit after Tax (%) Net Worth at the end of the year
Net Asset Value per Net Worth at the end of the year share (Rs.) Weighted average number of Equity Shares outstanding at the end of the year
1. Weighted average number of Equity Shares is the number of Equity Shares outstanding at the beginning of the year, adjusted by the number of Equity Shares issued during the year multiplied by the time-weighting factor. The time-weighting factor is the number of days for which the specific shares are outstanding as a proportion of the total number of days during the year. 2. Profit after Tax, as appearing in the statement of Profit & Loss of the respective years as restated has been considered for the purpose of computing the above ratios. These ratios are computed on the basis of consolidated financial statements of the Company. 3. Earnings per Share calculation are done in accordance with Accounting Standard 20 “Earnings per Share” issued by the Institute of Chartered Accountants of India. 4. During the year ended March 31st 2006, Brahamputra Consortium Limited has made allotment of 1949814 Equity Shares as bonus shares. 5. Net Worth means Equity Share Capital + Reserves & Surplus (excluding asset revaluation reserve) - Misc. Expenditure not written off or adjusted
Annexure – VI Capitalization Statement Rs. in Lacs Particulars Pre Issue Post Nine For the year ended Issue Months March 31, March 31, March 31, Ended 2006 2005 2004 December 31, 2006 Total Debt: 10191.38 7837.52 2861.13 817.74 [●] Short Term Debt 7911.36 4931.87 1998.43 598.76 [●] Long Term Debt 2280.02 2905.65 862.70 218.98 [●] Shareholders Funds: Share Capital 1200.00 1146.41 779.93 705.53 [●] Reserves & surplus 2042.35 1514.28 818.95 377.16 [●] Less: Misc. expenditure 8.16 9.68 4.92 6.07 [●] Less: Goodwill 22.30 22.30 22.30 22.30 [●] Total Shareholders Funds 3211.89 2628.71 1571.66 1054.32 [●] Long Term Debt / Shareholders 0.71 1.11 0.55 0.21 [●] funds
Note: Long Term debts exclude installments payable with in one year.
210 Annexure – VII Details of Other income Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 Rent Received 11.98 14.52 13.20 12.00 - - Dividend Received 7.47 7.45 - - - - Profit on sale of Shares - - 2.06 - - - Miscellaneous Income - 0.84 0.13 0.45 0.28 0.05 (Loss) / Profit from Joint 0.53 0.03 - - - - Venture Total 19.98 22.84 15.39 12.45 0.28 0.05
Annexure – VIII Sundry Debtors Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 Debtors outstanding for a 0.18 - 50.10 80.45 - 10.42 period exceeding six months Others 658.63 1496.65 1424.26 742.87 237.56 265.75 Total 658.81 1496.65 1474.36 823.32 237.56 276.17
Annexure – IX Unsecured Loans Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 From bodies corporate 520.33 - 105.74 238.21 20.00 - Total 520.33 - 105.74 238.21 20.00 -
Annexure – X Secured Loans Rs. in Lacs Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 Term loan 4396.59 4816.40 1690.16 554.25 488.86 629.21 Mobilization Advance 1375.20 621.84 949.44 - - - Working Capital Loan 3899.26 2399.28 115.78 25.28 - - Total 9671.05 7837.52 2755.38 579.53 488.86 629.21
211 Annexure – XI Related Party Transactions
I. List if Related Parties
Name of the Related Party Relationship Brahmaputra Infrastructure Ltd. Subsidiary Brahamputra Consortium Pte. Limited Subsidiary Siw Prasad Agarwalla Key Managerial Personnel Suresh Kumar Prithani Key Managerial Personnel Ramesh Kumar Prithani Key Managerial Personnel Manoj Kumar Prithani Key Managerial Personnel Sanjeev Kumar Prithani Key Managerial Personnel Surinder Kumar Soni Key Managerial Personnel Om Kumar Key Managerial Personnel Om Prakash Kejriwal Key Managerial Personnel Deo Chandra Hirawat Key Managerial Personnel Geeta Devi Agarwalla Key Managerial Personnel Shobna Prithani Key Managerial Personnel Anshu Prithani Key Managerial Personnel Anita Prithani Key Managerial Personnel Kiran Prithani Key Managerial Personnel Kamakhya Prasad Mozika Key Managerial Personnel Durga Devi Mozika Key Managerial Personnel Sanjay Kumar Mozika Key Managerial Personnel Ajay Kumar Mozika Key Managerial Personnel Siw Prasad Agarwalla & Sons (HUF) HUF of Key Managerial Personnel Suresh Kumar Prithani (HUF) HUF of Key Managerial Personnel Ramesh Kumar Prithani (HUF) HUF of Key Managerial Personnel Manoj Kumar Prithani (HUF) HUF of Key Managerial Personnel Sanjeev Kumar Prithani (HUF) HUF of Key Managerial Personnel BCL (JV) Joint Venture BLA-BCL JV Joint Venture BTS-BCL JV Joint Venture DRA-BCL JV Joint Venture DRA-BLA-BCL (JV) Joint Venture GPL-BCL JV Joint Venture KB-Brahmaputra Consortium Ltd (JV) Joint Venture Madhva-BCL JV Joint Venture PCL-Brahmaputra Consortium Ltd.(JV) Joint Venture Brahmaputra Concrete Pvt Ltd Associates Brahmaputra Enterprises (P) Ltd Associates Brahmaputra Hosiarpur-Phagwara Toll Roads Ltd Associates Brahmaputra Overseas Ltd Associates Brahmaputra Projects Ltd Associates Brahmaputra Promoters & Planners (P) Ltd Associates Brahmaputra Sirhind-Morinda Ropar Toll Roads Ltd Associates Brahmaputra Holdings Pvt Ltd Associates Brahmaputra Realtors Pvt Ltd Associates Brahmaputra Property Management Services Pvt. Ltd Associates Satluj Infrastructure Ltd. Associates Yoyo Distillers & Bottlers (P) Ltd Associates Indotech Tubewells Pvt. Ltd. Associates Karnani Finlease (P) Ltd Associates M L Singhi & Associates (P) Ltd Associates M/s K.P. Mozika Associates
212 II. Transactions with Related Parties
Rs. In Lacs Name of Nature of Nine For the year ended Related Party Transaction Months March March March March March Ended 31, 31, 31, 31, 31, Decemb 2006 2005 2004 2003 2002 er 31, 2006 Ajay Kumar Director’s 0.70 0.94 0.94 0.94 - - Mozika Remuneration Anita Prithani Share Application - - - - - 2.00 Money Rent 2.10 - - - - -
Security Deposit 0.90 - - - - - (Rent) Advance against 0.90 - - - - - Rent Anshu Prithani Share Application - - - - - 1.00 Money BCL (JV) Contract Receipts 1345.13 1179.38 - - - - Investment - 0.10 - - - - Brahmaputra Share Application 19.50 - - - - - Concrete Pvt Ltd Money Paid Brahmaputra Share Application - - - - 17.00 - Enterprises (P) Money Ltd Rent 0.74 1.48 - - - -
Brahmaputra Advance given 0.06 23.58 - - - - Hosiarpur- Phagwara Toll Investment (4.99) 4.99 - - - - Roads Ltd Brahmaputra Contract Receipts - - - - 159.47 30.00 Infrastructure Ltd. Machine Hiring - - - - - 22.74 Receipts/ other reimbursements Brahmaputra Advance given - - - - 65.55 7.68 Overseas Ltd Furniture 6.29 10.49 2.94 5.87 - - Purchased Rent Received 11.98 14.52 13.20 12.00 - -
Reimbursements of - - 2.40 - - - expenses Materials - 1.55 23.51 - - - Purchased Investment - - - (22.00) 20.00 2.00
Brahmaputra Advances/Rent - - - - 36.02 - Projects Ltd Paid Share Application - - 23.00 - 15.49 42.95 Money Rent - - - 1.14 1.13 -
213 Sub-Contract - - 4.46 18.94 - - payments Brahmaputra Share Application - - 3.00 - - - Promoters & Money Planners (P) Ltd Rent 1.09 1.32 1.32 - - -
Advance given - - - 1.65 - 27.00
Sub-Contract - - 2.76 - - - payments Building - - 6.00 - - - Mahipalpur A/c Brahmaputra Advance given 0.31 24.64 - - - - Sirhind-Morinda Ropar Toll Investment (4.99) 4.99 - - - - Roads Ltd BTS-BCL JV Investment 0.10 - - - - - DRA-BCL JV Investment 0.10 - - - - - GPL-BCL JV Investment 0.10 - - - - - Indotech Share Application - - 24.00 - - - Tubewells Pvt. Money Ltd. Advance Given - - - 7.50 - -
Machine Hiring - - - - - 8.75 Receipts/ other reimbursements Machinery rental - - - 8.80 - - charges
Assets Purchased - 12.67 - - - -
Drilling Work 0.46 3.30 - - - -
Karnani Finlease Advance/ Loan 1212.48 1195.44 381.83 31.95 - - (P) Ltd received Share Application 60.00 150.25 - - - - Money Advance Given 470.06 - - - - -
KB- Contract Receipts 1181.11 1002.13 538.96 - - - Brahmaputra Consortium Ltd (JV) Investment - 0.05 - - - -
M L Singhi & Advance/ Loan 1344.11 243.67 306.88 58.45 - - Associates (P) received Ltd Share Application 150.78 218.00 - - - - Money Advance Given 331.52 - - - - -
Madhva-BCL JV Investment 0.10 - - - - -
214 Manoj Kumar Director’s 2.70 2.40 2.40 1.80 1.80 1.80 Prithani Remuneration Share Application - 98.50 - - - 4.00 Money PCL- Contract Receipts 753.05 1218.57 903.77 - 835.97 - Brahmaputra Consortium Investment - - - - (5.00) 0.25 Ltd.(JV) Ramesh Kumar Director’s 2.70 2.40 2.40 1.80 1.80 1.80 Prithani Remuneration Share Application - 45.25 - - - - Money Sanajy Kumar Directors 0.70 0.94 0.94 0.94 - - Mozika Remuneration Sanjeev Kumar Director’s 2.70 2.40 2.40 1.80 1.80 1.80 Prithani Remuneration Share Application - 54.00 - - - - Money Shobna Prithani Share Application - 50.00 - - - - Money Rent 7.43 9.00 - - - -
Secuity Depost - - 2.25 - - - (Rent) Advance against - - 2.25 - - - Rent Siw Prasad Share Application - 16.75 - - - - Agarwalla Money Rent 0.56 0.75 0.75 0.60 0.60 -
Suresh Kumar Director's 5.99 6.18 6.18 3.33 1.80 1.80 Prithani Remuneration Share Application - 45.25 - - - - Money Computer - 1.02 - - - - purchased Suresh Kumar Share Application - 11.00 - - - - Prithani (HUF) Money BLA-BCL (JV) Investment 0.01 - - - - -
M/s K.P. Mozika Machine Hiring - - - - - 5.00 Receipts/ Other Reimbursements Sub-Contract - - 202.25 238.76 132.51 - Payments
215
III. Balance Outstanding with Related Parties Rs. In Lacs Name of Nature of Nine For the year ended Related Party Transaction Months Ended March March March March March December 31, 31, 31, 31, 31, 31, 2006 2006 2005 2004 2003 2002 Ajay Kumar Director’s (0.70) - (0.94) (2.67) - - Mozika Remuneration Anita Prithani Advance against 0.90 - - - - - Rent Rent (0.96) - - - - -
Security Deposit 0.90 - - - - - (Rent) BCL (JV) Contract Receipts 274.15 338.82 - - - - Investment 0.10 0.10 - - - - Brahmaputra Share Application 19.50 - - - - - Concrete Pvt Ltd Money Paid Brahmaputra Rent (0.97) (0.23) - - - - Enterprises (P) Ltd Share Application - - - - (17.00) - Money Brahmaputra Advance given 2.32 23.58 - - - - Hosiarpur- Phagwara Toll Investment - 4.99 - - - - Roads Ltd Brahmaputra Contract Receipts - - - - 68.74 - Infrastructure Ltd.
Brahmaputra Advance given - - - - 65.04 6.84 Overseas Ltd Furniture (6.29) - - - - - Purchased Rent Received 9.29 0.94 - - - -
Investment - - - - 22.00 2.00
Brahmaputra Advances/Rent - - - - 34.89 - Projects Ltd Paid Share Application - - - - (15.49) - Money
Brahmaputra Advance given - - - - - 27.00 Promoters & Planners (P) Ltd Rent (0.84) (0.09) (0.09) - - -
Brahmaputra Advance given 3.34 24.64 - - - - Sirhind-Morinda Ropar Toll Investment - 4.99 - - - - Roads Ltd BTS-BCL JV Investment 0.10 - - - - -
216 DRA-BCL JV Investment 0.10 - - - - - GPL-BCL JV Investment 0.10 - - - - - Indotech Drilling Work (3.60) (3.22) - - - - Tubewells Pvt. Ltd. Share Application - - - - (21.61) (21.61) Money
Karnani Finlease Advance Given 470.06 - - - - - (P) Ltd Advance/ Loan (168.58) - (39.05) (31.95) - - received KB- Contract Receipts 170.86 201.07 404.05 - - - Brahmaputra Consortium Ltd (JV) Investment 0.05 0.05 - - - -
M L Singhi & Advance Given 331.52 - - - - - Associates (P) Ltd Advance/ Loan (281.30) - (41.69) (58.45) - - received Madhva-BCL JV Investment 0.10 - - - - - Manoj Kumar Director’s (1.02) (0.20) (0.04) (0.17) (1.76) (0.57) Prithani Remuneration
PCL- Contract Receipts 43.28 164.60 242.44 - 154.06 - Brahmaputra Consortium Investment 2.63 2.63 2.63 2.63 2.63 7.63 Ltd.(JV) Ramesh Kumar Director’s (1.06) (0.15) (0.04) - (4.96) (3.45) Prithani Remuneration
Sanajy Kumar Directors (0.70) - (0.94) (2.67) - - Mozika Remuneration Sanjeev Kumar Director’s (0.88) (0.21) (0.01) (0.21) (2.28) (0.59) Prithani Remuneration
Shobna Prithani Advance against 2.25 2.25 2.25 - - - Rent Rent (0.69) (0.62) - - - -
Secuity Depost 2.25 2.25 2.25 - - - (Rent) Siw Prasad Rent (0.56) - (0.75) (1.20) (0.60) - Agarwalla
Suresh Kumar Director's (1.87) (0.31) (0.09) (0.65) (1.02) (0.30) Prithani Remuneration
BLA-BCL (JV) Investment 0.01 - - - - -
M/s K.P. Mozika Sub-Contract - - - (14.85) (101.43) - Payments
Note: Figures in brackets represent credit balances.
217
Annexure – XII Investments Rs. in Lacs Long-term investments
Particulars Nine For the year ended Months March March March March March Ended 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002 December 31, 2006 Trade (Quoted) 0.19 0.19 0.19 1.30 - - Trade (Unquoted) In Associates 19.50 9.98 - - 22.00 2.00 In Joint Venture 3.20 2.78 2.63 2.63 2.63 7.63
Total 22.89 12.95 2.82 3.93 24.63 9.63
Annexure - XIII
Changes in the Significant Accounting Policies
There have been no changes in accounting polices during the preceding five years except during the year ended 31st December 2006 in respect of liability for leave encashment, Gratuity and bonus payable to employees which has been provided at the year end in compliance with AS-15 issued by the Institute of Chartered Accountants of India.
For A.B.BANSAL AND COMPANY CHARTERED ACCOUNTANTS
A.B. BANSAL Partner Membership No. 84628 Date: 25/04/2007 Place: New Delhi
218 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion of our financial condition and results of operations together with our audited restated financial statements for the fiscal years ended March 31, 2002, 2003 and 2004, 2005, 2006 and for the nine months ended December 31, 2006 including the significant accounting policies and notes thereto and reports thereon which appear elsewhere in this D r a ft R e d H e r r i n g P r o s p e c t u s . These financial statements have been prepared in accordance with Indian GAAP, the Companies Act and as required under the SEBI Guidelines.
Unless indicated otherwise, the financial data in this section is derived from our restated financial statements prepared in accordance with Indian GAAP and included in this Prospectus. Our fiscal year ends on March 31 of each year. All references to a particular fiscal year are therefore to the 12-month ending March 31 of that year. You should also read the section titled “Risk Factors” beginning on page 10 of this Draft Red Herring Prospectus, which discusses numerous factors, and contingencies that could impact our company’s financial condition and results of operations.
OVERVIEW OF THE BUSINESS OF THE COMPANY
We are an infrastructure project development company and provide engineering, procurement and construction services for infrastructure projects in India. We are also executing two real estate development projects. Our project expertise is primarily in transportation engineering projects including roads, bridges flyovers, tunnels, land development/ embankment and airport runways, mining and hydroelectric projects.
Our Company was incorporated on September 2, 1998 with the Registrar of Companies, National Capital Territory of Delhi & Haryana and we received the certificate of Commencement of Business on September 25, 1998.
We have a strong presence in the eastern and north-eastern parts of India such as Assam and Arunachal Pradesh. These areas are relatively less penetrated in terms of infrastructure development and hold potential for more business. The Union Budget also increased allocation for the North Eastern sector and state governments has also focus on building infrastructure facilities on priority basis. With a presence in these areas, the Company holds an edge over its peers for future projects.
We execute infrastructure projects independently and in joint ventures. To meet technical and pre qualification requirements, we enter into Joint Ventures/ strategic alliances with entities operating same segment of business.
Over the years, BCL has built a reputation of being a competent and trusted company in the Construction Industry. The company has built a strong organizational base, with vital infrastructure set-up and executes projects by adopting modern techniques. The minute details are taken into consideration at BCL from the bidding stage right up to successful timely completion of the Project.
BCL has a strong order book position of Rs. 73093.79 Lacs as on January 1, 2007. The healthy order book will ensure a steady revenue growth over the next couple of years. The order composition is well diversified over various segments such as Roads and highways, Airports, Tunnels, ROBs, Mining, Hydroelectric Power Projects and Real Estate.
Significant Accounting Policies
1. Basis of accounting
The financial statements have been prepared to comply with the requirements of the Companies Act, 1956, under the historical cost convention on the accrual basis of accounting and in accordance with the standards on accounting issued by the Institute of Chartered Accountants of India referred to in section 211(3C) of the Companies Act, 1956.
219
2. Use of estimates
The preparation of financial statements in conformity with generally accepted accounting policies requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported accounts of revenues and expenses for the years presented.
3. Revenue recognition
i. Income from construction contracts is recognized by reference to the stage of completion of the contract activity as certified by the client. ii Revenue from real estate projects is recognized on the basis of percentage of completion method of accounting iii Income from industrial park project is recognized on the time of execution of sale contract, in relation to sold areas only.
4. Employee benefit
1. Provision for gratuity has been made on the basis of actuarial valuation obtained and debited to Profit and Loss account. 2. Provision in respect of leave encashment is made, based on accrual basis to the extent of leave credit available to the employees as at the period end.
5. Investment
Long term investments are stated at cost.
6. Inventory
All inventories consisting of Work in Progress (Contract), Industrial Park and Real-estate (Housing) has been valued at cost.
7. Foreign currency transactions
a) Transactions in foreign currencies are accounted for at exchange rate prevailing as on date of transaction. b) All assets and liabilities in foreign currencies existing at balance sheet date are translated at the rate of balance sheet date.
8. Misc. expenditure
a) Preliminary expenses are amortized over a period of 10 years. b) Increase in share capital are amortized over a period of 10 years. c) All expenditure exceeding Rs 5000/- incurred on any kind of software and its development termed as “Software Expenses” are amortized over a period of 5 years.
9. Fixed assets
Fixed Assets has been stated at cost less accumulated depreciation. Cost includes purchase price and all other attributable cost of bringing the assets to working condition for intended use.
10. Depreciation
Depreciation is provided on straight line method as per rates specified in Schedule XIV to the Companies Act, 1956.
220 11. Contingent liabilities
Contingent Liabilities not admitted by the company are not provided for in the accounts but are disclosed by way of Notes to Accounts.
12. Taxation
Income Tax comprises current tax, deferred tax and fringe benefit tax. Deferred tax assets and liabilities are recognized for the future tax consequences of timing differences subject to consideration of prudence. Deferred tax assets and liabilities are measured using the tax rates enacted or substantively enacted by the balance sheet date.
13. Earning per share
The earnings considered in ascertaining company’s EPS comprises the net profit after tax. The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year
14. Borrowing cost
Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are considered as part of the cost of that asset. Other borrowing costs are recognized as an expense in the year in which they are incurred.
15. Impairment of assets
Pursuant to Accounting Standard (AS-28) on – Impairment of assets issued by the Institute of Chartered Accountant of India, the company assessed its fixed assets for impairment as at the year end and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of accounts.
Significant Developments Subsequent to the Last Financial Year
The Directors of the company confirm that in their opinion, no circumstances have arisen since the date of the last financial statements as disclosed in this Prospectus and which materially and adversely affect the profitability of the Company, or the value of its assets or its ability to pay its liabilities within the next twelve months.
Factors that may affect results of operations
Except as otherwise stated in this Draft Red Herring Prospectus our financial condition and results of operations are affected by numerous factors and the following are of particular importance that could cause actual results to differ materially from the expectations:
• Availability of or increases in the cost of raw materials, labour and other inputs
The cost of raw materials, sub-contract and labour expenses, and other inputs constitutes a significant part of our operating expenses. Our actual expenses in executing an item rate contract may vary substantially from the assumptions underlying our bid for several reasons, including unanticipated increases in the cost of raw materials, fuel, labour and other inputs, unforeseen construction conditions, including inability of the client to obtain requisite government, environment and other approvals, delays caused by local weather conditions and suppliers or subcontractors’ failures to perform. Unanticipated increases in the price of raw materials, fuel costs, labour or other inputs not taken into account in our bid and delays in performing parts of the contract can have compounding effects by increasing the costs of performing other parts of the contract. These variations and the risks generally inherent to the construction industry may result in us experiencing reduced profitability or a loss on certain projects. We are also liable for a specified period following the completion of the project for any defects arising out of the services provided by us.
221 Our activities are labour intensive. In most of our projects, we utilize sub-contractors that hire casual or temporary labour to perform construction work. Strikes and other labour action may delay construction and result in loss of income and client goodwill, although we have not experienced any labour disruption that has materially and adversely affected our financial condition or results of operations. In addition, we may experience increases in wages and expenses as a result of labour demands or for attracting and retaining skilled construction labour in a period of high demand for such labour. Although generally our longer term contracts have price escalation clauses for increase in certain input costs but generally we are not able to fully recover all such increase in cost of inputs.
• Availability of cost effective funding sources
Our ability to grow in the infrastructure sector is largely dependent on cost effective avenues of funding and that are primarily met through funding by increased borrowing from external sources and the issuance of new debt. Our debt service costs as well as our overall cost of funds depends on many external factors, including developments in the Indian credit market and, in particular, interest rate movements and the existence of adequate liquidity in the debt markets. With the growth of our operations we have had to increasingly access the commercial borrowings and we have benefited from lower interest rates on our borrowings. We believe that going forward the availability of cost effective funding sources could affect our business operations and financial performance.
• Our bidding and execution capability
Infrastructure project development on a public private partnership basis in India involves pre-qualifying interested companies based on their technical and financial strengths. The nature of the Government's process is such that the pre-qualifications obtained in the past play an important role in allowing companies to bid for the new projects. Further, the ability to strategically partner with other players will also determine the success in award of projects for which we bid. The project management capability also affects our financial condition and operations.
• Competition
Despite the fact that we are not affected by competition in the short-term on account of our strong order book, our results of operations could be affected by competition in the infrastructure sector in India in the future. We expect competition to intensify due to possible new entrants in the market, existing competitors further expanding their operations and our entry into new markets where we may compete with well- established infrastructure companies. This we believe may impact our financial condition and operations.
• Tax benefits and incentives
We have benefited from, and continue to benefit from, certain tax regulations and incentives that accord favourable treatment to infrastructure-related activities. Moving forward, we believe that any change in the existing tax benefits and incentives can affect our financial condition and operations.
• General economic and business conditions
As a company operating in India, we are affected by the general economic conditions in the country and in particular the factors affecting the infrastructure industry in general and the projects we develop in particular. The Indian economy has grown steadily over the past three years. This economic growth was propelled by the growth in industrial activity and robust services sector. Quality infrastructure, covering the services of transportation, energy, urban infrastructure and industrial and commercial infrastructure is one of the important necessities for promoting and sustaining this economic growth. Growth in the industrial and manufacturing activity and services sector leads to growth in demand for infrastructure facilities which translates into new proposals for construction, up-gradation and maintenance of infrastructure facilities. Also, improvements in infrastructure facilities in turn have a strong impact upon GDP growth. The overall economic growth will therefore impact the results of our operations. The growth prospects of our business and our ability to implement our strategies will be influenced by macro-economic growth.
222 • Dependence on government policy and regulation towards Infrastructure
The growth of the infrastructure industry in India and our business is dependent on the establishment of stable government policies and prudent regulation. Infrastructure development in India has historically been the preserve of the central and state governments, and has been constrained by various factors such as shortages of public funding, political considerations and issues of transparency and accountability. Changes in government policies, which began in the 1990s, facilitated the entry of private capital into infrastructure and have led to rapid growth in certain sectors. More recently, policy changes in the transportation, energy, urban infrastructure and industrial and commercial infrastructure sectors have begun to attract private sector interest. We believe that with the policy and regulatory reforms continuing to move in the right direction, our growth and financial conditions and operations will be positively impacted.
Result of Operations
Cash Flow
The table below summaries the cash flow for the nine months ended December 31, 2006 and for the year ended March 31 2006, 2005, 2004 & 2003
Particulars Nine For the year ended Months March 31, March 31, March 31, March 31, Ended 2006 2005 2004 2003 December 31, 2006 Cash Flow from Operating Activities (31.66) (0.91) (221.15) 360.37 603.34 Cash Flow from Investing Activities (928.85) (4982.33) (1,588.17) (463.13) (432.99) Cash Flow from Financing Activities 1306.10 5198.17 2,350.16 209.05 (130.91) Net Increase in Cash & Cash 345.59 214.93 540.84 106.29 39.44 equivalents (A+B+C)
For Complete Cash Flow Statement please refer to section titled “Financial Statements” beginning on page 168 of this Draft Red Herring Prospectus.
EXPENSES
Our expenses consist of the cost of material, Store & Operating Expenses, Personnel Expenses, Administration & Selling Expenses, depreciation, and interest and financial charges. The following table shows our various expenses for the nine months ended December 31, 2006 and for years ended March 31 2006, 2005, 2004 & 2003 and shows those expenses as a percentage of total expenses:
Particulars Nine Months For the year ended Ended March 31, March 31, March 31, March 31, December 31, 2006 2005 2004 2003 2006 Amt % Amt % Amt % Amt % Amt % Material, Stores & 7795.30 82.03 7679.79 82.38 4826.10 86.81 3266.91 87.33 1892.55 81.91 Operating Expenses Personnel Expenses 244.98 2.58 229.53 2.46 150.27 2.70 76.83 2.05 60.28 2.61 Adm./Selling Exp. 223.40 2.35 234.79 2.52 136.16 2.45 96.08 2.57 95.33 4.13 Depreciation 699.00 7.36 561.96 6.03 320.37 5.76 220.12 5.88 190.23 8.23 Interest & Finance Charge 539.34 5.68 614.92 6.60 125.41 2.26 79.95 2.14 71.07 3.08 Misc. Expenses W/o 1.40 0.01 1.87 0.02 0.98 0.02 0.98 0.03 0.98 0.04 Total 9503.42 100 9322.86 100 5559.29 100 3740.87 100 2310.44 100
223 The following table shows our various expenses for the nine months ended December 30, 2006 and for years ended March 31 2006, 2005, 2004 & 2003 and also shows those expenses as a percentage of Receipt from Operation (Contract Receipt):
Particulars Nine Months For the year ended Ended March 31, March 31, March 31, March 31, December 31, 2006 2005 2004 2003 2006 Amt % Amt % Amt % Amt % Amt % Material, Stores & 7795.30 94.89 7679.79 82.50 4826.10 86.85 3266.91 83.96 1892.55 70.50 Operating Expenses Personnel 244.98 2.98 229.53 2.47 150.27 2.70 76.83 1.97 60.28 2.25 Expenses Adm./Selling Exp. 223.40 2.72 234.79 2.52 136.16 2.45 96.08 2.47 95.33 3.55 Depreciation 699.00 8.51 561.96 6.04 320.37 5.77 220.12 5.66 190.23 7.09 Interest & Finance 539.34 6.57 614.92 6.61 125.41 2.26 79.95 2.05 71.07 2.65 Charge Misc. Expenses 1.40 0.02 1.87 0.02 0.98 0.02 0.98 0.03 0.98 0.04 W/o Increase/Decrease (1905.66) (23.20) (773.70) (8.31) (389.15) (7.00) (17.05) (0.44) 78.50 2.92 in Stock Profit/(-) Loss on - - 11.69 0.13 (1.68) (0.03) (18.23) (0.47) 7.20 0.27 sale of Fixed Asset/Investment Other Income (19.94) (0.24) (22.82) (0.25) (15.36) (0.28) (12.41) -0.32 (0.28) (0.01) Total Expense 7577.82 92.24 8538.03 91.72 5153.10 92.74 3693.18 94.9 2395.86 89.25 (Net of Stock 1 and Other Income) Margin 637.55 7.76 770.88 8.28 403.60 7.26 197.97 5.09 288.66 10.75 Gross Receipt 8215.37 100 9308.91 100 5556.70 100 3891.15 100 2684.52 100 (Contract Receipt) Growth in Receipt - 67.53 42.80 44.95 31.75
Income Our Income comprises of (i) Receipt from Operation (Contract Receipt) and (ii) Other Income Receipt from Operations (Contract Receipt) The Receipt from Operation consists of receipt from civil contract, sale of industrial park plots and idelling receipt. Receipt from Operation (Contract Receipt) of the Company in 2006 increased to Rs. 9308.91 Lacs as compared to Rs. 2684.52 Lacs in 2003 on account of growth in projects undertaken by Company Other Income The Other income consist of income from rent, income from dividend, Profit/(-) loss from joint venture and other miscellaneous income. Other income of the Company in 2006 increased to Rs. 22.82 Lacs as compared to Rs. 0.28 Lacs in 2003 on account of rent received. Further, dividend received from subsidiary company also contributed to increase in Miscellaneous income. Expenditure
Our expenditure comprises of
(i) Material, Store & Operating Expenses; (ii) Personnel Expenses; (iii) Selling, Administrative expenses; (iv) Interest & finance cost;
224 (v) Depreciation Material, Stores & Operating Expenses Material Consumed, Stores & Operating Expenses as a percentage of total expenses increased in fiscal year 2006 in comparison of fiscal year 2003 by 0.47%. Material, Store & Operating Expenses includes: (i) expenditure for construction materials used in our projects such as steel, cement, equipment and other materials, consumable stores, steel plates, spares for the equipments etc.; (ii) contractor charges paid to sub-contractors to whom we have sub-contracted a part of our project work, piece rate workers’ payments and labour wages; (iii) hire charges paid for hiring of equipment from third parties; (iv) repair and maintenance costs of our equipment and facilities;(v) power, electricity and water charges; and (vi) freight, octroi and transportation cost etc. The nature of expenditure incurred by us on a given project is significantly dependent on the nature of the project. For example, for our construction activities, we may consider using varying proportions of manual or mechanized labour depending on the project specifications and conditions, or decide to sub-contract parts of such construction activities, resulting in a varying proportion of labour, fuel and/or sub-contractor costs. Personnel Expenses Personnel Expenses as a percentage of total expenses marginally decreased in fiscal year 2006 in comparison of fiscal year 2003 by 0.15%. Personnel Expenses include: (i) salaries, wages payments to our employees; (ii) contributions made to provident fund and other fund and iii) expenses relating to welfare and medical to staff. Selling, Administrative and Other Expenses Selling, Administrative and other general corporate expenses as a percentage of total expenses decreased in fiscal year 2006 in comparison of fiscal year 2003 by 1.61%. Selling, Administrative and other expenses include: (i) rent paid for office space and facilities utilized by us; (ii) insurance charges;(iii) traveling and conveyance charges; (iv) fees and taxes paid; (v) consultancy and professional charges paid; and (vi) other miscellaneous administrative and establishment expenses such as office expenses, printing and stationary, communication expenses, postage and advertisement expenses, donation etc. Interest & Finance Charges
Interest & finance Charges has increased from 3.08% in fiscal Year 2003 to 6.60% in fiscal Year 2006. The increase in interest and finance charges is mainly due to various loans facilities availed by the company.
Interest and finance charges include Interest expenses in respect of short-term and long-term bank loans and other charges incurred by us in respect of letters of credit and other financing arrangements and facilities. Depreciation Depreciation expense of the company when expressed as a percentage of expenses for fiscal 2003 and fiscal 2006 decreased by 2.20% however in terms of amount, the depreciation has increased to Rs 561.96 Lac during fiscal year 2006 in compare to Rs 190.23 Lac for the fiscal year 2003. This increase in depreciation was on account of additions made by the company in Gross Block. Margins
When express as a percentage of Income, there is an increase in Interest and finance expenses and Personnel Expenses and decrease in Material, Stores & Operating expenses (Net of Increase/Decrease in stock of WIP), administrative, selling & distribution expenses and depreciation expenses for fiscal 2003 and fiscal 2006 resulting a net effect of increase in Total Expenses (Net of Stock and Other Income) of 2.47%. Due to this increase in total expenses by 2.47%, our PBT Margin has decreased from 10.75% in fiscal 2003 to 8.28% in fiscal 2006. However in terms of amount, the PBT has increased to 770.88 Lac during fiscal year 2006 in compare to 288.66 Lac for the fiscal year 2003 representing a growth of 167.05%
225 REVIEW OF RESULTS OF OPERATIONS
Nine Months ended December 31, 2006 compared with Fiscal Year 2006 Receipt from Operations (Contract Receipt) The company continues with impressive performance during the current year. The Company has already achieved a turnover of Rs 8215.37 Lacs during a period of nine month ended on 31ST December, 2006 against the Total Turnover of Rs 9308.91 Lacs during the Fiscal Year 2006. The increase in Receipt from Operation (Contract Receipt) was on account of new projects undertaken. Other Income Other income decreased from Rs. 22.82 Lacs for the fiscal year 2006 to Rs. 19.94 Lacs during a period of nine month ended on 31ST December, 2006 Material, Stores & Operating Expenses Material, Store & Operating Expenses amounted to Rs. 7795.30 Lacs during a period of nine month ended on 31ST December, 2006. As a percentage of net income, it increased from 82.50 % in fiscal year 2006 to 94.89 % during a period of nine month ended on 31ST December, 2006. The value of Increase/Decrease in stock of Work in Progress also increased during period of nine month ended on 31ST December, 2006 offsetting the increase in material, store & operating expenses. The Increase/Decrease in stock of Work In Progress increased from 8.31% in fiscal year 2006 to 23.20% during period of nine month ended on 31st December, 2006. The Material, Store & Operating Expenses (Net of Increase/Decrease in stock of WIP) decreased from 74.19 % of income in fiscal year 2006 to 71.69% of income during a period of nine month ended on 31st December, 2006.The Company has built a reputation over the years and due to our vast experience and increase in scale of operation, Material, Store & Operating Expenses (Net of Increase/Decrease in stock of WIP) decreases in terms of percentage of income. Personnel Expenses Personnel Expenses amounted to 244.98 Lacs during a period of nine month ended on 31ST December, 2006. As a percentage of Income these have increased from 2.47 % in fiscal year 2006 to 2.98% during a period of nine month ended on 31ST December, 2006. Personnel expenses as a percentage of income have increased due to increase in salaries and recruitment of new personnel at various level of management. Selling, Administrative and Other Expenses Administrative, Selling and Other expenses amounted to 223.40 Lacs during a period of nine month ended on 31ST December, 2006. As a percentage of income, these have increased from 2.52% in fiscal year 2006 to 2.72% during a period of nine month ended on 31ST December, 2006. The Administrative, Selling and Other expenses as a percentage of income increased during the period due to the fact that there was an increase in number of sites coupled with increase in numbers of biddings and business development activities. Interest and Finance Charges The Interest & finance Charges amounted to Rs 539.34 Lacs. As a percentage of income these have decrease from 6.61 % in fiscal year 2006 to 6.57% during a period of nine month ended on 31ST December, 2006. Depreciation Depreciation expense amounted to Rs. 699.00 Lacs. Depreciation expense when expressed as a percentage of income these have increased from 6.04% in fiscal year 2006 to 8.51% during a period of nine month ended on 31ST December, 2006. This increase in depreciation was due to addition of Rs. 1343.25 Lacs made in fixed assets during the period. Net Profit Before Taxes Company registered Net profit before taxes amounting Rs. 637.55 Lacs during the period of nine month ended on 31st December, 2006 against Rs. 770.88 Lacs for the fiscal year 2006. When expressed as a
226 percentage of Income, there is an increase in, Personnel Expenses, Administrative, selling & distribution expenses and depreciation expenses and decrease in Material, Stores & Operating expenses(Net of Increase/Decrease in stock of WIP)and Interest and finance Expenses resulting a net effects of increase in Total Expenses (Net of Stock and Other Income) of 0.52%. Due to which PBT Margin have decreased from 8.28% in fiscal 2006 to 7.76% during period of nine month ended on 31st December, 2006.
COMPARISON OF FY 2006 WITH FY 2005 Receipt from Operations (Contract Receipt) Our Receipt from Operation (Contract Receipt) increased by 67.53% to Rs. 9308.91 Lacs in 2006 as compared to Rs. 5556.70 Lacs in 2005. The increase in Receipt from Operation (Contract Receipt) was on account of new projects and completion of certain projects during the period. Other Income Other income increased from Rs. 15.36 Lacs from for the fiscal year 2005 to Rs. 22.82 Lacs for the fiscal year 2006. However when expressed as a percentage of income, Other income decreased from 0.28% for the fiscal year 2005 to 0.25% for the fiscal year 2006. Material, Stores & Operating Expenses Material, Store & Operating Expenses increased from Rs. 4826.10 Lacs for the fiscal year 2005 to Rs. 7679.79 Lacs for the fiscal year 2006. However when expressed as a percentage of income, Material Consumed, Stores & Operating Expenses decreased from 86.85% in 2005 to 82.50% in 2006. The value of stock of Work in progress also increased from Rs. 389.15 Lacs for the fiscal year 2005 to Rs. 773.70 Lacs for the fiscal year 2006. When express as a percentage of income, the Increase/Decrease in stock of work in progress is increase by 1.31%. The Material, Store & Operating Expenses (Net of Increase/Decrease in stock of WIP) decreased from 79.85 % of income in fiscal year 2005 to 74.19% of income during fiscal year 2006. This is due to the fact that the company has acquired new assets worth Rs 4272.61 Lac for deployment into projects instead of hiring machineries & subletting the work, increase in scale of operation and concentrated sites has also reduced the cost. Personnel Expenses Personnel Expenses increased from Rs. 150.27 Lacs for the fiscal year 2005 to Rs. 229.53 Lacs for the fiscal year 2006. However when expressed as a percentage of income, Personnel Expenses decreased from 2.70% in 2005 to 2.47% in 2006. This is due to the fact that company has not recruited substantial personnel as compared to increase in the turnover i.e. 67.53%. Selling, Administrative and Other Expenses Selling, Administrative and Other Expenses increased from Rs. 136.16 Lacs for the fiscal year 2005 to Rs. 234.79 Lacs for the fiscal year 2006. However when expressed as a percentage of income, Personnel Expenses increased from 2.45% in 2005 to 2.52% in 2006. The Administrative, Selling and Other expenses in absolute term increased due to the fact that there is an increase in number of sites and increase in numbers of biddings and business development activities. However as a percentage of income, it slightly increased during the period due to the fact that the increase in expenses was less as compared to increase in receipt from operation. Interest & Finance Charges The Interest & finance Charges increased from Rs. 125.41 Lacs for the fiscal year 2005 to Rs. 614.92 Lacs for the fiscal year 2006. However when expressed as a percentage of income, The Interest & finance Charges increased from 2.26% in 2005 to 6.61% in 2006. The increase in interest & finance charges is on account of increase in short term / long termborrowings, part of which were used for making addition to fixed assets amounting to Rs 4272.61 Lacs. Depreciation Depreciation expense of the company when expressed as a percentage of income for fiscal 2005 and fiscal 2006 is increased by 0.27% however in terms of amount, the depreciation has increased to 561.96 Lacs
227 during fiscal year 2006 in compare to 320.37 Lacs for the fiscal year 2005. This increase in depreciation was on account of additions of Rs. 4272.61 Lacs in Gross Block during fiscal year 2006. Profit Before Tax The PBT Margin increased from 7.26% in 2005 to 8.28% in 2006. In absolute terms, Our Company has registered a Net profit before taxes amounting Rs. 770.88Lacs for the fiscal year 2006 against Rs. 403.60 Lacs for the fiscal year 2005. There is an increase in Interest and finance Expenses, administrative, selling & distribution expenses and depreciation expenses and decrease in Material, Stores & Operating expenses(Net of Increase/Decrease in stock of WIP) and Personnel Expenses resulting a net effects of decrease in Total Expenses (Net of Stock and Other Income) of 1.02%. Due to which our PBT margin increase from 7.26% in 2005 to 8.28% in 2006
COMPARISON OF FY 2005 WITH FY 2004 Receipt from Operations (Contract Receipt) Our Receipt from Operation (Contract Receipt) increased by 42.80% to Rs. 5556.70 Lacs in 2005 as compared to Rs. 3891.15 Lacs in 2004. The increase in Receipt from Operation (Contract Receipt) was on account of contunied increase in projects undertaken. Other Income Other income increased from Rs. 12.41 Lacs for the fiscal year 2004 to Rs. 15.36 Lacs for the fiscal year 2005. When expressed as a percentage of income, other income decreased from 0.32% for the fiscal year 2004 to 0.28% for the fiscal year 2005. Material, Stores & Operating Expenses Material, Store & Operating Expenses increased from Rs. 3266.91 Lacs for the fiscal year 2004 to Rs. 4826.10 Lacs for the fiscal year 2005. However when expressed as a percentage of income, Material Consumed, Stores & Operating Expenses increased from 83.96% in 2004 to 86.85% in 2005. The value of Increase/Decrease in stock of Work in progress also increased from Rs. 17.05 Lacs for the fiscal year 2004 to Rs. 389.15 Lacs for the fiscal year 2005. When express as a percentage of income, the Increase/Decrease in stock of work in progress is increase by 6.56% offsetting the increase in material, store & operating expenses. The Material, Store & Operating Expenses (Net of Increase/Decrease in stock of WIP) decreased from 83.52 % of income in fiscal year 2004 to 79.85% of income during fiscal year 2005. This is due to the fact that, the company has acquired new equipment worth Rs 1897.69 Lac for deployment into projects instead of hiring machineries & subletting the work and the increase in scale of operation has also reduced the cost. Personnel Expenses Personnel Expenses increased from Rs. 76.83 Lacs for the fiscal year 2004 to Rs. 150.27 Lacs for the fiscal year 2005. However when expressed as a percentage of income, Personnel Expenses increased from 1.97% in 2004 to 2.70% in 2005. Personnel expenses as a percentage of income have increased due to increase in salaries and recruitment of new personnel at various levels in the organization. Selling, Administrative and Other Expenses Selling, Administrative and Other Expenses increased from Rs. 96.08 Lacs for the fiscal year 2004 to Rs. 136.16 Lacs for the fiscal year 2005. However when expressed as a percentage of income, Personnel Expenses slightly decreased from 2.47% in 2004 to 2.45% in 2005 due to the fact that the increase in expenses is less as compare to increase in receipt from operation.
Interest & Finance Charges The Interest & finance Charges increased from Rs. 79.95 Lacs for the fiscal year 2004 to Rs. 125.41 Lacs for the fiscal year 2005. However when expressed as a percentage of income, The Interest & finance Charges increased from 2.05% in 2004 to 2.26% in 2005. The increase in interest & finance charges is due to increase in short term / long term loans taken for making addition in fixed assets of Rs. 1348.80 Lacs during fiscal year 2005.
228 Depreciation Depreciation expense of the company when expressed as a percentage of income for fiscal 2004 and fiscal 2005 is increased by 0.11% however in terms of amount, the depreciation has increased to 320.37 Lacs during fiscal year 2005 in compare to 220.12 Lacs for the fiscal year 2004. This increase in depreciation was on account of additions of Rs. 1348.80 Lacs made by the company in Gross Block during fiscal year 2005. Profit Before Tax The PBT Margin increased from 5.09% in 2004 to 7.26% in 2005. In absolute terms, Our Company registered a Net profit before taxes amounting Rs. 403.60 Lacs for the fiscal year 2005 against Rs. 197.97 Lacs for the fiscal year 2004. There is an increase in Interest and finance Expenses, depreciation expenses and Personnel Expenses and decrease in Material, Stores & Operating expenses(Net of Increase/Decrease in stock of WIP) and Administrative and selling expenses resulting a net effects of decrease in Total Expenses (Net of Stock and Other Income) of 2.17%. Due to which our PBT margin increase from 5.09% in 2004 to 7.26% in 2005.
COMPARISON OF FY 2004 WITH FY 2003 Receipt from Operations (Contract Receipt) Our Receipt from Operation (Contract Receipt) increased by 44.95% to Rs. 3891.15 Lacs in 2004 as compared to Rs. 2684.52 Lacs in 2003. The increase in Receipt from Operation (Contract Receipt) was due to addition of new projects. Other Income Other income increased from Rs. 0.28 Lacs for the fiscal year 2003 to Rs. 12.41 Lacs for the fiscal year 2004. When expressed as a percentage of income, other income increased from 0.01% for the fiscal year 2003 to 0.32% for the fiscal year 2004. Material, Stores & Operating Expenses Material, Store & Operating Expenses increased from Rs. 1892.55 Lacs for the fiscal year 2003 to Rs. 3266.91 Lacs for the fiscal year 2004. However when expressed as a percentage of income, Material Consumed, Stores & Operating Expenses increased from 70.50% in 2003 to 83.96% in 2004. The value of Increase/Decrease in stock of Work in progress also increased from Rs. -78.50 Lacs for the fiscal year 2003 to Rs. 17.05 Lacs for the fiscal year 2004. When express as a percentage of income, the Increase/Decrease in stock of work in progress is increase by 3.36% offsetting the increase in material, store & operating expenses. The Material, Store & Operating Expenses (Net of Increase/Decrease in stock of WIP) increased from 73.42 % of income in fiscal year 2003 to 83.52% of income during fiscal year 2004. This is due to certain new projects amounting to Rs 6627.00 Lacs awarded including Tunnel project at Agartala which had major materials component like steel, cement, sand, chips, gravels, etc where as the projects executed in the year 2002-03 mainly pertain to land development work. During the year 2003-04 the turnover of the Company stood at 3891.00 Lacs with a growth of 45 % as compare to the previous year whereas the equipments acquired during the year was 352.00 Lacs only. In order to have better controlling, speedy completion & execution of the projects and technicality involved we have preferred to sublet the most of the work to petty contractors/sub contractors thereby incurring piece rate work expenses amounting to 21.62% as compared with 11.23% for the FY 2002-03. Personnel Expenses
Personnel Expenses increased from Rs. 60.28 Lacs for the fiscal year 2003 to Rs. 76.83 Lacs for the fiscal year 2004. However when expressed as a percentage of income, Personnel Expenses decreased from 2.25% in 2003 to 1.97% in 2004. Personnel expenses in absolute term is increased however as a percentage of income, it decreased during the period due to the fact that the increase in expenses is less as compare to increase in receipt from operation.
229 Selling, Administrative and Other Expenses Selling, Administrative and Other Expenses increased from Rs. 95.33 Lacs for the fiscal year 2003 to Rs. 96.08 Lacs for the fiscal year 2004. However when expressed as a percentage of income, Personnel Expenses decreased from 3.55% in 2003 to 2.47% in 2004. The Administrative, Selling and Other expenses in absolute term slightly increasd however as a percentage of income, it decreased during the period due to the fact that the increase in expenses was less as compared to increase in receipt from operation. Interest & Finance Charges The Interest & finance Charges increased from Rs. 71.07 Lacs for the fiscal year 2003 to Rs. 79.95 Lacs for the fiscal year 2004. However when expressed as a percentage of income, The Interest & finance Charges decreased from 2.65% in 2003 to 2.05% in 2004. The interest & finance charges in absolute term is increased however as a percentage of income, it decreased during the period due to the fact that the increase in expenses was less as compared to increase in receipt from operation. Depreciation Depreciation expense of the company when expressed as a percentage of income for fiscal 2003 and fiscal 2004 is decreased by 1.43% however in terms of amount, the depreciation has increased to 220.12 Lacs during fiscal year 2004 in compare to 190.23 Lacs for the fiscal year 2003. The increase in depreciation amount was due to additions of Rs. 283.55 Lacs made by the company in Gross Block during fiscal year 2004. The Depreciation in absolute term is increased, however, as a percentage of income, it decreased during the period due to the fact that the increase in depreciation was less as compared to increase in receipt from operation. Profit Before Tax The PBT Margin decreased from 10.75% in 2003 to 5.09% in 2004. In absolute terms, net profit before tax decrease from 288.66 Lacs during fiscal year 2003 to 197.97 Lacs during fiscal year 2004 There is an increase in Material, Stores & Operating expenses(Net of Increase/Decrease in stock of WIP) and decrease in Interest and finance Expenses, depreciation expenses, Personnel Expenses and administrative & selling expenses resulting a net effects of increase in Total Expenses (Net of Stock and Other Income) of 5.66%. Due to which our PBT margin decreased from 10.75% in 2003 to 5.09% in 2004. This is due to certain new projects amounting to Rs 6627.00 Lacs awarded including Tunnel project at Agartala, which had major materials component like steel, cement, sand, chips, gravels, etc where as the projects executed in the year 2002-03 mainly pertain to land development work. During the year 2003-04 the turnover of the Company stood at 3891.00 Lacs with a growth of 45 % as compare to the previous year whereas the capital assets acquired during the year was 352.00 Lacs only. In order to have better controlling, speedy completion & execution of the projects and technicality involved we have preferred to sublet the most of the work to petty contractors/sub contractors thereby incurring piece rate work expenses amounting to 21.62% as compared with 11.23% for the FY 2002-03.
REVIEW OF FINANCIAL POSITION Fixed Assets Fixed assets comprise mainly of land and buildings, plant and machinery, furniture and fixtures, office equipment, computers, vehicles and capital work in progress. Gross Block of Fixed assets increased by Rs. 6263.25 Lacs or 291.08 %, from Rs. 2151.76 Lacs (Inclusive of capital work in progress of Rs. 157.95 Lacs) as of March 31, 2003 to Rs.8415.01 Lacs as of March 31, 2006(Inclusive of capital work in progress of Rs. 265.48 Lacs). Fixed assets increased by Rs.376.36 Lacs, or 17.49%, from Rs. 2151.76 Lacs (Inclusive of capital work in progress of Rs. 157.95 Lacs) as at March 31, 2003 to Rs. 2528.12 Lacs as at March 31, 2004. Fixed assets increased by Rs. 1348.80 Lacs or 53.35% from Rs. 2528.12 Lacs as at March 31, 2004 to Rs. 3876.92 Lacs as at March 31, 2005. Fixed assets increased by Rs. 4538.09 Lacs or 117.05% from Rs. 3876.92 Lacs as at March 31, 2005 to Rs. 8415.01 Lacs (Inclusive of capital work in progress of Rs. 265.48 Lacs) as at March 31, 2006. During the period of nine month ended on 31st December, 2006, there were additions in fixed assets of Rs. 1343.25 Lacs.
230 Investments Investment of Rs. 525.18 Lacs as on 31st March, 2006 consist mainly Investment in wholly owned subsidiary company M/s Brahmaputra Infrastructure Limited of Rs. 96.63 Lacs, Investment in SPVs of Rs. 9.98 Lacs and Investment in Joint Ventures of Rs. 418.57 Lacs. During Fiscal year 2006, Investment in Joint Ventures increased from 2.63 Lacs to 418.57 Lacs and the same is recovered or adjusted during the period ended on 31st December, 2006. Current Assets Current assets consist of inventories, Trade and other debtors, Cash and bank balances, Loans and advances and other assets. During the period ended on 31st December, 2006, total current assets increased by Rs. 2883.43 Lacs or 51.59% from Rs5589.57 Lacs as at Fiscal 2006 to Rs. 8473.00 Lacs as at December 31, 2006, due to increases in inventories (Rs. 2490.71 Lacs ), loans and advances (Rs. 716.37 Lacs), and cash and bank balances (Rs. 345.59 Lacs ) and decrease in debtors (Rs. 669.24 Lacs). Total current assets consist of inventories 46.32%, Debtors 7.40%, Loans & Advances 29.30% and Cash & Bank Balances 16.97%. In the fiscal year 2006, total current assets increased by Rs. 2378.68 Lacs or 74.08% from Rs. 3210.89 Lacs as at Fiscal 2005 to Rs. 5589.57 Lacs as at fiscal 2006, due to increases in inventories (Rs. 877.01 Lacs ), debtors (Rs. 225.64 Lacs), loans and advances (Rs. 1061.10 Lacs) and cash and bank balances (Rs. 214.93 Lacs ). Total current assets consist of inventories 25.66%, Debtors 23.19%, Loans & Advances 31.61% and Cash & Bank Balances 19.55% during the fiscal 2006. In the fiscal year 2005, total current assets increased by Rs. 1851.89 Lacs or 136.27% from Rs. 1359.00 Lacs as at Fiscal 2004 to Rs. 3210.89 Lacs as at fiscal 2005, due to increases in inventories (Rs. 428.22 Lacs ), debtors (Rs. 546.46 Lacs), loans and advances (Rs. 336.37 Lacs), and cash and bank balances (Rs. 540.84 Lacs ). Total current assets consist of inventories 17.35%, Debtors 33.34%, Loans & Advances 21.97% and Cash & Bank Balances 27.33%. In the fiscal year 2004, total current assets increased by Rs. 459.09 Lacs or 51.02% from Rs. 899.91 Lacs as at Fiscal 2003 to Rs. 1359.00 Lacs as at fiscal 2004, due to increases in inventories (Rs. 100.89 Lacs ), debtors (Rs. 286.52 Lacs), and cash and bank balances (Rs. 106.29 Lacs) and decrease in loans and advances (Rs. 34.61 Lacs). Total current assets consist of inventories 9.49%, Debtors 38.56%, Loans & Advances 27.16% and Cash & Bank Balances 24.78%. Current Liabilities and Provisions Current liabilities comprise Sundry creditors, advances from customers, expenses payable, accrued liabilities and tax payable. During the period ended on 31st December, 2006, Current liabilities and provisions increased by Rs. 633.49 Lacs or 25.80% from Rs. 2455.45 Lacs as at Fiscal 2006 to Rs. 3088.94 Lacs as at 31st December 2006, due to increase in Sundry Creditor Rs. 578.94 Lacs, Expenses payable Rs. 194.93 Lacs, Provision for income tax Rs. 70.70 Lacs, TDS & Service Tax Payable Rs. 33.38 Lacs and Provision for Gratuity Rs. 4.43 Lacs and decrease in Advance received Rs. 125.55 Lacs and Provision for Fringe Benefit Tax Rs. 0.54 Lacs. Total current liabilities and provision consist of Sundry Creditor 74.38%, Expenses payable 8.42%, Advance received 3.39%, TDS & Service Tax Payable 5.18%, Provision for income tax 8.11%, Provision for Fringe Benefit Tax 0.17%, Provision for Gratuity 0.35%. During the fiscal year 2006, Current liabilities and provisions increased by Rs.716.16Lacs or 41.18% from Rs. 1739.29 Lacs as at Fiscal 2005 to Rs. 2455.45 Lacs as at fiscal 2006, due to increase in Sundry Creditor Rs. 281.75 Lacs, Expenses payable Rs. 4.42 Lacs, Advance received Rs. 170.33 Lacs , TDS & Service Tax Payable Rs. 103.07 Lacs, Provision for income tax Rs. 107.12 Lacs, Provision for Gratuity Rs. 1.32 Lacs Provision for Fringe Benefit Tax Rs. 5.85 Lacs and Proposed dividend including dividend tax Rs. 42.30 Lacs . Total current liabilities and provision consist of Sundry Creditor 69.99%, Expenses payable 2.65%, Advance received 9.38%, TDS & Service Tax Payable 5.16%, Provision for income tax 7.32%, Provision for Fringe Benefit Tax 0.24%, Provision for Gratuity 0.26% and Proposed dividend including dividend tax 5.00%. During the fiscal year 2005, Current liabilities and provisions increased by Rs. 380.32 Lacs or 27.99% from Rs. 1358.97 Lacs as at Fiscal 2004 to Rs. 1739.29 Lacs as at fiscal 2005, due to increase in Sundry Creditor Rs. 198.83 Lacs, Expenses payable Rs. 50.92 Lacs, Advance received Rs. 59.97 Lacs, TDS & Service Tax Payable Rs. 14.25 Lacs, Provision for Gratuity Rs. 0.82 Lacs, Proposed dividend including dividend tax Rs.
231 80.50 Lacs and decrease in Provision for income tax Rs. 24.97 Lacs. Total current liabilities and provision consist of Sundry Creditor 82.61%, Expenses payable 3.49%, Advance received 3.45%, TDS & Service Tax Payable 1.35%, Provision for income tax 4.17%, Provision for Gratuity 0.29% and Proposed dividend including dividend tax 4.63%. During the fiscal year 2004, Current liabilities and provisions increased by Rs. 305.90 Lacs or 29.05% from Rs. 1053.07 Lacs as at Fiscal 2003 to Rs. 1358.97 Lacs as at fiscal 2004, due to increase in Sundry Creditor Rs. 410.41 Lacs, TDS & Service Tax Payable Rs. 7.41 Lacs, Provision for income tax Rs. 23.28 Lacs, Provision for Gratuity Rs. 2.01 Lacs and decrease in Expenses payable Rs. 116.01 Lacs, Advance received Rs. 21.20 Lacs. Total current liabilities and provision consist of Sundry Creditor 91.10%, Expenses payable 0.72%, TDS & Service Tax Payable 0.68%, Provision for income tax 7.18%, Provision for Gratuity 0.32%. Secured Loans Secured loans consist of long term loans and short term loans for working capital requirements. During the period ended on 31st December, 2006, Secured loans increased by 15.98% or by Rs 1243.17Lacs from Rs 7779.89Lacs as at fiscal year 2006 to Rs 9023.06Lacs as at 31st December, 2006, due to increase in short term borrowings for working capital by Rs 1130.51 Lacs, Mobilization advance Rs. 639.31 Lacs and decrease in long term borrowings by Rs 526.65Lacs. During fiscal year 2006, Secured loans increased by 181.53% or by Rs 5016.50Lacs from Rs 2763.39 Lacs as at fiscal year 2005 to Rs 7779.89Lacs as at fiscal year 2006, due to increase in short term borrowings for working capital by Rs 2275.49 Lacs and long term borrowings by Rs 3068.61Lacs and decrease in mobilization advance Rs. 327.60 Lacs. During fiscal year 2005, Secured loans increased by 386.34% or by Rs 2195.19 Lacs from Rs. 568.20 Lacs for fiscal year 2004 to Rs. 2763.39 Lacs for fiscal year 2005, due to increase in short term borrowings for working capital by Rs 109.83 Lacs, Mobilization advance Rs. 949.44 Lacs and long term borrowings by Rs 1135.92 Lacs. During fiscal year 2004, secured loans increased by 16.23% or by Rs 79.34 Lacs from Rs. 488.66 Lacs for fiscal year 2003 to Rs. 568.20 Lacs for fiscal year 2004, due to increase in short term borrowings for working capital by Rs 13.96 Lacs and long term borrowings by Rs 65.38. Net Worth During the period ended on 31st December, 2006 our Net worth increased by Rs. 560.44 Lacs, or 22.11%, from Rs. 2534.24 Lacs as at fiscal year 2006 to Rs. 3094.68 Lacs as at 31st December 2006. Increase in Net worth was on account of Increase in Share Capital by Rs. 53.59 Lacs or 4.67% and increase in reserve and surplus due to retention of profit by 36.18% or Rs. 505.44 Lacs. During fiscal year 2006, Net worth increased by Rs. 1027.90 Lacs, or 68.24%, from Rs. 1506.34 Lacs as at fiscal year 2005 to Rs. 2534.24 Lacs as at fiscal year 2006. Increase in Net worth was on account of Increase in Share Capital by Rs. 366.48 Lacs or 46.99% and increase in reserve and surplus due to retention of profit by 91.17% or Rs. 666.34 Lacs. During fiscal year 2005, Net worth increased by Rs. 474.17 Lacs, or 45.94%, from Rs. 1032.17 Lacs as at fiscal year 2004 to Rs. 1506.34 Lacs as at fiscal year 2005. Increase in Net worth was on account of Increase in Share Capital by Rs.74.40 Lacs or 10.55% and increase in reserve and surplus due to retention of profit by 120.09% or Rs. 398.79 Lacs. During fiscal year 2004, Net worth increased by Rs. 265.10, or 34.56%, from Rs. 767.07 Lacs as at fiscal year 2003 to Rs. 1032.17 Lacs as at fiscal year 2004. Increase in Net worth was on account of Increase in Share Capital Rs. 32.01 Lacs or 4.75% and increase in reserve and surplus due to retention of profit by 232.20% or Rs. 232.11 Lacs.
INFORMATION REQUIRED AS PER CLAUSE 6.10.5.5(A) OF THE SEBI GUIDELINES Unusual or infrequent events or transactions There have been no unusual or infrequent events or transactions that have taken place during the last year.
232 Significant economic changes that materially affected or are likely to affect income from continuing operations: Government’s focus on improving infrastructure will have major bearing on the companies involved in construction in infrastructure sector. Further, any adverse change in sales tax, works contracts tax, and other taxes or increase in raw material costs will have material affect on the working of our company. Except the above, there are no significant economics changes that materially affect or likely to affect income from continuing operations. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations: Apart from the risks as disclosed in this Draft Red Herring Prospectus, there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income form continuing operations. Changes in relationship between costs and revenues The relationship between cost and revenue is likely to be maintained. However, the expansion of the current operations would enable the Company to procure raw materials on more competitive terms from suppliers. This would in turn result in over all reduction in cost and help the Company to achieve economies of scale. However, changes in the prices of raw materials (for non-escalation contracts) have a significant bearing on the revenues of the Company. Extent to which material increases in revenues are due to increased volumes, introduction of new projects Increases in revenue are by and large linked to increase in volume of construction activity carried out by the company. Total turnover of each major industry segment in which the Company operates Please refer to the Section titled “Industry Overview” beginning on page 65 of this Draft Red Herring Prospectus. Status of any publicly announced new products or business segment Our Company has not announced any new product or segment. Seasonality of business Execution of work on construction sites may be affected by heavy monsoon/extreme weather. Usually the company has experienced lower overall construction progress in the July-September quarter due to southwest monsoons, which affects most parts of India. Dependence on single or few suppliers/customers The Company sources its raw materials from a set of known suppliers and is not under threat from excessive dependence on any single supplier. There is no dependence on any single customer. Competitive Conditions The Company faces stiff competition from larger and well-established players. The Company is smaller in size compared to the market leaders, which acts as deterrent for very large projects. However, the Company has bid for large projects in past and bagged a few large projects inspite of big companies in fray. Further, smaller proprietary firms also create competition for the Company. But, considering the size and entry norms for the contracts, for which the Company is bidding, the competition from smaller proprietary firms is minimal.
233 SECTION VI: LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS
Except as described below, there are no outstanding litigation, suits or criminal or civil prosecutions, proceedings or tax liabilities against our Company, our Directors, our Promoters, Promoter Group, our Subsidiaries, our Joint Ventures and there are no defaults, non payment of statutory dues, overdues to banks/ financial institutions, defaults against banks/ financial institutions, defaults in dues payable to holders of any debentures, bonds or fixed deposits other than unclaimed liabilities, defaults in creation of full security as per terms of issue/ other liabilities, proceedings initiated for economic/ civil/ and other offences (including past cases where penalties may or may not have been awarded and irrespective of whether there are specified under paragraph (i) of Part 1 of Schedule XIII of the Companies Act) against our Company, our Directors, our Promoters, Promoter Group, our Subsidiaries and our Joint Ventures
I. LITIGATION AGAINST OUR COMPANY
1. Income Tax Cases
(i) Assessment Year 2001-2002
We have challenged the penalty of Rs 26,29,147 imposed by Assessing Officer u/s 271(1)(c) of the Income Tax Act even though we have not challenged the assessment order and has paid the assessed tax for the assessment year 2001-2002. The Company has filed a return of income showing a loss of Rs 93,74,724/- which was reduced by the assessing officer in it’s order dated March 31, 2004 to Rs 23,33,321/- and for the disallowed amount initiated proceedings for imposition of penalty. We have challenged the penalty order on the ground that in the absence of any finding, that the Company was guilty of concealment of income by the Assessing Officer, no penalty could be imposed in law. We successfully challenged the penalty order before the Income Tax Appellate Tribunal (ITAT) and got the penalty set aside. The Income Tax department has however preferred an appeal (being ITA No 323 of 2006) before the Delhi High Court against the order of ITAT. The Division Bench of the High Court has referred the case to the full bench vide it’s order dated June 2, 2006 in view of divergent views taken by two different division benches of the High Court in the past on the issue. The Company has not received notice of hearing from the full bench yet.
(ii) Assessment Year 2002-2003
We have challenged the penalty of Rs 3,33,000/- imposed by the Income Tax department vide it’s order dated April 29, 2005 with respect to the Assessment Order dated October 29, 2004 for the assessment year 2002-03. The Assessing Officer has treated the sum of Rs 932,607/- as concealed income of the Company on the total disclosed taxable income of Rs 599,01,750/- on account of excess depreciation claimed on some machinery. We have not challenged the said Assessment Order and have paid the assessed tax. However, challenge to penalty order was made before the Commissioner Income Tax (Appeal)-VI, Delhi vide Appeal No 89/05-06 which was rejected vide order dated September 9, 2005. We have been contending that excess depreciation claimed by it was on account of a bonafide mistake and not a deliberate attempt to conceal income which is evident from the fact that the Company had on it’s own filed a revised return to rectify the mistake. We have has preferred an appeal before the ITAT, Delhi on January 10, 2006. The proceedings are pending and the next date of hearing is fixed on May 1, 2007.
(iii) Assessment Year 2004-05
We have challenged the Assessment Order dated November 10, 2006 for the year 2004-05, wherein on the taxable income of Rs 1,38,48,146/- certain depreciation claimed by the Company on computer accessories has been disallowed alongwith denial of sundry balances writing off, resulting in demand of Rs. 1,11,083, before the Commissioner, Income Tax (Appeal)-VI, Delhi. The Company has also received a notice under section 271(1) (c) of the Income Tax Act for proposed imposition of penalty equivalent to additional demand raised. Further, vide our letter dated December 21, 2006, we have requested the Deputy Commissioner of Income Tax not to proceed for recovery of demand
234 and imposition of penalty in view appeal pending before Commissioner, Income Tax (Appeal)-VI. Since then the Company has deposited a sum of Rs. 1,11,083 towards the additional demand raised by the department. No further proceedings have taken place so for.
2. Labour Dispute
We have received notices last being notice dated September 21, 2006 issued by O/O Deputy Commissioner of Labour, Commerce Centre, 6/7th Floor, Tardeo, Mumbai-400034 calling the Company for a personal hearing pertaining to the compensation payable to legal heirs of two deceased workmen. The Company has responded to the notice vide it’s submission dated October 6, 2006 whereby we have denied the workmen–employer relationship with the deceased and have refused to appear before the Deputy Commissioner. Further we have made representation through our Advocate that any claim by the third party/ legal heir has to be addressed under Workmen’s Compensation Act, 1972, to the respective authority and not to the Company and therefore the proceedings before Deputy Commissioner are of no legal consequences. In the past also, the Company had attended various meetings during the period from April 22, 2006 to June 22, 2006 before the Deputy Commissioner of Labour who vide its letter dated June 26, 2006 informed the union representing the deceased workmen’s, Mumbai Shramik Sangh (Sangharsha) to approach the Authority under Workmen’s Compensation Act for getting necessary orders. No further developments have taken place in the matter.
II. LITIGATIONS AGAINST OUR PROMOTER/ DIRECTORS
Our Directors, Mr. Manoj Kumar Prithani and Mr. Sanjeev Kumar Prithani have been charge sheeted for criminal conspiracy under Section 120-B of the Indian Penal Code, 1860 (IPC) by the Economic Offences Wing (EOW) of Central Bureau of Investigation (CBI) in the proceedings, which are primarily against three officers of ASCARD Bank namely, Mr. Khireshwar Saikia, Mr. Pahar Khan and Mr. Imran Khan under Section 409 read with 120-B of the IPC and Sections 13(2) and 13(i)(c) of the Prevention of Corruption Act, 1988 in a matter of alleged excess payment of Rs. 96,924 made by the Bank to erstwhile partnership firm M/s. Brahmaputra Consortium in the year 1995.
M/s Brahmaputra Consortium (erstwhile partnership firm in which Mr. Manoj Kumar Prithani and Mr. Sanjeev Kumar Prithani were partners) had done a work of making deep tube-wells for ASCARD Bank in the year 1995-96. On account of some financial irregularities found in the Bank’s affairs, Government of Assam through EOW, CBI had alleged that few contractors who had done some work for ASCARD Bank at that time including M/s Brahmaputra Consortium were co-conspirators in such financial irregularities. The proceedings are in progress in the court of Special Judge CBI, Guwahati. Our directors namely Mr. Manoj Kumar Prithani and Mr. Sanjeev Kumar Prithani have been granted bail by Court on April 16, 2007. No further proceedings have taken place.
III. LITIGATION AGAINST OUR JOINT VENTURES
1. Service Tax Case
Our joint venture with National Construction Company under the name Brahmaputra Consortium Limited (JV), received a Show Cause Notice C.NO.V(15)105/ADJ/ST/DIG/06 dated December 15, 2006 from the O/O Commissioner, Central Excise: Dibrugarh, Assam raising a demand of Rs 1,68,70,620 towards the outstanding service tax and Rs 3,37,411 towards the education cess pertaining to services rendered by the JV to North Eastern Coal Fields, Coal India Limited for work of “site preparation for coal extraction by way of earthmoving and clearances and production of Carbonaceous Shale by way of drilling, boring and excavation, core extraction, earthmoving up to the pit area” under the Work Order Agreement No NEC/GM/05/179/88 dated August 18, 2005. The work was awarded to the joint venture and the said joint venture had sub contracted the work to our Company and the work is under execution at present. Initially on account of prevailing uncertainties over applicability of service tax, the Coal India limited under the Work Order Agreement No NEC/GM/05/179/88 dated August 18, 2005 has agreed to pay service tax @ 10.2% in case same was payable on production of necessary documentary evidence. The rate of service has since increased to 12.24%. In view of the notice received, our Company has decided to pay the entire amount of service tax demanded till date at the current rate of 12.24% and the liability towards
235 service tax has been accounted for in the books of accounts of the Company. The Service Tax amount has since been paid to the department.
The matter has been taken up with Coal India Limited to pay the service tax calculated at the current rate of @ 12.24% instead of 10.2% agreed in terms of Work Order Agreement No NEC/GM/05/179/88 dated August 18, 2005.
Our JV has further represented to the Service Tax Department to transfer the case file to New Delhi as competent personnel to handle tax matters are not located at the site. Matter is under consideration by the Service Tax Department.
2. Proceedings in Allahabad High Court for quashing of Criminal Complaint under section 138 of the Negotiable Instruments Act and other incidental proceedings.
The Company had entered into a joint venture agreement with Dinesh R Agarwal Infracon (P) Ltd and Gautam Construction Company under the name DRA-BCL-GCC JV for making a bid to NHAI for construction of a section of NH-37 in Assam. The JV separately entered into a contract dated December 27, 2004 with M/s PNC Construction Company Limited (PNC Construction) to carry out pre-tender work for the JV in relation to its bid for construction of a section of NH-37 in Assam. PNC Construction was given six advance cheques amounting to Rs. 5.83 Crores by one of our group company, M/s Brahmaputra Promoters and Planners Private Limited on behalf of JV. Eventually the work/ bid was not awarded to JV by NHAI and PNC Construction did not carry out the entire pre- tender work. However, based on the contract and cheques with them, they filed four criminal complaints under section 138 of Negotiable Instruments Act, 1881 for dishonour of four cheques against the joint representative of JV, Mr. Sumit Kumar Todi.
These Complaints were filed in the Chief Judicial Magistrates Court, Agra and were numbered as case No 1975/05, 913/06, 1281/06 and 40/07. The joint venture had disputed their liability and therefore had filed a petition in the Hon’ble Allahabad High Court for quashing of one of the above criminal complaints, since by then the JV had received notice in one of the four complaints only. This complaint was case No 1975/05. The joint venture has also filed a civil suit [C.S (OS) No 2025 of 2006] in the Hon’ble High Court of Delhi for seeking a declaration that it does not owe any money to PNC Construction and therefore should be injuncted from presenting the remaining cheques for encashment.
The JV has recently amicably settled and compromised the disputes with PNC Construction and vides order dated February 25, 2007, passed by the CJM, Agra, these criminal complaints have been dismissed. Furthermore, PNC Construction has also returned the remaining two cheques, of the six cheques which were issued in favour PNC Construction, and for which complaints had not been presented yet. Consequently, in view of settlement, the suit filed by the JV in Delhi High Court has been withdrawn and the steps are being taken to withdraw the petition filed in Allahabad High Court.
3. Income Tax Cases
(i) Against KB-Brahmaputra Consortium Limited (JV)
Our Joint Venture, KB-Brahmaputra Consortium Limited (JV) has received a notice on July 25, 2006 under section 143(2) of the Income Tax Act, 1961 for the Income Tax Return filed for the assessment year 2005-2006. The proceedings are pending.
(ii) Against PCL-Brahmaputra Consortium Limited (JV)
Our Joint Venture, PCL-Brahmaputra Consortium Limited (JV) has received a notice on October 5, 2006 under section 143(2) of the Income Tax Act, 1961 for the Income Tax Return filed for the assessment year 2005-2006. The proceedings are pending.
236 IV. LITIGATION AGAINST OUR SUBSIDIARIES/ GROUP COMPANIES
Income Tax Cases
(i) Against our Subsidiary, Brahmaputra Infrastructure Limited
Our Subsidiary, M/s Brahmaputra Infrastructure Limited has received a notice on June 19, 2006 under section 143(2) of the Income Tax Act, 1961 for the Income Tax Return filed for the assessment year 2005-2006. The proceedings are pending.
(ii) Against our Group Company, M/s Brahmaputra Projects Limited
One of our groups Company, M/s Brahmaputra Projects Limited has received a notice on July 25, 2006 under section 143(2) of the Income Tax Act, 1961 for the Income Tax Return filed for the assessment year 2005-2006. The proceedings are pending.
III LITIGATION PURSUED BY OUR COMPANY/ JOINT VENTURES
(i) We have filed a writ petition in the Calcutta High Court against Eastern Coalfields India Ltd (“ECL”) and others challenging the disqualification of our Company at the first stage of the bidding process for the bids submitted by us in response to a tender floated by ECL with respect to the work of “Rajmahal Expansion OCP (17MTY) Expansion of the Coal production of Rajmahal OCP from 10.5 MTY level to 17 MTY Capacity Level and corresponding overburden removal”. The writ petition is registered as W.P No 22842(W) of 2006. In the hearing held on November 9, 2006 the single judge of the Hon’ble High Court refused to pass an ex-parte stay in favour of us staying the award of work in favour of a consortium lead by Essel Mining & Industries Ltd. Against the order of November 9, 2006 of the single judge, we have preferred an appeal before the Division Bench of the Calcutta High Court which is registered as MAT No 4404 of 2006 and is pending disposal.
(ii) IRCON had entered into an Agreement with one of the Company’s joint ventures, M/s PCL- Brahmaputra Consortium Limited JV to execute a work vide letter of award dated January 17, 2001 but did not pay against cost hike (cost escalation) on completion of work. The said joint venture had approached IRCON to appoint a Conciliator as per the terms of the Agreement, as it failed to honour it contractual obligations. In view of no response from IRCON to the request of the joint venture for appointment of Conciliator, the joint venture petitioned Delhi High Court for appointment of Arbitrator. The amount in dispute aggregates to Rs. 151.00 Lacs pertaining to cost escalation with respect to execution of work contract by joint venture. The court on April 23, 2007 has ordered NOIDA authorities to appoint Arbitrator within 2 weeks and also directed the Arbitrator to decide the case expeditiously.
4. Compounding of irregularities/ defaults in Compliance of the Companies Act, 1956
The Company has filed petitions under Section 621A of the Companies Act, 1956 with the Company Law Board for compounding certain irregularities/ defaults under section 383A and 141 of the Companies Act, 1956. The brief particulars are as follows:
S. No. Section Date of Brief particulars Date of under Petition Hearing which the Petition was made 1 383A March 5, Non appointment of Company Secretary in Not yet 2007 different periods listed 2 141 March 20, Non-filing of charge with respect to loan Not yet 2007 agreement dated November 22, 2006 with listed L&T Finance Limited 3 141 March 20, Non-filing of charge with respect to loan Not yet 2007 agreement dated October 3, 2006 with listed TML Financial Services Limited
237 4 141 April 18, Non-filing of charge with respect to loan Not yet 2007 agreement dated October 3, 2006 with listed TML Financial Services Limited 5 141 April 18, Non-filing of charge with respect to loan Not yet 2007 agreement dated January 6, 2006 with listed ICICI Bank Limited
MATERIAL DEVELOPMENTS SINCE LAST BALANCE SHEET DATE
Except as mentioned in this Prospectus, including the section titled “Management’s Discussion and Analysis of Financial Statements and results of Operations” beginning on page 219 of this Draft Red Herring Prospectus, no material developments have been taken place after December 31, 2006, the date of the latest balance sheet, that would materially adversely affect performance or prospects of our Company
238 GOVERNMENT APPROVALS
In view of the approvals listed below, we can undertake this Issue and our current business activities and no further major approvals from any governmental or regulatory authority or any other entity are required to undertake the Issue or continue our business activities.
A. Approvals for the Issue
1. In-principle listing approval from BSE dated [●]
2. In-principle listing approval form NSE dated [●]
B. Approvals for our Business
S. Name of License/ Registration/ License/ Issue Date Validity Period No. Authority Registration No. Registration under Companies Act, 1956 1 Certificate of Incorporation 55-95933 September 2, Valid until 1998 cancelled 2 Certificate of Commencement of 55-95933 September 25, Valid until Business 1998 cancelled Registration under Central/ Sales Tax Laws 3 Certificate of Registration under 07922000785 May 19, 2004 Valid until section 11 of Delhi Sales Tax on Works cancelled Contracts Act, 1999. 4 Certificate of Registration issued to 06091824912 March 28, 2005 Valid until Brahmaputra Consortium Limited cancelled under section 11 of Haryana Value Added Tax Act, 2003 5 Certificate of Registration issued to the 400072/S/6249 June 8, 2004 Valid until Company under Section 22 and 22A of cancelled Bombay Sales Tax Act, 1959 6 Certificate of Registration under the 400072/C/5709 June 8, 2004 Valid until Central Sales Tax (Registration and cancelled Turnover) Rules, 1957 for resale of building material, iron steel, hardware, electrical goods 7 Certificate of Registration issued to the BLP-GST-2872 May 19, 2004 Valid until Company as Dealer under Himachal cancelled# Pradesh General Sales Tax Act, 1968 and Rule 6 of Himachal Pradesh General Sales Tax Rules, 1970 8 Certificate of Registration issued to the CST-2882 May 19, 2004 Valid until Company under Section 7(1) and 7(2) cancelled# of Central Sales Tax Act, 1956 and Rule 5(1) of Central Sales Tax (Registration and Turnover) Rules 1957 for taxation on resale of hardware, electrical goods, construction material, lubricants, tyres and spare parts for use in the execution of contracts of plant & machinery etc. 9 Certificate of Registration issued to the ST/16388 March 12, 2001 Valid until Company under section 26 of West cancelled Bengal Sales Tax Act, 1994 10 Certificate of Registration as dealer GAU(O)/AGST August 17, 1999 Valid until issued to the Company under Section 1418 cancelled
239 11(3) of Assam General Sales Tax Act, 1993 11 Certificate of Registration issued to the GAU(D)/C-837 February 7, 2000 Valid until Company under Section 7(1) and 7(2) cancelled of Central Sales Tax Act, 1956 and Rule 5(1) of Central Sales Tax (Registration and Turnover) Rules 1957 for taxation on resale of cement and machinery for works contracts. Registration under Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975 12 Certificate of Registration issued to the PT/ R/1/1/30/ December 23, Valid until Company for being registered as an 4980 2005 cancelled employer under section 5(1) of Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975 Registration under Service Tax Law 13 Certificate of Registration under D2- April 21, 2005 Valid until section 69 of Finance Act, 1994 for II/ST/R19/GTS/1 cancelled payment of service tax on Goods 088/05 Transport Agency services 14 Letter of Allotment of the Service Tax AAACB8918KST0 May 12, 2005 Valid until Code by the Office of the Deputy 01 cancelled Commissioner Service Tax, Delhi II Registration under Income Tax Act, 1961 15 Permanent Account Number (PAN) AAACB8918K September 2, Valid until 1998 cancelled 16 Tax Deduction at Source Account DELB04361A Valid until Number (TAN) cancelled Importer-Exporter Code (IEC) under Foreign Trade Policy 17 Certificate of Importer Exporter Code 0501011331 May 24, 2001 Not Applicable Registrations under Shops and Commercial Establishments Act(s) 18 Certificate of Registration under SEA/OE/03/111/ July 5, 2002 Renewed up to Assam Shops and Establishment Act 460 31.12.2007 Original Contd. No. SEA/CE/03/111/ 0351
19 Certificate of Registration under SEA/CE-01-D- May 24, 2006 Valid up to Assam Shops and Establishment Act 665 December 31, 2007 20 Certificate of enlistment issued by the 0022 1102 5290 March 22, 2006 Valid until Municipal Commissioner, The Kolkata cancelled Municipal Corporation License Department, West Bengal Licenses under Explosives Act, 1884 21 Explosives premises at Baramura, S/EC/TR/72/6(E- July 1, 2007 March 31, 2009 District West Tripura 6529) 22 Explosives premises at District N.C. EC/EC/AS/22/10 July 1, 2007 March 31, 2009 Hills, Assam 4(E-6520) 23 Explosives premises at Baramura, E/EC/TR/22/7(E- July 1, 2007 March 31, 2009 District West Tripura 6527) 24 Explosives premises at Baramura, E/EC/TR/22/9(E- July 1, 2007 March 31, 2009 District West Tripura 6526) 25 Explosives premises at Baramura, E/EC/TR/22/8(E- July 1, 2007 March 31, 2009 District West Tripura 6528)
240 Registration under Motor Transport Workers Act, 1961 26 Registration under Motor Transport 39/MTU/BUD December 8, December 31, Act, 1961 2006 2006 2007 LICENSES/ REGISTRATIONS UNDER LABOUR LAWS Registration(s) under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 27 Registration Certificate issued by AS/3525 March 5, 1999 Valid until Employees’ Provident Fund (w.e.f. August 1, cancelled Organization, Regional Office, North 1998) East Region. 28 Registration Certificate issued by DL/35337 September 12, Valid until Employees’ Provident Fund 2006 (w.e.f. cancelled Organization, Regional Office, New July, 2006) Delhi. 29 Registration with the E.P.F. HP-3703 January 1, 2005 Valid until Commissioner, Kasumpati, Shimla-9, cancelled* Himachal Pradesh Licenses under the Contract Labour (Regulation and Abolition) Act, 1970 30 License under Contract Labour LAB(W)/137/200 Issued vide letter Renewed up to (Regulation and Abolition Act) 1970 5 /CL no. 13.09.2005 11.09.2007 for Subansiri Site, Arunachal Pradesh 31 SIL/111/20006/L October 26, October 25, 2007 License under Contract Labour IC 2006 (Regulation and Abolition) Act, 1970 for construction of new railway line from Kumarghat – Agartala Project 32 License under Contract Labour 37/ ISMWA/Bug December 13, December 13, (Regulation and Abolition) Act, 1970 2006 2006 2007 for widening and strengthening of Humhama –Budgam-Raithon –Arizol Road , Jammu & Kashmir 33 License under Contract Labour 8 March 15, 2007 December 31, (Regulation and Abolition) Act, 1970 2007 for construction of approaches to Road over Bridge in Jalandhar, Punjab 34 License under Contract Labour L-12/2006/E/6 Vide letter dated June 11, 2007 (Regulation and Abolition) Act, 1970 June 12, 2006 for earthwork at Kolkata, West Bengal 35 License under Contract Labour GH/46/14/2007- February 7, 2007 February 6, 2008 (Regulation and Abolition) Act, 1970 L for construction of new apron at Guwahati Airport at Borihar, Assam 36 License under Section 12(1) of the L/28/2007 February 23, February 22, Contract Labour (Regulation and 2007 2008 Abolition) Act, 1970 for Bogibeel project at Silpathar, Assam 37 License under Contract Labour L-12/2006/E/6 June 12, 2006 June 11, 2007 (Regulation and Abolition) Act, 1970 for Lumding – Silchar gauge conversion project 38 License under Contract Labour GH/46/18/2006/ January 25, November 2008 (Regulation and Abolition) Act, 1970 L 2006 for Lumding – Silchar gauge conversion project 39 License under Contract Labour DYCL/CLA/LIC- February 4, 2005 December 31, (Regulation and Abolition) Act, 1970 16/DESK/27 2007 for widening of construction of Western Express Highway from Aarey Flyover North End to Times of India
241 Flyover North End 40 License under Contract Labour L/27/2007 February 23, February 22, (Regulation and Abolition) Act, 1970 2007 2008 for supplying and taking of 50mm size ballast at Dhamalagaon Station – Bogibeel Bridge 41 License under Section 12(1) of the L/29/2007 February 23, February 22, Contract Labour (Regulation and 2007 2008 Abolition) Act, 1970 for quarrying and
supplying blasted stone boulders at Baruabamangaon/ Babulipara Yard – Bogibeel Bridge. 42 License under Section 12(1) of the L/30/2007 February 23, February 22, Contract Labour (Regulation and 2007 2008 Abolition) Act, 1970 for quarrying and
Supplying boulders at Bogibeel Bridge 43 License under Section 12(1) of the L/31/2007 February 23, February 22, Contract Labour (Regulation and 2007 2008 Abolition) Act, 1970 for supplying and
Staking of 50mm size ballast at Bogibeel Bridge 44 License under Contract Labour AGR/1742 July 10, 2006 July 9, 2007 (Regulation and Abolition) Act, 1970 for various projects at Kumarghat & Agartala 45 License under Contract Labour East/Con/ L-518 March 3, 2007 December 31, (Regulation and Abolition) Act, 1970 /07/DLG 2007 for Land Development work at Kolkata, West Bengal 46 Certificate of Registration under sub 09 March 19, 2007 - section (2) of Section 7 of the Contarct Labour (Regulation and Aboilition) Act, 1970 for construction work under the Real Estate Division 47 Licence under Section 12(1) of the SIL/58/2007/LIC April 05, 2007 April 04, 2008 Contract Labour (Regulation and Aboilition) Act, 1970 for construction of Tunnel No. 37 in between Chandranathpur - Damcherra 48 Licence under Section 12(1) of the SIL/57/2007/LIC April 05, 2007 April 04, 2008 Contract Labour (Regulation and Aboilition) Act, 1970 for construction of Tunnel No. III/11 (14) including earthwork in connection with Lumding – Silchar Gauge Coversion Project. 49 Licence under Section 12(1) of the SIL/56/2007/LIC April 05, 2007 April 04, 2008 Contract Labour (Regulation and Aboilition) Act, 1970 for construction of Tunnel No. 15 (III/12) including earthwork in connection with Lumding – Silchar Gauge Coversion Project. Licenses under Inter-State Migrant Workmen’s (Regulation of Employment and Conditions of Service) Act, 1979 50 License under Section 8(1) of Inter LAB(W)/137/200 Vide letter dated Renewed up to
242 State Migrant Workmen (Regulation of 5 /ISMW September 13, December 12, Employment and Condition of Service) 2005 2006. Act, 1979 for Hydroelectric Power Renewal pending. Project under NHPC at Subansiri Site, Arunachal Pradesh 51 License under Inter State Migrant 18/cont/Bud December 13, December 13, Workmen (Regulation of Employment 2006 2006 2007 and Condition of Service) Act, 1979 issued by Ministry of Labour and Employment for widening and strengthening of Humhama –Budgam- Raithon –Arizol Road , Jammu & Kashmir 52 License under Inter State Migrant SIL/04/2005/LIC November 25, Renewed upto Workmen (Regulation of Employment 2005 November 24, and Condition of Service) Act, 1979 2007 issued by Ministry of Labour and Employment for construction of Single line BG Tunnel in connection with Lumding – Silchar gauge conversion project 53 License under Inter State Migrant SIL/09/2007/LIC April 05, 2007 April 04, 2008 Workmen (Regulation of Employment /MIGRANT and Condition of Service) Act, 1979 issued by Ministry of Labour and Employment for construction of Tunnel No. 37 incluing earthwork in connection with Lumding – Silchar gauge conversion project 54 License under Inter State Migrant SIL/08/2007/LIC April 05, 2007 April 04, 2008 Workmen (Regulation of Employment /MIGRANT and Condition of Service) Act, 1979 issued by Ministry of Labour and Employment for construction of Tunnel No. 15 (III/12) including earthwork in connection with Lumding – Silchar Gauge Coversion Project 55 License under Inter State Migrant SIL/07/2007/LIC April 05, 2007 April 04, 2008 Workmen (Regulation of Employment /MIGRANT and Condition of Service) Act, 1979 issued by Ministry of Labour and Employment for construction of Tunnel No. III/11 (14) including earthwork in connection with Lumding – Silchar Gauge Coversion Project Miscellaneous Registrations/ Certifications 56 ISO 9001:2000 certificate for the 1605-2007-AQ- February 20, Certificate valid provision of civil construction works IND-RvA 2007 until February 20, including infrastructure development 2010 # The Company has vide its letter dated July 28, 2006 made an application to the Assistant Commissioner, Excise & Taxation, Distt. Bilaspur (Himachal Pradesh) for the cancellation of CST and GST registration (CST-2882 dated 19.05.2004 and GST-2872 dated 19.05.2004 respectively) as the Company has executed the Kol Dam Hydroelectric Power Project, Halnora, Bilaspur, Himachal Pradesh. * The Company has made an application dated July 14, 2005 to the E.P.F. Commissioner, Kasumpati, Shimla-9, Himachal Pradesh, for the cancellation of EPF Registration No. HP-3703 as the Company has already executed the Kol Dam Hydroelectric Power Project, Halnora, Bilaspur, Himachal Pradesh.
243 APPROVALS/ LICENSES FOR WHICH GRANT/ RENEWALS HAVE BEEN APPLIED
1. The Company has moved an application for registration under the West Begal Shops and Establishment Act, 1963 vide applicationm filed on August 24, 2006.
2. The Company has moved an application for registration for its trademark with Registrar of Trade Marks, New Delhi for registration of trademark under Class 37 (Infrastructure Development, Construction Development, Building Maintenance, E.P.C. contractor) vide application dated March 21, 2007 (Filed on March 22, 2007 under acknowledgement number 1542311)
Further, we have been advised that we are required to obtain certification of the standing orders under Industrial Employment (Standing Orders) Act, 1946, registration under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, Registration under Employees’ State Insurance Act, 1948 License under Contract Labour (Regulation and Abolition) Act, 1970 and License under Inter State Migrant Workmen (Regulation of Employment and Condition of Service) Act, 1979 for our sites. We are taking steps to seek necessary registrations. Though we are hopeful of getting these approvals, we cannot assure you that we will receive such approvals in the time frames anticipated by us or at all, which could adversely affect our business.
244 OTHER REGULATORY AND STATUTORY DISCLOSURES
Authority for the Issue
Our Board has, pursuant to resolution passed at its meeting held on January 2, 2007, authorized the Issue subject to the approval by the shareholders of our Company under section 81(1A) of the Companies Act.
Our shareholders have authorized the Issue by a special resolution in accordance with section 81(1A) of the Companies Act, passed at the extra ordinary general meeting of our Company held on January 27, 2007 at the registered office of our Company.
Prohibition by SEBI
Our Company, our Directors, our Promoters, our subsidiary, our group companies, and companies or entities with which our Company’s Directors are associated as directors/ promoters/ partners have not been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI.
Further, our Promoters have confirmed that they have not been detained as wilful defaulters by the RBI or any other governmental authority and there are no violations of securities laws committed by them in the past or are pending against them.
Eligibility for the Issue
We are eligible for the Issue in accordance with Clause 2.2.1 of the SEBI Guidelines as explained under, with the eligibility criteria calculated in accordance with unconsolidated financial statements under Indian GAAP:
• We have net tangible assets at least Rs. 300 Lacs in each of the preceding three full years of which not more than 50% is held in monetary assets and is compliant with clause 2.2.1 (a) of the SEBI Guidelines;
• We have a track record of distributable profits in accordance with Section 205 of the Companies Act, for at least three of the immediately preceding five years and is compliant with clause 2.2.1 (b) of the SEBI Guidelines;
• We have a net worth of at least Rs. 100 Lacs in each of the three preceding full years and is compliant with clause 2.2.1 (c) of the SEBI Guidelines;
• We have not changed our name in the last one year; and
• The aggregate of the proposed Issue size and all the previous Issues made in the same financial year in terms of size is not expected to exceed five times the pre-Issue net worth of our Company and is compliant with clause 2.2.1 (e) of the SEBI Guidelines.
Our net tangible assets, monetary assets, and net worth as derived from the restated financial statements prepared in accordance with SEBI Guidelines and Indian GAAP included in this Draft Red Herring Prospectus under the section titled "Financial Statements", and distributable profits as per Section 205 of the Companies Act as at, and for the last five years ended fiscal 2006 is set forth below: Rs. in Lacs Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Fiscal 2003 Fiscal 2002 Net Tangible Assets (1) 10826.55 4747.94 2004.83 1590.41 1426.31 Monetary Assets (2) 1092.52 877.59 337.85 230.46 191.02 Net Profit as restated 469.62 256.09 136.09 190.00 197.66 Net Worth as restated (3) 2534.24 1506.34 1032.17 767.07 580.50 Monetary assets as a 10.09 18.48 16.85 14.49 13.39 percentage of net tangible assets
245 (1) Net Tangible Assets is defined as the sum of fixed assets (including capital work in progress and excluding revaluation reserves), trade investments, current assets (excluding deferred tax assets) less current liabilities & provisions (excluding deferred tax liabilities and long term liabilities).
(2) Monetary assets include cash in hand and bank and quoted investments. For detailed figures, please refer to Section titled “Financial Statements” beginning on page no. 168 of this Draft Red Herring Prospectus.
(3) Net worth has been defined as the aggregate of equity share capital and reserves, excluding miscellaneous expenditure, if any.
Further, we undertake that the number of allottees in the Issue shall be at least 1,000. Otherwise, the entire application money shall be refunded forthwith. If there is a delay beyond 15 days after our Company becomes liable to pay the amount, our Company shall pay interest at the rate of 15% per annum for the delayed period.
Disclaimer Clause of SEBI
AS REQUIRED, A COPY OF THE DRAFT RED HERRING PROSPECTUS HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT RED HERRING PROSPECTUS 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 RED HERRING PROSPECTUS. THE BOOK RUNNING LEAD MANAGERS, A.K. CAPITAL SERVICES LIMITED AND PUNJAB NATIONAL BANK HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000 AS FOR THE TIME BEING IN FORCE. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING AN 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 RED HERRING PROSPECTUS, THE BOOK RUNNING 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 BOOK RUNNING LEAD MANAGERS, A.K. CAPITAL SERVICES LIMITED AND PUNJAB NATIONAL BANK HAVE FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED MAY 1, 2007 IN ACCORDANCE WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992 WHICH READS AS FOLLOWS: “(I) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIALS IN CONNECTION WITH THE FINALISATION OF THE DRAFT RED HERRING PROSPECTUS PERTAINING TO THE SAID ISSUE. (II) 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, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT: A. THE DRAFT RED HERRING PROSPECTUS FORWARDED TO SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE. B. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE, AS ALSO THE GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH.
246 C. THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE. D. BESIDE OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED HERRING PROSPECTUS ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATIONS ARE VALID. E. WHEN UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE WORTH OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS. F. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR SECURITIES AS PART OF PROMOTERS' CONTRIBUTION SUBJECT TO LOCK-IN AND THE SECURITIES PROPOSED TO FORM PART OF THE PROMOTERS' CONTRIBUTION SUBJECT TO LOCK-IN WILL NOT BE DISPOSED/ SOLD/TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITH SEBI TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT RED HERRING PROSPECTUS."
The filing of the Draft Red Herring Prospectus does not, however, absolve our Company from any liabilities under Section 63 or Section 68 of the Companies Act, 1956 or from the requirement of obtaining such statutory and 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 Book Running Lead Managers, any irregularities or lapses in the Draft Red Herring Prospectus.
All legal requirements pertaining to the Issue will be complied with at the time of filing of the Red Herring Prospectus with the RoC in terms of section 60B of the Companies Act.
Disclaimer from our Company and the BRLMs
Investors that bid in the Issue will be required to confirm and will be deemed to have represented to our Company, the Underwriters and their respective directors, officers, agents, affiliates, and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company and will not Issue, sell, pledge, or transfer the Equity Shares of our Company to any person who is not eligible under any applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company. Our Company, the Underwriters and their respective directors, officers, agents, affiliates and representatives accept no responsibility or liability for advising any investor on whether such investor is eligible to acquire Equity Shares of our Company.
Caution
Our Company, our Directors and the BRLMs accept no responsibility for statements made otherwise than in this Draft Red Herring Prospectus or in the advertisements or any other material issued by or at instance of the above mentioned entities and anyone placing reliance on any other source of information, including our website, www.brahamputra.com would be doing so at his or her own risk
The BRLMs accepts no responsibility, save to the limited extent as provided in the Memorandum of Understanding entered into among the BRLMs and us dated March 5, 2007 and the Underwriting Agreement to be entered into among the Underwriters and us.
All information shall be made available by us and BRLMs to the public and 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 show presentations, in research or sales reports or at bidding centers or elsewhere.
We shall not be liable to the Bidders for any failure in downloading the Bids due to faults in any software/hardware system or otherwise.
247 Disclaimer in respect of Jurisdiction
This Issue is being made in India to persons resident in India including Indian nationals resident in India who are majors, HUFs, companies, corporate bodies and societies registered under the applicable laws in India and authorized to invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission), Trusts registered under the Societies Registration Act, 1860, as amended from time to time, or any other trust law and who are authorized under their constitution to hold and invest in shares, Public financial institutions as specified in Section 4A of the Companies Act, venture capital funds registered with SEBI, state industrial development corporations, insurance companies registered with Insurance Regulatory and Development Authority, provident funds (subject to applicable law) with minimum corpus of Rs. 250 million and pension funds with minimum corpus of Rs. 250 million, and to permitted non-residents, FIIs registered with SEBI and eligible NRIs provided that they are eligible under all applicable laws and regulations to hold Equity Shares of the Company. This Draft Red Herring Prospectus does not, however, constitute an offer to sell or an invitation to subscribe to Equity Shares offered hereby in any other jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession this Draft Red Herring Prospectus comes is required to inform himself or herself about, and to observe, any such restrictions. Any dispute arising out of this Issue will be subject to the jurisdiction of appropriate court(s) in Delhi, India only.
No action has been or will be taken to permit a public offering in any jurisdiction where action would be required for that purpose, except that this Draft Red Herring Prospectus has been submitted to SEBI. Accordingly, the Equity Shares represented thereby may not be offered or sold, directly or indirectly, and this Draft Red Herring Prospectus may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this Draft Red Herring Prospectus nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of our Company since the date hereof or that the information contained herein is correct as of any time subsequent to this date.
The Equity Shares have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”) or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares are only being offered and sold (i) in the United States to “qualified institutional buyers”, as defined in Rule 144A of the Securities Act in reliance on Rule 144A under the Securities Act, and (ii) outside the United States to certain persons in offshore transactions in compliance with Regulation S under the Securities Act.
The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction.
Disclaimer Clause of BSE
As required, a copy of this Draft Red Herring Prospectus has been submitted to BSE. The Disclaimer Clause as intimated by BSE to us, post scrutiny of this Draft Red Herring Prospectus, shall be included in the Red Herring Prospectus prior to the RoC filing.
Disclaimer Clause of NSE
As required, a copy of this Draft Red Herring Prospectus has been submitted to NSE. The Disclaimer Clause as intimated by NSE to us, post scrutiny of this Draft Red Herring Prospectus, shall be included in the Red Herring Prospectus prior to the RoC filing.
Filing
A copy of this Draft Red Herring Prospectus has been filed with SEBI at the Division of Issues and Listing, SEBI Bhawan, C- 4G, Bandra Kurla Complex, Bandra (East), Mumbai-400 051.
248
A copy of the Red Herring Prospectus, along with the documents required to be filed under Section 60B of the Companies Act, will be delivered for registration to the RoC and a copy of the Prospectus required to be filed under Section 60 of the Companies Act will be delivered for registration to the RoC.
Listing
Applications have been made to the NSE and BSE for permission to deal in and for an official quotation of the Equity Shares. BSE shall be the Designated Stock Exchange with which the basis of allocation will be finalized for the Issue.
If the permission to deal in and for an official quotation of the Equity Shares are not granted by any of the Stock Exchanges, our Company shall forthwith repay, without interest, all moneys received from the applicants in pursuance of this Draft Red Herring Prospectus. If such money is not repaid within eight days after our Company becomes liable to repay it (i.e., from the date of refusal or within 15 days from the date of Bid/Issue Closing Date, whichever is earlier), then our Company and every Director of the Company who is an officer in default, shall, on and from expiry of eight days, be liable to repay the money, with interest at the rate of 15% per annum on application money, as prescribed under Section 73 of the Companies Act.
Our Company shall ensure that all steps for the completion of the necessary formalities for listing and commencement of trading at both the Stock Exchanges mentioned above are taken within seven working days of finalization of the basis of allotment for the Issue.
Consents
Consents in writing of: (a) the Directors, the Company Secretary and Compliance Officer, the Auditors, Bankers to the Company and Bankers to the Issue; and (b) Book Running Lead Managers to the Issue, Escrow Collection Bankers, Registrar to the Issue, Legal Advisors to the Issue, to act in their respective capacities, have been obtained and filed along with a copy of the Red Herring Prospectus with the RoC, as required under Sections 60 and 60B of the Companies Act and such consents have not been withdrawn up to the time of delivery of this Draft Red Herring Prospectus for registration with the RoC.
M/s A. B. Bansal & Co., our Auditors have given their written consent to the inclusion of their report in the form and context in which it appears in this Draft Red Herring Prospectus and such consent and report has not been withdrawn up to the time of delivery of this Draft Red Herring Prospectus for registration with the RoC.
Expert Opinion
Except as stated elsewhere in this Draft Red Herring Prospectus, we have not obtained any expert opinions.
Expenses of the Issue
The total expenses of the Issue are estimated to be approximately Rs. [●] Lacs. The expenses of this Issue include, among others, underwriting and management fees, selling commission, printing and distribution expenses, legal fees, statutory advertisement expenses and listing fees. All expenses with respect to the Issue would be borne by our Company.
The estimated Issue expenses are as under: (Rs. in Lacs) Particulars Expenses* As a As a percentage of percentage Total Issue of Total Expenses* Issue Size* Lead management, underwriting and selling commission [●] [●] [●] Advertisement and marketing expenses [●] [●] [●] Printing & stationary including distribution expenses [●] [●] [●] Others (Registrar’s fees, legal fees, listing fees, etc.) [●] [●] [●] Total estimated issue expenses [●] 100.00 [●] * To be completed after finalization of Issue Price
249 Fees Payable to the BRLMs and the Syndicate Members
The total fees payable to the Book Running Lead Managers and the Syndicate Members (including underwriting commission and selling commission) will be as stated in Engagement Letters with the BRLMs, the copies of which is available for inspection at the registered office of our Company.
Fees Payable to the Registrar to the Issue
The fees payable to the Registrar to the Issue for processing of application, data entry, printing of CAN/refund order, preparation of refund data on magnetic tape, printing of bulk mailing register will be as per the Memorandum of Understanding signed between us and the Registrar, a copy of which is available for inspection at the corporate office of our Company.
The Registrar to the Issue will be reimbursed for all out-of-pocket expenses including cost of stationery, postage, stamp duty and communication expenses. Adequate funds will be provided to the Registrar to the Issue to enable them to send refund orders or allotment advice by registered post/speed post/under certificate of posting.
Previous Rights and Public Issues
We have not made any public issue or rights issue of Equity Shares either in India or abroad in the five years preceding the date of this Draft Red Herring Prospectus.
Previous issues of shares otherwise than for cash
Except as stated in the section titled “Capital Structure” beginning on page no. 42 of this Draft Red Herring Prospectus, we have not issued any Shares for consideration otherwise than for cash.
Commission and brokerage paid on Previous Issues of our Equity Shares
Since this is the initial public offer of the Company, no sum has been paid or has been payable as commission or brokerage for subscribing to or procuring or agreeing to procure subscription for any of our Equity Shares since our inception.
Companies under the Same Management
We do not have any other company under the same management within the meaning of erstwhile Section 370(1B) of the Companies Act, which has made any capital issue during the last three years.
Promise vs. Performance
Neither our Company nor our group/ associate Companies has made any previous rights and public issues.
Outstanding Debentures or Bond Issues or Preference Shares
There are no outstanding debentures or bonds or preference shares issued by us as on the date of this Draft Red Herring Prospectus.
Stock Market Data for our Equity Shares
This being initial public offering of our Company, the Equity Shares are not listed on any stock exchange.
Mechanism for Redressal of Investor Grievances
The memorandum of understanding between the Registrar to the Issue and us will provide for retention of records with the Registrar to the Issue for a period of at least one year from the last date of dispatch of the letters of allotment, demat credit and refund orders to enable the investors to approach the Registrar to the Issue for redressal of their grievances.
250 All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such as name, address of the applicant, application number, number of Equity Shares applied for, amount paid on application, depository participant name and the bank branch or collection center where the application was submitted.
Disposal of Investor Grievances by our Company
We estimate that the average time required by us or the Registrar to the Issue for the redressal of routine investor grievances will be seven business days from the date of receipt of the complaint. In case of non- routine complaints and complaints where external agencies are involved, we will seek to redress these complaints as expeditiously as possible.
We have also appointed Mr. Narendra Nath Batabyal, Company Secretary of our Company as the Compliance Officer for this Issue and he may be contacted in case of any pre-Issue or post Issue related problems, at the following address:
Brahamputra House, A-7, Main Mahipalpur Road, New Delhi-110037, India Tel: 91-11-42290200 Fax: 91-11-41687880, 26787068 Email: [email protected]
Changes in Auditors
Except for following, there has been no change in the auditors of our Company in the last three years:
Name of Auditor Change Date of Change Reason for Change Singal Bros. & Associates, Appointment August 31, 2006 Appointed as joint Chartered Accountants statutory auditors A.B. Bansal & Co., Chartered Appointment August 31, 2006 Appointed as joint Accountants statutory auditors* Singal Bros. & Associates, Resignation April 6, 2007 Resignation Chartered Accountants
* A. B. Bansal & Co., Chartered Accountants has been appointed as sole statutory auditors of the Company in the extraordinary general meeting held on April 11, 2007 subsequent to resignation of Singal Bros. & Associates, Chartered Accountants as joint statutory auditors.
Capitalization of Reserves or Profits
We have not capitalized our reserves or profits during the last five years, except as stated in the section titled “Capital Structure” beginning on page 42 of this Draft Red Herring Prospectus.
Revaluation of Assets
We have not revalued our assets in the last five years.
Payment or Benefit to officers of our Company
Except statutory benefits upon termination of their employment in our Company or superannuation, no officer of our Company is entitled to any benefit upon termination of his employment in our Company or superannuation.
251 SECTION VII: ISSUE INFORMATION
TERMS OF THE ISSUE
The Equity Shares being issued are subject to the provisions of the Companies Act, our Memorandum and Articles of Association, the terms of this Draft Red Herring Prospectus, the Red Herring Prospectus and the Prospectus, Bid cum Application Form, the Revision Form, the Confirmation of Allocation Note and other terms and conditions as may be incorporated in the allotment advices and other documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, the Government of India, the Stock Exchanges, the RBI, RoC and/or other authorities, as in force on the date of the Issue and to the extent applicable.
Ranking of Equity Shares
The Equity Shares being issued shall be subject to the provisions of our Memorandum and Articles of Association and shall rank pari passu in all respects with the existing Equity Shares including rights in respect of dividend. The allottees will be entitled to dividend or any other corporate benefits, if any, declared by our Company after the date of allotment.
Mode of Payment of Dividend
We shall pay dividend to our shareholders as per the provisions of the Companies Act.
Face Value and Issue Price
The face value of the Equity Shares is Rs. 10 each and the Issue Price is Rs. [●] per Equity Shares. At any given point of time there shall be only one denomination for the Equity Shares.
Compliance with SEBI Guidelines
We shall comply with all disclosure and accounting norms as specified by SEBI from time to time.
Rights of the Equity Shareholder
Subject to applicable laws, the equity shareholders shall have the following rights:
• Right to receive dividend, if declared; • Right to attend general meetings and exercise voting powers, unless prohibited by law; • Right to vote on a poll either in person or by proxy; • Right to receive offers for rights shares and be allotted bonus shares, if announced; • Right to receive surplus on liquidation; • Right of free transferability of shares; and • Such other rights, as may be available to a shareholder of a listed public company under the Companies Act and our Memorandum and Articles of Association and Listing Agreement entered into with the Stock Exchanges.
For a detailed description of the main provisions of our Articles of Association dealing with voting rights, dividend, forfeiture and lien, transfer and transmission and/or consolidation/splitting, please refer to section titled "Main Provisions of Articles of Association" beginning on page 287 of this Draft Red Herring Prospectus.
Market Lot and Trading Lot
In terms of existing SEBI Guidelines, the trading in the Equity Shares shall only be in dematerialized form for all investors. Since trading of our Equity Shares is in dematerialized mode, the tradable lot is one Equity Share. In terms of Section 68B of the Companies Act, the Equity Shares shall be allotted only in dematerialized form. Allotment through this Issue will be done only in electronic form in multiples of 1 Equity Shares subject to a minimum allotment of [●] Equity Shares.
252 Joint Holders
Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint-tenants with benefits of survivorship.
Nomination Facility to the Investor
In accordance with Section 109A of the Companies Act, the sole or First Bidder, along with other joint Bidder(s), may nominate any one person in whom, in the event of death of sole Bidder or in case of joint Bidders, death of all the Bidders, as the case may be, the Equity Shares allotted, if any, shall vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to Equity Share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale/transfer/alienation of Equity Share(s) by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made only on the prescribed form available on request at the registered office of our Company or with the Registrar and Transfer Agents of our Company.
In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be required by our Board, elect either:
• To register himself or herself as the holder of the Equity Shares; or • To make such transfer of the Equity Shares, as the deceased holder could have made.
Further, our Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the Equity Shares, and if the notice is not complied with, within a period of ninety days, our Board may thereafter withhold payment of all dividends, bonuses or other money's payable in respect of the Equity Shares, until the requirements of the notice have been complied with.
Since the allotment of Equity Shares in the Issue will be made only in dematerialized mode, there is no need to make a separate nomination with us. Nominations registered with the respective Depository Participant of the applicant would prevail. If the investors require to change their nomination, they are requested to inform their respective Depository Participant.
Minimum Subscription
If we do not receive the minimum subscription of 90% of the Issue including devolvement of the members of the Syndicate, if any, within 60 days from the Bid/ Issue Closing Date, we shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after we become liable to pay the amount, we shall pay interest as per Section 73 of the Companies Act.
Further in terms of Clause 2.2.2A of the SEBI Guidelines, we shall ensure that the number of prospective allottees to whom Equity Shares will be allotted, will not be less than 1,000.
The Equity Shares have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”) or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares are only being offered and sold (i) in the United States to “qualified institutional buyers”, as defined in Rule 144A of the Securities Act in reliance on Rule 144A under the Securities Act, and (ii) outside the United States to certain persons in offshore transactions in compliance with Regulation S under the Securities Act.
The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by
253 persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction.
Arrangement for disposal of Odd Lots
There are no arrangements for disposal of odd lots.
Restriction on transfer of shares
There are no restrictions on transfers and transmission of shares/debentures and on their consolidation/splitting except as provided in our Articles. For further details, please refer to section titled "Main Provisions of our Articles of Association" beginning on page 287 of this Draft Red Herring Prospectus.
254 ISSUE STRUCTURE
The present Issue of 4,200,000 Equity Shares of Rs. 10 each, comprising of a Net Issue of 4,000,000 Equity Shares and an Employee Reservation Portion of up to 200,000 Equity Shares, at a price of Rs. [●] for cash aggregating to [●] Lacs is being made through the 100% Book Building Process.
Eligible QIBs Non-Institutional Retail Individual Employees/ Bidders Bidders Employee Reservation Portion Number of Up to 200,000 Equity Not more than Not less than Not less than Equity Shares* Shares 2,000,000 Equity 600,000 Equity 1,400,000 Equity Shares or Net Issue Shares or Net Issue Shares or Net Issue size less allocation size less allocation size less allocation to Non-Institutional to QIB Bidders and to QIB Bidders and Bidders and Retail Retail Individual Non-Institutional Individual Bidders. Bidders. Bidders. Percentage of Up to 4.76% of the Not more than 50% Not less than 15% Not less than 35% Issue Size Issue or the Issue of the Net Issue of the Net Issue or of the Net Issue or available for less Net Issue. size or the Net the Net Issue less the Net Issue less allotment/ Issue less allocation to QIB allocation to QIB allocation allocation to Non- Bidders and Retail Bidders and Non- Institutional Individual Bidders. Institutional Bidders and Retail Bidders. Individual Bidders.
However, up to 5% of the QIB Portion shall be available for allocation proportionately to Mutual Funds only. Basis of Proportionate Proportionate as Proportionate Proportionate allotment/ follows: allocation if respective (a) 100,000 Equity category is Shares shall be oversubscribed allocated on a proportionate basis to Mutual Funds; and
(b) 1,900,000 Equity Shares shall be allotted on a proportionate basis to all QIBs including Mutual Funds receiving allocation as per (a) above. Minimum Bid [●] Equity Shares Such number of Such number of [●] Equity Shares Equity Shares that Equity Shares that the Bid Amount the Bid Amount exceeds Rs. exceeds Rs. 100,000. 100,000.
255 Maximum Bid Up to 200,000 Equity Such number of Such number of Such number of Shares Equity Shares not Equity Shares not Equity Shares exceeding the Net exceeding the Net whereby the Bid Issue, subject to Issue, subject to Amount does not applicable limits. applicable limits. exceed Rs. 100,000. Mode of Compulsorily in Compulsorily in Compulsorily in Compulsorily in Allotment dematerialized form. dematerialized dematerialized dematerialized form. form. form. Trading Lot/ One Equity Share One Equity Share One Equity Share One Equity Share Market Lot Who can All or any of the Public financial Resident Indian Individuals Apply** following: institutions as individuals, HUF (in including Eligible defined in section the name of Karta), NRIs & HUFs (in a permanent 4A of the Eligible NRIs, the name of Karta) employee of our Companies Act, companies, applying for such Company and our scheduled corporate bodies, number of Equity Subsidiary as of [●] commercial banks, scientific Shares such that and based, working mutual funds institutions, the Bid Amount and present in India registered with societies and trusts does not exceed as on the date of SEBI, foreign Rs. 1,00,000/- submission of the Bid institutional cum Application investors registered Form; and with SEBI, multilateral and bi- a Director of the lateral development Company, whether a financial whole time Director, institutions, part time Director or venture capital otherwise, except funds registered any Promoters or with SEBI, state members of the industrial Promoter Group as of development [●] and based and corporations, present in India as on FVCIs, insurance the date of companies submission of the Bid registered with the cum Application Form Insurance Regulatory and Development Authority, provident funds with minimum corpus of Rs. 250 million and pension funds with minimum corpus of Rs. 250 million. Terms of Margin Amount shall QIB Margin Amount Margin Amount Margin Amount Payment be payable at the shall be payable at shall be payable at shall be payable at time of submission of the time of the time of the time of Bid cum Application submission of Bid submission of Bid submission of Bid Form to the cum Application cum Application cum Application Syndicate Members. Form to the Form to the Form to the Syndicate Syndicate Syndicate Members.# Members. Members. Margin Amount Full Bid Amount on At least 10% of the Full Bid Amount on Full Bid Amount on Bidding. Bid Amount. Bidding. Bidding.
256 *Subject to valid Bids being received at or above the Issue Price. Not more than 50% of the Net Issue shall be available for allocation on a proportionate basis to QIB Bidders. 5% of the QIB Portion shall be available to Mutual Funds only. Mutual Funds participating in the 5% share in the QIB Portion will also be eligible for allocation in the remaining QIB Portion. Further, not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Further, up to 200,000 Equity Shares shall be available for allocation on a proportionate basis to Eligible Employees, subject to valid bids being received at or above the Issue Price. If the aggregate demand by Mutual Funds is less than 100,000 Equity Shares, the balance Equity Shares available for allocation in the Mutual Funds reservation will first be added to the QIB Portion and be allocated proportionately to the QIB Bidders in proportion to their Bids. Under subscription, if any, in the Employee Reservation Portion will be added back to Net Issue to public. Under-subscription, if any, in any category, would be met with spill over from other categories at the sole discretion of our Company in consultation with the BRLMs and the Designated Stock Exchange.
**In case the Bid cum Application Form is submitted in joint names, the investors should ensure that the demat account is also held in the same joint names and are in the same sequence in which they appear in the Bid cum Application Form.
# After the Bid/Issue Closing Date, depending on the level of subscription, additional margin amount, if any, maybe called for from the QIB Bidders.
257 ISSUE PROCEDURE
Book Building Procedure
The Issue is being made through the 100% Book Building Process wherein up to 50% of the Net Issue to Public shall be available for allocation on a proportionate basis to QIB Bidders, including up to 5% of the QIB portion which shall be available for allocation to the Mutual Funds only. Further, a minimum of 35% of the Net Issue to Public shall be available for allocation on a proportionate basis to the Retail Individual Bidders and a minimum of 15% of the Net Issue to Public shall be available for allocation on a proportionate basis to Non-Institutional Bidders, subject to valid Bids being received at or above the Issue Price. Further, up to 200,000 Equity Shares shall be available for allocation on a proportionate basis to Eligible Employees, subject to valid bids being received at or above the Issue Price. Bidders are required to submit their Bids through the Syndicate. Further, QIB Bids can be submitted only through Syndicate Members. In case of QIB Bidders, the Company in consultation with the BRLMs may reject Bids at the time of acceptance of Bid cum Application Form provided that the reasons for rejecting the same shall be provided to such Bidder in writing. In case of Non-Institutional Bidders Retail Individual Bidders and Eligible Employees, our Company would have a right to reject the Bids only on technical grounds.
Investors should note that allotment of Equity Shares to all successful Bidders will only be in the dematerialized form. Bidders will not have the option of getting allotment of the Equity Shares in physical form. The Equity Shares on allotment shall be traded only in the dematerialized segment of the Stock Exchanges.
Bid cum Application Form
Bidders shall only use the specified Bid cum Application Form bearing the stamp of a member of the Syndicate for the purpose of making a Bid in terms of this Draft Red Herring Prospectus. The Bidder shall have the option to make a maximum of three Bids in the Bid cum Application Form and such options shall not be considered as multiple Bids. Upon the allocation of Equity Shares, dispatch of the CAN, and filing of the Prospectus with the RoC, the Bid cum Application Form shall be considered as the Application Form. Upon completing and submitting the Bid cum Application Form to a member of the Syndicate, the Bidder is deemed to have authorized our Company to make the necessary changes in the Red Herring Prospectus and the Bid cum Application Form as would be required for filing the Prospectus with the RoC and as would be required by RoC after such filing, without prior or subsequent notice of such changes to the Bidder.
The prescribed colour of the Bid cum Application Form for various categories, is as follows:
Category Colour of Bid cum Application Form Indian public, QIBs and Eligible NRIs/ FIIs applying on a non- White repatriation basis Eligible NRIs or FIIs applying on a repatriation basis Blue Eligible Employees Pink
Who can Bid?
1. Indian nationals resident in India who are majors, or in the names of their minor children as natural/legal guardians in single or joint names (not more than three);
2. Hindu Undivided Families or HUFs, in the individual name of the Karta. The Bidder should specify that the Bid is being made in the name of the HUF in the Bid cum Application Form as follows: “Name of Sole or First bidder: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of the Karta”. Bids by HUFs would be considered at par with those from individuals;
3. Companies, corporate bodies and societies registered under the applicable laws in India and authorized to invest in the equity shares;
4. Mutual Funds registered with SEBI;
258
5. Eligible NRIs on a repatriation basis or on a non repatriation basis subject to applicable laws. NRIs other than eligible NRIs are not eligible to participate in this issue;
6. Indian Financial Institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI regulations and the SEBI Guidelines and regulations, as applicable);
7. FIIs registered with SEBI;
8. Venture Capital Funds registered with SEBI;
9. State Industrial Development Corporations;
10. Trusts/societies registered under the Societies Registration Act, 1860, as amended, or under any other law relating to Trusts/societies and who are authorized under their constitution to hold and invest in equity shares;
11. Scientific and/or Industrial Research Organizations authorized to invest in equity shares;
12. Insurance Companies registered with Insurance Regulatory and Development Authority, India;
13. As permitted by the applicable law, Provident Funds with minimum corpus of Rs. 250 million and who are authorized under their constitution to hold and invest in equity shares;
14. Pension Funds with minimum corpus of Rs. 250 million and who are authorized under their constitution to hold and invest in equity shares; and
15. Permanent employees of our Company and our Subsidiary or Directors (whole-time Directors, part-time Directors or otherwise) of the Company, who are Indian Nationals and are based in India as on the date of submission of the Bid cum Application Form. The permanent employees should be on the payroll of the Company as of [●] and the Directors should be directors on Board as of [●].
Non-residents such as FVCIs, multilateral and bilateral development financial institutions are not permitted to participate in the Issue. As per the existing policy of the Government of India, OCBs cannot participate in this Issue.
Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law or regulation or as specified in this Draft Red Herring Prospectus.
Note:
Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law.
Participation by Associates of BRLMs and Syndicate Members
Associates of BRLM and Syndicate Members may bid and subscribe to Equity Shares in the Issue either in the QIB Portion or in Non Institutional Portion as may be applicable to such investors. Such bidding and subscription may be on their own account or on behalf of their clients. Allotment to all investors including associates of BRLM and Syndicate Members shall be on a proportionate basis.
Further, the BRLM and Syndicate Members shall not be entitled to subscribe to this Issue in any manner except towards fulfilling their underwriting obligation.
Maximum and Minimum Bid Size
(a) For Retail Individual Bidders: The Bid must be for a minimum of [●] Equity Shares and in multiples of [●] Equity Share thereafter, so as to ensure that the Bid Price payable by the Bidder
259 does not exceed Rs. 100,000. In case of revision of Bids, the Retail Individual Bidders have to ensure that the Bid Price does not exceed Rs. 100,000. In case the Bid Price is over Rs. 100,000 due to revision of the Bid or revision of the Price Band or on exercise of Cut-off option, the Bid would be considered for allocation under the Non-Institutional Bidders portion. The Cut-off option is an option given to the Retail Individual Bidders indicating their agreement to Bid and purchase at the final Issue Price as determined at the end of the Book Building Process.
(b) For Non-Institutional Bidders and QIB Bidders: The Bid must be for a minimum of such number of Equity Shares such that the Bid Amount exceeds Rs. 100,000 and in multiples of [●] Equity Shares thereafter. A Bid cannot be submitted for more than the Issue Size. However, the maximum Bid by a QIB investor should not exceed the investment limits prescribed for them by applicable laws. Under existing SEBI guidelines, a QIB Bidder cannot withdraw its Bid after the Bid/Issue Closing Date and is required to pay QIB Margin upon submission of Bid.
In case of revision in Bids, the Non-Institutional Bidders, who are individuals, have to ensure that the Bid Amount is greater than Rs. 100,000 for being considered for allocation in the Non- Institutional Portion. In case the Bid Amount reduces to Rs. 100,000 or less due to a revision in Bids or revision of the Price Band, Bids by Non-Institutional Bidders who are eligible for allocation in the Retail Portion would be considered for allocation under the Retail Portion. Non-Institutional Bidders and QIBs are not allowed to Bid at ‘Cut-off’.
(c) For Employee Reservation Portion: The Bid must be for a minimum of [●] Equity Shares and in multiples of [●] Equity Shares thereafter. Bidders in the Employee Reservation Portion applying for a maximum Bid in any of the bidding options not exceeding Rs.100,000 may bid at Cut-off Price. The allotment in the Employee Reservation Portion will be on a proportionate basis. However, the maximum Bid under the Employee Reservation Portion cannot exceed 200,000 Equity Shares.
Information for the Bidders:
(a) Our Company will file the Red Herring Prospectus with the RoC at least 3 (three) days before the Bid/Issue Opening Date.
(b) The members of the Syndicate will circulate copies of the Red Herring Prospectus along with the Bid cum Application Form to potential investors.
(c) Any investor (who is eligible to invest in our Equity Shares) who would like to obtain the Red Herring Prospectus and/ or the Bid cum Application Form can obtain the same from our registered office or from any of the members of the Syndicate.
(d) The Bids should be submitted on the prescribed Bid cum Application Form only. Bid cum Application Forms should bear the stamp of a member of the Syndicate. Bid cum Application Forms, which do not bear the stamp of a member of the Syndicate will be rejected.
(e) The members of the Syndicate shall accept Bids from the Bidders during the Issue Period in accordance with the terms of the Syndicate Agreement.
(e) The Price Band has been fixed at Rs. [●] to Rs. [●] per Equity Share. The Bidders can bid at any price within the Price Band, in multiples of Rs. 1 (One). In accordance with the SEBI Guidelines, our Company, in consultation with the BRLMS, reserves the right to revise the Price Band during the Bidding Period. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subject to compliance with the immediately preceding sentence, the floor of the Price Band can move up or down to the extent of 20% of the floor of the Price Band.
(f) In case the Price Band is revised, the Bidding/ Issue Period may be extended, if required, by an additional three days, subject to the total Bidding/ Issue Period not exceeding 10 working days. The revised Price Band and Bidding/ Issue Period, if applicable, will be widely disseminated by notification to the BSE and the NSE, and by issuing published in two national newspapers (one each in English and Hindi) and a regional language newspaper of wide circulation in the place where our Registered
260 Office is situated and also by indicating the change on the websites of the BRLMS and at the terminals of the members of the Syndicate.
(g) We, in consultation with the BRLMS, can finalize the Issue Price within the Price Band, without the prior approval of, or intimation to, the Bidders.
Method and Process of Bidding
(a) Our Company and the BRLMs shall declare the Bid/Issue Opening Date, Bid/Issue Closing Date and Price Band at the time of filing the Red Herring Prospectus with RoC and also publish the same in two widely circulated newspapers (one each in English and Hindi). This advertisement, subject to the provisions of Section 66 of the Companies Act shall be in the format prescribed in Schedule XX–A of the SEBI DIP Guidelines, as amended. The Members of the Syndicate shall accept Bids from the Bidders during the Issue Period in accordance with the terms of the Syndicate Agreement. Investors who are interested in subscribing to our Equity Shares should approach any of the members of the Syndicate or their authorized agent(s) to register their Bid.
(b) The Bidding Period shall be for a minimum of three working days and not exceeding seven working days. In case the Price Band is revised, the revised Price Band and the Bidding Period will be published in two national newspapers (one each in English and Hindi newspaper) and the Bidding Period may be extended, if required, by such number of days, subject to the total Bidding Period not exceeding ten working days.
(c) Each Bid cum Application Form will give the Bidder the choice to bid for up to three optional prices (for details refer to the paragraph titled “Bids at Different Price Levels” beginning on page 262 of this Draft Red Herring Prospectus) within the Price Band and specify the demand (i.e., the number of Equity Shares Bid for) in each option. The price and demand options submitted by the Bidder in the Bid cum Application Form will be treated as optional demands from the Bidder and will not be cumulated. After determination of the Issue Price, the maximum number of Equity Shares Bid for by a Bidder at or above the Issue Price will be considered for allocation/allotment and the rest of the Bid(s), irrespective of the Bid Price, will become automatically invalid.
(d) The Bidder cannot bid on another Bid cum Application Form after Bids on one Bid cum Application Form have been submitted to any member of the Syndicate. Submission of a second Bid cum Application Form to either the same or to another member of the Syndicate will be treated as multiple Bids and is liable to be rejected either before entering the Bid into the electronic bidding system, or at any point of time prior to the allocation or allotment of Equity Shares in this Issue. However, the Bidder can revise the Bid through the Revision Form, the procedure for which is detailed under the paragraph titled “Build up of the Book and Revision of Bids” beginning on page 266 of this Draft Red Herring Prospectus.
(e) The Members of the Syndicate will enter each Bid option into the electronic bidding system as a separate Bid and generate a Transaction Registration Slip, (“TRS”), for each price and demand option and give the same to the Bidder. Therefore, a Bidder can receive up to three TRSs for each Bid cum Application Form.
(f) During the Bidding/Issue Period, Bidders may approach the members of the Syndicate to submit their Bid. Every member of the Syndicate shall accept Bids from all clients / investors who place orders through them and shall have the right to vet the Bids, subject to the terms of the Syndicate Agreement and the Red Herring Prospectus.
(g) Along with the Bid cum Application Form, all Bidders will make payment in the manner described under the paragraph titled “Terms of Payment and Payment into the Escrow Accounts” beginning on page 264 of this Draft Red Herring Prospectus.
261 Bids at Different Price Levels
(a) The Price Band has been fixed at Rs. [●] to Rs. [●] per Equity Share of Rs. 10 each, Rs. [●] being the lower end of the Price Band and Rs. [●] being the higher end of the Price Band. The Bidders can bid at any price with in the Price Band, in multiples of Re. 1 (One).
(b) Our Company in consultation with the BRLMs, reserves the right to revise the Price Band, during the Bidding Period, in accordance with SEBI Guidelines. The higher end of the Price Band would not be more than 20% of the lower end of the Price Band. Subject to compliance with the immediately preceding sentence, the lower end of the Price Band can move up or down to the extent of 20% of the lower end of the Price Band disclosed in this Red Herring Prospectus.
(c) In case of revision in the Price Band, the Issue Period will be extended for such number of days after revision of Price Band subject to Bidding Period not exceeding ten working days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to BSE and NSE, by issuing a public notice in two widely circulated newspapers (one each in English and Hindi), and also by indicating the change on the websites of the BRLMs and at the terminals of the members of the Syndicate.
(d) Our Company, in consultation with the BRLMs, can finalize the Issue Price within the Price Band in accordance with this clause, without the prior approval of, or intimation, to the Bidders.
(e) The Bidder can bid at any price within the Price Band. The Bidder has to bid for the desired number of Equity Shares at a specific price. Retail Individual Bidders and Bidders in the Employee Reservation Portion applying for a maximum Bid in any of the bidding options not exceeding Rs. 100,000 may bid at Cut-off Price. However, bidding at Cut-off Price is prohibited for QIB or Non- Institutional Bidders or Eligible Employees bidding in the Employee Reservation where the bid size exceeds Rs. 100,000 and such Bids from QIBs, Non-Institutional Bidders and Eligible Employees bidding in the Employee Reservation Portion shall be rejected.
(f) Retail Individual Bidders and Eligible Employees bidding in the Employee Reservation Portion who bid at the Cut-Off Price agree that they shall purchase the Equity Shares at any price within the Price Band. Retail Individual Bidders and Eligible Employees bidding in the Employee Reservation Portion bidding at Cut-Off Price shall deposit the Bid Price based on the higher end of the Price Band in the Escrow Account. In the event the Bid Price is higher than the subscription amount payable by the Retail Individual Bidders and Eligible Employees bidding in the Employee Reservation Portion, who Bid at Cut off Price (i.e., the total number of Equity Shares allocated in the Issue multiplied by the Issue Price), the Retail Individual Bidders and Eligible Employees bidding in the Employee Reservation Portion, who Bid at Cut off Price, shall receive the refund of the excess amounts from the Escrow Account or the Refund Account as the case may be.
(g) In case of an upward revision in the Price Band announced as above, Retail Individual Bidders and Eligible Employees bidding in the Employee Reservation Portion who had bid at Cut-off Price could either (i) revise their Bid or (ii) make additional payment based on the higher end of the Revised Price Band (such that the total amount i.e., original Bid Price plus additional payment does not exceed Rs. 1,00,000 for Retail Individual Bidders and Eligible Employees bidding in the Employee Reservation Portion, if the Bidder wants to continue to bid at Cut-off Price), with the Syndicate Members to whom the original Bid was submitted. In case the total amount (i.e., original Bid Price plus additional payment) exceeds Rs. 100,000 for Retail Individual Bidders and Eligible Employees bidding in the Employee Reservation Portion, the Bid will be considered for allocation under the Non- Institutional Portion in terms of this Draft Red Herring Prospectus. If, however, the Bidder does not either revise the Bid or make additional payment and the Issue Price is higher than the higher end of the Price Band prior to revision, the number of Equity Shares bid for shall be adjusted downwards for the purpose of allotment, such that the no additional payment would be required from the Bidder and the Bidder is deemed to have approved such revised Bid at Cut-off Price.
(h) In case of a downward revision in the Price Band, announced as above, Retail Individual Bidders and Eligible Employees bidding in the Employee Reservation Portion who have bid at Cut-off Price could
262 either revise their Bid or the excess amount paid at the time of bidding would be refunded from the Escrow Account or the Refund Account as the case may be.
(i) In the event of any revision in the Price Band, whether upwards or downwards, the minimum application size shall remain [●] Equity Shares irrespective of whether the Bid Price payable on such minimum application is not in the range of Rs. 5,000 to Rs. 7,000.
Application in the Issue
Equity Shares being issued through the Red Herring Prospectus can be applied for in the dematerialized form only.
Bids by Mutual Funds
An eligible Bid by a Mutual Fund shall first be considered for allocation proportionately in the Mutual Fund Portion. In the event that the demand is greater than 100,000 Equity Shares, allocation shall be made to Mutual Funds proportionately, to the extent of the Mutual Fund Portion. The remaining demand by the Mutual Funds shall, as part of the aggregate demand by QIBs, be available for allocation proportionately out of the remainder of the QIB Portion, after excluding the allocation in the Mutual Fund Portion.
The Bids made by the asset management companies or custodian of Mutual Funds shall specifically state the names of the concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered with SEBI and such Bids in respect of more than one scheme of the Mutual Fund will not be treated as multiple Bids provided that the Bids clearly indicate the scheme for which the Bid has been made.
As per the current regulations, the following restrictions are applicable for investments by mutual funds:
No mutual fund scheme shall invest more than 10% of its net asset value in the Equity Shares or equity related instruments of any company provided that the limit of 10% shall not be applicable for investments in index funds or sector or industry specific funds. No mutual fund under all its schemes should own more than 10% of any company’s paid-up share capital carrying voting rights.
Bids by FIIs
As per the current regulations, the following restrictions are applicable for investments by FIIs:
The issue of Equity Shares to a single FII should not exceed 10% of our post-Issue issued capital (i.e. 10% of 16,200,000 Equity Shares of Rs. 10 each). In respect of a FII investing in our Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of our total issued capital or 5% of our total issued capital in case such sub-account is a foreign corporate or an individual. As of now, the aggregate FII holding in us cannot exceed 24% of our total issued capital. With the approval of the Board of Directors and the shareholders by way of a special resolution, the aggregate FII holding can go up to 100%. However, as on this date, no such resolution has been recommended to the shareholders of the Company for adoption.
Subject to compliance with all applicable Indian laws, rules, regulations guidelines and approvals in terms of regulation 15A(1) of the Securities Exchange Board of India (Foreign Institutional Investors) Regulations 1995, as amended, a FII or its sub account may issue, deal or hold, off shore derivative instruments such as Participatory Notes, equity-linked notes or any other similar instruments against underlying securities listed or proposed to be listed in any stock exchange in India only in favor of those entities which are regulated by any relevant regulatory authorities in the countries of their incorporation or establishment subject to compliance of “know your client” requirements. A FII or sub-account shall also ensure that no further downstream issue or transfer of any instrument referred to hereinabove is made to any person other than a regulated entity.
We have sought a confirmation from the Department of Industrial Policy and Promotion, Ministry of Commerce, GoI, by way of a letter dated March 6, 2007 that investment by FIIs registered with SEBI in the Equity Shares offered as part of this Issue would not fall within the ambit of Press
263 Note 2(2005 Series) issued by the GoI and will therefore not be subject to the conditions specified therein.
The above information is given for the benefit of the Bidders. The Company and BRLMs are not liable for any amendments or modification or changes in applicable laws or regulations, which may occur after the date of this Draft Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares Bid for do not exceed the applicable limits under laws or regulations.
Bids by Eligible NRIs
Eligible NRIs are required to comply with the following:
1. Individual Eligible NRIs can obtain the Bid cum Application Form from the Registered Office, our corporate office, members of the Syndicate or the Registrar to the Issue.
2. Eligible NRI Bidders may note that only such Bids as are accompanied by payment in free foreign exchange shall be considered for allotment. Eligible NRIs who intend to make payment through the Non-Resident Ordinary (NRO) accounts shall use the Bid cum Application Form meant for resident Indians (White in colour).
Escrow Mechanism
Our Company and members of the Syndicate shall open Escrow Accounts with one or more Escrow Collection Banks in whose favour the Bidders shall make out the cheque or demand draft in respect of his or her Bid and/or revision of the Bid. Cheques or demand drafts received for the full Bid Price from Bidders would be deposited in the Escrow Account. The Escrow Collection Banks will act in terms of the Red Herring Prospectus and the Escrow Agreement. The Escrow Collection Bank (s) for and on behalf of the Bidders shall maintain the monies in the Escrow Account. The Escrow Collection Bank(s) shall not exercise any lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Banks shall transfer the monies from the Escrow Account to the Public Issue Account as per the terms of the Escrow Agreement.
Payments of refund to the Bidders shall also be made from the Refund Account are per the terms of the Escrow Agreement and the Red Herring Prospectus.
The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been established as an arrangement between us, the members of the Syndicate, the Escrow Collection Bank(s) and the Registrar to the Issue to facilitate collections from the Bidders.
Terms of Payment and Payment into the Escrow Accounts
Each Bidder, shall provide the applicable Margin Amount, with the submission of the Bid cum Application Form by way of a cheque or demand draft for the maximum amount of his/ her Bid in favour of the Escrow Account of the Escrow Collection Bank(s) (for details refer to the paragraph titled “Payment Instructions” on page 274 of this Draft Red Herring Prospectus) and submit the same to the member of the Syndicate to whom the Bid is being submitted. Bid cum Application Forms accompanied by cash shall not be accepted.
The members of the Syndicate shall deposit the cheque or demand draft with the Escrow Collection Bank(s), which will hold such monies for the benefit of the Bidders until the Designated Date. On the Designated Date, the Escrow Collection Bank(s) shall transfer the funds equivalent to the size of the Issue from the Escrow Account, as per the terms of the Escrow Agreement, into the Public Issue Account with the Banker(s) to the Issue. The balance amount after transfer to the Issue Account shall be transferred to the Refund Account.
Each category of Bidders i.e., QIB Bidders, Non-Institutional Bidders, Retail Individual Bidders and Eligible Employees bidding in the Employee Reservation Portion would be required to pay their applicable Margin Amount at the time of the submission of the Bid cum Application Form. The Margin Amount payable by each
264 category of Bidders is mentioned under the section titled “Issue Structure” beginning on page 255 of this Draft Red Herring Prospectus. The maximum Bid Price has to be paid at the time of submission of the Bid cum Application Form based on the highest bidding option of the Bidder.
Where the Margin Amount applicable to the Bidder is less than 100% of the Bid Price, any difference between the amount payable by the Bidder for Equity Shares allocated/allotted at the Issue Price and the Margin Amount paid at the time of Bidding, shall be payable by the Bidder no later than the Pay-in-Date, which shall be a minimum period of 2 (two) days from the date of communication of the allocation list to the members of the Syndicate by the BRLMs. If the payment is not made favouring the Escrow Account within the time stipulated above, the Bid of the Bidder is liable to be cancelled. However, if the applicable Margin Amount for Bidders is 100%, the full amount of payment has to be made at the time of submission of the Bid cum Application Form.
Where the Bidder has been allocated/allotted lesser number of Equity Shares than he or she had bid for, the excess amount paid on bidding, if any, after adjustment for allocation/allotment, will be refunded to such Bidder within 15 days from the Bid/Issue Closing Date, failing which the Company shall pay interest at 15% per annum for any delay beyond the periods as mentioned above.
Electronic Registration of Bids
(a) The Members of the Syndicate will register the Bids using the on-line facilities of BSE and NSE. There will be at least one on-line connectivity in each city, where a stock exchange is located in India and where Bids are being accepted.
(b) The BSE and NSE will offer a screen-based facility for registering Bids for the Issue. This facility will be available on the terminals of the Members of the Syndicate and their authorized agents during the Bidding Period. Syndicate Members can also set up facilities for off-line electronic registration of Bids subject to the condition that they will subsequently upload the off-line data file into the on-line facilities for book building on a regular basis. On the Bid Closing Date, the Members of the Syndicate shall upload the Bids till such time as may be permitted by the Stock Exchanges.
(c) The aggregate demand and price for Bids registered on the electronic facilities of BSE and NSE will be uploaded on a half hourly basis, consolidated and displayed on-line at all bidding centers and the website of BSE and NSE. A graphical representation of consolidated demand and price would be made available at the bidding centers during the Bidding Period.
(d) At the time of registering each Bid, the members of the Syndicate shall enter the following details of the investor in the on-line system:
• Name of the investor. • Investor Category – Individual, Corporate, FII, Employee etc. • Numbers of Equity Shares bid for. • Bid price. • Bid cum Application Form number. • Margin Amount has been paid upon submission of Bid cum Application Form. • Depository Participant Identification Number and Client Identification Number of the beneficiary account of the Bidder.
(e) A system generated TRS will be given to the Bidder as a proof of the registration of each of the bidding options. It is the Bidder’s responsibility to obtain the TRS from the members of the Syndicate. The registration of the Bid by the member of the Syndicate does not guarantee that the Equity Shares shall be allocated/allotment either by the members of the Syndicate or our Company.
(f) Such TRS will be non-negotiable and by itself will not create any obligation of any kind.
(g) Incase of QIB Bidders, members of the syndicate also have the right to accept the bid or reject it. However, such rejection should be made at the time of receiving the bid and only after assigning a reason for such rejection in writing. In case on Non-Institutional Bidders, Retail Individual Bidders
265 and Eligible Employees bidding in the Employee Reservation Portion, Bids would not be rejected except on the technical grounds listed on page 277 of this Draft Red Herring Prospectus.
(h) The permission given by BSE and NSE to use their network and software of the Online IPO system should not in any way be deemed or construed to mean that the compliance with various statutory and other requirements by our Company and/or the BRLMs are cleared or approved by BSE and NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of our Company, our Promoter, our management or any scheme or project of our Company.
(i) It is also to be distinctly understood that the approval given by BSE and NSE should not in any way be deemed or construed that this Draft Red Herring Prospectus has been cleared or approved by the BSE and NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Red Herring Prospectus; nor does it warrant that the Equity Shares will be listed or will continue to be listed on the BSE and NSE.
(j) Only Bids that are uploaded on the online IPO system of the NSE and BSE shall be considered for Allocation. In case of discrepancy of data between the BSE or the NSE and the members of the Syndicate, the decision of the BRLMs, based on the physical records of Bid cum Application Forms, shall be final and binding on all concerned.
Build up of the Book and Revision of Bids
(a) Bids registered by various Bidders through the members of the Syndicate shall be electronically transmitted to the BSE or NSE mainframe on a regular basis.
(b) The book gets built up at various price levels. This information will be available with the BRLMs on a regular basis.
(c) During the Bidding/Issue Period, any Bidder who has registered his or her interest in the Equity Shares at a particular price level is free to revise his or her Bid within the Price Band using the printed Revision Form, which is a part of the Bid cum Application Form.
(d) Revisions can be made in both the desired number of Equity Shares and the Bid price by using the Revision Form. Apart from mentioning the revised options in the revision form, the Bidder must also mention the details of all the options in his or her Bid cum Application Form or earlier Revision Form. For example, if a Bidder has Bid for three options in the Bid cum Application Form and he is changing only one of the options in the Revision Form, he must still fill the details of the other two options that are not being revised, in the Revision Form. The members of the Syndicate will not accept incomplete or inaccurate Revision Forms.
(e) The Bidder can make this revision any number of times during the Bidding Period. However, for any revision(s) in the Bid, the Bidders will have to use the services of the same member of the Syndicate through whom he or she had placed the original Bid.
(f) Bidders are advised to retain copies of the blank Revision Form and the revised Bid must be made only in such Revision Form or copies thereof.
(g) Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for the incremental amount, if any, to be paid on account of the upward revision of the Bid. The excess amount, if any, resulting from downward revision of the Bid would be returned to the Bidder at the time of refund in accordance with the terms of this Draft Red Herring Prospectus. In case of QIB Bidders, the members of the Syndicate shall collect the payment in the form of cheque or demand draft for the incremental amount in the QIB Margin Amount, if any, to be paid on account of the upward revision of the Bid at the time of one or more revisions by the QIB Bidders.
(h) When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revised TRS from the members of the Syndicate. It is the responsibility of the Bidder to request for and
266 obtain the revised TRS, which will act as proof of his or her having revised the previous Bid.
Price Discovery and Allocation
(a) After the Bid/Issue Closing Date, the BRLMs will analyze the demand generated at various price levels.
(b) The Company in consultation with the BRLMs shall finalize the “Issue Price” and the number of Equity Shares to be allocated in each investor category.
(c) The allocation for QIBs for up to 50% of the Net Issue to Public would be on a proportionate basis (with a minimum 5% allocation of the QIB Portion reserved for Mutual Funds, and such Mutual Funds can participate in the remaining allocation for QIBs), in consultation with the Designated Stock Exchange subject to valid Bids being received at or above the Issue Price, in the manner as described in the Section titled “Basis of Allotment”. The allocation to Non-Institutional Bidders and Retail Individual Bidders of at least 15% and 35% of the Net Issue to Public respectively, would be on proportionate basis, in the manner specified in the SEBI Guidelines, in consultation with Designated Stock Exchange, subject to valid Bids being received at or above the Issue Price.
(d) Under subscription, if any, in any category would be allowed to be met with spill over from any of the other categories at our discretion, in consultation with the BRLMs and the Designated Stock Exchange. However, if the aggregate demand by Mutual Funds is less than 5% of QIB Portion (assuming QIB Portion is 50% of Net Issue to Public), the balance Equity Shares from 5% specifically available for allocation to Mutual Funds in the QIB Portion will first be added to the QIB Portion and be allocated proportionately to the QIB Bidders in proportion to their Bids.
(e) Under-subscription, if any, in the Employee Reservation portion will be added back to the Net Issue to the Public, and the ratio amongst the investor categories will be at the discretion of the Company and the BRLMs. In case of under-subscription in the Net Issue, spill over to the extent of under- subscription shall be permitted from the Employee Reservation portion.
(f) Allocation to Eligible NRIs and FIIs registered with SEBI applying on repatriation basis will be subject to the applicable.
(g) The BRLMs in consultation with us, shall notify the members of the Syndicate of the Issue Price and allocations to their respective Bidders, where the full Bid Price has not been collected from the Bidders.
(h) We reserve the right to cancel the Issue any time after the Bid/Issue Opening Date without assigning any reasons whatsoever.
(i) In terms of the SEBI Guidelines, QIB Bidders shall not be allowed to withdraw their Bid after the Bid/Issue Closing Date.
(j) QIB Bidders will be required to deposit the QIB Margin Amount at the time of submitting of their Bids. After the closure of bidding, the level of subscription in the various categories shall be determined. Based on the level of subscription, additional margin money, if any, shall be called for from the QIB Bidders. The QIB Bidders shall pay such additional margin money within a period of two days from the date of the letter communicating the request for such additional margin money.
Signing of Underwriting Agreement and RoC Filing
(a) We, the BRLMs, and the Syndicate Members shall enter into an Underwriting Agreement upon finalization of the Issue Price.
(b) After signing the Underwriting Agreement, the Company would update and file the updated Red Herring Prospectus with RoC, which then would be termed ‘Prospectus’. The Prospectus would have
267 details of the Issue Price, Issue size, underwriting arrangements and would be complete in all material respects.
(c) We will file a copy of the Prospectus with the RoC in terms of Section 56, Section 60 and Section 60B of the Companies Act.
Announcement of pre-Issue Advertisement
Subject to Section 66 of the Companies Act, the Company shall after receiving final observations, if any, on this Prospectus from SEBI, publish an advertisement, in the from prescribed by the SEBI DIP Guidelines in a widely circulated English national newspaper and a Hindi national newspaper of wide circulation.
Advertisement regarding Issue Price and Prospectus
We will issue a statutory advertisement after the filing of the Prospectus with the RoC in a widely circulated English national newspaper and a Hindi national newspaper of wide circulation. This advertisement, in addition to the information that has to be set out in the statutory advertisement, shall indicate the Issue Price. Any material updates between the date of Red Herring Prospectus and the date of Prospectus will be included in such statutory advertisement.
Issuance of Letter for Additional Margin Money
In case of QIB Bidders, who have submitted their Bids with the QIB Margin Amount, additional Margin Amount may be called for by our Company, in consultation with the BRLMs. The amount of such additional Margin Amount called for shall depend on the level of subscription in various categories, as determined on the basis of the electronic registration of Bids. The allotment of shares to QIB Bidders shall be finalized by our Company, in consultation with the BRLM and the Designated Stock Exchange.
Issuance of CAN
(a) Upon approval of the basis of allotment by the Designated Stock Exchange, the BRLMs or Registrar to the Issue shall send to the members of the Syndicate a list of their Bidders who have been allocated/allotted Equity Shares in the Issue. The approval of the basis of allotment by the Designated Stock Exchange for QIB Bidders may be done simultaneously with or prior to the approval of the basis of allocation for the Retail, Non-Institutional Bidders and Bids from Eligible Employees bidding in the Employee Reservation Portion. However, investors should note that the Company shall ensure that the date of allotment of the Equity Shares to all investors in this Issue shall be done on the same date.
(b) The BRLMs, or members of the Syndicate would dispatch a CAN to their Bidders who have been allocated Equity Shares in the Issue. The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the Equity Shares allocated to such Bidder. Those Bidders who have not paid the entire Bid Amount into the Escrow Account at the time of bidding shall pay in full the amount payable into the Escrow Account by the Pay-in Date specified in the CAN.
(c) Bidders who have been allocated/allotted Equity Shares and who have already paid the Bid Amount into the Escrow Account at the time of bidding shall directly receive the CAN from the Registrar to the Issue subject, however, to realization of his or her cheque or demand draft paid into the Escrow Account. The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for the allotment to such Bidder.
(d) The Issuance of CAN is ‘Subject to “Allotment Reconciliation and Revised CANs” as set forth herein.
INVESTORS ARE ADVISED TO INSTRUCT THEIR DEPOSITORY PARTICIPANT TO ACCEPT THE EQUITY SHARES THAT MAY BE ALLOTTED TO THEM PURSUANT TO THIS ISSUE.
268 Notice to QIBs: Allotment Reconciliation and Revised CANs
After the Bid/Issue Closing Date, an electronic book will be prepared by the Registrar on the basis of Bids uploaded on the BSE/NSE system. Based on the electronic book, QIBs may be sent a CAN, indicating the number of Equity Shares that may be allocated to them. This CAN is subject to the basis of final Allotment, which will be approved by the Designated Stock Exchange and reflected in the reconciled book prepared by the Registrar. Subject to SEBI Guidelines, certain Bid applications may be rejected due to technical reasons, non-receipt of funds, cancellation of cheques, cheque bouncing, incorrect details, etc., and these rejected applications will be reflected in the reconciliation and basis of Allotment as approved by the Designated Stock Exchange. As a result, a revised CAN may be sent to QIBs, and the allocation of Equity Shares in such revised CAN may be different from that specified in the earlier CAN. QIBs should note that they may be required to pay additional amounts, if any, by the Pay-in Date specified in the revised CAN, for any increased allocation of Equity Shares. The CAN will constitute the valid, binding and irrevocable contract (subject only to the issue of a revised CAN) for the QIB to pay the entire Issue Price for all the Equity Shares allocated to such QIB. The revised CAN, if issued, will supersede in entirety the earlier CAN.
Designated Date and allotment of Equity Shares
(a) Our Company will ensure that the allotment of Equity Shares is done within 15 days of the Bid/Issue Closing Date. After the funds are transferred from the Escrow Account to the Public Issue Account and Refund Account on the Designated Date, our Company would ensure the credit to the successful Bidders depository account of the allotted Equity Shares to the allottees within two working days from the date of allotment.
(b) In accordance with the SEBI Guidelines, Equity Shares will be issued, transferred and allotment shall be made only in the dematerialized form to the allottees. Allottees will have the option to rematerialize the Equity Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act.
GENERAL INSTRUCTIONS
Do’s: a) Check if you are eligible to apply; b) Read all the instructions carefully and complete the Resident Bid cum Application Form (white in colour) or Non-Resident Bid cum Application Form (blue in colour) or the Employee Bid cum Application Form (pink in colour) as the case may be; c) Ensure that the details about Depository Participant and Beneficiary Account are correct as allotment of Equity Shares will be in the dematerialized form only; d) Ensure that the Bids are submitted at the bidding centers only on forms bearing the stamp of a member of the Syndicate; e) Ensure that you have been given a TRS for all your Bid options; f) Submit revised Bids to the same member of the Syndicate through whom the original Bid was placed and obtain a revised TRS; g) Where Bid(s) is/ are for Rs. 50,000/- or more, each of the Bidders, should mention their Permanent Account Number (PAN) allotted under the IT Act. The copies of the PAN Card or PAN allotment letter should be submitted with the Bid cum Application form. If you have mentioned “Applied for” or “Not Applicable”, in the Bid cum Application Form in the section dealing with PAN number, ensure that you submit Form 60 or 61, as the case may be, together with permissible documents as address proof; h) Ensure that the Demographic Details are updated, true and correct in all respects;
269 i) Ensure that the name(s) given in the Bid cum Application Form is exactly the same as the name(s) in which the beneficiary account is held with the Depository Participant. In case the Bid cum Application Form 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 Bid cum Application Form.
Don’ts:
(a) Do not bid for lower than the minimum Bid size;
(b) Do not bid/ revise Bid price to less than the lower end of the Price Band or higher than the higher end of the Price Band;
(c) Do not bid on another Bid cum Application Form after you have submitted a Bid to the members of the Syndicate;
(d) Do not pay the Bid Price in cash, by money order or by postal order or by stockinvest;
(e) Do not send Bid cum Application Forms by post; instead submit the same to a member of the Syndicate only;
(f) Do not bid at Cut Off Price (for QIB Bidders and Non-Institutional Bidders and Eligible Employees bidding in the Employee Reservation Portion for bid amount in excess of Rs. 100,000) ;
(g) Do not fill up the Bid cum Application Form such that the Equity Shares bid for exceeds the Issue Size and/ or investment limit or maximum number of Equity Shares that can be held under the applicable laws or regulations or maximum amount permissible under the applicable regulations;
(h) Do not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground.
Instructions for Completing the Bid cum Application Form
Bidders can obtain Bid cum Application Forms and / or Revision Forms from the members of the Syndicate.
Bids and Revisions of Bids
Bids and revisions of Bids must be:
(a) Made only in the prescribed Bid cum Application Form or Revision Form, as applicable (white or blue or pink).
(b) Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructions contained herein, in the Bid cum Application Form or in the Revision Form. Incomplete Bid cum Application Forms or Revision Forms are liable to be rejected.
(c) For Retail Individual Bidders, the Bid must be for a minimum of [●] Equity Shares and in multiples of [●] thereafter subject to a maximum Bid Amount of Rs. 100,000.
(d) For Non-Institutional Bidders and QIB Bidders, Bids must be for a minimum of such number of Equity Shares that the Bid Price exceeds or equal to Rs. 100,000 and in multiples of [●] Equity Shares thereafter. Bids cannot be made for more than the Issue Size. Bidders are advised to ensure that a single Bid from them should not exceed the investment limits or maximum number of shares that can be held by them under the applicable laws or regulations.
(e) For Eligible Employees bidding in the Employee Reservation Portion, the Bid must be for a minimum of [●] Equity Shares and in multiple of [●] thereafter subject to a maximum of Bid Amount does not exceed Rs. [●].
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(f) In single name or in joint names (not more than three, and in the same order as their Depository Participant details).
(g) Thumb impressions and signatures other than in the languages specified in the Eighth Schedule to the Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.
Bidder’s Depository Account Details
IT IS MANDATORY FOR ALL THE BIDDERS TO GET THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL BIDDERS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID CUM APPLICATION FORM. INVESTORS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD.
IN CASE THE BID CUM APPLICATION FORM 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 BID CUM APPLICATION FORM.
Bidders should note that on the basis of name of the Bidders, Depository Participant’s name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository the demographic details including address, Bidders bank account details, MICR code and occupation (hereinafter referred to as ‘Demographic Details’). Hence, Bidders should carefully fill in their Depository Account details in the Bid cum Application Form.
These Demographic Details would be used for all correspondence with the Bidders including mailing of the CANs/Allocation Advice and printing of Bank particulars on the refund orders or for refunds through electronic transfer of funds, as applicable. The Demographic Details given by Bidders in the Bid cum Application Form would not be used for any other purpose by the Registrar to the Issue.
By signing the Bid cum Application Form, the Bidder would be deemed to have authorized the depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records.
In case of Bidders receiving refunds through electronic transfer of funds, delivery of refund orders/allocation advice/CANs 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 Bidder in the Bid cum Application Form would be used only to ensure dispatch of refund orders.
Please note that any such delay shall be at the Bidders sole risk and neither the Company, the Registrar, Escrow Collection Bank(s) nor the BRLM nor the CBRLM shall be liable to compensate the Bidder for any losses caused to the Bidder due to any such delay or liable to pay any interest for such delay.
In case no corresponding record is available with the Depositories, which matches three parameters, namely, names of the Bidders (including the order of names of joint holders), the Depository Participant’s identity (DP ID) and the beneficiary’s identity, then such Bids are liable to be rejected.
Bidder's Bank Details
Bidders should note that on the basis of names of the Bidders, Depository Participant's name, Depository Participant Identification Number and Beneficiary Account Number provided by them in the Bid cum Application Form, the Registrar will obtain from the Depository the Bidder bank Account details. These bank account details would be printed on the refund order, if any, to be sent to Bidders or used for sending the refund through Direct Credit, NEFT, RTGS or ECS, hence, Bidders are advised to immediately update their
271 bank account details as appearing on the records of the Depository Participant. Please note that failure to do so could result in delays in credit of refund to Bidders at the Bidders sole risk and neither the BRLM nor our Company shall have any responsibility and undertake any liability for the same.
Bids under Power of Attorney
In case of Bids made pursuant to a power of attorney or by limited companies, corporate bodies, registered societies, a certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the memorandum and articles of association and/or bye laws must be lodged along with the Bid cum Application Form. Failing this, our Company reserves the right to reject such Bids in whole or in part.
In case of the Bids made pursuant to a power of attorney by FIIs, VCFs and Mutual Funds, a certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of their SEBI registration certificate must be lodged along with the Bid cum Application Form. Failing this, our Company reserves the right to reject such Bid in whole or in part.
Our Company, in its absolute discretion, reserves the right to relax the above condition of simultaneous lodging of the power of attorney along with the Bid cum Application Form, subject to such terms and conditions that we/the BRLMs may deem fit.
Our Company, in its absolute discretion, reserves the right to permit the holder of the power of attorney to request the Registrar to the Issue that for the purpose of printing particulars on the refund order and mailing of the refund order/ CANs/allocation advice, the Demographic Details given on the Bid cum Application Form should be used (and not those obtained from the Depository of the Bidder). In such cases, the Registrar to the Issue shall use Demographic Details as given in the Bid cum Application Form instead of those obtained from the depositories.
Bids made by Insurance Companies
In case of the Bids made by insurance companies registered with the Insurance Regulatory and Development Authority, a certified copy of certificate of registration issued by Insurance Regulatory and Development Authority must be lodged along with the Bid cum Application Form. Failing this, our Company reserves the right to reject such Bids in whole or in part.
Bids made by Provident Funds
In case of the Bids made by provident funds, subject to applicable law, with minimum corpus of Rs. 250 million and pension funds with minimum corpus of Rs. 250 million, a certified copy of certificate from a chartered accountant certifying the corpus of the provident fund/pension fund must be lodged along with the Bid cum Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason therefore.
Bids by Non-Residents, including Eligible NRIs and FIIs on a repatriation basis
Bids and revision to the Bids must be made:
1. On the Bid cum Application Form or the Revision Form, as applicable (blue in color), and completed in full in BLOCK LETTERS in ENGLISH in accordance with the instructions contained therein.
2. In a single name or joint names (not more than three and in the same order as their Depository Participant details).
3. Eligible NRIs for a Bid Amount of up to Rs. 100,000 would be considered under the Retail Portion for the purposes of allocation and for a Bid Amount of more than Rs. 100,000 would be considered under Non-Institutional Portion for the purposes of allocation. Other Non-Resident Bidders must Bid for a minimum of such number of Equity Shares and in multiples of [●] that the Bid Amount exceeds Rs. 100,000. For further details, see the section titled "Issue Procedure - Maximum and Minimum Bid Size" beginning on page 258 of this Draft Red Herring Prospectus.
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4. In the names of individuals, or in the names of FIIs etc but not in the names of minors, OCBs, firms or partnerships, foreign nationals (excluding Eligible NRIs) or their nominees.
Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only, net of bank charges and/or commission. In case of Bidders who remit money through Indian Rupee drafts purchased abroad, such payments in Indian Rupees will be converted into U.S. Dollars or any other freely convertible currency as may be permitted by the RBI at the rate of exchange prevailing at the time of remittance and will be dispatched by registered post or if the Bidders so desire, will be credited to their Non-Resident External (NRE) accounts, details of which should be furnished in the space provided for this purpose in the Bid cum Application Form. Our Company will not be responsible for loss, if any, incurred by the Bidder on account of conversion of foreign currency.
It is to be distinctly understood that there is no reservation for Non-Residents, including Eligible NRIs and FIIs and all Non-Residents will be treated on the same basis with other categories for the purpose of allocation.
As per the existing policy of the government of India, OCBs cannot participate in this Issue. Further, NRIs, who are not Eligible NRIs, are not permitted to participate in this Issue
Bids by Eligible Employees
For the purpose of the Employee Reservation Portion, Eligible Employee means all or any of the following:
(a) a permanent employee of our Company and our Subsidiary as of [●] and based, working and present in India as on the date of submission of the Bid cum Application Form; and.
(b) a Director of the Company, whether a whole time Director, part time Director or otherwise, except any Promoters or members of the Promoter Group as of [●] and based and present in India as on the date of submission of the Bid cum Application Form.
Bids under Employee Reservation Portion by Eligible Employees shall be:
• Made only in the prescribed Bid cum Application Form or Revision Form (i.e. pink colour Form).
• Only Eligible Employees (as defined above) would be eligible to apply in this Issue under the Employee Reservation Portion.
• Eligible Employees, as defined above, should mention the Employee Number at the relevant place in the Bid cum Application Form.
• The sole/ first Bidder shall be the Eligible Employee as defined above.
• Bids by Eligible Employees will have to bid like any other Bidder. Only those bids, which are received at or above the Issue Price, would be considered for allocation under this category.
• The Bids must be for a minimum of [●] Equity Shares and in multiples of [●] Equity Shares thereafter. The allotment in the Employee Reservation portion will be on a proportional basis.
• Eligible Employees who Bid for Equity Shares of or for a value of not more than Rs. 100,000 in any of the bidding options can apply at Cut-Off Price. This facility is not available to other Eligible Employees whose Bid Amount in any of the bidding options exceeds Rs. 100,000.
• The maximum bid under Employee Reservation Portion by an Employee cannot exceed 200,000 Equity Shares.
• Bid/ Application by Eligible Employees can also be made in the “Net Issue” portion and such Bids shall not be treated as multiple bids.
273 • If the aggregate demand in this category is less than or equal to 200,000 Equity Shares at or above the Issue Price, full allocation shall be made to the Eligible Employees to the extent of their demand. Under-subscription, if any, in the Employee Reservation Portion will be added back to the Net Issue.
• If the aggregate demand in this category is greater than 200,000 Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis. For the method of proportionate basis of allocation, please see section titled “Basis of Allotment” on page 280 of this Draft Red Herring Prospectus.
• Under-subscription, if any, in the Employee Reservation portion will be added back to the Net Issue to the Public, and the ratio amongst the investor categories will be at the discretion of the Company, the BRLMs. In case of under-subscription in the Net Issue, spill over to the extent of under- subscription shall be permitted from the Employee Reservation portion.
• This is not an issue for sale within the United States of any equity shares or any other security of the Company. Securities of the Company, including any offering of its equity shares, may not be offered or sold in the United States in the absence of registration under U.S. securities laws or unless exempt from registration under such laws.
PAYMENT INSTRUCTIONS
Our Company shall open Escrow Accounts with the Escrow Collection Bank(s) for the collection of the Bid Amounts payable upon submission of the Bid cum Application Form and for amounts payable pursuant to allocation/allotment in the Issue. Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid and/or on allocation/allotment as per the following terms:
Payment into Escrow Account
1. The Bidders for whom the applicable Margin Amount is equal to 100% , shall, with the submission of the Bid cum Application Form, draw a payment instrument for the Bid Amount in favour of the Escrow Account and submit the same to the members of the Syndicate.
2. QIB Bidders will be required to deposit a QIB Margin Amount at the time of submitting of their Bids. After the closure of bidding, the level of subscription in all categories shall be determined. Based on the level of subscription, additional margin money, if any, shall be called for from the QIB Bidders. The QIB Bidders shall pay such additional margin money within a period of two days from the date of the letter communicating the request for such additional margin money.
3. In case the above Margin Amount paid by the Bidders during the Bidding Period is less than the Issue Price multiplied by the Equity Shares allocated to the Bidder, the balance amount shall be paid by the Bidders into the Escrow Account within the period specified in the CAN which shall be subject to a minimum period of two days from the date of communication of the allocation list to the members of the Syndicate by the BRLMs.
3. The payment instruments for payment into the Escrow Account should be drawn in favour of:
a) In case of Resident QIB Bidders: “Escrow Account– BCL Public Issue – QIB – R” b) In case of Non Resident QIB Bidders: “Escrow Account– BCL Public Issue – QIB – NR” c) In case of Resident Bidders: “Escrow Account– BCL Public Issue - R” d) In case of Non Resident Bidders: “Escrow Account– BCL Public Issue - NR” e) In case of Eligible Employees: “Escrow Account– BCL Public Issue - Employees”
• In case of Bids by NRIs applying on repatriation basis, the payments must be made through Indian Rupee drafts purchased abroad or cheques or bank drafts, for the amount payable on application remitted through normal banking channels or out of funds held in Non-Resident External (NRE) Accounts or Foreign Currency Non-Resident (FCNR) Accounts, maintained with banks authorized to deal in foreign exchange in India, along with documentary evidence in support of the remittance. Payment will not be accepted out of Non-Resident Ordinary (NRO) Account of Non-Resident Bidder bidding on a repatriation basis. Payment by drafts
274 should be accompanied by bank certificate confirming that the draft has been issued by debiting to NRE Account or FCNR Account.
• In case of Bids by FIIs, the payment should be made out of funds held in Special Rupee Account along with documentary evidence in support of the remittance. Payment by drafts should be accompanied by bank certificate confirming that the draft has been issued by debiting to Special Rupee Account.
6. Where a Bidder has been allocated/allotment a lesser number of Equity Shares than the Bidder has Bid for, the excess amount, if any, paid on bidding, after adjustment towards the balance amount payable on the Equity Shares allocated, will be refunded to the Bidder from the Refund Account.
7. The monies deposited in the Escrow Account will be held for the benefit of the Bidders till the Designated Date.
8. On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow Account as per the terms of the Escrow Agreement into the Public Issue Account with the Bankers to the Issue.
9. On the Designated Date and no later than 15 days from the Bid/Issue Closing Date, the Escrow Collection Bank shall also refund all amounts payable to unsuccessful Bidders and also the excess amount paid on Bidding, if any, after adjusting for allocation/allotment to the Bidders.
Payments should be made by cheque, or demand draft drawn on any Bank (including a Co-operative Bank), which is situated at, and is a member of or sub-member of the bankers’ clearing house located at the centre where the Bid cum Application Form is submitted. Outstation cheques/bank drafts drawn on banks not participating in the clearing process will not be accepted and applications accompanied by such cheques or bank drafts are liable to be rejected. Cash/ Stockinvest/Money Orders/ Postal orders will not be accepted.
Payment by Stockinvest
In terms of the Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the option to use the stockinvest instrument in lieu of cheques or bank drafts for payment of Bid money has been withdrawn. Hence, payment through stockinvest would not be accepted in this Issue.
SUBMISSION OF BID CUM APPLICATION FORM
All Bid cum Application Forms or Revision Forms duly completed and accompanied by account payee cheques or drafts shall be submitted to the members of the Syndicate at the time of submission of the Bid.
No separate receipts shall be issued for the money payable on the submission of Bid cum Application Form or Revision Form. However, the collection center of the members of the Syndicate will acknowledge the receipt of the Bid cum Application Forms or Revision Forms by stamping and returning to the Bidder the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid cum Application Form for the records of the Bidder.
OTHER INSTRUCTIONS
Joint Bids in the case of Individuals
Bids may be made in single or joint names (not more than three). In the case of joint Bids, all payments will be made out in favour of the Bidder whose name appears first in the Bid cum Application Form or Revision Form. All communications will be addressed to the First Bidder and will be dispatched to his or her address as per the Demographic Details received from the Depository.
275 Multiple Bids
A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares required. Two or more Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the same.
In this regard, the procedures which would be followed by the Registrar to the Issue to detect multiple applications are given below:
1. All applications with the same name and age will be accumulated and taken to a separate process file, which would serve as a multiple master.
2. In this master, a check will be carried out for the same PAN. In cases where the PAN is different, the same will be deleted from this master.
3. The Registrar will obtain, from the depositories, details of the applicant’s address based on the DP ID and Beneficiary Account Number provided in the Bid-cum-Application Form and create an address master.
4. The addresses of all the applications in the multiple master will be strung from the address master. This involves putting the addresses in a single line after deleting non-alpha and non-numeric characters i.e. commas, full stops, hash etc. Sometimes, the name, the first line of address and pin code will be converted into a string for each application received and a photo match will be carried out amongst all the applications processed. A print-out of the addresses will be taken to check for common names. The applications with same name and same address will be treated as multiple applications.
5. The applications will be scrutinized for DP ID and Beneficiary Account Numbers. In case applications bear the same DP ID and Beneficiary Account Numbers, these will be treated as multiple applications.
6. Subsequent to the aforesaid procedures, a print out of the multiple master will be taken and the applications physically verified to tally signatures as also father’s/ husband’s names. On completion of this, the applications will be identified as multiple applications.
In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple Bids provided that the Bids clearly indicate the scheme concerned for which the Bid has been made.
The Company reserves the right to reject, in our absolute discretion, all or any multiple Bids in any or all categories.
‘PAN’ or ‘GIR’ Number
Where Bid(s) is/are for Rs. 50,000 or more, the Bidder or in the case of a Bid in joint names, each of the Bidders, should mention his/her Permanent Account Number (PAN) allotted under the I.T. Act. The copy of the PAN card or PAN allotment letter is required to be submitted with the Bid-cum-Application Form. Applications without this information and documents will be considered incomplete and are liable to be rejected. It is to be specifically noted that Bidders should not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground. In case the Sole/First Bidder and Joint Bidder(s) is/are not required to obtain PAN, each of the Bidder(s) shall mention “Not Applicable” and in the event that the sole Bidder and/or the joint Bidder(s) have applied for PAN which has not yet been allotted each of the Bidder(s) should Mention “Applied for” in the Bid cum Application Form. Further, where the Bidder(s) has mentioned “Applied for” or “Not Applicable”, the Sole/First Bidder and each of the Joint Bidder(s), as the case may be, would be required to submit Form 60 (Form of declaration to be filed by a person who does not have a permanent account number and who enters into any transaction specified in rule 114B), or, Form 61 (form of declaration to be filed by a person who has agricultural income and is not in receipt of any other income chargeable to income tax in respect of transactions specified in rule 114B), as may be applicable, duly filled along with a copy of any one of the following documents in support of the
276 address: (a) Ration Card (b) Passport (c) Driving License (d) Identity Card issued by any institution (e) Copy of the electricity bill or telephone bill showing residential address (f) Any document or communication issued by any authority of the Central Government, State Government or local bodies showing residential address (g) Any other documentary evidence in support of address given in the declaration. It may be noted that Form 60 and Form 61 have been amended vide a notification issued on December 1, 2004 by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes. All Bidders are requested to furnish, where applicable, the revised Form 60 or 61, as the case may be.
UNIQUE IDENTIFICATION NUMBER – MAPIN
Unique Identification Number (“UIN”)
With effect from July 1, 2005, SEBI had decided to suspend all fresh registrations for obtaining UIN and the requirement to contain/quote UIN under the SEBI MAPIN Regulations/Circulars vide its circular MAPIN/Cir- 13/2005. However, in a recent press release dated December 30, 2005, SEBI has approved certain policy decisions and has now decided to resume registrations for obtaining UINs in a phased manner. The press release states that the cut off limit for obtaining UIN has been raised from the existing limit of trade order value of Rs.100,000 to Rs.500,000 or more. The limit will be reduced progressively. For trade order value of less than Rs.500,000 an option will be available to investors to obtain either the PAN or UIN. These changes are, however, not effective as of the date of the Draft Red Herring Prospectus and SEBI has stated in the press release that the changes will be implemented only after necessary amendments are made to the SEBI MAPIN Regulations.
RIGHT TO REJECT BIDS
In case of QIB Bidders, the Company in consultation with the BRLMs may reject Bids provided that the reasons for rejecting the same shall be provided to such Bidder in writing. In case of Non- Institutional Bidders, Retail Individual Bidders and bids by Eligible Employees bidding in the Employee Reservation Portion, our Company has a right to reject Bids based on technical grounds. Consequent refunds shall be made by cheque or pay order or draft and will be sent to the Bidder's address at the Bidder's risk.
Grounds for Technical Rejections
Bidders are advised to note that Bids are liable to be rejected inter alia on the following technical grounds:
1. Amount paid does not tally with the amount payable for the highest value of Equity Shares bid for;
2. Age of First Bidder not given;
3. In case of partnership firms, Equity Shares may be registered in the names of the individual partners and no firm as such shall be entitled to apply;
4. Bid by persons not competent to contract under the Indian Contract Act, 1872 including minors, insane persons;
5. PAN photocopy/PAN communication/ Form 60 or Form 61 declaration along with documentary evidence in support of address given in the declaration, not given if Bid is for Rs. 50,000 or more;
6. GIR number furnished instead of PAN;
7. Bids for lower number of Equity Shares than specified for that category of investors;
8. Bids at a price less than lower end of the Price Band;
9. Bids at a price more than the higher end of the Price Band;
10. Bids at Cut Off Price by Non-Institutional Bidders, QIB Bidders and Eligible Employees bidding in the Employee Reservation Portion in excess of Rs. 100,000.
277 11. Bids for number of Equity Shares which are not in multiples of [●];
12. Category not ticked;
13. Multiple Bids as defined in this Draft Red Herring Prospectus;
14. In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant documents are not submitted;
15. Bids accompanied by Stockinvest/money order/postal order/cash;
16. Signature of sole and / or joint Bidders missing;
17. Bid cum Application Forms does not have the stamp of the BRLMs or Syndicate Members;
18. Bid cum Application Forms does not have Bidder’s depository account details;
19. Bid cum Application Forms are not delivered by the Bidders within the time prescribed as per the Bid cum Application Forms, Bid/Issue Opening Date advertisement and the Red Herring Prospectus and as per the instructions in the Red Herring Prospectus and the Bid cum Application Forms;
20. In case no corresponding record is available with the Depositories that matches three parameters namely, names of the Bidders (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s account number;
21. Bids for amounts greater than the maximum permissible amounts prescribed by the regulations;
22. Bids by QIBs not submitted through members of the Syndicate;
23. Bids by OCBs;
24. Bids by Non-residents such as OCBs, FVCIs, multilateral and bilateral development financial institutions;
25. Bids by US persons other than “Qualified Institutional Buyers” as defined in Rule 144A of the Securities Act or other than in reliance of Regulation S under he Securities Act;
26. Bids by any person outside India if not in compliance with applicable foreign and Indian Laws; and
27. Bids by persons prohibited from buying, selling or dealing in the shares directly or indirectly by SEBI or any other regulatory authority.
Equity Shares in dematerialized form with NSDL or CDSL
As per the provisions of Section 68B of the Companies Act, the allotment of Equity Shares in this Issue shall be only in a dematerialized form, (i.e., not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode).
In this context, two agreements have been signed among the Company, the respective Depositories and the Registrar to the Issue: a) Agreement dated [●], 2007 with NSDL, us and the Registrar to the Issue. b) Agreement dated [●], 2007 with CDSL, us and the Registrar to the Issue.
All Bidders can seek allotment only in dematerialized mode. Bids from any Bidder without relevant details of his or her depository account are liable to be rejected.
278 a) A Bidder applying for Equity Shares must have at least one beneficiary account with either of the Depository Participants of either NSDL or CDSL prior to making the Bid. b) The Bidder must necessarily fill in the details (including the Beneficiary Account Number and Depository Participant’s identification number) appearing in the Bid cum Application Form or Revision Form. c) Allotment to a successful Bidder will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the Bidder d) Names in the Bid cum Application Form or Revision Form should be identical to those appearing in the account details in the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the Depository. e) If incomplete or incorrect details are given under the heading ‘Bidders Depository Account Details’ in the Bid cum Application Form or Revision Form, it is liable to be rejected. f) The Bidder is responsible for the correctness of his or her Demographic Details given in the Bid cum Application Form vis-à-vis those with his or her Depository Participant. g) Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL. All the Stock Exchanges where our Equity Shares are proposed to be listed have electronic connectivity with CDSL and NSDL. h) The trading of the Equity Shares of the Company would be in dematerialized form only for all investors in the demat segment of the respective Stock Exchanges.
COMMUNICATIONS
All future communications in connection with Bids made in this Issue should be addressed to the Registrar to the Issue quoting the full name of the sole or First Bidder, Bid cum Application Form number, Bidders Depository Account Details, number of Equity Shares applied for, date of bid form, name and address of the member of the Syndicate where the Bid was submitted and cheque or draft number and issuing bank thereof.
Investors can contact the Compliance Officer or the Registrar to the Issue in case of any pre-Issue or post- Issue related problems such as non-receipt of letters of allotment, credit of allotted shares in the respective beneficiary accounts, refund orders etc.
IMPERSONATION
Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68 A of the Companies Act, which is reproduced below:
"Any person who:
(a) makes in a fictitious name, an application to a company for acquiring or subscribing for, any shares therein, or
(b) otherwise induces a company to allot, or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years."
279 Basis of Allotment
A. For Retail Individual Bidders
• Bids received from the Retail Individual Bidders at or above the Issue Price shall be grouped together to determine the total demand under this category. The allotment to all the successful Retail Individual Bidders will be made at the Issue Price.
• The Net Issue size less allotment to Non-Institutional and QIB Bidders shall be available for allotment to Retail Individual Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.
• If the aggregate demand in this category is less than or equal to 1,400,000 Equity Shares at or above the Issue Price, full allotment shall be made to the Retail Individual Bidders to the extent of their valid Bids.
• If the aggregate demand in this category is greater than 1,400,000 Equity Shares at or above the Issue Price, the allotment shall be made on a proportionate basis up to a minimum of [●] Equity Shares (being the minimum bid quantity). For the method of proportionate basis of allotment, refer below.
B. For Non-Institutional Bidders
• Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped together to determine the total demand under this category. The allotment to all successful Non- Institutional Bidders will be made at the Issue Price.
• The Net Issue size less allotment to QIBs and Retail Portion shall be available for allotment to Non- Institutional Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.
• If the aggregate demand in this category is less than or equal to 600,000 Equity Shares at or above the Issue Price, full allotment shall be made to Non-Institutional Bidders to the extent of their demand.
• In case the aggregate demand in this category is greater than 600,000 Equity Shares at or above the Issue Price, allotment shall be made on a proportionate basis up to a minimum of [●] Equity Shares (being the minimum bid quantity). For the method of proportionate basis of allotment refer below.
C. For Employee Reservation Portion
• Bids received from Eligible Employees at or above the Issue Price shall be grouped together to determine the total demand under this category. The allocation to all the successful Eligible Employees will be made at the Issue Price.
• If the aggregate demand in this category is less than or equal to 200,000 Equity Shares at or above the Issue Price, full allocation shall be made to the Eligible Employees to the extent of their demand. • If the aggregate demand in this category is greater than 200,000 Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis up to a minimum of [●] Equity Shares (being the minimum bid quantity). For the method of proportionate basis of allocation, refer below.
D. For QIBs
• Bids received from the QIB Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allotment to all the QIB Bidders will be made at the Issue Price.
280 • The QIB Portion shall be available for allotment to QIB Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.
• Allotment shall be undertaken in the following manner:
(a) In the first instance allocation to Mutual Funds for up to 5% of the QIB Portion shall be determined as follows:
(i) In the event that Mutual Fund Bids exceeds 5% of the QIB Portion, allocation to Mutual Funds shall be done on a proportionate basis for up to 5% of the QIB Portion.
(ii) In the event that the aggregate demand from Mutual Funds is less than 5% of the QIB Portion then all Mutual Funds shall get full allotment to the extent of valid bids received above the Issue Price.
(iii) Equity Shares remaining unsubscribed, if any, not allocated to Mutual Funds shall be available for allotment to all QIB Bidders as set out in (b) below;
(b) In the second instance allotment to all QIBs shall be determined as follows:
(i) In the event that the oversubscription in the QIB Portion, all QIB Bidders who have submitted Bids above the Issue Price shall be allotted Equity Shares on a proportionate basis for up to 95% of the QIB Portion.
(ii) Mutual Funds, who have received allocation as per (a) above, for less than the number of Equity Shares Bid for by them, are eligible to receive Equity Shares on a proportionate basis along with other QIB Bidders.
(iii) Under-subscription below 5% of the QIB Portion, if any, from Mutual Funds, would be included for allocation to the remaining QIB Bidders on a proportionate basis.
(c) The aggregate allotment to QIB Bidders shall be up to 2,000,000 Equity Shares.
Procedure and Time Schedule for Allotment and Issue of Certificates
The Issue will be conducted through a “100% book building process” pursuant to which the Underwriters will accept bids for the Equity Shares during the Bidding Period. The Bidding Period will commence [●], 2007 and expire on [●], 2007. Following the expiration of the Bidding Period, our Company, in consultation with the BRLMs, will determine the Issue Price, and, in consultation with the BRLMs, the basis of allocation and entitlement to allotment based on the bids received and subject to the confirmation by the Stock Exchanges. Successful bidders will be provided with a confirmation of their allocation and will be required to pay any unpaid amount for the Equity Shares within a prescribed time. The Prospectus will be filed with Registrar of Companies, and SEBI. SEBI Guidelines require our Company to complete the allotment to successful bidders within 15 days from the Bid/Issue Closing Date. The Equity Shares will then be credited and allotted to the investors’ demat accounts maintained with the relevant depository participant. Upon approval by the Stock Exchanges, the Equity Shares will be listed and traded on BSE and NSE.
Method of Proportionate Allotment
In the event of the Issue being over-subscribed, the basis of allotment shall be finalized by our Company in consultation with the Designated Stock Exchange. The Executive Director/Managing Director of the Bombay Stock Exchange Limited (Designated Stock Exchange) along with the post Issue Lead Merchant Banker and the Registrars to the Issue shall be responsible to ensure that the basis of allotment is finalized in a fair and proper manner.
The allotment shall be made in marketable lots, on a proportional basis as explained below:
(a) Bidders will be categorized according to the number of Equity Shares applied for,
281 (b) The total number of Equity Shares to be allotted to each category as a whole shall be arrived at on a proportionate basis, which is the total number of Equity Shares applied for in that category (number of Bidders in the category multiplied by the number of Equity Shares applied for) multiplied by the inverse of the over-subscription ratio.
(c) Number of Equity Shares to be allotted to the successful Bidders will be arrived at on a proportionate basis, which is total number of Equity Shares applied for by each Bidder in that category multiplied by the inverse of the oversubscription ratio, in that category subject to a minimum allotment of [●] Equity Shares. The allotment lot shall be the same as the minimum application lot irrespective of any revisions to the price band.
(d) In all Bids where the proportionate allotment is less than [●] Equity Shares per Bidder, the allotment shall be made as follows:
• Each successful Bidder shall be allotted a minimum of [●] Equity Shares; and
• The successful Bidders out of the total Bidders for a category shall be determined by draw of lots in a manner such that the total number of Equity Shares allotted in that category is equal to the number of Equity Shares calculated in accordance with (b) above.
(e) If the proportionate Allotment to a Bidder is a number that is more than [●] but is not a multiple of one (which is the marketable lot), the decimal would be rounded off to the higher whole number if that decimal is 0.5 or higher. If the decimal is less than 0.5, it would be rounded off to the lower whole number. All Bidders in such categories would be allotted Equity Shares arrived at after such rounding off.
(f) If the Equity Shares allocated on a proportionate basis to any category are more than the Equity Shares allotted to the Bidders in that category, the remaining Equity Shares available for allotment shall be first adjusted against any other category, where the allotted Equity Shares are not sufficient for proportionate allotment to the successful Bidders in that category. The balance Equity Shares, if any, remaining after such adjustment will be added to the category comprising Bidders applying for minimum number of Equity Shares. The basis of allocation on a proportionate basis shall be finalized in consultation with the Designated Stock Exchange
Letters of Allotment or Refund Orders
We shall give credit of Equity Shares allotted, if any, to the beneficiary account with Depository Participants within two working days from the date of the Allotment. Applicants residing at 15 centers where clearing houses are managed by the RBI will get refunds through ECS (subject to availability of information for crediting the refund through ECS) except where applicant is otherwise disclosed as eligible to get refunds through Direct Credit, NEFT or RTGS. In case of other applicants, our Company shall ensure dispatch of refund orders, if any, of value up to Rs. 1,500 by "Under Certificate of Posting", and shall dispatch refund orders above Rs. 1,500, if any, by registered post or speed post at the sole or First Bidder's sole risk within 15 days of the Bid /Issue Closing Date. Applicants to whom refunds are made through electronic transfer of funds will be sent a letter (refund advice) through ordinary post intimating them about the mode of credit of refund within 15 working days of the closure of the Issue. Our Company shall ensure dispatch of refund orders/refund advice (for Direct Credit, NEFT, RTGS or ECS), if any, by "Under Certificate of Posting" or registered post or speed post, as applicable, only at the sole or First Bidder's sole risk within 15 days of the Bid/Issue Closing Date and adequate funds for making refunds to applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue.
In accordance with the Companies Act, the requirements of the Stock Exchanges and SEBI Guidelines, we undertake that:
• Allotment and transfer shall be made only in dematerialized form within 15 days from the Bid/Issue Closing Date;
• Dispatch of refund orders shall be done within 15 days from the Bid/Issue Closing Date; and
282 • We shall pay interest at 15% per annum (for any delay beyond the 15 day time period as mentioned above), if Allotment is not made, refund orders are not dispatched and/or demat credits are not made to investors within the 15 day time period prescribed above.
Our Company will provide adequate funds required for dispatch of refund orders or allotment advice to the Registrar to the Issue.
Save and except refunds effected through the electronic mode, i.e. Direct Credit, NEFT, RTGS or ECS, refunds will be made by cheques, pay orders or demand drafts drawn on a bank appointed by our Company as an Escrow Collection Bank and payable at par at places where Bids are received. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centers will be payable by the Bidders.
Mode of making refunds
The payment of refund, if any, would be done through the following methods in the following order of preference
1. NEFT - Payment of refund shall be undertaken through NEFT wherever the applicants' bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR), if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the Demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method.
2. ECS - Payment of refund would be done mandatorily through ECS for applicants having an account at any of the 15 centers where clearing houses for ECS are managed by Reserve Bank of India, namely Ahmedabad, Bangalore, Bhubneshwar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Kolkata, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram. This mode of payment of refunds would be subject to availability of complete bank account details including the nine digit Magnetic Ink Character Recognition (MICR) code as appearing on a cheque leaf, from the depository. The payment of refund through ECS is mandatory for applicants having a bank account at any of the 15 centers named hereinabove, except where applicant is otherwise disclosed as eligible to get refunds through direct credit or RTGS
3. Direct Credit - Applicants having their bank account with the Refund Banker shall be eligible to receive refunds, if any, through direct credit. The refund amount, if any, would be credited directly to the eligible applicant's bank account with the Refund Banker. Charges, if any, levied by the Refund Bank(s) for the same would be borne by our Company.
4. RTGS - Applicants having a bank account at any of the 15 centers detailed above, and whose bid amount exceeds Rs, 1 million, shall be eligible to exercise the option to receive refunds, if any, through RTGS. All applicants eligible to exercise this option shall mandatorily provide the IFSC code in the Bid cum Application form. In the event of failure to provide the IFSC code in the Bid cum Application form, the refund shall be made through the ECS or direct credit, if eligibility disclosed. Charges, if any, levied by the Refund Bank(s) for the same would be borne by our Company. Charges, if any, levied by the applicant's bank receiving the credit would be borne by the applicant.
Note: Wherever payments cannot be made through NEFT or ECS or direct credit and the refund amount exceeds one million, such applicants shall have the option to receive the refund payment through RTGS.
Please note that only applicants having a bank account at any of the 15 centers where clearing houses for ECS are managed by the RBI are eligible to receive refunds through the modes detailed in (1), (2), (3) and (4) above. For all the other applicants, including applicants who have not updated their bank particulars along with the nine digit MICR Code, the refund orders would be dispatched "Under Certificate of Posting" for refund orders of value up to Rs. 1,500 and through Speed Post/Registered Post for refund orders of Rs. 1,500 and above.
283
DISPOSAL OF APPLICATIONS AND APPLICATION MONEYS AND INTEREST IN CASE OF DELAY
Our Company shall give credit of Equity Share allotted to the beneficiary account with Depository Participants within 15 working days of the Bid Closing Date / Issue Closing Date. Applicants residing at 15 centers where clearing houses are managed by the Reserve Bank of India (RBI) will get refunds through ECS only (subject to availability of all information for crediting the refund through ECS) except where applicants are otherwise disclosed as eligible to get refunds through Direct Credit, NEFT or RTGS.
In case of other applicants, our Company shall ensure dispatch of refund orders, if any, of value up to Rs. 1,500 by "Under Certificate of Posting", and shall dispatch refund orders above Rs. 1,500, if any, by registered post or speed post, except for Bidders who have opted to receive refunds through the Direct Credit, NEFT, RTGS or ECS facility.
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 15 working days of closure of Issue.
Our Company shall ensure dispatch of refund orders, if any, by "Under Certificate of Posting" or registered post or speed post or Direct Credit, NEFT, RTGS or ECS, as applicable, only at the sole or First Bidder's sole risk within 15 days of the Bid Closing Date/Issue Closing Date, and adequate funds for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by the Issuer.
Our Company shall ensure dispatch of allotment advice, refund orders and give benefit to the beneficiary account with Depository Participants and submit the documents pertaining to the allotment to the Stock Exchanges within 2 (two) working days of date of Allotment.
Our Company shall use best efforts to ensure that all steps for completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed, are taken within 7 (seven) working days after the finalization of the basis of allotment.
In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI Guidelines we further undertake that:
• allotment of Equity Shares shall be made only in dematerialized form within 15 (fifteen) days of the Bid /Issue Closing Date;
• dispatch of refund orders, except for Bidders who have opted to receive refunds through the Direct Credit, NEFT, RTGS or ECS facility, within 15 (fifteen) working days of the Bid /Issue Closing Date would be ensured; and
• we shall pay interest at 15% (fifteen) per annum (for any delay beyond the 15 (fifteen)-day time period as mentioned above), if Allotment is not made and refund orders are not dispatched and/or demat credits are not made to investors within the 15 (fifteen)-day time prescribed above as per the guidelines issued by the Government of India, Ministry of Finance pursuant to their letter No. F/8/S/79 dated July 31, 1983, as amended by their letter No. F/14/SE/85 dated September 27, 1985, addressed to the stock exchanges, and as further modified by SEBI's Clarification XXI dated October 27, 1997, with respect to the SEBI Guidelines. In a case where the refund or portion thereof is made in electronic manner through Direct Credit, NEFT, RTGS or ECS, and the refund instructions have not been given to the clearing system in the disclosed manner within 15 days from the Bid/Issue Closing Date, we shall pay interest at 15% per annum.
Refunds will be made by cheques, pay-orders or demand drafts drawn on a bank appointed by us, as an Escrow Collection Bank and payable at par at places where Bids are received, except for Bidders who have opted to receive refunds through the Direct Credit, NEFT, RTGS or ECS facility. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centers will be payable by the Bidders.
284 Undertakings by our Company
We undertake as follows:
• that the complaints received in respect of this Issue shall be attended to by us expeditiously and satisfactorily;
• that all steps will be taken for the completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed within seven working days of finalization of the basis of allotment;
• that funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by us;
• that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within 15 days of the Bid/ Issue Closing Date, as the case may be, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund.
• that the refund orders or allotment advice to the Eligible NRIs or FIIs shall be dispatched within specified time; and
• that no further issue of Equity Shares shall be made till the Equity Shares issued through this Draft Red Herring Prospectus are listed or until the Bid monies are refunded on account of non-listing, under subscription, etc.
Utilization of Issue proceeds
Our Board of Directors certifies that:
• all monies received out of the Issue shall be credited/transferred to a separate bank account other than the bank account referred to in sub-section (3) of Section 73 of the Companies Act;
• details of all monies utilized out of Issue shall be disclosed under an appropriate head in our balance sheet indicating the purpose for which such monies have been utilized;
• details of all unutilized monies out of the Issue, if any shall be disclosed under the appropriate head in the balance sheet indicating the form in which such unutilized monies have been invested;
Our Company shall not have recourse to the Issue proceeds until the approval for trading of the Equity Shares from all the Stock Exchanges where listing is sought has been received.
Withdrawal of the Issue
Our Company in consultation with the BRLMs reserves the right not to proceed with the Issue at anytime including after the Bid/ Issue Opening Date but before Allotment, without assigning any reason thereof. In terms of the SEBI Guidelines, QIB Bidders shall not be allowed to withdraw their Bid after the Bid/Issue Closing Date
Restrictions on Foreign Ownership of Indian Securities
Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of the Government of India and FEMA. While the Industrial Policy, 1991 prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted in all sectors of the Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. Under the current foreign investment policy, foreign equity participation up to 100% is permissible.
285
Press Note No. 2 (2005 series), published by the Government of India has permitted foreign direct investment (“FDI”) of up to 100% under the automatic route in townships, housing, built-up infrastructure and construction-development projects, subject to certain conditions enumerated therein. A short summary of the conditions is as follows:
(a) Minimum land area to be developed is 10 hectares in case of serviced housing plots and built up area of 50,000 square meters in case of construction development projects. Where the development is a combination project, any one of the two conditions would suffice.
(b) Minimum capitalization of US$10 million for wholly owned subsidiary and US$5 million for a joint venture has been specified and it is required to be brought in within six months of commencement of business of the company.
(c) Further, the original investment is not permitted to be repatriated before three years from completion of minimum capitalization except with prior approval from FIPB.
(d) At least 50% of the project is required to be developed within five years of obtaining all statutory clearances and the responsibility for obtaining it is cast on the foreign investor. Further, the sale of undeveloped plots is prohibited.
For the purpose of this clause “undeveloped plots” have been defined to mean those plots where roads, water supply, street lighting, drainage, sewerage, and other conveniences, as applicable under prescribed regulations, have not been made available It is necessary that the investor provides this infrastructure and obtains the completion certificate from the concerned local body/service agency before he is allowed to dispose of serviced housing plots.
(e) Compliance with rules, regulations and bye-laws of state government, including land use requirements and provision of community amenities and common facilities, municipal and local body has been mandated and the investor is given the responsibility for obtaining all necessary approvals.
We have sought a confirmation from the Department of Industrial Policy and Promotion, Ministry of Commerce, GoI, by way of a letter dated March 6, 2007 that investment by FIIs registered with SEBI in the Equity Shares offered as part of this Issue would not fall within the ambit of Press Note 2(2005 Series) issued by the GoI and will therefore not be subject to the conditions specified therein.
Note:
• As per the existing policy of the Government of India, OCBs cannot participate in this Issue.
• Non-residents such as FVCIs, multilateral and bilateral development financial institutions are not permitted to participate in the Issue and this Issue is being offered in India only.
286 SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION
Pursuant to Schedule II of the Companies Act and SEBI Guidelines, the main provisions of the Articles of Association are detailed below. Please note that each provision hereinbelow is numbered as per the corresponding article number in the Articles of Association and capitalized/defined terms herein have the same meaning given to them in the Articles of Association.
PRELIMINARY
2. Save as provided herein, the regulations contained in Table “A” in schedule 1 of The Act shall not apply to the company.
3. The Authorised Share Capital of the company shall be such amount and be divided into such shares as may, from time to time, be provided in clause V of Memorandum of Association with power to subdivide consolidate and increase and with power from time to time, to issue any shares of the original capital with and subject to any preferential, qualified or special rights, privileges or conditions as may be, thought fit, and upon the subdivision of shares to apportion the right to participate in profits, in any manner as between the shares resulting from subdivision.
4. The Company shall have power to issue Preference Shares carrying right to redemption out of profits which would otherwise be available for dividend, or out of the proceeds of a fresh issue of shares made for purpose of such redemption, or liable to be redeemed at the option of the company, and the Board may subject to the provisions of Section 80 of the Act exercise such power in such manner as it thinks fit.
5a (1) Where at any time after the expiry of two years from the formation of the company or at any time after the expiry of one year from the allotment of shares in the company made for the first time after its formation, whichever is earlier, it is proposed to increase the subscribed capital of the company by allotment of further shares then:
a) Such further shares shall be offered to the persons who at the date of the offer, are holders of the equity shares of the company, in proportion, as nearly as circumstances admit, to the capital paid up on those shares at that date.
b) The offer aforesaid shall be made by a notice specifying the number of shares offered and limiting a time not being less than fifteen days from the date of the offer within which the offer if not accepted, will be deemed to have been declined.
c) The offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person and the notice referred to in sub clause (b) shall contain a statement of this right;
d) After the expiry of the time specified in the notice aforesaid or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose off them in such manner as they may think most beneficial to the company.
(2) Notwithstanding anything contained in sub-clause (1), the further shares aforesaid may be offered to any persons (Whether or not those persons include the persons referred to in clause (a) of sub- clause (1) hereof) in any manner whatsoever.
a) If a special resolution to that effect is passed by the company in General Meeting, or
b) Where no such resolution is passed, if the votes cast (whether on a show of hands or on a poll as the case may be) in favour of the proposal contained in the resolution moved in that general meeting (including the casting vote, if any, of the Chairman) by the members who, being entitled to do so, vote in person, or where proxies are allowed, by proxy, exceed the votes, if any cast against the proposal by members, so entitled and voting and the Central Government is satisfied, on an application made by the Board of Directors in this behalf that the proposal is most beneficial to the Company.
(3) Nothing in sub-clause © of (1) hereof shall be deemed; a) To extend the time within which the offer should be accepted; or
287 b) To authorise any person to exercise the right of renunciation for a second time on the ground that the person in whose favour the renunciation was first made has declined to take the shares comprised in the renunciation. (4) Nothing in this Article shall apply to the increase of the subscribed capital of the Company caused by the exercise of an option attached to the debenture issued or loans raised by the company: (i) To convert such debentures or loans into shares in the company; or (ii) To subscribe for shares in the company. Provided that the terms of Issue of such debentures or the terms of such loans include a term providing for such option and such term: a) Either has been approved by the Central Government before the Issue of the debentures or the raising of the loans or is in conformity with Rules, if any made by that Government in this behalf; and b) In the case of debentures or loans or other than debentures issued to or loans obtained from Government or any institution specified by the Central Government in this behalf, has also been approved by a special resolution passed by the company in General Meeting before the Issue of the debentures or raising of the loans. 5b. Subject to the provisions of Section 81 of the Act and these Articles, the shares in the capital of the company for the time being shall be under the control of the Directors who may issue, allot or otherwise dispose of the same or any of them to such persons, in such proportion and on such terms and conditions and either at a premium or at par or (subject to the compliance with the provision of Section 79 of the Act) at a discount and at such time as they may from time to time think fit and with the sanction of the company in the General Meeting to give to any person or persons the option or right to call for any shares either at par or premium during such time and for such consideration as the Directors think fit, and may Issue and allot shares in the capital of the company on payment in full or part of any property sold and transferred or for any services rendered to the company in the conduct of its business and any shares which may so be allotted may be issued as fully paid up shares and if so, issued, shall be deemed to be fully paid shares. Provided that option or right to call of shares shall not be given to any person or persons without the sanction of the company in the General Meeting. 6. Subject to the provisions of the Act it shall be lawful for the company to issue at a discount, shares of a class already issued. 7. The Company may, subject to compliance with the provisions of Section 76 of the Act, exercise the powers of paying commission on the issue of shares debentures. The commission may be paid or satisfied in cash or shares, debentures or debentures stock of Company. 8. The company may pay a reasonable sum of brokerage, subject to the ceiling prescribed under the Act. 9. Subject to Section 187 C of the Act, the Company shall be entitled to treat the registered holder of any shares as the absolute owner thereof and accordingly shall not, except as ordered by a court of competent jurisdiction or as by law required, be bound to recognize any trust, benami or equitable or other claim to or interest in such shares or any fractional part of a share whether or not it shall have express or other notice thereof. CERTIFICATE
10. The certificate to title to shares shall be issued under the seal of the Company.
11. Every member shall be entitled, without payment, to one or more certificates in marketable lots, for all the shares of each class or denomination registered in his name, or if the Directors so approve (upon paying such fee as the Directors may from time to time determine) to several certificates, each for one or more of such shares and the company shall complete and have ready for delivery such certificates within three months from the date of allotment, unless the conditions of Issue thereof otherwise provide, or within two months of the receipt of application of registration of transfer, transmission, sub-division, consolidation or renewal of any of its shares, as the case may be. Every certificate of
288 shares shall be under the seal of the company and shall specify the number and distinctive numbers of shares in respect of which it is issued and amount paid-up thereon and shall be in such form as the directors may prescribe or approve, provided that in respect of a share or shares held jointly by several persons, the company shall not be borne to Issue more than one certificate and delivery of a certificate of shares to one of several joint holders shall be sufficient delivery to all such holders.
12. If any certificate be worn out, defaced, mutilated or torn or if there be no further space on the back thereof for endorsement of transfer, then upon production and surrender thereof to the Company, a new certificate may be issued in lieu thereof, and if any certificate lost or destroyed then upon proof thereof to the satisfaction of the company and on execution of such indemnity as the company deem adequate, being given, and a new certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate.
Every certificate under the Article shall be issued without payment of fees if the Directors so decide, or on payment of such fees (not exceeding Rs.2/- for each certificate) as the Directors shall prescribe. Provided that no fee shall be charged for Issue of new certificates in replacement of those which are old, defaced or worn out or where there is no further space on the back thereof for endorsement of transfer.
Provided that notwithstanding what is stated above, the Directors shall comply with such Rules or Regulation or requirements of any Stock Exchange or the Rules made under the Act or the rules made under Securities Contracts (Regulation) Act, 1956 or any other Act, or rules applicable in this behalf.
The provisions of this Article shall mutatis mutandis apply to debentures of the Company.
JOINT-HOLDERS OF SHARES
13. Where to or more persons are registered as the holders of any share they shall be deemed to hold the same as joint-tenants with benefit of survivorship subject to provisions following and to the other provisions of these articles relating to joint holders;
a) The Company shall not be bound to register more than three persons as the joint holder of any shares.
b) The joint holders of a share shall be liable severally as well as jointly in respect of all payments which out to be made in respect of such shares.
c) On the death of any one of such joint holders the survivor or survivors shall be the only person recognized by the Company as having any title to or interest in such share but the board may deem require such evidence of death as it may deem fit.
d) Only the person whose name stands first in the Register as one of the joint holders of any share shall be entitled to delivery of the certificate relating to such share.
CALLS
14. The Directors may from time to time, subject to the terms on which any shares may have been issued, make such calls as they think fit. Upon the member in respect of all moneys unpaid on the shares held by them respectively, and not by the conditions of allotment thereto made payable at fixed times, and each member shall pay the amount of every call so made on him to the persons and at the times and places appointment by the Directors. A call may be made payable by installments.
15. That the option or right to call of shares shall not be given to any person except with the sanction of the Company in general meeting.
16. Not less than 30 (Thirty) days notice of any call shall be given specifying the time and place of payment and to whom such call shall be paid.
17. If by the terms of issue of any share or otherwise, the whole or part of the amount of issue price thereof is made payable at any fixed time or by installments at fixed times, every such amount of issue price or installment thereof shall be payable as if it was a call duly made by the Directors and of which due notice had been given and all the provisions herein contained in respect of calls shall apply to such amount or issue price or installments accordingly.
289 18. If the sum payable in respect of any call or installment be not paid on or before the day appointed for the payment thereof, the holder for the time being of the share in respect of which the call shall have been made or installment shall be due, shall pay interest for the same at the rate of 12 (twelve) percent per annum, from the day appointed for the payment thereof to the actual payment or at such other rate as the Directors may determine but they shall have power to waive the payment thereof wholly or part.
19. On the trial or hearing of any action or suit brought by the Company against any member or representative to recover any debt or money claimed to be due to the Company in respect of his shares, it shall be sufficient to prove that the name of the defendant is, or was, when the claim arose, on the Register of the Company as a holder, or one of the holders of the number of shares in respect of which such claim is made, that the resolution making the call is duly recorded in the minute book and that the amount claimed is not entered as paid in the books of the Company, and it shall not be necessary to prove the appointment of the Directors who made any call nor that a quorum of directors was present at the meeting at which any call was made nor that such meeting was duly convened or constituted, nor any other matter whatsoever; but the proof of the matters aforesaid shall be conclusive evidence of the debt.
20. The Directors may, if they think fit, subject to the provisions of Section 92 of the Act, agree to and receive from any member willing to advance the same whole or any part of the moneys due upon the shares held by him beyond the sums actually called for, and upon the amount so paid or satisfied in advance, or so much thereof as from time to time exceeds the amount of the calls then made upon the shares in respect of which such advance has been made, the company may pay interest at such rate, as the member paying such sum in advance and the Directors agree upon provided that money paid in advance of calls shall not confer a right to participate in profits or dividend. The Directors may at any time repay the amount so advanced.
The members shall not be entitled to any voting rights in respect of the moneys so paid by him until the same would but for such payment, become presently payable.
The provisions of these Articles shall mutatis mutandis apply to the calls on debentures of the Company.
FORFEITURE AND LIEN
21 If any member fail to pay any call or installment on or before the day appointed for the payment of the same, the Directors may at any time thereafter, during such time as the call or installment remains unpaid, serve notice on such member requiring him to pay the same together with any interest that may have accrued and expenses, that may have been incurred by the company by reasons of such non- payment.
22. The notice shall name a day (not being less than 30(thirty) days from the date of the notice) and a place or places on and at which such call or installment and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of non-payment at or before the time, and at the place or places appointed, the shares in respect of which such call was made or installment is payable will be liable to be forfeited.
23. If the requirement of any such notice as aforesaid be not complied with, any shares in respect which such notice has been given may, at any time, thereafter before payment of all calls or installments, interest and expenses due in respect thereof, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited share not actually paid before the forfeited. Neither the receipt by the Company of a portion of any money which shall, from time to time, be due from any member of the Company in respect of his shares, either by way of principal or interest, nor any indulgency granted by the Company in respect of the payment of any such money shall preclude the Company from thereafter proceeding to enforce a forfeiture of such share as herein provided.
24. When any shares shall have been so forfeited, notice of the forfeiture shall be given to the member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture with the date
290 thereof, shall forthwith be made in the Register but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or to make such entry as aforesaid.
25. Any share so forfeited shall be deemed to be the property of the Company, and the Directors may sell, re-allot or otherwise dispose off the same in such manner as they think fit.
26. The Director may, at any time before any share so forfeited shall not be sold, re-allotted or otherwise disposed off, annual the forfeiture thereof upon such conditions as they think fit.
27. Any member whose shares have been forfeited shall notwithstanding such forfeiture, be liable to pay and shall forthwith pay to the Company all calls, installments, interest and the expenses, owing upon or in respect of such shares, at the time of installments, interest and the forfeiture together with interest thereupon, from the time of the forfeiture until payment at 12 (Twelve) percent per annum or such other rate as the Directors may determine and the Directors may enforce the payment thereof without any deduction or allowance for the value of shares at the time of forfeiture but shall not be under any obligation to do so.
28. The forfeiture of a share shall involve the extinction of all interest in and also of all claims and demands against in the Company in respect of the share and all other rights incidental to the share except only such of those rights as by these Articles are expressly saved.
29. A duly verified declaration in writing that the declarant is a Director of the Company and that certain shares in the Company have been duly forfeited on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the shares and the receipt of the Company for the consideration, if any, given for the shares on the sale or disposition thereof, shall constitute a written title to such shares.
30. The Company shall have a first and paramount lien upon all the shares / debentures (other than fully paid-up shares / debentures) registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale thereof for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares / debentures and no equitable interest in any share shall be created except upon the footing and condition that this Article will have full effect and such lien shall extend to all dividends and bonuses from time to time declared in respect of such shares / debentures. Unless otherwise agreed, the registration of a transfer of shares / debentures shall operate as a waiver of the Company’s lien if any, on such shares / debentures. The Directors may at any time declare any shares / debentures wholly or in part to be exempt from the provisions of this clause.
31. Upon any sale after forfeiture or for enforcing a lien in purported exercise of the powers by these presents given, the Directors may appoint some person to execute an instrument of transfer of the shares sold and cause the purchaser’s name to entered in the register in respect of the shares sold and after his name has been entered in the Register in respect of such shares his title to such shares shall not be affected by any irregularity or invalidity in the proceedings in reference to such forfeiture, sale or disposition, nor impeached by any person and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively
32. Where any shares under the powers in that behalf herein contained are sold by the Directors and the certificate thereof has not been delivered to the Company by the former holders of the said shares the Directors may issue new certificate in lieu of certificate not so delivered.
33. The instrument of transfer shall be in writing and all provisions of Section 108 of the Companies Act, 1956 and the statutory modification thereof for the time being shall be duly complied with in respect of all transfer of shares and registration thereof.
TRANSFER AND TRANSMISSION OF SHARES
34. Subject to the provisions of Act, no transfer of shares shall be registered unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor or transferee has been delivered to the Company together with the certificate or certificates of the shares, or if no such certificate is in existence along with the letter of allotment of shares. Further, a common form of transfer shall be used. The instrument of transfer of any shares shall be signed both by or on behalf of the transferor and by or
291 on behalf of transferees and the transferor shall be deemed to remain the holder of such shares until the name of the transferee is entered in the register in respect thereof.
35. Application for the registration of the transfer of a share may be made either by the transferor or the transferee provided that, where such application is made by the transferor, no registration shall in case of partly paid shares be effected unless the company gives notice of the application to the transferee in the manner prescribed by the Act, and subject to the provisions of Articles hereof, the company shall, unless objection is made by the transferee within two weeks from the date of receipt the notice enter in the register the name of the transferee in the same manner and subject to the same conditions as if the application for the registration was made by the transferee.
36. Before registering any transfer tendered for registration, the Company may, if it so thinks fit, give notice by letter posted in the ordinary course to the registered holder that such transfer deed has been lodged and that, unless objection is taken, the transfer will be registered and if such registered holder fails to lodge an objection in writing at the office of the Company within two weeks from the posting of such notice to him he shall be deemed to have admitted the validity of the said transfer.
37. The Company shall keep a “Register of Transfers” and therein shall be fairly and distinctly entered particular of every transfer of any share.
38. Subject to the provisions of Section 111A, these articles and other applicable provisions of the Act or any other law for the time being in force, the Board may refuse whether in pursuance of any power of the Company under these Articles or otherwise to register the transfer of, or the transmission by operation of law of the right to, any shares or interest of a Member in or debentures of the Company. The Company shall within one month from the date on which the instrument of transfer, or the intimation of such transmission, as the case maybe, was delivered to the Company, send notice of the refusal to the transferee and the transferor or the person giving intimation of such transmission, as the case may be, giving such refusal. Provided that the registration of a transfer shall not be refused on the ground of the transferor being either alone or jointly with any other person or persons indebted to the Company or any account whatsoever except where the company has a lien on the shares.
39. (1) No transfer shall be made to a minor or a person of unsound mind.
(2) No fee shall be charged for registration of transfer, probate, letter of administration, certificate of death or marriage, power of Attorney or similar other instruments.
40. All instruments of transfer duly approved shall be retained by the Company and in case of refusal, instruments of transfer shall be returned to the person who lodges the transfer deeds.
41. If the Directors refuse to register the transfer of any shares, the company shall, within one month from the date on which the instrument of transfer was lodged with the Company or intimation given send to the transferor and the transferee or the person giving intimation of such transfer, notice of such refusal.
42. On giving seven day’s notice by advertisement in a news paper circulating in the district in which the office of the company is situated, the Register of members may be closed during such time as the Directors think fir not exceeding in the whole forty five days in each year but not exceeding thirty days at a time.
43. The executors or administrator or the holder of a succession certificate in respect of shares of a deceased member (not being one of several joint holders) shall be the only person whom the company shall recognise as having any title to the shares registered in the name of such member and, in case of death of any one or more of the joint holders of any registered shares the survivors shall be only persons recognised by the Company as having any title to interest in such shares but nothing herein contained shall be taken to release the estate of a deceased joint holder from any liability on shares held by him jointly with any other person. Before recognizing any legal representative or heir or a person otherwise claiming title to the shares the Company may require him to obtained a grant of probate or letters of administration or succession certificate, or other legal representation, as the case may be from a competent Court, provided nevertheless that in any case where the Board in its absolute discretion think fit, it shall be lawful for the Board to dispense with production of probate or letters of administration or a succession certificate or such other legal representation upon such terms as to indemnity or otherwise as the Board may consider desirable.
292 44. Any person becoming entitled to or to transfer shares in consequences of the death or insolvency of any member, upon producing such evidence that he sustains the character in respect of which he proposes to act under this article, or of his title as the Director think sufficient, may with the consent of the Directors (which they shall not be under any obligation to give), be registered as a member in respect of such shares or may, subject to the regulations as to transfer here in before contained, transfer such shares. This Article is here in after referred to as “The Transmission Article”. Subject to any other provisions of these Articles if the person so becoming entitled to shares under this or the last preceding Article shall elect to be registered as a member in respect of the share himself he shall deliver or send to the Company a notice in writing signed by him stating that he so elects. If he shall elect to transfer to some other person he shall execute an instrument of transfer of shares. All the limitations, restrictions and provisions of these articles relating to the rights to transfer and the registration of transfers of shares shall be applicable to any such notice of transfer as aforesaid.
45. Subject to any other provisions of these Articles if the Directors in their sole discretion are satisfied in regard thereof, a person becoming entitled to share in consequences of the death or insolvency of a member may receive and give a discharge for any dividends or other money payable in respect of the share. 46. The instrument of transfer shall be in writing and all the provisions of Section 108 of the Companies Act, 1956 and of any statutory modification thereof for the time being shall be duly complied with in respect of all transfers of shares and the registration thereof. 46a (i) Every holder of shares or debentures or fixed deposits of the Company will have freedom to nominate at any time a person to whom his shares/ debentures/fixed deposits shall vest in the event of his/her death. (ii) Where the shares/debentures/fixed deposits are held by more than one person jointly, the joint holders may together nominate, in the prescribed manner, a person to whom all the rights in the shares or debentures or fixed deposits of the Company, as the case may be, shall vest in the event of death of all the joint holders. (iii) Notwithstanding, anything contained in any other law for the time being in force, in respect of such shares or debentures or fixed deposits of the Company, where a nomination made in the prescribed purports to confer on any person the right to vest in the shares or debentures or fixed deposits of the Company, the nominee shall on the death of the holder of securities mentioned above, or as the case may be, on the death of the joint holders, become entitled to all the rights in such shares or debentures or fixed deposits, or as the case may be, all the joint holders, in relation to such shares or debentures, to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner. (iv) Any person who becomes nominee as aforesaid and becomes entitled to shares/ debentures/ deposits on the death of the registered holder, such nominee upon the production of such evidence as may be required by the Board of Directors of the Company, elect either to be registered as holder of the shares or debenture or Deposits or to make such transfer of the shares or debentures as the deceased shareholder or debenture holder could have made. (v) The Board of Directors of the Company shall in either case have the same right to decline or to suspend registration, as it would have had if the deceased shareholder or debenture holder had transferred the shares or debentures before his death. (vi) Where nominee is a minor it shall be lawful for the holder of the share or holder of debentures/fixed deposits to make the nomination to appoint in the prescribed manner any person to become entitled to shares in or debentures or Deposits of the Company in the event of his death during the minority. 46b (i) Dematerialization of Securities Notwithstanding any thing contained in these Articles, the company shall be entitled to dematerialise its existing securities and to offer securities in a dematerialised form pursuant to the Depositories Act, 1996 and to offer its shares, debentures and other securities for issue in dematerialised form. The Company shall further be entitled to maintain a Register of Members with the details of members holding shares both in material and dematerialised form in any media as permitted by law including any form of electronic media.
293 (ii) Issue of Securities and Option for Investors Every person subscribing to securities offered by the Company shall have the option to receive security certificates or to hold the securities with a depository. Such a person who is the beneficial owner of the securities can at any time opt out of a depository, if permitted by law, in respect of any security in the manner provided by the Depositories Act, and the Company shall, in the manner and within the time prescribed, issue to the beneficial owner the required Certificate of Securities. If a person opts to hold the security with a depository, and on the receipt of the information, the depository shall enter in its record the name of the allottees as the beneficial owner of the security. (iii) Securities in Depository mode to be in Fungible Form All securities held by a depository shall be dematerialized and be in fungible form. Nothing contained in Sections 153, 153A, 153B, 187B, 187C and 372A of the Act shall apply to a depository in respect of the securities held by it on behalf of the beneficial owners. (iv) Rights of Depositories and Beneficial Owners (a) Notwithstanding anything to the contrary contained in the act or these articles a depository shall be deemed to be the registered owner of the purposes of effecting transfer of ownership of security on behalf of the beneficial owner. (b) Save as otherwise provided in (a) above the depository as the registered owner of the securities shall not have any voting rights or any other rights in respect of the security held by it. (c) Every person holding securities of the company and whose name is entered as the beneficial owner in the records of the depository shall be deemed to be a member of the company. The beneficial owner of securities shall be entitled to all the rights and benefits and be subject to all the liabilities in respect of his securities, which are held by a depository. (v) Service of Documents Notwithstanding anything in the Act or these Articles to the contrary, where securities are held in a depository, the records of the beneficial ownership may be served by such depository on the company by means of electronic mode or by delivery of floppies or discs. (vi) Transfer of Securities Nothing contained in Section 108 of the Act or these Articles shall apply to a transfer of securities affected by a transferor and transferee both of who are entered as beneficial owners in the records of a depository. (vii) Allotment of Securities dealt with a Depository Notwithstanding anything in the Act or these Articles, where a depository deals with securities, the company shall intimate the details thereof to the depository immediately on allotment of such securities. (viii) Distinctive numbers of Securities held in a Depositor Nothing contained in the Act or these Articles regarding the necessity of having distinctive numbers for securities issued by the Company shall apply to securities held with a depository. (ix) Register and Index of Beneficial Owners The register and index of Beneficial Owners maintained by a Depository under the Depositories Act shall be deemed to be a Register and Index of members and other security holders. SHARES WARRANTS
47. Subject to the provisions of Sections 114 and 115 of the Act and subject to any directions which may be given by the Company in General Meeting, the Board may issue share-warrants in such manner and on such terms and conditions as the Board may deem fit. In case of such issue Regulations 40 to 43 of Table “A” in Schedule I of the Act, shall apply.
294 STOCKS
48. The Company may exercise the power of conversion of its shares into stock and in the case regulations 37 to 39 of Table “A” in Schedule I to the Act shall apply.
ALTERATION OF CAPITAL
49. The Company may, by ordinary resolution from time to time, after the condition of Memorandum of Association as follow: -
a) Increase in the Share Capital by such amount to be divided in to shares of such amount as may be specified in the resolution.
b) Consolidate and divide all or any of its share capital into shares or larger amount than its existing shares.
c) Sub divide its existing shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association, so however, that in the subdivision the proportion between the amount paid and the amount, if any unpaid on each reduced shares shall be the name as it was in the share from which the reduced share is derived, and
d) Cancel any shares, which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.
50. Subject to the provisions of Sections 100 to 104 of the Act, the Board may accept from any member the surrender of all or any of his shares on such terms and conditions as shall be agreed.
MODIFICATION OF RIGHT
51. If at any time the share capital is divided into different classes of shares the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be carried with consent in writing of the holders of three-fourths of the issued shares of that class, or with the sanction of a Special Resolution passed at a Separate Meeting of the holders of the shares of that class. To every such separate meeting the provision of these Articles, relating to general meeting shall apply, but so that the necessary quorum shall be two persons at least holding or representing by proxy one-tenth of the issued shares of the class but so that if at any adjourned meeting of such holders a quorum as above defined is not present, those members who are present shall be a quorum and that any holder of shares of the class present in person or by proxy may demand a poll, and on a poll shall have one vote for each shares of the class of which he is the holder. The company shall comply with the provisions of Section 192 of the Act as to forwarding a copy of any such agreement or resolution to the Registrar of Companies.
BORROWING POWERS
52. The Board may from time to time and at its discretion, subject to the provisions of Section 58A, 292 and 293 of the Act, and Regulations made there under and Directions issued by RBI raise or borrow, either from the Directors or from elsewhere and secure the payment of any sums or sum of money for the purpose of the Company.
53. Any debentures, debenture-stock or other securities may be issued at a discount, premium or otherwise and may be issued on condition that they shall be convertible into shares of any denomination and with any privileges and conditions as to redemption, surrender, drawing, allotment of shares, attending (but not voting) at the General Meeting, appointment of Directors and otherwise. Debentures with the right to conversion into or allotment of shares shall be issued only with the consent of the Company in the General Meeting by a Special Resolution. Any debentures-debenture stock bonds or other securities may be issued at a discount, premium or otherwise and with any special privileges, as to redemption, surrender, drawings, allotment of shares, appointment of Directors and otherwise. Debentures, debenture-stock, bonds and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued.
54. If the Board refuses to register the transfer of any debentures, the Company shall, within two months from the date on which the instrument of transfer was lodged with the Company, send to the transferee and to the transferor notice of the refusal.
295 RESERVES
55. Subject to the provision of the Act, the board shall in accordance with Section 205 (2A) of the act, before recommending any dividend, set aside out of the profits of the company such sums as it thinks proper as reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company may be properly applied and pending such application may at its discretion, either be employed in the business of the Company or be invested in such investments (other than shares of the Company as the Board may from time to time think fit). The Board may also carry forward any profit which it may think prudent not to divide without setting them aside as a reserve.
56. Any General Meeting may resolve that the whole or any part of the undivided profits of the Company (which expression shall include any premiums received on the issue of shares and any profits or other sums which have been set aside as a reserve or reserves or have been carried forward without being divided) be capitalised and distributed amongst such of the members as would be entitled to receive the same if distributed by way of dividend and in the same proportions on the footing that they become entitled thereto as capital and that all or any part of such capitalised amount be applied on behalf of such members in paying up in full any unissued shares of the Company which shall be distributed accordingly or in or towards payment of the uncalled liability on any issued shares, and that such distribution or payment shall be accepted by such member in full satisfaction of their interest in the said capitalised amount. Provided that any sum standing to the credit of a Share Premium Account or a Capital Redemption Reserve Account may, for the purposes of this Article only be applied in paying up of unissued shares to be issued to members of the company as fully-paid bonus shares.
57. For the purpose of giving effect to any resolution under last two preceding Articles, the Directors may settle any difficulty which may arise in regard to the distribution as they think expedient and in particular may issue fractional certificate.
GENERAL MEETING
58. The Directors may, whenever they think fit, call an Extra Ordinary General Meeting provided however it at any time there are not in India, Directors capable of acting who are sufficient in number to form a quorum any Director present in India may call an Extra ordinary General Meeting in the same manner as nearly as possible as that in which such a meeting may be called by the Board.
59. The Board of Directors of the Company shall on the requisition of such member or member of the company as is specified in subsection (4) of Section 169 of the Act forthwith proceed to call an Extra ordinary General Meeting of the Company and in respect of any such requisition and of any meeting to be called pursuant thereto, all the provisions of section 169 of the Act and of any statutory modification thereof for the time being shall apply.
60. The quorum for a general meeting shall be five members present in person.
61. At every General Meeting, the Chair shall be taken by the Chairman of the Board of Directors. If at any meeting, the Chairman of the Board of Directors be not present within fifteen minutes after the time appointed for holding the meeting or, though present be unwilling to act as chairman, the members present shall choose one of the Directors present to be Chairman or if no Director shall be present or though present shall be unwilling to take the Chair then members present shall choose one of their members, being a member entitled to vote, to be Chairman.
62. Any act or resolution which, under the provisions of this Article or of the Act, is permitted shall be sufficiently so done or passed if effected by an ordinary resolution unless either the Act or the articles specifically require such act to be done or resolution passed by a special resolution.
63. If within hall an hour from the time appointed for the meeting a quorum be not present, the meeting, if convened upon a requisition of share holders shall be dissolved but in any other case it shall stand adjourned to the same day in the next week at same time and place, unless the same shall be public holiday when the meeting shall stand adjourned to the next day not being a public holiday at the same time and place and if at such adjourned meeting a quorum be not present within half an hour from the time appointed for the meeting, those members who are present and not being less than two persons shall be a quorum and may transact the business for which the meeting was called.
64. In the case of an equality of votes the Chairman shall both on a show of hand and a poll have a casting vote in addition to the vote or votes to which he may be entitled as a member.
296 65. The Chairman of a General Meeting may adjourn the same, from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place, It shall not be necessary to give notice to the members of such adjournment or of the time, date and place appointed for the holding of the adjourned meeting.
66. If a poll be demanded, the demand of a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which a poll has been demanded
VOTES OF MEMBERS
67 (1) On a show of hands every member present in person and being a holder of Equity shares shall have one vote and every person present either as a proxy on behalf of a holder of Equity Shares or as a duly authorized representative of a body corporate being a holder of Equity Shares, if he is not entitled to vote in his own right, shall have one vote.
(2) On a poll the voting rights of a holder of Equity Shares shall be as specified in Section 87 of the Act.
(3) The voting rights of the holders of the Preference Shares including the Redeemable Cumulative Preference Shares shall be in accordance with the provisions of section 87 of the Act.
(4) No company or body corporate shall vote by proxy so long as a resolution of its Board of Directors under Section 187 of the Act is in force and the representative named in such resolution is present at the General Meeting at which the vote by proxy is tendered. 68. A person becoming entitled to a share shall not before being registered as member in respect of the share be entitled to exercise in respect thereof any right conferred by membership in relation to the meeting of the Company. If any member be a lunatic or idiot, he may vote whether on a show of hands or at a poll by his committee or other legal curator and such last mentioned persons may given their votes by proxy provided twenty four hours at least before the time of holding the meeting or adjourned meeting, as the case may be, at which any such person proposes to vote he shall satisfy the Board of his rights under this Article unless the Board shall have previously admitted his right to vote at such meeting in respect thereof. 69. Where there are joint holders of any share any one of such persons may vote at any meeting either personally or by proxy in respect of such shares as if he were solely entitled thereto and if more than one of such joint-holders be present at any meeting either personally or by proxy then that one of the said persons so present whose name stands prior in order on the register in respect o such share shall alone be entitled to vote in respect thereof. Several executor or administrators of deceased member in whose name any share stands shall for the purpose of this Article be deemed joint-holders thereof. 70. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his Attorney duly authorised in writing or if such appointer is a corporation under its common seal or the hands of its Attorney. 71. The instrument appointing a proxy and the Power-of-Attorney or other authority (if any) under which it is signed or a notarially certified copy of that power of authority shall be deposited at the office not less than forty-eight hours before the time for holding the meeting at which the person named in the instrument proposes to vote and in default, the instrument of proxy shall not be treated at valid. 72. A vote given in accordance with the terms of an instrument appointing a proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the instrument of transfer of the share in respect of which the vote is given. Provided no intimation in writing of the death, insanity, revocation or transfer of the share shall have been received at the office or by the Chairman of the Meeting before the vote is given. Provided nevertheless that the Chairman of any meeting shall be entitled to require such evidence as he may in his discretion think fit of the due execution of an instrument of proxy and that the same has not bee revoked. 73. Every instrument appointing a proxy shall as nearly as circumstances will admit be in the form set out in Schedule IX to the Act.
297 74. No objection shall be taken to the validity of any vote except at the meeting or poll at which such vote shall be tendered and every vote not disallowed at such meeting or poll and whether given personally or by proxy or otherwise shall be deemed valid for all purposes. 75. Before or on the declaration of the result of the voting on any resolution on a show of hand, a poll may be ordered to be taken by the Chairman of the Meeting on his own motion and shall be ordered to be taken by him on a demand made in that behalf by any member or members present in person or by proxy and fulfilling the requirements as laid down in Section 179 of the Act, for the time being in force. 76. No member shall be entitled to exercise any voting rights either personally or by proxy at any meeting of the Company in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or in regard to which the Company has and exercised any right or lien. DIRECTORS GENERAL PROVISIONS 77. The number of Directors shall not be less than three and not more than twelve. 78. The following shall be the First Directors of the Company: 1. Mr. Suresh Kumar Prithani 2. Mrs. Sobhna Prithani 3. Mr. Sanjeev Prithani 79. The Directors shall have power, at any time and from time to time, to appoint any person as Director as an addition to the Board but so that the total number of Directors shall not at any time exceed the maximum number fixed by the Articles. Any director so appointed shall hold office only until the next Annual General Meeting of the Company and shall be eligible for re-election 80. A Director shall not required to hold any share qualification. 81. Subject to provisions of the Act, the Directors shall be entitled to receive in each year a Commission @ 1% (one percent) of the net profits of the Company to be computed in accordance with the provisions of the Act, and such commission shall be divided among the Directors in such proportion and manner as may be determined by them. The Directors may allow and pay to any Directors may allow and pay to any Director who for the time being is resident out of the place at which any Meeting of the Directors may be held and who shall come to that place for the purpose of attending such meeting such sum as the Directors may consider fair and reasonable for his expenses in connection with his attending the meeting in addition to his remuneration as above specified. If any Director being willing is appointed to an executive office either whole time or part time or be called upon to perform extra services or to make any special exertions for any of the purposes of the Company then, subject to Sections 198, 309, 310 and 314 of the Act, the Board may remunerate such Director either by a fixed sum or by a percentage of profits or otherwise and such remuneration may be either in addition to or in substitution for any other remuneration to which he may be entitled to. 81A. The sitting fees payable to a Director for attending a meeting of the Board or a Committee of the Board or a general meeting shall be regulated as per the provisions of Section 310 of the Schedule XIII thereof. 82. The continuing Directors may act notwithstanding any vacancy in their body but so that if the number falls below the minimum number above fixed, the Directors shall not except for the purpose of filling vacancies or of summoning a General Meeting act so long as the number is below the minimum. 83. Subject to the provisions of Section 297, 299, 309 and 314 of the Act, the Directors (including Managing Director) shall not be disqualified by reasons of his their office as such, from holding office under the Company or from contracting with the Company either as vendor, purchaser, tender, agent, broker, lessor or otherwise nor shall any such contract or any contract or arrangement entered into by or on behalf of the Company with a relative of such Directors or the Managing Director or with any firm in which any Director or a relative shall be a partner or with any other partner or with a private company in which such Director is a member or director interested be avoided nor shall any Director or otherwise so contracting or being such members or so interested be liable to account to the company
298 for any profit realised by such contract or arrangement by reason only of such Director holding that office or of the fiduciary relation thereby established. APPOINTMENT OF DIRECTORS 84. The Company in General Meeting may, subject to the provision of these Articles and the Act, at any time elect any person to b e Director and may, from time to time increase or reduce the number of directors. 84A. Any member of the company shall be competent to propose the name of any person who is otherwise not disqualified as being a director of a company, for the office of director in the company and shall accordingly give a notice of at least 14 days in writing along with a deposit of Rs.500/- (Rupees Five Hundred) or such sum as may for the time being be prescribed by the Act, which shall be refunded only after the person proposed to be appointed as director is elected. 85. If any Director appointed by the Company in general meeting vacates office as a Director before his term of office will expire in the normal course, the resulting casual vacancy may be filled up by the Board at a meeting of the Board, but any person so appointed shall retain his office so long as the vacating Director would have retained the same if no vacancy had occurred. Provided that the Board may not fill such a vacancy by appointing thereto any person who has been removed from the office of the Director under Section 284 of the Act. 86. The Company shall, subject to the provisions of the Act, be entitled to agree with any person, firm or corporation that he or it shall have the right to appoint his or its nominee on the Board of Directors of the Company upon such terms and conditions as the Company may deem fit. The Corporation, firm or person shall be entitled, from time to time, to remove any such Director or Directors and appoint another or others in his or their places. He shall be entitled to the same rights and privileges and be subject to the same obligation as any other Director of the company. 87. (a) Notwithstanding anything the contrary contained in these Articles, so long as any moneys remain owing by the Company to the Industrial Development Bank of India (IDBI), Industrial Finance Corporation of India (IFCI), The Industrial Credit and investment Corporation of India Limited (ICICI), Life Insurance Corporation on India (LID), General Insurance Corporation of India (GIC), Unit Trust of India (UTI) and other Financial Institutions of Central or State Governments or to any other Corporation or Institution or to any other Financing Company or other Body out of any loans granted by them to the Company or so long as ISBI, ICICI, LIC, GIL, UTI, or any other Financing Company or Body (each of which IDBI, IFCI, ICICI, and LIC, GIC, UTI or other Finance Corporation or Credit Corporation or any other financing Company or body is hereinafter in these Articles referred to as “the Corporation”) continue to hold shares in the company as a result of underwriting or direct subscription, the Corporation shall have a right to appoint from time to time any person or persons as a director or directors whole time or non-whole time, (which director or directors is/are hereinafter referred to as nominee director/s”) on the board of the Company and to remove form such office any person or persons so appointed and to appoint any person or persons in his or their place/s. (b) The Board of directors of the company shall have no power to remove from office the nominee director/s. At the option of the Corporation, such nominee director/s shall not be liable to retirement by rotation of directors. Subject as aforesaid, the nominee director/s shall be entitled to the same rights and privileges and be subject to the same obligations as any other director of the Company. (c) The nominee director/s so appointed shall hold the said office only so long as any moneys remain owing by the company to the Corporation or as a result of underwriting or direct subscription and the nominee director/s so appointed in exercise of the said power shall ipso-facto vacate such office immediately after the moneys owing by the company tot he Corporation are paid off or the Corporation ceasing to hold shares in the Company. (d) The nominee director/s appointed under this Article shall be entitled to receive all notices of and attend all general meetings, board meetings and of the meetings of the committee of which the nominee director/s is/are member/s and also the minutes of such meetings. The Corporation shall also be entitled to receive all such notices and minutes.
299 (e) The Company shall pay to the nominee director/s sitting fees an expenses which the other directors of the Company are entitled to, but if any other fees, commission, moneys or remuneration in any form is payable to the Directors of the company, the fees, commission, moneys and remuneration in relation of the company, the fees, commission, moneys and remuneration in relation to such nominee director/s shall accrue to the Corporation and the same shall accordingly be paid by company directly to the Corporation. Any expenses that may be incurred by the Corporation or such nominee director/s in connection with their appointment or directorship shall also be paid or reimbursed by the company to the Corporation or as the case may be to such nominee director/s. Provided that if any such nominees director/s is an officer of the Corporation the sitting fees, in relation to such nominee director/s shall also accrue to Corporation and the same shall accordingly be paid by the company directly to the Corporation. Provided also that in the event of the nominee director/s being appointed as wholetime director/s such nominee directors shall exercise such powers and duties as may be approved by the Corporation and have such rights as are usually exercised or available to a wholetime director, in the management of the affairs of the Company. Such nominee director/s shall be entitled to receive such remuneration, fees, commission and money as may be approved by the Corporation.
88. Subject to the provisions of section 313 of the Act, the Board may appoint any person to act as an alternate director for a director during the letter’s absence for a period of not less than three months from the State in which meetings of the Board are ordinarily held and such appointment shall have effect and such appointee, whilst he holds office as an alternate director; shall be entitled to notice of meetings of the Board and to attend and vote thereat accordingly, but he shall ipso facto vacate office if and/when the absent director returns to State in which meetings of the Board are ordinarily held or the absent Director vacates office as Director.
ROTATION OF DIRECTORS
89. (1) Not less than two-thirds of the total number of Directors shall be persons whose period of office is liable to determination by retirement of Directors by rotation.
(2) At each Annual General Meeting of the Company, One-third of such of the Director for the time being as are liable to retire by rotation or if their number is not three or a multiple of three, then the number nearest to one-third shall retire from office.
(3) The Directors to retire by rotation at every Annual General Meeting shall be those who have been longest in office since their last appointment, but as between persons who became Directors on the same day, those to retire shall, in default of and subject to any agreement among themselves be determined by lot.
(4) If at an Annual General Meeting all the Directors appointed under Article 87 and 109 hereby are not exempt from retirement by rotation under Section 255 of the Act, then to the extent permitted by the said Section, the exemption shall extend to the Directors or Directors or Director appointed under Article 87. Subject to the foregoing provisions as between Director or Directors who shall not be liable to retire by rotation shall be determined by and in accordance with their respective seniorities as may be determined by the Board.
90. A retiring Director shall be eligible for re-election and shall act as a Director throughout the meeting at which he retires.
91. Subject to any resolution for reducing the number of Director, if at any meeting at which an election of Directors ought to take place, the places of the retiring Directors are not filled up, the meeting shall stand adjourned till the next succeeding day which is not a public holiday at the same time and place and if at the adjourned meeting, the places of the retiring Directors are not filled up, the retiring Directors or such of them as have not had their places filled up shall (if willing to continue in office) be deemed to have been re-elected at the adjourned meeting.
PROCEEDINGS OF DIRECTORS
92. The Directors may meet, together for the despatch of business, adjourn and otherwise regulate their meetings and proceedings as they think fit. Notice in writing of every meeting of the Directors shall ordinarily be given by a Director or such other officer of the company duly authorised in this behalf to every Director for the time being in India, and at his usual address in India to every other Director.
300 93. The quorum for a meeting of the Directors shall be determined, from time to time, in accordance with the provisions of section 287 of the Act. If a quorum shall not be present within fifteen minutes from the time appointed for holding a meeting of the Directors, if shall be adjourned until such date and time as the Directors present shall appoint.
94. The Secretary may at any time, and upon request of any two Directors shall, summon a meeting of the Directors.
95. Subject to the provisions of Sections 316, 372(5) and 386 of the Act, question arising at any meeting shall be decided by a majority of votes, each director having one vote and in case of any equality of votes, the Chairman shall have a second or casting vote.
96. The Chairman of the Board of Directors shall be the Chairman of the meetings of Directors. Provided that if the Chairman of the Board of Directors is not present within five minutes after the appointed time for holding the same, the Directors present shall choose one of their members to be Chairman of such meeting.
97. A meeting of Directors for the time being at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions by or under the Articles of the Company and the act for the time being vested in or exercisable by the Directors generally.
98. The Directors may, subject to compliance of the provisions of the Act, from time to time, delegate any of their powers to committee(s) consisting of such member or members of their body as they think fit, and may, from time to time, revoke such delegation. Any Committee so formed shall in the exercise of the powers so delegated conform to any regulations that may, from time to time be imposed on it by the Directors. The meeting and proceedings of any such Committee, if consisting of two or more members, shall be governed by the provisions herein contained for regulating the meetings and proceedings of the Directors so far as the same are applicable thereto and are not superseded by any regulation made by the Directors under this Articles.
99. All acts done at any meeting of Directors or of a Committee of the Directors or by any person acting as a Director shall be valid notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such Directors, Committee or person acting as aforesaid or that they or any of them were disqualified.
100. Except a resolution, which the Act, requires it specifically to be passed in a board meeting, a resolution may be passed by the Directors or Committee thereof by circulation in accordance with the provision of Section 289 of the Act.
Minutes of nay meeting of Directors or of nay Committee or of the Company if purporting to be signed by the Chairman of such meeting or by the Chairman of next succeeding meeting shall be receivable as prima facie evidence of the matters in such minutes. POWERS OF DIRECTORS 101. Subject to the provisions of the Act, the control of the Company shall be vested in the Directors who shall be entitled to exercise all such powers and to do all such acts and things as may be exercised or done by the Company and are not hereby or by law expressly required or directed to be exercised or done by the Company in General Meeting but subject nevertheless to the provisions of any law and of these presents, from time to time, made by the Company in General Meeting, provided that no regulation so made shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made. 102. Without prejudice to the general powers conferred by the preceding article the Directors may, from time to time, subject to the restrictions contained in the Act, delegate to managers, secretaries, officers, assistants and other employees or other persons (including any firm or body corporate) any of the powers authorised and discretions for the time being vested in the Directors. 103. The Directors may authorise any such delegate or attorney as aforesaid to sub delegate all or any of the powers, authorities and discretion for the time being vested in them.
301 104. All deeds, agreements and documents and all cheques, promissory notes, draft, hundies, bills of exchange and other negotiable instruments, and all receipts for moneys paid to the Company, shall be signed, drawn, accepted or endorsed or otherwise executed, as the case may be by such persons (including any firm or body corporate) whether in the employment of the Company or not and in such manner as the Directors shall, from time to time, by resolution determine. 105. The Directors may make such arrangements as may be thought fit for the management of the Company’s affairs abroad, and may for this purpose (without prejudice to the generality of their powers) appoint local bodies and agents and fix their remuneration and delegate to them such powers as may be deemed requisite or expedient. The foreign seal shall be affixed by the authority and in the presence of and instruments sealed therein shall be signed by such persons as the Directors shall, from time to time by writing under the common seal, appoint. The company may also exercise the powers of keeping Foreign Registers. Such regulations not being in consistent with the provisions of Sections 157 and 158 of the Act, the Board may, from time to time, make such provisions as it may think fit relating thereto and may comply with the requirement of any local law. 106. A Manager or secretary may be appointed by the Directors on such terms, at such remuneration and upon such conditions as they may think fit, and any Manager or Secretary appointed may be removed by the Directors. A Director may be appointed as Manager or Secretary, subject to Sections 314, 197A, 383A, 387, and 388 of the Act. 107. A provision of the Act or these regulations requiring or authorising a thing to be done by a director, manager or secretary shall not be satisfied by its being done by the same person same person acting both as director and as, or in place of the manager or secretary. MANAGING /WHOLE-TIME DIRECTORS 108. Subject to the provisions of Sections 197A, 269, 316 and 317 Schedule XIII of the Act, the board may, from time to time, appoint one or more Directors to be Managing Director or Managing Directors of Company and may, from time to time, (subject to the provisions of any contract between him or them and the Company), remove or dismiss him or them from office and appoint another or others in his place or their places. 109. Subject to the provisions of Section 255 of the Act and Article 90(4) change hereof, a Managing Director shall not, while he continues to hold that office, be subject to retirement by rotation, but he shall be counted for as certaining the number of Directors to retire (Subject to the provisions of any contract between him and the Company) he shall be subject to the same provisions as to resignation and removal as the other Directors, and he shall, ipso facto and immediately, cease to be a Managing Director if he ceases to hold the office of Director for any cause.
110. Subject to the provisions of Sections 198, 309, 310, 311 and Schedule XIII of the Act, a Managing Director shall, in addition to the remuneration payable to him as a Director of the Company under the Articles, receive such additional remunerations as may, from time to time, be sanctioned by the Company.
111. Subject to the provisions of the Act, in particular to the prohibitions and restrictions contained in Sections 292 and 293 thereof, the Board may, from time to time, entrust to and confer upon a Managing Director for the time being such of the powers exercisable under these presents by the board as it may think fit, and may confer such powers for such time, and to be exercised for such objects and purposes and upon such terms and conditions and with such restrictions as it think fit and the Board may confer such powers either collaterally with, or to the exclusion of, and in substitution for any of the powers of the Board in that behalf and may, from time to time, revoke, withdraw, alter or vary all or any of such powers.
COMMENCEMENT OF BUSINESS
112. The Company shall not at any time commence any business out of other objects of its Memorandum of Association unless the provisions of Section 149 of the Act have been duly complied with by it.
SEAL
113. The Directors shall provide for the safe custody of the Seal and the Seal shall never be used except by the authority of the Directors or a Committee of the Directors previously given and one Director at least
302 shall sign every instrument to which the seal is affixed provided nevertheless that any instrument bearing the Seal of the Company and issued for valuable consideration shall be binding on the Company notwithstanding any irregularity touching the authority of the Directors to issue the same.
DIVIDENDS
114. Subject to Rights of members entitled to shares (if any) with preferential or special rights attached to them, the profits of the Company, from time to time determined to be distributed as dividend in respect of any year or other period shall be applied for payment of dividend on the shares in proportion to the amount of capital paid up on the Shares provided that unless the Board otherwise determines all dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid up on the shares during any portion or portions of the period in respect of which dividend is paid. Provided always that subject as aforesaid any capital paid up on a share during the period in respect of which a dividend is declared shall (unless the Board otherwise determines or the terms of issue otherwise provide, as the case may be), only entitle the holder of such share to an apportioned amount of such dividend as from the date of payment but so that where capital is paid up in advance of calls such capital shall not confer a right to participate in profits.
115. The Company in General Meeting may declare a dividend to be paid to the members according to their rights and interest in the profits and may, subject to the provisions of Section 205 of the act, fix the time for payment.
116. No larger dividend shall be declared than is recommended by the Directors, but the Company in General Meeting may declare a smaller dividend. 117. No dividend shall be payable except out of the profit of the company of the year or any other undistributed profits and no dividend shall carry interest as against the Company. 118. The declaration of the Directors as to the amount of the net profits in the audited annual accounts of the Company for any year shall be conclusive. 119. The Directors may, from time to time, pay to the members such interim dividends as in their judgement the position of the Company justifies. 120. The Directors may retain any dividends on which the Company has a lien and may apply the same in or towards satisfaction of the debts, liabilities or engagements in respect of which the lien exists, subject to Section 205A of the Act. 121. A transfer of shares shall not pass the rights to any dividend declared thereon before the registration of the transfer. 122. Subject to Section 205A of the Act, the Directors may retain the dividends payable upon shares in respect of which any person is under the transmission Article entitled to become a member or which any person under the Article is entitled to transfer until such person shall duly become a member in respect thereof or shall transfer the same. 123. Any one of the several persons who are registered as joint holders of any share may give effectual receipts of all dividend payments on account of dividends in respect of such shares. 124. Unless otherwise directed, any dividend may be paid by cheque or warrant sent through post to the registered address of the member or person entitled thereto or in the case of joint-holders to the registered address of the one whose name stands first on the Register in respect of the joint holding to such person and such address and the member or person entitled or such joint – holders as the case may be may direct and every cheque or warrant so sent shall be made payable at par to the person or to the order of the person to whom it is sent or to the order of such other person as the member or person entitled or such joint-holders, as the case may be may direct. 125. The payment of every cheque or warrant sent under provisions of the last preceding Article shall, if such cheque or warrant purports to be duly endorsed, be a good discharge to the Company in respect thereof, provided nevertheless that the Company shall not be responsible for the loss of any cheque, warrant or postal money order which shall be sent by post to any member or by his order to any other person in respect of any dividend.
303 125A. Where the Company has declared a dividend but which has not been paid or claimed within 30 days from the date of declaration, transfer the total amount of dividend which remains unpaid or unclaimed within the said period of 30 days, to a special account to be opened by the company in that behalf in any scheduled bank to be called “_____Unpaid Dividend Account”. Any money transferred to the unpaid dividend account of a company which remains unpaid or unclaimed for a period of seven years from the date of such transfer, shall be transferred by the Company to the Fund known as Investor Education and protection Fund established under section 205C of the Act. No unclaimed and unpaid dividend shall be forfeited by the Board. 125B. No unclaimed dividend shall be forfeited by the Board and the Company shall comply with the provisions of Section 205A of the Companies Act, 1956 and rules made there under in respect of such dividend. BOOKS AND DOCUMENTS
126. The Books of Account shall be kept at the registered office or at such other place as the Directors think fit, and shall be open to inspection by the Directors during business hours.
127. The Directors shall, form time to time, determine whether and to what extent and at what times and places and under what conditions or regulations the accounts or books or documents of the Company or any them shall be open for inspection to members not being Directors, and no member (not being a Director) shall have any right of inspection to any books of account or documents of the Company except as conferred by law or authorised by the Directors or by the Company in General Meeting.
128. Balance Sheet and Profit and Loss Account will be audited once in a year by a qualified auditor for correctness as per provisions of the Act.
129. The first auditors of the company shall be appointed by the Board of Directors within one month after its incorporation who shall hold office till the conclusion of first annual general meeting.
130. The Directors may fill up any casual vacancy in the office of the auditors.
131. The remuneration of the auditors shall be fixed by the company in the annual general meeting except as otherwise decided or that remuneration of the first or any auditors appointed by the directors may be fixed by the directors.
NOTICES
132. The Company shall comply with the provisions of Sections 53, 172 and 190 of the Act as to the serving of notices.
133. Every person who, by operation of law, or by transfer or by other means whatsoever, shall become entitled to any shares shall be bound by every notice in respect of such share which previously to his name and address being entered on the register shall be duly given to the person from whom he derives his title to such share.
134. Any notice or document delivered or sent by post to or left at the registered address of any member in pursuance of these presents shall notwithstanding such member be then deceased and whether or not the Company has notice of his demise, be deemed to have been duly served in respect of any registered shares whether held solely or jointly with other persons by such member, until some other person be registered in his stead as the holder or joint-holders thereof and such service shall for all purposes of these presents be deemed a sufficient service of such notice or document on his or her heirs, executors or administrators, and all persons, if any, jointly interested with him or her in any such share,
135. The signature to any notice to be given by the Company may be written or printed.
RECONSTRUCTION
136. On any sale of the undertaking of the Company, the Directors or the Liquidators on a winding up may if authorised by special resolution, accept fully paid or partly paid-up shares; debentures or securities of any other Company whether incorporated in India or not than existing to be formed for the
304 purchase in whole or in part of the property of the company, and the Director (if the profit of the company permit), or the Liquidators (in a winding-up) may distribute such shares or securities or any other property of Company amongst the members without realisation, or vest the same in trustees for them, and any Special resolution may provide for the distribution or appropriation of the cash, shares or other securities, benefits or property, otherwise than in accordance with the strict legal rights of the members or contributories of the Company and for the valuation of any such securities or property at such price and in such manner as the meeting may approve and all holders of shares shall be bound to accept and shall be bound by any valuation or distribution so authorised, and waive all rights in relation thereto, save only in case the Company is proposed to be or is in the course of being wound up, such statutory rights, if any, under Section 494 of the Act as are incapable of being varied or excluded by these presents.
305 SECTION IX: OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts (not being contracts entered into in the ordinary course of business carried on by our Company or entered into more than two years before the date of this Draft Red Herring Prospectus) which are or may be deemed material have been entered or to be entered into by our Company. These contracts, copies of which have been attached to the copy of this Draft Red Herring Prospectus, delivered to the Registrar of Companies for registration and also the documents for inspection referred to hereunder, may be inspected at the registered and corporate office of our Company situated at Brahamputra House, A-7, Main Mahipalpur Road, New Delhi-110037, India, from 10.00 am to 4.00 pm on working days from the date of this Draft Red Herring Prospectus until the Bid/ Issue Closing Date.
Material Contracts for Inspection
1. Memorandum of Understanding dated March 5, 2007 with A. K. Capital Services Limited and Punjab National Bank.
2. Memorandum of Understanding dated April 5, 2006 with Registrar to the Issue.
3. Letters of appointment dated January 27, 2007 and February 3, 2007 to A.K. Capital Services Limited and Punjab National Bank respectively from our Company appointing them as BRLMs.
4. Contract of Indemnity dated April 16, 2007 with Centurion bank of Punjab Limited, Monitoring Agency to the Issue.
5. Letter of appointment dated March 1, 2007 to ICRA from our Company appointing them as Credit Rating Agency for carrying the IPO grading of the Issue.
6. Letter of appointment dated March 16, 2007 to Vaish & Associates from our Company appointing them as Legal Advisors to the Issue.
7. Escrow Agreement dated [●] between us, the BRLMs, Escrow Collection Bank(s) and the Registrar to the Issue.
8. Syndicate Agreement dated [●] between us, the BRLMs and the Syndicate Members.
9. Underwriting Agreement dated [●] between us, the BRLMs and the Syndicate Members.
10. Tripartite Agreement dated [●] between us, Registrar to the Issue and NSDL.
11. Tripartite Agreement dated [●] between us, Registrar to the Issue and CDSL.
Material Documents for Inspection
1. Our Memorandum and Articles of Association as amended from till date.
2. Our certificate of incorporation dated September 2, 1998
3. Land Development Agreement dated May 18, 2005
4. Resolution of our Board dated January 2, 2007 and our shareholders dated January 27, 2007 authorizing the Issue.
5. Resolutions passed by our Board dated May 1, 2007, [●] and [●] respectively approving the Draft Red Herring Prospectus, the Red Herring Prospectus and the Prospectus.
6. Resolution of our shareholders dated January 12, 2004, for appointment and remuneration to our Managing and whole-time Directors.
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7. Resolution of our shareholders dated April 28, 2006 for increase in remuneration of our Managing and whole-time Directors.
8. Reports of the Auditors dated April 25, 2007 prepared as per Indian GAAP and mentioned in this Draft Red Herring Prospectus.
9. Consent of the Auditors dated April 25, 2007 for inclusion of their report on accounts in the form and context in which they appear in this Draft Red Herring Prospectus.
10. Statement of Tax Benefits dated April 25, 2007 from the auditors.
11. Copies of annual reports of our Company for the years ended March 31, 2002, 2003, 2004, 2005, 2006 and audited financial statements for the nine months ended December 31, 2006.
12. General Power of Attorney executed by the Directors of our Company in favour of person(s) for signing and making necessary changes to this Draft Red Herring Prospectus and other related documents.
13. Consents of Bankers to the Company, BRLMs, Syndicate Members, Registrar to the Issue, Banker to the Issue, Legal Advisors to the Issue, Monitoring Agency, Appraising Entity, Auditors, Directors of our Company, Company Secretary and Compliance Officer, as referred to, in their respective capacities.
14. Appraisal Report dated April 23, 2007 from Punjab National Bank for appraising the working capital requirements of the Company.
15. Letter dated [●] from ICRA assigning IPO Grading for the Issue.
16. Applications dated [●], 2007 for in-principle listing approval from BSE and NSE.
17. In-principle listing approval dated [●] and [●] from BSE and NSE respectively.
18. Due Diligence Certificate dated May 1, 2007 to SEBI from BRLMs.
19. SEBI observation letter no. [●] dated [●].
Any of the contracts or documents mentioned in this Draft Red Herring Prospectus may be amended or modified at any time if so required in the interest of our Company or if required by the other parties, without reference to the shareholders subject to compliance of the provisions contained in the Companies Act and other relevant statutes.
307 DECLARATION
We, the Directors of the Company, certify that all the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government of India or the guidelines issued by the Securities and Exchange Board of India, established under Section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in this Draft Red Herring Prospectus is contrary to the provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992 or rules made or guidelines issued thereunder, as the case may be. We further certify that all statements in this Draft Red Herring Prospectus are true and correct.
Signed by all Directors
Mr. Suresh Kumar Prithani
Mr. Ramesh Kumar Prithani*
Mr. Manoj Kumar Prithani*
Mr. Sanjeev Kumar Prithani
Mr. Surinder Kumar Soni*
Mr. Om Kumar*
Mr. Om Prakash Kejriwal*
Mr. Deo Chandra Hirawat*
Signed by the Company Secretary and Compliance Officer
Mr. Narendra Nath Batabyal
Date: May 1, 2007
Place: New Delhi
* Signed through their constituted Attorney Mr. Suresh Kumar Prithani
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