Registered Office: HMT Bhavan, 59, Bellary Road, Bangalore-560 032, INDIA
Total Page：16
File Type：pdf, Size：1020Kb
INFORMATION MEMORANDUM
Private & Confidential – For Private Circulation Only (This Information Memorandum is neither a Prospectus nor a Statement in Lieu of Prospectus)
HMT LIMITED Registered Office: HMT Bhavan, 59, Bellary Road, Bangalore-560 032, INDIA (Incorporated on 7th February, 1953 as Private Limited Company under the Indian Companies Act, 1913 and converted as a Public Limited Company under the Companies Act, 1956) Tel.: (080) 23330333 Fax.: 91-80-23339111 Website: www.hmtindia.com E-Mail: [email protected]
Private Placement of Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures of Rs. 10,00,000/- each for cash at par aggregating Rs. 40.40 crores
GENERAL RISK: Investors are advised to read the Risk Factors carefully before taking an investment decision in this offering. For taking an investment decision, the investors must rely on their own examination of the Issuer and the Offer/ Issue including the risks involved. The Offer/ Issue being made on private placement basis, this Information Memorandum has not been filed with Securities & Exchange Board of India (SEBI). The Securities have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investors is invited to the summarized and detailed Risk Factors mentioned elsewhere in this Information Memorandum.
ISSUER’S ABSOLUTE RESPONSIBILITY: The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum 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 Information Memorandum is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
CREDIT RATING: “CARE AAA(SO)” by CARE: Instruments carrying this rating are considered to be of the best quality, carrying negligible investment risk. Debt service payments are protected by stable cash flows with good margins. While the underlying assumptions may change, such changes as can be visualized are most unlikely to impair the strong position of such instrument.
The rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating may be subject to revision or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The Rating agency has the right to suspend, withdraw the rating at any time on the basis of new information etc. For details, please refer to para on ‘Credit Rating’ mentioned elsewhere in this Information Memorandum.
LISTING: The Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures are proposed to be listed on The Stock Exchange, Mumbai (BSE).
TRUSTEE FOR THE BONDHOLDERS REGISTRAR TO THE ISSUE
The Western India Trustee & Executor Company Limited Karvy Consultants Limited 161/C, 16th Floor, Mittal Court, 51/2, T. K. N. Complex, Nariman Point, Vanivlis Road, Basavanagudi, Mumbai – 400 021. Bangalore – 560 004. Tel No. (022) 22880986, 22880988. Tel No. (080) 26613400,26621192. Fax No. (022) 22816477. Fax No. 91-80-26621169. E-mail: [email protected] E-mail: [email protected]
ISSUE OPEN FROM MARCH 16, 2004 TO MARCH 30, 2004 HMT Limited
2 HMT Limited
TABLE OF CONTENTS
INDEX TITLE PAGE NO.
DEFINITIONS/ ABBREVIATIONS 03
RISK FACTORS AND MANAGEMENT PROPOSALS THEREOF 04 – 06
HIGHLIGHTS OF THE COMPANY 06
PART I
I. GENERAL INFORMATION 07 – 10
II. CAPITAL STRUCTURE 11 – 12
III. TERMS & PARTICULARS OF THE PRESENT ISSUE 13 – 19
IV. COMPANY & MANAGEMENT 20 –33
V. ORGNAISATION STRUCTURE & MANAGEMENT 34 – 37
VI. STOCK MARKET DATA OF THE EQUITY SHARES OF THE COMPANY 37 – 38
VII. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL 38 – 39 PERFORMANCE
VIII. BASIS FOR ISSUE PRICE 39
IX. OUTSTANDING LITIGATIONS, DEFAULTS AND MATERIAL DEVELOPMENTS 39 – 41
X. INVESTOR GRIEVANCES & REDRESSAL SYSTEM 41 – 42
PART II
I. GENERAL INFORMATION 43 – 46
II. FINANCIAL INFORMATION 47 – 62
III. STATUTORY AND OTHER INFORMATION 63 – 64
IV. MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION 64 – 67
V. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 68
PART III
DECLARATION 69
3 HMT Limited
DEFINITIONS/ ABBREVATIONS
Term Meaning/ Definition/ Complete Term Act The Companies Act, 1956 as amended from time to time till date Articles Articles of Association of the Company Application Form The form in terms of which, the investors shall apply for the Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures of the Company the Company/ the Issuer HMT Limited, a company incorporated under section 617 of the Companies Act, 1956 and having Company/ the Issuer/ HMT its Registered Office at HMT Bhavan, No. 59, Bellary Road, Bangalore-560 032, INDIA Board/ BoD/ BOD Board of Directors of the Company or a Committee constituted thereof Bond(s)/ NCD(s)/ Government of India Guaranteed Redeemable Non Convertible Bonds in the nature of Debentures Debenture(s) of Rs. 10,00,000/- each offered through private placement route under the terms of this Information Memorandum Bondholder(s) The Holder(s) of the Bond(s) in dematerialised form Beneficial Owner(s) Bondholder(s) holding Bond(s) in dematerialized form (Beneficial Owner of the Bond(s) as defined in clause (a) of sub-section of Section 2 of the Depositories Act, 1996) BSE/ the concerned Stock The Stock Exchange, Mumbai Exchange CARE/ Rating Agency Credit Analysis & Research Limited CDSL Central Depository Services (India) Limited DDA Deemed Date of Allotment for the Bonds DP Depository Participant Depository(ies) National Securities Depository Limited (NSDL) and, Central Depository Services (India) Limited (CDSL) DIP Disclosure and Investor Protection Guidelines of SEBI DRR Debenture/ Bond Redemption Reserve FY/ F.Y. Financial Year FIs Financial Institutions GOI/ GoI Government of India HMT Machine Tools/ HMT Machine Tools Limited, a subsidiary of HMT Limited and having its Registered Office at ‘HMT HMTMTL Bhavan’, 59, Bellary Road, Bangalore – 560 032 (Karnataka) HMT Watches/ HMT WL HMT Watches Limited, a subsidiary of HMT Limited and having its Registered Office at ‘HMT Bhavan’, 59, Bellary Road, Bangalore – 560 032 (Karnataka) HMT Chinar Watches/ HMT Chinar Watches Limited, a subsidiary of HMT Limited and having its Registered Office at HMTCWL Lane-2, Phase II, SIDCO Industrial Complex, Bari Brahimana, Jammu – 181 133 (Jammu & Kashmir) HMT Bearing/ HMTBL HMT Bearing Limited, a subsidiary of HMT Limited and having its Registered Office at Moula Ali, Hyderabad – 500 040 (Andhra Pradesh) HMT International/ HMT(I) L HMT (International) Limited, a subsidiary of HMT Limited and having its Registered Office at ‘HMT Bhavan’, 59, Bellary Road, Bangalore – 560 032 (Karnataka) Issue/ Offer/ Offering Private Placement of Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures of Rs. 10,00,000/- each for cash at par aggregating Rs.40.40 crores Information Memorandum/ Memorandum of Information dated March 15, 2004 for Private Placement of Government of India Offer Document Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures of Rs. 10,00,000/- each for cash at par aggregating Rs 40.40 crores to be issued by HMT Limited IT Income Tax IT Act The Income Tax Act, 1961 (as amended from time to time) IS Information Systems Lead Arrangers 1. A. K. Capital Services Limited (in alphabetic order) 2. Allianz Securities Limited 3. Centrum Finance Limited 4. RR Financial Consultants Limited 5. UTI Bank Limited Memorandum Memorandum of Association of the Company NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited OTS One Time Settlement OCS Out-of-court Settlement PAN Permanent Account Number Praga Tools/ PTL Praga Tools Limited, a subsidiary of HMT Limited and having its Registered Office at 6-6-8/32, Kavadiguda Road, Secunderabad – 500 080 (Andhra Pradesh) Registrars to the Issue/ Karvy Consultants Limited, 51/2, T.K.N Complex, Vanivilas Road, Basavanagudi, Registrars/ Registrar & Bangalore-560 027 Transfer Agents ROC/ RoC Registrar of Companies, Karnataka at Bangalore RBI The Reserve Bank of India Regional Stock Exchange Stock Exchange, Bangalore SEBI Securities and Exchange Board of India constituted under the Securities and Exchange Board of India Act, 1992 (as amended from time to time) SEBI Guidelines SEBI (Disclosure and Investor Protection Guidelines 2000 (as amended from time to time) Trustees/ Trustees to the The Western India Trustee & Executor Company Limited Bondholder(s)/ WITECO TDS Tax Deducted at Source
4 HMT Limited
RISK ENVISAGED BY MANAGEMENT AND MANAGEMENT PROPOSALS (MP) TO ADDRESS THE RISKS
Following are certain issues for the investors to consider before taking an investment decision in the offer. In some of the risk factors and management proposals thereof, reference has been invited for detailed para mentioned elsewhere in this Information Memorandum, which can be used to obtain more details about the said risk.
INTERNAL RISKS
1. Debenture Redemption Reserve Company proposes to create Debenture Redemption Reserve for the present issue of Bonds only to the extent of 25% of the value of Bonds issued.
MP: As per extant circular no. 6/3/2001-CL.V dated 18.04.2002 issued by the Government of India with respect to creation of Debenture Redemption Reserve, for manufacturing and infrastructure companies, the adequacy of DRR is defined at 25% of the value of debentures issued through private placement route. In terms of extant provisions of Companies Act, 1956, the Company is required to create Debenture Redemption Reserve out of profits, if any, earned by the company. In case of the current issue of Bonds, to ensure the timely payment of principal amount of Bonds and the interest thereon, the Government of India has provided an unconditional and irrevocable guarantee, text of which is reproduced elsewhere in this Information Memorandum. The Company has also appointed a Trustee to protect the interest of the investors.
2. Project Cost not being appraised The project cost has not been appraised by any institution/ agency and are based on the Company’s own estimates.
MP: The funds to be mobilized under these Bonds are for the purpose of repayment of the existing Bonds (2002) Series-E/ Bridge Loan and therefore there is no specific project cost to be incurred out of the amount to be raised through this Bonds issue.
3. Credit Rating HMT has obtained credit rating of ‘CARE AAA(SO)’ from Credit Analysis & Research Limited (CARE) for an amount of Rs. 40.40 crores for its current issue. Instruments carrying this rating are considered to be of the best quality, carrying negligible investment risk. Debt service payments are protected by stable cash flows with good margins. While the underlying assumptions may change, such changes as can be visualized are most unlikely to impair the strong position of such instrument.
MP: Investors may please note that, the rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating may be subject to revision, suspension or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The Rating agency has the right to suspend, withdraw or revise the rating at any time on the basis of new information etc. Credit Rating of all listed and/ or unlisted taxable bonds/ debentures/ commercial paper issued by the Company for the last 3 years have been disclosed under the head ‘Credit Rating’ mentioned elsewhere in this Information Memorandum.
4. Contingent Liabilities of the Company As on March 31, 2003 and September 30, 2003, the contingent liabilities of the Company stood at Rs. 94.48 crores and Rs. 91.60 crores respectively. For details refer to para on ‘Contingent Liabilities’ mentioned elsewhere in this Information Memorandum.
MP: The contingent liabilities have arisen in the normal course of business of the Company.
5. Pending Grievances As on September 30, 2003, no shareholders’ complaint was pending. Total complaints received from shareholders and disposed of during the period 01.04.2003 to 30.09.2003 were 7 out of which, there were no cases for non- receipt of dividend.
MP: The Company has set up a Shareholders Committee, which was last reconstituted on November 17, 2000 comprising of the Chairman and Managing Director as a single member of the Committee to look after transfer/ transmission of shares issued by the Company, issue of duplicate certificates and certificates after split/ consolidation/ renewal apart from confirmation of demateralisation of shares on transfer to a depository. The Committee also looks after the grievances of the Shareholders/ Investors. Share transfers, dividend payment and all other investor related activities are attended to and processed at the office of the Registrar & Transfer Agent, Karvy Consultants Limited. The Company has also put in place the Investor Relations Cell at its Registered Office to look after the services needed by the shareholders. No shareholders’ complaint has been pending against the Company for more than 60 days. With respect to the current issue of bonds, the Company has designated a Compliance Officer, who can be contacted by the investors in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc.
5 HMT Limited
6. Income Tax Proceedings As on September 30, 2003, there is no disputed demand of income tax and interest tax.
7. Outstanding Litigations against the Company As on September 30, 2003, there are outstanding Litigations amounting to Rs.56.56 crores excluding interest (a total of 13 cases) for “Claims not acknowledged as debts”. For details, please refer to the para on ‘Outstanding Litigations’ mentioned elsewhere in this Information Memorandum.
MP: These claims are not likely to affect the operations and finances of the Company.
8. Outstanding Litigations against the Promoter & Companies/ firms/ ventures promoted by the Promoter of the Company Since the Government of India is the promoter of the Company, it is not possible to give details of pending litigations against the Government or the companies/ firms/ ventures promoted by the Government because of large number of such undertakings.
9. Non-Accomplishment of Targeted Demand Levels The Company is mainly engaged in manufacturing of Tractors. The demand for the products of the company is largely dependent upon the overall monsoon conditions in the country. The Company has also indigenously developed and introduced two new Tractor brands namely “CHANDI” and “CROP KING”. Any major fluctuation in demand for products of the company could adversely affect its financial performance. Financing problems of the Company’s growth plans may also adversely affect its operational as well as financial performance.
MP: In addition to manufacturing and sale of Tractors, the Sale of Engines are aggressively marketed. Recently, HMT has launched Tractors for Earth Moving applications with suitable attachments, which have found good demand in the markets.
10. Delays in Servicing of Past Loans and/ or Bonds of the Company There have been instances where the Company has delayed on repayment/ debt servicing obligations to its lenders and/ or investors on its earlier loans and/ or bonds.
MP: There are no defaults on debt/ interest servicing obligations on all Government of India Guaranteed borrowings. The defaults/ delays in servicing of earlier loans/ bonds not guaranteed by Government of India were due to continuous cash losses incurred by the Company which adversely affected its cash-flow position and the same is being addressed by the Company under the Turnaround Plan.
11. Accumulated Losses of the Company Although the Company showed operating profits in the Financial years 2000-2001 & 2001-2002, as on September 30, 2003, there are accumulated losses in the books of the Company amounting to Rs. 429.77 crores.
MP: As a part of scheme of arrangement, the accumulated losses of Rs.436.51 crores of the Company prior to re-structuring on March 31, 2000, have been retained in the books of HMT Limited (Holding) Co.
12. State of Financial Performance of the Company Given the Company’s weak financial position, the Ministry of Heavy Industries, Government of India, has been regularly infusing funds to enable the Company to service its debt obligations. In addition, the GoI has provided guarantees to support the Company’s borrowings from the markets. This support from the GoI is a key ingredient in maintaining the present credit rating of the bonds of the Company.
MP: Government of India has committed for providing the need-based support to the Company.
13. Industry Concentration The business of the Company is concentrated on manufacturing of Tractors. Any adverse impact in the demand of Tractors could materially affect the operations of the Company.
MP: In addition to manufacturing and sale of Tractors, the Sale of Engines are aggressively marketed. Recently, HMT has launched Tractors for Earth Moving applications with suitable attachments, which have found good demand in the markets.
14. Contingent Liabilities of Company’s Subsidiaries As on March 31, 2003, the contingent liabilities of the subsidiaries of the Company (i.e. HMT Machine Tools Limited, HMT Watches Limited, HMT Chinar Watches Limited, HMT Bearing Limited, HMT (International) Limited and Praga Tools Limited) stood at Rs. 168.45 crores. For details refer to para on ‘Subsidiaries of the Company’ mentioned elsewhere in this Information Memorandum.
MP: These contingent liabilities of the Subsidiary Companies are not likely to affect the operations and finances of the Company.
6 HMT Limited
15. Utilization of Funds The utilization of the funds proposed to be raised through this private placement is entirely at the discretion of the Company and no monitoring agency has been appointed to monitor the deployment of funds.
MP: The funds raised through this private placement are not meant for any specific project and hence a monitoring agency may not be required. The Company is managed by professionals under the supervision of its Board of Directors. Further, the Company is subject to a number of regulatory checks and balances as stipulated in its regulatory environment. Therefore, the management believes that the funds raised via this private placement would be utilised only towards satisfactory fulfillment of the ‘Objects of the Issue’ mentioned elsewhere in this Information Memorandum.
EXTERNAL RISKS 1. Natural calamities like floods, droughts and earthquakes could hamper the project of the Company & its implementation. 2. The operations of the Company are subject to regulations by the Government. Major changes in Government policies might have an adverse bearing on the operations of the Company. 3. Competition in the tractor manufacturing business has increased with the entry of new players and is likely to increase further as a result of further deregulation in the sector. 4. The financial statements and derived ratios therefrom contained in the Information Memorandum are prepared/computed as per the permissible accounting practices. While due care has been taken to reflect the true economic reality regarding the financials of the Company as far as possible, the investors may want to make their own adjustments to the same before arriving at an investment decision in the offer.
NOTES TO RISK FACTORS Net worth (excluding revaluation reserves) of the Company as on March 31, 2003 and September 30, 2003 was Rs.15.35 crores and (Rs.13.29 crores) respectively. The present private placement of the Company aggregates Rs.40.40 crores including option to retain oversubscription. The Book Value of the share as on March 31, 2003 and September 30, 2003 was Rs.0.33/- and (Rs.0.28/-) respectively (face value of Rs.10/-). For details of transactions between the Company and its subsidiaries, the investors are advised to refer to the para ’Subsidiaries of the Company’ mentioned elsewhere in this Information Memorandum. The financial information as contained in PART II including the notes to accounts, significant accounting policies as well as auditors’ qualifications has been duly certified by the statutory auditors of the Company. As far as possible, these audited numbers have been used for computation or derivation of other financial information contained in the Information Memorandum. However, such other financial information contained in the Information Memorandum except as contained in PART II has been certified by the management of the Company. Investors are also advised to refer to the Notes to Accounts and the Auditor’s Report appearing later in this Information Memorandum. Interest of Promoters/Directors: The Directors of the Company are interested only to the extent of shares held by them.
HIGHLIGHTS OF THE COMPANY Company with over 50 years of existence. A Government of India undertaking with shareholding of 98.18% of GoI as on September 30, 2003. Impressive market share of over 4.2% in the domestic tractor manufacturing business.
7 HMT Limited
PART I HMT LIMITED (Incorporated on 7th February. 1953 as Private Limited Company under the Indian Companies Act, 1913 and converted as a Public Limited Company under the Companies Act, 1956) Registered Office: HMT BHAVAN, 59,Bellary Road, Bangalore –560 032, INDIA. Tel.: (080) 3330333; Fax: 91-80-3339111 Website: hmtindia.com E-Mail: [email protected]
Private Placement of Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures of Rs. 10,00,000/- each for cash at par aggregating Rs. 40.40 crores
I. GENERAL INFORMATION
OFFER OF BONDS HMT Limited is seeking offer for subscription of Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures of Rs. 10,00,000/- each for cash at par aggregating Rs. 40.40 crores.
AUTHORITY FOR THE PRESENT ISSUE This present issue of Bonds is being made pursuant to the Resolution of the Board of Directors of the Company, passed at its 242nd meeting held on 21.11.2003.
REGISTRATION AND GOVERNMENT APPROVALS This present issue of Bonds is being made in accordance with extant guidelines for floatation of PSU Bonds as amended from time to time. The Government of India (GoI) has vide its letter no. 5(32)/2000-PE.X dated March 08, 2004 conveyed an unconditional and irrevocable guarantee for the repayment of principal amount of bonds for HMT for an amount of Rs.40.40 crores and interest thereon. The said guarantee is issued by GoI in concurrence with the Ministry of Finance, Department of Economic Affairs (Budget Division) vide their U.O. No. 816/B(SD)/2003 dated December 23, 2003 and Integrated Finance Wing, DHI vide their diary no. 297/Fin.III/2004 dated March 08, 2004. The Company can undertake the activities proposed by it in view of the present approvals and no further approval from any government authority(ies) is required by the Company to undertake the proposed activities save and except those approvals which may be required to be taken in the normal course of business from time to time.
DISCLAIMER CLAUSE This Information Memorandum (“Memorandum”) is neither a prospectus nor a statement in lieu of prospectus and does not constitute an offer to the public generally to subscribe for or otherwise acquire the Bonds to be issued by HMT Limited. The Memorandum is for the exclusive use of the Institutions to whom it is delivered and it should not be circulated or distributed to third parties. This Information Memorandum is not intended to be circulated to more than 49 parties. This Information Memorandum for issue of Bonds on private placement basis has been prepared in conformity with the extant SEBI circular no. SEBI/MRD/SE/AT/36/2003/30/09 dated September 30, 2003 and SEBI circular no. SEBI/MRD/SE/AT/46/2003 dated December 22, 2003. Therefore as per the applicable provisions, copy of this Information Memorandum has not been filed or submitted to SEBI. It is to be distinctly understood that the Information Memorandum should not, in any way, be deemed or construed that the same has been cleared or vetted 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 Information Memorandum. The Issuer Company certifies that the disclosures made in this Information Memorandum are generally adequate and are in conformity with the captioned SEBI circular. This requirement is to facilitate investors to take an informed decision for making investment in the proposed Issue.
It should also be clearly understood that while the Issuer Company is primarily responsible for the correctness, adequacy and disclosure of all relevant information in the Information Memorandum. The Issuer Company herein also certifies that it has disclosed various material information including those relating to litigation like commercial disputes etc in the Information Memorandum for the said Issue.
Further the Issuer Company confirms that: a. this Information Memorandum 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; and c. the disclosures made in this Information Memorandum are true, fair and adequate to enable the investors to make a well informed decision as to the investment in the proposed Issue. d. all the intermediaries named in this Information Memorandum are registered with SEBI and that till date such registration is valid.
The Issue of Bonds being made on private placement basis, filing of this Information Memorandum is not required, however the same does not absolve the Issuer 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 Issuer Company, any irregularities or lapses in this Information Memorandum.
DISCLAIMER STATEMENT FROM THE LEAD ARRANGERS In light of SEBI circular no. SEBI/MRD/SE/AT/36/2003/30/09 dated September 30, 2003 and SEBI circular no. SEBI/MRD/SE/AT/46/2003 dated December 22, 2003, it is advised that the Issuer Company has exercised self due- diligence to ensure complete compliance of prescribed disclosure norms etc in this Memorandum. The role of the Lead Arrangers in the assignment is confined to marketing and placement of the bonds on the basis of this Memorandum as prepared by the Issuer Company.
8 HMT Limited
The Lead Arrangers have neither scrutinized nor vetted nor has it done any due-diligence for verification of the contents of this Memorandum. The Lead Arrangers shall use this Memorandum for the purpose of soliciting subscription(s) from qualified institutional investor(s) in the bonds to be issued by the Issuer Company on private placement basis. It is to be distinctly understood that the aforesaid use of this Memorandum by the Lead Arrangers should not in any way be deemed or construed that the Memorandum has been prepared, cleared, approved or vetted by the Lead Arrangers; nor do they in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Memorandum; nor do they take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer. The Lead Arrangers or any of its directors, employees, affiliates or representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever nature and extent in connection with the use of any of the information contained in this Memorandum.
DISCLAIMER STATEMENT FROM THE ISSUER The Issuer Company accepts no responsibility for statements made otherwise than in the Information Memorandum or any other material issued by or at the instance of the Issuer Company and anyone placing reliance on any other source of information would be doing so at his/her/their own risk.
FILING OF INFORMATION MEMORANDUM As per extant SEBI guidelines/ regulations, filing of this Information Memorandum is not required either with SEBI, RoC or any other regulatory authority(ies). The present issue of bonds being made on private placement basis, copy of this Information Memorandum along with the documents as specified under the head “Material Contracts and Documents for Inspection” required to be filed with Registrar of Companies (RoC) under Section 60 of the Companies Act, 1956 shall not be applicable and hence the same has not been delivered to RoC for registration nor has the same been filed with SEBI for vetting/ comments/ registration.
DISCLAIMER CLAUSE OF THE STOCK EXCHANGE Application has been made to The Stock Exchange, Mumbai (hereinafter referred to as ”BSE”) to list the Bonds now being privately placed through this Information Memorandum to seek a permission to deal in such Bonds. The Company shall comply with the requirements of the listing agreement to the extent applicable to it on a continuous basis. A copy of this Information Memorandum is submitted to the BSE for hosting the same on its web site. It is to be distinctly understood that the submission of this Information Memorandum to BSE or hosting of this Information Memorandum by BSE on its web site should not in any way be deemed or construed that this Information Memorandum has been cleared or approved by BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Information Memorandum; nor do it warrant that this Issuer’s securities will be listed or continue to be listed on the Exchange; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer.
Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.
DISCLAIMER IN RESPECT OF JURISDICTION The private placement of Bonds is made in India to Companies, Corporate Bodies, Trusts registered under the Indian Trusts Act, 1882, Societies registered under the Societies Registration Act, 1860 or any other applicable laws, provided that such Trust/ Society is authorised under constitution/ rules/ bye-laws to hold debentures in a Company, Indian Mutual Funds registered with SEBI, Indian Financial Institutions, Insurance Companies, Commercial Banks including Regional Rural Banks and Co-operative Banks, Provident, Pension, Gratuity, Superannuation Funds as defined under Indian laws. The Information Memorandum does not, however, constitute an offer to sell or an invitation to subscribe to securities 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 Information Memorandum comes is required to inform himself about and to observe any such restrictions. Any disputes arising out of this issue will be subject to the exclusive jurisdiction of the courts at Bangalore (Karnataka). All information considered adequate and relevant about the Issuer and the Issuer Company has been made available in this Information Memorandum for the use and perusal of the potential investors and no selective or additional information would be available for a section of investors in any manner whatsoever.
LISTING The equity shares of the Company are listed on The National Stock Exchange of India Limited (NSE) and The Stock Exchange, Mumbai (BSE).
The Company has made an application to The Stock Exchange, Mumbai (BSE) to list the Bonds to be issued and allotted under this Information Memorandum. The Company shall complete all the formalities relating to listing of the Bonds within 70 days from the date of closure of the Issue. If such permission is not granted within 70 days from the Date of Closure of the Issue or where such permission is refused before the expiry of the 70 days from the closure of the Issue, the Company shall forthwith repay without interest, all monies received from the applicants in pursuance of the Information Memorandum, and if such money is not repaid within 8 days after the Company becomes liable to repay it (i.e. from the date of refusal or 70 days from the date of closing of the subscription list, whichever is earlier), then the Company and every director of the Company who is an officer in default shall, on and from expiry of 8 days, will be jointly and severally liable to repay the money, with interest at the rate of 15 per cent per annum on application money, as prescribed under Section 73 of the Companies Act, 1956.
MINIMUM SUBSCRIPTION As the Issue of Bonds is being made on private placement basis, the requirement of minimum subscription shall not be applicable.
CAUTIONARY NOTE Though not applicable to the issue of bonds, as a matter of abundant caution, attention of applicants is specially drawn to the provisions of sub-section (1) of Section 68A of the 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.”
9 HMT Limited
ISSUE SCHEDULE The Issue will open for subscription at the commencement of banking hours and close at the close of banking hours on the dates indicated below or earlier or on such extended date as may be decided by the Company at its sole and absolute discretion without giving any reasons or prior notice. In such a case, investors will be intimated about the revised time schedule by the Company. The Company also reserves the right to keep multiple Deemed Date(s) of Allotment at its sole and absolute discretion without any notice.
ISSUE OPENS ON Tuesday March 16, 2004 ISSUE CLOSES ON Tuesday March 30, 2004 DEEMED DATE OF ALLOTMENT Wednesday March 31, 2004
STATUTORY AUDITORS M/s. S.V.R. Associates Chartered Accountants S-3, IInd Floor, Mangalam Chambers, 25, K.H. Road, Bangalore – 560 027. Tel No. (080) 22240210. Fax No. 91-80-22290355 E-mail: [email protected]
LEAD ARRANGERS TO THE ISSUE (in alphabetic order)
A. K. Capital Services Limited Flat No. ‘N’, Sagar Apartments, 6, Tilak Marg, New Delhi – 110 001. Tel No. (011) 23385704, 23388235. Fax No. 91-11-23385189.
Allianz Securities Limited 2nd Floor, 3, Scindia House, Janpath, New Delhi – 110 001. Tel No. (011) 51514666 (10 lines). Fax No. 91-11-51514665.
Centrum Finance Limited Khetan Bhavan, 5th Floor, 198, J. Tata Road, Churchgate, Mumbai – 400 020. Tel: (022) 22023838. Fax: 91-22-22046096.
RR Financial Consultants Limited 412-422, Indra Prakash, 21 Barakhamba Road, New Delhi – 110 001. Tel No. (011) 23352496-99. Fax No. 91-11-23353703.
UTI Bank Limited Maker Towers 'F', 11th Floor, Cuffe Parade, Colaba, Mumbai – 400 005. Tel No. (022) 22189106, 22189107. Fax No. 91-22-22162467.
REGISTRAR TO THE ISSUE
Karvy Consultants Limited 51/2, T. K. N. Complex, Vanivlis Road, Basavanagudi, Bangalore – 560 004. Tel No. (080) 26613600, 26621192. Fax No. 91-80-26621169. E-mail: [email protected]
10 HMT Limited
TRUSTEES FOR THE BONDHOLDERS
The Western India Trustee & Executor Company Limited 161/C, 16th Floor, Mittal Court, Nariman Point, Mumbai – 400 021. Tel No. (022) 22880986, 22880988. Fax No. (022) 22816477. E-mail: [email protected]
BANKERS TO THE ISSUE
UTI Bank Limited No.9, M.G. Road, Bangalore-560 001, Tel No. (080) 25559555. Fax No. 91-80-25553444.
COMPLIANCE OFFICER AND COMPANY SECRETARY Mr. U. Jagadish Nayak Chief, Corporate Legal & Company Secretary HMT Limited Registered Office, HMT Bhavan, 59, Bellary Road, Bangalore – 560 032, Tel : (080) 23330333. Fax No. 91-80-23339111. E-mail:[email protected]
The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc.
BROKERS TO THE ISSUE Apart from Lead Arrangers to the Issue appointed by the Issuer Company, there is/are no other broker(s) appointed by the Issuer Company for the purpose of marketing the Issue. Therefore no person/ firm/ company other than the Lead Arrangers to the Issue, whether member of recognised stock exchange(s) or otherwise, can act as Brokers to the Issue.
CREDIT RATING Credit Analysis & Research Limited (hereinafter referred to as ‘CARE’) has assigned a ‘CARE AAA(SO)’ (Triple A Structured Obligation) rating to the Rs. 40.40 crores Government of India Guaranteed Redeemable Non Convertible Bond Issue of the Company vide its letter dated February 21, 2004 Instruments carrying this rating are considered to be of the best quality, carrying negligible investment risk. Debt service payments are protected by stable cash flows with good margins. While the underlying assumptions may change, such changes as can be visualized are most unlikely to impair the strong position of such instrument. The text of the rating letter from CARE is reproduced elsewhere in this Information Memorandum.
Please note that, the rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating may be subject to revision or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The Rating agency has the right to suspend, withdraw the rating at any time on the basis of new information etc.
Other Credit Ratings for past 3 Years Rating as on Security Type Amount Credit Rating Rating Agency Notes/ Remarks (Rs. in crores) 08.09.2000 GOI Guaranteed Bonds 469.00 LAAA (SO) ICRA Rs.310 crore redeemed 08.09.2000 GOI Guaranteed Bonds 40.40 MAAA (SO) ICRA Redeemed 25.11.2002 GOI Guaranteed Bonds 310.00 CARE AAA(SO) CARE Existing 25.11.2002 GOI Guaranteed Bonds 40.40 PR1+(SO) CARE Redeemed
Other than the above credit ratings for its Bonds, Commercial Paper etc, the Company has not sought any credit rating from any rating agency for any of its listed and/ or unlisted debt securities in the past 3 years.
UNDERWRITING The present Issue of Bonds on private placement basis has not been underwritten.
11 HMT Limited
II. CAPITAL STRUCTURE (Rs. in crores) As on September 30, 2003 Nominal Value Issue Amount 1. SHARE CAPITAL A Authorised Share Capital 50,00,00,000 Equity Shares of Rs. 10/- each 500.00 B Issued Share Capital 46,81,70,740 Equity Shares of Rs. 10/- each 468.17 C Subscribed & Paid-up Share Capital 46,81,70,740 Equity Shares of Rs. 10/- each 468.17 2. PRESENT ISSUE OF BONDS THROUGH THIS INFORMATION MEMORANDUM a. Issue of 404 Government of India Guaranteed Redeemable Non-Convertible 40.40 Bonds in the nature of Debentures of Rs. 10,00,000/- each b. Now Offered in terms of this Information Memorandum 40.40 Issue of 404 Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures of Rs. 10,00,000/- each Of which, Reservations are Nil c. Net Offer in terms of this Information Memorandum 40.40 Issue of 404 Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures of Rs. 10,00,000/- each 3. PAID-UP SHARE CAPITAL AFTER THE PRESENT ISSUE 46,81,70,740 Equity Shares of Rs. 10/- each 468.17 (The issue is done through private placement of Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures which would not have any impact on the Paid up share capital of the Company) 4. SHARE PREMIUM ACCOUNT a. Before the Issue Nil b. After the Issue Nil 5. LOAN FUNDS a. Secured Loans 745.98 b. Unsecured Loans 39.25
NOTES ON CAPITAL STRUCTURE (1) PROMOTER’S CONTRIBUTION AND LOCK-IN Sr. Date of Date when Consideration No. of shares Face Value Issue Price % of Post- Lock- No. Allotment made fully (Cash, bonus, Issue paid-up In Period paid-up kind, etc.) capital 1. Nil Nil Nil Nil Nil Nil Nil Nil There is no contribution from the promoters in the Bond Issue.
(2) PROMOTERS CONTRIBUTION AND LOCK-IN IN RESPECT OF PROMOTERS WHOSE NAME FIGURE IN THE INFORMATION MEMORANDUN AS PROMOTERS IN THE PARAGRAPH ON “PROMOTERS AND THEIR BACKGROUND” Sr. Name of the Date of Date when Consideration No. of Face Issue % of Post- Lock- No. Promoter Allotment made fully (Cash, bonus, shares Value Price Issue paid-up In paid-up kind, etc.) capital Period 1. Nil Nil Nil Nil Nil Nil Nil Nil Nil There is no contribution from the promoters in the Bond Issue.
(3) SHARE CAPITAL HISTORY OF THE COMPANY Sr. Name of the Year of Consideration (Cash, No. of Equity Face Value Issue Price Cumulative Equity Share No. Allottee Allotment bonus, kind etc) Shares (Rs.) (Rs.) Capital (Rs. in Crores) 1 Govt. of India 1953-54 Cash 2000000 10 10 2.00 2 Govt. of India 1954-55 Cash 1187800 10 10 3.19 3 Govt. of India 1954-55 Kind 712200 10 10 3.90 4 Govt. of India 1958-59 Cash 950000 10 10 4.85 5 Govt. of India 1959-60 Cash 460000 10 10 5.31 6 Govt. of India 1962-63 Cash 1250000 10 10 6.56 7 Govt. of India 1963-94 Cash 1440000 10 10 8.00 8 Govt. of India 1965-99 Cash 3500000 10 10 11.50 9 Govt. of India 1966-67 Cash 500000 10 10 12.00 10 Govt. of India 1972-73 Cash 8855000 10 10 20.86 11 Govt. of India 1973-74 Cash 2760000 10 10 23.62 12 Govt. of India 1974-75 Cash 2720000 10 10 26.34 13 Govt. of India 1975-76 Cash 2580000 10 10 28.92 14 Govt. of India 1975-76 Kind 4000000 10 10 32.92 15 Govt. of India 1976-77 Cash 600000 10 10 33.52 16 Govt. of India 1977-78 Cash 1800000 10 10 35.32 17 Govt. of India 1978-79 Cash 2000000 10 10 37.32 18 Govt. of India 1983-84 Cash 100 10 10 37.32 19 Govt. of India 1987-88 Kind 6243300 10 10 43.56 20 Govt. of India 1989-90 Cash 15000000 10 10 58.56 21 Govt. of India 1989-90 Kind 10506000 10 10 69.06 22 Govt. of India 1990-91 Cash 9500000 10 10 78.56 23 Govt. of India 1991-92 Cash 9170000 10 10 87.73 24 Govt. of India 1995-96 Cash 7645765 10 10 95.38 25 Govt. of India 1996-97 Cash 5265000 10 10 100.65 26 Govt. of India 1997-98 Cash 8000000 10 10 108.65 27 Govt. of India 1998-99 Cash 18001175 10 10 126.65 28 Govt. of India 1999-00 Cash 21350000 10 10 148.00 29 Govt. of India 1999-00 Kind 10424400 10 10 158.42 30 Govt. of India 2000-01 Cash 309750000 10 10 468.17 Note: Shares having Face value of Rs.1000/- was split into share with Face value of Rs.10/- w.e.f. 31.03.1992.
12 HMT Limited
(4) LIST OF TOP 10 SHAREHOLDERS AND THE NUMBER OF SHARES HELD BY THEM (as on September 30, 2003): Sr. No. Name of Shareholder Number of Shares held % Shareholding 1. President of India 459673640 98.19 2. Life Insurance Corporation of India 1591000 0.34 3. Bank of Baroda 1000000 0.21 4. The New India Assurance Company Limited 643700 0.14 5. General Insurance Company Limited 395900 0.08 6. National Insurance Company Ltd 292936 0.06 7. The Oriental Insurance Company Limited 278349 0.06 8. United India Insurance Company Limited 257914 0.06 9. Hiro Wadhunal Balani 122997 0.03 10. Hiro Wadhwani Balani 100000 0.02
(5) SHAREHOLDING PATTERN (as on September 30, 2003): Sr. No. Category Number of Shares Held % Shareholding A Promoter's Holding 1. Promoters * Directors / Relatives - Indian Promoters 459674340 98.18 - Foreign Promoters 0 0 2. Persons acting in Concert - - Sub Total * 459674340 98.18 B. Non-Promoters Holding 3. Institutional Investors - a. Mutual Funds & UTI 30900 0.01 b. Banks, Financial Institutions, Insurance Companies (Central/ 4454999 0.95 State Govt. Institutions/ Non Government Institutions) c. Foreign Institutional Investors 0 0 Sub Total * 4485899 0.96 4. Others a. Private Corporate Bodies 0 0 b. Indian Public 740941 0.16 c. NRIs/ OCBs 2925281 0.63 d. Trade Union 344279 0.07 Sub Total * 4010501 0.86 Grand Total 468170740 100.00 *as defined in Regulation 2[h] of SEBI (Substantial Acquisition of Shares and Takeover) Regulations 1997. The Promoters’ holding shall include all entries in the Promoters’ Group – Individual or Body Corporates.
(6) Promoter holding and lock-in provisions: the promoter holding after this issue would remain intact at 98.18%. Further, the present issue is a debt issue and therefore the provisions of lock-in do not apply. (7) None of the directors have, either directly or indirectly, undertaken transactions in the shares of HMT Limited in the last 6 months. (8) The Issuer Company has not issued any shares or debentures or agreed to issue any shares or debentures for consideration other than cash other than that mentioned elsewhere in the Information Memorandum, within the two years preceding the date of this Information Memorandum. (9) The number of shareholders of the Issuer Company as on September 30, 2003 was 7700. (10) At any given time there shall be only one denomination for the shares of the Company and the Company shall comply with such disclosure and accounting norms as specified by SEBI from time to time. (11) Reservation for small investors in allotment: The present Issue of bonds being made on private placement basis, there shall be no reservation for small/ individual investors and the allotment for bonds shall be finalized by the Company at its sole and absolute discretion. (12) The Issuer Company has not raised any bridge loan or any other similar financial arrangement against the proceeds of the Issue. (13) The promoters, Directors and the lead arrangers of the Issuer Company has not entered into any standby, buy-back or similar arrangements for purchase of securities offered through this Information Memorandum. (14) There is no balance of revaluation reserves outstanding in the Balance Sheet of the Company as on March 31, 2003 and as on September 30 2003.
13 HMT Limited
III. TERMS AND PARTICULARS OF THE PRESENT ISSUE The Company proposes to mobilize through private placement of Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures of the face value of Rs. 10,00,000/- each at par aggregating Rs. 40.40 crores.
The Bonds offered are subject to provisions of the Companies Act, 1956, Securities Contract Regulation Act, 1956, Memorandum and Articles of Association of the Company, Terms of this Information Memorandum, Instructions contained in the Application Form and other terms and conditions as may be incorporated in the Trustee Agreement and Bond Trust Deed. Over and above such terms and conditions, the Bonds shall also be subject to the applicable provisions of the Depositories Act 1996 and the laws as applicable, guidelines, notifications and regulations relating to the allotment & issue of capital and listing of securities issued from time to time by the Government of India (GoI), Reserve Bank of India (RBI), Securities & Exchange Board of India (SEBI), concerned Stock Exchange(s) or any other authorities and other documents that may be executed in respect of the Bonds.
OBJECTS OF THE ISSUE The present issue of bonds is being made for retirement/ replacement of earlier high cost borrowings of the Company. The Company does not propose to raise funds for any fixed asset creation and/ or for rotation of working capital.
The expenses of the present issue would also be met from the proceeds of the Issue. The Main Object Clause of the Memorandum of Association of the Company enables it to undertake the activities for which the funds are being raised through the present issue and also the activities which the Company has been carrying on till date. The proceeds of this Issue after meeting all expenses of the Issue will be used by the Company for meeting issue objects.
NATURE & STATUS OF THE BONDS The Bonds are to be issued in the form of Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures.
INSTRUMENT & ISSUE DETAILS AT A GLANCE Issue Size Rs. 40.40 crores Issue Objects Retirement/ replacement of earlier high cost borrowings of the Company Instrument Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures Security/ Government Unconditional and irrevocable guarantee by the Government of India (GoI) covering timely pay- Guarantee ment of interest and repayment of principal amounts on the Bonds Structured Payment The Company shall adhere to a ‘Structured Payment Mechanism’ as devised and stipulated by the Mechanism Credit Rating Agency i.e. CARE, for ensuring timely payment of servicing obligations on these Bonds. The details of the Structured Payment Mechanism are given elsewhere in this Information Memorandum Instrument Form Only in Dematerialised Form Credit Rating ‘CARE AAA(SO)‘ by CARE Face Value Rs. 10,00,000/- per Bond Issue Price At par (Rs. 10,00,000/- per Bond) Minimum Application 5 Bonds and in multiples of 1 Bond thereafter Tenure 2 Years Put & Call Option None Redemption/ Maturity At par at the end of 2 Years from the Deemed Date of Allotment Coupon Rate * 6.50% p.a. Interest Payment Annually Listing Proposed on The Stock Exchange, Mumbai (BSE) Trustee The Western India Trustee & Executor Company Limited (WITECO) has been appointed by the Issuer Company to act as Trustees for the bondholer(s) Interest on Application At the coupon rate (i.e. @ 6.50% p.a.) (subject to deduction of tax at source, as applicable) from Money the date of realization of cheque(s)/ demand draft(s) upto one day prior to the Deemed Date of Allotment * subject to deduction of tax at source, as applicable.
GOVERNMENT GUARANTEE The Government of India (GoI) has, unconditionally and irrevocably guaranteed the repayment of principal amount of bonds for HMT for an amount of Rs. 40.40 crores and interest thereon. The said guarantee is issued by GoI for raising Bonds for rolling over the existing Bonds or raising fresh Bonds for repayment of existing bonds. The guarantee has been issued vide GoI letter no. 5(32)/2000-PE.X dated March 08, 2004 and is issued in concurrence with the Ministry of Finance, Department of Economic Affairs (Budget Division) vide their U.O. No. 816/B(SD)/2003 dated December 23, 2003 and Integrated Finance Wing, DHI vide their diary no. 297/Fin.III/2004 dated March 08, 2004. The text of the Government of India Guarantee letter is reproduced elsewhere in the Information Memorandum.
STRUCTURED PAYMENT MECHANISM The rating of ‘CARE AAA(SO)’ assigned by Credit Analysis & Research Limited (CARE) to the Rs. 40.40 crore Government of India guaranteed bonds issue programme of HMT is subject to HMT putting in place the Structured Payment Mechanism stipulated by CARE, which is outlined hereunder: 1. HMT will appoint a trustee for the Bond holders, acceptable to CARE. 2. HMT would open a no-lien “Escrow Account” in a nationalised bank or a ‘AAA’ rated bank and the issue proceeds would be deposited in this account. HMT would be utilising the issue proceeds only as per directives of the guarantee letter. 3. HMT would make timely payments of guarantee fee and keep the Trustees informed regarding the same. 4. HMT would also open a no-lien “Designated Account” in a nationalised bank or a ‘AAA’ rated bank and the Trustee would have the responsibility of monitoring the Designated Account. Such Designated Account will be used only for servicing the obligations on the Bond Issue. 5. The trigger points for payment of coupon and redemption of the Bonds (considering T as the date for payment of interest/ principal) would be as under:
14 HMT Limited
T-60 Trustee shall intimate the amount(s) and due date of principal and interest payment obligation to HMT Limited and Government of India (GoI) T-45 HMT Limited will ensure availability of the entire payment obligation in the designated bank account. Trustee shall verify the sufficiency of funds in the designated bank account for the interest or principal payment obligation. In case of insufficiency of funds, the trustee shall treat the same as ‘Event of Default’ and invoke the guarantee. GoI has to ensure the availability of funds in the designated account at least 7 days (T-7) prior to the due date. T-7 Last date for dispatch of cheques to investors T Due date of payment of Interest or Principal obligation to Investors 6. The “event of default” for the purpose of guarantee would be non-availability of sufficient funds for the purpose of debt servicing in the designated account 45 days prior to each debt servicing date. 7. The above structure is supplementary and not complementary to the duty of HMT to duly service its debt obligations on time, to anticipate shortfalls in funds and to intimate separately to GoI the need for such funds to meet the debt obligations on time.
SECURITY The bonds are secured by way of unconditional and irrevocable guarantee from the Government of India towards payment of interest, repayment of principal and other obligations. The additional security in the form of charge over the assets of the Company in favour of Trustees to the Bondholders, as required, shall be determined by the Company in consultation with the Trustees. The said security shall be created in favour of the Trustees within 3 months from the Deemed Date of Allotment or such extended period as may be permitted by the relevant authority(ies).
The security will be created by the Company as aforesaid in favour of the Trustees on such of the asset(s) for which the Company obtains, after all due diligence and efforts, the requisite consents and permissions applicable under law or in accordance with conditions of holding of such assets for creating charge. The creation of such security shall be sufficient compliance of the Company’s obligation to create security.
KEY TERMS Face Value & Issue Price Each Bond has a face value of Rs. 10,00,000/- and is issued at par i.e. for Rs. 10,00,000/- each.
Minimum Application The application should be for a minimum of 5 Bonds (Rs. 50,00,000/-) and in multiples of 1 Bond (Rs. 10,00,000/-) thereafter.
Interest on Application Money Interest at the coupon rate (i.e. @ 6.50% p.a.) (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to all the applicants on the application money for the Bonds. Such interest shall be paid from the date of realisation of cheque(s)/ demand draft(s) upto one day prior to the Deemed Date of Allotment. The interest on application money will be computed on an Actual/ 365 day basis. Such interest would be paid on all the valid applications, including the refunds. Where the entire subscription amount has been refunded, the interest on application money will be paid alongwith the Refund Orders. Where an applicant is allotted lesser number of bonds than applied for, the excess amount paid on application will be refunded to the applicant alongwith the interest on refunded money.
The interest cheque(s)/ demand draft(s) for interest on application money (alongwith Refund Orders, in case of refund of application money, if any) shall be dispatched by the Company within 15 days from the Deemed Date of Allotment and the relative interest warrant(s) alongwith the Refund Order(s), as the case may be, will be dispatched by registered post to the sole/ first applicant, at the sole risk of the applicant.
Interest on the Bonds The Bonds shall carry interest at the coupon rate (i.e. @ 6.50% p.a.) (subject to deduction of tax at source at the rates prevailing from time to time under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof for which a certificate will be issued by the Company) on the outstanding amount of the principal till redemption. Interest will be paid annually on March 31 each year throughout the tenure of the Bonds till final redemption. The first interest payment shall be made on March 31, 2005 and the last interest payment shall be made at the time of final redemption of the Bonds. Interest on Bonds will cease on the date of final redemption in all events.
(In case the Deemed Date of Allotment is revised (pre-poned/ postponed) then the above interest payment date may also be revised (pre-poned/ postponed) accordingly by the Company at its sole & absolute discretion).
If any interest payment date falls on a day which is not a Business Day (‘Business Day’ being a day on which Commercial Banks are open for Business in the city of Bangalore, Karnataka), then payment of interest will be made on the next day that is a business day but without liability for making payment of interest for the intervening period.
Computation of Interest Interest for each of the interest periods shall be calculated, on 'actual/ 365 (366 in case of a leap year) days' basis, on the face value of principal outstanding on the Bonds at the respective coupon rate rounded off to the nearest Rupee.
Deemed Date of Allotment Interest on the Bonds shall accrue to the Bondholder(s) from March 31, 2004, which shall be the Deemed Date of Allotment. All benefits relating to the Bonds will be available to the investors from the Deemed Date of Allotment. The actual allotment of Bonds may take place on a date other than the Deemed Date of Allotment. The Company reserves the right to keep multiple allotment date(s)/ deemed date(s) of allotment at its sole and absolute discretion without any notice. In case if the issue closing date is changed (pre-poned/ postponed), the Deemed Date of Allotment may also be changed (pre-poned/ postponed) by the Company at its sole and absolute discretion.
15 HMT Limited
Depository Arrangements The Company has appointed Karvy Consultants Limited, 51/2, T. K. N. Complex, Vanivlis Road, Basavanagudi, Bangalore – 560 004, Tel. No: (080) 26621192, 26613400, Fax No.: (080) 26621169 as Registrars & Transfer Agent for the present bond issue. The Company has made necessary depository arrangements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for issue and holding of Bonds in dematerialised form. In this context the Company has signed two tripartite agreements as under: Tripartite Agreement dated 03.07.2001 between HMT Limited, Karvy Consultants Limited and National Securities Depository Limited (NSDL) for offering depository option to the investors. Tripartite Agreement dated 19.06.2001 between HMT Limited, Karvy Consultants Limited and Central Depository Services (India) Limited (CDSL) for offering depository option to the investors. Investors can hold the bonds only in dematerialised form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time.
Procedure for applying for Demat Facility 1. The applicant must have at least one beneficiary account with any of the Depository Participants (DPs) of NSDL or CDSL prior to making the application. 2. The applicant must necessarily fill in the details (including the beneficiary account number and Depository Participant’s ID) appearing in the Application Form under the heading ‘Details for Issue of Bonds in Electronic/ Dematerialised Form’. 3. Bonds allotted to an applicant will be credited directly to the applicant’s respective Beneficiary Account(s) with the DP. 4. For subscribing the bonds, names in the application 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. 5. Non-transferable allotment advice/refund orders will be directly sent to the applicant by the Registrars to the Issue. 6. If incomplete/incorrect details are given under the heading ‘Details for Issue of Bonds in Electronic/ Dematerialised Form’ in the application form, it will be deemed to be an incomplete application and the same may be held liable for rejection at the sole discretion of the Company. 7. For allotment of Bonds, the address, nomination details and other details of the applicant as registered with his/her DP shall be used for all correspondence with the applicant. The Applicant is therefore responsible for the correctness of his/her demographic details given in the application form vis-à-vis those with his/her DP. In case the information is incorrect or insufficient, the Issuer would not be liable for losses, if any. 8. It may be noted that Bonds being issued in electronic form, the same can be traded only on the Stock Exchanges having electronic connectivity with NSDL or CDSL. The Stock Exchange, Mumbai where the Bonds of the Company are proposed to be listed has connectivity with NSDL and CDSL. 9. Interest or other benefits would be paid to those Bondholders whose names appear on the list of beneficial owners given by the Depositories to the Company as on Record Date/ Book Closure Date. In case of those Bonds for which the beneficial owner is not identified by the Depository as on the Record Date/ Book Closure Date, the Company would keep in abeyance the payment of interest or other benefits, till such time that the beneficial owner is identified by the Depository and conveyed to the Company, whereupon the interest or benefits will be paid to the beneficiaries, as identified, within a period of 30 days.
Market Lot The market lot will be one Bond (“Market Lot”). Since the bonds are being issued only in dematerialised form, the odd lots will not arise either at the time of issuance or at the time of transfer of bonds.
Letter(s) of Allotment/ Bond Certificate(s)/ Refund Order(s) Issue of Letter(s) of Allotment The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/ Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial credit within 15 days from the Deemed Date of Allotment. The initial credit in the account will be akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the account will be akin to a Bond Certificate.
Issue of Bond Certificate(s) Subject to the completion of all legal formalities within 3 months from the Deemed Date of Allotment, or such extended period as may be approved by the Appropriate Authorities, the initial credit akin to a Letter of Allotment in the Beneficiary Account of the investor would be replaced with the number of Bonds allotted.
The Bonds since issued in electronic (dematerialized) form, will be governed as per the provisions of The Depository Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to time and other applicable laws and rules notified in respect thereof.
Despatch of Refund Orders The Company shall ensure dispatch of Refund Order(s) of value upto Rs. 1,500/- under certificate of posting and Refund Order(s) of value of over Rs. 1,500/- by Registered Post only and adequate funds for the purpose shall be made available to the Registrar to the Issue by the Issuer Company.
Terms of Payment The full face value of the Bonds applied for is to be paid alongwith the Application Form. Investor(s) need to send in the Application Form and the cheque(s)/ demand draft(s) for the full face value of the Bonds applied for. Face Value per Bond Minimum Application for Amount Payable on Application per Bond Rs. 10,00,000/- 5 Bonds and in multiples of 1 Bond thereafter Rs. 10,00,000/-
Payment of Interest The interest will be payable annually to the Bondholder(s) whose names appear in the List of Beneficial Owners given by the Depository to the Company on the Record Date. Payment of interest will be made by way of cheque(s)/ interest warrant(s)/ demand draft(s), which will be dispatched to the sole/ first applicant, 7 days before the due date(s) by registered post at the sole risk of the applicant.
16 HMT Limited
Tax Deduction at Source (TDS) Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source. For seeking TDS exemption/ lower rate of TDS, relevant certificate(s)/ document(s) must be lodged at least 15 days before the payment of interest becoming due with the Company Secretary, HMT Limited, HMT Bhavan, 59, Bellary Road, Bangalore-560 032, or to such other person(s) at such other address(es) as the Company may specify from time to time through suitable communication.
Tax exemption certificate/ declaration of non-deduction of tax at source on interest on application money, should be submitted along with the Application Form. Where any deduction of Income Tax is made at source, the Company shall send to the Bondholder(s) a Certificate of Tax Deduction at Source.
Tax Benefits Under the existing provisions of the Income Tax Act, 1961 for the time being in force, the following tax benefits and deductions will be available to the Bondholders of the Company subject to the fulfillment of the requirements of the relevant provisions. The tax benefits are given as per the prevailing tax laws and may vary from time to time in accordance with the amendments or enactment thereto. As alternate views are also possible, the Bondholder(s) are advised to consult their own tax advisers on the tax implications of the acquisition, ownership and sale of Bonds, and income arising thereon.
I. To Resident Bondholders No Income Tax will be deducted at source from interest payable on Bonds in the following cases: a) In case of payment of interest to a Bondholder, who is an individual and resident in India, where the interest payment in the aggregate during the financial year does not exceeds Rs. 2,500/-; b) Tax will be deducted at a lower rate where the Assessing Officer, on an application of any Bondholder, issues a certificate for deduction of tax at such lower rate as per provisions of the Section 197(1) of the Income Tax Act. In all other situations, tax would be deducted at source on each payment as per prevailing provisions of the Income Tax Act. Details on deduction of tax at source are given under para ‘Tax Deduction at Source (TDS)’ mentioned elsewhere in this Information Memorandum. No Wealth Tax is payable in respect of investments in Bonds of the Company.
II. To the other Eligible Institutions a) Mutual Funds registered under the SEBI Act or regulations made thereunder or such other mutual fund sets up by public sector bank or public financial institution or authorised by Reserve Bank of India and notified by the Central Government will, subject to the provisions of Chapter XII-E, be exempted from income tax on all their income, including from investment in Bonds under the provisions of Section 10(23D) of Income Tax Act. b) Section 10(25) of the Income Tax Act, inter alia, exempts from tax, any income received by the Recognized Provident Funds, approved Superannuation Funds or approved Gratuity Funds. c) No Wealth Tax is payable in respect of investments in Bonds of the Company.
Notes: 1. All the above benefits are as per the current tax law as amended by the Finance Act, 2003. 2. The stated benefits will be available only to the sole/ first named holder in case the bonds are held by joint holders.
Put & Call Option Neither Put Option shall be available to the Bondholder(s), nor Call Option would be available to the Company to redeem the Bonds prior to maturity.
Redemption The face value of the Bonds will be redeemed at par, at the end of 2 Years from the Deemed Date of Allotment. In case if the principal redemption date falls on a day which is not a Business Day (‘Business Day’ being a day on which Commercial Banks are open for Business in the city of Bangalore, Karnataka, then the payment due shall be made on the next Business Day together with additional interest for the intervening period.
Payment on Redemption Payment on redemption will be made by cheque(s)/ warrants(s) in the name of the Bondholder whose name appears on the List of Beneficial owners given by Depository to the Company as on the Record Date. On the Company dispatching the redemption warrants to such Beneficiary(ies) by registered post/ courier, the liability of the Company shall stand extinguished.
The Bonds shall be taken as discharged on payment of the redemption amount by the Company on maturity to the list of Beneficial Owners as provided by NSDL/ CDSL/ Depository Participant. Such payment will be a legal discharge of the liability of the Company towards the Bondholders. On such payment being made, the Company will inform NSDL/ CDSL/ Depository Participant and accordingly the account of the Bondholders with NSDL/ CDSL/ Depository Participant will be adjusted.
The Company liability to the Bondholders towards all their rights including for payment or otherwise shall cease and stand extinguished from the due date of redemption in all events. Further the Company will not be liable to pay any interest or compensation from the date of redemption. On the Company dispatching the amount as specified above in respect of the Bonds, the liability of the Company shall stand extinguished.
Record Date The ‘Record Date’ for the Bonds shall be 15 days prior to each interest payment and/ or principal repayment date.
Effect of Holidays Should any of dates defined above or elsewhere in the Information Memorandum, excepting the Deemed Date of Allotment, fall on a Saturday, Sunday or a Public Holiday, the next working day shall be considered as the effective date(s).
Mode of Transfer of Bonds Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these bonds held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his depository participant.
17 HMT Limited
List of Beneficial Owners The Company shall request the Depository to provide a list of Beneficial Owners as at the end of the Record Date. This shall be the list, which shall be considered for payment of interest or repayment of principal amount, as the case may be.
Trustees for the Bondholders The Company has appointed The Western India Trustee & Executor Company Limited (WITECO), 161/C, 16 th Floor, Mittal Court, Nariman Point, Mumbai – 400 021, to act as Trustees for the Bondholders (“Trustees”). A copy of letter from WITECO conveying their in-principle consent to act as Trustees for the bondholders is enclosed elsewhere in this Information Memorandum.
The Company and the Trustees will enter into a Trustee Agreement, inter alia, specifying the powers, authorities and obligations of the Trustees and the Company. The Bondholder(s) shall, by signing the Application Form and without any further act or deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or authorized officials to do inter-alia all acts, deeds and things necessary in respect of or relating to the security to be created for securing the Bonds being offered in terms of this Information Memorandum. All the rights and remedies of the Bondholder(s) shall vest in and shall be exercised by the said Trustees without having it referred to the Bondholder(s). No Bondholder shall be entitled to proceed directly against the Company unless the Trustees, having become so bound to proceed, fail to do so. Any payment made by the Company to the Trustees on behalf of the Bondholder(s) shall discharge the Company pro tanto to the Bondholder(s). The Trustees will protect the interest of the Bondholders in the event of default by the Company in regard to timely payment of interest and repayment of principal and they will take necessary action at the cost of the Company.
Right to Accept or Reject Applications The Board of Directors/ Committee of Directors reserves its full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. Interest on application money will be paid from the date of realisation of the cheque(s)/ demand drafts(s) till one day prior to the date of refund. The Application Forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to: a. Number of bonds applied for is less than the minimum application size; b. Applications exceeding the issue size; c. Bank account details not given; d. Details for issue of bonds in electronic/ dematerialised form not given; e. PAN/GIR and IT Circle/Ward/District not given; f. In case of applications under Power of Attorney by limited companies, corporate bodies, trusts, etc. relevant documents not submitted; g. In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded, as may be permitted.
How to Apply This Information Memorandum is neither a prospectus nor a statement in lieu of prospectus and does not constitute an offer to the public generally to subscribe for or otherwise acquire the Bonds issued by the Company. The document is for the exclusive use of the Institution(s) to whom it is delivered and it should not be circulated or distributed to third parties. The document would be sent specifically addressed to the institution(s) by the Issuer Company and/ or its Lead Arrangers.
Only eligible investors as given hereunder may apply for bonds by completing the Application Form in the prescribed format in BLOCK LETTERS in English as per the instructions contained therein. Applications should be for a minimum of 5 Bonds and in multiples of 1 Bond thereafter. Applications not completed in the said manner are liable to be rejected. Application Form duly completed in all respects must be submitted with any of the designated branches of the Bankers to the Issue. The name of the applicant’s bank, type of account and account number must be filled in the Application Form. This is required for the applicant’s own safety and these details will be printed on the refund orders and interest/ redemption warrants.
The applicant or in the case of an application in joint names, each of the applicant, should mention his/her Permanent Account Number (PAN) allotted under the Income-Tax Act, 1961 or where the same has not been allotted, the GIR No. and the Income tax Circle/Ward/District. As per the provision of Section 139A(5A) of the Income Tax Act, PAN/GIR No. needs to be mentioned on the TDS certificates. Hence, the investor should mention his PAN/GIR No. it the investor does not submit Form 15G/15AA/other evidence, as the case may be for non-deduction of tax at source. In case neither the PAN nor the GIR Number has been allotted, the applicant shall mention “Applied for” and in case the applicant is not assessed to income tax, the applicant shall mention ‘Not Applicable’ (stating reasons for non applicability) in the appropriate box provided for the purpose. Application Forms without this information will be considered incomplete and are liable to be rejected.
Applications may be made in single or joint names (not exceeding three). In the case of joint applications, all payments will be made out in favour of the first applicant. All communications will be addressed to the first named applicant whose name appears in the Application Form at the address mentioned therein.
Unless the Issuer Company specifically agrees in writing with or without such terms or conditions it deems fit, a separate single cheque/ demand draft must accompany each Application Form. Applicants are requested to write their names and application serial number on the reverse of the instruments by which the payments are made.
All applicants are requested to tick the relevant column “Category of Investor” in the Application Form. Public/ Private/ Religious/ Charitable Trusts, Provident Funds and Other Superannuation Trusts and other investors requiring “approved security” status for making investments. Investors are advised to exercise due caution in selecting the appropriate option for which they wish to apply.
Application Form must be accompanied by either demand draft(s) or cheque(s) drawn or made payable in favour of ‘HMT Limited Bonds 2004 Series-G’ and crossed ‘Account Payee Only’. Cash, outstation cheques, money orders, postal orders and stockinvest shall not be accepted. The Company assumes no responsibility for any applications/ cheques/ demand drafts lost in mail. Detailed instructions for filling up the application form and list of collection centres are provided elsewhere in this Information Memorandum.
18 HMT Limited
No separate receipts shall be issued for the application money. However, Bankers to the Issue at their Designated Branch(es) receiving the duly completed Application Forms will acknowledge the receipt of the applications by stamping and returning the acknowledgment slip to the applicant. Applications shall be deemed to have been received by the Issuer Company only when submitted to Bankers to the Issue at their designated branches or on receipt by the Registrar as detailed above and not otherwise.
For further instructions, please read Application Form carefully.
Who Can Apply The following categories of investors may apply for the bonds, subject to fulfilling their respective investment norms/ rules by submitting all the relevant documents alongwith the application form. 1. Scheduled Commercial Banks; 2. Financial Institutions; 3. Insurance Companies; 4. Primary/ State/ District/ Central Co-operative Banks (subject to permission from RBI); 5. Provident, Gratuity and Superannuation Funds; 6. Regional Rural Banks; 7. Mutual Funds; 8. Companies, Bodies Corporate authorised to invest in bonds; 9. Port Trusts, 10. Trusts, Individuals, Association of Persons, Societies registered under the applicable laws in India which are duly authorised to invest in bonds.
Applications not to be made by 1. Individuals (Resident/ Non-Residents of India, Adult/ Minor); 2. Hindu Undivided Family (neither by the name of the Karta); 3. Partnership Firms or their nominees; 4. Overseas Corporate Bodies (OCBs); 5. Foreign Institutional Investors (FIIs).
Applications under Power of Attorney A certified true copy of the power of attorney or the relevant authority as the case may be alongwith the names and specimen signature(s) of all the authorized signatories and the tax exemption certificate/ document, if any, must be lodged alongwith the submission of the completed Application Form. Further modifications/ additions in the power of attorney or authority should be notified to the Company or to its Registrars or to such other person(s) at such other address(es) as may be specified by the Company from time to time through a suitable communication.
Application by Mutual Funds In case of applications by Mutual Funds, a separate application must be made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such applications will not be treated as multiple applications, provided that the application made by the Asset Management Company/ Trustees/ Custodian clearly indicate their intention as to the scheme for which the application has been made.
Future Borrowings The Company shall be entitled to borrow/ raise loans or avail of financial assistance in whatever form as also issue Bonds/ Debentures/ Notes/ other securities in any manner with ranking as pari-passu basis or otherwise and to change its capital structure, including issue of shares of any class or redemption or reduction of any class of paid up capital, on such terms and conditions as the Company may think appropriate, without the consent of, or intimation to, the Bondholder(s)/ Trustees in this connection.
Purchase/ Sale of Bonds The Company may, at any time and from time to time, purchase Bonds at discount, at par or at premium in the open market in accordance with the applicable laws. Such Bonds, at the option of the Company, may be cancelled, held or resold at such price and on such terms and conditions as the Company may deem fit and as permitted by law.
Right to Re-Issue In the event of the bonds being bought back, or redeemed before maturity in any circumstances whatsoever, the Company shall have and shall be deemed to have had, the rights to re-issue the bonds as per the provisions of law.
Bondholder not a Shareholder The Bondholders will not be entitled to any of the rights and privileges available to the Shareholders.
Rights of Bondholders 1. The Bonds shall not, except as provided in the Companies Act, 1956 confer upon the holders thereof any rights or privileges available to the members of the Company including the right to receive Notices or Annual Reports of, or to attend and/or vote, at the General Meeting of the Company. However, if any resolution affecting the rights attached to the Bonds is to be placed before the shareholders, the said resolution will first be placed before the concerned registered Bondholders for their consideration. In terms of Section 219(2) of the Act, holders of Bonds shall be entitled to a copy of the Balance Sheet on a specific request made to the Company. 2. The rights, privileges and conditions attached to the Bonds may be varied, modified and/or abrogated with the consent in writing of the holders of at least three-fourths of the outstanding amount of the Bonds or with the sanction of Special Resolution passed at a meeting of the concerned Bondholders, provided that nothing in such consent or resolution shall be operative against the Company, where such consent or resolution modifies or varies the terms and conditions governing the Bonds, if the same are not acceptable to the Company. 3. The registered Bondholder or in case of joint-holders, the one whose name stands first in the Register of Bondholders shall be entitled to vote in respect of such Bonds, either in person or by proxy, at any meeting of the concerned Bondholders and every such holder shall be entitled to one vote on a show of hands and on a poll, his/her voting rights shall be in proportion to the outstanding nominal value of Bonds held by him/her on every resolution placed before such meeting of the Bondholders.
19 HMT Limited
4. The quorum for such meetings shall be at least five Bondholders present in person. 5. The Bonds are subject to the provisions of the Companies Act, 1956, the Memorandum and Articles, the terms of this Information Memorandum and Application Form. Over and above such terms and conditions, the Bonds shall also be subject to other terms and conditions as may be incorporated in the Trustee Agreement/ Letters of Allotment/ Bond Certificates, guidelines, notifications and regulations relating to the issue of capital and listing of securities issued from time to time by the Government of India and/or other authorities and other documents that may be executed in respect of the Bonds. 6. Save as otherwise provided in this Information Memorandum, the provisions contained in Annexure C and/ or Annexure D to the Companies (Central Government’s) General Rules and Forms, 1956 as prevailing and to the extent applicable, will apply to any meeting of the Bondholders, in relation to matters not otherwise provided for in terms of the Issue of the Bonds. 7. A register of Bondholders will be maintained in accordance with Section 152 of the Act and all interest and principal sums becoming due and payable in respect of the Bonds will be paid to the registered holder thereof for the time being or in the case of joint-holders, to the person whose name stands first in the Register of Bondholders. 8. The Bondholders will be entitled to their Bonds free from equities and/or cross claims by the Company against the original or any intermediate holders thereof.
Succession In the event of winding-up of the holder of the Bond(s), the Company will recognize the executor or administrator of the concerned Bondholder(s), or the other legal representative as having title to the Bond(s). The Company shall not be bound to recognize such executor or administrator or other legal representative as having title to the Bond(s), unless such executor or administrator obtains probate or letter of administration or other legal representation, as the case may be, from a Court in India having jurisdiction over the matter.
The Company may, in their absolute discretion, where they think fit, dispense with production of probate or letter of administration or other legal representation, in order to recognize such holder as being entitled to the Bond(s) standing in the name of the concerned Bondholder on production of sufficient documentary proof or indemnity.
Notices All notices to the Bondholder(s) required to be given by the Company or the Trustees shall be published in one English and one regional language daily newspaper in Mumbai, New Delhi, Kolkata, Chennai and Bangalore and/ or, will be sent by post/ courier to the sole/ first allottee or sole/ first Beneficial Owner of the Bonds, as the case may be from time to time.
All notice(s) to be given by the Bondholder(s) shall be sent by registered post or by hand delivery to the Company or to such persons at such address as may be notified by the Company from time to time through suitable communication.
Joint-Holders Where two or more persons are holders of any Bond(s), they shall be deemed to hold the same as joint tenants with benefits of survivorship subject to other provisions contained in the Articles.
Sharing of Information The Company may, at its option, use on its own, as well as exchange, share or part with any financial or other information about the Bondholders available with the Company, with its subsidiaries and affiliates and other banks, financial institutions, credit bureaus, agencies, statutory bodies, as may be required and neither the Company or its subsidiaries and affiliates nor their agents shall be liable for use of the aforesaid information.
Undertaking by the Issuer The Issuer Company undertakes that: a) the complaints received in respect of the Issue shall be attended to by the issuer company expeditiously and satisfactorily; b) it shall take all steps for completion of formalities for listing and commencement of trading at all the concerned stock exchange(s) where securities are to be listed and taken within 7 working days of the deemed date of allotment. c) the funds required for despatch of refund orders by registered post shall be made available to the Registrar to the Issue by the Issuer Company; d) no further issue of securities shall be made till the securities offered through this Information Memorandum are listed or till the application moneys are refunded on account of non-listing, under-subscription, etc; e) necessary co-operation to the credit rating agency(ies) shall be extended in providing true and adequate information till the debt obligations in respect of the instrument are outstanding.
20 HMT Limited
IV. COMPANY & MANAGEMENT
HISTORY & BACKGROUND OF THE COMPANY HMT Limited was set up in Bangalore, India by the Government of India in 1953 to manufacture Machine Tools to build the industrial edifice of the country. The entire share capital, at the time of incorporation was subscribed by the Government of India and hence it is a Public Sector Undertaking (PSU).
Since its incorporation in 1953, HMT has developed a vast infrastructure for manufacturing and distribution. Over the years, it diversified into the manufacture of Watches, Tractors, Printing Machinery, Die-Casting and Plastic Processing Machinery, Metal Forming Presses etc. These products embodied globally renowned technologies, which were absorbed through collaboration agreements.
Notable among the collaborators were Oerlikon, Fritz Werner and Geildemester of Germany for Machine Tools, Citizen of Japan for Watches and Motokov of Czechoslovakia for Tractors. But HMT’s mainstay has been Machine Tools business in view of its core competence in manufacturing machines and the importance of the machine tools industry to the national economy.
HMT has spun off machine tools and watch business into subsidiary companies with effect from 01.04.2000 and tractor division, a profit making unit, is with HMT Limited with an aggregate turnover of Rs. 28,712 lakh for the year 2001-02, profit of Rs. 1,024 lakh and with an employee strength of 2,809.
In 1974, HMT established a subsidiary Company, HMT (International) Limited, to undertake exports of its products and services. HMT also has 2 other subsidiary companies, HMT Bearing Limited, and Praga Tools Limited, manufacturing bearings, and machine tools & accessories respectively.
ORIGIN AND DEVELOPMENTS AT A GLANCE It was in the early post independence era that, HMT began in a small way to meet a big commitment; 'To manufacture mother machines to build modern industrial India'. HMT was conceived by the Government of India in 1949, and was incorporated in 1953, with the objective of producing a limited range of machine tools, required for building an industrial edifice for the country.
THE 1960's With the success achieved in the initial years in absorbing the technology and in attaining production competence far ahead of the original plans, the Company launched a bold plan of diversification and expansion which resulted in the duplication of the Bangalore Unit and the setting up of new units at Pinjore, Kalamassery and Hyderabad. In 1967, recession struck the Indian Engineering Industry and the consumption of machine tools dipped drastically. The traumatic years of recession did indeed serve to bring to the fore two latent strengths of HMT, namely, the urge to survive and the confidence to innovate. With these strengths at full play, the Company emerged from the recession:
With the world's widest range of machine tools and associated services under a single corporate entity. With action plans firmly launched for diversification into Tractors, Presses and Press Brakes, Printing Machines, Die Casting and Plastic Injection Moulding Machines, Horological Machinery, etc., which were considered to have economic cycles that are different from those of machine tools. With a Watch Factory already established in 1961-62, additional capacities for watch production were contemplated to provide a greater cushion against cyclical fluctuations in capital goods markets and also to meet the burgeoning demand for watches. With export markets of enormous potential under active development.
THE 1970's The 70s witnessed the fructification of all the diversification plans as envisaged. HMT setup HMT International Limited as a subsidiary company to channel HMT's products and technical services abroad. Two more units for manufacture of Watches, one at Srinagar and one at Tumkur. HMT took over Machine Tool Corporation at Ajmer as its sixth machine tool unit.
THE 1980's In the 80s, HMT as a part of vertical integration efforts, launched units to manufacture: Watches at Ranibagh, Watch Cases at Bangalore, Stepper Motors at Tumkur, CNC Systems at Bangalore, Ball screws for use on CNC machines at Bangalore etc. Also HMT took over Indo-Nippon Precision Bearings Ltd, a state owned unit as a subsidiary, which was renamed HMT-Bearings Limited. HMT took over Praga Tools Limited as another subsidiary.
THE 1990's The Company restructured itself into five Business Groups viz., Machine Tools, Watches, Tractors, Industrial Machinery and Engineering Components as part of Business Reorganisation.
The New Millennium HMT restructured with addition of three more Subsidiaries to those already existing. HMT now comprised of six subsidiaries under the ambit of the Holding Company which also manages the Tractors business directly. 1. HMT Machine Tools Limited, Bangalore 2. HMT Watches Limited, Bangalore 3. HMT Chinar Watches Limited, Jammu 4. HMT Bearings Limited, Hyderabad 5. Praga Tools Limited, Hyderabad 6. HMT (International) Limited, Bangalore
The strategic plans of the HMT group is coordinated by the holding company at Bangalore. To navigate through the challenges of the new millennium, HMT seeks strategic alliances from global leaders to synergise its own strengths with symbiotic inputs from the partners. For HMT, the whole world of opportunities is ahead to emerge as a global engineering conglomerate.
21 HMT Limited
MAJOR MILESTONES Year Development City State 1953 Machine Tools I Bangalore Karnataka 1961 Machine Tools II Bangalore Karnataka 1962 Watch Factory I Bangalore Karnataka 1963 Machine Tools III Pinjore Haryana 1965 Machine Tools IV Kalamassery Kerala 1967 Machine Tools V Hyderabad Andhra Pradesh 1971 Tractor Division Pinjore Haryana 1971 Die Casting Division Bangalore Karnataka 1972 Printing Machinery Division Kalamassery Kerala 1972 Watch Factory II Bangalore Karnataka 1973 Precision Machinery Division Bangalore Karnataka 1975 Machine Tools VI Ajmer Rajasthan 1975 HMT (International) Ltd. Bangalore Karnataka 1975 Watch Factory III Srinagar Jammu & Kashmir 1978 Watch Factory IV Tumkur Karnataka 1981 HMT Bearings Limited Hyderabad Andhra Pradesh 1981 Quartz Analog Watches Bangalore Karnataka 1982 Watch Factory V Ranibagh Uttar Pradesh 1982 Specialised Watch Case Division Bangalore Karnataka 1983 Stepper Motor Division Tumkur Karnataka 1985 Ball Screw Division Bangalore Karnataka 1986 CNC Systems Division Bangalore Karnataka 1991 Central Re-conditioning Division Bangalore Karnataka
ACCOLADES - OVER THE YEARS Year Award Instituted by 1960-61 Outstanding Performance President of India 1961-62 Outstanding Performance President of India 1970-71 Excellence Performance in Exports Govt. of Mysore 1971-72 Outstanding Export Performance Govt. of Mysore 1971-72 Outstanding Export Performance EEPC 1975-76 National Award for Outstanding Export Performance Ministry of Commerce 1978-79 Best Product at IMTEX - 79 PMT & FIE 1981-82 Best Export Performance EEPC 1981-82 Best Product at IMTEX - 82 FIE Foundation 1982-83 Export Excellence EEPC 1982-83 Meritorious Performance in the field of Export Ministry of Commerce Harvard Business School Association of India & 1983 Best Corporate Performance Economic Times 1983-84 Most Effective Organisation Foundation for Organisation Research (FORE) 1983-84 Best Productivity Organisation Research (FORE) 1983-84 Export Excellence EEPC 1984-85 Best Productivity National Productivity Council 1984-85 Export Excellence EEPC 1984-85 Meritorious Performance in the field of Export Ministry of Commerce 1985-86 Best Product at IMTEX - 86 CMTI - PMT Trust 1985-86 Best Product at IMTEX - 86 FIE Foundation 1985-86 Best Productivity National Productivity Council 1985-86 Export Excellence EEPC 1986-87 Export Excellence EEPC 1986-87 Excellence in Productivity CEI 1986-87 Best Productivity National Productivity Council 1987-88 Export Excellence EEPC 1987-88 Best Productivity National Productivity Council 1988-89 Company Standards Bureau of Indian Standards 1988-89 Best Product at IMTEX - 89 CMTI - PMT Trust 1988-89 Best Product at IMTEX - 89 FIE Foundation 1988-89 Outstanding Performance in Industrial Safety National Safety Council 1988-89 Best Productivity National Productivity Council 1988-89 Best Company for HRD Practices CEI National Award for R&D Efforts in Industry - 1990 in the 1990 Department of Scientific and Industrial Research Mechanical Industrial Sector Valuable Contribution & Significant Encouragement to the 1989-90 H.N.THADANI cause of the Industrial Engineering Profession in India 1990-91 Best Productivity National Productivity Council 1990-91 Tech. Development for Machine Tools, Bangalore Directorate General of Technical Development 1991-92 Best Productivity National Productivity Council 1992 National Safety National Safety Council 1994 Best Performance in Company Standardisation Sir Jahangir Ghandy Trophy 1995 Best Products at IMTEX - 95 CMTI - PMT Trust Award 1995 Best Product at IMTEX - 95 FIE Foundation 1995-96 Regional 'Top Exporters Shield' Engineering Export Promotion Council, Chennai
22 HMT Limited
1996-97 Regional 'Top Exporters Shield -Project Exporters' Engineering Export Promotion Council, Chennai 1997-98 All India Trophy for Highest Exporters Engineering Export Promotion Council, Kolkata 1998 Best Product at IMTEX - 98 FIE Foundation 1998 Best Products at IMTEX - 98 CMTI - PMT Trust Award Regional Trophy for Highest Exporters in the Group - Engineering Export Promotion Council, Southern 1998-99 Services Exporter Region, Chennai 2001 Best Product at IMTEX - 2001 FIE Foundation 2001 Best Products at IMTEX - 2001 CMTI - PMT Trust Award 2004 Best Products at IMTEX - 2004 CMTI – PMT Trust Awards
CORPORATE VISION “To be a leading global engineering conglomerate focussed on customer delight in our fields of endeavour”.
CORPORATE MISSION To establish ourselves as one of the world’s premier companies in the engineering field having strong international competitiveness; To achieve market leadership in India through ensuring customer satisfaction by supplying internationally competitive products and services; To achieve sustained growth in the earnings of the group on behalf of shareholders.
CORPORATE OBJECTIVES & GOALS To encourage the modernisation of Indian Industry through the supply of engineering goods and services of world class excellence; To maintain technological leadership through continuous efforts to update product technology and manufacturing methods; To globalise our operations by developing a mix of international markets and businesses; To ensure a satisfactory return on capital employed, to meet the growth needs and the aspirations of our stakeholders; To present an active, pleasant and productive working environment.
MAIN OBJECTS OF THE COMPANY The main objects of the Company as contained in the Memorandum of Association are: 1. (a) To carry on the business of iron founders, mechanical engineers, manufacturers of all types of implements, machinery, machine tools, small tools, cutting tools and hand tools makers, brass founders, metalworkers, iron and steel converters, smiths wood workers, metallurgists and to buy, sell, repair, convert, alter, export, import let on hire and deal in machinery, implements and hardware of all kinds. (b) To carry on the business of manufacturers of textile machinery, agricultural machinery, dairy machinery and equipments, milk machinery, leather machinery packaging machinery for various applications, stone processing machinery, plastic machinery, tobacco machinery, ceramic machinery, food processing machinery of all kinds f various applications, vending machines, glass products machinery, all types of automated machinery systems and robots, including computer integrated manufacturing lines, laser machines, plasma machines, theromat machines, bio- technology and other non-traditional machining processes, process control equipments hydraulic and water supply engineers, manufacturers of all types of engineering equipments and fittings of every description, manufacturers of automobiles of all types, steam vehicles of all kinds and their spare parts of whatsoever description. (c) To carry on the business of electrical and electronic engineers and of manufacturers of all types of electrical and electronic machinery, apparatus and appliances required for or capable of being used in connection with the generation, distribution, supply, accumulation and employment of electricity and to buy, sell, import, export or otherwise deal in such machinery, apparatus or appliances. (d) To carry on manufacture of alternating current and direct current generators, motors, rotary converters, transformers or rectifiers, indicating meters, integrating meters, recording meters, cluster meters of all types, kinds and sizes for various applications, air brake and oil brake manual and remote control switches with overload and undervoltage releases, air and oil cooled contractor and electrically operated starters and regulators with overload and undervoltage tripping devices for AC and DC meters, switch boards, protective devices for AC and DC machines, lines and feeders, primary and secondary storage battery and accumulators, commercial and domestic heating devices, electric furnaces and refrigerating and air-conditioning apparatus and accessories, vacuum cleaners, lighting fixtures electrical conveyors, lifts, medical ultra high frequency diathermy apparatus, X-ray apparatus, electrically propelled cars, railway signaling and interlocking devices, wireless receivers, wireless transmitters, automatic and manually operated telephone instruments, high and low tension insulated cables for electrical power distribution, telephone cables, cotton covered and enamelled wires, incandescent lamps, fluorescent lamps, discharge lamps, electroluminescent lamps and all types of electric lamps and all types of electric lamps and other lighting apparatus and materials, parts and components and accessories, thermionic tubes, X-neon tubes, porcelain, bakelite, mica, cloth, paper and other insulating material, wiring accessories. (e) To carry on al or any of the business of engineers, engineering consultants, miners, builders, contractors, ship owners, ship builders, wagon builders, engine builders, merchants, importers, exporters, farmers and of buying, selling and dealing in property of all kinds of iron, brass and other metal founders, machinists, tool makers, wire drawers, tube pipe and tank manufacturers, moulders, metallurgists and metal workers, fitter, mill wrights, galvanisers, japanners, electroplaters and enamellers. (f) To carry on the business of manufacturers and dealers of every sort of missile, armaments, weapons and system for a warlike, sporting or other purposes and components thereof for various defense and non-defense applications. (g) To carry on the business of water proofers and manufacturers of Indian rubber, leather, imitation leather, leather cloth, plastics, oil cloth, linoleum, tarpaulins, hospital sheetings and surgical bandages. (h) To manufacture, procure, sell, import, export or otherwise deal in watches, time pieces, clocks, time measuring and time keeping instruments/ devices and other precision instruments/ devices of all sizes, types and forms and components thereof, operated mechanically, electrically, electronically or by a combination thereof. (i) To manufacture procure, sell, import, export or otherwise deal in professional and entertainment equipments and components thereof operated mechanically, electrically, electronically or by a combination thereof for applications of various kinds and to develop and deal with computer software for various applications and to hire out computer time.
23 HMT Limited
2. To manufacture, buy, sell, exchange, install, work, alter, improve, manipulate, prepare for market, import or export and otherwise deal in all kinds of plants and machinery, wagons rolling stock apparatus, tools, utensils, substances, materials and things necessary or convenient for carrying on any of the business which the company is authorised to carry on or which is usually dealt in by persons engaged in such business. 3. To carry on in India and elsewhere the business of iron masters, steel makers, steel converters, iron founders, tin plate makers, colliery proprietors, miners, manufacturers, of ferro manganese contractors, merchants, importers, exporters and farmers in all their respective branches. 4. To carry on the business of carries by land, sea and air. 5. To purchase, take on lease, under license or concession or otherwise lands, buildings, works, mines, minerals deposits, mining rights, plantations, forests and any right and privileges or interest therein and to explore, work, exercise, develop and to turn to account the same. 6. To carry on the business of manufacturers of and deals in explosives, ammunition, fireworks, and other explosive products and accessories of all kinds and whatsoever composition and whether for military, sporting, mining, industrial or any other purpose. 7. To carry on the business of electric supply Company and to do all things incidental to such business. 8. To search for and to purchase or otherwise acquire from any Government, State or authority any licenses, concessions, grants, decrees, rights, powers and privileges whatsoever which may seem to the Company capable of being turned to account and to work, develop, carry out, exercise, and turn to account the same. 9. To purchase, take on lease or in exchange or under amalgamation, license or concession or otherwise absolutely or conditionally, solely or jointly with others and make, construct, maintain, work, hire, hold, improve, alter, manage, let, sell, dispose of exchange, roads, canals, watercourses, ferries, piers, aerodrome, lands, buildings, warehouses, works, factories, mills, workshops, railways, sidings, tramways, engines, machinery and apparatus, water rights, way leaves, trademarks, patents and designs, privileges or rights of any description or kind. 10. To construct, execute, carry out, improve, work, develop, administer, manage or control in India and elsewhere, works and conveniences of all kinds, which expression in this Memorandum includes railways, tramways, ropeways, docks, harbour piers, wharves canals, reservoirs, embankments, irrigations reclamation, improvement sewage, drainage, sanitary, water, gas, electric light, telephonic, telegraphic, and power supply works; and hotels, ware houses, markets and buildings private or public and all other works or conveniences whatsoever. 11. To apply for, tender, purchase or otherwise acquire any contract and concessions for or in relation to the construction, execution, carrying out equipment, improvement, management, administration or control of works and conveniences, and to undertake, executive, carryout, dispose of, or otherwise turn to account the same. 12. To enter into any contract or arrangement for the more efficient conduct of the business of the Company or any part thereof and to sublet any contracts from time to time. 13. To establish, provide, maintain and conduct or otherwise subsidise research laboratories and experimental workshops for scientific and technical research and experiments, to undertake and carry on scientific and technical researches, experiments and tests of all kinds, to promote studies and researches both scientific and technical, investigations and inventions by providing, subsidising, endowing or assisting laboratories, workshops, libraries, lectures, meetings and conferences and by providing or contributing to the remunerations of scientific or technical professors or teachers and by providing or contributing to the award of scholarships, prizes, grants to students or otherwise and generally to encourage, promote and reward studies, researches, investigations, experiments, tests and inventions of any kind that may be considered likely to assist any business which the Company is authorised to carry on. 14. To take or otherwise acquire and hold shares in any other Company having objects altogether on in part similar to those of this Company, and to underwrite solely or jointly with another or others, shares in any such Company. To take or otherwise acquire shares in any other Company if the acquisition of such shares seems likely to promote further or benefit the business or interests of this Company. 15. To acquire or take over with or without consideration and carry on the business of managers, secretaries, treasurers, and agents or managing agents by themselves or in partnership with others of companies of partnerships or concerns whose objects may be similar, in part or in whole, to those of the Company. 16. To carry on any other trade or business which may seen to the Company capable of being conveniently carried on in connection with any of the Company’s objects or calculated directly or indirectly to enhance the value of or render profitable any of the Company’s property or rights. 17. To acquire and undertake the whole or any part of the business, property and liabilities of any person, firm or Company carrying on any business, which the Company is authorised to carry on, or possessed of property suitable for the purposes of this Company. 18. To let out on hire all or any of the property of the Company whether, immovable or movable including all and every description of apparatus or appliances. 19. To enter into partnership or into any agreement for sharing or polling profits amalgamation union of interests, co-operation, joint venture, reciprocal concession or otherwise or amalgamate with the person or Company carrying on or engaged in or about to carry on or engage in any business or transaction which this Company is authorised to carry on or engage in any business undertaking or transaction which may seem capable of being carried on or conducted so as directly or indirectly to benefit this Company. 20. To guarantee the payment of money unsecured or secured; to guarantee or become sureties for the performance of nay contracts or obligations. 21. To sell, let exchange or otherwise deal the undertaking of Company or any part thereof for such consideration as the Company may think fit and in particular for shares, debentures or securities of any other Company having objects altogether or in part similar to those of this Company and if thought fit to distribute the same among the shareholders of the Company. 22. To pay for any properties, rights or privileges acquired by the Company, either in shares of this Company partly in shares and partly in cash, or otherwise. 23. To promote and undertake the formation of any institution or Company for the purpose of acquiring al or any of the property and liabilities of this Company or for any other purpose which may seem directly or indirectly calculated to benefit this Company or form any subsidiary Company or companies. To carry on any business which may seem capable of being carried on conveniently with the business or objects of the Company and to acquire any interest in any industry or undertaking. 24. To lend money on mortgage of immovable property or on hypothecation or pledge of movable property or without security to such persons and on such terms and as may seem expedient and in particular to customers of and persons having dealings with the Company.
24 HMT Limited
25. To acquire or hold shares in an undertaking or Company to acquire the right to use or manufacture and to put up telegraphs, telephones, phonographs, radio transmitting or receiving stations or sets, dynamos, accumulators, and all apparatus in connection with the generation, accumulation, distribution, supply and employment of electricity or any power that can be used as a substitute therefor, including all cables, wires or appliances for connecting apparatus at a distance with the other apparatus, and including the formation of exchanges or centres. 26. To construct, maintain, lay down, carry out, work, sell, let on hire and deal in telephonic and all kinds of works, machinery, apparatus, conveniences and things capable of being used in connection with any of the objects of the Company and in particulars any cables, wires, lines stations, exchanges, reservoirs, accumulators, lamps, meters and engines. 27. To purchase or by any other means acquire, and protect, prolong and renew whether in India or elsewhere, any patent, patent rights, brevets d’invention licences, protections and concessions which may appear likely to be advantageous or useful to the Company, and to use and turn to account and manufacture under or grant licenses or privileges in respect of the same and to spend money in experimenting upon and testing and improving or seeking to improve any patents, inventions or rights which the Company may acquire or propose to acquire. 28. To obtain order, or Act of Legislature in India or any other places, or order Act or authority from the authorities of any Country, State or Dominion for enabling the Company to obtain all powers and authorities necessary, or expedient to carry out or extend any of the objects of the Company, or for any other purpose which may seem expedient, and to oppose any proceedings on applications which may seem calculated directly or indirectly to prejudice the Company’s interests. 29. To enter into any agreements with the Government of India or any Local or State Government in India or with the Government of any other State, Country or Dominion or with any authorities, local or otherwise or with any Rulers, Chiefs, Landlords or other persons that may seem conducive to the Company’s objects or any of them and to obtain from them any rights, powers and privileges, licenses, grants and concessions which the Company may think fit desirable to obtain and to carry out, exercise and comply with any arrangements, rights, privileges and concessions. 30. To provide for the welfare of employees or its ex-employees of the Company and the wives and families or the dependents or connections of such persons by building or contributing to the building of houses, dwellings, or chawls or by grants of money, pensions, allowances, bonus or other payments or by creating and from time to time subscribing or contributing to Provident Fund and other associations, institutions, funds or trusts and by providing or subscribing or contributing towards places of instruction and recreation, hospitals and dispensaries, medical and other attendance and other assistance as the Company may think fit, and to subscribe or otherwise to assist or to guarantee money to charitable, benevolent, religious, scientific, national, public or other institutions or objects or purposes. 30A. To undertake, carry out, promote and sponsor rural development, Including any programme for promoting The social and economic welfare of or the uplift of the public in any rural area and to incur any expenditure on any programme of rural development and to assist execution and promotion thereof either directly or through an independent agency or in any other manner. Without prejudice to the generality of the foregoing, “programme of rural development” shall also include any programme for promoting the social and economic welfare of, or the uplift of the public in any rural area which the Directors consider it likely to promote and assist rural development and the words “rural area” shall include such areas as may be regarded as rural areas under Section 35CC or the Income Tax Act, 1961, or any other law relating to rural development for the time being in force or as may beregarded by the Directors as rural areas and the Directors may at their discretion in order to implement any of the above-mentioned objects or purposes transfer without consideration or at such fair or concessional value as the Directors may think fit and divest the ownership of any property of the Company to or in favour of any Public or Local Body or Authority of Central or State Government or any authority specified in that behalf by such Government or established under any law for the time being in force as the Directors may approve. 30B. To undertake, carry out, promote and sponsor or assist any activity for the promotion and growth of the national economy and for discharging what the Directors may consider to be social and moral responsibilities of the Company to the public as also any activity which the Directors consider likely to promote national welfare or social, economic or moraluplift of the public or any section of the public and in such manner and by such means as the Directors may think fit and the Directors may without prejudice to the generality of the foregoing, undertake, carry out, promote and sponsor any activity for publication of any books, literature, newspapers, etc., or for organising lecturers or seminars likely to advance these objects or for giving merit awards, for giving scholarships, loans or any other assistance to deserving students or other scholars or persons to enable them to prosecute their studies or academic pursuits or researches and for establishing conducting, or assisting any institution, fund, trust, etc, having any one of the aforesaid objects as one of its object, by giving donations or otherwise in any other manner and the Directors may at their discretion in order to implement any of the above-mentioned objects of purposes transfer without consideration or at such fair or concessional value as the Directors may think fit and divest the ownership of any property of the Company to or in favour of any Public or Local Body or Authority or Central or State Government or any Public Institution or Trust or Fund recognised or approved by the Central on State Government or any authority specified in that behalf by the such Government or established under any law for the time being in force, as the directors may approve. 31. To distribute any of the property of the Company among the members in specie or kind but so that no distribution amounting to a reduction of capital be made except with the sanction (if any) for the time being required by law. 32. To make, draw, accept, endorse, execute and issue cheques, Promissory Notes, Bills of exchange, Bills of lading, Debentures and other negotiable or transferable instruments. 33. To invest and deal with the moneys of the Company in any securities, shares, investments, properties movable or immovable and in such manner as may from time to time be determined and to sell, transfer or deal in with the same. 34. To borrow or raise money or to receive money on deposit at interest or otherwise in such manner as the Company may think fit, and in particular by the issue of debenture or debentures stock, perpetual or otherwise including debenture or debenture stock, convertible into shares of this Company, or perpetual annuities and in security of any such money so borrowed, raised or received, to mortgage, pledge or charge the whole or any part of the property, assets or revenues of the Company, present or future, including its uncalled capital by assignment or otherwise or to transfer or convey, the same absolutely or in trust and to purchase, redeem or pay off any such securities. 35. To remunerate any person firm or Company for services rendered or to be rendered in placing or assisting to place or guaranteeing the placing of any of the shares in the Company’s capital or any debentures or debenture stock or other securities of the Company or in or about the formation or promotion of the Company or the conduct of its business. 36. To do all or any of the above things and all such other things as are incidental or may be thought conducive to the attainment of the above objects or any of them and as principals, agents, contractors, trustees or otherwise and either alone or in conjunction with others.
25 HMT Limited
Changes in the Memorandum and Articles of Association of the Company (after Listing of Equity Shares of the Company at the Stock Exchanges based on the directions issued by the Ministry of Industry, Department of Public Enterprises for listing of the entire Paid-up Capital consequent upon disinvestment of shares by the Government) Sr. Description of Clause Amended/inserted/Deleted Amended vide No. Clause EGM/AGM held on 1 Share Certificates 7 AGM held on 29.9.1992 Issue of New Share Certificates 8 Payment in anticipation of Calls may carry interest 9-B Transmission of Shares 19 Fee on Transfer 20 Seal 72 Unclaimed Dividends 97 2 Allotment of Shares 6 EGM held on Company’s lien on shares 11 27.11.1992 Notice of Refusal to register transfer etc. 15 Issue at discount etc., or with special privileges 34 3 Capital Clause V of MOA AGM held on 30.9.1996 Article 4 of AOA 4 Capital Clause V of MOA AGM held on Article 4 of AOA 31.12.1998 Dematerialisation 30 A 5 Capital Clause V of MOA AGM held on 30.9.1999 Article 4 of AOA 6 Capital Clause V of MOA EGM held on 4.9.2000 Article 4 of AOA
BUSINESS OF THE COMPANY AND IT’S PRODUCTS AND SERVICES HMT Limited, with a diverse range of products, over 18 manufacturing units and a countrywide well established marketing network restructured its various businesses into different subsidiaries under the ambit of a Holding Company. The constituent subsidiaries of HMT Limited are as below while the holding company retains the Tractors Business Group. Sr. No. Name of Subsidiary % Holding 1 HMT Machine Tools Limited 100 2 HMT Watches Limited 100 3 HMT Chinar Watches Limited 100 4 HMT International Limited 100 5 HMT Bearings Limited 97.24 6 Praga Tools Limited 51.00
HMT Limited, the Holding Company with its Corporate Head Quarters at Bangalore forms the hub for the activities of the different subsidiaries. The Holding Company while ensuring good corporate governance also pursues strategies such as: Creation of strategic alliances, Development of brand equity, Provision of strategic planning inputs, Interface with regulatory agencies, Creation and maintenance of data warehouse with suitable corporate informational data for the use of all subsidiaries.
HMT’s Tractors Business The profile of the Tractors Business Group is as follows:
HMT’s Tractor business commenced its operations in 1971 in technical collaboration with M/s MOTOKOV, Czechoslovakia Republic. Initially, HMT started the operation with the manufacture of 25 HP Tractor at the manufacturing plant established in Pinjore, Haryana State. Over the years, it has developed Tractors ranging from 25 HP to 75 HP. The company achieved market leadership in tractors by enlarging its range to cover most of the applications for the farming community.
Currently the company has three tractor manufacturing units in India located at Pinjore in Haryana, Mohali in Punjab and Hyderabad in Andhra Pradesh. It has a well-equipped R&D Center duly recognized by the Department of Scientific and Industrial Research, the Government of India. The Tractor Business Group of HMT has been a proud recipient of a number of National Level - Productivity Awards. It has also been certified for ISO-9001 by KEMA, Netherlands. It has an installed capacity of 18,000 Tractors for manufacturing and assembly operations. It has an in-house marketing organization comprising 17 Area Offices, 11 Stockyards and over 300 Dealers spread across the country. HMT Tractors Group is ably supported by over 40 Ancillary Units. It has qualified and experienced workforce. HMT has produced and marketed over 3,60,000 Tractors since inception in India and abroad. MODEL HP RANGE MAIN FEATURE 2522 25 AVL fuel efficient engine & New Style Bonnet 3022 30 Fuel efficient engine (HMT Design); New Style Bonnet 3522 35 AVL adapted fuel efficient engine & New Style Bonnet 4511 45 HMT Design 5911 58 Heavy Duty Tractor (Czech Design) 7511 75 HMT Design; Power steering & ROPS 2522 OS 25 Low height and width for orchard applications 3522 CS 35 Wetland cultivation 3522 DX 35 Direct Axle Drive 4511 CS 45 Wetland cultivation 4922 EDI 49 AVL adapted fuel efficient engine & New Style Bonnet ENGINES 25, 30, 35, 45 & 58 Gen-set & Commercial applications CS: Coastal Special DX: Direct Axle OS: Orchard Special
26 HMT Limited
27 HMT Limited
SUBSIDIARIES OF THE COMPANY
A. HMT MACHINE TOOLS LIMITED Date of Incorporation, Promoters & Management HMT Machine Tools Limited (HMTMTL) was incorporated as a fully owned subsidiary of HMT Limited on August 09, 1999. HMTMTL is a multi-unit, multi-location, multi-technology company manufacturing a wide variety of ‘state-of-the-art” machine tools. HMTMTL has its manufacturing units at 5 locations with each unit specialized in a particular family of machines. The sales and service network is spread across the length and breadth of the country. As a leading manufacturer of Machine Tools in India HMTMTL provides: One of the best of the products in terms of technology, productivity and cost effectiveness; Comprehensive customer support services including application engineering, customer training and after sales service.
All the manufacturing units of HMTMTL are ISO 9001 certified.
Affairs of HMT Machine Tools are managed by eminent and professional Board of Directors comprising following persons:
1. Mr. M. S. Zahed - Chairman 2. Mr. S. Nigam - Director 3. Mr. Manoj Kumar Singh - Director
Product Range 1. Turning Machines 2. Grinding Machines CNC Lathes Cylindrical Grinders – CNC CNC Turning Centres Internal Grinders – CNC Heavy Duty Lathes Centreless Grinders - Non-CNC Single/ Twin Spindle Chuckers Surface Grinders - Non-CNC Multispindle CNC Automats Double Disc Grinders - Non-CNC Sliding Head Automats Grinders – Others CNC Training Lathes Cylindrical Grinders - Non-CNC Centre Lathes Centreless Grinders – CNC CNC Slant Bed Turning Centres Surface Grinders – CNC CNC Heay Duty Lathes Double Disc Grinders – CNC CNC Chuckers Tool & Cutter Grinders CNC Turnmill Centres 3. Gear Manufacturing Machines 4. Machining Centres Gear Hobbers – CNC Machining Centres – Horizontal Gear Shapers – CNC Machining Centres - High Speed Gear Hobbers - Non-CNC Machining Centres – Vertical Gear Shapers - Non- CNC CNC Drilling & Tapping Centre Flexible Manufacturing Cells Flexible Manufacturing Modules Flexible Manufacturing Systems 5. Other GPMs 6. Special Application Machines Programmable Knee Type Milling Machine Multi Station Round Table SPM Turret Ram Type Milling Machine SPM for Battery Manufacturing Column Drill Broaching Machine 2-Axes CNC Precision Co-ordinate Table Knee Type Milling Machine Dual Spindle Case Trimming Machine Radial Drill Duplex Milling Machines Carbide Tool Lapping Machine Bilateral Master- Slave Servo manipulators Vertical Surface Broaching Machine CNC Heavy Duty Internal Grinding Machine CNC Drilling & Reaming Machine CNC Stitching & Hole Drilling Machine Head Turning & Mouth Reaming Machine Rotary Indexing Machines Flash Hole Drilling Machines CNC 4-Axes Chucker CNC Precision Internal Grinding Machine 7. Diecasting Machines 8. Presses HMT-MTL offers 9 models of Die-Casting Machines HMT-MTL offers wide range of with locking forces ranging from 80 to 1100 tones to Mechanical Presses cover a wide range of pressure Die-Casting of Hydraulic Presses Aluminum, Zinc, Magnesium, Copper, Lead & Tin Mechanical Press Brakes & other Presses components. The HMT range covers Mechanical Presses up to The salient features of these machines include 2500 tonnes and Hydraulic Presses upto 8000 tonnes. digital setting of Die-closing / Opening and Ejector HMT Presses are designed and offered in various Speed, Flying Piston type accumulator individually arrangements. adjustable speeds and pressures, large adjustable Crank / Eccentric Shaft / Eccentric Gear / Knuckle opening stroke and programme logic control. Joint Type with a choice of single point, two point or HMT manufacturing six models of Plastic Injection four points of power application and gearing Moulding Machine ranging from 80 to 630 tones arrangements to suit individual requirements. locking force.
28 HMT Limited
9. CNC Systems 10. Precision Ballscrews CNC Systems covering controls for A wide range of Precision Ball Screws used in CNC Turning Machine Machine Tool, Roto Gravure printing machines and Machining Centers various engineering products for conversion of rotary Grinders & Punch Presses motion into linear movement and vice versa. Turning Centers The range covers Ball Screws in sizes from Dia 25 Twin Spindle Chucker MM to Dia 80 MM with leads 5,8, 10 & 12 MM pitches. Maximum length up to 3500 MM
HMT’s Printing Machinery range includes: Five Color Sheet fed Offset Printing Machines; Four Color Sheet fed Offset Printing Machines; Two Color Sheet fed Offset Printing Machines; Single Color Sheet fed Offset Printing Machines; Web Offset Printing Machines; Programmable Guillotines; Punching & Stitching Machines; Numbering Attachment.
Brief Financials (Rs. in crores) Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003 Total Sales 209.28 260.98 229.38 Total Income 252.04 262.55 227.70 Total Expenditure 348.21 333.20 329.87 Profit Before Tax (PBT) (96.17) (70.65) (102.17) Profit After Tax (PAT) (96.17) (70.65) (102.17) Share Capital 10.70 10.70 10.70 Reserves & Surplus * 0.12 0.12 - Dividend (%) 0.00 0.00 0.00 Book Value per Share (Rs.) (193.31) (331.13) (443.53) Earning Per Share (Rs.) (89.88) (66.03) (95.49) * Excluding revaluation reserves and after deducting miscellaneous expenditure not written-off or adjusted)
HMTMTL is an unlisted company and therefore the details of its public issue such as year of issue, amount of issue, stock market data of equity shares, etc are not applicable. Further, it is certified that there has been no change in the capital structure of the company in the last six months.
Contingent Liabilities of HMT Machine Tools Ltd. (Rs. in crores) Particulars As at March 31, 2003 Claims against the Company not acknowledged as debts a Tax related claims pending in appeal i) Excise Duty 3.90 ii) Sales Tax 1.15 iii) Custom Duty 3.22 iv) Property Tax 3.72 b Employee related claims relating to Lockouts, Back wages incentive & Annual bonus, 4.57 etc., pending adjudication, to the extent ascertainable c Others 5.02 2 Guarantees/ Counter Guarantees issued 18.84 3 Bills purchased/ discounted 4.67 4 Additional Bonus, if any, for the year 1985-86 0.06 5 Wage/ Salary/ DA Revision arrears payable, including HRA/ NPA/ FPI, if any, for the period 30.19 01.01.92 to 31.03.95/30.09.95 over and above the provision made as per the agreement entered into with workmen/ Government’s approval 6 Pending formulation of Wage/ Salary revision agreement w.e.f. 01.01.1997, interim relief from that date has been paid. Provision has not been determined and made for the entire liability 7 Non receipt of related Form against levy of concessional Sales Tax 23.36 8 Estimated amount of contracts remaining to be executed on capital account and not 4.86 provided for TOTAL 103.56
Transactions of the Company with HMT Machine Tools Ltd. Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003
Rent Paid by the HMT Machine Tools to the Nil 1.75 0.88 Company (Rs. in crores) Loan Advanced by the Company to HMT Machine 177.84 136.47 15.54 Tools (Rs. in crores) Interest Received by the Company from HMT 5.26 27.71 35.56 Machine Tools (Rs. in crores) Interest paid by the Company to HMT Machine 2.63 10.52 13.40 Tools (Rs. in crores)
29 HMT Limited
B. HMT Watches Limited Date of Incorporation, Promoters & Management HMT Watches Limited (HMTWL) was incorporated as a fully owned subsidiary of HMT Limited on August 09, 1999. HMTWL manufactures Mechanical and Quartz Analog watches. The manufacture of wristwatches started as part of diversification strategy of HMT in the year 1962, under Technical collaboration with CITIZEN Watch Company of Japan with a manufacturing unit at Bangalore. HMTWL comprises of three manufacturing units at Bangalore, Tumkur and Ranibagh while its marketing headquarters is based in Bangalore. All its manufacturing units have obtained the ISO 9001 certification. The product range of HMTWL includes more than 1500 models to choose from catering to all segments of the market, from Economy to Premium and Young to the Old. HMTWL brand enjoys very high brand equity in the India Market. The brand has consecutively been adjudged as one of the best Indian brands in surveys by leading agencies in the country. HMTWL brand continues to be the main stream brand among major watch dealers in the domestic market. The Quality and Reliability of HMT watches has been the main selling feature and attraction of the consumer.
Affairs of HMT Watches are managed by eminent and professional Board of Directors comprising following persons:
1. Mr. M. S. Zahed - Chairman 2. Mr. S. Nigam - Director 3. Mr. S. Siddalingaswamy - Managing Director* * under suspension w.e.f. 30.07.2003 Product Range 1. The Mechanical Range 3. Series of Quartz Watches Hand wound Gents & Ladies - Desh Ki Dhadkan Elegance - Its all about YOU Automatic Day-date - The Watch that lasts & lasts Roman - ONLY For MEN Utsav - The Well Dressed Watch Sangam - Absolutely Modern, Absolutely Indian 2. Special Clocks Lalit - Value for Money, For those who value Tower Clock Money Solar Clock Pace - For cute faces Population Clock Swarna - Good as Gold Display Clock Shreyas - Sign of Good Times Floral Clock Chandan - The fragrance watch International Clock Braille - A gift of time to the blind Master Slave Clock
Brief Financials (Rs. in crores) Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003 Total Sales 108.64 80.57 45.35 Total Income 139.12 72.68 41.44 Total Expenditure 198.30 178.90 154.99 Profit Before Tax (PBT) (59.18) (106.29) (112.92) Profit After Tax (PAT) (59.18) (106.29) (112.92) Share Capital 5.49 5.49 5.49 Reserves & Surplus * 0.30 0.30 0.30 Dividend (%) 0.00 0.00 0.00 Book Value per Share (Rs.) (188.23) (442.48) (753.93) Earning Per Share (Rs.) (107.80) (193.60) (205.68) * Excluding revaluation reserves and after deducting miscellaneous expenditure not written-off or adjusted)
HMTWL is an unlisted company and therefore the details of its public issue such as year of issue, amount of issue, stock market data of equity shares, etc are not applicable. Further, it is certified that there has been no change in the capital structure of the company in the last six months.
Contingent Liabilities of HMT Watches Ltd. (Rs. in crores) Particulars As at March 31, 2003 1 Claims against the Company not acknowledged as debts a Tax related claims pending in appeal i) Excise Duty 2.41 ii) Custom Duty 2.66 iii) Property Tax 1.31 iv) Others 0.26 b Employee related claims relating to Lockouts, Back wages incentive & Annual bonus, 3.00 etc., pending adjudication, to the extent ascertainable 2 Bills purchased/ discounted 11.16 3 Wage/ Salary/ DA Revision arrears payable, including HRA/ NPA/ FPI, if any, for the period 10.00 01.01.92 to 31.03.95/30.09.95 over and above the provision made as per the agreement entered into with workmen/ Government’s approval 4 Estimated liability in respect of current All India Leave Travel Concession Encashment 2.62 Facility which is accounted on claim basis 5 Non receipt of related Form against levy of concessional Sales Tax 0.89 6 Towards leased land at Tonkur measuring 112.01 acres together with solatium and interest 3.05 as per demand from KIADB. Title is pending registration in the name of the Company 7 Estimated amount of contracts remaining to be executed on capital account and not 0.31 provided for TOTAL 37.67
30 HMT Limited
Transactions of the Company with HMT Watches Ltd. Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003 Rent Paid by the HMT Watches to the Company Nil 1.42 0.71 (Rs. in crores) Loan Advanced by the Company to HMT Watches 172.30 87.77 30.30 (Rs. in crores) Interest Received by the Company from HMT 3.25 26.19 33.32 Watches (Rs. in crores) Interest paid by the Company to HMT Watches 69.33 428.14 563.15 (Rs. in crores)
C. HMT CHINAR WATCHES LIMITED Date of Incorporation, Promoters & Management HMT Chinar Watches Limited (HMTCWL) was incorporated as a fully owned subsidiary of HMT Limited on September 04, 2000 with Jammu as its head quarters. The manufacture of wristwatches as part of its diversification strategy started in the year 1962 under Technical collaboration with CITIZEN Watch Company of Japan with a manufacturing unit at Bangalore. HMTCWL manufactures mechanical and quartz range watches. The product range of HMTCWL consists of the Mechanical Gents hand wound watch. Marketing, Sales and After Sales Service for watches of HMTCWL is catered to by HMTWL.
Affairs of HMT Chinar Watches are managed by eminent and professional Board of Directors comprising following persons:
1. Mr. M. S. Zahed - Chairman 2. Mr. Mukul Kumar - Director 3. Mr. B. A. Pukhta - Managing Director
Product Range 1. The Mechanical Range 3. Series of Quartz Watches Hand wound Gents & Ladies - Desh Ki Dhadkan Elegance - Its all about YOU Automatic Day-date - The Watch that lasts & lasts Roman - ONLY For MEN Utsav - The Well Dressed Watch Sangam - Absolutely Modern, Absolutely Indian 2. Special Clocks Lalit - Value for Money, For those who value Tower Clock Money Solar Clock Pace - For cute faces Population Clock Swarna - Good as Gold Display Clock Shreyas - Sign of Good Times Floral Clock Chandan - The fragrance watch International Clock Braille - A gift of time to the blind Master Slave Clock
Brief Financials (Rs. in crores) Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003 Total Sales 1.94 2.02 1.21 Total Income 11.72 12.12 17.72 Total Expenditure 19.67 22.28 24.03 Profit Before Tax (PBT) (7.94) (10.16) (6.31) Profit After Tax (PAT) (7.94) (10.16) (6.31) Share Capital 1.41 1.41 1.41 Reserves & Surplus * - - - Dividend (%) 0.00 0.00 0.00 Book Value per Share (Rs.) (283.26) (367.67) (460.00) Earning Per Share (Rs.) (56.31) (72.06) (44.75) * Excluding revaluation reserves and after deducting miscellaneous expenditure not written-off or adjusted)
HMTCWL is an unlisted company and therefore the details of its public issue such as year of issue, amount of issue, stock market data of equity shares, etc are not applicable. Further, it is certified that there has been no change in the capital structure of the company in the last six months.
Contingent Liabilities of HMT Chinar Watches Ltd. (Rs. in crores) Particulars As at March 31, 2003 1 Claims against the Company not acknowledged as debts: 4.33 Employee related claims relating to Lockouts, Back wages incentive & Annual bonus, etc., pending adjudication, to the extent ascertainable 2 Wage/ Salary/ DA Revision arrears payable, including HRA/ NPA/ FPI, if any, for the period 1.38 01.01.92 to 31.03.95/30.09.95 over and above the provision made as per the agreement entered into with workmen/ Government’s approval 3 Estimated liability in respect of All India Leave Travel Concession encashment facility, 0.22 which is accounted on claim basis TOTAL 5.93
31 HMT Limited
Transactions of the Company with HMT Chinar Watches Ltd. Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003 Loan Advanced by the Company to HMT Chinar 29.47 6.42 9.55 Watches (Rs. in crores) Interest Received by the Company from HMT 4.29 4.97 5.79 Chinar Watches (Rs. in crores) Interest paid by the Company to HMT Chinar 0.02 0.11 0.17 Watches (Rs. in crores)
D. HMT BEARING LIMITED Date of Incorporation, Promoters & Management HMT Bearings Limited (HMTBL), formerly known as Indo-Nippon Bearings Limited was incorporated in the year 1970. It is the only company of its kind in the public sector set up to manufacture Ball & Roller Bearings. HMTBL was established in technical collaboration with M/s Koyo Seiko Co. Ltd., Japan an internationally reputed manufacturer of Bearings. In the year 1981, HMTBL became a subsidiary of HMT Limited. The manufacturing unit is located in Hyderabad and marketing and sales offices cater to the whole of India. The manufacturing unit has obtained the ISO 9001 certification.
Affairs of HMT Bearing are managed by eminent and professional Board of Directors comprising following persons:
1. Mr. M. S. Zahed - Chairman 2. Mr. A. K. Rath - Director 3. Mr. Neeraj Mishra - Managing Director
Product Range The main thrust of HMTBL has been in the direction of import substitution. HMTBL designs, manufactures and supplies: Ball Bearings; Cylindrical Roller Bearings and, Taper Roller Bearings.
Brief Financials (Rs. in crores) Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003 Total Sales 52.43 43.65 25.70 Total Income 54.22 50.66 22.68 Total Expenditure 52.43 49.86 37.70 Profit Before Tax (PBT) 2.20 0.94 (15.03) Profit After Tax (PAT) 1.12 0.86 (10.56) Share Capital 8.73 8.73 8.73 Reserves & Surplus * 4.11 4.69 - Dividend (%) 0.00 0.00 0.00 Book Value per Share (Rs.) 14.71 15.34 (20.43) Earning Per Share (Rs.) 1.28 0.99 (12.10) * Excluding revaluation reserves and after deducting miscellaneous expenditure not written-off or adjusted)
HMTBL is an unlisted company and therefore the details of its public issue such as year of issue, amount of issue, stock market data of equity shares, etc are not applicable. Further, it is certified that there has been no change in the capital structure of the company in the last six months.
Contingent Liabilities of HMT Bearings Ltd. (Rs. in crores) Particulars As at March 31, 2003 1 Guarantees/ Counter Guarantees issued 0.06 2 Bills purchased/ discounted 3.03 3 Employee related claims relating to Lockouts, Back wages incentive & Annual bonus, etc., 0.79 pending adjudication, to the extent ascertainable 4 Letters of Credit for Supplies 0.01 5 Estimated amount of contracts remaining to be executed on capital account and not 0.05 provided for. TOTAL 3.94
Transactions of the Company with HMT Bearings Ltd. Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003 Dividend paid by HMT Bearing to the Company Nil 1.27 Nil (Rs. in crores)
E. HMT (INTERNATIONAL) LIMITED Date of Incorporation, Promoters & Management HMT(International) Limited [HMT(I)], was set up in 1974 as a wholly owned subsidiary of HMT Limited, to undertake exports of goods manufactured by HMT and other leading Indian manufacturers. HMT(I) is headquartered at Bangalore and has a global network extending over 38 countries with 67 representations to service its clientele worldwide. HMT(I) has sold over 12,500 machines in more than 70 countries with efficient after sales service. HMT(I) also offers a comprehensive package of consultancy of technical and engineering services from concept to commissioning on turnkey basis. Its track record include prestigious projects in Algeria, Indonesia, Kenya, Malaysia, Mauritius, Tanzania, UAE, Maldives and other countries.
32 HMT Limited
Affairs of HMT (International) are managed by eminent and professional Board of Directors comprising following persons:
1. Mr. M. S. Zahed - Chairman 2. Mr. S. S. Kapur - Director 3. Mr. P. J. Mohan Ram - Managing Director
Main Business HMT(I)'s business portfolio includes trading in: Machine Tool and Industrial Machinery; Watches; Tractors & Agricultural Implements; General Engineering Products; Industrial Commodities; Software and IT Services; Projects & Services.
Brief Financials (Rs. in crores) Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003 Total Sales 45.79 56.79 37.98 Total Income 6.73 10.50 9.97 Total Expenditure 6.36 9.88 9.59 Profit Before Tax (PBT) 0.38 0.54 0.34 Profit After Tax (PAT) 0.30 0.50 0.20 Share Capital 0.24 0.48 0.48 Reserves & Surplus * 20.38 20.57 19.97 Dividend (%) 20.00 15.00 15.00 Book Value per Share (Rs.) 848.33 436.25 425.63 Earning Per Share (Rs.) 12.50 10.42 4.17 * Excluding revaluation reserves and after deducting miscellaneous expenditure not written-off or adjusted)
HMT(I) is an unlisted company and therefore the details of its public issue such as year of issue, amount of issue, stock market data of equity shares, etc are not applicable. Further, it is certified that there has been no change in the capital structure of the company in the last six months.
Contingent Liabilities of HMT (International) Ltd. (Rs. in crores) Particulars As at March 31, 2003 1 Guarantees and Letters of Credit issued to various parties 6.71 2 Interest on the unsecured loan of Rs. 13891727/- claimed by State Bank of India has not 6.00 been provided for in the accounts 3 Estimated liability in respect of All India Leave Travel Concession encashment facility, 1.96 which is accounted on claim basis 4 Estimated amount of contracts remaining to be executed on capital account and not 0.04 provided for. TOTAL 14.71
Transactions of the Company with HMT (International) Ltd Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003 Dividend paid by HMT (International) to the 0.02 0.05 0.07 Company (Rs. in crores)
F. PRAGA TOOLS LIMITED Date of Incorporation, Promoters & Management Praga Tools Limited (PTL) was incorporated on May 20, 1943 as Praga Tools Corporation Limited to manufacturer Machine Tools with head quarters at Secunderabad. It was renamed as Praga Tools Limited in 1963. HMT Limited took over PTL as one of its subsidiaries with the transfer of majority of the share holding in the year 1988. PTL has contributed to the development of machine tool industry in the country and created a vast band of skilled technicians. Its most treasured testimonial is user preference for Praga products. PTL manufactures Machine Tools for various applications including CNC Machines. In the earlier years Praga has had collaboration with world famous machine tool manufacturers. The collaborations have culminated in Praga producing machine tools of highest quality conforming to international standards.
Affairs of Praga Tools are managed by eminent and professional Board of Directors comprising following persons:
1. Mr. M. S. Zahed - Chairman (from 29.04.2003) 2. Mr. Kishan Mehrotra - Managing Director 3. Mr. Mukul Kumar - Director 4. Mr. K. V. Ramanamurthy - Director (upto 31-05-2003) 5. Mr. Minnie Mathew - Director (upto 17-10-2003) 6. Mr. T. S. Appa Rao - Director (from 17-10-2002 to 07-07-2003)
33 HMT Limited
Product Range 1. Turning Machines 2. Grinding Machines CNC Lathes Cylindrical Grinders – CNC CNC Turning Centres Internal Grinders – CNC Heavy Duty Lathes Centreless Grinders - Non-CNC Single/ Twin Spindle Chuckers Surface Grinders - Non-CNC Multispindle CNC Automats Double Disc Grinders - Non-CNC Sliding Head Automats Grinders – Others CNC Training Lathes Cylindrical Grinders - Non-CNC Centre Lathes Centreless Grinders – CNC CNC Slant Bed Turning Centres Surface Grinders – CNC CNC Heay Duty Lathes Double Disc Grinders – CNC CNC Chuckers Tool & Cutter Grinders CNC Turnmill Centres 3. Gear Manufacturing Machines 4. Machining Centres Gear Hobbers – CNC Machining Centres – Horizontal Gear Shapers – CNC Machining Centres - High Speed Gear Hobbers - Non-CNC Machining Centres – Vertical Gear Shapers - Non- CNC CNC Drilling & Tapping Centre Flexible Manufacturing Cells Flexible Manufacturing Modules Flexible Manufacturing Systems 5. Other GPMs 6. Special Application Machines Programmable Knee Type Milling Machine Multi Station Round Table SPM Turret Ram Type Milling Machine SPM for Battery Manufacturing Column Drill Broaching Machine 2-Axes CNC Precision Co-ordinate Table Knee Type Milling Machine Dual Spindle Case Trimming Machine Radial Drill Duplex Milling Machines Carbide Tool Lapping Machine Bilateral Master- Slave Servo manipulators Vertical Surface Broaching Machine CNC Heavy Duty Internal Grinding Machine CNC Drilling & Reaming Machine CNC Stitching & Hole Drilling Machine Head Turning & Mouth Reaming Machine Rotary Indexing Machines Flash Hole Drilling Machines CNC 4-Axes Chucker CNC Precision Internal Grinding Machine 7. Diecasting Machines 8. Presses HMT-MTL offers 9 models of Die-Casting Machines HMT-MTL offers wide range of with locking forces ranging from 80 to 1100 tones to Mechanical Presses cover a wide range of pressure Die-Casting of Hydraulic Presses Aluminum, Zinc, Magnesium, Copper, Lead & Tin Mechanical Press Brakes & other Presses components. The HMT range covers Mechanical Presses up to The salient features of these machines include 2500 tonnes and Hydraulic Presses upto 8000 tonnes. digital setting of Die-closing / Opening and Ejector HMT Presses are designed and offered in various Speed, Flying Piston type accumulator individually arrangements. adjustable speeds and pressures, large adjustable Crank / Eccentric Shaft / Eccentric Gear / Knuckle opening stroke and programme logic control. Joint Type with a choice of single point, two point or HMT manufacturing six models of Plastic Injection four points of power application and gearing Moulding Machine ranging from 80 to 630 tones arrangements to suit individual requirements. locking force. 9. CNC Systems 10. Precision Ballscrews CNC Systems covering controls for A wide range of Precision Ball Screws used in CNC Turning Machine Machine Tool, Roto Gravure printing machines and Machining Centers various engineering products for conversion of rotary Grinders & Punch Presses motion into linear movement and vice versa. Turning Centers Twin Spindle Chucker The range covers Ball Screws in sizes from Dia 25 MM to Dia 80 MM with leads 5,8, 10 & 12 MM pitches. Maximum length up to 3500 MM
Brief Financials (Rs. in crores) Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003 Total Sales 9.09 4.98 6.55 Total Income 7.50 5.53 8.25 Total Expenditure 41.61 40.02 45.18 Profit Before Tax (PBT) (34.41) (35.06) (37.50) Profit After Tax (PAT) (34.41) (35.06) (37.50) Share Capital 36.17 36.17 36.17 Reserves & Surplus * - - - Dividend (%) 0.00 0.00 0.00 Book Value per Share (Rs.) (50.68) (60.37) (72.40) Earning Per Share (Rs.) (33.29) (33.92) (36.28) * Excluding revaluation reserves and after deducting miscellaneous expenditure not written-off or adjusted)
34 HMT Limited
PTL is an unlisted company and therefore the details of its public issue such as year of issue, amount of issue, stock market data of equity shares, etc are not applicable. Further, it is certified that there has been no change in the capital structure of the company in the last six months.
Contingent Liabilities of Praga Tools Ltd. (Rs. in crores) Particulars As at March 31, 2003 1 Claims against the Company not acknowledged as debts 2.27 2 Bills purchased/ discounted 0.01 3 Disputed Sales Tax Demand 0.36 TOTAL 2.64
Transactions of the Company with Praga Tools Limited There has been no financial transaction of Praga Tools with the Company over past three years.
GROUP COMPANIES OF THE COMPANY Since the Government of India is the promoter of the Company, it is not possible to give details of its group companies because of the large number of such undertakings.
JOINT VENTURE OF THE COMPANY SUDMO-HMT Process Engineers (India) Limited Date of Incorporation, Promoters & Management SUDMO-HMT Process Engineers (India) Limited (SUDMO-HMT) was incorporated on September 05, 1994. It is a joint venture between HMT Limited and SUDMO Schleicher AG, Germany. The nature of activities in which the company is engaged in are total project engineering and marketing services of food processing machineries, equipments and other relevant items.
Brief Financials (Rs. in crores) Particulars Year ended Year ended Year ended March 31, 2001 March 31, 2002 March 31, 2003 Total Sales 0.25 0.10 0.01 Total Income 0.28 0.14 0.04 Total Expenditure 0.27 0.14 0.03 Profit B`efore Tax (PBT) 0.01 - 0.01 Profit After Tax (PAT) 0.01 - 0.01 Share Capital 0.30 0.30 0.30 Reserves & Surplus * 0.01 0.01 0.01 Dividend (%) Nil Nil Nil Book Value per Share (Rs.) 10.23 10.24 10.45 Earning Per Share (Rs.) 0.33 - 0.33 * Excluding revaluation reserves and after deducting miscellaneous expenditure not written-off or adjusted)
This Joint Venture Company operated at nominal levels during financial year 2003-2003 and achieved sales and income of Rs. 4.29 lakhs as against sales and income of Rs. 13.90 lakhs recorded during the previous year. The operations resulted in a Net Profit after tax of Rs. 0.52 lakhs compared to break even in the previous year. A strategic decision regarding the continuation of the Venture consequent upon change in the joint venture partner abroad is being taken considering the future prospects and related business profile of the joint venture including the capabilities and business plans of the successor to the original foreign partner.
SUDMO-HMT is an unlisted company and therefore the details of its public issue such as year of issue, amount of issue, stock market data of equity shares, etc are not applicable. Further, it is certified that there has been no change in the capital structure of the company in the last six months.
There has been no financial transaction of SUDMO-HMT with the Company over past three years.
35 HMT Limited
V. ORGANISATION STRUCTURE & MANAGEMENT
PROMOTERS & THEIR BACKGROUND The Company is promoted by the Government of India and the day to day affairs of the Company are managed under the guidance and overview of a professional Board of Directors under the administrative control of Ministry of Heavy Industries & Public Enterprises, Department of Heavy Industry, Government of India.
SHAREHOLDING OF THE PROMOTERS Name of the Promoter Number of Shares held Face Value of Shares Held %age Shareholding (as on Sept., 2003) (Rs. in crores Government of India 459674340 459.67 98.18
DETAILS IN CHANGE OF MANAGEMENT OF THE COMPANY IF ANY There has been no change in the management of the Company therefore the provisions regarding furnishing of details of changes in management of the Company including details of the person(s) who are holding the controlling interest together with the applicability and compliance with the SEBI (Substantial acquisition of shares and takeovers) Regulation 1997), shall not be applicable.
KEY MANAGERIAL PERSONNEL (as on date) Given below is a list of key managerial personnel of the Company. The Company confirms that all these employees are on the employment and serving the Company as permanent employees: Emp. Name and Address Age Date of Qualification Details of Work Compensation No. # Designation (Years) Joining previous Experience (2002-2003)* HMT employment 1097 Shri. M.S. Zahed HMT House 55 09.01.2003 B.E. (Mech) First 33 YEARS Rs.4,62,711/- Chairman & HMT Township, years- PGDM (IIM-B) appointment Managing Jalahalli, in HMT Director Bangalore-560031 # Emp. No. = Employee Number * As per section 217(2)A of the Companies Act, 1956
CHANGES IN KEY MANAGERIAL PERSONNEL IN LAST 1 YEAR There has been no change in the Key Managerial Personnel of the Company over past one year.
BOARD OF DIRECTORS (as on January 31, 2004) Sr. Name & Designation Age Qualification & Date of Date of Expiry of Residential Address Particulars of other No. (Years) Experience Appointment Current Term Directorships 1. Shri M.S. Zahed 55 B.E.(Mech) 09.01.2003 5 Years or date HMT House HMT Machine Tools Ltd. (Chairman & Managing years PGDM (IIM-B) of Retirement or HMT Township, HMT Watches Ltd. Director) until further Jalahalli, HMT Chinar Watches Ltd. Orders whichever Bangalore-560 031 HMT (International) Ltd. is earlier HMT Bearings Ltd. SUDMO-HMT Process Engineers (I) Limited Gulf Metal Foundry (LLC) UAE Praga Tools Limited 2. Shri Naresh Chaturvedi 56 M.Sc., Physics 12.05.2003 Until further 321, Asiad Village, HMT (International) Ltd. (Director) years LLB Orders August Kranti Additional Secretary & I.A.S. (1970) Marg, Financial Adviser to New Delhi-110 049 Govt. of India, Ministry of Heavy Industries & Public Enterprises, New Delhi 3. Shri Navin Kumar 52 M.Sc., Physics 21.08.2003 Until further E-12, R.K. Puram, Hindustan Cables Ltd. (Director) years- I.A.S (1975) Orders Sector 13, Heavy Engineering Joint Secretary to the New Delhi-110 022 Corporation Ltd. Govt. of India, Ministry HMT (International) Ltd. of Heavy Industries & Public Enterprises, Department of Heavy Industry, New Delhi The directors of the Company together hold 200 shares in the Company as presidential nominees.
Brief Biographies of Directors of HMT
Shri M.S. Zahed Mr. Zahed has widespread experience in the international marketing of engineering products and Project Management. He has travelled to several countries and has been involved in the implementation of many turnkey projects taken up by HMT and has extensively associated with several international contracts. Being a keen follower of Information Technology, he has also marketed HMT's ERP package and other Software Products in India & abroad during his tenure at HMT(I). He was Executive Director of HMT (International) before taking over as Director, Organisation and Management.
Shri Naresh Chaturvedi During thirty-three years of professional experience as member of the Indian Administrative Service, he has had the opportunity to be associated with diverse aspects of administration and financial management and has worked in different parts of the country in various capacities.
Over the period he has among other positions served as Managing Director of Food Corporation of India, Secretary to the Governor of West Bengal, Director General, Food, & Ex-Officio Principal Secretary of Food & Supplies Department Govt. of West Bengal, Principal Secretary, Fisheries Dept., Govt. of West Bengal, Special Secretary, Home Dept., Govt. of West Bengal, and as Excise Commissioner of Govt. of West Bengal and Govt. of Uttar Pradesh.
36 HMT Limited
Shri Navin Kumar During twenty five years of professional experience as member of the Indian Administrative Service, has been associated with diverse aspects of administration and has worked in several departments of the state and central governments in various capacities.
Among the assignments held by him in the provincial government were the posts of Member, Electricity Board; Secretary, Personnel and Administrative Reforms; Secretary, Forest and Environment; and Secretary, Department of Cooperatives. Shri Navin Kumar came to work with the Government of India in 1988. He was initially assigned to the Ministry of Water Resources. Subsequently, he moved to the Department of Economic Affairs in the Ministry of Finance where he worked until 1993. Thereafter, he was selected by the Commonwealth Secretariat to serve as the Chief Technical Adviser to the Government of Sierra Leone during the period 1993-96.
Mr. Navin Kumar returned to the Government of India after doing a stint with the Provincial Government in August 1999. Before his present assignment, he has worked as Joint Secretary in the Department of Economic Affairs, Ministry of Finance. He is currently working as Joint Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises.
CORPORATE GOVERNANCE (as appearing the annual report for the financial year 2002 -03) The Code of Corporate Governance introduced by the Securities and Exchange Board of India (SEBI) has to be implemented by the Company in terms of the listing agreements with the Stock Exchanges.
The Company has been following good Corporate Governance practices like striking out reasonable balance in the composition of the Board of Directors, setting up of Audit Committee and other Committees, adequate disclosure of information and business to be deliberated by the Board, etc. The Compliance of some of these provisions/ requirement have been inadequate during the year under review primarily due to vacancies in the position of Directors on the Board which are yet to be filled up by the Government being the appointing authority for all positions of Directors in the Company. Nevertheless the Company has taken up the matter strongly with the Government for an early decision in filling up the vacant positions of Directors especially with regard to part-time independent Directors in order to effectively comply with the listing requirements as well as the provisions of the Companies Act, 1956.
Board of Directors The Board of Directors presently comprises of only one Wholetime Director i.e. Chairman & Managing Director and two part-time Official Directors. The filling up of vacancy in the positions of Wholetime Directors and a few part time non-official (independent) Directors requires further decision by the Government in terms of the Articles of Association of the Company. The day-to-day management of the Company is conducted by the Chairman & Managing Director subject to the supervision and control of the Board of Directors duly assisted by the Wholetime Directors. During the year 2002-03, four Board Meetings were held on May 29, August 27, and November 12 in 2002, and on January 30, 2003.
The composition of Directors and their attendance at the Board Meeting and at the General Meeting during the year are: Name Category Attendance Particulars No. of Other directorships Committee Member/ Board General Chairman ships held Meeting Meetings Directorship Committee Membership Chairmanship M.S. Zahed C 4 Yes 4 V.K. Malhotra* OD 3 NA Ajoy Acharya* OD 4 NA 7 1 1 R.A. Sharma** WTD 2 NA 7 4
C: Chairman & Managing Director OD: Official Director WTD: Wholetime Director NA: Not Attended * Appointed as Official/ Nominee Director * Withdrawn as Official Director ** Retired as Functional Director Subsequently Shri V.K. Malhotra, IAS, and Shri Ajoy Acharya, IAS, part-time Official Directors were replaced with Shri Naresh Chaturvedi, IAS, with effect from May 12, 2003, and Shri Navin Kumar, IAS, with effect from August 21, 2003, respectively, by the Government.
Audit Committee The Audit Committee of the Board was re-constituted on October 30, 2001 comprising of Shri K. K. Jaswal, Shri Ajoy Acharya, the part-time Directors and Shri R.A. Sharma, Director, Tractor. However, with cessation of the Directors the Audit Committee could not be reconstituted in line with the statutory/ listing requirements and hence did not meet during the year 2002-03 to deliberate on the designated issues. The further reconstitution of the Audit Committee awaits decision of the Government on filling up of the vacant positions of Directors including independent Directors.
Remuneration Committee Being a Government Company, the nomination and fixation of terms and conditions of appointment of Directors are made by Government of India. As such, no remuneration committee is required/ has been constituted. The details of remuneration of whole time Directors are given below: Name of Director Salary Other benefits (Rs.) Total (Rs.) Shri M.S. Zahed 3,73,551 89,160 4,62,711 No Sitting fee is payable to any of the directors except part time non-official Directors. The salary of the whole time Directors does not include performance-linked incentive except amount payable as per the productivity linked incentive scheme of the Company.
Shareholders Committee The Shareholders Committee was last reconstituted on November 17, 2000 comprising of the Chairman and Managing Director as a single member of the Committee to look after transfer/ transmission of shares issued by the Company, issue of duplicate certificates and certificates after split/ consolidation/ renewal apart from confirmation of demateralisation of shares on transfer to a depository. Thirteen meetings were held during the year 2002-03.
37 HMT Limited
Name of the Compliance Officer: Shri U. Jagadish Nayak, Chief, Corporate Legal & Company Secretary The said Committee also looks after the grievances of the Shareholders/ Investors. However, there were no major complaints except regarding certain delay/ loss of the relevant share certificates in transit, etc., which are being redressed as early as possible subject to compliance of all legal formalities to protect the interest of the Company and upon receipt of relevant documents in this regard.
1. Number of shareholders complaints received during the period from 1.4.2002 to 31.3.2003 : 7 2. Number of complaints solved to the satisfaction of shareholders : 4 3. Number of pending share transfers with M/s. Karvy Consultants Ltd., the Registrars and Share Transfer Agents : 3
General Body Meetings The last three Annual General Meeting were held as under: Financial year Date Time Location 1999-2000 22.12.2000 10.30 a.m. Registered Office at No. 59, Bellary Road, Bangalore – 560 032 2000-2001 28.12.2001 4.00 p.m. As above 2001-2002 27.12.2002 4.30 p.m. As above No special resolutions were required to be put through postal ballot during the above meetings.
Human Resources The employee strength of the Company as on March 31, 2003, was 2649 as compared to 2809 as at the end of the previous year. The Company was able to reduce the surplus workforce by 147 employees during the year through Voluntary Retirement Scheme (VRS) introduced during March 2003 with financial support provided by the Government in the form of interest bearing loans. The number of employees on the rolls of the Company as on March 31, 2003, in SC/ ST, Ex-Servicemen and Physically Handicapped categories stood as follows:
Sr.No. Category Number of Employees 1. Scheduled Castes 597 2. Scheduled Tribes 110 3. Ex-Servicemen 29 4. Physically Handicapped 19
Pursuant to the directions of the Government, the Company decided to roll back the age of superannuation from 60 years to 58 years in respect of all the employees of the Company and the Subsidiaries including Board level Officers with effect from April 07, 2003. The amendment of the Standing Orders of the Units incorporating the said roll back of the age of superannuation in respect of the workmen is underway pending completion of statutory formalities.
As on March 31, 2003, the Company including its Subsidiaries had a total workforce of 10718 employees, which comprised various categories under manufacturing and other professional areas as detailed below: IP as on Engineering Diploma in Professionals 31.3.2003 Graduates Engg. Finance HRM ITI Others HMT Limited (including Tractors) 2649 123 206 18 8 1586 708 HMTMTL 4600 523 661 18 23 1776 1599 HMT WL 2330 71 231 5 13 195 1815 HMTCWL 662 3 5 - - 231 423 HMTBL 397 25 27 3 5 159 178 HMT(I) L 80 27 1 1 2 - 49 Total 10718 772 1131 45 51 3947 4772
Personal Costs have been substantially reduced by implementing several austerity measures and downsizing of surplus manpower through rationalisation of manpower and implementation of the Voluntary Retirement Scheme (VRS). The Company has achieved reduction in surplus manpower to an extent of 9061 personnel over a period of last three years. The detailed break up, Company wise is as follows: Sl. No. No. of employees 1. HMT Limited (including Tractors) 1239 2. HMT Machine Tools Limited 4429 3. HMT Watches Limited 297 4. HMT Chinar Watches Limited 158 5. HMT Bearings Limited 258 TOTAL 9061
The Company has taken various measures for optimum utilization of the existing manpower through deployment/ re-deployent, training and re-training in order to bridge the gap created due to VRS so as to balance the manpower requirement of the Company. The Company is currently addressing the twin issues of attracting and retaining talent in the context of the perfect dynamic market scenario where the financial expectations have undergone radical change in recent years. But at the same time the Company is very conscious of the need, not only to control head count but also to further reduce the manpower. The vacant positions of separated employees are being filled up only based on urgent necessity under unavoidable circumstances while re- training and re-deployment of the existing staff is done on a continuous basis.
Internal control systems & their adequacy The Company has adequate internal control procedures in respect of accounting and maintaining records. The salient features of internal control systems are:
38 HMT Limited
1. Clear delegation of power with authority limits for incurring capital and revenue expenditure; 2. Well laid down Corporate policies for accounting, reporting and Corporate Governance; 3. Safeguarding assets against unauthorized use or losses; 4. Detailed Annual budget giving further break up of monthly targets under various heads; 5. Continuous review of the performance by the Executive Committee; 6. Compliance with laws and regulations.
The Internal Audit Department of the Company along with external firms appointed for carrying out internal audits of Units/ Divisions reviews, evaluates and appraises the various systems, procedures/ policies laid down by the Company and suggests meaningful and useful improvements. Internal Audit Department coordinates with the Units/ Divisions of the Company for ensuring coverage of all areas of operations in order to bring a transparency in the whole spectrum of the Company.
VI. STOCK MARKET DATA OF THE EQUITY SHARES OF THE COMPANY
The equity shares of the Company are listed on The National Stock Exchange of India Limited (NSE), and The Stock Exchange, Mumbai (BSE).
(i) The following table shows the high and low of daily closing share prices of the Company on The Stock Exchange, Mumbai (BSE) and The National Stock Exchange of India Limited (NSE) for the periods indicated: Period BSE NSE High (Rs.) Low (Rs.) Average * (Rs.) High (Rs.) Low (Rs.) Average * (Rs.) 2000-2001 9.75 5.30 7.91 11.20 5.00 7.04 2001-2002 8.60 3.50 5.29 8.50 3.50 5.33 2002-2003 38.70 6.05 18.95 38.40 6.05 18.52 April 2003 19.80 14.05 16.15 19.70 13.80 16.11 May 2003 23.90 16.30 18.70 26.95 16.40 18.66 June 2003 23.90 20.30 21.61 24.00 20.00 21.58 July2003 26.10 18.75 21.41 26.00 19.05 21.46 August 2003 24.00 19.15 21.55 24.40 19.20 21.53 September 2003 24.75 16.60 20.34 24.80 16.75 20.35 October 2003 22.90 17.60 19.30 21.70 17.50 19.22 November 2003 24.75 17.50 20.77 26.80 17.40 20.65 December 2003 29.75 20.45 25.40 28.90 22.35 25.38 January 2004 31.45 20.00 24.83 31.35 20.00 24.78 * Average of the daily closing share price
(ii) The following table shows the number of shares traded on the days High and Low prices of the Company’s shares recorded on The Stock Exchange, Mumbai (BSE) and The National Stock Exchange of India Limited (NSE) for the last ten months: Period BSE NSE High Low High Low Date Number Date Number of Date Number of Date Number of of shares shares shares shares traded traded traded traded 2000-2001 21-07-00 4280 20-10-00 1000 20-07-00 49707 13-03-01 6350 21-02-01 7500 30-03-01 4300 2001-2002 18-02-02 37502 17-09-01 1550 18-02-02 41528 14-09-01 600 2002-2003 04-07-02 851514 01-04-02 9650 04-07-02 2465696 01-04-02 48666 April 2003 22-04-03 116916 14-05-03 740 22-04-03 438000 01-04-03 6665 May 2003 27-05-03 150174 02-05-03 1720 27-05-03 506490 02-05--03 27075 June 2003 10-06-03 87465 24-06-03 7560 10-06-03 309266 03-06-03 45773 July 2003 07-07-03 245120 31-07-03 14495 08-07-03 440201 28-07-03 21985 August 2003 19-08-03 45849 07-08-03 33490 19-08-03 161240 01-08-03 32650 September 2003 05-09-03 114670 22-09-03 8197 05-09-03 291330 23-09-03 7725 October 2003 10-10-03 18775 31-10-03 15923 09-10-03 88011 31-31-03 52212 November 2003 12-11-03 285501 05-11-03 3237 13-11-03 267732 05-11-03 27596 December 2003 04-12-03 194988 02-12-03 25497 04-12-03 434390 03-12-03 473124 January 2004 06-01-04 216936 22-01-04 24755 06-01-04 491848 22-01-04 66927
(iii) The closing market price of the share on November 21, 2003, the day the Board of Directors approved this issue, was Rs. 21.15/- on NSE and Rs. 21.30/- on BSE (since this is an issue of pure debt, the share prices mentioned above would not be relevant).
(iv) The total volume of securities traded in each month on The Stock Exchange, Mumbai (BSE) and The National Stock Exchange of India Limited (NSE) is as follows: Period Total number of shares traded BSE NSE 2000-2001 330641 1604351 2001-2002 465478 994516 2002-2003 8365974 35007334 April 2003 347949 1431959 May 2003 730509 2548331 June 2003 518550 1707850 July 2003 863959 2353247 August 2003 461093 1448980 September 2003 486752 1140190 October 2003 303454 630920 November 2003 841612 1717826 December 2003 1134668 3023953 January 2004 1321907 3124283 The equity shares of the Company are actively traded at all the Stock Exchanges where they are listed.
39 HMT Limited
PROMISE V/s. PERFORMANCE The Company had not given any financial projections in its Offer Document at the time of taping the markets with its equity public issue. The Company has privately placed bonds on various occasions in the past, where the Information Memorandum(s) given to investors may have provided financial projections. These projections were made only because Reserve Bank of India had advised banks to insist on such projections where the tenure of the bonds was 5 years or longer. These projections were indicative and not in the nature of any promise. In view of the same, this clause is not considered to be applicable. The subsidiary and joint venture companies of the Company are all unlisted companies and they have not raised equity share capital/ debt from the capital markets. Therefore the provision for furnishing comparison of such companies’ performance vis-à- vis projections is not considered to be applicable.
VII. MANAGEMENT DISCUSSION & ANALYSIS OF FINANCIAL PERFORMANCE
Profit & Loss Account of the Company for the last three financial years as per the audited balance sheets of the Company and half year ended 30 September 2003 are as given in the following table: Year/ Period ended March 31, March 31, March 31, Half year %age change %age change 2001 2002 2003 ended Sept. from 2001 to from 2002 to 30, 2003 2002 2003 INCOME Sales 345.22 287.10 183.30 39.99 (16.83) (36.15) Other Income 67.59 32.97 37.65 5.20 (51.22) 14.19 Total Income 421.48 295.66 214.16 51.91 (29.85) (27.56) EXPENDITURE Material Cost 220.70 160.17 107.34 26.77 27.42 32.98 Employees Cost 70.32 52.96 51.88 25.91 24.69 2.04 Interest Cost 10.15 -0.45 10.97 5.70 104.43 (2337.78) Other Operating Cost 88.84 67.11 68.10 14.71 24.46 (1.47) Depreciation 4.46 4.39 4.47 2.26 1.56 (1.82) Total Expenditure 397.07 288.10 248.14 78.34 27.44 13.87 Profit before Tax 24.41 7.82 (34.01) (26.44) 67.96 (534.91) Provision for Taxation - (2.42) 0.40 - Net Profit for the Year 24.41 10.24 (34.41) (26.44) 58.05 (436.04)
Significant items of income and expenditure during 2002-03 (comparison of financials for the year ended March 2003 with March 2002) Net Profit: Net profit of the Company declined from Rs. 10.24 crores in the year ended March 31, 2002 to Rs 34.41 crores (Loss) in the year ended March 31, 2003 showing a decline of 436.04%. Sales: Sales of the Company decreased from Rs. 287.10 crores in the year ended March 31, 2002 to Rs 183.30 crores in the year ended March 31, 2003 showing a decline of 36.15%. Other Income: Other Income of the Company increased from Rs.32.97 crores in the year ended March 31, 2002 to Rs 37.65 crores in the year ended March 31, 2003 showing a growth of 14.19%. Other income of the company comprises of servicing income, export incentives, recoveries from staff/ others, profit on sale of assets, dividend from subsidiaries and other miscellaneous income. These incomes are earned in the normal course of business of the Company. Total Income: Total income of the Company showed a downward trend by decreasing to Rs.214.16 crores from Rs.295.66 crores in year ended March 31, 2003 and year ended March 31, 2002 respectively. This resulted in a decline of 27.56% Material Cost: Material cost decreased from Rs.160.17 crores in year ended March 31, 2002 to Rs.107.34 crores in year ended March 31, 2003. Employees Cost: Employee cost decreased from Rs.52.96 crores in year ended March 31, 2002 to Rs.51.88 crores in the year ended March 31, 2003. Operating Expenses: The major portion of the Operating Expenses of the Company comprises of power & fuel, excise duty, rebate on sales, other agents commission etc Even though there was an decline in sales the operating expenses of the company increased to Rs. 68.10 crores in the year ended March 31, 2003 from Rs. 67.11 crores in the year ended March 31, 2002.. Total Expenditure: While the total income of the Company declined by Rs. 81.50 crores (27.56% decrease), the total expenditure of the Company decreased only by Rs. 39.96 crores (13.87% decrease).
Significant items of income and expenditure during 2001-02 (comparison of financials for the year ended March 2002 with March 2001) Net Profit: Net Profit of the Company decreased from Rs. 24.41 crores in the year ended March 31, 2001 to Rs. 10.24 crores in the year ended March 31, 2002 showing a decline of 58.05%. Sales: Sales of the Company decreased from Rs. 345.22 crores in the year ended March 31, 2001 to Rs 287.10 crores in the year ended March 31, 2002 showing a decline of 16.83%. Other Income: Other Income of the Company decreased from Rs.67.59 crores in the year ended March 31, 2001 to Rs 32.97 crores in the year ended March 31, 2002 showing a decline of 51.22%. Other income of the company comprises of servicing income, export incentives, recoveries from staff/ others, profit on sale of assets, dividend from subsidiaries and other miscellaneous income. These incomes are earned in the normal course of business of the Company. Total Income: Total income of the Company showed a downward trend by decreasing to Rs.295.66 crores from Rs421.48 crores in year ended March 31, 2002 and year ended March 31, 2001 respectively. This resulted in a decline of 29.85%. Material Cost: Material cost decreased from Rs.220.70 crores in year ended March 31, 2001 to Rs.160.17 crores in year ended March 31, 2002 Employees Cost: Employee cost decreased from Rs.70.32 crores in year ended March 31, 2001 to Rs. 52.96 crores in the year ended March 31, 2002. Operating Expenses: The major portion of the Operating Expenses of the Company comprises of power & fuel, excise duty, rebate on sales, other agents commission etc The operating expenses of the company decreased to Rs. 67.11 crores in the year ended March 31, 2002 from Rs.88.84 crores in the year ended March 31, 2001. Total Expenditure: While the total income of the Company declined by Rs. 125.82 crores (29.85% decrease), the total expenditure of the Company decreased by Rs.108.97 crores (27.44% decrease).
40 HMT Limited
COMPANIES UNDER THE SAME MANAGEMENT As per Circular No. 9/76 dated 19.05.1976 issued by the Department of Companies Affairs, Government of India, the provision of Section 370(1B) of the Act are not applicable to a Government Company.
PARTICULARS OF THE ISSUE MADE BY COMPANIES UNDER THE SAME MANAGEMENT IN LAST 3 YEARS The Company is a Government Company and hence Section 370(1B) of the Companies Act, 1956 is not applicable.
VIII. BASIS FOR ISSUE PRICE
This issue being a debt issue, the price has been determined taking market rates into consideration.
IX. OUTSTANDING LITIGATIONS, DEFAULTS AND MATERIAL DEVELOPMENTS
The litigations against the Company, its promoters and companies/ firms/ ventures promoted by the promoters are classified into 3 categories: 1. Cases filed against the Company; 2. Cases filed against the Promoters and companies/ firms/ ventures promoted by the promoters of the Company; 3. Disputed Tax Liabilities.
1. The details of the cases filed against the Company as on 30.09.2003 and which are outstanding as on date There are 13 cases against the Company with monitory relief amounting to Rs. 56.56 crores excluding interest claimed therein against the Company. The details of these cases are as below: Sr. Case No¸Brief Name of the Time of Court before Amount Remarks/ No. description of the case Principal Parties Institution which the case involved Latest Position and Charges/ is pending Rs in .crores allegations involved 1 CP No.246/01 M/s. Williamson 06.12.2001 0.30 (P) Pending – Hearing Claims on account of Magor Education + Int. for Admission non-redemption of Trust, Calcutta principal amount of HMT Bonds along with interest 2 C.P. No.2/2003 by M/s. DCM during 0.25 (P) Claims on account of Employees January 2003 + Int. non-redemption of Provident Fund principal amount of Trust HMT Bonds along with High Court of interest Karnataka 3 C.P. No. 99/2002 Eastern Railway 27.05.2002 1.00 (P) Claims on account of Employees (Winding up + Int. non-redemption of Cooperative Bank Petition) principal amount of HMT Bonds along with interest 4 CP No. 162/2003 DCM Limited, New During 2003 1.77 (P) Preliminary stages of Claims on account Non Delhi + Int. Hearing payment of outstandings towards supplies made 5 Writ Petition No. TELCO, Mumbai 23.08.00 High Court of 18.23 (P) Contempt Petition 1814(Gratuity) Judicature, + Int. filed by Telco Trusts 1815(PF) & 1816 disposed of subject (Superannuation Fund) to furnishing of 2000 undertaking to Claims on account of . dispose of the land non-redemption of at Kalamassery (100 principal amount of acres) and remit the HMT Bonds along with proceeds on account interest of Principal + interest on or before 31.12.2003. Application for extension of time in the matter filed by HMT 6 O.S. No.4974/99 Central Board of 23.03.2001 City Civil Court, 25.00 (P) Application for Leave Trustees Bangalore + Int. to Defend granted to O.S. No. 7157/2000 (EPFO) HMT subject to Claims on account of furnishing security non-redemption of for the claim by way principal amount of of unencumbered HMT Bonds along with properties. To obtain interest clearance for litigation by Committee on Disputes before 31.03.2004
41 HMT Limited
7 O.S. 16123/2000 Indian 13.09.2000 City Civil Court, 2.31 (P) Matter pending in the 1474/2001 Petrochemicals Bangalore + Int. Lok Adalat of High Claims on account of Corporation Limited Court of Karnataka non-redemption of . based on Civil principal amount of Rivision Petition filed HMT Bonds along with by IPCL for interest possibilities of settlement Out of Court 8 O.A. 330/2002 Allahabad Bank, 17.06.2002 2002Debts 4.85 (P) Clearance from Claims on account of B’lore Recovery + Int. Committee on non-redemption of Tribunal, Disputes awaited for principal amount of Bangalore proceeding further in HMT Bonds along with Debt Recovery interest Tribunal. Proposal for settlement submitted by HMT to the Bank. 9 1849/2001. Lala Diwan Chand 06.09.2001 High Court, 1.50 (P) To be heard on Claims on account of Trust & Ors New Delhi + Int. HMT’s Application non-redemption of for Leave to Defend principal amount of HMT Bonds along with interest. 10 (O.A) No. 169/02 Nainital Bank 05.08.2002 Debts 0.50 (P) Pending for final Claims on account of Limited, Nainital, Recovery + Int. arguments/hearing non-redemption of U.P., Branch at Tribunal, New and disposal principal amount of New Delhi Delhi HMT Bonds along with interest 11 Cases pending before Filed by ex- During 2002- Supreme Court Not Court has ordered various Courts for employees 2003 quantifiable for payment of 55% payment of wage/pay of arrears for all the revision arrears eligible employees in instalment before November 2003 and balance arrears in 3 instalments starting March 2005. Application for extension of time filed by HMT 12 MFA 2359/99 Bharat Sanchar During 2000 High Court of 0.35 Arbitration Award A.C No. 82/2000 Nigam Ltd. & Karnataka/City + Int. directing HMT to pay Bangalore Telecom Civil Court, difference in rentals A.C.No.8/2001 filed District Bangalore challenged by HMT against Bangalore in City Civil Court Telecom Laying of 100 pair jelly filled cables by Bangalore Telecom from Peenya Telephone Exchange to HMT’s Computer Centre at Jalahalli 13 O.S. No.7476/1998 East Coast During 1998 0.50 Pending for Claim on account of Construction & + Int. arguments balance payments Industries arising out of Construction of HMT’s Corporate Office Building at Bangalore
2. Cases filed against the Promoters and companies/ firms/ ventures promoted by the promoters of the Company Since the Government of India is the promoter of the Company, it is not possible to give details of pending litigations against the Government or the companies/ firms/ ventures promoted by the Government because of large number of such undertakings.
3. Disputed Tax Liability As on September 30, 2003 there are no disputed demand of Income tax/ interest tax against the Company.
Except as mentioned above, no proceedings have been launched against the Company for any of the offences under any enactment, irrespective of whether specified in Paragraph 1 of Part I of Schedule XIII to the Companies Act. No such litigation or disputes are pending as on today and there are no defaults or outstanding statutory dues.
4. Dues to Small Scale Industries As on March 31, 2003, there are 244 Small-scale undertakings/ creditors to which the Company owes amount where payment is outstanding for a period of more than 30 days.
42 HMT Limited
5. Statutory and Other Dues The Company has not defaulted in meeting any statutory dues except Provident Fund remittance of Rs.0.48 crores as on March 31, 2003. There are no dues to Financial Institutions. All Fixed Deposits were repaid on maturity except Unclaimed Deposits of Rs.0.08 crores, which will be repaid as and when claims are received or will be remitted to the Investors Education and Protection Fund. The Company has not issued any Preference Shares. There are no defaults on debt/ interest servicing obligations on all Government of India Guaranteed borrowings. The Company has honored all its GoI Guaranteed Bonds/ Loan commitments on their due dates. In respect of loans/ bonds not guaranteed by Government of India, there have been instances of delays/ defaults in honoring commitments due to continuous cash losses incurred by the Company which adversely affected its cash-flow position and the same is being addressed by the Company under the Turnaround Plan.
Other than the above there are no disputes/ litigations towards tax liabilities or any civil or criminal prosecutions against the Company and its Directors for any offense, economic or otherwise. There are no pending proceedings initiated for economic offences. No penalties have been imposed on the Company by RBI or any other regulatory authority. No proceedings is known to be contemplated by Governmental authorities except those relating to income tax disputes as given above. No disciplinary action/ investigation has been taken by the Securities and Exchange Board of India/ Stock Exchange against the Company and its Directors.
AGAINST THE DIRECTORS OF THE COMPANY There are no outstanding litigations, disputes or penalties against the Directors of the Company, including tax liabilities, economic offences, criminal or civil prosecution for any offence, irrespective of whether specified under any enactment in Paragraph 1 of Part I of Schedule XIII, of the Companies Act, 1956 or any other liability in their personal capacities or as Director/Partner/Sole Proprietor in the Company or any other company/firm.
There are no litigations against the Directors involving violation of statutory regulations or criminal offences. No disciplinary action has ever been taken by the Securities and Exchange Board of India or Stock Exchanges and no penalty has been imposed by any authority. There is no suit pending against the Directors in capacity as director or partner or sole proprietor in any other company/firm.
Other than as stated above, there are no disputes/ litigations towards tax liabilities or any criminal or civil prosecutions against the Company for any offence – economic or otherwise. No criminal proceedings have been launched against the Company under any of the enactment irrespective of whether specified in paragraph 1 of part I of Schedule XIII of the Companies Act.
Interest of Directors of the Company The Directors of the Company are interested to the extent of shares held by them and/or by their friends and relatives or which may be subscribed by them and/or allotted to them by the Company.
The Directors of the Company are interested to the extent of fees, if any, payable to them for attending meetings of the Board or Committee and reimbursement of travelling and other incidental expenses, if any, for such attendance as per the Articles of Association of the Company.
The Directors of the Company are not interested in the appointment of or acting as Underwriters, Lead Arrangers, Registrars, Credit Rating Agency and/ or Bankers to the Issue or any such intermediary registered with SEBI.
The Directors of the Company are not interested in any property acquired by the Company within two years of the date of Information Memorandum or proposed to be acquired by it.
Save as stated above, no amount or benefit has been paid or given to the Company’s Directors or Officers since its incorporation nor is intended to be paid or given to any Directors or Officers of the Company except the normal remuneration and/ or disbursement for services as Directors, Officers or Employees of the Company.
X. INVESTOR GRIEVANCE & REDRESSAL SYSTEM The Shareholders Committee was last reconstituted on November 17, 2000 comprising of the Chairman and Managing Director as a single member of the Committee to look after transfer/ transmission of shares issued by the Company, issue of duplicate certificates and certificates after split/ consolidation/ renewal apart from confirmation of demateralisation of shares on transfer to a depository. Thirteen meetings were held during the year 2002-03. The said Committee also looks after the grievances of the Shareholders/ Investors. However during the financial year 2002-03, there were no major complaints except regarding certain delay/ loss of the relevant share certificates in transit, etc., which are being redressed as early as possible subject to compliance of all legal formalities to protect the interest of the Company and upon receipt of relevant documents in this regard.
1. Number of shareholders complaints received during the period from 1.4.2002 to 31.3.2003 : 7 2. Number of complaints solved to the satisfaction of shareholders : 4 3. Number of pending share transfer: with M/s. Karvy Consultants Limited (Registrars) : 3
As on 30.09.2003, there are no shareholders’ complaints pending. In respect of above, in 7 cases the Company/ Registrar are yet to receive their response/ reply from the shareholders for issue of duplicate share certificates. There have been no shareholders’ complaints with respect to non-receipt of dividend warrants etc.
Share transfers, dividend payment and all other investor related activities are attended to and processed at the office of the Registrar & Transfer Agent, Karvy Consultants Limited, 51/2, T. K. N. Complex, Vanivlis Road, Basavanagudi, Bangalore – 560 004 [Tel No. (080) 26613400, 26621192, Fax No. (080) 26621169]. The Company has also put in place the Investor Relations Cell at its Registered Office to look after the services needed by the shareholders. Any communication, documents, complaints can also be sent to the following address for redressal: Investor Relations Cell, HMT Limited, Registered Office, HMT Bhavan, 59, Bellary Road, Bangalore –560 032.
43 HMT Limited
The details of the Compliance Officer of the Company are as follows:
Mr. U. Jagadish Nayak Chief, Corporate Legal & Company Secretary HMT Limited Registered Office, HMT Bhavan, 59, Bellary Road, Bangalore – 560 032, Tel : (080) 3330333. Fax No. 91-80-3339111 E-mail:[email protected]
The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc.
The investors can also contact the Registrars to the Issue, Karvy Consultants Limited, 51/2, T. K. N. Complex, Vanivlas Road, Basavanagudi, Bangalore – 560 004 [Tel No. (080) 26613400, 26621192, Fax No. (080) 26621169] in case of queries/ complaints, if any, regarding this issue.
44 HMT Limited
PART II
I. GENERAL INFORMATION
Consents Consents in writing from the Directors, Registrars, Bankers to the Issue and Trustees to the Issue, Directors, Compliance Officer cum Chief, Corporate Legal & Company Secretary, Lead Arrangers to act in their respective capacities have been obtained by the Issuer Company and such consents have not been withdrawn upto the date of opening of the Issue. M/s. S.V.R. Associates, the Auditors of the Company have given their written consent to the inclusion of their Report in the form and context in which they appear in the Information Memorandum Such consents and reports have not been withdrawn upto the date of opening of the issue.
Expert Opinion Save as stated elsewhere in this Information Memorandum, the Company has not obtained any other expert opinion.
Changes in Directors during last three years The changes that took place in the Board of Directors since April 01, 2000 are as follows: Sl. No. Name Date of change Reason for change and position held 1 M.S. Zahed 5.5.2000 Appointed as Director, Mktg. Policy, Corporate Planning & Projects 16.10.2001 Appointed as Director (Organisation & Management) 9.1.2003 Appointed as CMD 2 R.K. Chavali 14.7.2000 Withdrawal of nomination by IFCI – Nominee Director 3 Debatosh Ray 10.8.2000 Appointed as Nominee Director in place of R.K. Chavali 4 K.G. Vassal 16.8.2000 Resignation – Nominee Director of UTI 5 S. Shankar 18.9.2000 Appointed as Nominee Director by UTI in place of Shri K.G. Vassal 9.11.2000 Withdrawal of nomination by UTI 6 Debatosh Ray 8.11.2000 Withdrawal of nomination by IFCI 7 B.Ravindranath 17.11.2000 Withdrawal of nomination by IDBI – Nominee Director 8 K.S. Jagannathan 20.11.2000 Voluntary Retirement – Director, Finance 9 H.K. Samadani 30.11.2000 Voluntary Retirement – Director, Machine Tools 10 N. Ramanuja 31.3.2002 Superannuation – C&MD 11 K.K. Jaswal 4.7.2002 Withdrawal of nomination by Ministry – Part-time Official Director 12 R.A. Sharma 4.7.2002 Resignation – Director, Tractors 13 V.K. Malhotra 4.7.2002 Appointed as Part-time Official Director in place of K.K. Jaswal by the Ministry 12.5.2003 Withdrawal of nomination by Ministry 14 Ajoy Acharya 21.8.2003 Withdrawal of nomination by Ministry – Part-time Official Director 15 Naresh Chaturvedi 12.5.2003 Appointed as Part-time Official Director in place of V.K. Malhotra by the Ministry 16 Navin Kumar 21.8.2003 Appointed as Part-time Official Director in place of Ajoy Acharya by the Ministry
Changes in Auditors during last three years Given below are the changes in the Company’s Auditors during the past 3 years. Sr. Name of the Auditor Year of Change Added/ Retired Reason of Change No. 1. M/s D. Rangaswamy & Co. 2002-2003 Retired Retired 2. M/s S.V.R & Associates 2002-2003 Added Added in place of retired Auditor
Authority for the Present Issue This present issue of Bonds is being made pursuant to the Resolution of the Board of Directors of the Company, passed at its 242nd meeting held on 21.11.2003.
Disposal of Applications and Application Money The Board of Directors/ Committee of Directors of the Company reserves its full unqualified and absolute discretion without giving any reason, the right to accept or reject any application in whole or in part. If any application is rejected in full, the whole of the application money received, and if the application is rejected in part, the excess application money, after adjustment of allotment money if any, will be refunded to the applicants by registered post only (refund order(s) of value upto Rs. 1,500/- will be sent under certificate of posting). Adequate funds for the purpose shall be made available by the Company to the Registrar to the Issue.
No receipt will be issued by the Company. However, the nominated branches of the Bankers to the Issue receiving the application will acknowledge the receipt of the application by stamping and returning the detachable acknowledgement slip appended to each application form. Refund (if any) will be made by cheque/ demand draft drawn on the Bank at Mumbai and payable at par at all the places where applications are accepted.
Procedure and Time Schedule for Allotment/ Refund The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/ Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial credit within 15 days from the Deemed Date of Allotment. The initial credit in the account will be akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the account will be akin to a Bond Certificate.
45 HMT Limited
Letter(s) of Regret alongwith Refund Order(s), as the case may be, will be despatched by Registered Post or as per extant postal rules at the sole risk of the applicant to the sole/ first applicant within 15 days of closer of the Issue. In accordance with the extant postal rules the Company will ensure dispatch of refund orders of value upto Rs. 1500/- under Certificate of Posting and refund orders of value above Rs. 1500/- by Registered Post only. The Company will provide adequate funds to the Registrars to the Issue, for the purpose of despatch of Letter(s) of Regret/ Refund Order(s).
Subject to the completion of all legal formalities within 3 months from the Deemed Date of Allotment, or such extended period as may be approved by the Appropriate Authorities, the initial credit akin to a Letter of Allotment in the Beneficiary Account of the investor would be replaced with the number of Bonds allotted which will be akin to a Bond Certificate.
In case of joint applications, refund/ pay orders, if any, will be made out in the first name and all communications will be addressed to the person whose name appears first in the application form.
Oversubscription and Basis of Allotment The Board of Directors/ Committee of Directors reserves its full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. Interest on application money will be paid from the date of realisation of the cheque(s)/ demand drafts(s) till one day prior to the date of refund. The Application Forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to: a. Number of bonds applied for is less than the minimum application size; b. Applications exceeding the issue size; c. Bank account details not given; d. Details for issue of bonds in electronic/ dematerialised form not given; e. PAN/GIR and IT Circle/Ward/District not given; f. In case of applications under Power of Attorney by limited companies, corporate bodies, trusts, etc. relevant documents not submitted; g. In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded, as may be permitted.
In the event of issue being oversubscribed, the Company reserves its full, unqualified and absolute right of allotment/ rejection in full or prorata at its discretion without assigning any reason thereof. However the broad basis to be followed by the Company would be as under:
At the end of each banking day during the currency of the issue, a sum of total subscription amount realised and credited to Issuer Company’s account would be ascertained by the Issuer Company and if the cumulative realised amount upto that date is less than or equal to Rs. 40.40 crores, then all the applicant(s) till that date would be given full and firm allotment. For the amounts credited to the Issuer Company’s account on the day wherein the cumulative credit exceeds Rs. 40.40 crores, allotment will be made on pro-rata basis based on balance amount available for allotment on that day. The allotment shall be subject to rounding-off to the nearest multiple of marketable lot (i.e. in multiples of 1 Bond).
Interest on Application Money Interest at the coupon rate (i.e. @ 6.50% p.a.) (subject to deduction of income tax under the provisions of the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof, as applicable) will be paid to all the applicants on the application money for the Bonds. Such interest shall be paid from the date of realisation of cheque(s)/ demand draft(s) upto one day prior to the Deemed Date of Allotment. The interest on application money will be computed on an Actual/ 365 day basis. Such interest would be paid on all the valid applications, including the refunds. Where the entire subscription amount has been refunded, the interest on application money will be paid alongwith the Refund Orders. Where an applicant is allotted lesser number of bonds than applied for, the excess amount paid on application will be refunded to the applicant alongwith the interest on refunded money.
The interest cheque(s)/ demand draft(s) for interest on application money (alongwith Refund Orders, in case of refund of application money, if any) shall be dispatched by the Company within 15 days from the Deemed Date of Allotment and the relative interest warrant(s) alongwith the Refund Order(s), as the case may be, will be dispatched by registered post to the sole/ first applicant, at the sole risk of the applicant.
STATUTORY AUDITORS M/s. S.V.R. Associates Chartered Accountants S-3, IInd Floor, Mangalam Chambers, 25, K.H. Road, Bangalore – 560 027. Tel No. (080) 22240210. Fax No. 91-80-22290355 E-mail: [email protected]
LEAD ARRANGERS TO THE ISSUE (in alphabetic order)
A. K. Capital Services Limited Flat No. ‘N’, Sagar Apartments, 6, Tilak Marg, New Delhi – 110 001. Tel No. (011) 23385704, 23388235. Fax No. 91-11-23385189.
46 HMT Limited
Allianz Securities Limited 2nd Floor, 3, Scindia House, Janpath, New Delhi – 110 001. Tel No. (011) 51514666 (10 lines). Fax No. 91-11-51514665.
Centrum Finance Limited Khetan Bhavan, 5th Floor, 198, J. Tata Road, Churchgate, Mumbai – 400 020. Tel: (022) 22023838. Fax: 91-22-22046096.
RR Financial Consultants Limited 412-422, Indra Prakash, 21 Barakhamba Road, New Delhi – 110 001. Tel No. (011) 23352496-99. Fax No. 91-11-23353703.
UTI Bank Limited Maker Towers 'F', 11th Floor, Cuffe Parade, Colaba, Mumbai – 400 005. Tel No. (022) 22189106, 22189107. Fax No. 91-22-22162467.
REGISTRAR TO THE ISSUE
Karvy Consultants Limited 51/2, T. K. N. Complex, Vanivlis Road, Basavanagudi, Bangalore – 560 004. Tel No. (080) 26613600, 26621192. Fax No. 91-80-26621169. E-mail: [email protected]
TRUSTEES FOR THE BONDHOLDERS
The Western India Trustee & Executor Company Limited 161/C, 16th Floor, Mittal Court, Nariman Point, Mumbai – 400 021. Tel No. (022) 22880986, 22880988. Fax No. (022) 22816477. E-mail: [email protected]
BANKERS TO THE ISSUE
UTI Bank Limited No.9, M.G. Road, Bangalore-560 001, Tel No. (080) 25559555. Fax No. 91-80-25553444.
47 HMT Limited
COMPLIANCE OFFICER AND COMPANY SECRETARY Mr. U. Jagadish Nayak Chief, Corporate Legal & Company Secretary HMT Limited Registered Office, HMT Bhavan, 59, Bellary Road, Bangalore – 560 032, Tel : (080) 23330333. Fax No. 91-80-23339111. E-mail:[email protected]
The investors can contact the Compliance Officer in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc.
BROKERS TO THE ISSUE Apart from Lead Arrangers to the Issue appointed by the Issuer Company, there is/are no other broker(s) appointed by the Issuer Company for the purpose of marketing the Issue. Therefore no person/ firm/ company other than the Lead Arrangers to the Issue, whether member of recognised stock exchange(s) or otherwise, can act as Brokers to the Issue.
CREDIT RATING AGENCY
Credit Research & Analysis Limited Kalpataru Point, 2nd Floor, Kamani Marg, Sion (East), Mumbai – 400 022. India Tel.: (022) 56602871-75 / 2402 4541-43. Fax: 91-22-56602876. E-mail: [email protected] Website: http:www.careratings.com
48 HMT Limited
II. FINANCIAL INFORMATION S-3, II Floor Mangalam Chambers # 25, K. H. Road, S V R & Associates Bangalore – 560 027. Chartered Accountants Tel : 2224 0210 Telefax : 2229 0355 e-mail : [email protected] AUDITOR’S CERTIFICATE To
The Board of Directors HMT Limited Registered Office, HMT Bhavan, Bellary Road, Bangalore-560 032.
In terms of our appointment for the purpose of certification of the statement of accounts to be incorporated in the Information Memorandum proposed to be issued by the Company in connection with the Private Placement of Government of India Guaranteed Redeemable Non-Convertible Bonds in the nature of Debentures aggregating upto Rs. 40.40 crores, we state as follows:
(1) We have examined the financial statements of HMT Limited for the five financial years i.e. from Financial Years ended March 31, 1999 to March 31, 2003 and financial statements for six months ended September 30,2003, which have been made up and audited by the Auditors of the Company of those respective years/ half-year. For the purpose of preparing this certificate, we have relied on their audit reports.
(2) In accordance with the requirements of Clause B(1) and B(3) of Part-II of Schedule-II to the Companies Act, 1956 and Clause 6.18.1 and 6.18.3 of Chapter VI of Securities and Exchange Board of India (Disclosure and Investors Protection) Guidelines, 2000, we state as follows:-
A. The Profit & Loss of HMT Limited for the 5 financial years ended March 31, 2003 and for the six months ended September 30, 2003 and Assets and Liabilities as of those dates are extracted from the aforesaid accounts, which were drawn-up in accordance with the provisions of the Companies Act, 1956.
B. We confirm that the Profit & Loss for the five financial years ended March 31, 2003 and the six months ended September 30, 2003 and the Assets & Liabilities for each of the relevant years/ half year, are as set out in Part-I and Part-II respectively.
C. The aforesaid statements of Profit & Loss and Assets & Liabilities:
i) read together with Significant Accounting Policies and Significant Changes in Accounting Policies as set out in Part-III, Material Notes on Accounts and Notes on Adjustments as set out in Part IV and subject to auditor’s qualifications for which no adjustments could be carried out, as set out in Part V, have been drawn after giving effect to adjustments and regrouping as and where, in our opinion, considered appropriate and,
ii) have been prepared by the Company in accordance with the provisions of The Companies Act, 1956 and guidelines issued by Securities and Exchange Board of India (Disclosure and Investors Protection) Guidelines, 2000, and amendments made thereto.
D. The Company has 6 subsidiaries namely, HMT Machine Tools Limited, HMT Watches Limited, HMT Chinar Watches Limited, HMT Bearings Limited, HMT (International) Limited and Praga Tools Limited with a shareholding of 100%, 100%, 100%, 97.24%, 100% and 51% respectively as on September 30, 2003.
E. The statements of Profit & Loss, Assets and Liabilities of the subsidiaries of the Company viz, HMT Machine Tools Limited, HMT Watches Limited, HMT Chinar Watches Limited, HMT Bearings Limited, HMT (International) Limited and Praga Tools Limited of each of the five financial years ended on March 31, 2003 (wherever applicable) which have been made up and audited by the Auditors of the respective subsidiary companies of those respective years are as set out in Part VI.
F. We further state that in respect of the five financial years ended March 31, 2003, the amount of dividend transferred to the shareholders by HMT Limited and the dividend declared by its subsidiaries (wherever applicable) is given in Part VII.
for and on behalf of, M/s S V R & Associates Chartered Accountants
sd/- K. Shankar Partner
Place: Bangalore, Karnataka Date: 8th March 2004
49 HMT Limited
PART I – STATEMENT OF PROFIT AND LOSS Rs. in Crores For the Year/ Half Year ended March 31, March 31, March 31, March 31, March 31, Sept. 30, 1999 2000 2001 2002 2003 2003 INCOME 1. SALES (i) Tractors 434.39 362.61 318.27 260.57 167.06 32.04 (ii) Food Processing Machinery 2.35 2.69 2.40 1.66 0.89 1.09 (iii) Lamps & Lamp Components 0.04 0.02 - - 0.01 - (iv) Accessories 2.97 4.02 4.65 3.96 2.74 1.68 (v) Sundry jobs and miscellaneous sales 17.44 20.76 19.86 20.88 12.58 5.17 (vi) Packing/ forwarding charges 0.04 0.04 0.04 0.03 0.02 0.01 Total (1) 457.23 390.14 345.22 287.10 183.30 39.99 Machine Group 247.22 262.73 - - - - Watch Group 145.93 92.94 - - - - Watch Group (WPS) 7.58 2.47 - - - - 2 Transfer to Plant 16.25 4.09 - 0.01 - - 3. Other Income (i) Servicing Income 2.90 3.34 0.03 0.01 0.02 - (ii) Stores Issued to Contractors 0.07 0.01 - 0.01 - - (iii) Recoveries from Staff/ Others 2.22 2.31 0.95 1.53 1.76 1.17 (iv) Consultancy Income - 0.01 0.02 0.02 - - (v) Royalty from Subsidiaries - - 0.34 0.03 - (vi) Rentals from Subsidiaries - - 3.17 1.58 0.79 (vii) Profit on Sale of Investments - 3.41 - 2.90 - 1.46 (viii) Profit on Sale of Assets 12.89 6.30 4.71 0.27 15.53 0.01 (ix) Dividend from Other Investments - - - 0.01 - - (x) Dividend from Subsidiaries 1.31 1.30 0.02 1.32 0.07 0.07 (xi) Provision written off on Interest - - 50.32 13.38 1.74 - (xii) Provision written off on Liabilities 4.31 2.24 3.46 3.82 6.81 0.10 (xiii) Miscellaneous Income 14.06 11.01 8.08 6.19 10.11 1.60 Total (3) 37.76 29.93 67.59 32.97 37.65 5.20 4. Accretion/ (Decretion) to WIP, Finished Stock and Scrap (11.41) 30.28 8.67 (24.42) (6.79) 6.72 TOTAL INCOME (1+2+3+4) 900.56 812.58 421.48 295.66 214.16 51.91 EXPENDITURE 1. Material Cost 418.58 386.97 220.70 160.17 107.34 26.77 2. Personnel Cost 292.60 306.67 70.32 52.96 51.88 25.91 3. Other Operating Cost 211.72 321.19 88.84 67.11 68.10 14.71 4. Interest Charges (i) Government Loans - 0.95 0.46 - - 1.02 (ii) Inter-Corporate Loans 1.12 1.10 1.10 0.79 0.21 0.10 (iii) Cash Credit from Banks 33.81 32.19 10.42 13.13 14.23 6.35 (iv) HMT Bonds 23.14 24.85 14.41 15.06 18.16 9.18 (v) GOIG HMT Bonds (VRS) - - 12.35 46.50 53.96 22.05 (vi) GOIG HMT Bonds (Working Capital) - - 1.86 4.75 4.10 1.52 (vii) Financial Institutions 12.81 20.32 6.89 (viii) Debentures 9.07 7.25 4.06 (ix) Others 6.37 7.69 3.99 3.12 1.90 1.95 Total 86.32 94.35 55.54 83.35 92.56 42.17 Less: Interest paid 82.62 11.26 45.39 83.80 81.59 36.47 Total (4) 3.70 83.09 10.15 (0.45) 10.97 5.70 5. Depreciation 14.63 15.07 4.46 4.39 4.47 2.26 6. VRS compensation written off - 3.59 5.25 6.47 3.50 7. Less: Jobs done for Internal use (4.10) (3.50) (0.99) (1.33) (1.09) (0.51) TOTAL EXPENDITURE (1+2+3+4+5+6-7) 937.13 1109.49 397.07 288.10 248.14 78.34 Profit/ (Loss) before Prior Period Adjustments (36.57) (296.91) 24.41 7.56 (33.98) (26.43) Less: Prior Period Adjustments - - - (0.26) 0.03 0.01 Profit/ (Loss) Before Tax (36.57) (296.91) 24.41 7.82 (34.01) (26.44) Less: Tax Liability 0.20 - - (2.42) 0.40 - Net Profit/ (Loss) For The Year/ Half Year (36.77) (296.91) 24.41 10.24 (34.41) (26.44) Add: Reserve Withdrawn 9.53 2.25 25.48 0.48 - - Profit Available for Appropriation (27.24) (294.66) 49.89 10.72 (34.41) (26.44) APPROPRIATIONS Transfer to Capital Reserve ------Transfer to Other Reserve ------Balance Carried to Balance Sheet (27.24) (294.66) 49.89 10.72 (34.41) (26.44)
Adjustments resulting from audit qualifications, material amounts relating to Adjustments for previous years and changes in accounting policies: Rs. in Crores For the Year/ Half Year ended March 31, March 31, March 31, March 31, March 31, 1999 2000 2001 2002 2003 1. Audit Qualification Nil Nil 42.66 71.43 51.91 2. Material adjustments relating to previous year Nil Nil Nil Nil Nil 3. Changes in Accounting policy Nil Nil Nil Nil Nil
50 HMT Limited
PART II – STATEMENTS OF ASSETS AND LIABILITIES Rs. in Crores March 31, March 31, March 31, March 31, March 31, Sept. 30, 1999 2000 2001 2002 2003 2003 A SOURCE OF FUNDS 1. Shareholders’ Fund Share Capital 130.50 158.42 468.17 468.17 468.17 468.17 Reserves & Surplus ------Total (1) 130.50 158.42 468.17 468.17 468.17 468.17 2. Loan Funds Secured Loans (i) Bonds 56.03 60.50 54.44 133.91 149.09 152.28 (ii) GOIG HMT Bonds - - 350.40 515.42 523.15 509.40 (iii) From Banks 175.25 175.25 132.61 82.27 89.50 81.91 (iv) Term Loans 11.49 11.01 6.18 2.71 2.25 2.39 (v) From Financial Institution 40.26 57.49 Total (i + ii + iii + iv + v ) 283.03 304.25 543.63 734.31 763.99 745.98 Unsecured Loans (i) Bonds 139.25 151.17 37.22 24.70 24.64 24.64 (ii) Inter-Corporate Loans 9.81 10.85 9.96 8.02 2.57 2.42 (iii) From Government of India 4.10 7.16 0.47 0.01 0.01 12.19 (iv) Debentures 40.32 46.43 (v) Others 25.20 34.81 Total (i + ii + iii) 218.68 250.42 47.65 32.73 27.22 39.25 Total (2) 501.71 554.67 591.28 767.04 791.21 785.23 3. Capital Suspense 33.35 33.35 - - - - TOTAL (A) (1+2+3) 665.56 746.44 1059.45 1235.21 1259.38 1253.40 B APPLICATION OF FUNDS 1. Fixed Assets Gross Block 500.34 509.79 109.93 112.44 113.85 113.95 Less: Depreciation 375.88 385.47 70.29 73.28 76.89 79.15 (i) Net Block 124.46 124.32 39.64 39.16 36.96 34.80 (ii) Capital Work in Progress 0.54 0.64 0.32 0.38 0.35 0.35 (iii) Machinery & Equipment in Transit 16.22 10.46 3.50 3.22 3.64 3.53 Total (1) = (i + ii + iii) 141.22 135.42 43.46 42.76 40.95 38.68 2. Investments (i) In Government Securities ------(ii) Trade Investments 0.21 (iii) In Subsidiaries Companies 16.54 16.54 44.57 44.57 44.57 44.57 (iv) Others 0.93 11.35 0.93 0.93 0.93 0.82 Total (2) = (i + ii + iii + iv) 17.68 27.89 45.50 45.50 45.50 45.39 3. Current Assets, Loans & Advances (i) Inventories 359.45 352.00 93.45 45.31 44.83 50.06 (ii) Sundry Debtors 325.40 316.11 177.47 200.52 158.93 122.19 (iii) Cash & Bank Balances 70.49 40.44 108.41 25.50 21.29 4.28 (iv) Other Current Assets 5.16 5.54 1.10 1.10 1.10 1.05 (v) Loans & Advances a. Loans to Subsidiaries - - 379.61 610.26 665.66 665.66 b. Advances to Subsidiaries 0.62 0.67 6.54 18.61 20.01 31.45 c. Loans to Others ------d. Advances to Others 158.02 123.98 59.84 64.09 47.09 65.24 Total (v) = (a+b+c+d) 158.64 124.65 445.99 692.96 732.76 762.35 Total (3) = (i + ii + iii + iv + v) 919.14 838.74 826.42 965.39 958.91 939.93 4. Current Liability & Provisions Current Liabilities (i) Sundry Creditors 172.74 201.14 88.02 73.58 84.10 72.09 (ii) Subsidiary Companies 9.71 13.31 12.52 13.48 12.76 5.51 (iii) Others 257.90 352.47 112.21 92.83 89.65 121.31 Total (I + ii + iii) 440.35 566.92 212.75 179.89 186.51 198.91 Provisions (i) Contingencies 2.72 5.50 11.65 12.17 13.68 13.11 (ii) Gratuity 25.11 35.27 9.69 12.73 15.39 17.03 (iii) Others 84.05 84.77 35.87 26.37 22.53 22.32 Total (i + ii + iii) 111.88 125.54 57.21 51.27 51.60 52.46 Total (4) 552.23 692.46 269.96 231.16 238.11 251.37 5. Net Current Assets (3-4) 366.91 146.28 556.46 734.23 720.80 688.56 6. Deferred Tax (Net) - - - 0.05 (0.69) (0.69) 7. Miscellaneous Expenses 0.15 0.34 34.04 43.75 49.49 51.69 8. Profit & Loss Account 139.60 436.51 379.99 368.92 403.33 429.77 TOTAL (B) (1+2+5+6+7+8) 665.56 746.44 1059.45 1235.21 1259.38 1253.40 Note: Owing to the subsidiarisation of the Company w.e.f. 01.04.2000, the financial figures for the first two years are not comparable with those of the succeeding years.
51 HMT Limited
PART III
A. SIGNIFICANT ACCOUNTING POLICIES (As per audited report for the half year ended September 30, 2003)
Basis of preparation of financial statements The financial statements are prepared as of a going concern, under the historical cost convention, on accrual basis of accounting and in accordance with the provisions of the Companies Act, 1956 and comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India to the extent applicable.
Fixed Assets Fixed Assets are stated at cost of acquisition or construction, net or Cenvat credit, less accumulated depreciation to date. Cost includes direct costs and financing costs related to borrowing attributable to acquisition that are capitalized until the assets are ready for use. Land received free of cost from the State Governments has been nominally valued and incidental expenditure incurred thereon has been capialised. Expenditure on development of land is included in the cost of land. Fixed Assets acquired under financial leases are not capitalised. However, the amount of lease rentals for the unexpired period of the lease is disclosed as contingent liability. Items of Capital Assets with WDV of Rs. 1 lakh and above, which have been retired from active use, are disclosed at lower of book value or net realisable value and shown separately in the Fixed Assets Schedule.
Depreciation Depreciation on fixed assets is provided on straight-line method, at the rates prescribed in Schedule XIV to the Companies Act, 1956, pro-rata with reference to the date of addition or deletion except assets costing less than Rs. 5000 per asset which is written off to Re. 1/- in the year of purchase. Depreciation on fixed assets is calculated on a pro-rata basis from the date of such addition or as the case may be up to the date on which such asset has been sold, discarded or destroyed. Premium for leasehold land is amortised equally over the period of lease.
Investments Investments are either classified as current or long-term. Current investments are carried at lower of cost and fair value. Long- term investments are carried at cost and provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment. Gain or loss is recognized in the year of sale.
Foreign currency transactions Transaction in foreign currency are recorded at the exchange rate(s) prevailing on the date of transaction or at the forward contract rate(s) wherever applicable. Current assets and liabilities (other than those relating to fixed assets) are restated at the rates prevailing at the year end or at the forward contract rate(s) wherever applicable, and the difference is recognised as income or expenditure in the profit and loss account. Exchange difference arising on restatement of liabilities in foreign currency relating to fixed assets is adjusted to the carrying cost of the specific asset.
Borrowing Cost Borrowing costs are charged to revenue except those incurred on acquisition or construction of a qualifying asset that necessarily takes substantial time to be ready and until intended use of the said asset, that are capitalized to the cost of such asset.
Leases Lease Rentals paid as per contractual obligations in respect of assets taken on lease are charged to revenue.
Retirement Benefits Provident Fund is provided for, under a defined benefit scheme. The contributions are made to the Trust administered by the company. Leave encashment is provided for under a defined benefit scheme on actuarial valuation. Gratuity is provided for, under a defined benefit scheme, to cover eligible employees, liability being determined on actuarial valuation. Annual contributions are made, to the extent required, to a trust constituted and administered by the Life Insurance Corporation of India under which the coverage is limited to Rs. 50,000/- per eligible employee, the balance provision is being retained in the books to meet any additional liability accruing thereon for payment of Gratuity. Settlement allowance is provided for, under a defined benefit scheme, to cover eligible employees, liability being determined on actuarial valuation. Pension is provided for under a defined benefit scheme, contributions being administered by the Government.
Warranty Warranty provision for contractual obligations in respect of machines/ tractors sold to customers is set up on the basis of an annual assessment made with reference to the past experience and is provided in the year of sale.
Inventories Inventories are valued at the lower of cost and net realizable value. The cost of materials is ascertained by adopting Weighted Average Cost Method.
Development & Commissioning In respect of new projects, the pre-production revenue expenditure (including depreciation) is collated under the head “Development and Commissioning Expenditure” and charged to revenue over four financial years as follows: (a) In the year of commencement of commercial production, one-fourth of the development and commissioning expenditure on a pro-rata basis for the period of production in that year: and (b) The balance equally over the next three financial years immediately following.
Deferred Revenue Expenditure Technical Assistance fees (including fees for technical documentation and exchange fluctuation difference) paid/ payable under foreign collaboration agreements are amortized equally over the duration/ balance duration of the relevant agreement. Expenditure incurred on reconditioning of plant, machinery and equipment is amortized over a technically evaluated period of useful life not exceeding five years with pro-rata write off in the initial year. Gratuity, Earned Leave encashment, Settlement Allowance and Lump sum Compensation paid to employees relieved under Voluntary Retirement Scheme are written off over a period of 10 years. Expenses incurred in respect of Bonds issued for raising funds to meet payment made under the Voluntary Retirement Scheme are amortized proportionately over a period of 10 years.
52 HMT Limited
Revenue Recognition Sales are set up base on: Physical delivery of goods to the customer/ customer’s carrier/ common carrier, duly supported by invoice, excise duty paid challan, gate pass, delivery voucher and LR/ GR, in case of ex-works contracts. LR/ GR obtained and endorsed in favour of customer (consignee ‘self’), in case of FOR destination contracts. Despatches to dealers/ customers in respect of Tractors. Sales include Excise Duty but are net of trade discount and exclude sales tax.
Special Tools Expenditure on manufactured and bought out special tools are amortised equally over a five year period or earlier, if scraped. Individual items costing less than Rs. 750/- are written off fully in the initial year of acquisition/ manufacture.
Research and Development Costs Revenue expenditure is charged to profit and loss account under natural heads. Capital expenditure is recorded as addition to fixed assets and depreciated over the estimated life of the related assets. Prototypes developed are carried as items of inventory at the lower of cost or net realizable value until sale/ transfer/ scrapping. Prototypes remaining undisposed off for a period of five financial years are provisioned for obsolescence in the sixth year. Contribution to sponsored Research and Development are amortised equally over the duration/ balance duration of the programme.
Income Tax Taxes are determined following the tax effect accounting method and a provision therefor is recognized. A deferred tax asset or deferred tax liability is recorded to recognize the tax effect on timing differences arising on reconciliation of profit as per financial statements and profit as per taxation
Earnings per Share Basic earning per share is determined by considering the net profit after tax, inclusive of the post tax effect on extraordinary items, if any, and the number of shares outstanding on a weighted average basis.
Others The amount of Rs. 50000/- per head received/ receivable from LIC in respect of gratuity claims of employees separated during the year is accounted as other income. In respect of employees who have separated other than under Voluntary Retirement Scheme, the Gratuity paid in excess of Rs. 50000/-, Earned Leave Encashment (ELE), Settlement Allowance (SA) is debited to the respective provision accounts. The provision at the year end for Gratuity, ELE and SA is restated as per the actuarial valuation done at the year-end. In case of ELE and SA, any short or excess provision is charged as expenditure or treated as provision no longer required.
B. SIGNIFICANT CHANGES IN ACCOUNTING POLICIES BETWEEN 01.04.1998 AND 30.09.2003
1. Changes in Accounting Policy on Providing Depreciation- Until Financial year ending March 31, 2002 the accounting policy adopted by the Company in respect of depreciation was at the monthly pro-rata basis instead of daily pro-rata basis as prescribed in Schedule VI of the Companies Act, 1956. In line with the requirement of the Companies Act from this year onwards depreciation would be charged on daily pro-rata basis. Consequent to such change over in the method, reduction in depreciation resulted in decrease in loss by Rs. 43000/-.
PART IV
A. MATERIAL NOTES ON ACCOUNTS (As per audited report for the half year ended September 30, 2003)
BALANCE SHEET (Rs, in thousands) As at 30.9.2003 As at 31.3.2003 1 The Company is contingently liable for: 1.1 Claims against the Company not acknowledged as debts A. Tax related claims pending in appeal i) Excise Duty 6830 6830 ii) Sales Tax 13382 13382 B. Employee related claims relating to Lockouts, Back wages incentive & Annual bonus, etc., pending adjudication, to the extent ascertainable 5352 4570 C. Others 106942 108703 1.2 Guarantees/ Counter Guarantees issued 278148 278148 1.3 Bills purchased/ discounted 119301 118925 1.4 Additional Bonus, if any, for the year 1985-86 (Refer Note No. 9.1) 350 350 1.5 Wage/ Salary/ DA Revision arrears payable, including HRA/ NPA/ FPI, if any, for the period 1.1.92 to 31.3.95/30.9.95 over and above the provision made as per the agreement entered into with workmen/ Government’s approval (Ref. Note No. 9.2) 53107 53107 1.6 Pending formulation of Wage/ Salary revision agreement w.e.f. 1.1.1997, interim relief from that date has been paid. Provision has not been determined and made for the entire liability 1.7 Non receipt of related Form against levy of concessional Sales Tax 216648 241011 2 Estimated amount of contracts remaining to be executed on capital account and not provided for 115983 119725 3 Other liabilities include unspecified/ excess credits in bank accounts 6 138 4 Issued, Subscribed and paid-up capital includes 84,96,400 shares of Rs. 10/- each disinvested by Government of India to Financial Institutions & Mutual Funds. Percentage of Capital disinvested 1.81% 1.81% 5 The Company has initiated negotiations with the Bondholders in respect of 5 years Bonds 1999-2000 for settlement of their dues by way of One Time Settlement/ issue of Fresh Bonds
53 HMT Limited
6 Balance in Cash Credit Account as per UCO Bank statement includes interest unilaterally debited by Bank consequent to annulling the notional set-off facility, which was earlier extended in respect of Fixed Deposit Repayment Current Account, retrospectively for the period 1.4.91 to 31.03.96 which is disputed by Company and pending reversal by Bank 35675 35675 7 Investments Includes Advance Against Equity which represents the value of machines supplied to Nigeria Machine Tools Limited, Nigeria, towards Equity participation. Share allotment is to be finalised after despatch of balance machines in terms of the contract. (provision for Loss in Investment value Rs. 1,60,30 thousands on account of erosion in value of Nigerian Naira has 17155 17155 been made) 8 Inventories: Include Excise Duty paid/ payable on Closing Stock of Finished Goods as per the Guidance Note on Accounting Treatment for Excise Duty isued by the Institute of Chartered Accountants of India with effect from 1.4.1999. However, this has no effect on the working results of the Company 24807 15328 9 Advances Include: 9.1 Amounts recoverable from employees advances, bonus, etc., pending adjudication/ negotiations 3966 4117 9.2 Adhoc payments to employees towards Wage/ Salary/ DA arrears, if any, pending adjustment and provision to this extent has been made in the accounts 115484 115581 10 Deferred Tax (Net) Accounting for Taxes as per Accounting Standard-22. Deferred Tax balance as at March 31, 2003 comprising the timing difference between the profit as per financial statements and as per Income tax and is made up of: Deferred Tax Assets (Net) Opening Balance 525 525 On depreciation to Fixed Assets 6217 6217 Disallowance under income Tax & unabsorbed depn. & Loss for the year/ Gratuity 9545 9545 On Deferred Revenue Expenditure-VRS -23212 -23212 Deferred Tax Liabilities (Net) Closing Balance -6925 -6925 11 Balances under ‘Sundry Debtors’, ‘Loans & Advances’, and ‘Current Liabilities’ are subject to confirmation, although confirmation has been sought in some cases
54 HMT Limited
PROFIT & LOSS ACCOUNT 12 Sales includes sales returns in respect of a) Tractors 90656 172532 b) Food Processing Machinery 0 658 13 Salaries and Wages include 13.1 Provision for Earned Leave encashment made based on Actuarial valuation of Earned Leave at the credit as at the half year 6682 8012 end Provision remaining at the half year end Rs. 24271 thousands 13.2 Provision for Settlement Allowance made based on Actuarial valuation 371 1933 Provision remaining at the half year end Rs. 8339 thousands 14 Gratuity has been provided/ paid under a Group Gratuity Policy with Life Insurance Corporation of India. Additional provision made during the period for full coverage (in excess of Rs. 50,000/- per employee)based on actuarial Valuation by LIC 9227 16286 15 Value of Special Tools individually costing less than Rs. 750 written off during the period 3231 5536 16 Voluntary Retirement Compensation, Gratuity, Earned Leave Encashment and Settlement Allowance paid to employees under Voluntary Retirement Scheme is treated as Deferred Revenue Expenditure and amortised over a period of 10 years 34999 64692 Balance to be written off Rs. 516031 thousands 17 The expenditure incurred in respect of Bonds issued for raising funds to meet payment under the Voluntary Retirement Scheme has been treated as Deferred Revenue Expenditure & amortised over a period of 10 years. Amortisation in the previous year includes stamp duty, withdrawn in the current year since no longer required 40 79 Balance to be written off Rs. 542 thousands 18 Expenditure on Research & Development 4281 11057 19 Changes in Accounting policy on Providing Depreciation: Up to the last financial year, the accounting policy adopted by the Company in respect of depreciation was at the monthly pro-rata basis in stead of daily pro-rata basis as prescribed in Sch VI of the Companies Act, 1956 Consequent to Change over in the method of providing depreciation in line with the requirement of the Companies Act, 1956, reduction in depreciation resulted in decrease in loss by - 43 GENERAL 20 Current period figures are not comparable as the corresponding figures are for full year 21 The Company is carrying a business of manufacturing and selling of Tractors and Food Processing Machines. The Segment Reporting as per AS-17 is not applicable to HMT Limited, as the transactions of Food Processing Machinery is less than 10% of Tractor Business
55 HMT Limited
Period ended 30.09.2003 Year ended 31.3.2003 NOTES FORMING PART OF PROFIT AND LOSS ACCOUNT (Rs. in Thousands) 1. CONSUMPTION OF RAW MATERIALS AND COMPONENTS Quantity Value Quantity Value Steel MT 253 6082 MT 1012 22800 Non-ferrous Metals MT 8 MT 21 Ferrous Casting MT 470 17961 MT 1912 73315 Non-ferrous Castings MT 60 MT 85 Forgings MT 298 11986 MT 1226 48965 Standard parts 845 236 Components 187148 809489 Others 308 224398 954911
2. TURNOVER Period ended 30.09.2003 Year ended 31.3.2003 (Rs. in Thousands) Nos Value No Value Tractors 1326 320436 6802 1670640 Food Processing Machines 51 10908 94 8864 GLS Lamps 0 12 Lamp Components 0 92 Accessories 16801 27405 Sundry Jobs and Miscellaneous Sales 51793 125972 399938 1832985
3. INFORMATION REGARDING IMPORTS, EXPENDITURE Period ended 30.09.2003 Year ended 31.3.2003 AND EARNINGS IN FOREIGN CURRENT/ EXCHANGE (Rs. in Thousands) AND CONSUMPTION (a CIF VALUE OF IMPORTS ) Raw Materials 859 451 Components and Spare Parts - 2929 Capital Goods - - (b) EXPENDITURE IN FOREIGN CURRENCY ON ACCOUNT OF TRAVELLING EXPENSES (ON PAYMENT BASIS) - - (c) CONSUMPTION OF RAW MATERIALS, COMPONENTS, STORES & SPARE PARTS Imported 2489 8% 10274 1% Indigenous 265177 92% 1063166 99% (d) EARNINGS IN FOREIGN EXCHANGE
EXPORTS NIL NIL
4. LICENCED CAPACITY, INSTALLED CAPACITY, PRODUCTION AND FINISHED STOCK Products Unit Licenced Installed Production Opening Closing Capacity Capacity Finished Finished Stock Stock Tractors Nos 25000 18000 1545 367 586 (25000) (18000) (6361) (808) (367) Food Processing Machines Nos 650 295 46 17 12 (650) (295) (81) (30) (17) Figures in brackets relate to previous year * Annual
B. NOTES ON ADJUSTMENTS No adjustments in the Accounts has been carried out in respect of Auditors Qualifications.
PART V
AUDITORS QUALIFICATIONS FOR WHICH ADJUSTMENTS COULD NOT BE CARRIED OUT
Auditors Qualifications having impact on profitability for which adjustments could not be carried out: (Rs. In crores) Sr. Particulars March 31, March 31, March 31, March 31, March 31, No. 1999 2000 2001 2002 2003 1 Disputed Interest on Cash Credit a/c - - 8.21 9.56 - 2 Provisions not made - - 24.60 45.34 49.96 3 Treatment of Deferred Revenue Expenditure - - 9.85 3.64 1.95 4 Accounting of Income on Sale of Investment/ - - - 12.89 - Gratuity reimbursement/ Interest waiver Reduction in Profits - - 42.66 71.43 51.91
56 HMT Limited
Key Accounting Ratios For the Year/ Half Year ended March 31, March 31, March 31, March 31, March 31, Sept. 30, 1999 2000 2001 2002 2003 2003 Earnings per Share (EPS) (Rs.) (2.82) (18.74) 0.52 0.22 (0.73) (0.56) Cash Earnings per Share (Rs.) (1.70) (17.79) 0.62 0.31 (0.63) (0.52) Net Asset value per share (Rs.) 1.85 (15.47) 1.16 1.19 0.33 (0.28) Return on Net worth (%) (30.75) (205.53) 7.79 1.67 (7.26) (5.65)
Definitions of Key Ratios Earnings per Share (EPS) (Rs.) Profit After Tax/ Number of Equity Shares Cash Earnings per Share (Rs.) (Profit After Tax + Depreciation)/ Number of Equity Shares Book Value per Share/ Net Asset value per share (Rs.) Networth at year end/ Number of Equity Shares Return on Net worth (%) Net Profit/ Average Equity
Capitalisation Statement as at September 30, 2003 (Rs. in crores) Particulars Pre Issue Post Issue as adjusted for the proposed Issue of Bonds of Rs. 40.40 crores Loan Funds: Long Term 662.92 662.92 Short Term 122.31 122.31 Total Debt 785.23 785.23 Shareholders’ Funds: Share Capital 468.17 468.17 Reserves and Surplus Nil Nil Total Equity 468.17 468.17 Long Term Debt/ Equity Ratio 1.42 1.42
Tax Shelter Owing to continuous losses, there is no tax liability for the five financial years ended i.e., March 31, 1999 to March 31, 2003. The liability for 6 months ended September 30, 2003 is Nil.
Cash Flow Statement (Rs. in lakhs) For the Year ended March 31, 2002 March 31, 2003 A. CASH FLOW FROM OPERATING ACTIVITIES Net Profit before Tax and Extra-ordinary items (3401) 782 Adjustment for: Depreciation 447 440 Profit on Sale of Fixed Asset (net) (1553) (27) Foreign Exchange (net) - - Interest debited (Net) 1097 (37) Dividend received (7) (134) Deferred revenue Expenditure (Net) (573) (971) Provision for Obsolescence, Doubtful debts, Advances, Investment (9) 34 Income from sale of Investments - (290) (598) (985) Operating Profit Before Working Capital Changes (3999) (203) Adjustment for: (Increase)/ Decrease in Trade & Other Receivables 119 (26972) (Increase)/ Decrease in Inventories 117 4750 (Increase)/ Decrease in Other Current Assets 1 - (Increase)/ Decrease in Trade payables 749 (3464) 986 (25686) Cash Generated From Operations (3013) (25889) Direct Taxes paid (35) - Cash Flow Before Extra-Ordinary Items (2978) (25889) Extra-ordinary Items - - Net Cash From Operating Activities (2978) (25889) B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (278) (374) Sale proceeds of Fixed Assets 1563 31 Acquisition of Companies - - Purchase of Investments - - Proceeds from Sale of Investments - 290 Dividend Received 7 134 Net Cash used in Investing Activities 1292 81 C. CASH FLOW FROM FINACING ACTIVITIES Proceeds from Issue of Share Capital - - Proceeds from Long Term/ Short Term Borrowings (Net) 655 16503 Repayment of Deferred Credit - - Repayments of Finance Lease Liabilities - - Exchange Difference (net) - - Dividends paid - - Interest Paid (7549) (7366) Interest Received (8159) (8380) Net Cash used in Investing Activities 1265 17517 Net Increase in Cash and Cash Equivalents (421) (8291) Cash and Cash Equivalents as at 1st April (Opening Balance) 2550 10841 Cash and Cash Equivalents as at 31st March (Closing Balance) 2129 2550
57 HMT Limited
Details of Outstanding Unsecured Liabilities (as on September 30, 2003) (Rs. in crores) As on Interest Rate Repayment Date/ Schedule Inter Corporate Loans 10.00% Overdue Loan from Government of India 15.50% Equally five years on sanction date Bonds 14.00% to 16.50% Overdue
Principal Terms of Bonds/ Loans & Assets charged as Security (as on September 30, 2003) Sr. Description Amount Outstanding Assets charged as security Principal terms of issue No. (Bonds Series/Loan) (Rs. Cr) 1 13% 31.50 Secured by assets of the Company located at Pinjore Non-convertible Bonds 5 Year Bonds and assets of Machine Tools Ltd, a Subsidiary redeemable at par on Company located at Ajmer 01.11.2003 2 12% to 15% 7.25 Secured by all present and future movable and Non-convertible Bonds 5 Year Bonds immovable property belonging to Machine Tools Ltd, redeemable at par – earliest (1999-2000) a Subsidiary Company located at Bangalore and date of redemption being Kalamassery and subject to a prior charge in favour 22.06.1999 of the Bankers on the movable property being inventories and receivable towards working capital requirements 3 10% to 12% 113.54 Secured by assets of the Company located at Pinjore Non-convertible Bonds 3 Year Bonds (2004) and assets of Machine Tools Ltd, a Subsidiary redeemable at par– earliest Company located at Ajmer date of redemption being 31.03.2004 4 10.75% to 11.30% 159.00 Secured by registered martgage of the immovable Non-convertible Bonds 10 Year HMT Bonds property of the Company in the State of Maharastra redeemable at par – earliest 2010-Guaranteed by date of redemption being Central Government 31.10.2007 5 8.50% 310.00 Secured by registered martgage of the immovable Non-convertible Bonds 8 Year HMT Bonds property of the Company in the State of Maharastra redeemable at par – earliest 2010-Guaranteed by date of redemption being Central Government 27.11.2008 6 7.50% 40.40 Secured by registered martgage of the immovable Non-convertible Bonds 1 Year HMT Bonds property of the Company in the State of Maharastra redeemable at par – earliest 2002-Guaranteed by date of redemption being Central Government 29.11.2003 7 Cash Credit from 67.12 Secured by hypothecation of inventories and sundry For Working Capital Banks debtors by first ranking “pari passu” inter-se the requirements participating banks 8 Short Term Loan 14.79 Secured by creation of charge on land and building For Working Capital from Banks located at Bangalore requirements 9 Term Loan from 2.39 Secured by charges ranking “pari passu” with the Repayable in monthly HDFC charges created in the Company’s favour by instalments – earliest martgage of employee dwelling units and first completion by January 2004 martgage of immovable property at Bangalore
Contingent Liabilities 1. The Company has following contingent liabilities for which no provisions have been made in the books of accounts of the Company for the year ended March 31, 2003 and half year ended September 30, 2003: ` (Rs, in thousands) Particulars As at 30.09.2003 As at 31.03.2003 1 Claims against the Company not acknowledged as debts a Tax related claims pending in appeal i) Excise Duty 6830 6830 ii) Sales Tax 13382 13382 b Employee related claims relating to Lockouts, Back wages incentive & Annual 5352 4570 bonus, etc., pending adjudication, to the extent ascertainable c Others 106942 108703 2 Guarantees/ Counter Guarantees issued 278148 278148 3 Bills purchased/ discounted 119301 118925 4 Additional Bonus, if any, for the year 1985-86 350 350 5 Wage/ Salary/ DA Revision arrears payable, including HRA/ NPA/ FPI, if any, for the 53107 53107 period 01.01.92 to 31.03.95/30.09.95 over and above the provision made as per the agreement entered into with workmen/ Government’s approval 6 Pending formulation of Wage/ Salary revision agreement w.e.f. 01.01.1997, interim 0.00 0.00 relief from that date has been paid. Provision has not been determined and made for the entire liability 7 Non receipt of related Form against levy of concessional Sales Tax 216648 241011 8 Estimated amount of contracts remaining to be executed on capital account and not provided for 115983 119725 TOTAL 916043 944751 2. We have examined all the contracts, claims and litigations against the Company and have analysed the likely impact of the same as indicated above. We certify that apart from the contingent liabilities indicated above, the Company does not have any other contingent liabilities. for and on behalf of, M/s. S.V.R. Associates Chartered Accountants
sd/- Date: 8th March 2004 K. Shankar Place: Bangalore, Karnataka Partner
58 HMT Limited
PART VI
1. HMT MACHINE TOOLS LIMITED
STATEMENT OF PROFIT AND LOSS (Rs. in crores) For the year ended March 31, 2001 March 31, 2002 March 31, 2003 I) INCOME Sales (i) Machine tools 144.28 186.28 153.22 (ii) Accessories 17.06 43.96 44.30 (iii) Sundry jobs & miscellaneous sales 46.67 29.46 30.77 (iv) Packing/Forwarded charges 1.27 1.28 1.09 Total(I +ii + iii + iv) 209.28 260.98 229.38 Transfer to Plant 2.42 3.11 0.60 Other Income 29.39 24.49 20. 79 Accretion/Decretion to WIP, Finished Goods & Scraps 10.95 (26.03) (23.07) TOTAL 252.04 262.55 227.70
II) EXPENDITURE Materials 92.91 89.62 80.23 Personnel 140.63 112.74 104.48 Depreciation 6.41 6.64 6.27 Other Expenses 68.41 64.76 66.81 Interest 29.78 40.48 46.53 VRS compensation written off 13.24 23.39 28.03 Less: Expenditure allowed to jobs done for internal use (3.17) (4.43) (2.48) TOTAL 348.21 333.20 329.87 Profit/(Loss) Before Tax (96.17) (70.65) (102.17) Provision of Income Tax - - - Profit/(Loss) After Tax (96.17) (70.65) (102.17) Add: Reserve withdrawn - - 0.12 Balance carried to Balance Sheet (96.17) (70.65) (102.05)
STATEMENT OF ASSETS AND LIABILITIES (Rs. in crores) As on March 31, 2001 March 31, 2002 March 31,2003 A. SOURCES OF FUNDS 1. Shareholders Funds Capital 10.70 10.70 10.70 Reserves & Surplus 0.12 0.12 - 2. Loans Funds Secured Loans 46.58 61.78 63.09 Unsecured loans 277.88 423.74 444.54 Total (2) 324.46 485.52 507.63 TOTAL (1+2) 335.28 496.34 518.33
B. APPLICATION OF FUNDS 1. Fixed Assets Gross Block 210.15 210.86 212.14 Less: Depreciation 157.64 162.95 167.86 Net Block 52.51 47.91 44.28 Capital Work in Progress 0.04 0.07 0.24 Machinery & Equipment in transit & under inspection/erection 1.06 1.02 0.77 Total (1) 53.61 49.00 45.29 2. Investments - - 0.01 3. Current Assets, Loans and Advances Inventories 167.25 134.67 110.19 Sundry Debtors 58.61 91.13 75.48 Cash & Bank Balance 11.81 10.96 9.21 Other Current Assets 4.75 4.37 4.56 Loans and Advances 56.15 61.58 63.43 Total (3) 298.57 302.71 262.87 4. Current Liabilities & Provisions Current Liabilities 177.10 160.59 212.37 Provisions 57.46 59.91 62.87 Total (4) 234.56 220.50 275.24 5. Net Current Assets (3-4) 64.01 82.21 (12.37) 6. Miscellaneous Expenses 121.49 198.31 216.53 7. Profit and Loss Account 96.17 166.82 268.87 TOTAL (1+2+5+6+7) 335.28 496.34 518.33
59 HMT Limited
2. HMT WATCHES LIMITED
STATEMENT OF PROFIT AND LOSS (Rs. in crores) For the year ended March 31, 2001 March 31, 2002 March 31, 2003 I) INCOME Sales (i) Watches 103.52 69.28 35.92 (ii) Watches issued to employees/others 0.60 0.25 0.13 (iii) Sundry jobs & miscellaneous sales 2.21 7.64 7.84 (iv) Packing/Forwarded charges 2.31 3.40 1.46 Total(I +ii + iii + iv) 108.64 80.57 45.35 Other Income 33.92 7.53 9.76 Accretion/Decretion to WIP, Finished Goods & Scraps (3.44) (15.42) (13.67) TOTAL 139.12 72.68 41.44
II) EXPENDITURE Material 42.08 22.77 9.18 Personnel 74.46 63.13 57.46 Depreciation 4.26 3.79 3.31 Other Expenses 50.58 47.63 29.02 Interest 21.67 31.73 38.63 VRS compensation written off 5.46 9.85 17.39 Less: Expenditure allowed to jobs done for internal use (0.21) - - TOTAL 198.30 178.90 154.99 Profit /(Loss) before Prior Period Items (59.18) (106.22) (113.55) Less: Prior Period Items - 0.07 (0.63) Profit/(Loss) Before Tax (59.18) (106.29) (112.92) Provision of Income Tax - - - Profit/(Loss) After Tax (59.18) (106.29) (112.92) Add: Reserve withdrawn - (59.18 (165.47) Balance carried to Balance Sheet (59.18 (165.47) (278.39)
STATEMENT OF ASSETS AND LIABILITIES (Rs. in crores) As on March 31, 2001 March 31, 2002 March 31, 2003 A. SOURCES OF FUNDS 1. Shareholders Funds Capital 5.49 5.49 5.49 Reserves & Surplus 0.30 0.30 0.30 2. Loan Funds Secured Loans 43.83 45.78 46.67 Unsecured loans 176.44 263.07 294.35 Total (2) 220.27 308.85 341.02 TOTAL (1+2) 226.06 314.64 346.81
B. APPLICATION OF FUNDS 1. Fixed Assets Gross Block 185.97 187.32 187.99 Less: Depreciation 160.70 164.09 166.40 Net Block 25.27 23.23 21.59 Capital Work in Progress 0.02 0.02 0.04 Machinery & Equipment in transit & under inspection/erection 2.15 1.96 0.20 Total (1) 27.44 25.21 21.83 2. Investments - 0.01 0.01 3. Current Assets, Loans and Advances Inventories 103.32 84.79 70.22 Sundry Debtors 67.40 60.90 31.48 Cash & Bank Balance 3.30 4.45 1.90 Other Current Assets 0.02 0.06 0.11 Loans and Advances 27.30 24.67 25.48 Total (3) 201.34 174.87 129.19 4. Current Liabilities & Provisions Current Liabilities 80.45 100.85 188.35 Provisions 31.40 33.31 35.57 Total (4) 111.85 134.16 223.92 5. Net Current Assets (3-4) 89.49 40.71 (94.73) 6. Miscellaneous Expenses 49.95 83.24 141.31 7. Profit and Loss Account 59.18 165.47 278.39 TOTAL (1+2+5+6+7) 226.06 314.64 346.81
.
60 HMT Limited
3. HMT CHINAR WATCHES LIMITED
STATEMENT OF PROFIT AND LOSS (Rs. in crores) For the year ended March 31, 2001 March 31, 2002 March 31, 2003 I) INCOME Sales (i) Inland Sales 1.82 1.95 1.16 (ii) Watches issued to employees/others 0.02 0.01 - (iii) Sundry jobs & miscellaneous sales 010 0.06 0.05 (iv) Packing/Forwarded charges - - - Total(I +ii + iii + iv) 1.94 2.02 1.21 Other Income 10.24 10.37 14.77 Accretion/Decretion to WIP, Finished Goods & Scraps (0.46) (0.27) 1.74 TOTAL 11.72 12.12 17.72
II) EXPENDITURE Material 0.71 0.91 1.10 Personnel 11.64 12.87 13.34 Depreciation 0.08 0.12 0.09 Other Expenses 2.40 2.67 2.26 Interest 4.74 5.41 6.16 VRS compensation written off 0.10 0.30 1.08 Less: Expenditure allowed to jobs done for internal use - - - TOTAL 19.67 22.28 24.03 Profit /(Loss) before Prior Period Items (7.94) (10.16) (6.31) Less: Prior Period Items - - - Profit/(Loss) Before Tax (7.94) (10.16) (6.31) Provision of Income Tax - - - Profit/(Loss) After Tax (7.94) (10.16) (6.31) Add: Reserve withdrawn - - - Balance carried to Balance Sheet (7.94) (10.16) (6.31)
STATEMENT OF ASSETS AND LIABILITIES (Rs. in crores) As on March 31, 2001 March 31, 2002 March 31, 2003 A. SOURCES OF FUNDS 1. Shareholders Funds Capital 1.41 1.41 1.41 Reserves & Surplus - - -
Secured Loans 1.55 1.73 1.82 Unsecured loans 30.82 37.52 47.35 Total (2) 32.37 39.25 49.17 TOTAL (1+2) 33.78 40.66 50.58
B. APPLICATION OF FUNDS 1. Fixed Assets I Gross Block 10.09 10.37 10.44 Less: Depreciation 9.12 9.24 9.33 Net Block 0.97 1.13 1.11 Capital Work in Progress - - - Machinery & Equipment in transit & under nspection/erection 0.21 - - Total (1) 1.18 1.13 1.11 2. Investments - - - 3. Current Assets, Loans and Advances Inventories 5.12 4.80 6.48 Sundry Debtors 0.01 0.76 0.24 Cash & Bank Balance 0.09 - 0.01 Other Current Assets - - - Loans and Advances 2.92 2.59 4.14 Total (3) 8.14 8.15 10.87 4. Current Liabilities & Provisions Current Liabilities 11.31 15.45 20.51 Provisions 5.58 6.42 7.16 Total (4) 16.89 21.87 27.67 5. Net Current Assets (3-4) (8.75) (13.72) (16.80) 6. Miscellaneous Expenses 0.87 2.62 9.32 7. Profit and Loss Account 40.48 50.63 56.95 TOTAL (1+2+5+6+7) 33.78 40.66 50.58
61 HMT Limited
4. HMT BEARINGS LIMITED
STATEMENT OF PROFIT AND LOSS (Rs. in crores) For the year ended March 31, March 31, March 31, March 31, March 31, 1999 2000 2001 2002 2003 I) INCOME Sales (i) Domestic 47.37 54.90 45.17 37.49 22.04 (ii) Excise Duty - - 7.15 6.01 3.59 (iii) Exports 0.20 0.05 0.11 0.15 0.07 (iv) Packing/Forwarded charges - - - - - Total(I +ii + iii + iv) 47.57 54.95 52.43 43.65 25.70 Other Income 2.44 0.72 0.81 1.12 2.55 Accretion/Decretion to WIP, Finished Goods & Scraps 0.83 (0.01) 0.98 5.89 (5.57) TOTAL 50.84 55.66 54.22 50.66 22.68
II) EXPENDITURE Material 20.42 25.56 22.88 20.29 12.39 Personnel 14.80 13.44 13.82 12.88 13.93 Depreciation 1.24 1.17 1.21 1.73 1.81 Other Expenses 10.56 10.97 13.02 12.10 6.76 Interest 1.15 1.39 1.50 2.86 2.81 VRS compensation written off - - - - - Less: Expenditure allowed to jobs done for internal use - - - - - TOTAL 48.17 52.53 52.43 49.86 37.70 Profit /(Loss) before Prior Period Items 2.67 3.13 1.79 0.80 (15.02) Less: Prior Period Items (0.06) (0.37) (0.41) (0.14) (0.01) Provision of Income Tax 1.89 1.74 1.08 0.08 (4.47) Profit/(Loss) After Tax 0.84 1.76 1.12 0.86 (10.56) Add: Reserve withdrawn 3.40 2.74 2.90 2.49 4.69 Profit available for Appropriation 4.24 4.50 4.02 3.35 (5.87) Appropriations Transfer to General reserve 0.06 0.15 0.09 - - Proposed dividend 1.31 1.31 1.31 - - Dividend tax 0.13 0.14 0.29 - - Balance carried to balance sheet 2.74 2.90 2.33 - - Total 4.24 4.50 4.02 - -
STATEMENT OF ASSETS AND LIABILITIES (Rs. in crores) As on March 31, March 31, March 31, March 31, March 31, 1999 2000 2001 2002 2003 A. SOURCES OF FUNDS 1. Shareholders Funds Capital 8.73 8.73 8.73 8.73 8.73 Reserves & Surplus 4.35 4.59 4.11 4.69 - 2. Loan Funds Secured Loans 6.98 9.10 17.66 20.92 17.64 Unsecured loans - - - - 17.38 Total (2) 6.98 9.10 17.66 20.92 35.02 TOTAL (1+2) 20.06 22.42 30.50 34.34 43.75
B. APPLICATION OF FUNDS 1. Fixed Assets I Gross Block 21.13 20.71 27.46 28.33 28.68 Less: Depreciation 15.94 16.55 17.76 19.57 21.39 Net Block 5.19 4.16 9.70 8.76 7.29 Capital Work in Progress - 0.01 - 0.31 0.17 Machinery & Equipment in transit & under inspection/erection - - 0.05 0.24 - Total (1) 5.19 4.17 9.75 9.31 7.46 2. Investments - - 0.70 4.02 4.02 3. Current Assets, Loans and Advances Inventories 10.73 12.49 13.34 18.02 10.57 Sundry Debtors 14.35 16.45 19.01 20.18 9.52 Cash & Bank Balance 0.91 1.78 2.26 0.29 1.25 Other Current Assets - - - - - Loans and Advances 2.80 2.51 2.29 0.62 0.82 Total(3) 28.79 33.23 36.90 39.11 22.16 4. Current Liabilities & Provisions Current Liabilities 10.72 12.45 13.11 15.31 15.00 Provisions 3,20 2.53 3.74 2.82 1.46 Total (4) 13.92 14.98 16.85 18.13 16.46 5. Net Current Assets (3-4) 14.87 18.25 20.05 20.98 5.70 6. Miscellaneous Expenses - - - 0.03 16.47 7. Profit and Loss Account - - - - 5.87 8. Deferred Tax Assets - - - - 4.23 TOTAL (1+2+5+6+7+8) 20.06 22.42 30.50 34.34 43.75
.
62 HMT Limited
5. HMT (INTERNATIONAL) LIMITED
STATEMENT OF PROFIT AND LOSS (Rs. in crores) For the year ended March 31, March 31, March 31, March 31, March 31, 1999 2000 2001 2002 2003 I) INCOME Sales and Commission i Sale of machine tools, equip., accessories etc. 31.49 34.79 42.76 51.88 27.21 ii Agency commission on exports 0.11 0.01 - - - iii Export assistance 0.01 0.07 0.08 0.07 0.10 iv Difference in exchange 0.65 0.09 0.10 0.06 - Total(I +ii + iii + iv) 32.26 34.96 42.94 52.01 27.31 Technical services 0.54 0.74 0.89 0.51 0.28 Project Works 6.65 5.19 1.96 4.27 10.39 Total 39.45 40.89 45.79 56.79 37.98 Less: Cost of Sales 34.74 36.18 40.07 48.18 33.95 Trading Profit 4.71 4.71 5.72 8.61 4.03 Interest Income 0.63 1.31 0.89 1.29 1.98 Other Income 0.42 0.27 0.12 0.60 3.96 TOTAL 5.76 6.29 6.73 10.50 9.97
II) EXPENDITURE Personnel 2.44 2.40 2.85 2.23 2.14 Depreciation 0.22 0.23 0.22 0.24 0.26 Other Expenses 2.48 3.20 2.88 6.79 6.26 Interest 0.36 0.37 0.41 0.62 0.93 VRS compensation written off - - - - - Less: Expenditure allowed to jobs done for internal use - - - - - TOTAL 5.50 6.20 6.36 9.88 9.59 Profit /(Loss) before Prior Period Items 0.26 0.09 0.37 0.62 0.38 Less: Prior Period Items (0.21) 0.03 (0.01) 0.08 0.04 Provision of Income Tax 0.20 0.05 0.08 0.04 0.14 Profit after Tax 0.27 0.01 0.30 0.50 0.20 Add: Balance brought forward 0.31 0.41 - 0.01 0.01 Profit available for Appropriation 0.58 0.42 0.30 0.51 0.21 Appropriations Transfer to General reserve 0.54 0.01 0.07 0.39 0.08 Proposed dividend 0.03 0.03 0.05 0.07 0.07 Dividend tax - - - - - Transfer to foreign exchange reserve - 0.38 0.17 0.04 0.04 Balance carried to balance sheet 0.01 - 0.01 0.01 0.02 Total 0.58 0.42 0.30 0.51 0.21
STATEMENT OF ASSETS AND LIABILITIES (Rs. in crores) As on March 31, March 31, March 31, March 31, March 31, 1999 2000 2001 2002 2003 A. SOURCES OF FUNDS 1. Shareholders Funds Capital 0.24 0.24 0.24 0.48 0.48 Reserves & Surplus 20.59 20.13 20.38 20.57 19.97 2. Loan Funds Secured Loans 4.04 3.48 5.33 7.39 8.38 Unsecured loans 7.62 7.70 7.62 7.62 3.64 Total (2) 11.66 11.18 12.95 15.01 12.02 TOTAL (1+2) 32.49 31.55 33.57 36.06 32.47
B. APPLICATION OF FUNDS 1. Fixed Assets Gross Block 15.13 15.03 15.28 15.37 15.44 Less: Depreciation 0.77 0.88 1.16 1.33 1.48 Net Block 14.36 14.15 14.12 14.04 13.96 Capital Work in Progress - - - - - Machinery & Equipment in transit & under inspection/erection - - - - - Total (1) 14.36 14.15 14.12 14.04 13.96 2. Investments 0.30 0.30 0.30 0.30 0.30 3. Current Assets, Loans and Advances Inventories 1.08 0.26 0.11 0.09 5.05 Sundry Debtors 21.53 23.54 22.64 24.06 13.81 Cash & Bank Balance 5.09 4.87 3.42 6.38 6.77 Other Current Assets - - - - - Loans and Advances 10.49 7.22 5.90 3.47 3.59 Total(3) 38.19 35.89 32.07 34.00 29.22 4. Current Liabilities & Provisions Current Liabilities 18.09 18.67 12.71 11.91 9.71 Provisions 2.35 0.28 0.47 0.48 0.49 Total (4) 20.44 18.95 13.18 12.39 10.20 5. Net Current Assets (3-4) 17.75 16.94 18.89 21.61 19.02 6. Miscellaneous Expenses 0.08 0.16 0.26 0.11 0.02 7. Profit and Loss Account - - - - - 8. Deferred Tax Assets - - - - (0.83) TOTAL (1+2+5+6+7+8) 32.49 31.55 33.57 36.06 32.47
63 HMT Limited
6. PRAGA TOOLS LIMITED
STATEMENT OF PROFIT AND LOSS (Rs. in crores) For the year ended March 31, March 31, March 31, March 31, March 31, 1999 2000 2001 2002 2003 I) INCOME Sales i. Sales less Returns 10.59 13.97 7.59 4.66 6.00 ii. Job Work 0.11 0.59 1.42 0.22 0.42 iii. Service Charges 0.03 0.05 0.06 0.05 0.06 iv. Cost of item of Stock in trade utilized internally 0.08 0.11 0.02 0.06 0.07 Total (i + ii + iii + iv) 10.81 14.72 9.09 4.99 6.55 Less: Discount on Sales (0.15) (0.04) (0.02) (0.03) (0.03) Other Income 1.51 4.42 0.74 1.63 4.07 Accretion/Decretion to WIP, Finished Goods & Scraps 1.20 0.26 (2.31) (1.06) (2.34) TOTAL 13.37 19.36 7.50 5.53 8.25
II) EXPENDITURE Material 4.05 5.55 1.47 1.93 3.20 Personnel 16.76 17.12 16.58 15.98 10.90 Depreciation 0.53 0.48 0.44 0.27 0.24 Other Expenses 5.07 7.04 4.00 4.96 5.41 Interest 15.11 16.06 16.54 16.88 23.46 VRS compensation written off - - - - 1.97 Provision for Doubtful Debts 0.15 1.82 2.58 - - TOTAL 41.67 48.07 41.61 40.02 45.18 Profit /(Loss) before Prior Period Items (28.30) (28.71) (34.11) (34.49) 36.93) Less: Prior Period Items 0.53 0.40 0.31 0.57 0.57 Provision of Income Tax - - - - - Profit/(Loss) After Tax (28.83) (29.11) (34.42) (35.06) (37.50) Add: Balance of Loss brought forward 127.34 155.94 185.05 219.47 254.53 Profit available for Appropriation (156.17) (185.05) (219.47) (254.53) (292.03) Appropriations Transfer to General reserve - - - - - Proposed dividend - - - - - Dividend tax - - - - - Balance carried to balance sheet (156.17) (185.05) (219.47) (254.53) (292.03) Total (156.17) (185.05) (219.47) (254.53) (292.03)
STATEMENT OF ASSETS AND LIABILITIES (Rs. in crores) As on March 31, March 31, March 31, March 31, March 31, 1999 2000 2001 2002 2003 A. SOURCES OF FUNDS 1. Shareholders Funds Capital 15.73 36.17 36.17 36.17 36.17 Reserves & Surplus 0.23 - - - - 2. Loan Funds Secured Loans 118.47 130.24 154.23 180.67 221.38 Unsecured loans 13.49 14.90 16.31 17.13 18.48 Total (2) 131.96 145.14 170.54 197.80 239.86 TOTAL (1+2) 147.92 181.31 206.71 233.97 276.03
B. APPLICATION OF FUNDS 1. Fixed Assets Gross Block 37.35 37.38 37.39 37.40 37.46 Less: Depreciation 32.08 32.56 32.99 33.27 33.46 Net Block 5.27 4.82 4.40 4.13 4.00 Capital Work in Progress 0.35 0.33 0.33 0.25 - Machinery & Equipment in transit & under inspection/erection - - - - - Total (1) 5.62 5.15 4.73 4.38 4.00 2. Investments - - - - - 3. Current Assets, Loans and Advances Inventories 18.28 17.36 14.41 11.94 7.22 Sundry Debtors 7.82 7.89 7.20 6.12 2.85 Cash & Bank Balance 0.52 0.31 0.12 0.13 0.70 Other Current Assets - - - - - Loans and Advances 7.28 5.63 3.13 2.22 1.32 Total(3) 33.90 31.19 24.86 20.41 12.09 4. Current Liabilities & Provisions Current Liabilities 40.95 35.19 34.11 37.22 31.01 Provisions 6.82 4.89 8.24 8.13 7.10 Total (4) 47.77 40.08 42.35 45.35 38.11 5. Net Current Assets (3-4) (13.87) (8.89) (17.49) (24.94) (26.02) 6. Miscellaneous Expenses - - - - - 7. Profit and Loss Account 156.17 185.05 219.47 254.53 292.03 8. Deferred Revenue Expenditure - - - - 6.02 TOTAL (1+2+5+6+7+8) 147.92 181.31 206.71 233.97 276.03
64 HMT Limited
PART VII
STATEMENT OF DIVIDEND DECLARED BY THE COMPANY AND ITS SUBSIDIARIES
1. HOLDING COMPANY HMT LIMITED Year ended March 31, March 31, March 31, March 31, March 31, 1999 2000 2001 2002 2003 For the Year 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 Number of shares (in crores) 12.66 13.30 45.52 46.82 46.82 Rate of Dividend (%) Nil Nil Nil Nil Nil Amount of Dividend (Rs. in crores) Nil Nil Nil Nil Nil
2. SUBSIDIARIES OF THE COMPANY a. HMT MACHINE TOOLS LIMITED Year ended March 31, March 31, 2002 2003 For the Year 2001-2002 2002-2003 Number of shares (in crores) 1.07 1.07 Rate of Dividend (%) Nil Nil Amount of Dividend (in Rs.) Nil Nil b. HMT WATCHES LIMITED Year ended March 31, March 31, 2002 2003 For the Year 2001-2002 2002-2003 Number of shares (in crores) 0.55 0.55 Rate of Dividend (%) Nil Nil Amount of Dividend (in Rs.) Nil Nil c. HMT CHINAR WATCHES LIMITED Year ended March 31, March 31, 2002 2003 For the Year 2001-2002 2002-2003 Number of shares (in crores) 0.14 0.14 Rate of Dividend (%) Nil Nil Amount of Dividend (in Rs.) Nil Nil d. HMT BEARING LIMITED Year ended March 31, March 31, March 31, March 31, March 31, 1999 2000 2001 2002 2003 For the Year 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 Number of shares (in crores) 0.87 0.87 0.87 0.87 0.87 Rate of Dividend (%) 15.00 15.00 15.00 Nil Nil Amount of Dividend (in Rs.) 13093628 13093628 13093628 Nil Nil e. HMT (INTERNATIONAL) LIMITED Year ended March 31, March 31, March 31, March 31, March 31, 1999 2000 2001 2002 2003 For the Year 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 Number of shares (in crores) 0.024 0.024 0.024 0.048 0.048 Rate of Dividend (%) 10.00 10.00 20.00 15.00 15.00 Amount of Dividend (in Rs.) 240000 240000 480000 720000 720000 f. PRAGA TOOLS LIMITED Year ended March 31, March 31, March 31, March 31, March 31, 1999 2000 2001 2002 2003 For the Year 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 Number of shares (in crores) 0.45 0.45 0.75 0.75 1.00 Rate of Dividend (%) Nil Nil Nil Nil Nil Amount of Dividend (in Rs.) Nil Nil Nil Nil Nil
65 HMT Limited
III. STATUTORY AND OTHER INFORMATION
Minimum Subscription As the Issue of Bonds is being made on private placement basis, the requirement of minimum subscription shall not be applicable.
Expenses of the Issue The expenses of the Issue payable by the Company such as fees to the Lead Arrangers, reimbursement of expenses and payments to the Registrars to the Issue, printing expenses, listing fees, fees of the Trustees for the Bondholders, stamp duty and other expenses will be met out of the proceeds of the Issue.
Fees Payable to the Intermediaries The fees payable and the terms of appointment of intermediaries such as Lead Arrangers to the issue, legal advisors to the issue, tax consultants, registrars to the issue, trustees for the bondholders, credit rating agency(ies) etc are set out in the relevant appointment letters, copies of which are kept open for inspection at the Registered Office of the Company.
Underwriting and Procurement Commission/ Brokerage The issue is not underwritten and hence no underwriting commission is payable. As the Company shall not be appointing any Broker other than the Lead Arrangers to the issue, no procurement commission/ brokerage shall be payable to any other broker in addition.
Previous Issues by the Company No Equity Public Issue has been made by HMT. However, the Company has raised Non-Convertible Redeemable Bonds by way of private placement as under: Issue Year of Deemed Issue Security Tenure Credit Coupon Redemption Series Placement Date of Amount (in Rating Rate (% Date allotment (Rs.in Cr) Years) p.a) Bonds Earliest Secured by the Not 10% to Earliest date (2004) 2001-02 date being 75.50 Assets of the 3 Rated 12% being Series- 01.04.2001 Company 01.04.2004 A,B,C,D Bonds Earliest Secured by LAAA 10.75% to Earliest date (2010)- 2001-02 date being 159.00 Charge on 10 (SO’) 11.30% being GOIG 31.10.2001 Company’s 31.10.2007 Series- Property in C, D Maharastra Bonds Secured by PR1+ 7.50% Redeemed on (2010- 2002-03 29.11.2002 40.40 Charge on 1 (SO’) maturity GOIG Company’s Series E Property in Maharastra Bonds Secured by CARE 8.50% Earliest date (2010- 2002-03 27.11.2002 310.00 Charge on 8 AAA being GOIG Company’s (SO’) 27.11.2008 Series F Property in Maharastra GOIG = Government of India Guaranteed
Except as stated above, the Company has not issued any shares/ debentures/ bonds or agreed to issue any shares/ debentures/ bonds for cash or otherwise within the two years preceding the date of this Information Memorandum.
Offer Otherwise than for Cash There have not been any issues for consideration other than cash, save as except stated elsewhere in the Information Memorandum.
Option to Subscribe Save as otherwise stated in the Information Memorandum, the Company has not given any person nor does it propose to give any person any option to subscribe to the shares/ debentures/ bonds of the Company.
Undertaking regarding purchase of property There is no property which the Company has purchased or acquired or proposes to purchase or acquire, which is to be paid for, wholly or partly, out of the proceeds of the present Issue or the purchase or acquisition of which has not been completed on the date of issue of this Information Memorandum, other than the property as given hereunder: a. the contracts for the purchase or acquisition whereof were entered into, or may be entered into, in the ordinary course of the Company’s business, such contracts not being made in contemplation of the Issue or in consequence of the contract; or b. in respect of which the amount of the purchase consideration is not material. The Company has not purchased any property in which any of its directors had or have any direct or indirect interest or in respect of any payment thereof. The Company has no plans, at present, to acquire any running business out of the proceeds of the Issue.
Terms of Appointment of Chairman and Managing Director Appointment by the President of India in pursuance of Article 67(1) of Article of Association vide Order No.5(34)/2001-PE.X dated January 09, 2003. in the scale of pay of Rs.13,000 – Rs.500 – Rs.15,000 (pre-revised) for a period of five years or till the date of Superannuation or until further Orders, whichever is earlier.
Nature and Interest of Directors No Director of the Company is interested in the appointment of any of the intermediaries to the issue such as lead arrangers, registrars, bankers, trustees, rating agency(ies) etc. No Director of the Company is interested in any property acquired by the Company within two years of the date of the Information Memorandum or proposed to be acquired by it. The Directors are not
66 HMT Limited interested in any loan or advance given by the Company to any person(s)/ Company(ies) nor is any beneficiary of such loan or advance related to any of the Directors of the Company.
67 HMT Limited
Capitalisation of Reserves or Profits The Company has not made any capitalisation of reserves from the date of inception.
Revaluation of Assets There is no balance of revaluation reserves outstanding in the Balance Sheet of the Company as on March 31, 2003 and as on September 30 2003 and therefore the provision regarding furnishing of data with respect to revaluation of assets shall not be applicable.
IV. MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION The main provisions of the Articles of Association of the Company (hereinafter referred to as the Article(s) are reproduced below.
Allotment of Shares (Article 6) 6. Subject to the direction of the President in that behalf and subject to the provision hereinafter contained, the shares shall be under the control of the Directors who may allot or otherwise dispose of the same to such persons, on such terms and conditions and at such times as the Directors think fit and with full powers to give to any person the call of any shares whether at par or at premium or (subject to the provisions of the Act) at a discount and for such time and for such considerations as the Directors think fit; 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 General Meeting.
Share Certificates (Article 7) 7. Every person whose name is entered as a Member in the register shall without payment, be entitled to a certificate under the Common Seal of the Company specifying the share or shares held by him and the amount paid thereon; provided that, in respect of a share or shares held jointly by several persons, the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all. The Company will not charge any fees for sub-division, and consolidation of share and debenture certificates and for sub-division of Letters of Allotment and split, consolidation, renewal and pucca transfer receipts into denominations corresponding to the market unit of trading and for registration of any power of Attorney, Probate, Letters of Administration or similar other documents. Further, the Company will not charge any fees exceeding those which may be agreed upon with the Stock Exchanges for sub-division any consolidation of share and debenture certificates and for sub-division of Letters of Allotment and split, consolidation, renewal and pucca transfer receipts into denominations other than those fixed for the market units of trading.
Issue of new Share Certificates in place of one defaced, lost or destroyed (Article 8) 8. The Company will not charge any fees for issue of new certificates in replacement of those which are old, decrepit or worn out, or where the cages on the reverse for recording transfers have been fully utilised. The Company will not charge any fees exceeding those which may be agreed upon with the Stock Exchanges for issue of new certificates in lieu of those that are torn, defaced, lost or destroyed.
Calls on Shares (Article 9) 9. The Directors may, from time to time, make calls upon the members in respect of any moneys unpaid on their shares and specify the time or times of payments, and each member shall pay to the Company at the time or times so specified the amount called on his shares: Provided, however, that the Directors may from time to time, at their discretion extend the time fixed for the payment of any call.
Joint – Holders liability to pay (Article 10) 10. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.
Forfeiture of Shares (Article 10 (A)) 10(A) (1) If a member fails to pay any call, or installment of a call, on the day appointed for payment thereof, the Board may, at any part of the call or installment remains unpaid, serve a notice on him requiring payment of so much of the call or installment as is unpaid, together with any interest which may have accrued. 10(A) (2) The notice aforesaid shall (a) name a further day (not being earlier than the expiry of fourteen days from the date of service of the notice) on or before which the payment required by the notice is to be made; and (b) state that, in the event of non- payment on or before the day so named, the share in respect of which the call was made, will be liable to be forfeited. 10(A) (3) If the requirements of any such notice as aforesaid are not complied with any share in respect of which the notice has been given, may, at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Board to that effect. 10(A) (4) A forfeited share may be sold or otherwise disposed off on such terms and in such manner as the Board thinks fit. 10(A) (5) At any time before a sale or disposal as aforesaid, the Board may cancel the forfeiture on such terms as it thinks fit.
Company’s lien on Shares (Article 11) 11. The Company shall have a first and paramount lien upon all the shares (Other than fully paid-up shares) registered in the name of each member (whether solely or jointly with others) and upon the proceeds of the sale thereof for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such share and no equitable interest in any shares shall be created except upon the footing and condition that Article 15 hereof will have full effect. And such lien shall extend to all dividends and bonuses from time to time declared in respect of such shares. Unless otherwise agreed the registration of the transfer of shares shall operate as a waiver of the Company’s lien if any on such shares. The Directors may at any time declare any shares wholly or in part to be exempt from the provisions of this clause.
Transfer & Transmission of Shares (Article 14) 14. The right of members to transfer their shares shall be restricted as follow: (a) A share may be transferred by a member or other person entitled to transfer to a person approved by the President. (b) Subject as aforesaid, the Directors may, in their absolute and uncontrolled discretion refuse to register any proposed transfer of shares.
Notice of refusal to register transfer (Article 15) 15. If the Directors refuse to register the transfer of any shares they shall within two months of the date on which the instrument of transfer is delivered to the Company, send to the transferee and the transferor notice of the refusal; provided that 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 on any account whatsoever except a lien on the shares.
68 HMT Limited
Company not bound to recognise any interest in shares other than that of the registered holders Save as herein otherwise provided, the Directors shall be entitled to treat the person whose name appears on the register of the members as the holder of any share 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 benami trust or equity or equitable contingent or other claim to or interest in such a share on the part of any person whether or not it shall have express or implied notice thereof.
Execution of transfer (Article 16) 16. The instrument of transfer of any share in Company shall be executed both by the transferor and transferee, and he transferor shall be deemed to remain holder of the share until the name of the transferee is entered in the register of the members in respect thereof.
Form of Transfer (Article 17) 17. Share in and debentures of the Company shall be transferred in accordance with the provisions of Section 108 of the Act and prevailing rules made thereunder by the Central Government from time to time.
Transfer to be left at office and evidence of title to be given (Article 18) 18. Every instrument of transfer shall be left at the office for registration, accompanied by the certificate of the shares to be transferred and such evidence as the Company may require to prove the title of the transferor, or his right to transfer the shares. All instruments of transfer shall be retained by the Company, but any instrument of transfer of which the Directors may decline to register shall on demand, be returned to the person depositing the same.
Transmission by Operation of law (Article 19) 19. (a) (i) On the death of a member, the survivors where the member was a joint holder, and his legal representatives where he was a sole holder, shall be the only persons recognised by the Company, as having any title to his interest in the shares. (ii) Nothing in clause (i) shall release the estate of the decreased joint holder from any liability in respect of any share which had been jointly held by him with other persons. (b) (i) Any persons becoming entitled to a share in consequence of the death or insolvency of a member may, upon such evidence being produced as may from time to time properly be required by the Board and subject as hereinafter provided, elect, either; To be registered himself as holder of the share; or To make such transfer of the share as the deceased or insolvent member could have made. (ii) The Board shall, in either case, have the same right to decline or suspend registration as it would have had, if the deceased or insolvent member had transferred the share before his death or insolvency. (c) (i) If the person so becoming entitled shall elect to be registered as holder of the share himself, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects. (ii) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing a transfer of the share. (c) (iii) All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or insolvency of the member had not occurred and the notice or transfer were a transfer signed by that member. (d) A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company. Provided that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the share, until the requirements of the notice have been complied with.
Fee on transfer (Article 20) 20. There will be no charge for registration of transfer of shares and debentures.
When transfer books and Register may be closed (Article 21) 21. The transfer books and register of members may be closed for any time or times not exceeding in the whole 45 days in each year but not exceeding 30 days at a time, after giving not less than seven days notice in terms of Section 154 of the Act.
Directors’ right to refuse registration (Article 22) 22. The Directors shall have the same right to refuse to register a person entitled by transmission to any shares is or is nominee, as if he were the transferee the named in an ordinary transfer presented for registration.
Sub-division and consolidation of shares (Article 28) 28. Subject to the approval of the President, the Company in general meeting may from time to time sub-divide or consolidate its shares or any of them and exercise any of the other powers conferred by Section 94 of the Act and shall file with the registrar such notice of exercise of any such powers as may be required by the Act.
Dematerialisation of shares (Article 30A)
Options for Investors 3) Every person subscribing to shares offered by the Company shall have the option to receive the share certificates or to hold the shares with the depository. Such a person who is the beneficial owner of the shares can at any time opt out of the depository, if permitted by the law, in respect of any shares 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 Shares. If a person opts to hold his shares with a depository, the Company shall intimate such depository the details of allotment of the shares, and on receipt of the information, the depository shall enter in its record the name of the allotee as the beneficial owner of the shares.
69 HMT Limited
Shares in Depositories 4) All shares held by a depository shall be dematerialised and be in fungible form. Nothing contained in Sections 153, 153A, 153B, 187B, 187C and 372 of the Act shall apply to be in to a depository in respect of the shares held by it on behalf of the fungible form beneficial owners.
Rights of Depositories and Beneficial Owner 5) a) Notwithstanding anything to the contrary contained in the Act or these Articles, a depository shall be deemed to be the registered owner for the purposes of effecting transfer of ownership of shares on behalf of the beneficial owner. b) Save as otherwise provided in (a) above, the depository as the registered owner of the shares shall not have any voting rights or any other rights in respect of the shares held by it. c) Every person holding shares 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 shares shall be entitled to all the rights and benefits and be subject to all the liabilities in respect of his shares which are held by a depository.
Transfer of shares 7) Nothing contained in Section 108 of the Act or these Articles shall apply to a transfer of shares effected by a transferor and transferee both of whom are entered as beneficial owners in the records of the depository.
Allotment of Shares dealt with in a depository 8) Notwithstanding anything contained in the Act or these articles, where shares are dealt with in a depository, the Company shall intimate the details thereof to the depository immediately on allotment of such shares.
Distinctive number of shares held in a depository 9) Nothing contained in the Act or these Articles regarding the necessity of having distinctive numbers for shares issued by the Company shall apply to shares held with a depository.
Register and index of beneficial owners The register and index of beneficial owners maintained by a depository under the Depositories Act, 1996, shall be deemed to be the Registered and Index of Members and Shareholders for the purposes of these Articles.
Power to borrow (Article 31) 31. Subject to the approval of the President and subject to the provisions of Sections 292 and 293 of the Act, the Directors, may, from time to time, borrow or secure the payment of any sum of sums of money for the purposes of the Company.
Conditions on which money may be borrowed (Article 32) 32. The Directors may, subject to the approval of the President secure the repayment of such moneys in such manner and upon such terms and conditions in all respects as they thing fit and in particular, by the issue of bonds, perpetual or redeemable debentures or debenture stock, or any mortgage, charge or security on the undertaking of the whole or any part of the property of the Company (both preset and future) including its uncalled capital for the time being.
Persons not to have priority over any prior charge (Article 35) 35. Whenever any uncalled capital of the Company is charged all persons taking any subsequent charge thereon shall take the same subject to such prior charges and shall not be entitled, by notice to the shareholders or otherwise, to obtain priority over such prior charge.
Indemnity may be given (Article 36) 36. If the Directors or any of them or any other persons shall become personally liable for the payment of any sum primarily due from the Company the Directors may execute or cause to be executed any mortgage, charge or security over or affecting the whole or any part of the assets of the Company by way of indemnity to secure the Directors or persons so becoming liable as aforesaid from any loss in respect of such liability.
Specific Powers to Directors (Article 69) To pay for property in debentures etc (2) To pay for any property, rights or privileges acquired by or services rendered to the Company either wholly are partially in cash or in shares, bonds, debentures or other securities of the Company, and any such shares may be issued either as fully paid- up or with such amount credited as paid-up thereon as may be agreed upon; and any such bond, debentures or other securities may be either specifically charged upon all or any part of the property of the Company and its uncalled capital or not so charged;
To secure contracts by mortgage (3) To secure the fulfillment of any contracts or engagements entered into by the company by mortgage of all or any of the property of the Company and its uncalled capital for the time being or in such other manner as they may think fit;
To appoint Trustees (5) To appoint any person or persons (whether incorporated or not) to accept and hold in trust for the Company, any property belonging to the Company or in which it is interested or for any other purposes, and to execute and do all such deeds and things as maybe requisite in relation to any such trusts, and to provide for the remuneration of such trust or trustees.
To invest moneys (11) To invest in the Reserve Bank of India or in such securities as may be approved by President and deal with any of the moneys of the Company upon such investments authorised by the Memorandum of Association of the Company (not being shares in this Company) and in such manner as they think fit, and from time to time to vary or realise such investments;
To give security by way of indemnity (12) To execute in the name and on behalf of the Company in favour of any Director or other person who may incur or be about to incur any liability for the benefit of the Company such mortgages of the Company’s property (present and future) as they think fit and any such mortgage may contain a power of sale and such other powers, covenants and provisions as shall be agreed on;
70 HMT Limited
Dividends (Article 83) 83. The profits of the Company available for payment of dividend subject to any special rights relating thereto created or authorised to be created by these presents and subject to the provisions of these presents as to the reserve fund, shall, with the approval of the President, be divisible among the members in proportion to the amount of capital held by them respectively. 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 only entitle the holder of such share to apportioned amount of such dividend as from the date of payment.
Debts may be deducted (Article 89) 89. The Directors may retain any dividends on which the Company has a lien, and may apply the same in or towards the satisfaction of the debts, liabilities or engagements in respect of which the lien exists.
Effect of transfer (Article 92) 92. A transfer of shares shall not pass the right to any dividend declared thereon after such transfer and before the registration of the transfer.
Dividend to joint holders (Article 94) 94. Any one of the several persons, who are registered as the joint holders of any share, may give effectual receipts for all dividends and payments on account of dividends in respect of such shares.
Notice to joint holders (Article 114) A notice may be given by the Company to the joint holders of a share by giving the notice to the joint holder named first in the register in respect of the share.
Indemnity (Article 120) 120. Subject to the provision of Section 201 of the Act (1 of 1956) every Director, Manager, Secretary and other Officer or servant of the Company shall be indemnified by the Company against, and it shall be at the duty of the Directors out of the funds of the Company to pay, all cost, losses and expenses which any officer or servant may properly incur or become liable to by reason of any contract entered into, or act or thing done by him as such officer or servant, or in any way in the discharge of his duties; and the amount for which such indemnity is provided shall immediately attach as a lien on the property of the Company and have priority as between the members over or other claims.
71 HMT Limited
V. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The contracts referred to in Para (A) below (not being contracts entered into in the ordinary course of the business carried on by the Company or entered into more than 2 years before the date of the Information Memorandum) which are or may be deemed to be material have been entered into by the Company. Copies of these contracts together with the copies of documents referred to in Para (B) below have been attached to the copy of the Information Memorandum and the same may be inspected at the Registered Office of the Company between 10:00 am and 12:00 noon on any working day until the closing of the subscription list.
A. Material Contracts 1. Copy of letters appointing A. K. Capital Services Limited, Allianz Securities Limited, Centrum Finance Limited, RR Financial Consultants Limited and UTI Bank Limited as the Lead Arrangers to the issue. 2. Copy of letter No. JGMF/CHO/GOIGB dated 23rd February, 2004 appointing Karvy Consultants Limited as Registrar and Transfer Agents and copy of MoU entered into between the Company and the Registrars. 3. Copy of letter no. GGMF/CHO/GOIGB/ dated March 12, 2004 appointing The Western India Trustee & Executor Company Limited (WITECO) as Trustees to the Bondholders.
B. Documents 1. Memorandum and Articles of Association of the Company. 2. Certificate of Incorporation dated February 07, 1953. 3. Copy of the Resolution of the Board of Directors passed in the 242 nd meeting held on 21.11.2003 authorizing the current issue of Bonds. 4. Copy of unconditional and irrevocable guarantee from the Government of India conveyed vide its letter no. 5(32)/2000- PE.X dated March 8, 2004. 5. Auditors Report dated 08.03.2004 referred to in the Information Memorandum and their consent dated 08.03.2004 to include the same in the Information Memorandum. 6. Consent from the Legal Advisors, Directors, Auditors, Bankers to the Company, Lead Arrangers to the Issue, Registrars to the Issue referred to in this Information Memorandum to act in their respective capacities. 7. Copies of the initial listing application vide letter No. Secl. 1 dated January 8, 2004 made to The Stock Exchange, Mumbai. 8. Copy of letter No. WITCO/NJM/ dated March 12, 2004 conveying in-principle consent from The Western India Trustee & Executor Company Limited (WITECO) to act as Trustees to the Bondholders. 9. Annual Reports of the Company for Financial Years 1998-1999, 1999-2000, 2000-2001, 2001-2002 and 2002-2003. 10. Letter no. List/Debt/Smg/Pg/2004 dated January 15, 2004 received from The Stock Exchange, Mumbai conveying the in- principle approval for listing of the Bonds. 11. Letter dated February 21, 2004 from Credit Analysis & Research Limited (CARE) conveying the credit rating of ‘AAA(SO)’ for the present issue of Bonds of the Company. 12. Tripartite Agreement dated July 03, 2001between the Company, National Securities Depository Limited (NSDL) and Karvy Consultants Limited for issue of bonds in dematerialised form. 13. Tripartite Agreement dated June 19, 2001 between the Company, Central Depository Services (India) Limited (CDSL) and Karvy Consultants Limited for issue of bonds in dematerialised form.
72 HMT Limited
PART III
DECLARATION
All the relevant provisions of the Companies Act, 1956, Securities and Exchange Board of India, the guidelines issued by the Government and any other competent authority have been complied with and no statement made in this Information Memorandum is contrary to the provisions of the Companies Act, 1956 and rules framed thereunder. All the legal requirements applicable till the date of this Information Memorandum have been complied with. Further it is certified that, all disclosures made in this Information Memorandum are true and correct.
The Issuer Company accepts no responsibility for the statements made otherwise than in this Information Memorandum or any other material issued by or at the instance of the issuer and that any one placing reliance on any other source of information would be doing so at his own risk.
Signed by Mr. M. S. Zahed pursuant to the authority granted by the Board of Directors of the Company at their 242 nd meeting held on 21.11.2003:
Dated: March 15, 2004 Place: Bangalore, Karnataka.
73 WEB PAGE : www.dhi.nic.in Gram BHARI UDYOG GOVERNMENT OF INDIA
MINISTRY OF HEAVY INDUSTRIES & PUBLIC ENTERPRISES Udyog Bhavan DEPARTMENT OF HEAVY INDUSTRY New Delhi – 110 011 5(32)/2000-PE X March 8, 2004
Ref. No. ………………………….. Dated……………………….
GUARANTEE FROM THE GOVERNMENT OF INDIA.
In pursuance to the request of HMT Limited, Bangalore to extend the period of Government of India’s Guarantee in respect of the Non-Convertible Bonds for Rs. 40.40 crore issued vide Guarantee letter No. 5/32/2000-PE.X dated 6th November 2002 (which has now been expired and the dues alongwith interest thereon) the Government of India hereby extend fresh guarantee for raising bonds upto Rs. 40.40 crore for a period of two (2) years and Guarantee the timely repayment of principal amount on the due date and payment of interest thereon as per the terms stipulated in the Information Memorandum for Private Placement. This guarantee is unconditional and irrevocable and shall be in force until all the dues in respect of the Bond issue are repaid by HMT.
This Guarantee is issued with the concurrence of the Department of Economic Affairs (Budget Div.) vide their UO No. 816/B (SD)/2003 dated 23rd December, 2003 and IFW, DHI vide their Diary No. 297/Fin.III/2004 dated 8th March 2004.
sd/- (S. K. GUPTA) DESK OFFICER HMT Limited CREDIT ANALYSIS & RESEARCH LTD., 2-B, Wellington Plaza, 3rd Floor, 90, Anna Salai, Chennai – 600 002 Tel/ Fax : 2860 0876, 2860 0811, 2860 7812 Shri G.S.Shantiraj Group General Manager– Finance, HMT Limited, HMT Bhavan, 59, Bellary Road, Bangalore – 560032 Confidential Dear Sir, February 21, 2004
Credit Rating of Short term Bonds issue of Rs. 40.4 crore
Please refer to your letter dated February 12, 2004 requesting for rating of the proposed bond issue of your company for an amount of Rs. 40.4 crore. Ministry of Heavy Industries & Public Enterprises, Government of India (GoI) has vide letter dated December 24, 2003, extended the Government Guarantee (issued vide letter no. 5/32/2000-PE X dated September 4, 2000), for a further period of two years. The Bonds would be redeemable at the end of two years from the date of allotment.
2. Our Rating Committee has assigned a ‘CARE AAA(SO)’ [Triple A (Structured Obligation)] rating to the proposed bond issue. The bonds are backed by an unconditional and irrevocable guarantee from GoI, as above. The rating would come into effect only after compliance of specific conditions as per Annexure I. Instrument carrying this rating are considered to be of the best quality, carrying negligible investment risk. Debt service payments are protected by stable cash flows with good margin. While the underlying assumptions may change, such changes as can be visualised are most unlikely to impair the strong position of such instruments. Our rating symbols for long and medium term instruments and explanatory notes thereon are given at Annexure II.
3. In order to enable you to use the rating, please send us your acceptance in writing within two weeks of this letter. Unless accepted, the rating cannot be used in any manner whatsoever.
4. Please arrange to get the rating revalidated, in case the issue is not made within a period of six months from the date of this letter or in case there is any change in the size or terms of the issue.
5. Kindly arrange to submit to us a copy each of the documents pertaining to the issue enlisted in Annexure III within three months from the date of this letter. Further, please inform us the details of this issue [date/s of issue, name of investor/s, amount/s issued, interest-rate/s, date/s of payment of interest, date/s and amount/s of repayment/s etc.] as soon as it has been placed.
6. CARE reserves the right to suspend/withdraw/revise the rating assigned on the basis of new information or in the event of failure on the part of the company to furnish such information, material and clarifications as may be required by CARE. CARE shall also be entitled to publicise/disseminate/such suspension/ withdrawal/ revision in the assigned rating in any manner considered appropriate by it, without reference to you.
7. CARE ratings are not recommendations to buy, sell, or hold any securities.
8. If you need any clarification, you are welcome to approach us in this regard.
Thanking you, Yours faithfully,
sd/- [T.N.Arun Kumar] Deputy General Manager Encl: as above
75 HMT Limited
THE WESTERN INDIA TRUSTEE AND EXECUTOR CO. LTD. ( Subsidiary of The United Western Bank Ltd.)
161/C, 16th Floor, Mittal Court, Narim an Point, Mum bai – 400 021. Tel. : 22812883, 22880988 / 86 Fax : 22816477 E-m ail : [email protected]
th WITCO/NJM/ 12 March, 2004
HMT Limited 59, Bellary Road, Bangalore – 560 052 Karnataka Kind Attn:- Shri G.S.Shantiraj General Manager Finance
Dear Sir,
Re:- Trusteeship – GOI Guaranteed HMT Bonds, Issue aggregating to Rs. 40.40 Cores.
th We are in receipt of your letter NO.GGMF/CHO/GOIGB/ dated 12 March, 2004, wherein you have requested us to give our confirmation for our appointment as Debenture Trustee.
In this connection, we hereby confirm our appointment as Debenture Trustee for your GOI Guaranteed HMT Bonds issue aggregating to Rs. 40.40 Cores on same terms and th conditions conveyed to you vide our letter No.WITCO/04/VGP/521 dated 12 March, 2004.
Thanking you,
Yours faithfully,
sd/- Managing Director
R egd. Office : Vishwastha Bhavan, 218, Pratapganj Peth, Satara Tel. : (02162) 280075, 284002 Fax : (02162) 284686 E-mail : [email protected] Pune Office : Sadhana Apartments, 2076 Sadashiv Peth, Behind S. P. College, Pune – 411 030 Tel. : (020) 4321626 Fax : (020) 4321627
76 ADDRESSES OF DESIGNATED BRANCHES OF THE COLLECTING BANKER
UTI BANK LIMITED
Centre Address STD Code Telephone Number(s) Fax Number(s)
Chennai 82, Aalim Centre, Dr. Radhakrishnan Salai, 044 28111085, 28111086, 28111087 Mylapore, Chennai - 600 004 28111088
Bangalore No.9, M.G. Road, Block A, 080 25559555, 25559666 25559444 Bangalore - 560 001
Hyderabad 6-3-879/B, First Floor, G Pulla Reddy Building, 040 23405182, 23405185, 23407184 Begumpet Road, Hyderabad - 500 016 23415186
Ahmedabad Sakar-1, Ground Floor, Opp. Gandhigram 079 6586829, 6584201, 6581854 Railway Station, Off Ashram Road, 6581093 Ahmedabad - 380 009
Delhi “Statesman House”, 148, Barakhamba Road, 011 23311047, 23311050, 23311054 New Delhi – 110 001 23311051
Mumbai Universal Insurance Building, Sir P.M. Road, 022 22835782, 22835784, 22835785 Fort, Mumbai - 400 001 22835786
G.D. Somani Memorial School, 022 22165261, 22165263 22165264 625, G.D. Somani Marg, Cuffe Parade, Colaba, Mumbai – 400 005
Kolkata No.7 Shakespeare Sarani, Kolkata - 700 071 033 22822933, 22825189 22827611, 22824961 22826463
HMT Limited
ADDRESSES OF LEAD ARRANGERS TO THE ISSUE (in alphabetic order)
A. K. Capital Services Limited Centre Address Contact Person STD Code Telephone No. Fax No. Mumbai 135/136, Free Press House, 13th Floor, Vikas Jain/ 022 56349300 56360977 Free Press Journal Marg, Nariman Point, Vibhu Agarwal/ (10 lines) Mumbai – 400 021 Apoorva Srivastava New Delhi Flat No. ‘N’, Sagar Apartments, Neetan Singh/ Sarvesh 011 23385704, 3382380, 23385189 6, Tilak Marg, New Delhi - 110 001 Sharma/ Ajeet Chauhan 23388235 Bangalore Office No. 711, 7th Floor, Brigade Tower, Kishore Sheshadri/ 080 22292770, 2223404, 22292770 No-135, Brigade Road, Bangalore-560025 Mahesh Chopra 22077119 Ahmedabad 211, Shail Complex, IInd Floor, Opp. Jinesh Shah 079 30910590 30910590 Madusudan House, Shilp Char Rasta, C.G. Road, Navrangpura, Ahmedabad – 380 009 Chennai 3D, Ali Towers, 22, Greams Road, A. George 044 28295339, 8293345 28290341 Chennai – 600 006 Kolkata Oswal Chambers, 5th Floor, Premanshu Sharma/ 033 22428023, 22428024 22428023, 2, Church Lane, Kolkata – 700 001 Vikramjit Sarkar 22428024 Hyderabad 5-9-93/1, Shakti Sai Complex, 2/7, 2nd Floor, Neetu Rai/ 040 55638862 55638862 Chapel Road, Hyderabad – 500 001 Rajesh Pathania
Allianz Securities Limited Centre Address Contact Person STD Code Telephone No. Fax No. Mumbai 1-B, EMCA House, 289 Shaheed Bhagat Sameer Apte/ Pallavi 022 22675108, 22675138, 22671562 Singh Road, Fort , Mumbai – 400001 Parab/ Bijal Shah/ Arun 22678919, 22678809, Parab/ Vinesh Kotian 22610658 New Delhi 2nd Floor, 3, Scindia House, Manoj Arora/ Rajani 011 51514666 51514665 Janpath, New Delhi – 110 001 Dasgupta/ Jagdeep (10 lines) Singh/ Gopal Sharma/ Nupur Bagchi Bangalore S-416, 4th Floor, South Block, Manipal Jayshree/ Shashi 080 25092153, 25092154, 25092155 Centre, Dickenson Road, Kumar M.C/ Prasoon V. 25092155 Bangalore - 560042 Thampi/ N.D.G.Prasad Chennai 12-A, Eldam Square, New No.12, Old No. Venkateswaran/ 044 24315001, 24315002 24315002 167, Eldams Road, Alwarpet, Vegya Kumar Chennai – 600018 Kolkata 23-A , Royd Street, 1st Floor, Room No. Arindam Biswas/ Subha 033 22176721, 22176722, 22176723 101, Kolkatta – 700016 Sen Roy/ Arpita De/ 22176723 Shoban Dhar
Centrum Finance Limited Centre Address Contact Person STD Code Telephone No. Fax No. Mumbai Khetan Bhavan, 5th Floor, 198, J.Tata Kapil Bagla/ Ram 022 22023838 (10 lines) 22046096 Road, Churchgate, Mumbai – 400 020 Subramanian/ Navin Bangera/ Amit Patankar/ Virendra Kulkarni New Delhi 309, Ashoka Estate, Ranjit Kumar/ 011 23752617, 23752618, 23752891 24, Barakhamba Road, Connaught Place, Neeraj Thakur/ 23752892 New Delhi - 110 001 Poonam Shekhawat Bangalore 128, Silverlake Terrace, Pankaja/ Vijay/ 080 25582541, 25585770 25581669 167, Richmond Road, Bangalore – 560 025 Rina Kanani Chennai Flat No 4, 4th Floor, Real Enclave, 22, Satish Kumar 044 28239470 28233611 Jasier Street, Nungambakkam, Chennai - 600 034 Ahmedabad 1, Narnarayan Complex, Swastik Char Parag Parekh 079 26465694, 26468942 26465694 Rasta, Off. C G Road, Navrangpura, Ahmedabad – 380 009 Pune 108, Sohrab Hall, 1st Floor, Sasson Road, Sanjay Vidwans 020 6059402-04 6059401 Opp Jehangir Nursing Road, Pune – 411 001 Kolkata Flat No 81, 8th Floor, Circular Court, Sumit Gothi/ 033 22873682 22873683 Premises No 8, A.J.C. Bose Road, Ashok Agarwal Kolkata – 700 017 Hyderabad Shop No 3, Mogul’s Court, Bashirabaug, Venkat Narayan 040 23299785, 55629351 55665377 Hyderabad – 500 001 Baroda 20, FF Panorama Complex, 1st Floor, R. C. Jaimin Bhatt 0265 2350594, 2350595 Dutta Road, Baroda – 39 0005
78 HMT Limited
RR Financial Consultants Limited Centre Address Contact Person STD Code Telephone No. Fax No. Bangalore S - 111, Manipal Centre, Sidharth Gupta/ 080 25581513, 25581514 25593664 47, Deckinson Road, Bangalore - 560042 Anshul Kolkata 704, Krishna Building, Tapa Shankar Das/ 033 22802963, 22802964, 22802964 224, AJC Bose Road, Kolkata – 700017 Kishan Biyani 22474828 Mumbai 133-A, Mittal Tower, A Wing, Shiba/ Aradhana/ 022 22886627, 22886628 22851925 Nariman Point, Mumbai – 400021 Reshma/ Manish/ Divya/ Ankit New Delhi 4th Floor, Indra Prakash, Naresh Varshney/ 011 23352496-99 23353703 21, Barakhamba Road, New Delhi - 110 001 Kiran/ Anurag Arun Lucknow G - 32,Shriram Tower, Ritu Agarwal 0522 2286518 2286110 13A Ashok Marg, Lucknow Ahmedabad 401, Abhijit Bluilding, Sharansh Soni 079 26404241 26467260 Near Mitha Khali Cross Roads, Navrangpura, Ahmedabad - 380 009 Jaipur 104-105, Ground Floor, Ganpati Plaza, Amit Kumar 0141 25113317 - MalI Road, Jaipur Chandigarh SCO 35-36, Cabin No. 3, 1st Floor, Narendra Sharma 0172 22722787, 22727008 Sector – 17, Chandigarh.
UTI Bank Limited Centre Address Contact Person STD Code Telephone No. Fax No. Mumbai 111, Maker Towers 'F', 11th Floor, Pawan Bansal/ 022 22165552, 22162684 22162467 Cuffe Parade, Colaba, Mumbai – 400005 Gagan Baya Kolkata 5, Shakespeare Sarani, 1st Floor, Bipin Saraf 033 22824973 22821727 Kolkata – 700071 Chennai 82, Dr. Radhakrishnan Salai, Mylapore, S. Kumar 044 28116070 28114781 Chennai – 600004 New Delhi Ashoka Estate, 5th Floor, Sushil Bhagat/ 011 23352748, 23359931 23352747 24, Barakhamba Road, New Delhi - 110001 Karan Bagga Hyderabad 6-3-879/B, G. Pulla Reddy Building, G.V. Sreeramkumar 040 55669825 23407184 1st Floor, Begumpet Road, Hyderabad – 500016 Bangalore No. 9, M.G. Road, Bangalore – 560001 P.R. Rajeev 080 25559555 25559444
79