Chemplast Sanmar Limited Letter of Offer
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LETTER OF OFFER March 13, 2009 For private circulation to our equity shareholders only CHEMPLAST SANMAR LIMITED (Chemplast Sanmar Limited was originally incorporated on March 13, 1985 as Urethanes India Limited (“UIL”) under the provisions of Companies Act, 1956. Chemicals and Plastics India Limited (“CPIL”), was amalgamated with UIL with effect from 1st October 1991 and our name was changed from “Urethanes India Limited” to “Chemicals and Plastics India Limited” with effect from May 15, 1992. The name of our Company was further changed to Chemplast Sanmar Limited with effect from September 28, 1995. For further details please refer to the section “History of the Company and other Corporate Matters” beginning on page 63 of this Letter of Offer). Registered Office: 9, Cathedral Road, Chennai - 600086 Phone: +91-44-28128500 Fax: +91-44-28112627, Website: www.sanmargroup.com Contact Person & Compliance Officer: Mr. M. Raman, Company Secretary E-mail: [email protected] Phone: +91-44-28128722 Fax: +91-44-28112627 For Private Circulation to our Equity Shareholders Only ISSUE ON A RIGHTS BASIS OF 31,98,79,627 EQUITY SHARES OF Re. 1/- EACH FOR CASH AT A PRICE OF Rs. 5/- PER SHARE (INCLUDING PREMIUM OF RS.4/- PER SHARE) FOR AN AMOUNT AGGREGATING Rs 159,93,98,135 TO THE EQUITY SHAREHOLDERS IN THE RATIO OF 2 EQUITY SHARES FOR EVERY 3 EXISTING EQUITY SHARES HELD BY THE SHAREHOLDERS ON THE RECORD DATE. i.e. MARCH 24, 2009 IN TERMS OF THIS LETTER OF OFFER. THE FACE VALUE OF THE SHARES IS Re.1/- AND THE ISSUE PRICE IS 5 TIMES THE FACE VALUE OF THE EQUITY SHARES. GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and Investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in this Issue. For taking an investment decision, Investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Investors are advised to refer to “Risk Factors” beginning on page ix of this Letter of Offer before making an investment in this Issue. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Letter of Offer is true and correct in all 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 Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect. LISTING Our existing Equity Shares are listed on Bombay Stock Exchange Limited (“BSE”), National Stock Exchange of India Limited (“NSE”) and Madras Stock Exchange Limited (“MSE”). We have received “in- principal” approvals from BSE, NSE and MSE for listing the Equity Shares arising from the Issue vide letters dated November 11,2008, January 5,2009 and November 20, 2008 respectively. BSE shall be the Designated Stock Exchange. Lead Manager to the Issue Registrar to the Issue Ernst & Young Merchant Banking Services Pvt. Ltd. Integrated Enterprises (India) Ltd. Jalan Mill Compound, 95 Ganpatrao Kadam Marg, 2nd Floor. “Kences Towers”, No.1 Ramakrishna Street, Lower Parel, Mumbai 400013. North Usman Road, T Nagar, Chennai- 600 017 Tel: +91-22-6657 9326, 4035 6300 Fax: +91-22-4035 6400 Tel : +91-44-2814 0801 - 03, Fax : +91-44-2814 2479 Contact Person: Ms. Nishita John Contact Person: Mr S Sriram E-mail id: [email protected] Email: [email protected] Website: www.ey.com/india Website:www.iepindia.com ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR RECEIVING ISSUE CLOSES ON REQUEST FOR SPLIT FORMS MONDAY, MARCH 30, 2009 MONDAY, APRIL 6, 2009 MONDAY, APRIL 13, 2009 i CONTENTS NO OFFER IN THE UNITED STATES ................................................................................................................ iii PRESENTATION OF FINANCIAL AND MARKET DATA ................................................................................. iv FORWARD-LOOKING STATEMENTS..................................................................................................................v ABBREVIATION AND TECHNICAL TERMS .................................................................................................... vi RISK FACTORS ..................................................................................................................................................... ix SUMMARY ..............................................................................................................................................................1 THE ISSUE ..............................................................................................................................................................4 SELECTED FINANCIAL INFORMATION............................................................................................................5 GENERAL INFORMATION .................................................................................................................................10 CAPITAL STRUCTURE ........................................................................................................................................17 OBJECTS OF THE ISSUE ....................................................................................................................................23 BASIS FOR ISSUE PRICE ....................................................................................................................................29 STATEMENT OF TAX BENEFITS .......................................................................................................................31 INDUSTRY OVERVIEW ......................................................................................................................................36 OUR BUSINESS ....................................................................................................................................................44 HISTORY OF OUR COMPANY AND OTHER CORPORATE MATTERS.........................................................63 DIVIDEND POLICY .............................................................................................................................................69 MANAGEMENT ...................................................................................................................................................70 PROMOTERS AND PROMOTER GROUP ..........................................................................................................80 FINANCIAL INFORMATION .............................................................................................................................130 STOCK MARKET DATA FOR EQUITY SHARES OF OUR COMPANY ........................................................159 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS ................................................................................................................................................161 MATERIAL DEVELOPMENTS ..........................................................................................................................169 OUTSTANDING LITIGATIONS AND DEFAULTS...........................................................................................170 GOVERNMENT APPROVALS ...........................................................................................................................226 STATUTORY AND OTHER INFORMATION....................................................................................................248 TERMS OF THE ISSUE ......................................................................................................................................257 MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ........................................................................277 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ..............................................................283 DECLARATION ..................................................................................................................................................285 ii NO OFFER IN THE UNITED STATES The rights and the Equity Shares of our Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the United States of America or the territories or possessions thereof (the ‘‘United States’’ or ‘‘U.S.’’) or to, or for the account or benefit of, “U.S. Persons” (as defined in Regulation S under the Securities Act (‘‘Regulation S’’), except in a transaction exempt from the registration requirements of the Securities Act. The rights referred to in this Letter of Offer are being offered in India, but not in the United States. The offering to which this Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any shares or rights for sale in the United