TABLE OF CONTENTS DEFINITIONS AND ABBREVIATION ................................................................................................. i FORWARD-LOOKING STATEMENTS, CERTAIN CONVENTIONS AND MARKET DATA ................. vi RISK FACTORS ................................................................................................................................. vii SUMMARY ........................................................................................................................................ 1 OFFERING DETAILS .......................................................................................................................... 2 GENERAL INFORMATION ................................................................................................................. 6 CAPITAL STRUCTURE ...................................................................................................................... 10 OBJECTS OF THE ISSUE .................................................................................................................. 18 BASIC TERMS OF ISSUE .................................................................................................................. 25 BASIS FOR ISSUE PRICE .................................................................................................................. 25 TAX BENEFITS CERTIFICATE TO THE COMPANY AND ITS MEMBERS .......................................... 27 INDUSTRY OVERVIEW .................................................................................................................... 31 BUSINESS OVERVIEW ..................................................................................................................... 40 HISTORY AND CORPORATE STRUCTURE ...................................................................................... 56 MANAGEMENT ................................................................................................................................. 59 PROMOTERS .................................................................................................................................... 72 FINANCIAL STATEMENTS ................................................................................................................ 74 MANAGEMENT DISCUSSION AND ANALYSIS ............................................................................... 117 LEGAL AND OTHER INFORMATION ................................................................................................ 123 OTHER REGULATORY AND STATUTORY DISCLOSURE ................................................................ 158 ISSUE INFORMATION ....................................................................................................................... 165 BASIS OF ALLOTMENT .................................................................................................................... 174 MAIN PROVISIONS OF ARTICLES OF ASSOCIATION ..................................................................... 176 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION .................................................... 188 DECLARATION .................................................................................................................................. 190 DEFINITIONS AND ABBREVIATIONS Definitions Term Description “KMSML” or “the Company” or “our K.M. Sugar Mills Limited, a public limited company incorporated under the Company” or “K. M. Sugar Mills Limited” Companies Act, 1956 or “we” or “us” and “our” Conventional/General Terms Term Description Act The Companies Act, 1956 BSE The Bombay Stock Exchange Limited CDSL Central Depository Services (India) Limited Directors The Directors of the Company, i.e. K.M. Sugar Mills Limited Equity Shares The Equity Shares of face value of Rs. 10/- each of the Company FEMA Foreign Exchange Management Act, 1999, as amended from time to time, and the rules and regulations framed there under. FIIs Foreign Institutional Investor as defined under SEBI (Foreign Institutional Investors) Regulations, 1995 registered with SEBI and as defined under FEMA (Transfer or Issue of security by a person resident outside India) regulations, 2000 and under other applicable laws in India. GAAP Generally Accepted Accounting Practices IT Act The Income Tax Act, 1961, as amended from time to time NSE National Stock Exchange of India Limited RBI Reserve Bank of India SEBI The Securities and Exchange Board of India constituted under the SEBI Act SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time. SEBI Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000, issued by SEBI, as amended from time to time. Offering related terms Term Description Applicant Any prospective investor who makes an application for shares in terms of this Prospectus Application Form The form in terms of which the investors shall apply for the Equity Shares of the Company Depository A depository registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996, as amended from time to time Depositories Act The Depositories Act, 1996, as amended from time to time Depository Participant A Depository participant as defined under the Depositories Act i Term Description Issue/Fresh Issue/IPO Initial Public Offering of 64,00,000 Equity Shares by K.M. Sugar Mills Limited Issue Closing Date The date on which the issue closes for subscription by the public Issue Opening Date The date on which the issue opens for subscription by the public Issue Period The period between the Issue opening date and Issue closing date and includes both these dates Issue Price The price at which the Equity Shares will be issued by the Company under this Prospectus Prospectus/Offer Document Refers to this document, in terms of which the present Issue of Equity Shares are proposed to be made, to be filed with ROC, Uttar Pradesh and Uttaranchal, Kanpur Project The proposed project of the Company for: ■ Expansion cum balancing of sugarcane crushing capacity from 4500 TCD to 6500 TCD Registrar Registrar to the Issue, viz. Intime Spectrum Registry Limited Stock Exchange(s) Unless otherwise mentioned refers to The Bombay Stock Exchange Limited, (BSE) Company related terms Term Description Act The Companies Act, 1956 Articles The Articles of Association of K.M. Sugar Mills Limited Auditors The statutory auditors of the Company M/s Mehrotra & Mehrotra, Chartered Accountants Board/Board of Directors The Board of Directors of K.M. Sugar Mills Limited Directors The directors of our Company, unless the context otherwise requires Equity Shares The Equity Shares of face value of Rs. 10/- each of the Company Fiscal or FY or Financial Year ■ Twelve months ending 31st March 2000 ■ Twelve months ending 31st March 2001 ■ Twelve months ending 31st March 2002 ■ Eighteen months ending 30th September 2003 ■ Twelve months ending 30th September 2004 Indian GAAP Generally accepted accounting principles in India Insurance Act Insurance Act, 1938, as amended from time to time IRDA Insurance Regulatory and Development Authority constituted under the IRDA Act IRDA Act Insurance Regulatory and Development Authority Act, 1991, as amended from time to time ii Term Description IT Act The Income Tax Act, 1961, as amended from time to time Memorandum/ Memorandum The Memorandum of Association of K.M. Sugar Mills Limited of Association Non Resident A person who is not an NRI, an FII and is not a person resident in India NRI/ Non-Resident Indian A person resident outside India, as defined under FEMA and who is a citizen of India or a Person of Indian Origin under FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 Promoters Mr. L.K. Jhunjhunwala Mr. Aditya Jhunjhunwala Mr. Sanjay Jhunjhunwala L.K. Jhunjhunwala (HUF) RoC Registrar of Companies, Uttar Pradesh and Uttaranchal, Kanpur Registered Office of the Company 11, Moti Bhawan, Collectorganj, Kanpur – 208 001 Company/ Industry-related Terms Term Description B.E. Bachelor of Engineering BOD Biological Oxygen Demand COD Chemical Oxygen Demand Cogeneration Cogeneration of Power implies generation of power from by-product i.e. bagasse while main operations of the Company are different from power generation, and no external raw material is consumed for generating power. DG Diesel Generator ETP Effluent Treatment Plant FSQ Free Sale Quota GRPF Grooved Roller Pressure Feeder ISMA Indian Sugar Mills Association KLPD Kilo Litre Per Day KWH Kilo Watt per Hour Mech. Mechanical MPNG Ministry of Petroleum and Natural Gases MRM Monthly Release Mechanism MT Metric Tonne MW Mega Watt OGL Open General License PDS Public Distribution System iii Term Description PPA Power Purchase Agreement SMP Statutory Minimum Price SAP State Advised Price SDF Sugar Development Fund SO2 Sodium Oxide TCD Tons crushed per day TPD Tons per Day TRS Total Reducing Sugar ABBREVIATIONS Term Description AGM Annual General Meeting of the Company AS Accounting Standard A. Y./AY Assessment Year BVQI Bureau Veritas Quality International CAGR Compounded Annual Growth Rate CII Confederation of Indian Industries CEGAT Central Excise Customs and Gold Appellate Tribunal CESTAT The Customs, Excise, Service Tax Appellate Tribunal CLB Company Law Board CDSL Central Depository Services (India) Limited CIBIL Credit Information Bureau (India) Limited DCA Department of Company Affairs DP Depository Participant DRT Debt Recovery Tribunal EGM Extra-ordinary General Meeting of the Company EPS Earnings Per Share EU European