Orient Paper & Industries Limited

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Orient Paper & Industries Limited DRAFT LETTER OF OFFER (Private and Confidential) For Equity Shareholders of the Company only Dated January 10, 2007 ORIENT PAPER & INDUSTRIES LIMITED (Originally incorporated under the Indian Companies Act, 1913, as “Orient Paper Mills Limited” vide certificate of registration dated July 25, 1936 issued by Registrar of Joint Stock Companies, Bengal and received its certificate of commencement of business on July 30, 1936. The name of our Company was changed to “Orient Paper & Industries Limited” on September 13, 1978. The registered office of our Company was shifted from 8, Royal Exchange Place, Calcutta-700001, West Bengal to Brajrajnagar, District – Jharsuguda - 768216, Orissa, in the year 1947 and further shifted to its current address, Unit- VIII, Plot No.7, Bhoinagar, Bhubaneswar-751012, Orissa in the year 2000. Registered Office: Unit-VIII, Plot No. 7, Bhoinagar, Bhubaneswar-751 012, Orissa Head office: 9/1, R. N. Mukherjee Road, Kolkata - 700 001 Contact Person & Compliance Officer: Mr. P.K. Sonthalia, President (Finance) & CFO, Tel: +91 33 2248 3406; Fax: +9133 2242 0933; E-mail: [email protected] DRAFT LETTER OF OFFER Issue of [y] Equity Shares of Rs. 10 each for cash at a price of Rs. [y] (including a premium of Rs. [y]) per Equity Share not exceeding an aggregate amount of Rs. 17,500 lacs on rights basis to the existing Equity Shareholders of our Company in the ratio of [y] Equity Share for every [y] Equity Shares held on Record Date i.e. [y] The face value of the Equity Shares is Rs. 10 per share and the Issue Price is [y] times the face value. GENERAL RISKS Investment 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 section titled “Risk Factors” beginning on Page 8 of this Draft Letter of Offer 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 Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this document. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Draft 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 Draft 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 document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing Equity Shares of our Company are listed on Bombay Stock Exchange Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”). Accordingly, our Company proposes to list the Equity Shares on BSE and NSE, for which in-principle approvals have been received from BSE and NSE vide letters dated [y] and [y] respectively. Bombay Stock Exchange Limited shall be the Designated Stock Exchange. 1 ISSUE OPENS ON: LAST DATE FOR RECEIVING ISSUE CLOSES ON: REQUESTS FOR SPLIT FORMS: [y] [y] [y] LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE Securities ICICI Securities Limited Sharepro Services (India) Pvt. Ltd. ICICI Centre Satam Estate, 3rd Floor, H.T. Parekh Marg, Churchgate Above Bank of Baroda, Mumbai 400 020 Cardinal Gracious Road, Chakala, Tel: +91 22 2288 2460 Andheri (E), Mumbai - 400 099 Fax: +91 22 2282 6580 Tel: 91-22-2821 5168, 2821 5169 Website: www.icicisecurities.com Fax: 91-22-2837 5646 E-mail: [email protected] Website : www.shareproservices.com Contact Person: Mr. Debasis Panigrahi E mail: [email protected] Contact Person : V. Kumaresan 2 TABLE OF CONTENTS Contents Page No. Section I – General Definitions ,Abbreviations and Technical terms 4 Section II – Risk Factors 8 Section III – Introduction 27 The Issue 29 Summary Financial Information 30 General Information 38 Capital Structure 43 Objects of The Issue 51 Basis for Issue Price 62 Statement of Possible Tax Benefits 64 Section IV – About the Issuer Company Industry Overview 72 Our Business 85 Regulations and Policies 96 History and Other Corporate Matters 100 Our Management 107 Our Promoters 118 Related Party Transactions 133 Section V – Financial Information Auditor’s Report 134 Management’s Discussion and Analysis of Financial Conditions and Results of 243 Operations Financial Indebtedness 253 Section VI – Legal and Regulatory Information Outstanding Litigations 257 Government / Statutory and Business Approvals 297 Material Developments 316 Other Regulatory and Statutory Disclosures 317 Stock Market Data for the Equity Shares of Our Company 324 Section VII – Issue Information 325 Section VIII – Main Provisions of Memorandum and Articles of Association Main Provisions of Memorandum and Articles of Association 347 Section IX – Other Information Material Contracts and Documents for Inspection 362 Declaration 363 3 DEFINITIONS, ABBREVIATIONS AND TECHNICAL TERMS In this Letter of Offer, the terms “we”, “us”, “our”, “Our Company” or “OPIL”, unless the context otherwise implies, refer to Orient Paper & Industries Limited. All references to “Rs.”or “INR” refer to Rupees, the lawful currency of India, “USD” or “US$” refer to the United States Dollar, the lawful currency of the United States of America. References to the singular also refers to the plural and one gender also refers to any other gender, wherever applicable, and the words “Lakh” or “Lacs” mean “100 thousand” and the word “million” means “10 lakh” and the word “crore” means “10 million” or “100 lacs” and the word “billion” means “1,000 million” or “100 crores”. Any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. Conventional/ General Terms and Abbreviations Act The Companies Act, 1956 AGM Annual General Meeting APHA American Public Health Association APMDC Andhra Pradesh Mineral Development Corporation Limited Articles/ Articles of Articles of Association of Our Company as originally framed or as altered Association/ AOA from time to time in pursuance of any previous companies law or of this Act AS Accounting Standards as issued by the Institute of Chartered Accountants of India Board/Board of Board of Directors of Orient Paper & Industries Limited or Committee of the Directors/ Directors Board of Directors of Orient Paper & Industries Limited authorized to take /Committee of Directors decisions on matters related to / incidental to this Issue for Rights Issue BIS Bureau of Indian Standards BSE Bombay Stock Exchange Limited CAGR Compounded Annual Growth Rate CDSL Central Depository Services (India) Limited CENVAT Central Value Added Tax CESTAT Central Excise and Sales Tax Appellate Tribunal CIT (A) Commissioner of Income Tax (Appeals) CMA Cement Manufacturers’ Association Company/ OPIL/ Orient Paper & Industries Limited Issuer/We/us CSE The Calcutta Stock Exchange Association Limited Depositories NSDL and CDSL Depository Participant A depository participant as defined under the Depositories Act, 1996 as amended from time to time DGS&D Directorate General of Supplies & Disposals Directors Directors on the Board of Our Company ECS Electronic Credit System EGM Extraordinary General Meeting EPS Earnings per share FCNR Account Foreign Currency Non Resident Account FEMA Foreign Exchange Management Act, 1999, read with rules and regulations there under and amendments thereto FERA Foreign Exchange Regulation Act, 1973 FII(s) Foreign Institutional Investors registered with SEBI under applicable laws FIPB Foreign Investment Promotion Board, Ministry of Finance, Government of India 4 FY Financial Year of Our Company being the period of 12 months ending on March 31 of every year GAAP Generally Accepted Accounting Principles GDP Gross Domestic Product GIR Number General Index Registry Number GoI Government of India HUF Hindu Undivided Family IPMA Indian Paper Manufacturers’ Association I-Sec/ Lead Manager ICICI Securities Limited ISO International Standards Organization IT Act Income Tax Act, 1961 and amendments thereto ITAT Income Tax Appellate Tribunal Kolkata High Court High Court of Judicature at Calcutta Memorandum/ Memorandum of Association of our Company as originally framed or as Memorandum of altered from time to time in pursuance of any previous companies law or of Association/ MOA this Act MOEF Ministry of Environment and Forest NA Not Applicable NAV Net Asset Value NRE Account Non Resident External Account NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited P/E Ratio Price/ Earning Ratio PAN Permanent Account Number Promoter The term “Promoter” in relation to OPIL shall have the same meaning as ascribed to it under the SEBI Guidelines, and shall refer to (i) Mr. C.K. Birla and (ii) Central India Industries Limited RBI Reserve Bank of India RBI Act The Reserve Bank of India Act, 1934 as amended from time to time RoNW Return on Net Worth SEBI Securities and Exchange Board of India SEBI Act The Securities and Exchange Board of India Act, 1992 as amended from time to time SEBI DIP Guidelines SEBI (Disclosure & Investor
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