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C M Y K PROSPECTUS Date: 16th February, 2006 MALU PAPER MILLS LIMITED (Incorporated in India on January 11,1994 as Malu Solvex Limited under the Companies Act, 1956 with Registration No. 11-76009 with Registrar of Companies, Maharashtra. The name of the Company was changed to Malu Paper Mills Limited on April 24, 1998) Registered Office: “ Heera Plaza”’ 4th Floor, Near Telephone Exchange, Central Avenue, Nagpur – 440 008. (Maharashtra) Tel.: +91 712 2760308, 2778506, 2733100, Fax: +91 712 2760310 E-mail: [email protected] Website: www.malupaper.com Contact Person: Mr. Girish Malpani, CFO & Compliance Officer PUBLIC ISSUE OF 66,67,000 EQUITY SHARES OF RS 10- EACH FOR CASH AT A PREMIUM OF RS 20/- PER SHARE (i.e. AT A PRICE OF RS.30/-PER SHARE) AGGREGATING RS 2000.10 LACS. The Issue price of Rs 30/- per share is three (3) times the face value. RISK IN RELATION TO THE FIRST ISSUE This being the first issue of the Equity Shares of Malu Paper Mills Limited, there has been no formal market for the Equity shares of the Company. The face value of the shares is Rs.10/- and the issue price is three times of the face value. The issue price (has been determined and justified by the Lead Merchant Banker and the Issuer Company as stated under Justification of Premium paragraph on page 35) should not be taken to be indicative of the market price of the equity shares after the equity shares are listed. No assurance can be given regarding an active and/or sustained trading in the equity shares of the Company or regarding the price at which the equity shares will be traded after listing. GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely on their own examination of the issuer and the offer including the risks involved. The equity shares 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. Investors should note that no rating agency has graded the issue. Attention of the investors is specifically invited to the Statement of Risk Factors beginning on page nos v to xvi of this Prospectus. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Prospectus contains all information with regard to the issuer and the issue, which is material in the context of the issue, that the information contained in the Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this 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 Equity Shares issued through this Prospectus are proposed to be listed on the Bombay Stock Exchange Limited (BSE) (The Designated Stock Exchange) and the National Stock Exchange of India Limited (NSE). The Company has received in-principle approvals from these Stock Exchanges for the listing of the Equity Shares pursuant to letters dated 06.01.2006 and 30.01.2006 respectively. LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE MICROSEC CAPITAL LTD. INTIME SPECTRUM REGISTRY LTD SEBI Regn.No INM 000010791 C-13, Pannalal Silk Mills Compound L B S Marg, Bhandup (West) Azimganj House, 2nd Floor Mumbai 400 078 7, Camac Street, Kolkata 700 017 Tel: +91-22-2596 0320 Ph: 91-33-2282 9330 Fax: 91-33-2282 9335 Fax: +91-22-2596 0329 E-Mail: [email protected] Website: www.intimespectrum.com Website: www.microsec.co.in E-Mail: [email protected] ISSUE PROGRAMME ISSUE OPENS ON : MARCH 06, 2006, MONDAY ISSUE CLOSES ON : MARCH 10, 2006, FRIDAY C M Y K TABLE OF CONTENTS TITLE PAGE NO. Definitions and Abbreviations ....................................................................................................................... i. I Risk Factors 1. Forward-looking Statements and Market Data .................................................................................................. v. 2. Risk Factors ...................................................................................................................................................... vi. II Introduction 1. Summary ............................................................................................................................................................ 1 2. General Information ........................................................................................................................................... 5 3. Capital Structure ................................................................................................................................................ 9 4. Objects of the Issue .......................................................................................................................................... 22 III About Malu Paper Mills Ltd 1. Industry Overview ............................................................................................................................................. 41 2. Business Overview ............................................................................................................................................ 48 3. History and Corporate Structure of Malu Paper Mills Ltd ................................................................................ 61 4. Management ....................................................................................................................................................... 63 5. Promoter ............................................................................................................................................................ 73 6. Currency of Presentation ................................................................................................................................... 76 7. Dividend Policy ................................................................................................................................................... 76 IV Financial Statements 1. Financial Information of Malu Paper Mills Ltd ................................................................................................... 77 2. Financial Information of Group Companies ....................................................................................................... 97 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations as Reflected in the Financial Statements ............................................................................................................... 104 V Legal & Other Information 1. Outstanding Litigations and Material Developments .......................................................................................... 110 2. Government Approvals/Licensing Arrangements ............................................................................................... 114 VI Other Regulatory and Statutory Disclosures .............................................................................................. 116 VII Issue Information 1. Terms of the Issue ............................................................................................................................................ 123 2. Issue Procedure ................................................................................................................................................ 125 VIII Main Provisions of the Articles of Association .......................................................................................... 135 IX Other Information 1. List of Material Contracts and Documents for Inspection ................................................................................ 142 2. Declaration ......................................................................................................................................................... 144 2. DEFINITIONS AND ABBREVIATIONS Conventional Terms Term Description “Malu Paper Mills Limited” or “the Issuer” or Unless the context otherwise requires, refers to, Malu Paper Mills “the Company”, and “MPML” Limited, a public limited Company incorporated under the Companies Act Issue Related Terms Term Description Applicant Any prospective investor who makes an application for Equity 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 Allotment Issue or transfer, as the context requires, of Equity Shares pursuant to the Offer to the successful applicant as the context requires Allottee The successful applicant to whom the Equity Shares are being/ have been issued Articles/Articles of Association The Articles of Association of Malu Paper Mills Limited Auditors The statutory auditors of the Company, viz. Demble Ramani & Co, Chartered Accountants Bankers to the Issue HDFC Bank Limited, UTI Bank Limited Board of Directors/Board The Board of Directors of Malu Paper Mills Limited or a committee thereof BSE The Bombay Stock Exchange Limited Companies Act/the Act The Companies Act, 1956, as amended from time to time Depository A depository registered with SEBI

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