C M Y K
LETTER OF OFFER August 19, 2006
OCL India Limited (The Company was originally incorporated as Orissa Cement Limited on October 11, 1949 under the Indian Companies Act, 1913 with the Registrar of Joint Stock Companies, Orissa at Cuttack. The Company obtained the certificate of commencement of business w.e.f. February 10, 1950. Name of the Company was changed to OCL India Limited w.e.f. January 15, 1996) Registered Office: AT/P.O. Rajgangpur 770 017, District Sundergarh, Orissa, India Telephone: + 91 6624 221212/220121; Fax: + 91 6624 220 933 Corporate Office: 11th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi 110 001 Telephone: + 91 11 2332 1212; Fax: + 91 11 2373 1333 E-mail: [email protected], Website: www.ocl.in, Compliance Officer: Mr. Rakesh Malhotra
FOR PRIVATE CIRCULATION TO EQUITY SHAREHOLDERS OF THE COMPANY ONLY
ISSUE OF 63,63,960 EQUITY SHARES OF RS. 2/- EACH FOR CASH AT A PREMIUM OF RS. 118 (ISSUE PRICE OF RS. 120) PER EQUITY SHARE ON RIGHTS BASIS TO THE ELIGIBLE EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF 1 EQUITY SHARE FOR EVERY 6 EQUITY SHARES HELD ON THE BASIS OF BOOK CLOSURE DATES (SEPTEMBER 5 TO SEPTEMBER 9, 2006 (BOTH DAYS INCLUSIVE) AGGREGATING TO RS. 7636.75 LACS ISSUE PRICE: Rs. 120 PER EQUITY SHARE OF FACE VALUE OF Rs. 2/- Issue Price is 60 times of 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 the 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 the 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 the Letter of Offer. Investors are advised to refer to the section titled ‘Risk Factors’ starting on page v of the Letter of Offer before making an investment decision in the Issue.efer to “Risk Factors” on page vi of the 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 the Letter of Offer 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 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 the 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 The existing Equity Shares of the Company are listed on the National Stock Exchange of India Limited (NSE Limited), Bombay Stock Exchange Limited (the Designated Stock Exchange) (BSE Limited) and Bhubaneswar Stock Exchange. Our application for getting the Equity Shares voluntarily delisted from Bhubaneswar Stock Exchange is pending. The Equity Shares being offered in terms of the Letter of Offer will be listed at NSE Limited and BSE Limited. We have received in- principle approvals from BSE Limited and NSE Limited vide their letters dated May 4, 2006 and May 12, 2006 respectively for listing of the Equity Shares arising from the Issue.
LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE
UTI Bank Limited C B Management Services (Private) Limited Central Office: 111, Maker Towers F, Cuffe Parade, P-22, Bondel Road Mumbai 400 005 Kolkata 700 019 Tel: + 91 22 6707 4407 (Extn 1725) Tel: +91 33 2280 6692-94/2280 2486 Fax: + 91 22 22162467 Fax: +91 33 2287 0263 Email: [email protected], Website: wwww.utibank.com Email: [email protected] Contact Person: Mr. Rohit Shrivastava Contact Person: Mr. S. Ghosh
ISSUE PROGRAMME LAST DATE FOR REQUEST FOR ISSUE OPENS ON ISSUE CLOSES ON SPLIT APPLICATION FORMS SEPTEMBER 25, 2006 OCTOBER 9, 2006 OCTOBER 27, 2006
C M Y K TABLE OF CONTENTS
Chapters Page No.
Definitions and Abbreviations ...... i
Risk Factors ...... vi
Summary of Our Business and Financial Data ...... 1
General Information ...... 6
Capital Structure ...... 10
Objects of the Issue ...... 16
Basis for Issue Price ...... 20
Statement of Tax Benefits ...... 23
Industry Overview ...... 29
Our Business ...... 37
Our History and Corporate Structure ...... 51
Our Management ...... 59
Our Promoters ...... 69
Our Subsidiaries & Group Companies ...... 73
Related Party Transactions ...... 87
Regulation and Policies...... 89
Dividend Policy ...... 92
Our Audited Financial Statements ...... 93
Management’s Discussion and Analysis of Financial Condition and Results of Operations ...... 132
Statutory and Other Information ...... 137
Stock Market Data ...... 144
Government Approvals/Licensing Arrangement ...... 146
Outstanding Litigation ...... 154
Material Developments ...... 180
Terms of the Issue ...... 181
Material Contracts and Documents for Inspections ...... 198
Declaration ...... 200 DEFINITION AND ABBREVIATIONS Conventional/General Terms Terms Description Beneficiary Account The demat account of the successful allottee to whom the shares are allocated Companies Act/Act The Companies Act, 1956, as amended from time to time Depository A depository registered with SEBI under the SEBI (Depositories and Participants) Regulations, 1996, as amended from time to time Depositories Act Depositories Act, 1996, as amended from time to time Depository Participant A depository participant as defined under the Depositories Act FEMA Foreign Exchange Management Act, 1999, as amended from time to time, and the regulations framed thereunder FII Foreign Institutional Investors (as defined under the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995) registered with SEBI under applicable laws in India FY / Fiscal / Financial Year Period of twelve months ending March 31 unless otherwise stated Indian GAAP Generally accepted accounting principles in India Non Residents All Applicants who are not NRIs or FIIs and are not persons resident in India Non-Resident Indians Non-Resident Indian, as defined under Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended from time to time OCB/Overseas Corporate Body A company, partnership, society or other corporate body owned directly or indirectly to the extent of at least 60% by NRIs including overseas trusts, in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly as defined under FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992 SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time SEBI (DIP) Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on January 27, 2000, as amended, including instructions and clarifications issued by SEBI from time to time Takeover Code The Securities and Exchange Board of India (Substantial Acquistion of Shares and Takeovers) Regulations, 1997
Issue Related Terms Terms Description Abridged Letter of Offer Abridged Letter of Offer made in terms of section IV of chapter VI of SEBI (DIP) Guidelines, which is circulated to Eligible Equity Shareholders together with composite application form Allotment Issue of Equity Shares pursuant to the Issue to the successful Applicants
i OCL INDIA LIMITED
Terms Description Allottee The successful Bidder to whom the Equity Shares are being/have been allotted Banker(s) to the Issue UTI Bank Limited Book Closure Dates September 5 to September 9, 2006 (both days inclusive) decided by the committee of Directors of our Company in consultation with the Designated Stock Exchange for deciding the eligibility of Equity Shareholders of our Company for the Issue Designated Stock Exchange Bombay Stock Exchange Limited Draft Letter of Offer Draft Letter of Offer dated March 14, 2006 as filed with SEBI for its comments Eligible Equity Shareholders Equity Shareholders of our Company, whose name stands registered on our Company’s register of members:
As beneficial owners as at the end of business hours on September 4, 2006 as per the list to be furnished by NSDL and CDSL in respect of Equity Shares held in electronic form; and
As members in the register of members of our Company after giving effect to valid share transfers in physical form lodged with our Company on or before September 4, 2006 First Applicant The Applicant whose name appears first in the Composite Application Form Issue/ Issue Size Issue of 63,63,960 Equity Shares of Rs. 2/- each for cash at a premium of Rs. 118 (Issue Price of Rs. 120) per Equity Share on Rights basis to the Eligible Equity Shareholders of the Company in the ratio of one Equity Share for every six Equity Sharesaggregating to Rs. 7636.75 lacs Issue Period The period between the Issue Opening Date and the Issue Closing Date inclusive of both days and during which applicants can submit their composite application forms Issue Price Rs. 120 per Equity Share, i.e., Rs. 2 plus a premium of Rs. 118 per Equity Share Issuer/Company OCL India Limited Lead Manager Lead Manager to the Issue, in this case being UTI Bank Limited Letter of Offer Letter of Offer dated August 19, 2006 filed with the Stock Exchanges before the opening of the Issue. All references to Letter of Offer also include references to the Abridged Letter of Offer Registrar/Registrar to the Issue Registrar to the Issue, in this case being C B Management Services (Private) Limited Rights Entitlement The number of Equity Shares that an Equity Shareholder is entitled to under the Letter of Offer in proportion to his/ her/ its existing shareholding in the Company
ii Company/Industry Related Terms Terms Description Articles/Articles of Association Articles of Association of OCL India Limited Auditors The statutory auditors of the Company viz. V. Sankar Aiyar & Company, Chartered Accountants Board/ Board of Director Board of Directors of OCL India Limited Dalmia Agencies Dalmia Agencies Private Limited Dalmia Cement Dalmia Cement (Bharat) Limited Dapel Investments Dapel Investments Private Limited Director(s) Director(s) of OCL India Limited unless otherwise specified Equity Shares Ordinary Shares of the Company of face value of Rs. 2/- each. Earlier the ordinary share were of face value of Rs. 10/- each. In an EGM held on June 25, 2005 sub division of Equity Shares was approved resulting in each Equity Share of Rs.10/ - each being subdivided into 5 Equity Share of Rs. 2/- each Equity Shareholders Persons holding Equity Shares of the Company unless otherwise specified in the context thereof Europa Commercial Europa Commercial & Trades Limited Grandeur Travels Grandeur Travels & Tours Private Limited Hari Machines Hari Machines Limited Himalayan Natural Himalayan Natural Products Limited Kabirdas Investments Kabirdas Investments Limited Kashmissa Industries Kashmissa Industries Limited Konark Minerals Konark Minerals Limited Memorandum / Memorandum The Memorandum of Association of OCL India Limited of Association OCL India The Issuer, i.e., OCL India Limited OCL Iron and Steel OCL Iron and Steel Limited OCL Global OCL Global Limited Preference Shares Shares of the Company of face value of Rs. 100/- each Promoter Group The Promoters, the immediate relatives of the Promoters and such entities/ partnership firms as prescribed under Explanation II to Clause 6.8.3.2 of the SEBI DIP Guidelines Promoters Individuals: Mr. Mridu Hari Dalmia, Mr. Raghu Hari Dalmia, Mr. Yadu Hari Dalmia, Mr. Gaurav Dalmia, Mrs. Abha Dalmia, Mrs. Padma Dalmia and Mrs. Usha Devi Jhunjhunwala Hindu Undivided Family: M/s. Gautam Dalmia; and Trusts: Mridu Hari Dalmia Parivar Trust and Sumana Trust Rama Investment Rama Investment Company Private Limited Registered Office of the Company Registered Office: AT/PO: Rajgangpur, District: Sundargarh, Orissa 770 017, India. Registrar of Companies or RoC Registrar of Companies Orissa at Cuttak Rights Issue Committee Committee of the Board of Directors of OCL India Limited uthorized to take decisions on matters related to or incidental to the Issue Satya Miners Satya Miners & Transporters Limited Swank Services Swank Services Private Limited “we” or “us” and “our” Unless the context otherwise require, refers to OCL India Limited
iii OCL INDIA LIMITED
Abbreviation of General Terms Abbreviation Full Form AGM Annual General Meeting of the shareholders of the Company AS Accounting Standards as issued by the Institute of Chartered Accountants of India BSE Limited Bombay Stock Exchange Limited CAF Composite Application Form CAGR Compounded Annual Growth Rate CDSL Central Depository Services (India) Limited EBDIT Earnings before Depreciation, Interest and Tax EBIT Earnings before Interest and Tax EGM/ EOGM Extraordinary General Meeting EPS Earnings Per Equity Share EU European Union FCNR Account Foreign Currency Non Resident Account FDI Foreign Direct Investment FIPB Foreign Investment Promotion Board FOB Free on Board FY Financial Year GoI Government of India HUF Hindu Undivided Family I.T. Act The Income Tax Act, 1961 KVA Kilo Volt Ampere KW Kilo Watt KWh Kilo Watt Hour LC Letter of Credit LoI Letter of Intent MnTPA Million Tons per Annum NAV Net Asset Value NRE Account Non Resident External Account NRI Non Resident Indians NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited P/E Ratio Price/Earnings Ratio PAN Permanent Account Number
iv Abbreviation Full Form PAT Profit after Tax PBT Profit before Tax R & D Research and Development RBI Reserve Bank of India ROE Return on Equity RONW Return on Net Worth Rs. Indian Rupees SEBI Securities and Exchange Board of India TAN Tax Deduction Account Number TRS Transaction Registration Slip TTM Trailing Twelve Months USA United States of America USD / US$ United States Dollar UTI Bank UTI Bank Limited VRS Voluntary Retirement Scheme w.e.f. With effect from YOY Year on Year
In the Letter of Offer, all references to “Rs.” 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. All references to the singular also refer to the plural and one gender also refer to any other gender, wherever applicable. The words lac” means “one hundred thousand” and the word “million” means “ten lac” and the word “crore” means “ten million” or “one hundred lacs”. In the Letter of Offer, any discrepancies in any table between total and the sums of the amount listed are due to rounding off.
v OCL INDIA LIMITED
RISK FACTORS An investment in equity shares involves a high degree of risk. You should carefully consider all of the information in the Letter of Offer, including the risks and uncertainties described below, before making an investment in our Equity Shares. If any of the following risks actually occur, our business, financial condition and results of operations could suffer, the trading price of our Equity Shares could decline, and you may lose all or part of your investment. Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial or other implication of any of the risks mentioned herein under: Internal Risk Factors Our business is mainly concentrated in Orissa any change in the prevailing market conditions may adversely affect our operations Cement accounts for more than 50% of our total turnover and contributes to approximately 75% of our profits before interest and tax. The main market for our cement division is Orissa though we also sell in other states. The quantity sold in other states is not very substantial as we sell nearly 65% of our production in Orissa. If the market for cement in Orissa were to slow down it would affect our operations significantly. Our business is dependent upon our ability to mine sufficient limestone for our operations We meet most of our requirements for limestone, the key raw material for cement production, from Lanjiberna quarries for our cement operations, which is located about 10 kms away from our plant. Some of the our quarries on freehold land. We are required to obtain the grant of a lease from the State Government of Orissa in order to mine the limestone deposits. Our mining leases were initially granted for terms of 20 years and in accordance with the Mines and Minerals (Regulation and Development) Act, 1957, as amended and the Mineral Concession Rules, 1960, as amended. These mining leases are renewable for additional terms of 20 years at a time subject to certain conditions. Mining rights are subject to compliance with certain conditions, and the Government of India and State Governments have the power to take action with respect to mining rights, including imposing fines or restrictions, revoking the mining rights or changing the amount of royalty payable for mining the quarries. We currently pay a royalty of Rs. 45 per ton and welfare cess of Rs 1 per ton of limestone despatched from our quarries There can be no assurance that mining royalties will not be increased in the future. Although we believe that our mining rights are sufficient to meet current and projected production levels, if our mining rights are revoked or not renewed upon expiration, or significant restrictions on the usage of the rights are imposed or applicable environmental standards are substantially increased, our ability to operate our plants adjacent to the affected mining sites could be disrupted until alternative limestone sources are located, which could materially and adversely affect our financial condition and results of operations. There are numerous uncertainties inherent in estimating quantities of reserves, including many factors beyond our control. In general, estimates of reserves by independent consultants or the Company, including estimates of reserves set forth elsewhere in the Letter of Offer, are based upon a number of variable factors and assumptions, such as geological and geophysical characteristics of the reserves, historical production performance from the properties, the quality and quantity of technical and economic data, extensive engineering judgments, the assumed effects of regulation by Government of India agencies and future operating costs. All such estimates involve uncertainties, and classifications of reserves are only attempts to define the degree of likelihood that the reserves will result in revenue for the Company. For those reasons, estimates of the economically recoverable reserves attributable to any particular group of properties and classification of such reserves based on risk of recovery, prepared by different engineers or by the same engineers at different times, may vary substantially. In addition, such estimates can be and will be subsequently revised as additional pertinent data becomes available prompting revision. Actual reserves may vary significantly from such estimates. To the extent actual reserves is significantly less than our estimates, our financial conditions and results of operations are likely to be materially and adversely impacted. While these
vi estimates are based on detailed studies conducted by independent experts, there can be no assurance that these estimates would not be materially different from estimates prepared by other experts in accordance with different internationally recognized codes. We are dependent upon the continued supply of coal, petcoke and other raw materials and fuel, the supply and costs of which can be subject to significant variation due to factors outside our control We currently rely on a number of domestic suppliers to provide certain raw materials, including gypsum and additives such as clay, hard morrum etc. for our cement. We are dependent for coal supplies on coal linkage system/special agreement with collieries and any change in the policy of Government may adversely affect our coal supplies. If we are unable to obtain adequate supplies of raw materials or fuel in a timely manner or on acceptable commercial terms, or if there are significant increases in the cost of these supplies, our business and results of operations may be materially and adversely affected. Our increased power requirement on account of expansion/modernization etc is dependant on State Government’s policy on distribution of power in the state and we are also exposed to the risk of revision of power tariff. Our operations are subject to manufacturing risks and may be disrupted by a failure in our facilities Our manufacturing operations could be disrupted for reasons beyond our control. These disruptions may include extreme weather conditions, fire, natural catastrophes or raw material supply disruptions. Our facilities are also subject to operating risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, obsolescence, labour disputes, natural disasters, industrial accidents and the need to comply with the directives of relevant government authorities. In addition, there is a risk that production difficulties such as capacity constraints, mechanical and systems failures, construction/upgrade delays or delays in the delivery of machinery may occur, causing suspension of production and reduced output. Any significant manufacturing disruption could adversely affect our ability to make and sell products, which could have a material adverse effect on our business, financial condition and results of operations. We are also required to carry out planned shutdowns of our plants for maintenance. We also shut down plants for capacity expansion and equipment upgrades. In addition, due to the nature of our business and despite compliance with requisite safety requirements and standards, our operations are subject to operating risks associated with cement manufacturing. These hazards include storage tank leaks and ruptures, explosions, discharges or releases of hazardous substances, manual handling, exposure to dust and the operation of mobile equipment and manufacturing machinery. We also engage in mining operations for limestone and are subject to risks associated with mining, including fires, explosions and other accidents at the mine site and disruption in lime stone transport system. These operating risks may cause personal injury and property damage and could result in the imposition of civil and criminal penalties. The occurrence of any of these events could have a material adverse effect on the productivity and profitability of a particular manufacturing facility and on our business, financial condition and results of operations. An inability to utilize our manufacturing capacities to optimum levels or streamline our production planning and procurement processes will adversely impact our results of operations. Our results of operations could be adversely affected by strikes, work stoppages or increased wage demands by our employees or our inability to attract and retain skilled personnel As of June 30, 2006, we had 1689 full-time employees, of which 108 employees were employed at our corporate and marketing offices and 1581 employees were employed at our manufacturing facilities at Rajgangpur in all the three manufacturing divisions viz. Cement, Refractories and Sponge Iron. Most of our workmen are represented by labour unions. While we consider our current labour relations to be good, there can be no assurance that we will not experience future disruptions to our operations due to disputes or other problems with our work force, which may adversely affect our business and results of operations. As of June 30, 2006, approximately 3353 contract labourers were working at our manufacturing facilities. The number of contract labourers varies from time to time based on the nature and extent of work contracted to independent contractors. We enter into contracts with independent
vii OCL INDIA LIMITED contractors primarily for packing, as well as cleaning and other specified assignments. All contract labourers engaged at our facilities are assured minimum wages that are fixed by the respective state governments. Any upward revision of wages required by such state governments to be paid to such contract labourers, or offer of permanent employment or the unavailability of the required number of contract labourers, may adversely affect our business and results of our operations. Our ability to meet future business challenges depends on our ability to attract and recruit talented and skilled personnel. The objects of the Issue for which funds are being raised have not been not appraised by any bank, financial institution or an independent organisation The requirement of funds as stated in the section titled ‘Objects of the Issue’ on page 16 of the Letter of Offer is based on the internal management estimates and has not been appraised independently by any bank, financial institution or any independent organisation. The deployment of funds is entirely at the discretion of our Board of Directors. All the figures included under the ‘Objects of the Issue’ are based on our own estimates. We have not placed orders for the plant and machinery, equipments etc. for the planned outflow for the Project The net proceed of the Issue is proposed to part fund the Project. We are yet to start making orders for procuring the plant and machinery etc. Any delay in placing orders or procurement of plant and machinery etc. may delay implementation of the Project. Such delays may also lead to increase in prices of these equipments further affecting our cost estimates of the Project. We have not identified alternate sources of financing for the cost of the Project Cost of the Project is estimated at Rs. 11,988 lacs to be funded by a mix of net proceeds from the Issue and internal accurals. We have not identified alternate sources of financing for the cost of the Project. Any delay on our part to raise money through the Issue will delay the implementation of the Project. Further, the Issue proceeds are to be deployed at the sole discretion of the Company and is not subject to monitoring by any independent agency. Threat of cheap imports of Refractory products from China Of late, due to the reduction of import duty on finished products and high duty on raw materials, European manufacturers and some of the Indian manufacturers have shifted their base to China and exporting mainly bricks made out of fused magnesia to Indian steel units and achieving good performance. Though this is presently applicable for bricks based on fused magnesia, it may be extended to other products like fireclay and high alumina bricks for coke ovens, blast furnace and also silica refractories for non-recovery coke oven batteries. Risk arising out of limited number of Iron Ore Mine Owners The supply and price of Iron Ore which is the raw material used in the manufacture of sponge iron is under the control of limited number of iron ore mine owners and their strength has increased due to the non-issuance of fresh mining leases by the Governmentt for the past few years. This puts these suppliers in an advantageous position over us since they can get better terms for the supply of iron ore. Our operations are subject to a degree of risk and could expose us to material liabilities, loss in revenues and increased expenses Our operations are subject to various risks associated with the production of cement, refractories and sponge iron. These hazards can cause injury and loss of life, severe damage to and destruction of property and equipment, and environmental damage, and may result in the suspension of operations and the imposition of civil and criminal liabilities. Employees, members of the public or government authorities may bring claims against us arising out of
viii our production processes. Any liability incurred as a result of such events has the potential to materially impact our business, financial condition and results of operations. Such events may also adversely affect public perception about our business and the perception of our suppliers, customers and employees, leading to an adverse effect on our business. Our business operations have the potential to cause personal injury and loss of life, damage to or destruction of property, plant and equipment and damage to the environment, and are subject to risks such as fire, theft, flood, earthquakes and terrorism. Although we implement safety measures to reduce the risk of these occurrences, we cannot eliminate these risks completely. We maintain insurance coverage in such amounts and against such risks, which we believe are in accordance with industry practice. However, such insurance may not be adequate to cover all losses or liabilities that may arise from our operations, and we may, in the future, not be able to maintain insurance of the types or at levels, which we deem necessary or adequate, or at rates, which we consider reasonable. We do maintain insurance coverage in respect of product liability in respect of certain exports only. Accordingly, any material product liability claim or prolonged interruption to our business may have a material adverse effect on our business, financial condition and results of operations. We may also incur liability claims in excess of our insurance coverage or that are subject to substantial deductibles, or we may incur uninsured liability costs. In addition, insurance proceeds may not be adequate to completely cover the substantial liabilities, lost revenues or increased expenses that we may incur. Moreover, any claims made under our policies will likely cause our premiums to increase, and we may not be able to maintain adequate insurance coverage levels in the future. If we are not able to renew or maintain our statutory and regulatory permits and approvals required to operate our business, it may have a material adverse effect on our business We require certain statutory and regulatory permits, licenses and approvals to operate our business. In the future, we will be required to renew such permits, licenses and approvals, and obtain new permits, licenses and approvals for any proposed operations. While we believe that we will be able to renew or obtain such permits, licenses and approvals as and when required, there can be no assurance that the relevant authorities will issue any of such permits or approvals in the time-frame anticipated by us or at all. Failure by us to renew, maintain or obtain the required permits or approvals may result in the interruption of our operations and may have a material adverse effect on our business, financial condition and results of operations. Few of these approvals have already expired. Renewal applications have been filed with the appropriate authorities. Non-renewal or delay in renewal of these approvals may subject us to action by the respective government authority and may further result in the interruption of our operations and may have a material adverse effect on our business. Dependency on foreign colaborator for technology and know how Technical Collaboration Agreement dated August 19, 1997 with M/s Plibrico SA Luxembourg for a period of 10 years, for receiving various services from Plibrico, including (i) manufacture (ii) use, (iii) sell, (iv) and application expires. Though access to improvements in technology achieved by Plibrico would come to an end on the expiry of the agreement, OCL has been advised that as per terms of this agreement, there is no fetter on OCL continuing to manufacture refractory products by using the knowledge already acquired by it on payment of lump sum in terms of the contract. After the expiry of the agreement, OCL cannot hold out that the said refractory products were manufactured under licence from Plibrico. This could affect the sales of our refractory products adversely. We have certain contingent liabilities, which may adversely affect our financial condition For the FY 2005-06, contingent liabilities not provided for appearing in our financial statements aggregated Rs.1,135 lacs. These included liabilities on account of claims against the Company not acknowledged as debt amounting to Rs. 1,117 lacs. In the event that any of these contingent liabilities materialize, our financial condition may be adversely affected. For details of contingent liabilities for last five financial years, kindly refer to ‘Annexure G’ in the section titled ‘Financial Statements’on page 93 of the Letter of Offer.
ix OCL INDIA LIMITED
Some of our subsidiaries and group companies have incurred losses in past Our Subsidiaries have incurred losses in the past, as per the details given below: (Rs. in lacs) Name of our Subsidiaries Net Profit / (Loss) FY 2006 FY 2005 FY 2004 Kashmissa Industries Limited (0.07) (0.26) (20.15) Orissa Iron and Steel Limited1 (4) N.A. N.A Hari Fertilizer Limited2 N.A. (5) 2
1. Incorporated on February 20, 2006 2. Ceased to be a subsidiary w.e.f. September 30, 2005 For further details, kindly refer to the section titled ‘Our Subsidiaries and Group Companies’ begining on page 73 of the Letter of Offer. Mr.Y.H.Dalmia a Promoter of our Company is also the promoter of Dalmia Cement (Bharat) Limited Mr.Y.H.Dalmiya a Promoter of our Company is also the promoter of Dalmia Cement (Bharat) Limited, both the companies are into similar operations and this could lead to a conflict of interest. One of our Directors is a partner in a law firm that is currently advising the Company on certain legal proceedings under arrangements other than for the reimbursement of expenses incurred or normal remuneration or benefits One of our directors, Mr. Pradip (Pinto) Khaitan who is also the chairman, is a partner in M/s Khaitan & Company, a law firm, which has been appointed by the Company to take care of legal matters of the Company. In addition, Mr. Pradip (Pinto) Khaitan will be an interested party in any future arrangements that the Company may enter into with such law firm. Members of our Promoter group will continue to retain majority control in the Company after the Issue, which will enable them to influence the outcome of matters submitted to shareholders for approval; there may be conflicts of interest with certain Promoter group companies Upon completion of the Issue, members of the Promoter group will beneficially own atleast 61.16% of our post- Issue equity share capital. As a result, the Promoter group will have the ability to control our business including matters relating to any sale of all or substantially all of our assets, the timing and distribution of dividends and the election or termination of appointment of our officers and directors. This control could delay, defer or prevent a change in control of the Company, impede a merger, consolidation, takeover or other business combination involving the Company, or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company even if it is in the Company’s best interest. In addition, for so long as the Promoter group continues to exercise significant control over the Company, they may influence the material policies of the Company in a manner that could conflict with the interests of our other shareholders. The Promoter group may have interests that are adverse to the interests of our other shareholders and may take positions with which we or our other shareholders do not agree. There were some discrepancies in the shareholding pattern reports/returns that we have filed with the Stock Exchanges There were discrepancies in the returns of shareholding pattern that we had filed with the Stock Exchanges. These discrepancies pertained to clubbing mistakes of persons holding over 1% of paid up capital in the Company and
x discrepancy in reporting made under the listing agreement and under the Takeover Code regarding the total holding of Promoters for the quarter ending March 31, 2001. For the quarter ending March 31, 2001, whereas the return filed by our Company under the Takeover Code showed total holding of the Promoters at 55.30%, the return filed for the same period under listing agreement showed the total holding of the Promoters at 41.95%. The clubbing mistakes of persons holding over 1% of paid up capital in the Company pertained to clubbing of holdings of individual Promoter(s) with that of HUF, of which he was the karta and of trust, of which he was a member. Though we have filed revised returns with the Bombay Stock Exchange and Natioanl Stock Exchange rectifying the error, penalties/fines may be imposed on us for such erroneous reporting under the relevant law. There are a number of outstanding litigations We are party to a number of pending litigations. We have also filed few cases against various parties. No assurance can be given as to whether these matters will be settled in favour of or against our Company and / or these entities. Nor can any assurance be given that no further liability will arise out of these claims. A summary of the said pending litigation and proceedings is as follows: 1. Cases/proceedings/appeals against our Company: (Rs. in lacs) S. No. Type of Cases No. of Cases Amount Involved 1 Pending in High Courts 22 20.04 2 Consumer dispute 1 Not ascertainable 3 Industrial dispute 5 8.75 4 Civil 3 0.97 5 Motor accident claim 1 5.00 6 Sales Tax 18 457.40 Total 51 492.16 2. Cases/proceedings/appeals filed by our Company: (Rs. in lacs) S. No. Type of Cases No. of Cases Amount Involved 1 Pending in High Courts 40 283.65 2 Provident Fund 1 91.31 3 Employees State Insurance 8 25.58 4 Arbitration 1 981.29 Total 51 1381.83 3. Cases/proceedings/appeals by and against Mr. Pradip (Pinto) Khaitan, our Director: (Rs. in lacs) S. No. Type of Cases No. of Cases Amount Involved 1 Default cases 1 Not ascertainable 2 Criminal complaints 4 Not ascertainable
xi OCL INDIA LIMITED
4. Cases/proceedings/appeals by and against our Group Companies: Against Dalmia Cement (Bharat) Limited (Rs. in lacs) S. No. Type of Cases No. of Cases Amount Involved 1 Civil matters 5 120.16 2 Concerning statutory matters 25 777.64 Total 30 898.28 By Dalmia Cement (Bharat) Limited (Rs. in lacs) S. No. Type of Cases No. of Cases Amount Involved 1 Civil 95 2110.87 2 Criminal cases 44 663.93 Total 139 2774.80 Against Hari Machines Limited (Rs. in lacs) S. No. Type of Cases No. of Cases Amount Involved 1 Sales 1 45.16 2 ESIC and SECL. 1 10.85 Total 2 56.01 Against Dalmia Agencies Private Limited (Rs. in lacs) S. No. Type of Cases No. of Cases Amount Involved 1 Excise 1 7.03 2 Income Tax 1 1.71 3 Sales Tax 1 0.97 Total 3 9.71 For full details of pending litigation, kindly refer to section titled ‘Outstanding Litigation’ on page 155 of the Letter of Offer. EXTERNAL RISK FACTORS Our business and results of operations are dependent on economic conditions in India Due to the significant impact of transportation costs on our overall costs, cement manufacturing and sale in India is largely regional in nature. Our production facilities are located in the State of Orissa, and we sell most of our cement to customers in Orissa. Economic conditions and the level of growth in Orissa therefore have a direct impact on our business and results of operations, including the level of demand and the prices for our products and the availability and prices of transport and raw materials. The level of general economic activity in Orissa and, more specifically, the strength of the Orissa housing and construction sectors, have a direct impact on demand for our cement. The level of economic activity is influenced
xii by a number of factors, including national and international economic activity, political and regulatory policy, and climate conditions such as monsoons and drought. There can be no assurance that such growth will continue at the same pace or at all, or that levels of cement consumption in Orissa and the states that we primarily supply to will not decrease. If the pace of growth of the Indian economy slows or turns negative, our business, financial condition and results of operations would be materially and adversely affected. The performance of the refractory and sponge units are dependent on the performance of the steel industry which in turn linked to the performance of the domestic and international economic conditions. There can be assurance that the growth being witnessed today will not slow down or even stop. The Indian cement industry is cyclical and is affected by a number of factors beyond our control The Indian cement industry is cyclical in nature. In recent years, cement prices and profitability of cement manufacturers have fluctuated significantly in India, depending upon overall supply and demand. A number of factors influence supply and demand for cement, including production overcapacity, general economic conditions, in particular activity levels in certain key sectors such as housing and construction, our competitors’ actions and local, state and central government policies, which in turn affect the prices and margins we and other Indian cement manufacturers can realize. Excess cement production capacity in the market has been one of the major factors influencing cyclicality in the Indian cement market. Such excess capacity in cement production has in the past had a direct impact on the price at which we can sell our cement and the margins we realize. The long lead-time required to add or expand capacity in the cement industry has also led to supply/demand imbalances. The long lead-time makes it more difficult for Indian cement companies to time the commencement of new production facilities at a time when demand out- balances supply. According to CMA estimates, as at March 31, 2006, total installed capacity in India was 157.1 MnTPA while demand for the year ended March 31, 2006 was 121 million tons (excluding exports of 4 million tons of cement and 6 million tons of clinker). There can be no assurance that excess production capacity will not continue or deteriorate in the north Indian cement market. To the extent it does, our business and results of operations may be materially and adversely impacted. Governmental actions and changes in policy could adversely affect our business The Government of India and the government of each state of India (each a “State Government”) have broad powers to affect the Indian economy and our business in numerous ways. In the past, the Government of India and the State Governments have used these powers to influence, directly and indirectly, the Indian cement industry or other industries on which the cement industry is dependent. Examples of such measures include: Imposing import restrictions and customs duties on imports; Granting tax concessions for setting up new manufacturing plants; Allocating Government of India and State Government funding for public infrastructure programs in north India; and Providing preferential coal prices to cement manufacturers. Some of these measures, the effect of which helps local cement producers, are currently being employed by the Government of India and/or State Governments. However, there can be no assurance that such policies will continue in the future. For example, the Government of India has announced its commitment to reducing import restrictions further and to a phased reduction of customs tariffs. Any change in existing Government of India and/or State Government policies or new policies providing or withdrawing support to the Indian industry or otherwise affecting the economy of eastern India, including the construction industry,
xiii OCL INDIA LIMITED could adversely affect the supply/demand balance and competition in markets in which we operate and negatively affect our cost structure. There can be no assurance that we would be able to pass on such increase in costs to our customers through an increase in our prices. Taxes and other levies imposed by the Government of India or other State Governments, as well as other financial policies and regulations, may have a material adverse effect on our business, financial condition and results of operations Taxes and other levies imposed by the Government of India or State Governments that affect our industry include customs duties, excise duties, sales tax, income tax and other taxes, duties or surcharges introduced on a permanent or temporary basis from time to time. The central and state tax scheme in India is extensive and subject to change from time to time. Any adverse changes in any of the taxes levied by the central or state governments may adversely affect our competitive position and profitability. Under existing regulations, we are currently required to pay to the relevant State Governments or the Government of India a royalty on the extraction of limestone, excise duty on cement, sales tax (or value added tax, where it has been implemented), duties on power tariffs, sales tax on stores and spares, packaging and other raw materials and import duty on coal. There can be no assurance that the current levels of these taxes, duties and royalties will not increase in the future, or that State Governments will not introduce additional levies, each of which may result in increased operating costs and lower sales realizations. To the extent additional levies are imposed, there can be no assurance that we would be able to pass such cost increases on to our customers. Our operations are subject to environmental, labour and other regulations Our cement operations are subject to various Indian national and State environmental laws and regulations relating to the control of pollution in the various locations in India where we operate. In particular, the discharge or emission of chemicals, dust or other pollutants into the air, soil or water that exceed permitted levels and cause damage to others may give rise to liabilities to the Government of India and State Governments and third parties, and may result in our incurring costs to remedy such discharge or emissions, such as from the use of coal. There can be no assurance that compliance with such environmental laws and regulations will not result in a curtailment of production or a material increase in the costs of production or otherwise have a material adverse effect on our financial condition and results of operations. Environmental laws and regulations in India have been increasing in stringency and it is possible that they will become significantly more stringent in the future. Stricter laws and regulations, or stricter interpretation of the existing laws and regulations may impose new liabilities on us or result in the need for additional investment in pollution control equipment, either of which could affect our business, financial condition or prospects. We are also subject to laws and regulations governing relationships with employees, in such areas as minimum wage and maximum working hours, overtime, working conditions, hiring and terminating of employees, contract labour and work permits. Furthermore, the success of our strategy to modernize and optimize our existing operations, open newly-constructed plants or acquire new plants is contingent upon, among other things, receipt of all required licenses, permits and authorizations, including local land use permits, building and zoning permits and environmental permits. Changes or concessions required by regulatory authorities could also involve significant costs and delay or prevent completion of the construction or opening of a plant or could result in the loss of an existing license. Environmental regulation imposes additional costs and may affect the results of our operations While we believe that our facilities are in compliance in all material respects with applicable environmental laws and regulations, additional costs and liabilities related to compliance with these laws and regulations are an inherent part of our business. We, like other cement producers and mine operators, are subject to various central, state and local environmental, health and safety laws and regulations concerning issues such as damage caused by mining, air emissions, wastewater discharges, solid and hazardous waste handling and disposal, and the investigation and remediation of contamination. These laws and regulations are increasingly becoming stringent and may in the future create substantial environmental compliance or remediation liabilities and costs. For example, our operations produce
xiv certain waste products, which must be properly disposed of under applicable environmental laws. Further, there are certain additional regulations applicable to mines, such as our limestone quarries. These laws can impose liability for non-compliance with health and safety regulations or clean up liability on generators of hazardous waste and other substances that are disposed of either on or off-site, regardless of fault or the legality of the disposal activities. Other laws may require us to investigate and remedial contamination at our properties, including contamination that was caused in whole or in part by previous owners of our properties. While we intend to comply with applicable environmental legislation and regulatory requirements, it is possible that such compliance may prove restrictive and onerous. In addition to potential clean up liability, we may become subject to monetary fines and penalties for violation of applicable laws, regulations or administrative orders. This may result in the closure or temporary suspension or impose adverse restrictions on our operations. We may also, in the future, become involved in proceedings with various regulatory authorities that may require us to pay fines, comply with more rigorous standards or other requirements or incur capital and operating expenses for environmental compliance. We are subject to risks arising from currency exchange rate fluctuations, which could adversely affect our business, financial condition and results of operations Changes in currency exchange rates influence our results of operations. Refractory division depends upon 38% of requirement from import out of the total raw material requirement during the year 2004-05 and 37% during 2005-06 up to December 2005. The Materials like Magnesite and fused Alumina Group are required to be imported for manufacturing of the refractory product. We import small quantities of coal, packing material and stores and spares for our operations and our future capital expenditures, including any imported equipment and machinery, may be denominated in currencies other than Indian rupees. We also export our refractory products for a substantial amount. Any decline in the value of the rupee against such other currencies could increase the rupee cost of purchasing such equipment. The exchange rate between the rupee and the U.S. dollar has changed substantially in recent years and may continue to fluctuate significantly in the future. This exchange rate uncertainty may lead to reduction in our revenues and thus affect our operations adversely. We are subject to risks arising from interest rate fluctuations, which could adversely affect our business, financial condition and results of operations Changes in interest rates could significantly affect our financial condition and results of our operations. As of March 31, 2006, 30,873 lacs of our borrowings were at floating rates of interest. If the interest rates for our existing or future borrowings increase significantly, our cost of servicing such debt will increase. This may adversely impact our results of operations, planned capital expenditures and cash flows. Any further issuance of Equity Shares by us or sales of our Equity Shares by our significant shareholders may adversely affect the trading price of the Equity Shares Any future issuance of our Equity Shares by us could dilute your shareholding. Any such future issuance of our Equity Shares or sales of our Equity Shares by any significant shareholder, including our promoters, may also adversely affect the trading price of our Equity Shares, and could impact our ability to raise capital through an offering of our securities. In addition, any perception by investors that such issuances or sales might occur could also affect the trading price of our Equity Shares. Terrorist attacks or war or conflicts involving India or other countries could adversely affect business sentiment and the financial markets and adversely affect our business South Asia has, from time to time, experienced instances of civil unrest and hostilities amongst Asian countries. Military activity or terrorist attacks in the future could influence the Indian economy by disrupting communications and making travel and transportation more difficult. Such political tensions could create a greater perception that
xv OCL INDIA LIMITED investments in Indian companies involve a higher degree of risk. This, in turn, could have a material adverse effect, on the market for securities of Indian companies, including our shares and on the market for our products. You will not receive the Equity Shares you purchase in the Issue until several days after you pay for them, which will subject you to market risk The Equity Shares you purchase in the Issue will not be credited to your demat account with depository participants/ share certificates will not be dispatched to you until approximately 35 days from the Issue Closing Date. You can start trading your Equity Shares only after receipt of listing and trading approvals in respect of these Equity Shares which will require additional time. Since our Equity Shares are already listed on the Stock Exchanges, you will be subject to market risk from the date you pay for the Equity Shares to the date they are listed. Further, there can be no assurance that the Equity Shares allocated to you will be credited to your demat account/shares certificates will be dispatched to you, or that trading in the Equity Shares will commence, within the time periods specified above. The price of our Equity Shares may be volatile, or an active trading market for our Equity Shares may not develop The trading price of our Equity Shares may fluctuate due to a variety of factors, including our results of operations and the performance of our business, competitive conditions, general economic, political and social factors, volatility in the Indian and global securities markets, growth of business and leisure travel, the performance of the Indian and global economy and significant developments in India’s fiscal regime. There can be no assurance that an active trading market for our Equity Shares will develop or be sustained, or that the price at which our Equity Shares are initially offered will correspond to the prices at which they will trade in the market subsequent to this Issue. Notes to Risk Factors: Issue of 63,63,960 Equity Shares of Rs./- each for cash at a premium of Rs. 118 (Issue Price of Rs. 120) per Equity Share on rights basis to the Eligible Equity Shareholders of the Company in the ratio of 1 Equity Share for every 6 Equity Shares held on the basis of Book Closure Dates (September 5 to September 9, 2006 (both days inclusive) aggregating to Rs. 7636.75 lacs. The book value per Equity Share as on March 31, 2006 was Rs. 57.94. The net worth of the Company as on March 31, 2006 was Rs. 22,124 lacs. Our Promoters hold 61.16% of paid-up share capital of our Company. The average cost of acquisition per Equity Share to our Promoter is Rs 63.05. For cost of acquistion individual Promoter wise, kindly refer to the section titled ‘Our Promoters’ on 69 of the Letter of Offer. For related party transactions, kindly refer to page 87 of the Letter of Offer. Except as disclosed in the sections titled “Our Management” and “Our Promoters” beginning on pages 59 and 69 of the Letter of Offer, none of our Promoters, Directors or key managerial personnel have any interest, other than reimbursement of expenses incurred or normal remuneration or benefits. For details of transactions in Equity Shares of the Company by our Promoters during last six months kindly refer to page 14 of the Letter of Offer. Investors are advised to refer to the section titled ‘Basis for Issue Price’ on page 20 of the Letter of Offer before making an investment in the Issue. Investors are free to contact or the Compliance Officer or the Registrar to the Issue for any complaints, information or clarifications pertaining to the Issue. For contact details of the Registrar to the Issue and the Compliance Officer, please refer to the cover page of the Letter of Offer.
xvi SUMMARY OF OUR BUSINESS
Our Company is into the business of manufacture of cement, refractories and sponge iron. Our cement factory was started with an objective of setting up a superior grade cement manufacturing facility at Rajgangpur in Orissa at the request of the Government of Orissa for use in the construction of Hirakud Dam, now we are a company with annual turnover exceeding Rs. 500 crores. We have experience of over five decades in the manufacture of cement and refractories. Sponge iron division of the Company is relatively new and we are into this segment of the business since 2002. We sell cement mainly in Eastern India under the brand ‘Konark’. Our Company is the largest manufacturer and seller of grey cement in the State of Orissa and one of the most prominent players in the Eastern India. Over the period of time ‘Konark’ has been able to establish itself as premium quality grey cement. Our cements are certified under ISO 9001(Version 2000). Our refractories manufacturing capacity is approximately 80,000 metric tonnes per annum. In the year 1994, we obtained ISO 9001 certification for our entire range of refractories works, the first ever company to do so in India. Going ahead, besides continuously adding to the capacities of cement, refractories and sponge iron, we intend to venture into steel manufacturing. We have already entered in to a memorandum of understanding with the Government of Orissa for setting up a 0.25 MnTPA of steel plant and 14 MW capacity power plant.
Competitive Strengths
Experience of our Company and Promoters We have experience of over five decades in the manufacture of cement and refractories. Over the years, on one side we have kept on increasing our manufacturing capacities in both cement and refractories and on the other side we have also continuously improvised our manufacturing process aimed to achieve higher level of operational efficiency. Now, we are a company with interests in cement, refractories, sponge iron and steel with turnover exceeding Rs. 650 crores. We have a stable and experienced middle and senior level management team with significant experience in the industry. The Dalmia Group, our Promoters is a business conglomerate with consolidated revenues of US$ 90 million with interests in cement, industrial ceramics, real estate, information technology, investments, engineering and trading. Over the period of time, our Promoters have gained significant expertise of establishing and running large manufacturing plants of cement, refractories etc., which is one of our core competitive strengths.
Quality of products and strong brand name We sell cement under the brand ‘Konark’, which has over the period of time has been able to establish itself as a premium quality grey cement. We believe that ‘Konark’ is a very strong brand name for superior grade grey cement in the Eastern India, more particularly in the state of Orissa. Brand name plays a critical role for the retail purchasers of cement in India. We believe that our brand name and reputation of consistently supplying high quality products provide us with a definitive advantage over our competitors.
Proximity and access to large reserves of high quality limestone We have captive mines for limestones, the major raw material for manufacture of cement. Our limestone reserves are of high quality. The extractable limestones in our mines are sufficient to meet our requirement for a reasonably long length of time for both our existing as well as the capacities proposed to be added. Further, the proximity of limestone mines with our cement manufacturing facilities adds to our advantage resulting because of lower transportation costs.
Extensive marketing and distribution network We have a wide distribution network for grey cement in Eastern India. Our distribution network for grey cement products consists of number of feeder depots serviced by several regional sales offices in Orissa, West Bengal, Jharkhand and Bihar. In addition, we have more than 1450 stockists that store and distribute our cement. We also have a team of sales promoters and handling agents. We believe that the extent of this network, and our relationships with our dealers,
1 OCL INDIA LIMITED enables us to market and distribute our cement efficiently.
Our Strategy Our Corporate Vision is ‘To serve customers, shareholders and society at large through the pursuit of business excellence’. We, on one hand intend to further strengthen our position as one of the leading players in the cement and refractories industry and at the same time want to diversify into steel manufacturing. In order to meet this objective, our business strategy is focused on the following:
Increase production capacity Our strategy has been to manufacture more and more cement with the same capacity of clinker. We have been able to manufacture higher quantities of cement with a given quantity of clinker because of our strategy to focus on blended varieties of cement. For the FY 2006, we had produced 8.26 lac metric tonnes of clinker against which the cement manufactured by us was 15.83 lac metric tonnes. We further intend to increase our grinding capacities, which will add to our cement manufacturing capacity.
Continuous expansion of the distribution network and focus on brand promotion In order to improve our market share, we intend to continue to focus on the expansion of our distribution network and the promotion of our brands. We continuously seek to add additional authorized dealers and retailers to our network, and strengthen our relationships with the existing dealers and retailers that carry our products. In order to enhance our relationships with dealers, we undertake programs to provide training and advice on marketing and sales techniques and technical applications of cement products.
Captive Power Plant We have installed a captive Power Plant of 14 MW capacity w.e.f. May 13, 2006, which would partly run on waste heat available at the Sponge Iron Plant and partly coal based. The captive power plant is expected to decrease the cost of power substantially. Cost of power is a major head of expenditure for cement industry. Having a captive power plant will give us ad edge over our competitors.
Focus on the Eastern India Our target market has been Eastern India for our cement business. Since our manufacturing facility for cement business is based in Orissa we save on account of transportation cost, which is major head of expenditure. The addition in capacity, which we are looking for, will also be based in and around our existing business. Our strategy to continue to focus in the Eastern India will give us ad edge over our competitors.
2 SUMMARY OF FINANCIAL DATA
Statement of Restated Profit and Loss (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 INCOME 1. Sales and Self Consumption i. Sales 69340 56366 44928 36357 30678 ii. Self Consumption 743 634 457 278 301 Total (i+ii) 70083 57000 45385 36635 30979 Less: Excise Duty 10371 8399 6992 5389 4834 Total (1) 59712 48601 38393 31246 26145 2. Other Receipts 1093 586 522 413 430 3. Increase/Decrease in Inventory i. Opening Stock 3500 4175 3633 3180 2907 ii. Closing Stock 3979 3500 4175 3633 3180 Total (ii – i ) 479 (675) 542 453 273 Total Income (1+2+3) 61284 48512 39457 32112 26848 EXPENDITURE 1. Raw Material Consumed 21871 18305 13994 10463 8839 2. Purchases 694 1518 289 32 9 3. Salaries, Wages & Benefits to Employees 2456 2295 2636 2876 2781 4. Power and Fuel 8695 7019 6385 5724 4519 5. Interest & Other Financial Charges i. Interest on Term Loan & Deposits 1460 895 806 582 639 ii. Others 906 669 600 477 395 Less: Interest Received 1031 268 735 287 160 Total (5) 1335 1296 671 772 874 6. Depreciation 2704 2214 1968 1411 1259 7. Other Expenses 17972 12206 10015 8422 7889 Total Expenditure (1+2+3+4+5+6+7) 55727 44853 35958 29700 26170 Net Profit/ (Loss) Before Tax 5557 3659 3499 2412 678 Less: Provision for Tax - Current 475 300 650 222 60 Less: Fringe Benefit Tax 60 Less: Provision for Tax - Deferred 1310 743 588 357 221 MAT Credit available for set off (67) Provision for tax relating to earlier years written back 201 277 Net Profit/ Loss for the Year as per audited statement of accounts 3779 2817 2261 1833 674
3 OCL INDIA LIMITED
(Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Adjustment on account of changes in Accounting Policies - a. Payment under VRS earlier treated as deferred revenue, being charged to Profit & Loss A/c 430 37 (467) b. Method of depreciation on Plant and Machinery of Sponge Iron Plant changed from SLM to WDV 57 (57) c. Adjustment towards tax provisions (35) 35 Adjusted Profit after tax 3779 2817 2748 1778 242 Add: Profit/ Loss Brought Forward 3561 3835 2557 1396 2165 Profit available for appropriation 7340 6652 5305 3174 2407 Appropriations Transfer to General Reserve 2500 2500 800 450 940 Transfer to Debenture Redemption Reserve 250 250 Transfer to Reserve for Bad & Doubtful Debts Proposed Dividend 382 297 594 148 71 Interim Dividend Tax on Dividend 53 44 76 19 Adjusted Profit carried to Balance Sheet 4155 3561 3835 2557 1396
Notes: 1. There are no other adjustments resulting from audit qualifications, material amounts relating to adjustments for previous year and changes in accounting policies; 2. Other receipts for the year-ended 31.03.2006 includes Rs.270 lacs being Profit on sale of shares of Hari Fertilizers Limited, an erstwhile subsidiary Company. (Since then ceased to be a subsidiary company) 3. The provision for current tax for the year ended 31.03.2006, 31.03.2005 and 31.03.2002 has been made as per Section 115JB of the Income Tax Act, 1961
4 Statement of Restated Assets and Liabilities (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 A. Fixed Assets i) Gross Block 62532 50916 43984 41146 34275 Less: Accumulated Depreciation 26664 23855 21959 20177 18809 Net Block 35868 27061 22025 20969 15466 Less: Revaluation Reserve 400 423 448 488 520 Net Block after adjustment for 35468 26638 21577 20481 14946 evaluation reserve ii) Capital work in progress 10667 9760 2971 814 1216 Total 46135 36398 24548 21295 16162 B. Investments 63 65 65 41 78 C. Current Assets, Loans & Advances Inventories 11822 10151 10057 7690 7638 Sundry Debtors 8918 8675 8079 7239 6638 Cash & Bank Balances 3429 1479 1371 1698 614 Other Current Assets 573 94 1 16 103 Loans & Advances 9223 6958 3480 2328 1708 Total 33965 27357 22988 18971 16701 D. Liabilities & Provisions Secured Loans 33873 24657 12612 11919 7823 Unsecured Loans 7964 8998 7367 5013 4307 Current Liabilities 9212 7480 7749 5949 5781 Provisions 750 732 1118 432 105 Deferred Tax Balance 6240 4929 4186 3598 3241 Total 58039 46796 33032 26911 21257 E. Net Worth (A+B+C-D) 22124 17024 14569 13396 11684 Net Worth Represented By F. Share Capital 764 594 594 712 712 G. Reserves & Surplus Capital Reserve 60 55 55 55 55 Share Premium Account 2333 717 717 1657 1657 Revaluation Reserve 400 423 448 488 520 General Reserve 14000 11500 9000 8200 7500 Capital Redemption Reserve 125 125 125 6 6 Reserve for Bad & Doubtful Debts 187 222 243 209 108 Profit & Loss A/c 4155 3561 3835 2557 1396 Investment Allowance Reserve 250 Debenture Redemption Reserve 500 250 Less: Revaluation Reserve 400 423 448 488 520 Reserves (Net of Revaluation Reserves) 21360 16430 13975 12684 10972 Total (F+G) 22124 17024 14569 13396 11684 H. Miscellaneous Expenditure to the extent not written off I. Net Worth (F+G-H) 22124 17024 14569 13396 11684
5 OCL INDIA LIMITED
OCL India Limited Registered with Registrar of Companies, Orissa, Chalchitra Bhavan, 2nd Floor, Buxi Bazar, Cuttack 753 001 Registration No. 15-00185 of 1949-50 dated October 11, 1949 CIN: U26942OR1949PLC00185
GENERAL INFORMATION Dear Shareholder(s), Pursuant to the resolutions passed by the Board of Directors of the Company at its meetings held on October 29, 2005 it has been decided to make a Rights Issue of the Equity Shares as per following details: Issue of 63,63,960 Equity Shares of Rs. 2/- each for cash at a premium of Rs. 118 (Issue Price of Rs. 120) per Equity Share on Rights basis to the Eligible Equity Shareholders of the Company in the ratio of 1 Equity Share for every 6 Equity Shares held on the basis of Book Closure Dates, September 5 to September 9, 2006 (both days inclusive) aggregating to Rs. 7636.75 lacs
GENERAL INFORMATION The Company was originally incorporated as Orissa Cement Limited on October 11, 1949 under the Indian Companies Act, 1913 with the Registrar of Joint Stock Companies, Orissa at Cuttack. The Company obtained the certificate of commencement of business on February 10, 1950. Name of our Company was changed to OCL India Limited w.e.f. January 15, 1996. Registered Office Corporate Office AT/PO: Rajgangpur, 11th Floor, Narain Manzil, District: Sundargarh, 23, Barakhamba Road, Orissa 770 017, India. New Delhi 110 001 Telephone: + 91 6624 221212/220121 Telephone: + 91 11 2332 1212 Fax: + 91 6624 220 933 Fax: + 91 11 2373 1333 E-mail: [email protected] E-mail: [email protected] Website: www.ocl.in Website: www.ocl.in
Our Board of Directors Our Company is managed by a Board of Directors comprising of eight directors. Mr. Pradip (Pinto) Khaitan is the Chairman of our Company. The day to day affairs of the Company is managed by Mr. Ved Prakash Sood, the Whole Time Director. Our Board of Directors currently comprises of the following: S. No. Name of the Directors Designation 1 Mr. Pradip (Pinto) Khaitan Chairman 2 Mr. Vishnu Dayal Jhunjhunwala Director 3 Mr. Yadu Hari Dalmia Director 4 Dr. Sheo Raj Jain Director (Independent) 5 Mr. Dhramendra Nath Davar Director (Independent) 6 Mr. Harsh Vardhan Lodha Director (Independent) 7 Dr. Ramesh C Vaish Director (Independent) 8 Mr. Ved Prakash Sood Whole Time Director For brief profile of our Chairman and Whole Time Director and other Directors kindly refer to the section titled ‘Our Management’ on page 59 of the Letter of Offer.
6 Issue Schedule The subscription will open upon the commencement of the banking hours and will close upon the close of banking hours on the dates mentioned below: Issue Opening Date September 25, 2006 Last date for receiving requests for split forms October 9, 2006 Issue Closing Date October 27, 2006 Note: Investors may contact the Registrar to the Issue or the Compliance Officer in case of any Pre-Issue/ Post-Issue related problems such as non-receipt of Letter of Offer/ Letter of Allotment/ share certificates/ refund orders/ etc. For contact details of the Registrar to the Issue and the Compliance Officer, kindly refer to the following contact details: Lead Manager to the Issue Registrars to the Issue UTI Bank Limited C B Management Services (Private) Limited Central Office: 111, Maker Towers F, P-22, Bondel Road Cuffe Parade, Colaba Kolkata 700 019 Mumbai 400 005 Telephone: +91 33 2280 6692-94/ 2280 2486 Telephone: + 91 22 6707 4407 (Extn 1725) Fax: +91 33 2287 0263 Fax: + 91 22 22162467 Email: [email protected] Email: [email protected] Contact Person: Mr. S. Ghosh Website: wwww.utibank.com Contact Person: Mr. Rohit Shrivastava Auditors of the Company Legal Advisor to the Issue V. Sankar Aiyar & Company Corporate Professionals Chartered Accountants Solicitors & Advisors, Satyam Cinema Complex 7/9 Sarvpriya Vihar, Flat No. 202-203, New Delhi 110 016 Ranjit Nagar Commercial Complex, Telephone: + 91 11 2696 6100/ 2696 7100 New Delhi 110 008 Fax: + 91 11 2696 7100 Telephone: + 91 11 2570 2074/2691 Email: [email protected] Fax: + 91 11 2570 5010 Website: wwww.corporateprofessionals.com Email: [email protected] Contact Person: Mr. Girish Narang Contact Person: Mr. V. Rethinam Company Secretary Compliance Officer Ms. Rachana Goria Mr. Rakesh Malhotra 11th Floor, Narain Manzil, Executive Director (Finance) 23, Barakhamba Road, 11th Floor, Narain Manzil, New Delhi 110 001 23, Barakhamba Road, Telephone: + 91 11 2332 1212 New Delhi 110 001 Fax: + 91 11 2373 1333 Telephone: + 91 11 2332 1212 E-mail: [email protected] Fax: + 91 11 2373 1333 Website: www.ocl.in E-mail: [email protected] Website: www.ocl.in Investors can contact the abovementioned compliance officer or the Registrar to the Issue in case of any Issue related queries such as non-receipt of letters of allotment/ share certificates / refund orders, etc.
7 OCL INDIA LIMITED
Banker to the Issue UTI Bank Limited Ashoka Estate Building, 1st Building, 24, Barakhamba Road, New Delhi 110 001 Tel: + 91 11 4151 5445-8 Fax: + 91 11 2335 2747 Email: [email protected] Website: www.utibank.com Contact Person: Mr. Anurag Gupta
Bankers to the Company State Bank of India United Bank of India Commercial Branch, Overseas (Kolkata) Branch, Rourkela, Bisra Chowk, 15C, Hemanta Basu Sarani, District Sundargarh, Kolkata 700 001 Orissa 769 001 Tel: + 91 33 22430068 / 0071, Tel: + 91 661 250 1757 / 1827 Fax: + 91 33 2248 5552 Fax: + 91 661 510 341 Email:[email protected] Email: [email protected] Website: www.unitedbankofindia.com Website: www.statebankofindia.com Contact Person: Mr. S. Chatterjee Contact Person: Mr. T C Pradhan Punjab National Bank UCO Bank Large Corporate Branch Subash Chowk, Rajgangpur, A-9, Connaught Place, District Sundargarh, Orissa 770 017 New Delhi 110 001 Tel: + 91 6624 20740 / 222740 Tel: + 91 11 233 27368 / 15661 Fax: + 91 6624 220740 Fax: + 91 11 2371 2518 Email: [email protected] Email: [email protected] www.ucobank.com Website: www.pnbindia.com Contact Person: Mr. K. P. Mishra Contact Person: Mr. S. P. Singh UTI Bank Limited Statesman House, 13th Floor,148, Barakhamba Road, New Delhi 110 001 Tel: + 91 11 2331 1153 / 34 Fax: + 91 11 5152 1953 Email: [email protected] Website: www.utibank.com Contact Person: Mr. Akshaya Kumar Panda Inter-se allocation of responsibilities among Lead Managers As there is only one Lead Manager inter-se allocation of responsibilities is not applicable.
Credit Rating This being an Issue of Equity Shares, no credit rating is required. For details of the ratings received / reaffirmed by the Company for other securities/ instruments in the last 3 years kindly refer to the section titled ‘Our History and Corporate Structure’ on page 51 of the Letter of Offer.
8 Trustees As the Issue is of Equity Shares, the appointment of Trustees is not required. Monitoring Agency As the Issue size shall be less then Rs. 500 crores monitoring agency is not required to be appointed to monitor the utilization of funds.
Grading of the Issue We have not opted for the grading of the Issue from any independent agency.
Minimum Subscription If we do not receive the minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the applicants within forty-two days from the date of closure of the Issue. If there is a delay in the refund of subscription by more than 8 days after the Company becomes liable to repay the subscription amount, (i.e. forty two days after closure of the Issue), we shall pay interest for the delayed period, at prescribed rates in sub-section (2) and (2 A) of Section 73 of the Companies Act. The Rights Issue will become undersubscribed after considering the number of Equity Shares applied as per entitlement plus additional Equity Shares.
Underwriting The Issue is not being underwritten.
9 OCL INDIA LIMITED
CAPITAL STRUCTURE
Share capital of our Company as on the date of filing of the Letter of Offer is set forth below: (Rs. in lacs, except share data) Share Capital Face Value Aggregate Value (A) Authorized Share Capital 7,00,00,000 Equity Shares of Rs.2/- each 1400.00 1,00,000 Preference Shares of Rs. 100 each 100.00 (B) Issued Capital before the Issue 4,49,15,345 Equity Shares of Rs.2/- each 898.31 (C) Subscribed & Paid up Share Capital 3,81,83,760 Equity Shares of Rs.2/- each 763.67 (D) Present Issue offered to Existing Shareholders 63,63,960 Equity Shares of Rs.2/- each 127.27 (E) Paid up Equity Capital after the Issue 4,45,47,720 Equity Shares of Rs. 2/- each 890.95 (F) Securities Premium Account Before the Issue 2,333.00 After the Issue 9842.47 a. Difference of 67,31,585 Equity Shares between the issued and paid up share capital is on account of: i. 62,34,865 Equity Shares extinguished pursuant to the buy back scheme more particularly described in point no. (d) below; ii. 84,665 Equity Shares forfeited due to non-payment of call money; iii. 4,12,055 Equity Shares due to non-exercise of conversion option by the holders of detachable warrrant b. The details of increase and change in authorized share capital of our Company since the date of incorporation till filling of the Letter of Offer with SEBI is as follows: (Rs. in lacs, except face value) Date of change Nature of increase/ Number of Face Value Authorized change Equity Shares Share Capital May 16, 1987 Increase 30,00,000 Rs. 10/- 800.00 September 8, 1994 Increase 70,00,000 Rs. 10/- 1500.00 June 25, 2005 Subdivision 7,00,00,000 Rs. 2/- 1500.00 c. At an AGM held on June 25, 2005 sub division of Equity Shares was approved resulting in each Equity Share of Rs.10/- each being subdivided into 5 Equity Share of Rs. 2/- each and consequently the authorized share capital of our Company was altered from Rs. 1500 lacs consisting of 1,40,00,000 Equity Shares of Rs. 10/- each and 1,00,000 Preference Shares of Rs. 100/- each to Rs. 1500 lacs consisting of 7,00,00,000 Equity Shares of Rs. 2/- each and 1,00,000 Preference Shares of Rs.100/- each.
10 d. Our Company has bought back the Equity Shares in two tranches in the FY 2001-02 and FY 2003-04 as per the terms and conditions of the letter of offer issued by the Company in accordance with the SEBI (Buy-back of Securities) Regulations, 1998. In the first tranche in the FY 2001-02, 63265 Equity Shares of Rs. 10/- each at market rate and in the second tranche in the FY 2003-04, 11,83,708 Equity Shares of Rs. 10/- each at a price of Rs.80/- per Equity Share were bought back by the Company. e. Pursuant to the conversion of detachable warrants issued with the Zero Coupon Convertible Debentures (ZCCDs) on rights basis in FY 1996, 85,03,290 Equity Shares of face value of Rs. 2/- each was issued to the holders of detachable warrants at a premium of Rs. 19/- per Equity Share (issue price Rs. 21/- per share of Rs.2 each/- being the proportionate amount on account of subdivision of Equity shares of Rs.10/- each) as the terms of the letter of offer issued for ZCCD. Pre and Post Issue Shareholding pattern of the Company Category No. of Equity Percentage No. of Percentage Shares currently Equity Shares held (Post Allotment) Promoters Holding Indian Promoters 23353410 61.16 27245645 61.16 Foreign Promoters Nil Nil Nil Nil Persons acting in Concert Nil Nil Nil Nil Sub Total [A] 23353410 61.16 27245645 61.16 Institutional Investors Mutual Funds 2967162 7.77 3461689 7.77 Banks, FIs, Insurance Cos etc. 3116 0.61 271969 0.61 FIIs 4500 0.01 5250 00.01 Sub Total [B] 3204778 8.39 3738908 8.39 Others Private Corporate Bodies 3949888 10.34 4608203 10.34 Indian Public 7438708 19.48 8678493 19.48 NRI/OCBs 205713 0.54 239998 0.54 Any Other 31263 0.09 36473 0.09 Sub Total [C] 1162557213 30.45 9813563167 30.45 GRAND TOTAL [A+B+C] 38183760 100 44547720 100 Note: Post-Issue shareholding pattern is on the assumption that each of the categories will apply in the Issue up to their full entitlement.
11 OCL INDIA LIMITED
Pre Issue Shareholding of our Promoters (As on June 30, 2006) S. No. Name(s) No. of Shares % Holding 1 Mr. M.H. Dalmia 2,017,980 5.28% 2 Mridu Hari Dalmia Parivar Trust 7,086,085 18.56% 3 Mrs. Abha Dalmia 1,682,230 4.41% 4 Mr. Gaurav Dalmia 50,000 0.13% 5 Mr. Y.H. Dalmia 9,987,680 26.16% 6 Mr. R.H. Dalmia 1,808,115 4.74% 7 Mrs. Padma Dalmia 558,820 1.46% 8 Gautam Dalmia (HUF) 94,750 0.25% 9 Sumana Trust 17,750 0.05% 10 Mrs. Usha Devi Jhunjhunwala 50,000 0.13% Total 23,353,410 61.16%
Notes to Capital Structure: 1. Share Capital History of our Company Date of Number of Face Issue Nature of Cumulative Cumulative Allotment shares Value Price Issue & paid up share and Date Allotted (Rs.) (Rs.) Consideration reason for share premium when made allotment capital (Rs.) (Rs.) fully paid-up 03.01.1950 3,040 10/- 10/- Cash at par Subscription 30,400 Nil to MoA 03.01.1950 5,04,000 10/- 10/- Cash at par First Issue 50,70,400 Nil 01.06.1950 1,610 10/- 10/- Cash at par Right Issue 50,86,500 Nil 16.03.1951 70,000 10/- 10/- Cash at par Right Issue 57,86,500 Nil 24.12.1952 1,00,000 10/- 10/- Cash at par Right Issue 67,86,500 Nil 21.12.1956 3,21,350 10/- 10/- Cash at par Right Issue 1,00,00,000 Nil 14.11.1958 4,99,950 10/- 10/- Cash at par Right Issue 1,49,99,500 Nil 02.12.1958 50 10/- 10/- Cash at par Right Issue 1,50,00,000 Nil 26.12.1959 7,50,000 10/- 10/- Cash at par Right Issue 2,25,00,000 Nil 28.01.1967 4,46,176 10/- 10/- Nil Bonus Issue 2,69,61,760 Nil 16.03.1967 1,504 10/- 10/- Nil Bonus Issue 2,69,76,800 Nil 25.05.1967 2,320 10/- 10/- Nil Bonus Issue 27000000 Nil 23.09.1987 26,07,877 10/- 10/- Nil Bonus Issue 5,30,78,770 Nil 14.12.1987 91,359 10/- 10/- Nil Bonus Issue 5,39,92,360 Nil 14.05.1988 764 10/- 10/- Nil Bonus Issue 5,40,00,000 Nil 01.01.1997 18,00,000 10/- 105/- Cash at Right Issue 7,20,00,000 premium 10.08.2005 85,03,290 2/- 21/- Conversion of As per note warrant Note: a) Due to stock split 5 ordinary shares of 2/- each were allotted to the holder of 1 ordinary share of Rs. 10/-. Similary holder of warrants who excercised their rights to subscribe to the share of Rs. 10/- each were allotted ordinary shares of Rs. 2/ - each in same proportion. Consequently the distinctive numbers were renumbered from 1 to 89830690. b) Out of 18,00,000 warrants 16,931 warrants were forfeited and 82,411 warrants lapsed due to non exercise of right.thus 85,03,290 shares of Rs. 2/- each were allotted i.e. 17,00,658 X 5
12 The present Issue being a Rights Issue is exempt from the requirement of promoters’ contribution and lock-in thereof in terms of clause 4.10.1(c) of SEBI DIP Guidelines. Further, presently no Equity Shares of the Company are under lock-in. 2. The Equity Shareholders do not hold any warrant, option or convertible loan or any debenture, which would entitle them to acquire further Equity Shares. 3. As on the date of filing the Letter of Offer with SEBI, there are no outstanding financial instruments or any other right, which would entitle the Promoters or shareholders or any other person any option to receive equity shares after the Issue. The Company does not have any outstanding ESOP. Our Board has recently approved the issue of secured redeemable non-convertible debentures aggregating to Rs. 50 crores on a private placement basis. 4. Top Ten shareholders of the Company: a) Top ten shareholders as on the date of filing of the Letter of Offer Name No. of Shares % of Pre-Issue Capital Yadu Hari Dalmia 9987680 26.16% Mridu Hari Dalmia Parivar Trust 7901495 20.69% Mridu Hari Dalmia 2017980 5.28% Prudential ICICI Trust Limited – Prudential ICICI 1731168 4.53% Infrastructure Fund Abha Dalmia 1682230 4.41% Raghu Hari Dalmia 992705 2.60% Jai Kumar Jain 689062 1.80% Yogalshree Tonics & Foods Private Limited 682500 1.79% Shreevallabh Orthopaedic Instruments (P) Limited 682500 1.79% Padma Dalmia 558820 1.46% Total 26926140 70.52%
b) Top ten shareholders 10 days prior to the date of filing of the Letter of Offer Name No. of Shares % of Pre-Issue Capital Yadu Hari Dalmia 9987680 26.16% Mridu Hari Dalmia Parivar Trust 7086085 18.56% Mridu Hari Dalmia 2017980 5.28% Raghu Hari Dalmia 1808115 4.74% Prudential ICICI Trust Limited – Prudential ICICI 1731168 4.53% Infrastructure Fund Abha Dalmia 1682230 4.41% Jai Kumar Jain 689062 1.80% Yogalshree Tonics & Foods Private Limited 682500 1.79% Shreevallabh Orthopaedic Instruments (P) Limited 682500 1.79% Padma Dalmia 558820 1.46% Total 26926140 70.52%
13 OCL INDIA LIMITED
c) Top ten shareholders as on June 30, 2004 Name No. of Shares % of Pre-Issue Capital Raghu Hari Dalmia 1013475 17.07% Padma Dalmia 994061 16.75% Mridu Hari Dalmia 600000 10.11% Abha Dalmia 400000 6.74% Mridu Hari Dalmia Parivar Trust 397834 6.70% Sharmila Dalmia Parivar Trust 245000 4.13% Mridu Hari Dalmia (H.U.F.) 225000 3.79% Kanupriya Somani 223000 3.76% Raghu Hari Dalmia (H.U.F.) 195000 3.28% Sandeep Jhunjhunwala 88505 1.49% Total 4381875 73.82% 5. Details of the equity shares of the company being purchased/sold by the promoters during last six months except for the details herein under provided, our promoters have not purchased/sold any Equity Shares of the Company during last six months Name of the Promoter Date of No. of Equity Purchase Sale Value Transaction Shares Value (Rs. in lacs) (Rs. in lacs) Mr. Raghu Hari Dalmia* 11.08.2006 8,15,410 — Nil M/s. Mridhu Hari Privar Trust* 11.08.2006 8,15,410 Nil — M/s. M. H. Dalmia (HUF) 12.09.2005 11,25,000 — 126.56 M/s. Devanshi Trust 12.09.2005 1,00,000 — 11.25 M/s. Aryaman Hari Trust 12.09.2005 1,00,000 — 11.25 M/s. Aanyapriya Trust 12.09.2005 1,00,000 — 11.25 M/s. Kanupriya Trust 12.09.2005 1,11,500 — Gifted to Kanupriya Somany Ms. Kanupriya Somany 12.09.2005 1,11,500 Gift from Kanupriya — Trust M/s. Mridu Hari Dalmia Parivar Trust 12.09.2005 14,25,000 160.31 — M/s. Sharmila Dalmia Pariwar Trust 12.09.2005 14,30,000 — Gifted to Ms. Sharmila Dalmia Ms. Sharmila Dalmia 12.09.2005 14,30,000 Gift from SDPT — Mr. Gaurav Dalmia 19.09.2005 2,67,000 — Gifted to Mridu Hari Dalmia Parivar Trust Ms. Sharmial Dalmia 19.09.2005 14,30,000 — - do - Ms. Kanupriya Somany 19.09.2005 13,36,500 — - do - M/s. Mridu Hari Dalmia Parivar Trust 19.09.2005 30,33,500 Gift from Sh. Gaurav Dalmia, Ms. Sharmila Dalmia and Ms. Kanupriya Somany — Mr. M. H. Dalmia 21.09.2005 18,51,310 — 2612.03
14 Name of the Promoter Date of No. of Equity Purchase Sale Value Transaction Shares Value (Rs. in lacs) (Rs. in lacs) Mrs. Abha Dalmia 21.09.2005 7,00,000 — 978.32 Mr. R. H. Dalmia 21.09.2005 50,000 — 70.56 M/s. R. H. Dalmia (HUF) 21.09.2005 9.75,000 — 1368.49 M/s. Raghu Hari Dalmia Parivar Trust 21.09.2005 7,000 — 9.78 Kumari Vrinda Dalmia (minor) 21.09.2005 1,000 — 1.40
*Gift of Equity Shares from Mr. Raghu Hari Dalmia to M/s. Mridu Hari Dalmia Parivar Trust 6. The Company has not availed of any bridge loan against the proceeds of the Issue. 7. The Company, Promoters, Directors and Lead Manager to the Issue have not entered into any buy-back, standby or similar arrangements for the Equity Shares being issued through the Letter of Offer. 8. There would be no further issue of capital whether by way of issue of bonus shares, preferential allotment, rights issue or in any other manner during the period commencing from the filing of the Draft Letter of Offer with SEBI until the Equity Shares offered through the Letter of Offer have been listed. 9. Our Board has recently approved capital expenditure of Rs. 700 crores +/- 10% for increase in the cement capacity from existing 1.8 million tonne per annum to 3.8 million tonne per annum. To part fund this capital expenditure the Company may issue further Equity Shares or instrumemnts convertible in Equity Shares at a future date. Except as above, at present the Company does not have any intention or proposal to alter our capital structure for a period of six months from date of opening of the Issue, by way of split/consolidation of the denomination of Equity Shares or to make a further issue of Equity Shares (including issue of securities convertible into Equity Shares) whether preferential or otherwise except ESOPs if any or if we enter into acquisition or joint ventures or make investments, in which case we may consider raising additional capital to fund such activity or use equity shares as a currency for acquisition or participation in such joint ventures or investments. 10. We have not issued any Equity Shares out of revaluation reserve or for consideration other than cash except for bonus issues out of free reserves. 11. We have made following allotments of Equity Shares by way of Bonus Issue by capitalization of general reserves: Date of Allotment Number of Equity Shares Face Value Nature of Allotment January 28, 1967 4,50,000 10 Bonus in the ratio of 1:5 September 23, 1987 27,00,000 10 Bonus in the ratio of 1:1
12. The Promoters have confirmed and have undertaken, vide undertakings dated March 13, 2005 and July 17, 2006 to subscribe in the Issue up to the full extent of their entitlement in the Issue. 13. At any given point of time there shall be only one denomination of Equity Shares of our Company, unless otherwise permitted by law. The Company shall comply with such disclosures and accounting norms specified by SEBI from time to time. 14. Our Company had 9,532 Equity Shareholders as on the date of signing this Letter of Offer. 15. The terms of issue to Non-Resident Equity Shareholders/Applicants have been presented under the section ‘Terms of the Issue’ on page 182 of the Letter of Offer. 66. There are restrictive covenants in the agreements that we have entered into with certain banks for short-term loans and long-term borrowings. These restrictive covenants in many cases provides for borrowers covenants which are restrictive in nature and require us to obtain their prior permission for alteration of the capital structure, change in beneficial ownership of or control of the Company, entering into any merger/amalgamation, expenditure in new projects, transfer/change in the key personnel, change in the constitutional documents etc. Further, in many cases lenders have right to appoint a nominee director on the Board of Directors of the Company upon an event of default. Also, there are restrictive covenants regarding declaration and payment of dividend in cases of any subsisting default or out of accumulated reserves.
15 OCL INDIA LIMITED
OBJECTS OF THE ISSUE
With a modest beginning in 1949 with an objective to manufacture superior grade cement in Orissa at the request of the Government of Orissa for use in the construction of Hirakud Dam, today we are a multi-divisional company with interests in cement, refractories, sponge iron and steel. We started our operations in the 1952 by commissioning a wet process cement plant. With a view to grab the growing opportunities in the refractories segment, the Company decided to diversify into refractories in 1954. Over the years, we have kept on increasing our manufacturing capacities in both cement and refractories and as on date we are the largest producer of cement in the state of Orissa. In the year 1994, we became the first company in India to obtain ISO 9001 certification for our entire range of refractories works. Going ahead, we also obtained ISO 9002 certification for our cement works in the year 1998. With the growing demand of cement in the Eastern India, particularly of blended varities of cements, we intend to increase the production capacity of our cement plant. We intend to add a vertical roller machine (VRM) to our already existing line of three VRMs in our cement plant at Rajgangpur. By installing another VRM, cement manufacturing capacity of the Company will increase from 1.8 MnTPA to 2.2 MnTPA. The proceeds of the Issue after deducting Issue expenses are estimated at Rs. 7594.25 lacs and are intended to be deployed as under: 1. To increase cement manufacturing capacity of the Company, which will enable us to produce increased volumes of blended cement. We intend to add a VRM to our already existing line of three VRMs in our cement plant at Rajgangpur; and 2. To meet the expenses of the Issue.
Requirement of Funds We estimate the total requirement of funds for the Project as follows: (Rs. in lacs) Particulars Amount Civil Structure & Foundation and other Installation 1386.00 Plant and Machinery (Imported) 3167.00 Plant and Machinery (Indigenous) 5700.00 Technical fee and Pre operative Expenses 660.00 Provision for Contingency 1075.00 Issue Related Expenses 42.5 TOTAL 12,030.50 Our assessment of requirement of fund is based on internal management estimates and has not been appraised by any bank or financial institution. The objects clause of the Memorandum of Association of our Company enables us to undertake existing activities as well as the activities for which the funds are being raised through the Issue.
Means of Finance The entire requirement of the funds for the Project is proposed to be funded through the proceeds of the Issue and internal accruals of the Company. In case of any shortfall in the means of finance or cost escalation in the Project, the same shall be met by our Promoters from their own resources. Excess money, if any, will be utilized for general corporate purpose including but not restricted to repayment of loans or towards working capital requirement.
16 (Rs. in lacs) S. No. Sources of Finance Amount 1 Rights Issue of Equity Shares 7,636.75 2 Internal Accruals 4,393.75 TOTAL 12,030.50
Details of the Project / Use of Issue Proceeds We intend to add to our production capacity (particularly the blended varities of cement) of our cement plant from the present level of 1.8 MnTPA to 2.2 MnTPA. We intend to achieve capacity addition by adding a VRM to our already existing line of three VRMs in our cement plant at Rajgangpur. In the years 1997, 2002 and 2005 we had added three VRMs in our cement plant for manufacturing blended cements by grinding fly ash and slag with the clinker. The VRM proposed to be added under the Project will the fourth in the row. The contract dated September 2, 2003 that we have entered into with M/s LOESCHE GmbH, Germany and LOESCHE India Private Limited, India for procuring the third VRM (the Contract) provided a right in favour of our Company to place a repeat order on the same terms and conditions within 60 months from the date of the Contract. As per terms of the Contract prices of the repeat order of imported supplies were to remain the same as earlier.
Description of Capital Expenditure
Civil Structure, Foundation & Other Installation We have estimated the total cost to be incurred on civil structure, foundation and other installations at Rs. 1386 lacs, the details of which are as under: (Rs. in lacs) Particulars Amount Bag Filter Building 760.00 Coal Mill 200.00 VRM Building 280.00 Backet Elevator Foundation and Structure 30.00 Bag Filter and Booster Fan Foundation and Structure 50.00 Cable Trench 30.00 Belt Conveyor Structure 36.00 Total 1386.00
Plant & Machinery (Imported) We plan to add a VRM to the already existing line of three VRMs in our cement plant at Rajgangpur to increase the cement manufacturing capacity. In the years 1997, 2002 and 2005 we had added three VRMs in our cement plant for manufacturing blended cements by grinding fly ash and slag with the clinker. The VRM being added under the Project will the fourth in the row. The contract dated September 2, 2003 that we have entered into with M/s LOESCHE GmbH, Germany for procuring the third VRM (the Contract) provided a right in favour of our Company to place a repeat order on the same terms and conditions within 60 months from the date of the Contract. As per terms of the Contract prices of the repeat order of imported supplies were to remain the same as earlier. We have already placed a LoI dated April 19, 2005 to M/s LOESCHE GmbH, Germany intimating them of our interest to procure a VRM, subject to necessary internal clearances. Further, vide a letter dated April 20, 2005 we have placed one more LoI for our interest in obtaining engineering plans, assembly drawings etc. for the installation of the VRM. The following table summarizes the details of the LoI placed:
17 OCL INDIA LIMITED
S. No. Particulars of Machine Units Amount Date of LoI Supplier (Rs. in lacs) 1 VRM (Model no. LM 56.3 + 1 2897.58 April 19, 2005 LOESCHE GmbH, 3C/S (M-73) fly ash based Germany PPC and slag grinding system 2 Other Equipments — 269.42 — — TOTAL 3167.00 The prices of machineries are inculsive of tax & duties and erection, commissioning & testing charges but exclusive of freight charges, import duties and transit insurance.
Plant & Machinery (Indigenous) The expenditure on indigenous plant and machinery to be procured for supprting the installation of VRM has been estimated at Rs. 5700.00 lacs. Subject to availability at the appropriate time, we intend to source all these machines from Loesche India Private Limited, India the supply of which is covered under the provisions of the Contract that we had entered into with them while purchasing the similar machines while installing the 3rd VRM. The Contact gives us a right to place a repeat order of these machines on the same terms and conditions The following is the break up of the plant and machineries to be procured locally: S. No. Particulars of Machine Amount(Rs. in lacs) Date of LoI Supplier 1 Equipments (including accessories 1581.01 April 19, 2005* Loesche India Private and essential spare parts) for VRM Limited, India 2 Coal Mill with Auxilary including 856.18 - - Coal Mill Bag Filter 3 Ducts and Chutes 599.42 - - 4 Power Distribtion System 551.03 - - 5 Electrical and Instrumentation 259.11 - - 6 Bucket Elevator 169.58 - - 7 Emengy Saving Equiments 145.61 - - 8 Main Filter 320.04 - - 9 Belt Conveyor 116.48 - - 10 Fabrication, Erection and Stores Consumption 272.34 - - 11 Others 829.20 - - TOTAL 5700.00 * LoI has been placed for a portion of the equiment valuing Rs. 12,31,36,000.
Technical Fee and Pre-Operative Expenses Techinal fee of around Rs. 650 lacs is payable to LOESCHE GmbH, Germany and LOESCHE India Private Limited, New Delhi for engineering services. We have already placed a LoI to LOESCHE GmbH for procuring engineering plans, assembly drawings and technical drawings etc. at a total cost of one million Euro. We have estimated around Rs. 10 lacs to be the cost of start up expenses and trail run.
Contingency The total amount of Rs. 1075.00 lacs has been provided for contingencies, which is around 10 % of the capital expenditure.
18 Availability of Utilities for the Project Since the expansion of grinding capacity will be within the boundary of the existing cement plant, all the existing facilities such as roads, site office, storage sheds, construction water and power supply can be readily utilized even for the Project. In addition, fly ash and slag, required for manufacturing blended cements are present in abundance in the state of Orissa. Also, we will not be required to add to our existing capacity of manufacturing clinker for adding to the production capacity of blended cements.
Status of Statutory Clearances for the Project No major statutory clearances/government approvals are required for the Project, other than the approvals, which we have already obtained for our existing business operations.
Schedule of Implementation We expect the Project to start commercial production by March 2008. Details of schedule of implementation is as follows: Activity Start Date Completion Date Status Placing a letter of intent (LoI) for obtaining a VRM - - LoI Issued Placing order for the VRM May 2006 - Pending Setting up on the VRM - December 2007 Pending Trail Run January 2008 - Pending Commencement of Production - March 2008 Pending
Schedule of Fund Deployment Proceeds of the Issue will be deployed in the Project over a period of two years. During FY 2007 we propose to spend Rs. 2130.84 lacs, where as the balance amount is proposed to be spent during FY 2008.
Funds already Deployed in the Project So far we have not deployed any fund in the Project.
Expenses of the Issue The expenses for the Rights Issue are estimated to be around Rs. 42.5 lacs, i.e., at approximately 0.55 % of the Issue Size. The expenses for the Issue will include issue management and marketing fees payable to the Lead Manager Rs. 20 lacs, Registrar’s fees of Rs. 0.50 lacs, Legal Advisor’s fees of Rs. 3 lacs, Auditor’s fees of Rs. 1 lac, printing and distribution costs estimated at Rs. 8 lacs, advertisement cost estimated at Rs. 5 lacs, other expenses and contingencies estimated at Rs. 5 lacs. The expenses for the Issue will be borne out of the proceeds of the Issue.
Interim Use of Proceeds Pending use of funds as described above, we intend to invest the proceeds of the Issue in high quality interest bearing short term / long term instruments including deposits with banks for the necessary duration. These investments would be authorised by our Board or a duly authorised committee thereof. We may also use the same to fund our existing working capital requirement on a temporary basis.
Monitoring of Utilisation of Funds We have not appointed any monitoring agency to monitor the utilization of proceeds of the Issue. Our Board will monitor the utilization of the proceeds of the Issue. We will disclose the utilization of the proceeds of the Issue under a separate head in our Balance Sheet for FY 2007 clearly specifying the purpose for which such proceeds have been utilized. We will also, in our Balance Sheet for FY 2007, provide details, if any, in relation to all such proceeds of the Issue that have not been utilized thereby also indicating investments, if any, of such unutilized proceeds of the Issue. No part of the Issue proceeds will be paid by us as consideration to our Promoters, Directors, key management personnel or companies promoted by our Promoters except in the course of normal business. 19 OCL INDIA LIMITED
BASIS FOR ISSUE PRICE
Investors should read the following summary with the Risk Factors included from page numbers vi to xvi and the details about the Company and its financial statements included in the Letter of Offer to get a more informed view before making the investment decision. The face value of the Equity Shares is Rs. 2/- Equity Shares and Issue Price is 60 times of face value of the Equity Shares. The trading price of the Equity Shares of the Company could decline due to these risks and you may lose all or part of your investments.
Qualitative Factors
Leading position in Orissa We are one of the prominent players amongst the cement manufacturers in the Eastern Region and are the largest producer of cement in the state of Orissa. There has been an upward trend in the demand for cement in the Eastern region and we believe that we are well positioned to take advantage of this growing demand. .
Proximity and access to large reserves of high quality limestone We have access to large reserves of limestone to support our manufacturing operations, which we believe are sufficient to sustain our current and planned capacity for many years to come. This proximity to the sources of raw material gives us a competitive advantage over our competitiors.
Quality of products and strong brand name We have built a strong reputation by consistently providing high quality products. Our brand ‘Konark’ is one of the most well-known and respected cement brands. Strong brand name enables us to command premium and also provides us with a competitive advantage in ensuring that cement dealers carry our products.
Extensive marketing and distribution network We have a wide distribution network for cement in Eastern India. We have 300 feeder depots and more than 1500 retail stores that stock our cement products. This enables us to market and distribute our cement widely and efficiently.
Experience and Technical Know-how We have more than 55 years of experience in the Indian cement industry, which we believe provides us with the skills to maximize production efficiency, expand production capacity and reduce costs. Further, we have a stable and experienced middle and senior level management team, many of whom have been with the Company for over 20 years.
Developing cheaper and reliable captive source of power Power cost accounted for 16% of our expenditures in FY 2006. We currently rely on power provided by the state electricity board and other sources such as diesel generator sets, which are relatively expensive sources of power and our average cost of power is higher than other plants of a similar size whose power needs are furnished by their own captive power plant. We are currently implementing a project that we anticipate will lead to a reduction in our power costs.
20 Quantitative Factors 1. Adjusted Earnings per Share (EPS) Period Ended EPS Weight FY 2004 9.11 1 FY 2005 9.49 2 FY 2006 10.76 3 Weighted Average 10.06 a. EPS has been calculated as per the following formula: (Adjusted Net Profit after tax attributable to equity shareholders)/(Weighted average number of equity shares outstanding during the year/ period) b. EPS calculations have been done in accordance with the Accounting Standard 20 – “Earnings per share” issued by the Institute of Chartered Accountants of India. 2. Price Earning Ratio (P/E) of 11.15 in relation to the Issue Price of Rs. 120 Based on EPS as of March 31, 2006 3. Return on Net Worth (RoNW) Period Ended RoNW Weight FY 2004 18.86% 1 FY 2005 16.55% 2 FY 2006 17.08% 3 Weighted Average 17.2% a. RoNW has been calculated as per the following formula: (Adjusted Net Profit after tax)/(Net Worth excluding revaluation reserve and deferred revenue expenditure at the end of the year/period) 4. Minimum Return on Total Net Worth after Issue needed to maintain Pre-Issue EPS of Rs. 10.76 is 16.11 % 5. Net Asset Value (NAV) NAV as on March 31, 2006 57.94 NAV after the Issue 66.81 Issue Price 120.00
Period Ended NAV Weight FY 2004 49.05 1 FY 2005 57.36 2 FY 2006 57.94 3 Weighted Average 56.27 a. NAV has been calculated as per the following formula: Net worth at the year end / Number of Equity Shares 6. Comparison with other listed companies The Company is not comparable in absolute terms since it is into the business of cement, refractories and sponge iron manufacturing. The companies given below are comparable to us to some extent. Dalmia Cement, Ultratech and Shree Cement are cement companies whereas Vesuvius India Limited is a company engaged in the business of manufacturing refractories
21 OCL INDIA LIMITED
Particulars EPS (Rs.) P/E (times) RoNW (%) OCL India Limited 9.1 19.7 17.8 Dalmia Cement (Bharat) Limited 18.3 18.3 12.0 Ultratech Cement Limited 13.3 51.4 0.3 Shree Cement Limited 5.3 189.0 10.8 Vesuvius India Limited 14.3 20.5 25.1 *Source for information is ‘Capital Market’ May 22-June4, 2006 issue. The figures for the Company have also been taken from the same source and may not match with figures in “Financial Information” chapter on page 93 of the Letter of Offer. *The EPS has been taken on TTM basis.
The Lead Manager believes that the Issue Price of Rs. 120 is justified in view of the above qualitative and quantitative parameters narrated above. See the section titled “Risk Factors” on page vi of the Letter of Offer and the financials of the Company including important profitability and return ratios, as set out in the Auditors’ Report on page 125 of the Letter of Offer to have a more informed view.
22 STATEMENT OF TAX BENEFITS
The Board of Directors OCL India Limited 11th Floor, Narain Manzil 23, Barakhamba Road New Delhi 110 001
Benefits under the Income Tax Act, 1961 As per the existing provisions of the Income Tax Act, 1961 (the IT Act) and other laws as applicable for the time being in force, the following tax benefits and deductions are and will, inter-alia be available to M/s OCL India Limited and its shareholders.
A. To the Company 1. Dividend income (whether interim or final), in the hands of the company as distributed or paid by any other Company is completely exempt from tax in the hands of the Company, under section 10(34) of the IT Act. 2. Long-term capital gains would be subject to tax at the rate of 20% (plus applicable surcharge and education cess) as per the provisions of section 112(1)(b) of the IT Act. However, as per the proviso to Section 112(1), the long term capital gains resulting on transfer of listed securities or units or zero coupon bonds, (not covered by section 10(36) and 10(38)), would be subject to tax at the rate of @ 20% with indexation benefits or 10% without indexation benefits (plus applicable surcharge and education cess) as per the option of the assessee. 3. Long term capital gain arising from transfer of an ‘eligible equity share’ in a Company Purchased on or after the 1st day of March, 2003 and before the 1st day of March, 2004 and held for a period of 12 months or more is exempt from tax under section 10(36) of the IT Act. 4. Long term capital gain arising from the sale of Equity Shares in any company through a recognised stock exchange or from the sale of units of an equity oriented fund shall be exempt from Income Tax, if such sale takes place after 1st of October 2004 and such sale is subject to Securities Transaction tax, as per the provisions of section 10(38) of the IT Act; Provided that long term capital gain shall be taken into account in computing the book profit and income tax payable under Section 115JB of the Act. 5. Short Term capital gains arising from the transfer of Equity Shares in any company through a recognised stock exchange or from the sale of units of equity-oriented fund shall be subject to tax @ 10% provided such a transaction is entered into after the 1st day of October, 2004 and the transaction is subject to Securities Transaction Tax, as per the provisions of section 111A of the IT Act. 6. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the IT Act, the Company would be entitled to exemption from tax on gains arising from transfer of the long term capital asset (not covered by section 10(36) and section 10 (38)) if such capital gain is invested in any of the long-term specified assets in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money.
B. To Resident Shareholders 1. Dividend (whether interim or final) declared, distributed or paid by the Company is completely exempt from tax in the hands of the shareholders of the Company as per the provisions of section 10(34) of the IT Act. 2. Any income of minor children clubbed with the total income of the parent under section 64(1A) of the IT Act, will be exempt from tax to the extent of Rs. 1500/- per minor child under section 10(32) of the IT Act. 3. As per the provisions of Section 112(1)(a) of the IT Act, long-term capital gains would be subject to tax at the rate of 20% (plus applicable surcharge and education cess). However, as per the proviso to Section 112(1), the long
23 OCL INDIA LIMITED
term capital gains resulting on transfer of listed securities or units or zero coupon bonds (not covered by sections 10(36) and 10(38), would be subject to tax at the rate of @ 20% with indexation benefits or 10% without indexation benefits (plus applicable surcharge and education cess) as per the option of the assessee. 4. Long term capital gain arising from the sale of Equity Shares in any company through a recognised stock exchange or from the sale of units of an equity oriented mutual fund shall be exempt from Income Tax if such sale takes place after 1st of October 2004 and the sale is subject to Securities Transaction tax, as per the provisions of section 10(38) of the IT Act. 5. Short Term capital gains arising from the transfer of Equity Shares in any company through a recognised stock exchange or from the sale of units of equity-oriented fund shall be subject to tax @ 10% provided such a transaction is entered into after the 1st day of October, 2004 and the transaction is subject to Securities Transaction Tax, as per the provisions of section 111A of the IT Act. 6. As per the provisions of section 88E, where the business income of a resident includes profits and gains from sale of taxable securities, a rebate shall be allowed from the amount of income tax equal to the Securities transaction tax paid on such transactions. However the amount of rebate shall be limited to the amount arrived at by applying the average rate of income tax on such business income. 7. In accordance with and subject to the conditions and to the extent specified in Section 10(36) of the IT Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their ‘eligible Equity Share’ in the Company purchased during the period March 1, 2003 to February 29, 2004 (both days inclusive) and held for a period of 12 months or more. 8. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the IT Act, the shareholders would be entitled to exemption from tax on long term capital gains arising on transfer of their shares in the Company (not covered by sections 10(36) and 10(38)), if such capital gain is invested in any of the long term specified assets in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money. 9. In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and subject to the conditions and to the extent specified in Section 54F of the IT Act, the shareholder would be entitled to exemption from long term capital gains on the sale of shares in the Company (not covered by sections 10 (36) and 10 (38)), upon investment of net consideration in purchase /construction of a residential house. If part of net consideration is invested within the prescribed period in a residential house, then such gains would not be chargeable to tax on a proportionate basis. Further, if the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains shall be charged to tax as long-term capital gains in the year in which such residential house is transferred.
C. To Non-Resident Indian Shareholders 1. Dividend (whether interim or final) declared, distributed or paid by the Company is completely exempt from tax in the hands of the shareholders of the Company as per the provisions of section 10(34) of the IT Act. 2. Any income of minor children clubbed with the total income of the parent under Section 64(1A) of the IT Act will be exempt from tax to the extent of Rs. 1,500 per minor child per year in accordance with the provisions of section 10(32) of the IT Act. 3. In the case of shareholder, being a non-resident Indian and subscribing to shares in convertible foreign exchange, in accordance with and subject to the conditions and to the extent specified in Section 115D read with Section 115E of the IT Act, long term capital gains arising from the transfer of shares of an Indian company (not covered by sections 10(36) and 10(38)), will be subject to tax at the rate of 10% as increased by a surcharge and education cess at an appropriate rate on the tax so computed, without any indexation benefit but with protection against foreign exchange fluctuation. 4. In case of a shareholder being a non-resident Indian, and subscribing to the shares in convertible foreign exchange in accordance with and subject to the conditions and to the extent specified in Section 115F of the IT Act, the
24 nonresident Indian shareholder would be entitled to exemption from long term capital gains (not covered by sections 10(36) and 10(38)) on the transfer of shares in the Company upon investment of net consideration in modes as specified in sub-section (1) of Section 115F. 5. In accordance with the provisions of Section 115G of the IT Act, Non Resident Indians are not obliged to file a return of income under Section 139(1) of the IT Act, if their only source of income is income from investments or long term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the IT Act. 6. In accordance with the provisions of Section 115H of the IT Act, when a Non Resident Indian become assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer along with his return of income for that year under Section 139 of the IT Act to the effect that the provisions of Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money. 7. As per the provisions of section 115 I of the I.T. Act, a Non-Resident Indian may elect not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing his return of income for that year under Section 139 of the IT Act, declaring therein that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the IT Act. 8. In accordance with and subject to the conditions and to the extent specified in Section 112(1) (c) (read with proviso) of the IT Act, tax on long term capital gains arising on sale on listed securities or units not covered by sections 10(36) and 10(38) will be, at the option of the concerned shareholder, 10% of capital gains (computed without indexation benefits) or 20% of capital gains (computed with indexation benefits) as increased by a surcharge and Education cess at an appropriate rate on the tax so computed in either case. 9. As per the provisions of section 10(38), long term capital gain arising from the sale of Equity Shares in any company through a recognised stock exchange or from the sale of units of an equity oriented mutual fund shall be exempt from Income Tax if such sale takes place after 1st of October, 2004 and such sale is subject to Securities Transaction tax. 10. As per the provisions of section 111 A, Short Term capital gains arising from the transfer of Equity Shares in any company through a recognised stock exchange or from the sale of units of equity-oriented fund shall be subject to tax @ 10% provided such a transaction is entered into after the 1st day of October, 2004 and the transaction is subject to Securities Transaction Tax. 11. As per the provisions of section 88E, where the business income of a assessee includes profits and gains from sale of taxable securities, a rebate shall be allowed from the amount of income tax equal to the Securities transaction tax paid on such transactions. However the amount of rebate shall be limited to the amount arrived at by applying the average rate of income tax on such business income. 12. In accordance with and subject to the conditions and to the extent specified in Section 10(36) of the IT Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their ‘eligible Equity Shares’ in the Company purchased during the period March 1, 2003 to February 29, 2004 (both days inclusive) and held for a period of 12 months or more. 13. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the IT Act, the shareholders would be entitled to exemption from tax on long term capital gains (not covered by sections 10(36) and 10(38)) arising on transfer of their shares in the Company if such capital gain is invested in any of the long term specified assets in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the specified asset is transferred or converted into money. 14. In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and subject to the conditions and to the extent specified in Section 54F of the IT Act, the shareholder would be entitled to exemption from long term capital gains (not covered by sections 10(36) and 10(38)) on the sale of shares in the Company upon investment of net consideration in purchase / construction of a residential house. If part of net consideration
25 OCL INDIA LIMITED
is invested within the prescribed period in a residential house, then such gains would not be chargeable to tax on proportionate basis. Further, if the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains tax exempted earlier, would become chargeable to tax as long term capital gains in the year in which such residential house is transferred. 15. As per the provisions of Section 90(2) of the IT Act, the provisions of the IT Act would prevail over the provisions of the tax treaty to the extent they are more beneficial to the Non-Resident.
D. To Other Non-Residents 1. Dividend (whether interim or final) declared, distributed or paid by the Company is completely exempt from tax in the hands of the shareholders of the Company, under section 10(34) of the IT Act. 2. Any income of minor children clubbed with the total income of the parent under Section 64(1A) of the IT Act will be exempt from tax to the extent of Rs.1500 per minor child per year, in accordance with the provisions of section 10(32) of the IT Act. 3. In accordance with and subject to the conditions and to the extent specified in Section 112(1) (c) of the IT Act, tax on long term capital gains arising on sale on listed securities or units will be, at the option of the concerned shareholder, 10% of capital gains (computed without indexation benefits) or 20% of capital gains (computed with indexation benefits) as increased by a surcharge and education cess at an appropriate rate on the tax so computed in either case. 4. As per the provisions of section 10(38), long term capital gain arising from the sale of Equity Shares in any company through a recognised stock exchange or from the sale of units of an equity oriented mutual fund shall be exempt from Income Tax, if such sale takes place after 1st of October 2004 and such sale is subject to Securities Transaction tax. 5. As per the provisions of section 111 A, Short Term capital gains arising from the transfer of Equity Shares in any company through a recognised stock exchange or from the sale of units of equity-oriented fund shall be subject to tax @ 10%, provided such a transaction is entered into after the 1st day of October, 2004 and the transaction is subject to Securities Transaction Tax. 6. As per the provisions of section 88E, where the business income of an assessee includes profits and gains from sale of taxable securities, a rebate shall be allowed from the amount of income tax equal to the Securities transaction tax paid on such transactions. However the amount of rebate shall be limited to the amount arrived at by applying the average rate of income tax on such business income. 7. In accordance with and subject to the conditions and to the extent specified in Section 10(36) of the IT Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their ‘eligible Equity Share’ in the Company purchased during the period March 1, 2003 to February 29, 2004 (both days inclusive) and held for a period of 12 months or more. 8. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the IT Act, the shareholders would be entitled to exemption from tax on gains arising on transfer of their shares in the Company (not covered by sections 10(36) and 10(38)) if such capital gain is invested in any of the long term specified asset in the manner prescribed in the said section. Where the long term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money. 9. In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and subject to the conditions and to the extent specified in Section 54F of the IT Act, the shareholder would be entitled to exemption from long term capital gains (not covered by sections 10(36) and 10(38)) on the sale of shares in the Company upon investment of net consideration in purchase/construction of a residential house. If part of net consideration is invested within the prescribed period in a residential house, then such gains would not be chargeable to tax on a proportionate basis. Further, if the residential house in which the investment has been made is transferred within a
26 period of three years from the date of its purchase or construction, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such residential house is transferred. 10. As per the provisions of Section 90(2) of the IT Act, the provisions of the IT Act would prevail over the provisions of the tax treaty to the extent they are more beneficial to the Non Resident.
E. To Foreign Institutional Investors 1. In case of a shareholder being a Foreign Institutional Investor (FIIs), in accordance with and subject to the conditions and to the extent specified in Section 115AD of the IT Act, tax on long term capital gain (not covered by sections 10(36) and 10(38)) will be 10% and on short term capital gain will be 30% as increased by a surcharge and education cess at an appropriate rate on the tax so computed in either case. However short term capital gains on sale of Equity Shares of a company through a recognised stock exchange or a unit of an equity oriented fund effected on or after 1st October 2004 and subject to Securities transaction tax shall be taxed @ 10% as per the provisions of section 111A. It is to be noted that the benefits of Indexation and foreign currency fluctuation protection as provided by Section 48 of the IT Act are not available to FIIs. 2. As per the provision of Section 90(2) of the IT Act, the provisions of the IT Act would prevail over the provisions of the tax treaty to the extent they are more beneficial to the Non Resident. 3. In accordance with and subject to the conditions and to the extent specified in Section 10(36) of the IT Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their ‘eligible Equity Share’ in the Company purchased during the period March 1, 2003 to February 29, 2004 (both days inclusive) and held for a period of 12 months or more. 4. Long term capital gain arising from the sale of Equity Shares in any company through a recognised stock exchange or from the sale of units of an equity oriented fund shall be exempt from Income Tax, if such sale takes place after 1st of October, 2004 and such sale is subject to Securities Transaction tax, as per the provisions of section 10(38) of the IT Act. 5. As per the provisions of section 88E, where the business income of an assessee includes profits and gains from sale of taxable securities, a rebate shall be allowed from the amount of income tax equal to the Securities transaction tax paid on such transactions. However the amount of rebate shall be limited to the amount arrived at by applying the average rate of income tax on such business income. 6. In accordance with and subject to the conditions and to the extent specified in section 54EC of the IT Act, the shareholders would be entitled to exemption from tax on long term capital gains (not covered by sections 10 (36) and 10(38)) arising on transfer of their shares in the Company, if such capital gain is invested in any of the long term specified assets in the manner prescribed in the said section. Where the long term specified assets is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long term specified asset is transferred or converted into money. 7. Under section 196D(2) of the IT Act, no deduction of tax at source will be made in respect of income by way of capital gains arising from the transfer of securities referred to in Section 115AD.
F. To Mutual Funds In case of a shareholder being a Mutual fund, as per the provisions of Section 10 (23D) of the IT Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made there under, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds authorised by the Reserve Bank of India would be exempt from Income Tax, subject to the conditions as the Central Government may by notification in the Official Gazette specify in this behalf.
G. To Venture Capital Companies/ Funds In case of a shareholder being a Venture Capital Company / Fund, as per the provisions of Section 10(23FB) of the IT Act, any income of Venture Capital Companies / Funds registered with the Securities and Exchange Board of India, would exempt from Income Tax, subject to the conditions specified.
27 OCL INDIA LIMITED
Benefits under the Wealth Tax Act, 1957 As per the prevailing provisions of the above Act, no Wealth Tax shall be levied on value of shares of the Company.
Benefits under the Gift Tax Act As no Gift tax is leviable in respect of gifts made on or after October 1, 1998, any gift of shares will not attract gift tax. Notes: 1. All the above benefits are as per the current tax laws as amended by the Finance Act, 2006 and will be available only to the sole / first named holder in case the shares are held by joint holders. 2. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to any benefits available under the double taxation avoidance agreements, if any, between India and the country in which the non-resident has fiscal domicile. 3. In view of the individual nature of tax consequences, each investor is advised to consult his / her own tax advisor with respect to specific tax consequences of his / her participation in the scheme. The tax implications of an investment in the Equity Shares, particularly in view of the fact that certain recently enacted legislations, may not have direct legal precedent or may have a different interpretation on the benefits which an investor can avail.
For V. Sankar aiyar & Co. Chartered Accountants
(V.Rethinam) Partner Membership No. 10412 Date: June 5, 2006
28 INDUSTRY
Information presented in this section has been extracted from publicly available documents and industry publications and has not been prepared or independently verified by us or the BRLM, or any of our or its respective affiliates. Unless otherwise indicated, information presented in this section has been extracted from publications of the Cement Manufacturers’ Association (CMA), Indian Refractory Makers Association (IRMA) and Sponge Iron Manufacturers Association (SIMA).
Overview of Indian Grey Cement Industry
Global Overview Global cement production was reported at 1.95 Billion tonnes during FY 2003, with China accounting for 41.61% of the total output. India was the second largest producer with 6.48% of the total output, followed by the United States at 4.75%. India’s share of global cement production has increased from 2.9% in 1990 to 6.48% in 2003. This increase is mainly attributable to improved economic conditions and increased construction activity in India as compared to global economy. India is likely to further emerge as a major global player with its export expected to grow to 18 million tonnes by FY 2011.
Indian Overview Indian cement industry is highly clustered. Cement units are concentrated in close proximity to limestone deposits. Competition is also localized because the cost of transportation of cement to distant markets often results in the product being uncompetitive in those markets. Hence, cement units tend to be located close to both limestone deposits, as well as the markets those units service. This is one of the key factors, which has resulted in the Indian market being more regional and fragmented in nature. Indian cement industry comprises of 53 cement producers, operating 130 cement plants with an operating capacity of 157.1 MnTPA employing over 1,35,000 people. Over the years, the cement industry has made significant progress upgrading and assimilating the latest technology. At present, 96% of the total capacity in the industry is based on modern, environment-friendly and energy-efficient dry process technology, with only 4% of the capacity based on old wet and semidry process technologies. Each million tonne of capacity is associated with a direct employment for almost 1000 people. Actual cement production in FY 2006 was 141.8 MnT, compared to 127.6 MnT in FY 2005, at a growth rate of 11.2%. Domestic cement consumption in FY 2006 was 135.6 MnT, representing a 10.2% increase over the previous year domestic consumption of 123.1 MnT. Despite this comparatively high growth rate enjoyed by the Indian cement industry, India’s per capita cement consumption of approximately 125 kgs per annum as at March 31, 2005. The key players in the Indian cement industry and their share of installed capacity as of March 31, 2006 included ACC (11.8%), Ultratech Cement Limited (10.8%), Gujarat Ambuja (9.5%), Grasim Industries (9%), and India Cements (5.6%). In FY 1995, these companies together had 34% of the total capacity in the country. However, with increasing consolidation in the industry, their share of total capacity increased to 46.7% as of March 31, 2006. (Source: Cement Manufacturers Association)
Recent Consolidation of Grey Cement Industry Currently, the cement industry in India continues to be highly fragmented compared to other cement producing countries. Although the share of cement capacity of the top five cement companies has increased to 47% in FY 2006 from 34% in FY 1995, there are still approximately 20 different cement companies in India which have less than 2.0 MnTPA of cement capacity. Multinational cement companies such as Lafarge, Holcim and Italcementi have, over a period of time, acquired substantial interests in cement companies in India. In early 2005, Holcim acquired control of ACC, India’s largest cement producer. At the same time the larger Indian cement companies have acquired cement companies and/or plants to consolidate their position and benefit from economies of scale and better leverage in terms of pricing their products.
29 OCL INDIA LIMITED
Demand and Supply Trends According to the Cement Manufacturers Association (CMA), from FY 2000 to FY 2005, the average installed capacity of the cement industry in India increased at a CAGR of 7.1%. During the same period, capacity utilization decreased from 87% in FY 2000 to 79% in FY 2002 and has since then increased to 90% in FY 2006.
Indian Cement Capacity, Production, Capacity Utilization Domestic Consumption and Exports (In million tonnes, except percentage data) FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 Cement Capacity for the year 129.8 137 144.3 151.3 157.1 Cement Production 102.4 111.4 11.5 127.6 141.8 Capacity Utilization 79% 81% 81% 84% 90% Domestic Cement Consumption 99 107.59 113.9 123.1 135.6 Cement Export 3.38 3.47 3.36 4.07 6.01 Clinker Export 1.76 3.54 5.64 5.99 3.18 (Source: Cement Manufacturers Association) The capacity of the industry is taken as the sum total of the installed capacity of the large players, and does not include the total capacity of mini-cement players (i.e small producers with individual capacity of up to 300,000 tonnes), which has been estimated at 11.1 MnTPA as of March 31, 2006. Capacities are monthly add-ups. Of the total capacity as of March 31, 2005, approximately 5.1 MnTPA is not in operation.
Geographic Concentration of Indian Cement Manufacturers The Indian cement market, on account of its regional nature, is separated into the key markets of Northern, Southern, Eastern, Central and Western India, for purposes of understanding regional dynamics. The states in India comprising these regions, as classified by CMA, are set forth below: Region States and Union Territories North Chandigarh, Delhi, Haryana, Himachal Pradesh, J&K, Punjab, Rajasthan, Uttaranchal East Assam, Meghalaya, Bihar, Jharkhand, Orissa, West Bengal, Chhattisgarh, Other North East states South Andhra Pradesh, Tamil Nadu, Karnataka, Kerala West Gujarat, Maharashtra Central Uttar Pradesh, Madhya Pradesh The following table highlights production, demand and capacity trends by region for the key markets in India during the periods indicated:
Regional Capacity, Production and Capacity Utilization (In million tonnes, except percentage data) FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 Northern India Capacity(1) 23.4 25.2 26 27.4 28.9 Production 21.9 24.1 25.2 26.7 29.7 Capacity Utilization 94% 96% 97% 98% 103% Eastern India Capacity(1) 20.6 21.3 22.4 22.8 23.4 Production 16.7 16.7 16.7 18.7 20 Capacity Utilization 81% 79% 74% 82% 86%
30 (In million tonnes, except percentage data) FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 Central India Capacity(1) 20.5 21 21.7 24.2 25 Production 16.7 17.8 18.5 20.4 22.3 Capacity Utilization 81% 85% 85% 84% 89% Western India Capacity(1) 21.9 24.1 28 28.9 28.9 Production 17.2 19.3 21 22.8 24.9 Capacity Utilization 79% 80% 75% 79% 86% Southern India Capacity(1) 43.4 45.3 46.3 48.1 50.9 Production 29.9 33.4 36.1 39 44.9 Capacity Utilization 69% 74% 78% 81% 88% Total Capacity(1) 129.8 137 144.3 151.3 157.1 Production 102.4 111.3 117.5 127.6 141.8 Average Capacity Utilization 79% 81% 81% 84% 90% Available capacity is the monthly add-up capacity (Source: Cement Manufacturers Association) There are imbalances in cement demand between the different regions in India. Northern region has been operating at close to 100% capacity, which is in excess of operating rates in any other region. Adjusting for non-operational capacity of approximately 1.57 MnT in Northern India, effective capacity utilization will be higher at 103%.
Capacity, Production and Capacity Utilization of constituent states in Eastern Region Eastern Region consists of Chhattisgarh, Jharkhand, West Bengal, Orissa, Bihar, Assam and Other North East states. The following table sets forth the installed capacity of cement, cement production and cement consumption of the constituent states in the Eastern Region: (In million tonnes) FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 Chhattisgarh (Ranking 8) Capacity 10.65 (7.65) 10.32 (7.40) 10.22 (6.98) 10.67 10.82 Production 8.63 (8.42) 7.13 (6.40) 7.30 (6.21) 8.33 8.64 Cement Consumption 1.47 1.37 1.42 2.09 3.08 Jharkhand (Ranking 10) Capacity 3.47 (2.58) 3.57 (3.27) 4.57 (3.12) 4.57 4.66 Production 3.01 (2.94) 3.64 (3.27) 3.59 (3.05) 3.78 4.16 Cement Consumption 1.40 1.77 2.03 2.31 2.63 West Bengal (Ranking 13) Capacity 2.29 (2.32) 3.12 (2.23) 3.13 (2.14) 3.13 3.46 Production 1.74 (1.70) 2.52 (2.26) 2.74 (2.34) 3.12 3.25 Cement Consumption 5.94 5.63 5.78 6.22 6.59
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(In million tonnes) FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 Orissa (Ranking 14) Capacity 2.76 (2.05) 2.85 (2.17) 3.04 (2.08) 3.04 3.04 Production 2.43 (2.38) 2.61 (2.35) 2.48 (2.11) 2.92 3.31 Cement Consumption 2.93 3.45 3.38 3.90 4.15 Bihar (Ranking 16) 1.00 (0.74) 1.00 (0.71) 1.00 (0.68) 1.00 1.00 Capacity 0.63 (0.61) 0.56 (0.51) 0.34 (0.29) 0.37 0.46 Production 3.28 3.20 3.13 3.80 4.36 Cement Consumption Assam and Other North East States (Ranking 18 & 19) Capacity 0.40 (0.30) 0.40 (0.28) 0.40 (0.28) 0.40 0.40 Production 0.24 (0.23) 0.25 (0.22) 0.22 (0.18) 0.21 0.23 Cement Consumption 1.28 1.54 1.74 2.07 1.85 Total Capacity in Eastern India Capacity 20.58 (15.64) 21.26 (10.06) 22.38 (15.28) 22.81 157.15 Production 16.68 (16.28) 16.7 (15.01) 16.67 (14.18) 18.73 141.81 Cement Consumption 16.3 16.96 17.48 20.4 135.56 Figures in brackets are percentage to All India Total (Source: Cement Manufacturers Association)
Growth in Cement Industry Cement consumption varies across regions because of the differences in per capita income and the level of industrial development in each state of the region. Demand in Eastern and Central region has been largely driven by the housing sector, whereas infrastructure, investments in industrial projects and the housing sector (in varying proportions) have had a more significant impact on demand in the Western, Northern and Southern regions. Growth in Consumption Region 5 Year CAGR 3 Year CAGR 1 Year Growth Growth for the (2000 - 05) (2002-05) (2004-05) period ended 2005-06 Northern India 7.5% 7.6% 6.1% 12% Southern India 5.2% 8.2% 4.4% 18% Eastern India 11.3% 7.8% 16.7% 11% Western India 4.4% 5.8% 9.2% 5% Central India 3.2% 8.3% 7.6% 1% Total 6.0% 7.5% 8.1% 10% (Source: Cement Manufacturers Association) Eastern India is expected to demonstrate strong cement demand, driven by increased emphasis on infrastructure projects including urban infrastructure and power projects and continued growth in housing sector. Upswing in exports Cement exports have been growing at a CAGR of 15.9% during FY 2000 to FY 2005, while clinker exports have grown at a CAGR of 38.2% during the same period. With an increase in export demand and realizations, coastal plants in India
32 have been exporting their additional production, reducing supply pressure in the domestic market. India exports cement and clinker primarily to its neighboring countries and Africa and West Asia. In the near term, with high construction activity expected in Afghanistan and Middle East, India’s proximity to these markets is also likely to lead to a growth in cement exports.
Recent Trends in Grey Cement Industry
Slowdown in the creation of fresh capacity According to the CMA there was a significant increase in capacity during FY 2001 and FY 2002, which was driven primarily by the planned phase out of the Government’s sales tax incentives resulting in decline in capacity utilization from 94% in FY 2000 to 79% in FY 2002. In 1999, state governments decided to withdraw the sales tax incentives that were extended to new manufacturing units and for expansion of existing capacity. However, projects that had already commenced or were in the pipeline were exempted from this provision. This resulted in a rush among cement producers to set up capacity and avail of this benefit before it was phased out. However, new additional capacity decreased after the phase out of the sales tax incentives. With demand expected to grow faster than the increase in capacity, demand supply imbalance is generally expected to narrow in the near term resulting in improved capacity utilization.
Increasing demand from housing and infrastructure Over the last decade, growth in cement consumption in India has been driven primarily by private housing and commercial construction activities. With declining retail interest rates and incentives given to housing loans, residential construction is expected to generate increased demand for cement products. In addition to demand from housing, in recent Government budgets, the Government has indicated its commitment to developing infrastructure in the country and undertaking large projects involving construction of ports, airports, power plants, and highways linking different parts of the country. Some of the key infrastructure projects, which have been announced and are underway include: 1. The Golden Quadrilateral Project: This project proposes to link the key metropolitan cities of Delhi-Mumbai-Chennai- Kolkata (approximately 5,800 kilometers); and 2. The East-West and North-South Road Corridors: This project envisages constructing roads that will traverse India (approximately 7,000 kilometers). In addition, the Government has also announced plans to build roads (approximately 200,000 kilometers) linking every village in the country with a population of over 1,000. The increased focus on infrastructure development, together with the increasing demand for housing and commercial construction, are expected to drive growth of the cement industry.
Overview of Indian Refractories Industry ‘Refractory’ items are materials, which are hard to work with and are especially resistant to heat and pressure. Refractories are products used for high temperature insulation and erosion/corrosion and are made mainly from non-metallic minerals. They are so processed that they become resistant to the corrosive and erosive action of hot gases, liquids and solids at high temperatures in various types of kilns and furnaces. Refractory has its history in ‘Basalt’, which is a naturally occurring siliceous refractory product. It was formed many years back and is still being formed in lava flows from volcanic eruptions under the natural geological forces of heat and pressure. Modern refractory production is largely a replication of this process of forming naturally occurring, synthetic, non-metallic mineral oxides (and some non-oxides like carbides or nitrides) under the bonding conditions of high heat and pressure. With technological advancement, alternative-bonding techniques, such as with chemicals, cements, resins, etc. have also developed over the period of time. Because refractory products are so resistant to heat, erosion and corrosion, they are typically used in any process involving heat and corrosion such as in kilns and furnaces. According to the main chemical component, i.e. fireclay, or magnesia, or zirconia, etc. they are commonly known as alumino-silicate or acid refractories, basic refractories, and neutral refractory products.
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In physical characteristics, refractories typically have relatively high bulk density, high softening point and high crushing strength. They are produced as standard bricks or as shapes or as granular or unshaped or monolithic products. The principal applications of refractories are in iron and steel industries, cement, glass, non-ferrous metals, petro-chemicals and fertilizer industry, chemicals, ceramics and even thermal power stations and incinerators. In India, the history of manufacture of refractories dates back to the year 1874, when for the first time manufacture of fireclay bricks started. In the year 1985, with the manufacture of Ceramic Fibres the Refractory industry achieved a milestone. Today in the organized sector there are about 60 refractories manufacturing companies registered with Indian Refractory Makers Association (IRMA). IRMA is the national organization for the refractory manufacturing companies in India, which was set up in 1958. IRMA provides a range of advisory and representational services to its members. It also extends information and data-bank services on refractories specifications etc. The major players in the India Refractory industry are ACC Refractories, OCL India, IFGL Refractories, Orient Abrasive, Vesuvius India, Refcem, Saurashtra Calcine Bauxite & Allied Industries and Tata Refractories etc.
Refractory Production in India Consumption pattern of Refractory products in India The aggregate refractories production capacity in India is approximately 15,00,000 metric tonnes per annum. The Non-ferrous actual annual production however is around 10,00,000 Ceramics metal Others metric tonnes. Steel Industry in India is the largest consumer 3% 3% of refractory products in India followed by cement and glass 4% industry. The industry wise consumption pattern of refractory Glass Industry 4%
Steel Industry Cement Industry 74% 12% (Source: Indian Refractory Makers Association) products in India has been shown in the chart: The following table gives the data on production of refractories in India during last five financial years: (Quantity in metric tonnes) Refractory Production Capacity FY 2002 FY 2003 FY 2004 FY 2005 Fireclay Refractories 560000 169938 178143 198070 260946 High Alumina Refractories 410000 265267 271945 360671 361836 Silica Refractories 57500 19146 15250 31117 24523 Basic Refractories 336000 214082 214346 186816 195912 Special products 34220 21242 24452 28793 27923 Others 253800 89262 76126 86467 158893 TOTAL 1651520 778938 780263 891935 1030033 (Source: Indian Refractory Makers Association)
Export of Refractories from India Many of the member units are exporting their products to different countries of the world, from Australia to South-east Asia, South Asia, Middle East, Europe, USA and even to South America. Exports of refractories from India have grown at an average rate of 20% per annum over the last 6 years. Several of the units have received ISO 9000 accreditation and many are registered as approved vendors with a number of well-known design, engineering and consultancy organizations.
34 The following table gives the data on export of refractories in India during five financial years ending March 31, 2005: (Quantity in metric tonnes) Export of Refractories FY 2002 FY 2003 FY 2004 FY 2005 Fireclay Refractories 2983 2239 12406 6749 High Alumina Refractories 5268 7953 12266 21942 Silica Refractories 3290 15149 6074 3156 Basic Refractories 7750 8306 11862 9418 Monolithics/Castables 1630 1872 5191 7513 Special products 5828 4933 14236 14750 Others 3589 6148 28545 17409 TOTAL 30339 46600 90580 80937 (Source: Indian Refractory Makers Association) Import of refractories in India have been to the tune of approximately 168320 metric tonnes for the FY 2004-05 up by over 300% in comparison to FY 2002-03 when the import was approximately 57763 metric tonnes.
Future Outlook of Refractories Industry in India Demand of refractories in the domestic industry (volume wise) was almost stagnant till FY 2001-02. Since then it has grown at a rate of over 6%. In FY 2006-07, the total requirement of refractories is expected to be 1072189 metric tonnes, out of which the domestic demand is expected to be approximately 1042189 metric tonnes (as against 698079 metric tones of domestic demand in FY 2001-02). In FY 2011-12, the total requirement of refractories is expected to be 1105911 metric tonnes, out of which the domestic demand is expected to be approximately 1140911 metric tonnes. (Source: ‘Demand Projection for Refractories over the next ten years in India’ by Technology Information, Forecasting and Assessment Council, New Delhi)
Overview of Indian Sponge Iron Industry The global installed capacity for manufacture of sponge iron during FY 2004 as approximately 54.60 million metric tonnes. About 90% of world sponge iron production is gas based and 10% is coal based. Out of the total coal based sponge iron capacities approximately 75% is produced in India, 16% in South Africa and balance 9% in countries like Brazil, Egypt, Iran and. In India, coal based sponge iron has been an attractive investment destination because of huge resources of non-coking coal and Iron ore, which are the vital inputs for producing sponge iron. During 1990-91 the installed capacity of sponge iron in India was 12 lac tonnes. In 2004, the installed capacity increased to 95 lac tonnes per annum, which further increased to 150 lac tonnes during the current financial year. This accomplishment has put India on the world map of metaliks for the steel industry. It is estimated that the additional capacities of approximately 70 lac tonnes of sponge iron will be further added in the next five years. During 2003-04 India had recorded production of 80.93 lac tonnes of sponge iron ranking as the largest producer of sponge iron in the world and contributing approximately 15.5% share of the total world production. For the year 2004-05, India has achieved this distinction for the second consecutive term. In 2005-06, production of sponge iron in India was expected to be over 96 lac tonnes, way ahead of other countries. In the aftermath of de-licensing and priority allocation of natural gas and non-coking coal to DRI (Direct Reduction of Iron Ore) units, the production of sponge iron in India metamorphosed into a thriving and fast growing economic activity. The Indian Government took initiative by setting up a demonstration sponge iron plant of capacity 30,000 tpy with the assistance of UNIDO/UNDP at Paloncha in Andhra Pradesh in 1980. Then came the first commercial plant of Orissa in 1984 having the capacity of 1,00,000 tpy. Following this the Industry set up plants with large capacities. As a result, the production of DRI increased from 27.2 thousand tonnes in 1981-82 to 54.8 lac tonnes in 2000-01. The Indian Sponge Iron Industry was a fledging industry in the eighties with a production level of less than 10 lac tonne. The nineties saw the DRI industry attain stature and importance in India. After crossing the 10 lac tonne mark in 1991-
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92, it showed consistent growth of production up to 1997-98/. However, the industry faced problems thereafter as is reflected in the table below. (Quantity in lac tonnes) Gas Based DRI Coal Based DRI Total DRI Production Year Production Growth(percent) Production Growth(percent) Production Growth(percent) 1990-91 NA NA NA NA 8.60 NA 1991-92 NA NA NA NA 13.00 51.2 1992-93 8.97 NA 4.69 NA 13.66 5.08 1993-94 15.23 69.8 8.09 72.5 23.32 70.07 1994-95 21.89 43.7 12.21 50.9 34.10 46.2 1995-96 29.58 35.1 12.84 5.1 42.42 24.4 1996-97 33.34 12.7 16.87 31.4 50.21 18.3 1997-98 36.42 9.2 17.36 2.9 53.78 7.1 1998-99 34.48 -5.3 17.80 2.5 52.28 -2.8 1999-00 34.62 0.4 18.78 5.5 53.40 2.1 2000-01 34.62 0 20.19 7.5 54.81 2.6 (Source: Sponge Iron Manufacturers Association) India produced 93.7 lac tonnes of sponge iron in 2004 against 76.6 lac tonnes for the year 2003. This shows over all industry growth of 22.28%. Gas based segment grew by 11.47% whereas major growth of 34% is from fast expanding coal based sponge iron. During 2004-05 the DRI production in India reached 4643107 lac tonnes for gas based DRI Units and 5420188 lac tonnes for coal based DRI Units. The sponge based industry looks forward to similar growth in next 5-10 years to meet the fast growing demand of quality metaliks by the steel industry in line with the national steel policy. The demand for sponge Iron is expected to increase in geometric progression because of difficult availability of steel melting scrap, limited reserves of coking coal, in addition to unprecedented price increase of these materials. Sponge iron has also found its use as a preferred source of quality metallic not only in EAF / IF but also in charge- mix of blast furnaces. With the projected rise in demand for steel the future of sponge iron industry seems bright and secure. Further, because of regular difficulties in availability of contracted quantities of natural gas, no fresh investments are being made in the gas-based sector. The Industry therefore, has to heavily depend on coal based sponge iron, at least for next 5 years. SIMA (Sponge Iron Manufacturers Association) is an association of producers of sponge iron in India, which was set up in the year 1992. 53 producers of sponge iron are associated with SIMA. SIMA works towards promotion and protection of the interests of the Indian sponge iron industry.
36 OUR BUSINESS
We are into the business of manufacture of cement, refractories and sponge iron. The Cement factory was started with an objective of setting up a superior grade cement manufacturing facility at Rajgangpur in Orissa at the request of the Government of Orissa for use in the construction of Hirakud Dam, now we are a company with annual turnover exceeding Rs. 650 crores. We have experience of over five decades in the manufacture of cement and refractories. The sponge iron division of the Company is relatively new and we are into this segment of the business since 2002. We sell cement mainly in Eastern India under the brand ‘Konark’. We are the largest manufacturer and seller of grey cement in the state of Orissa and one of the most prominent players in the Eastern India. Over the period of time ‘Konark’ has been able to establish itself as premium quality grey cement. Our cements are certified under ISO 9001(Version 2000). Our refractories manufacturing capacity is approximately 80,000 metric tonnes per annum. In the year 1994, we obtained ISO 9001 certification for our entire range of refractories works, the first ever company to do so in India. Going ahead, besides continuously adding to the capacities of cement, refractories and sponge iron, we intend to venture into steel manufacturing. We have already entered in to a memorandum of understanding with the Government of Orissa for setting up a 0.25 MnTPA of steel plant and 14 MW capacity power plant.
Our Competitive Strengths
Experience of our Company and Promoters We have experience of over five decades in the manufacture of cement and refractories. Over the years, on one side we have kept on increasing our manufacturing capacities in both cement and refractories and on the other side we have also continuously improvised our manufacturing process aimed to achieve higher level of operational efficiency. Now, we are a company with interests in cement, refractories, sponge iron and steel with turnover exceeding Rs. 650 crores. We have a stable and experienced middle and senior level management team with significant experience in the industry. The Dalmia Group, our Promoters is a business conglomerate with consolidated revenues of US$ 90 million with interests in cement, industrial ceramics, real estate, information technology, investments, engineering and trading. Over the period of time, our Promoters have gained significant expertise of establishing and running large manufacturing plants of cement, refractories etc., which is one of our core competitive strengths.
Quality of products and strong brand name We sell cement under the brand ‘Konark’, which has over the period of time has been able to establish itself as a premium quality grey cement. We believe that ‘Konark’ is a very strong brand name for superior grade grey cement in the Eastern India, more particularly in the state of Orissa. Brand name plays a critical role for the retail purchasers of cement in India. We believe that our brand name and reputation of consistently supplying high quality products provide us with a definitive advantage over our competitors.
Proximity and access to large reserves of high quality limestone We have captive mines for limestones, the major raw material for manufacture of cement. Our limestone reserves are of high quality. The extractable limestones in our mines are sufficient to meet our requirement for a reasonably long length of time for both our existing as well as the capacities proposed to be added. Further, the proximity of limestone mines with our cement manufacturing facilities adds to our advantage resulting because of lower transportation costs.
Extensive marketing and distribution network We have a wide distribution network for grey cement in Eastern India. Our distribution network for grey cement products consists of number of feeder depots serviced by several regional sales offices in Orissa, West Bengal, Jharkhand and Bihar. In addition, we have more than 1450 stockists that store and distribute our cement. We also have a team of sales promoters and handling agents. We believe that the extent of this network, and our relationships with our dealers, enables us to market and distribute our cement efficiently.
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Our Strategy Our Corporate Vision is ‘To serve customers, shareholders and society at large through the pursuit of business excellence’. We, on one hand intend to further strengthen our position as one of the leading players in the cement and refractories industry and at the same time want to diversify into steel manufacturing. In order to meet this objective, our business strategy is focused on the following:
Increase production capacity Our strategy has been to manufacture more and more cement with the same capacity of clinker. We have been able to manufacture higher quantities of cement with a given quantity of clinker because of our strategy to focus on blended varieties of cement. For the FY 2006, we had produced 8.26 lac metric tonnes of clinker against which the cement manufactured by us was 15.83 lac metric tonnes. We further intend to increase our grinding capacities, which will add to our cement manufacturing capacity.
Continuous expansion of the distribution network and focus on brand promotion In order to improve our market share, we intend to continue to focus on the expansion of our distribution network and the promotion of our brands. We continuously seek to add additional authorized dealers and retailers to our network, and strengthen our relationships with the existing dealers and retailers that carry our products. In order to enhance our relationships with dealers, we undertake programs to provide training and advice on marketing and sales techniques and technical applications of cement products.
Captive Power Plant We have installed a captive Power Plant of 14 MW capacity w.e.f. May 13, 2006, which would partly run on waste heat available at the Sponge Iron Plant and partly coal based. The captive power plant is expected to decrease the cost of power substantially. Cost of power is a major head of expenditure for cement industry. Having a captive power plant will give us ad edge over our competitors.
Focus on the Eastern India Our target market has been Eastern India for our cement business. Since our manufacturing facility for cement business is based in Orissa we save on account of transportation cost, which is major head of expenditure. The addition in capacity, which we are looking for, will also be based in and around our existing business. Our strategy to continue to focus in the Eastern India will give us ad edge over our competitors.
Cement Manufacturing Process The production process for cement consists of drying, grinding and mixing limestone and additives like clay and iron bearing material into a powder known as “raw meal”. The raw meal is then heated and burned in kiln with pre-heater and precalciner and then cooled in an air cooling system to form a product, known as clinker. Clinker subsequently ground with gypsum to form Ordinary Portland Cement (“OPC”). Portland Slag Cement is manufactured by intimately mixing OPC and separately ground granulated slag Other blended cement manufactured by us is fly ash based Portland Pozzolana Cement (PPC) which is manufactured by grinding clinker, gypsum and fly ash together . Blending of clinker with other materials helps impart key characteristics to cement, which eventually govern its end use. We believe that the business environment in Eastern India for grey cement is favorable for cement manufacturers. As per CMA data, during fiscal 2005, grey cement plants in the state of Orissa operated at 96 % capacity utilization as compared to an average of 84 % on an all-India basis. As per CMA data, the capacity utilization of our Company for FY 2005 has been over 100 %. With limited capacity expansion in cement expected in the next few years, cement manufacturing facilities in India are expected to operate at high levels of capacity utilization. There are two general processes for producing clinker and cement in India: a dry purpose and a wet process. The basic differences between these processes are the form in which the raw meal is fed into the kiln, and the amount of energy consumed in each of the processes. In the dry process, the raw meal is fed into the kiln in the form of a dry powder resulting in energy saving, whereas in the wet process the raw meal is fed into the kiln in the form of slurry. There is also a semi-dry process, which consumes more energy than the dry process but lesser than the wet process.
38 Mining Purchased Power
Crushing
Other raw Raw Material, Material, Bauxite, Iron Iron Ore Ore and and Grinding Redmud
Raw Meal
Blending & Storage
Fuel (Coal & Oil) Pre-Heating/Pre-Calciner & Purchased Power / Generated Power Clinkerization
Clinker Storage Gypsum
Cement Grinding Fly Ash / Slag
Cement Storage
Packing
Market
The basic steps involved in the production process are set out below:
Dry process In dry process production, limestone is crushed to a uniform and usable size, blended with certain additives (such as iron ore and bauxite) and discharged on a vertical roller mill, where the raw materials are ground to fine powder. An electrostatic precipitator deduts the raw mill gases and collects the raw meal for a series of further stages of blending. The homogenized raw meal thus extracted is fed to the top of a preheater by airlift pumps/elevators. In the preheaters the material is heated to 750°C. Subsequently, the raw meal undergoes a process of calcination in a precalcinator (in which the carbonates present are reduced to oxides) and is then fed to the kiln. The remaining calcination and clinkerization reactions are completed in the kiln where the temperature is raised to between 1,450°C and 1,500°C. The clinker formed is cooled and conveyed to the clinker storage from where it is extracted and transported to the cement mills for producing cement. For producing OPC, clinker and gypsum are used and for producing Portland Pozzolana Cement (“PPC”), clinker, gypsum and fly ash are used. In the production of Portland Blast Furnace Stag Cement (“PSC”), granulated blast furnace slag from steel plants is added to clinker.
Wet process The wet process differs mainly in the preparation of raw meal, where water is added to raw materials to produce slurry. The chemical composition is corrected and the slurry is then pumped to the kiln where evaporation of moisture, preheating, calcination and sintering reaction takes place. The clinker is cooled and transported as in the case of other plants with suitable conveyors to cement mills for grinding. The wet process is more energy intensive, and thus becomes expensive when power and energy prices are high.
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Special cement clinker The basic process outlined above can be modified slightly in order to make cements with special characteristics. In case of Sulphate Resisting Portland cement clinker, the raw mix is designed so as to produce clinker with reduced C3A content. Similarly in Oil Well Cement Clinker, the raw mix is modified to produce clinker with lower C3A and higher C3S content.
Cement varieties Three basic varieties of Ordinary Portland cement (33,43and 53 grade) and other two types of blended cement like Portland slag cement and Portland pozzolana cement (Fly ash based) are sold in the market. The basic difference among these cements is the percentage of clinker, gypsum and blending material such as granulated blast furnace slag and fly ash used. Since the grinding process is the most expensive part of the cement manufacturing process, blending of cement effectively raises the production without requiring any additional clinker but it requires investments for extra grinding and packing capacity. The different varieties of cement are manufactured or sold in India conforming to the requirements of Bureau of Indian standards as per the quality control Order, 1955 issued under Ministry of Industry (Department of Industrial Policy and Promotion) Notification No .641(E) dated 19th July 1995. For a discussion on the principal types of cements and their uses, Please see the section titled “Our Business” on page 37 of the Letter of Offer.
Types of Grey cement Different types of grey cement produced by us consists of Ordinary Portland cement (43 and 53 grade), OPC 53S grade High strength Ordinary Portland Cement used for the manufacture of Railway Sleepers, Portland slag cement, Portland Pozzolana cement (Fly ash Based), Sulphate Resisting Portland Cement and Oil Well Cement (Class – G) Type HSR/ MSR. There are also other varieties of cement which we do not manufacture are Rapid Hardening Portland cement, Hydrophobic Portland Cement, Low Heat Portland Cement, Super Sulphated cement, Masonry Cement etc.
Ordinary Portland cement OPC is manufactured by grinding Portland cement clinker and gypsum so as to produce a cement capable of complying to the requirements of the relevant specification laid down by Bureau of Indian specification .OPC 33grade, 43grade and 53grade cement are designated on the basis of their characteristics 28days Compressive strength.
Detail of Cement Plants and Grinding Units in Orissa (Quantity in million tonnes) S. No. Name of Cement Company/Plant Location Annual Installed Capacity 1 OCL India Limited Rajgangpur 1.80 2 Bargarh Cement Limited Bargarh 0.96 3 Ultra Tech Cement Limited Jharsuguda 0.80 Total 3.56 (Source: Cement Manufacturers Association)
Types of Grey Cement 53-grade OPC (IS: 12269-1987): 53-grade OPC is high strength cement. According to the BIS requirements, 53-grade OPC must have a 28-day compressive strength of no less than 53 MPa. For certain specialized products, such as pre- stressed concrete and certain pre-cast concrete items requiring high strength, 53-grade OPC is considered useful as it
40 can produce high-grade concrete at lower cement content levels. We produce 53-grade OPC by exposing the clinker to the grinding process for longer period of time, which results in a higher density and stronger cement. As the grinding process requires a significant amount of power, finer grinding for the 53-grade OPC requires more power and is therefore priced higher compared to lower grades of OPC. 53-grade OPC can be used for the following applications: 1. Pre-cast concrete items such as paving blocks, tiles and building blocks; 2. Pre-stressed concrete components; and 3. Runways, concrete roads and bridges. 43-grade OPC (IS-8112:1989): According to the BIS requirements, 43-grade OPC must have a 28-day compressive strength of no less than 43 MPa. 43-grade OPC is commonly used in the following applications: 1. General civil engineering construction work; 2. Pre-cast items such as blocks, tiles and pipes; 3. Asbestos products such as sheets and pipes; and 4. Non-structural works such as plastering and flooring.
Portland Slag cement Portland slag cement is obtained by mixing Portland cement clinker, gypsum and granulated slag in suitable proportion and grinding the mixture to get a thorough and intimate mix between the constituents .It may also be manufactured by separately grinding Portland cement clinker, gypsum and granulated slag and then mixing them intimately. The resultant product is a cement which has physical properties similar to those of ordinary Portland cement In addition it has low heat of hydration and is relatively better resistant to soil and water containing excessive amounts of sulphates of alkali metals, alumina and iron, as well as to acidic water and can there fore be used for Marine works with advantage. The manufacture of Portland slag cement has been developed primarily to utilize blast furnace slag, a by-product from Blast furnaces. The development of manufacture of this type of cement will considerably increase the total output of cement production in the country and will in addition provide a profitable use for an otherwise by-product. The slag constituent in Portland slag cement shall be not less than 25% and not more than 70%. We mainly manufacture this product by using the method of Intermixing.
Portland Pozzolana Cement We also manufacture PPC (IS: 1489 (Part-1) – 1991) under the brand name of Konark. PPC is also known as blended cement or silicate cement, and this blended cement has become increasingly popular in the market in recent years. Fly ash based PPC can be manufactured by adding 15 to 35% fly ash material that is a by-product of thermal power plants. In the manufacture of PPC, a portion of the clinker is replaced with fly ash. This enables the cement manufacturer to produce a higher quantity of cement per ton of clinker. As a result, the cement manufacturer can increase its production capacity by making a limited investment in grinding capacity without a corresponding investment in earlier stage production equipment such as kilns. Further, the only cost incurred for fly ash is transportation cost from the thermal power plants that generate it to the cement manufacturing site, as fly ash is currently available free of cost. The use of fly ash therefore significantly reduces the overall cost of production of cement. The advantage of PPC is its low heat of hydration and corresponding resistance to exposure to various environmental chemicals such as salt water. It is particularly suitable for marine and hydraulic construction and other mass concrete structures. This cement has durability that is equivalent to OPC and can be used most of the applications where OPC is used. As PPC is generally sold at a comparable price to OPC and the cost of production of PPC is comparatively lower, PPC’s margins per ton are generally higher compared to OPC.
41 OCL INDIA LIMITED
Raw Materials The principal raw materials for cement production are limestone, gypsum, granulated blast furnace slag and fly ash.
Limestone Limestone is the basic raw material for producing cement. The manufacture of each ton of clinker requires approximately 1.44 tons of limestone. We currently operate one limestone quarry at Lanjiberna situated in relative proximity to our plant. We are required to obtain a lease from the Orissa state government in order to mine the limestone deposits. These leases were initially granted for a term of 20 years. Pursuant to current provisions of Mines and Minerals (Development and Regulation) Act, 1957, and Mineral Concession Rules, 1960, as amended, such leases may be renewed for a term of up to 20 years at a time. The lease expires in the year 2010. We currently pay a royalty of Rs.45 per ton of limestone extracted. As we have access to high quality limestone, we generally do not need to purchase additional high quality limestone or other additives, referred to as “sweeteners,” from external sources.
Gypsum Another principal raw material used in the manufacture of cement is gypsum, which acts as a retarding agent to control the setting time for cement. It is added to clinker at the grinding stage in quantities that vary from approximately 3 to 4 % for grey cement, depending on the requirements of the final product as well as the quality of the gypsum. We source Mineral Gypsum from Jaisalmir of the State of Rajasthan and chemical (by product) gypsum from Vizag, Haldia. We believe we have an adequate supply of gypsum available to us to meet our existing and planned needs.
Fly ash Fly ash, which is used in the manufacture of PPC, is a by-product of the coal burning process at thermal power plants. Some of the fly ash we use is obtained from various thermal power plants nearby.. Fly ash is currently available without charge from a number of nearby thermal power plants, and we presently have arrangements to access all of our fly ash requirements. However, we incur the cost of transportation when transporting the fly ash to our plants.
Others Additives like clay, hard morrum, shalestone, are also required for clinkerisation in small quantities, all of which are available from local suppliers.
Refractories Manufacturing
Type of Refractories We manufacture many varieties of Refractories. These are silica, firebricks, high alumina, basic burnt, magnesia Carbon bricks, slide plates, Alumina graphite Refractories for continuous casting precast blocks, castables and monolithics of various quality. The total capacity including all the Refractories is around 80000 mt per annum.
42 The process of manufacturing is given in flow sheet below:
Precast Slide Plate Basic Silica Fire Concast Castable Brick
Incoming Raw Material
Crushing Grinding Seperation
Batching & Mixing
Vibrocasting Pressing/Handmoulding Curing
Drying Crushing & Tempering remixing
Loading Cutting
Tar Drilling Firing Machining ImpregnationImpregnation
Tempering Chipping Casting Washing & Drying
Finishing Drying Surface Drying Final Drying
Stack Yard
Quality Assurance
Packaging & Dispatch
43 OCL INDIA LIMITED
Manufacturing Process for Basic, Silica and Fire Brick Crushing and grinding of assured raw material is done by Jaw Crusher for reducing the lump size fit to feed to Impact Mill for reducing the size further. Free iron is separated by magnetic separation. Vibrating screen is used to separate the sizes by sieving the material to size; Coarse, Middle and Oversize for return to Impact Mill. Microfine is generated by grinding in Ball Mill, Delicon Mill with air separation. Different fractions are fed to the hopper as per sizes. For batching, by the help of travelling balance desired quantity is weighed from different hoppers for batch making. Batch materials are fed to mixers for mixing with binder and additives. After mixing, batch material is pressed in mould to sizes by pressing in different types of presses of varying capacity. Pressing material is pushed to dryer on channel trolley for removing added moisture at temperature 80-120°C for normal material and 120-170°C for Magnesia carbon quality for developing strength. Dried bricks are checked to separate defective bricks. Thereafter bricks are loaded on Loading Car (for Basic and Fire Brick products) at pre fixed loading patterns for different geometry bricks. For silica, dried bricks are loaded in Chamber Kiln in different benches. Bricks are fired as per scheduled temperature profile. Fired bricks from kiln as well as dried Magnesia carbon brick are checked for sizes, physical defect and good bricks are kept in lots. Lot samples are collected and tested for different properties for Quality assurance. Method of packing is sometimes loose packing with straw for inland bulk customer and sometimes in Crate packing for inland and overseas customer with stretch wrapping.
For Concast products After batching and mixing the mix is cured for a pre-fixed span at a pre-determined temperature and humidity. The cured green mix is mixed once again for achieving homogeneity. Thereafter mould is filled with green mix and pressed in Cold Isostatic Press at a pre-fixed pressure. The product is de-moulded and cured in ambient air. Thereafter dried as per schedule. Dried product is loaded in stainless steel can and fired in reducing atmosphere as per the firing schedule. Cutting of product is done, if necessary. Physical checking is done. Machining is done to meet the customer’s dimension. Subsequently, the products is washed and dried again. Product is coated with desired chemicals and again put to firing. This process is varies from product to product. Different packing methods are adopted for different product dimensions.
For Castable & Precast After batching & mixing, the process stops for castable products. Material is packed and dispatched. For precast, the dry material mixed previously is now mixed with water/ liquid additives for pre-fixed time. The wet mix is added into the precast moulds and vibration process is adopted for casting the shapes. The precast shapes are cured at pre-fixed temperature and time. Cured precast shapes are checked for physical defects, quality assured and dispatched. Sponge Iron Manufacturing Sponge Iron production-using coal involves reducing iron ore (lump ore or pellets) with a carbonaceous material such as coal. This reduction process is carried out in a Rotary Kiln at a pre-determined temperature. The input raw materials (viz., iron ore, coal and limestone in the required calibrated sizes) are fed into the rotary kiln that is inclined and rotates at a pre- determined range of speeds. The material (iron ore reduced to iron) discharged is then cooled and magnetically separated. Sponge Iron is taken to a storage bin for dispatch. The char, which is not magnetic and contains a certain amount of carbon can be recycled if found suitable or alternatively sold as fuel for applications such as in brick manufacturing. A simplified diagrammatic representation of the process is shown below.
WATER BO ILER ORE COAL
REDUCTION KILN
ABC COLLER E SP
DRI SEPARA-
DRI W TION
I.D .F A N STACK SPONGE IRON PROCESS FLOW SHEET
44 MoU with Government of Orissa for establishment of a Steel Plant We have entered into a memorandum of understanding dated November 27, 2004 with the Government of Orissa (GoO) for setting up a 0.25 MnTPA of steel plant and 14 MW capacity power plant at Lamloi in Rajgangpur in Orissa with an estimated investment of about Rs. 204.21 crores. The following are the salient features of the MoU: 1. Government of Orissa has agreed to hand over approximately 180 acres of land required for the purpose of setting up the steel plant and associated facilities free from all encumbrances; 2. Government of Orissa will recommend to the GoI for allotment of suitable coal blocks for captive coal mining for the project; 3. Government of Orissa will assist the Company in making a firm arrangement with Orissa mining Corporation (OMC) and other private players in the state of Orissa to meet substantial requirement of iron ore. GoO will further explore the possibility of evolving a long term arrangement with OMC for development of iron ore areas; assign appropriate priority in recommending application for iron ore mines. 4. Government of Orissa will permit the Company to withdraw water to the tune of 1000 cum/day to meet the project and housing related water requirement; 5. Government of Orissa will assist the Company in obtaining a no objection from the state pollution control board and will further assist the Company during environment impact assessment; and 6. Sale of all products shall be affected in the State of Orissa (including inter-State sales). Except that the finished products may be exported out of India. As per the term of the MoU, the plant is to start commercial production within five years from the date of the MoU. For accomplishing the above said objective our Company has had started works in this direction. The financial closure for the project has already been achieved. (Rs. in lacs) S. No. Project proposal Name of the Bank; Amount of Amount of Total Actual Total Estimated for which Bank Sanction letter Bank Loan Promoters’ Project cost/ project cost loan has been reference No. & date Sanctioned share Estimated as per MOU sanctioned project cost dated as per bank 27.11.05 estimate 1 100 TPD Sponge Iron UTI Bank, New Delhi 600 136 736 - Kiln No. I (Sanction letter No. UTIB/ NDL/ CR/ 02-03/ 756 Dated 3.8.2002 2 100 TPD Sponge Iron SBI, Rourkela 550 - 415 Kiln No. II&Sponge Iron (Sanction letter Kiln ESPs. No.Cr/6/584 & & dt.13.01.03) & UTI Bank, New Delhi (Sanction letter No. UTIB/DEL/CR/03-04/ 400 - 820 1012 dt.26.09.03) Sub-Total 950 285 1235 - 3 100 TPD Sponge Iron SBI, Rourkela 500 49 549 - Kiln No. III (Sanction letter No. Cr/07/454 dt.01.10.03
45 OCL INDIA LIMITED
(Rs. in lacs) S. No. Project proposal Name of the Bank; Amount of Amount of Total Actual Total Estimated for which Bank Sanction letter Bank Loan Promoters’ Project cost/ project cost loan has been reference No. & date Sanctioned share Estimated as per MOU sanctioned project cost dated as per bank 27.11.05 estimate 4 100 TPD Sponge Iron UTI Bank, New Delhi 540 165 705 - Kiln No. IV (Sanction letter No.U TIB/DEL/CR/04-05/ 1115 dt. 18.10.04 5 DRI Plant’s Coal UTI Bank (Sanction 200 50 250 - Vibrating Feeder cum letter No. UTBI/DEL/ diverter RMD/AP/05-06/151 Dt. 22.8.2005 for Rs.65 Crores against estimated investment of Rs.99 Crores) 6 200TPD x 2 Sponge UTI Bank (Sanction 3022 1581 4603 - Iron Kilns letter No. UTBI/DEL/ RMD/AP/05-06/152 Dt. 22.8.2005 for Rs.65 Crores against estimated investment of Rs.99 Crores) Sub-Total of DRI Portion 5812 2266 8078 7350 7 14 MW Captive Power SBI, Rourkela 3700 1273 4973 - Plant (Sanction letter No. Cr/09/56 dated 11.05.2005 81st set of Induction UTI Bank (Sanction 1400 450 1850 - Furnace and Concast letter No. UTBI/DEL/ facilities RMD/AP/05-06/151 Dt. 22.8.2005 for Rs.65 Crores against estimated investment of Rs.99 Crores) 9 2nd set of Induction UTI Bank (Sanction 1161 607 1768 - Furnace and Concast letter No. UTBI/DEL/ facilities RMD/AP/05-06/152 Dt. 22.8.2005 for Rs.65 Crores against estimated investment of Rs.99 Crores) 10 3rd set of Induction UTI Bank (Sanction 1160 607 1767 - Furnace and Concast letter No. UTBI/DEL/ facilities RMD/AP/05-06/152 Dt. 22.8.2005 for Rs.65 Crores against estimated investment of Rs.99 Crores)
46 (Rs. in lacs) S. No. Project proposal Name of the Bank; Amount of Amount of Total Actual Total Estimated for which Bank Sanction letter Bank Loan Promoters’ Project cost/ project cost loan has been reference No. & date Sanctioned share Estimated as per MOU sanctioned project cost dated as per bank 27.11.05 estimate 11 Mini Blast Furnace UTI Bank (Sanction 1157 605 1762 - letter No. UTBI/DEL/ RMD/AP/05-06/152 Dt. 22.8.2005 for Rs.65 Crores against estimated investment of Rs.99 Crores) Sub-Total of Steel 8578 3542 12120 13071 Plant Portion 12 Mines development - 1000 1000 - GRAND TOTAL OF MOU STEEL 14390 6808 21198 20421 PROJECT
Intimation of our Company’s Identification as one of the joint allocatees of Captive Coal Block Ministry of Coal, GoI has vide its letter no. 13016/33/2005-CA-I dated February 2, 2006 has intimated that our Company has been identified as one of the joint allocatees for a captive coal block of Radhikapur (West) in MCL area in the State of Orissa having an estimated extractible reserve of 210 MT. The share of our Company works out approximately to 31 MnTPA of extractable reserves, which is meant for captive use in the manufacture of sponge iron, captive power generation and cement clinker manufacture. In the opinion of the Management, this might have a favourable impact on the cost of production of said products manufactured by the company. However, precise value of such cost advantage cannot be ascertained at this juncture as it is dependant on various contingent factors. Moreover, such benefit is expected to start accruing to the company only after the said coal mine is brought under active mining operation, which might take 4 to 5 years’ time.
Environmental Regulation and Practice Under the Environment (Protection) Act of 1986, as amended and relevant state enactments, in order to set up a cement plant, various environmental clearances have to be obtained from the central and state governments. Until January 1994, obtaining an environmental clearance from the central government was only an administrative requirement intended for extremely large projects undertaken by the government or public sector undertakings. However, the environment impact assessment notification issued by the Ministry of Environment and Forests, GoI in January 1994 (as amended in May 1994) made environmental impact assessments mandatory for 29 different identified activities and industries, including the cement industry. This notification includes detailed procedures for obtaining environmental clearance and for public involvement and also sets schedules for decision-making. Once an industry has been set up, it is required to meet the standards for emissions, effluents and noise levels prescribed under the Environment (Protection) Rules framed under the Environment (Protection) Act of 1986, as amended. Most states have State Pollution Control Boards (“SPCB”), which have a significant role to play in enforcing environmental management, and pollution control as required under different laws. The Central Pollution Control Board and SPCB are responsible for enforcing legal action against polluters. The Orissa State Pollution Control Board (OSPCB) is responsible for environmental management at the state level, with emphasis on air and water quality. The OSPCB is responsible for enforcing and monitoring all activities within the state
47 OCL INDIA LIMITED of Orissa and for issuing no-objection certificates for industrial development under the Water (Prevention and Control of Pollution) Act of 1974, as amended, the Cess Act of 1977, as amended and the Air (Prevention and Control of Pollution) Act of 1981, as amended. Environmental clearance is not required at the time of renewal of a mining lease if there is no increase in the originally sanctioned lease area and/or production. The applicant should, however, seek prior environmental clearance from the Government of India for expanding production and/or mining lease area irrespective of the quantum of increase in size of area/production/or investment involved. Our plants are all located in Orissa. All the required environmental clearances have been obtained for our current operations.
Research and Development Our principal research and development activities focus on increasing the productivity and cost efficiency of our operations, particularly with respect to the efficient use of power. In recent years, we have focused our research and development activities on reducing the KWh of power per ton of cement, and the reduction of heat consumption per ton of clinker. In addition, we are currently conducting research on the optimal coal mix in our manufacturing facilities and maximizing the benefits of converting our kilns to petcoke as a source of fuel. In addition to these activities, our Nimbahera manufacturing facility was chosen by the World Bank and the Danish International Development Agency as one of the four training centres in India to serve as the “Regional Training Centre” for Northern India.
Technical Collaboration Starting with initial technical know how from Dr. C. Otto and Co, Germany, OCL subsequently entered into a collaboration with General Refractories of USA for expansion of its factory and enlarging of the products range. OCL entered into collaboration for refractory technology with T.Y.K Corporation of Japan for manufacture of magnesia carbon bricks, new generation castables, precast blocks, continuous casting refractories, alumina silicon carbide carbon and alumina magnesia carbon refractories. Recently the company has entered in to a tie up with Pilibrico Gmbh, Luxembourg for manufacture of gas purging refractories.
Research & Development Apart from having our own research and development activities, we have promoted Dalmia Institute of Scientific and Industrial Research (DISIR). We regularly engage services of DISIR in carrying out application oriented specific research projects in the fields of cement refractories manufacturing. The strong R&D base and large pool of highly experienced scientists and engineers have enabled us to progressively absorb changing and advance technologies and continuously improve upon the technologies for optimum results and ultimate satisfaction of the customers.
Quality We are highly focused on quality. We have adopted Total Quality Management with Eicher Consultancy Services Limited as the main consultants. We were the first manufacturer of refractories in India to get ISO 9001 certification in the year 1994 for the silica products. Later on, we received ISO 9001 certification to cover refractory bricks and monolithics of basic, silica, firebrick & high alumina quality including magnesia carbon, slide gate, castables, precast, & concast refractories. Our cement division obtained ISO 9002 certificate in 1998 and ISO 9001 (2000 Version) in the year 2004.
Awards and Recognitions We are the first Indian refractory manufacturer to secure the ISO 9001 certification for all our refractory products. The refractory division of our Company has earned special export awards for outstanding export performance for consecutive three years from 1994 to 1996. In 1991, we received the National Quality Award for outstanding achievement in the pursuit of total quality by the Institute of Directors, New Delhi.
48 Employees As of June 30, 2006, we had 1689 full-time employees, of which 108 employees were employed at our corporate and marketing offices, and 1581 employees were employed at our manufacturing Units. We have never experienced any material losses or significant work stoppages as a result of disputes with our employees. We consider our current labour relations to be cordial. Workers Union and Wage Settlement Agreement We have two recognised workers unions, one for the workers of our cement, refractories and sponge iron manufacturing facilities called the Utkal Shramik Sangh and the other for the workers of Lanjiberna limestone mines called the Lanjiberna Shramik Sangh. These unions are affiliated to INTUC.. Periodically, our Company enters into wage settlement agreements with these unions. A wage settlement agreement dated December 31, 2003 was entered into between our Company and Utkal Shramik Sangh, which is valid for a period of five years ending December 31, 2008. Deputy Labour Commissioner, Rourkela had acted as the Conciliation Officer in the said wage settlement agreement. We have also entered into a wage settlement agreement dated March 3, 2004 with Lanjiberna Shramik Sangh, which is valid for a period of five years ending December 31, 2008. Assistant Labour Commissioner Central, Rourkela had acted as the Conciliation Officer in the said wage settlement agreement.
Insurance All our plants and machinery and buildings are insured against standard fire and special peril policy (covering fire, lighting, explosion, implosion, aircraft damage, riot, strike, malicious and terrorist damage, impact by any rail/road vehicle or animal subsidence, landslide, bursting and/or overflowing of Water tanks etc., missile testing operations, bush fire, leakage from automatic sprinkler installations). We have also taken all risk transit policy for all incoming stores materials and selective raw materials, product liability insurance for product liability on export of refractories, all risk erection policy for erection of upcoming power plant and Steel Melt Shop with Induction Furnace. We have not obtained any policy for loss of business profits. All insurance polices are tariff policies excepting Transit and Product Liability policies. The rates, terms, conditions and scope of coverage tariff policies are determined by the Insurance Regulatory & Development Authority. We have not taken any key man insurance policy. However, we have obtained group personal accident policy with medical extention w.e.f. July 1, 2006 for providing against accident to employees and mediguard policy for providing for medical coverage of our executives who are not covered under E.S.I. scheme. Total present coverage under all our policies is approximately Rs. 83,170 lacs. Our present policies for of all our manufacturing facilities are valid until June 30, 2007. We believe that our insurance arrangements are consistent with industry standards for cement manufacturers in India. Our insurance cover is reviewed on a yearly basis. In the past, instances such as fires in Concast plant, Diesel Generation concast plant, sets etc. have take place giving rise to certain claims that we have made with our insurers. As on June 30, 2006, claims to the tune of approximately Rs. 350 lacs are pending with the insurance companies.
Patents and Trade Marks We have registered trademark for ‘Konark’, the brand name for our grey cement together with it’s logo. The registration of this trademark has been renewed for a period of ten years from December 16, 2004. We also have a registered trademark named ‘Rath’, one of the brands of grey cement, which we were selling earlier. Renewal of this trademark registration has also been done for a period of seven years from December 22, 2001. We have obtained patent of an invention for process for the manufacture of refractory gunning material. This patent has been granted for period of 14 years from March 23, 1992. We have no other material intellectual property.
Corporate Social Responsibility We are a conscious and active corporate citizen. On an on-going basis we undertake community development programs. We have spent over seventy lacs rupees during last four and a half years on peripheral development activities. Among other things, we have constructed three school buildings, installed several tube wells, constructed irrigation wells, treated several villagers, renovated government hospital building and have constructed several bio-gas plants.
49 OCL INDIA LIMITED
Immovable Property We own and have also occupied several immovable properties on lease. Our registered office is located at Rajgangpur in the state of Orissa. All the manufacturing facilities for production of cement, refractories and sponge iron are also at Rajgangpur. The area covering approximately 525 acres in Rajgangpur consisting of the factory and office premises, residential colony and other colony area have been declared to an industrial township by Government of Orissa. The corporate office of the Company is at New Delhi. Set forth below is a brief summary of our office properties and manufacturing facilities: Property Address Property Rights Area (In acres) Offices Registered Office & Rajgangpur, Sundargarh, Orissa Leasehold 389.84 Colony Bhubaneswar Sales F/31A, West Bargarh, Bhubaneswar. Leasehold 0.24 Office Corporate Office 11th Floor, Narain Manzil, 23, Barkhamba Road, Leasehold 6,708 New Delhi Sq. Ft. Manufacturing Facilities Cement Rajgangpur, Sundargarh, Orissa Village Pahal, Leasehold 55.6 Bhubaneswar Freehold 61.22 Refractories Rajgangpur, Sundargarh, Orissa Leasehold 79.50 Sponge Iron Rajgangpur, Sundargarh, Orissa Freehold 84.61 Mines Lanjiberna Lanjiberna Limestone mines, District Sundargarh, Leasehold 2208 Chiraipani /Kripsara OrissaChiraipaniQuartz mines, Kripsara Fire claymines Freehold 12.64 Occupational lease Cement/Refractory With Government of Orissa at Rajgangpur, 65.84 Sundargarh, Orissa Cement/Refractory Village Bihabund, Kukuda Leasehold 21.605 Others Village Agarpara, West Bengal Freehold 6.625 Villages Biswali and Mania in the district of Freehold 89.34 Cuttack, Orissa
Township We have a township consisting of two colonies, East Colony and West Colony, having approximately 600 quarters. The township also has bungalows for the whole time director and executive directors. The township is equipped with all the modern facilities such as community welfare center, market complex, medical center, recreational club, stadium, temple, parks etc. The township provides hundred percent accommodations to the employees of the Company.
50 OUR HISTORY AND CORPORATE STRUCTURE
Syt. Jaidayalji Dalmia, an industrialist of farsighted vision had decided to set up a cement plant in Rajgangpur in Orissa at the request of the Government of Orissa to manufacture superior grade cement for use in the construction of Hirakud Dam. This had lead to incorporation of our Company as Orissa Cement Limited on October 11, 1949 under the Indian Companies Act, 1913. The Company obtained certificate of commencement of business on February 10, 1950. Name of the Company was changed to OCL India Limited w.e.f. January 15, 1996. Name of the Company was changed primarily to reflect the diversified activities being undertaken by the Company. The Company started its operations in the year 1952 by commissioning a wet process cement plant. With a view to grab the growing opportunities in the refractories segment, the Company decided to diversify into refractories also. For a brief spell, the Company had also ventured into the manufacture of a wide range of cement-allied products. The Company was also the first manufacturer of pre-stressed concrete railway sleepers. Over the years, we have kept on increasing our manufacturing capacities in both cement and refractories. That apart, we have also continuously improvised our manufacturing process aimed to achieve higher level of operational efficiency and reduce environmental hazards. In the year 1994, we became the first company in India to obtain ISO 9001 certification for our entire range of refractories works. Going ahead, we also obtained ISO 9002 certification for our cement works in the year 1998. The Equity Shares of the Company are listed on the NSE Limited, BSE Limited and Bhubaneswar Stock Exchange. The Equity Shares of the Company were also listed on Delhi Stock Exchange and Calcutta Stock Exchange. As the Equity Shares of our shares were mainly traded on NSE Limited and BSE Limited and virtually negligible trading was taking place at Calcutta Stock Exchnage, Bhuabeswar Stock Exchange and Delhi Stock Exchange, we had applied to these three stock exchanges for getting our Equity Shares voluntarily delisted. Pursuant to our application, we have been delisted from Delhi Stock Exchange and Calcutta Stock Exchange w.e.f. July 12, 2004 and April 25, 2005 respectively. However, our application for delisting from Bhubaneswar Stock Exchange is pending.
Key Events in the History of the Company Year Events 1949 Established as Orissa Cement Limited 1951 Commissioning of first 500 tpd wet process cement plant 1954 Diversified into refractories 1956 Commissioning of Firebricks Plant 1957 Commissioning of 2nd 600 tpd wet process cement plant 1958 Commissioning of Silica Plant 1959 Commissioning of Burnt Basic Brick Plant 1962 Manufacture of Chemically Bonded Basic Bricks 1963 Manufacture of Coke Oven Silica 1972 Expansion of Silica Plant 1986 Manufacture of MGC Brick and Slide Plate 1988 Modernisation of cement plant-conversion from wet to dry process 1992 Commissioning of Concast, Castable and Precast Plant Export of Silica Bricks 1994 ISO 9001 Certification Refractory works 1997 Further Expansion of Silica Plant Installation of vertical roller mill for cement and slag grinding 1998 ISO 9002 Certification of Cement Works 1999 Manufacture if Directional Purging Element 2000 Modernisation of Concast Plant
51 OCL INDIA LIMITED
Year Events 2001 Modernisation of Castable & Precast Plant 2002 Expansion & Modernisation of Concast Plant Installation of 2nd Vertical roller mill for cement and slag, and fly ash based PPC grinding 2002 Set up Sponge Iron Plant with initial capacity of 30,000 MT 2002 Increased the capacity of Sponge Iron Plant to 60,000 MT 2003 Obtained API Monogram for manufacturing Oil Well Cement 2003 Increased the capacity of Sponge Iron Plant to 90,000 MT 2004 ISO 9001-2000 version of Cement works Substantial expansion and modernization of clinkering capacity 2004 Increased the capacity of Sponge Iron Plant to 1,20,000 MT 2005 Installation of 3rd Vertical roller mill for cement and slag grinding 2005 Capacity enhancement of Slide Gate Refractories and Castable & Precast Plant Manufacture of High Alumina Cement and Augmentation of Mould Manufacturing Plant 2006 Installation of 14 MW captive power plant Steel billets plant with installed capacity of 0.85 lakh MT p.a. commissioned
Objects Clause The objects of the Company as contained in the Memorandum of Association are: 1. To produce, manufacture, refine, prepare, import, export, purchase, sell and generally to deal in all kinds of cement (ordinary, white, coloured, Portland, alumina, blast furnace, silica, etc, etc.), cement products of any description (pipes, poles, asbestos sheets, blocks, tiles, garden-wares, etc. etc.), lime, limestone and/ or by-products thereof, and in connection therewith to take on lease or acquire, erect, construct, establish operate and maintain cement factories, quarries and collieries workshops and other works. 2. To produce, manufacture, treat, purchase, sell or otherwise deal with; (a) Bricks, Tiles, Pipes, Pottery, Earthenware, sanitary-ware, China and Terracotta, Refractories and Ceramic-ware of all kinds. (b) Colours, Paints, Varnishes, etc. (c) Caustic Soda, Chlorine and other allied products. (d) Sulphuric Acid, Sulphates, Alums and other allied Products. (e) Grinding of Oil-seeds, Refining of Oil, Manufacture of Soap, etc. (f) Midget electrodes, carbon rods of all kinds, electrodes of all kinds, batteries, battery cells, bulbs, wires, cables, dynamos, motors, fans, stoves and all other electrical goods, radios, transistors, all kinds of electronic goods, materials, products and equipment including all kinds of Television, computers, computer hardware, computer software, computer peripherals, integrated and hybrid circuits, printed circuits, all kinds of films tapes, disks etc. pertaining to designing and simulation including Computer Aided Designing, Computer Aided Engineering, Computer Aided Manufacturing, architectural and product designs, garment and carpet styling, factory simulation, medical imaging, image processing and mapping, motion films, digital magnetic video films, short and documentary films, advertisement and publicity films, special effects films, TV films computer animation films, cell animation films, manual animation films, laser produced films, video games, TV serials, transparencies, bromides, video software, audio tapes and disks, video tapes and disks compact disks, laser disks, tape recorders and players, disk recorders and players prerecorded tapes and disks of all kinds audio and visual communications equipment, audio equipment, video equipment, projectors, microprocessors, all or any parts required for any of the above.
52 (g) All kinds of calcium carbonate, all chemicals, basic, intermediary or otherwise all varieties of Alkalis acids, drugs, fungicides an pesticides, fertilizers and petrochemicals of all kinds, pharmaceutical, Medicinal and chemical preparations; (h) All kinds and classes of paper. Board and pulp, cutlery, knives, scissors, razors and blades; (i) Sugar, sugar products, confectionery, dry and preserved fruits, juices, vegetables, bread, flour, biscuits, baking materials, processed foods, vegetable oils, containers of all kinds and description; (j) All kinds of cotton, silk, artificial silk, woolen, linen, jute, hemp, synthetic fibres and yarn, textiles or other articles made of any one or more of these; (k) Rubber, natural and synthetic, leather, imitation leather, leather cloth, plastic, oil cloth, linoleum, hospital sheetings and all other articles of any description made from or prepared with rubber, leather or plastic; (l) Abrassives in all forms, alumina, aluminium and all derivatives there from; (m) Ships, boats, barges, tugs and all other vehicles of water transport of all kinds and description. 2A. To process, convert, treat, manipulate or manufacture all kinds of food stuffs, oil seeds, vegetables, vegetable products, fruits, grass, timber, bamboo, straw, cotton, jute, rubber, sugarcane, tea, coffee, coconuts, cashew nuts, tobacco and other articles that are the produce of land or soil and to sell, purchase and deal in the same as Principals or Agents. 2B. To carry on business as dealers in, and producers of dairy, farms, and garden produce of all kinds, and in particular milk, cream, butter, ghee, cheese, poultry and eggs, fruits and vegetables. 2C. To carry on the business of iron founders, steel founders, non-ferrous metal founders, mechanical engineers, structural engineers, electrical engineers, manufactures of cast iron and steel pipes, manufacturers of grinding medias, manufactures of agricultural implements, other machineries, airconditioners, refrigerators, consumer and domestic appliances, tool makers, metal workers boiler makers, mill wright machinists, iron and steel converters. 2D. To carry on the business of builders, contractors, promoters of all types of construction including Roads, bridges, towers, factory buildings, residential flats, dwelling houses, hotels, restaurants, shops, officers, and for that purpose, organise, incorporate and manage co-operative societies. 2E. To deal in purchase, sale, exchange and/or transfer of securities, shares, debentures and all other forms of investments either for ready or on forward transactions and to carry on all kinds of investment business. 2F. To carry on the business of the letting on hire, hire purchase or easy payment system of appliances, fittings, machines, equipments, vehicles, furniture wireless and television receivers and other apparatus and all other things of whatsoever nature of description capable of inclusion in this class of business. 2G. To carry on the business of producers, creators, directors, buyers, sellers, suppliers, exporters, importers, hirers, contractors, stockists, distributors, repairers, consultants and dealers of and in all kinds of descriptions of: (a) electronic components, devices, systems, appliances and testing equipments; (b) photocopiers, fax machines, data processing machines, accounting and business machines, transformer; (c) sound production and recording including recording of analogue and digital sound dialogues and music; (d) all kind of publishing and printing including desk top publishing, offsets printing, laser printing of brochures, pamphlets, magazines, periodicals, books maps, newspapers, annual reports, tourist and other literature; (e) equipments for all kinds of advertisement, publicity and campaigning; (f) conductors, semiconductors, resistors capacitors, inductors, coils, connectors, display devices; (g) transistors, diodes, photo transistors, photo diodes, silicon transistors and related items, and equipment utilizing such devices; (h) telephone of telegraph equipment, studio equipment, sound equipment and amplifying equipment etc.;
53 OCL INDIA LIMITED
3. To carry on any business relating to the mining and working of minerals, the production and working of metals, and the production, manufacture, and preparation of any other materials which may be usefully or conveniently combined with the engineering or manufacturing business of the Company, or any contracts undertaken by the Company, and either for the purpose only of such contracts or as an independent business. 3 A. To carry on the business of manufacture, purchase , sale , or, otherwise deal in all varieties of sponge iron, pig iron, Cast iron, re-rolling products , alloy steels, special steels and any other kinds and grades of iron or steel or any by-products thereof including fabrication and machining thereof. 4. To construct, improve, maintain, develop, work, manage, carry out or control any roads, ways tramways, railways branches or sidings, bridges reservoirs, water courses, wharves, manufactories, ware houses, electric works, shops, stores and other, works and conveniences which may seem calculated directly or indirectly to advance to Company’s interests, and to contribute to, subsidise or otherwise assist or take part in the construction, improvement, maintenance, working, management, Carrying out or control thereof. 5. To buy, sell, import, export, manipulate, prepare for market, and deal in merchandise of all kinds, and generally to carry on business as merchants, importers and exporters and to buy, sell and deal in property of all kinds. 6. To carry on the business of contractors, clearing and forwarding agents, general carriers of passengers and goods bonded car-man, and common car-man. 7. To carry on the business of insurance agents of all types of insurance work for any insurance company. 8. (a) To undertake, transact and execute all kinds of agency business and render all kinds of services technical, managerial or otherwise including all kinds of computer software services and services of designing and simulation, computer aided designing, computer aided engineering computer aided engineering computer aided manufacturing, architectural and product designing, garment and carpet styling, factory simulation, medical imaging, image, processing, mapping of all kinds, sound production and recording of all kinds including recording of analogue and digital sound dialogues and music, rendering services of all kind computer aided or otherwise of publishing and printing including Desk Top Publishing, Offset printing, laser printing, making for others all kinds of films including motion films, digital and magnetic and video films, short and documentary films, advertisement and publicity films, special effects films, TV films, computer animation films, cell animation films, manual animation films, laser produced films, making for others transparencies bromides and video software etc. making for other all kinds of advertisement, Publicity and campaigns with electronic equipment computer software or otherwise. (b) To act as Advisers, Consultants or Manager and to render advice assistance guidance, in any capacity whatsoever, to any person, Firm or Company, on all aspects of business, organisation and industry and to advise upon the means and methods for extending, developing all types of business and Industry and all systems or processes relating to production, storage, distribution, marketing and sale of goods and/ or relating to rendering or services. 9. To receive money, securities and valuables of all kinds on deposit or safe custody on any terms. 10. To borrow, raise or secure the payment of money in such manner as the Company shall think fit, and in particular by the issue of debentures, or debenture stock, perpetual or otherwise, charged upon all or any of the Company’s property, both present and future, including its uncalled capital, and to purchase, redeem, or pay off any such securities. 11. To lend money, securities or other property, either with or without security, to such persons or companies and on such terms as may seem expedient, and in particular to customers and others having dealings with the Company, and to guarantee the performance of contracts by any such persons or companies. 12. To draw, make, accept, endorse, discount, execute, and issue promissory notes, bills of exchange, bills of lading, warrants, debentures and other negotiable or transferable instruments. 13. To invest and deal with the moneys of the Company in such manner as may, from time to time, be determined by the directors. 14. To purchase or otherwise acquire, issue, re-issue, sell, place, and deal in shares, stocks, bonds, debentures and securities of all kinds.
54 15. To take or, otherwise acquire, and hold shares in any other company having objects altogether or in part similar to those of this Company or other wise, or carrying on any business capable of being conducted so as directly or indirectly to benefit this company. 16. To apply for, purchase, or otherwise acquire any patents, brevets invention, licences concessions and the like conferring any exclusive or limited right to use, or any secret or other information as to any invention which may seem capable of being used for any of the purposes of the Company, or the acquisition of which may seem calculated directly or indirectly to benefit the Company, and to use, exercise, develop, or grant licenses in respect of, or otherwise turn to account the property rights or information so acquired. 17. To acquire and undertake the whole or any part of the business, property and liabilities of any person 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 construct, maintain, and alter any buildings or works, necessary or convenient for the purposes of the Company. 19. Generally to purchase, take on lease or in exchange, hire or otherwise acquire any real and personal property, and rights or privileges which the company may think necessary or convenient for the purposes of its business and in particular any land, buildings, easements, machinery, plant, and stock-in-trade. 20. To sell, improve, manage, develop, exchange, lease, mortgage, enfranchise, dispose of, turn to account, or otherwise deal with, all or any part of the property and rights of the company. 21. To enter into contracts of indemnity and to indemnify any party or become sureties against any debts, obligations or liabilities. 22. To enter into any contract or agreement of guarantee. 23. To guarantee or become sureties for the performance of any agreement or contract of any party or parties or for the discharge of any duty or obligation of any party or parties or the payment of money by any party or parties. 24. To enter into partnership or into any arrangement for sharing profits, union of interests, co-operation, joint adventure, reciprocal concession, or otherwise, with any 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, or any business or transaction capable of being conducted so as directly of indirectly to benefit this Company. And to lend money to guarantee the contracts, or otherwise assist, any such person or company, and to sell, hold, re-issue, with or without guarantee, or otherwise deal with the same. 25. To enter into any arrangements with any Governments or authorities, supreme, municipal, local, or otherwise, that may seem conducive to the Company’s objects, or any of them, and to obtain from any such Government or authority, any rights, privileges and concessions which the Company may think desirable to obtain, and to carry out, exercise and comply with any such arrangements, rights, privileges and concessions. 26. To remunerate any person or company for services rendered, or to be rendered, in placing or assisting to place or guaranteeing the place of any or the shares in the Company’s capital, or any 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. 27. To establish and support or aid in the establishment and support of associations, institutions, funds, trusts, and conveniences calculated to benefit employees or ex-employees of the Company or its predecessors in business or the dependants or connections of such persons, and to grant pensions and allowances, and to make payment towards insurance and to subscribe or guarantee money for charitable or benevolent objects or for any exhibition, or for any public, general or useful object. 28. To make donations to such persons and in such cases, and either of cash or other assets, as the Directors may think directly or indirectly conducive to any of the company’s objects otherwise considered expedient. 29. To undertake and execute any Trust, the undertaking of which may seem desirable to the Directors, to make or receive gifts of any kind, cash or otherwise, for any purpose whatsoever. 30. To promote any company or companies for the purpose of acquiring all or any of the property, rights and liabilities of this Company, or for any other purpose, which may seem directly or indirectly calculated to benefit this Company.
55 OCL INDIA LIMITED
31. To form, constitute, and promote companies, syndicates, associations, and undertaking of all kinds. 32. To carry on and undertake any business transaction or operation commonly carried on or undertaken by promoters of companies, financiers, concessionaries, contractors for public and other works, capitalists, merchants, traders, and to carry on any other business which may seem to the company capable of being conveniently carried on in connection with the objects, or calculated, directly or indirectly, to enhance the value of, or render profitable, any of the Company’s property or rights. 33. To carry on any other business, whether manufacturing or otherwise, which may seem to the Company capable of being conveniently carried on in connection with the above or calculated directly or indirectly to enhance the value of or render profitable any of the Company’s property or rights. 34. To promote the establishment, carrying on, and development of trades and businesses or all kinds within any territories in which the Company is interested, and to subsidise, grant special rights to, or otherwise assists, support, protect, or encourage all persons and companies engaged or proposing to engage therein. 35. To adopt such means of making known the products of the Company as may seem expedient, and in particular by advertising in the press, by purchase and exhibition of works of art of interest, by publication of books and periodicals, and by granting prizes, rewards and donations. 36. To sell or dispose of the undertaking of the Company or any part thereof and all or any of the property of the Company for cash or for stock, for shares or securities of any other company or for such other consideration as the Directors may think fit. 37. To obtain any provisional order or Act of legislature for enabling the Company to carry any of its objects into effect, or for effecting any modification of the Company’s constitution, or for any other purpose which may seem expedient, and to oppose any proceedings or applications which may seem calculated, directly or indirectly, to prejudice the Company’s interest. 38. To procure the Company to be registered or recognised in any foreign country or place. 39. To do all or any of the above things in any part of the world and as principals, agents, contractors, trustees or otherwise, and by or through trustees, agents, or otherwise, and either alone or in conjunction with others. 40. To do all such other things as are incidental or conducive to the attainment of the above objects
Changes in our Memorandum of Association The following are the amendments made in the Memorandum of Association of our Company: S. No. Date of change Brief Particulars of Change 1 30.10.1973 Inserted Clause 2(g) to (m) which deals with production, manufacture, treating, purchasing, selling of various products Inserted Clause 2B to 2 F which deals with production, manufacture, treating, purchasing, selling of various products Amended Clause 8(b) & clause 29, which permits the Company to act as Advisers, Consultants or Manager and to render advice assistance guidance, in any capacity whatsoever 2 16.05.1987 Authorised capital of the company has been increased from 5 to 8 crores* by creation of 30,00,000 Ordinary shares Rs.10/- each 3 21.09.1989 Inserted Clause 2(f) which deals with production, manufacture, treat, purchase, sell or otherwise deal with Midget electrodes, carbon rods of all kinds, electrodes of all kinds etc Inserted Clause 2G and amended clause 8 (a) which deals with production, manufacture, treating, purchasing, selling of various products and undertaking, transacting and executing all kinds of agency business
56 S. No. Date of change Brief Particulars of Change 4 08.09.1994 Authorised capital of the Company has been further increased from 8 to 15 crores by creation of 70,00,000 Ordinary shares Rs.10/- each 5 29.09.1997 Inserted Clause 2A which deals with production, manufacture, treating, purchasing, selling of various products 6 21.12.2001 Insertion of new clause No.3A to carry on the business of manufacture, purchase, sale or otherwise deal in all verities of Sponge iron, Pig iron, Cast iron, Alloy steel, Special steel etc., 7 25.06.2005 Each ordinary share** of Rs. 10 each has been sub divided into 5 ordinary shares of Rs.2 each. Consequently 1,40,00,000 ordinary shares of Rs. 10/- each forming part of the authorised capital have been sub-divided into 7,00,00,000 ordinary shares of Rs. 2/- each
Pervious Credit Ratings Rating Date Security Type Amount Credit Rating Remarks (Rs. in crores) Rating Agency 20. 09. 2004* Commercial Paper 70.00 A1+ ICRA The Rating indicates high credit quality and the rated instrument carries lowest credit risk 30.11.2004 Non Convertible 30.00 AA- CARE The Rating indicates high Debentures quality by all standards and classifed as high investment grade. 09.12.2005** Non Convertible 25.00 LAA- ICRA The Rating indicates high credit Debentures quality and the rated instrument carries low credit risk * Vide a letter dated July 19, 2006 ICRA has reaffirmed the ‘A1+’ rating, which is valid till October 20, 2006. ** Vide a letter dated May 1, 2006 ICRA has enhanced the amount from Rs. 25 Crores to Rs. 50 Crores. Other than the above credit ratings, the Company has not sought any credit rating from any rating agency during past three years.
Our Subsidiaries We have three wholly owned subsidiaries, viz, Konark Minerals Limited, Kashmissa Industries Limited and OCL Iron and Steel Limited. For details regarding our wholly owned subsidiaries, kindly refer to the section titled ‘Our Subsidaries & Group Companies’ on page 73 of the Letter of Offer. We were also having one more wholly owned subsidiary, Hari Fertilizers Limited (Hari Fertilizers). Hari Fertilizers has ceased to be a subsidiary of our Company w.e.f. September 30, 2005. Hari Fertilizers was incorporated to de-merge OCL’s Ammonium Chloride and Soda Ash business. However, before such de-merger, the plant was closed and the business of Ammonium Chloride and Soda Ash was finally discontinued in 1989. As there was no intention to revive the same, the equity shares of Hari Fertilizers were sold during the current FY 2005-06.
Shareholders Agreement Our Company does not have any shareholders agreements.
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Other Agreements 1. Collaboration Agreement for Technical Assistance with Plimmer Technology International Limited, Scotland: Our Company has entered into a Collaboration Agreement (the Agreement) with Plimmer Technology International Limited (PTIL) for the period of 7 years from the first date of commencement of royalty payment, i.e., from October 1, 2000 to September 30, 2007. Pursuant to the Agreement we have made payments of £ 75,000 for the services rendered by PTIL. In addition to the above, we are also liable to pay royalty at a rate not exceeding 3% calculated on the net ex-factory sale price, exclusive of excise duties minus cost of the standard bought out components and the landed cost of imported component irrespective of the source of procurement inclusive of ocean freight, insurance, customs duties etc. Royalty is calculated semi-annually at the end of each successive six month’s period and paid in respect of each successive period within sixty days from the expiration of that period. 2. Licence Agreement with Plibrico S.A., Luxembourg for Manufacturing of Porous Plugs Plibrico S.A. (Pilbrico) is engaged in the production and sale of monolithic refractories and special shapes and is owner of know-how relating to monolithic refractories for construction of porous plugs used in the treatment of liquid metals and know how related to the construction of these porous plugs. Our Company has entered into an agreement (the Agreement) with Plibrico for seven years starting October 1, 2000. Under the Agreement Plibrico approves our Company, subject to the terms and conditions of the Agreement, to the exclusive right and license, without the right to sub-license, for manufacture, use, sell and application of their licensed products in the territory of India and all countries in Asia and Middle East except Japan, China, Malyasia, Indonasia, Egypt, Singapore, Vietnam. As per terms of the Agreement, we have paid know-how fees of USD 150,000 in three installments to Plibrico. We are also required to pay from the beginning of commercial production, a running royalty of 15 % on added value of the licenced products after deduction of taxes, duties, packing charges etc. dispatched by the Company during the period of the Agreement. However, this royalty will be subject to 5 % maximum on sale price ex works. As per the Agreement Plibrico is not liable for any problems, which may arise due to third party complainants concerning the production and/or usage and/or sale of the licenced products by our Company with respect to any industrial rights of the third parties. In addition to the Agreement our Company has entered into a Supplementary Agreement with Plibrico to amend the Agreement dated March 27, 1997 in terms of the letters dated May 6, 1997 and July 31, 1997 of GoI. Pursuant to the Supplimantary Agreement both the parties have confirmed that from the date of execution of the Agreement, the terms and conditions of GoI, as appearing in the letter no. 40 (97)/283(97)/PAB dated May 6, 1997 and letter no. 40(97)/283(97)/PAB dated July 31, 1997 issued by GoI forms part of the Supplimantary Agreement and clauses of the Agreement which differ/ vary with the said terms and conditions, which were deemed to have been amended and/or substituted pursuant to the said terms and conditions and, it is deemed that the said terms and conditions of GoI on said substitution and/or amendment, were originally part of the Agreement.
Strategic and Financial Partners Our Company does not have any Strategic and Financial Partners.
58 OUR MANAGEMENT
Board of Directors Under our Articles of Association we cannot have lesser than 5 directors and more than 15 directors. Presently, we have eight directors. The day to day affairs of the Company is looked after by Mr. Ved Prakash Sood, the Whole Time Director under the overall supervision and control of the Board of Directors. He is assisted by a team of professionals in the fields of engineering, marketing, finance and management. Other members of the Board are renowned personalities and having significant expertise in their field and have been actively contributing through their valuable advice and support. Our Board meets with requirements of corporate governance as it consists of seven non-executive Directors (including the Chairman) out of total eight Directors as on date. Further, our four directors are independent. The following table sets forth details regarding our Board of Directors: Name, Designation, Father’s Name, Age Date of Appointment Other Directorships Address and Occupation and Tenure Mr. Pradip (Pinto) Khaitan 64 25.09.2004 1. Suzlon Energy Limited Chairman Liable to retire by 2. Visa Steel Limited S/o Late Mr. B. P. Khaitan rotation 3. Woodlands Medical Centre Limited M/s. Khaitan & Company 4. CESC Limited Emerald House,1-B, 5. Electrosteel Castings Limited Old Post OfficeStreet, 6. Graphite India Limited Kolkatta 700 001 7. Hindustan Motors Limited Advocate 8. Pilani Investments & Industries Corporation Limited 9. Dalmia Cement (Bharat) Limited 10. India Glycols Limited 11. Lanco Industries Limited 12. South Asian Petrochem Limited Mr. Vishnu Dayal Jhunjhunwala 82 25.06.2005 1. Marathwada Refactories Limited Director Liable to retire by S/o Late Dwarkadas Jhunjhunwala rotation Vishnupuri,1/13/1B, Civil Lines, Faizdabad 224 001 Industrialist Mr.Yadu Hari Dalmia 58 25.06.2005 1. Mayuka Investment Limited Director Liable to retire by 2. Puneet Trading & Investment S/o Late Jaidayal Dalmia rotation Company Private Limited 18, Golf Links, 3. Rama Investment Company Private Archbishop Makarios Marg, Limited New Delhi 110 003 Industrialist Mr. Harsh Vardhan Lodha 38 25.09.2004 1. Punjab Produce Holdings Limited Director (Independent) Liable to retire by 2. Mazbat Properties Private Limited S/o Mr. R.S.Lodha rotation 3. Mazbat Investments Private 8, National Tower, Limited 13, Loudon Street, 4. East India Investment Company Kolkatta 700 017 Private Limited Chartered Accountant 5. Punjab Produce & Trading Company Private Limited 6. Gwalior Webbing Company Private Limited
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Name, Designation, Father’s Name, Age Date of Appointment Other Directorships Address and Occupation and Tenure 7. Boroda Agents & Trading Company Private Limited 8. Alfred Herbert (I) Limited 9. Sicpa India Limited 10. Birla Corporation Limited 11. Fenner India Limited 12. Universal Cables Limited 13. Hindustan Gum & Chemicals Limited 14. Optic Fibre Goa Limited 15. Swiss India Financial Services 16. Vindhya Telelinks Limited Alternate directorships held in 17. City Consultants Limited 18. Elco Consultants Limited 19. Harsh Chemicals Limited 20. Advance Business Services Limited 21. Manoraj Investment Limited 22. Central Business Services Limited Dr. Ramesh C Vaish 64 25.06.2005 1. Ansal Properties & Infrastructure Director (Independent) Liable to retire by Limited S/o Late S Vaish169, rotation 2. Daurala Organics Limited Golf Links, 3. Express Newspaper Limited New Delhi 110 003 4. Goetze (India )Limited Chartered Accountant 5. Jaiprakash Associates Limited 6. Jaiprakash Hydro Power Limited 7. Jaypee Karcham Hydro Corporation Limited 8. Mayar India Limited 9. M Corp Global Limited 10. Omax Autos Limited 11. Bharat Consultants (Private) Limited Mr. Dhramendra Nath Davar 71 25.06.2005 1. Sandhar Infosystems Limited Director (Independent) Liable to retire by 2. SLD Auto Limited S/o Late Daryalal Davar rotation 3. Jaiprakash Power Venture Limited B-5/82, Safdurjung Enclave 4. Jaiprakash Associates Limited New Delhi 110 229 5. Heg Limited Retired Banker 6. Sandhar Technologies Limited 7. S.P.Wahi Technology & Management Consultants Private Limited 8. Sandhar Auto Components Limited 9. Rajasthan Spinning & Weaving Mills Limited 10. Maral Overseas Limited 11. Jaiprakash Hydro Power Limited 12. Adayar Gate Hotel Limited 13. Indo Continental Hotel & Resort Limited
60 Name, Designation, Father’s Name, Age Date of Appointment Other Directorships Address and Occupation and Tenure 14. Sandhar Steady Stream Tooling Private Limited 15. Ansal Properties & Industries Limited 16. Hero Honda Finlease Limited Dr. Sheo Raj Jain 71 16.09.2003 1. Neelachal Ispat Nigam Limited Director (Independent) Liable to retire by 2. Consteel India Private. Limited S/o Late Mr. Maniklal Jain rotation N15/1, DLF Qutab Enclave, Phase-II, Guragaon 122 002 Advisor Mr.Ved Prakash Sood 65 01.04.2003 1. Konark Minerals Limited Whole Time Director Five Years 2. Kashmissa Industries Limited S/o Late Tulsi Ram Sood OCL India Limited, Rajgangpur 770 017, District: Orissa Service
Brief Profile of our Directors Mr. Pradip (Pinto) Khaitan, aged 64 years, is the Chairman of our Company for last twenty years. Mr. Khaitan is a renowned lawyer and is a senior partner in M/s Khaitan & Company, Kolkata He has varied and rich experience of several years in commercial and corporate laws, tax laws, arbitration, foreign collaboration, merger and acquisitions and restructuring and demergers besides sharp acumen in other business activities. He is a Director on the Board of several renowned and reputed companies and also a Trustee of reputed educational and charitable institutions. Mr. Vishnu Dayal Jhunjhunwala, aged 82 years, is a director on our Board. He is an industrialist having experience of more than four decades in running, managing and operating various industries. Mr. Yadu Hari Dalmia, aged 58 years is an eminent industrialist having rich and varied experience of over thirty-two years. He is a member of the Dalmia industrial family. Dalmia Group is a business conglomerate with interests in cement, industrial ceramics, real estate, information technology, investments, engineering and trading. Mr. Y. H. Dalmia is the President of Dalmia Cement (Bharat) Limited heading the cement division, finance and taxation of that company. He has been associated with various industry organizations. He was the President of Cement Manufacturers Association for the year ending 1999-2000. He was also the Chairman of National Council for Cement and Building Materials. Administration and Finance Committee during 1996-98 and Chairman of the Board of Governors of NCB during 1999 and 2000. Mr. Yadu Hari Dalmia holds a bachelors degree in commerce from Delhi University and is a fellow member of the Institute of Chartered Accountants of India. Mr. Harsh Vardhan Lodha, aged 36 years, is an independent director on our Board. He is a chartered accountant and a partner of Lodha & Company, an accounting and consulting firm with its offices in Kolkatta, Mumbai, New Delhi, Chennai and Hyderabad . Mr. Lodha is also a member of the main committee of FICCI, the Apex Chamber of Commerce in the country. He has served as Chairman of its corporate laws and governance committee and co-chairman of its capital markets and taxation sub committees. He is also served as a member of the accounting standards board set up by the Institute of Chartered Accountants of India and alternate member of the national advisory committee on accounting standards set up by Government of India. He is a Director on the Board of several well known and reputed companies. Mr. Dhramendra Nath Davar, aged 71 years, an eminent professional, formerly Chairman of IFCI Limited and presently on the Board of number of reputed companies has vast, varied and wide experience and expertise in Finance, Banking, Corporate Laws and commercial activities. He is also a Director on the Board of few reputed training institutions and non- governmental (social) organizations. He had been a part time consultant to the World Bank, United Nations Industrial Development Organization for several years.
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Dr. Ramesh C Vaish, aged 64 years, an eminent Chartered Accountant, is an independent director on our Board. He is vastly experienced with expertise on all corporate matters including accountancy, taxation and international taxation/laws with over 35 years of experience. He is on the Board of several reputed companies. Dr. Sheo Raj Jain, aged 71 years, a Mechanical Engineer from Pilani Institute, is an independent director on our Board. He is the former chairman of Steel Authority of India Limited (SAIL). SAIL is the India’s largest steel producing company. He was also chairman of Coal India Limited and Heavy Engineering Corporation Limited Prior to this, he was Managing Director of Bhillai Steel Plant. He has variety of experience in the business arena with speciality in steel and heavy industry. Mr. Ved Prakash Sood, aged 65 years, is the Whole Time director of our Company. He joined the Company in 1963 and has worked in various capacities including as heading the cement and refractory division. Mr. Sood holds a masters degree in social work from University of Delhi.
Details of Borrowing Powers of Directors Our Articles of Association authorise our Board, to borrow moneys and secure the payment thereof. Our shareholders at the AGM held on June 25, 2005 authorised the Board to borrow by way of loan (term loans/working capital facilities/ external commercial borrowings and securities (debentures) from financial institutions/ banks etc. The Board of Directors of the Company is authorized to borrow such sums of money which, together with the moneys already borrowed by the Company (apart from temporary loans obtained from the Company’s bankers in ordinary course of business) at any time is not in excess of the aggregate of the paid up capital and free reserves of the Company by more than Rs. 400 crores.
Remuneration paid to Directors In an AGM held on September 16, 2003 our shareholders have approved the appointment of Mr. Ved Prakash Sood as the Whole Time Director of our Company on the following terms and conditions: The appointment of Mr. Ved Prakash Sood as the Whole Time Director is valid for a period of five years ending March 31, 2008. The appointment has been made at remuneration as detailed hereunder: Salary of Rs. 8,58,900 per annum; Perquisites valued at Rs. 3,09,452 per annum; and Contribution to PF and other Funds valued at Rs. 2,16,270 per annum The Break up of the Perquisite value is as under: Medical Reimbursement Rs. 48,741 Leave Travel Allowance Rs. 65,000 Perquisite value of car Rs. 21,600 Medical insurance Rs. 8,500 House perquisite & Water Charges Rs. 1,65,611 Rs. 3,09,452 As per the terms and conditions, the agreement may be terminated by either party by giving three months notice. If the agreement is terminated by the Company, there is an option to pay three months salary in lieu of the notice. We also pay commission @ 1% of yearly net profits to our other directors subject to the ceiling of one percent of the annual profits. We pay sitting fees of Rs. 5,000/- per meeting to our directors (other than the Whole Time Member) for attending meetings of the Board and Rs. 3,000/- per meeting for attending meetings of committees of the Board. The sitting fee is paid in addition to reimbursement of out of pocket expenses.
62 Shareholding of the Directors in our Company The following table provides details of shareholding of the Directors in OCL India Limited as on June 30, 2006: Name of Director Number of Equity Shares % Shareholding Mr. Ved Prakash Sood 51847 0.136 Mr. Yadu Hari Dalmia 9987680 26.16
Changes in Our Board of Directors during last 3 years The changes in the Board of Directors of our Company during last three years are as under: Name of Director Date of change Reasons for change Mr. Ved Prakash Sood April 1, 2003 Appointment as Whole Time Director Mr. Mohan Lal Chand March 1, 2004 Resignation Mr. R. C. Vaish January 21, 2005 Appointment as a director Mr. Shyam Sunder Bhartia March 18, 2005 Resignation Mr. Y. H. Dalmia May 17, 2005 Appointment as a director
Interest of Directors (Other than Promoter directors) Except as stated in the section titled ‘Related Party Transactions’ on page 87 of the Letter of Offer, and to the extent of shareholding in the Company as stated above, the Directors do not have any other interest in the business. Our Directors may be deemed to be interested to the extent of their compensation as mentioned above. Our Directors may also be regarded as interested in the Equity Shares, if any, held by or that may be subscribed by and allotted to the companies, firms and trusts, in which they are interested as directors, members, partners or trustees. All Directors may be deemed to be interested in the contracts, agreements/arrangements entered into or to be entered into by us with any company in which they hold directorships or any partnership firm in which they are partners. Except as detailed hereinunder, our Company has not entered into any contract, agreements or arrangements in preceding two years from the date of the Letter of Offer in which the directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements or arrangements or are proposed to be made to them. Name of the Director Name of the Party Number & date of Principal terms of the the contract/order Contract/orders Mr. P K Khaitan M/s Khaitan & Co, Appointment letter Appointment as consultants New Delhi No. ND:228/05 dated for legal and other matters at 12th August 12, 2002 a remuneration of Rs. 9,000/- p.m for 3 years w.e.f April 1, 2002. The appointment has been renewed for a further term of 3 years w.e.f. April 1, 2005 on the same terms and conditions. The Articles of Association provide that the Directors and officers shall be indemnified by the Company against loss in defending any proceeding brought against Directors and officers in their capacity as such, if the indemnified Director or officer receives judgment in his favour or is acquitted in such proceeding.
Compensation paid to the Directors during FY 2006 The following table sets forth details of the payments made to the Directors of the Company for a period starting April 1. 2005 and ending March 31, 2006:
63 OCL INDIA LIMITED
(Amount in INR) Name of the Director Sitting Fees Salaries and Commission Total Perquisites Mr. Pradip (Pinto) Khaitan 15,000 — 4,00,000 4,15,000 Mr. Vishnu Dayal Jhunjhunwala 38,000 — 2,00,000 2,38,000 Mr. Yadu Hari Dalmia 20,000 — 1,74,795 1,94,795 Mr. Harsh Vardhan Lodha 16,000 — 3,00,000 3,16,000 Dr. D. N. Dawar 32,000 — 3,00,000 3,32,000 Dr. Ramesh C Vaish 19,000 — 2,00,000 2,19,000 Dr. Sheo Raj Jain 39,000 — 2,00,000 2,39,000 Mr. Ved Prakash Sood — 13,84,831 — 13,84,931 Mr. Y. H. Dalmia was appointed as a director of the Company w.e.f. May 17, 2005.
Corporate Governance The Company stands committed to good corporate governance practices. We have set up internal policies to ensure best practices in corporate governance. Our corporate governance philosophy is dedicated to the attainment of the highest levels of accountability and transparency in dealings with our stakeholders. Our corporate governance policies lay emphasis on communication, both internal and external and reporting. The Company has complied with SEBI Guidelines in respect of corporate governance specially with respect to broad basing of the Board, constitution of committees of the Board such as Audit Committee, Shareholders/Investor Grievance Committee etc. The Board has eight Directors, of which four are independent directors in accordance with the requirements of Clause 49 of the listing agreement of the Stock Exchanges. The Chairman of the Board is a non-executive Director. Committees of the Board have been constituted in order to look into the matters in respect of audit, compensation of executive directors, shareholders/Investors Grievance Redressal, details of which are as follows:
Audit Sub Committee The Audit Sub Committee was constituted on July 31, 2000. The Committee currently consists of three directors Mr. Harsh Vardhan Lodha, Mr V.D. Jhunhunwala and Dr. S.R. Jain. Out of the three members, Mr. Harsh Vardhan Lodha and Dr S.R. Jain are independent directors. Mr. Harsh Vardhan Lodha, chairman of the Audit Sub Committee is a chartered accountant. The Audit Sub Committee of the Company meets at least four times a year. One meeting is held before finalisation of annual accounts and one in each quarter. During the FY 2006 the Audit Sub Committee met on May 17, 2005, July 20, 2005, October 29, 2005 and January 23, 2006. During the current financial year also the Audit Sub Committee met on May 15, 2006 and July 17, 2006. The role and terms of reference of the Audit Sub committee was decided by the Board of Directors keeping in view the requirements of clause 49 of the listing agreement and provisions of the Act. The Committee reviews the Annual accounts and quarterly results of the Company before submission to Board of Directors with reference to accounting policies, disclosure of related party transactions, qualification in the audit report and the matters required to be included in the Directors Responsibility Statement. In addition to the above, the Audit Sub Committee will be required to review the following: 1. Management discussion and analysis of financial condition and results of operations; 2. Statement of significant related party transactions: a) A statement in summary form of transactions with related parties in the ordinary course of business shall be placed periodically before the audit committee;
64 b) Details of material individual transactions with related parties, which are not in the normal course of business, shall be placed before the audit committee; and c) Details of material individual transactions with related parties or others, which are not on an arm’s length basis, should be placed before the audit committee, together with Management’s justification for the same. 3. Management letters / letters of internal control weaknesses issued by the statutory auditors; 4. Internal audit reports relating to internal control weaknesses; and 5. The appointment, removal and terms of remuneration of the chief internal auditor shall be subject to review by the Audit Sub Committee. Shareholder/Investors Grievance Committee The Committee was constituted with effect from October 30, 2001 to look into the redressal of shareholder and investor complaints. This committee consists of four Directors, Mr. D. N. Davar, Mr. V.D.Jhunjhunwala, Dr. S.R.Jain, Mr. V.P.Sood. Mr. D. N. Davar, an independent Diretor on our Board is the chairman of the Committee. The last meeting of the Committee was held on May 17, 2005 to review the investor complaints and further meetings were not warranted as there were no genuine investor complaints. NSE Limited has issued a letter dated April 20, 2005 that there are no complaints pending against OCL India Limited as on the date of the issuance of the letter.
Remuneration Committee Constitution of remuneration committee is an optional requirement under the listing agreement. We have not constituted any Remuneration Committee. Our Board fixes the remuneration of the Whole time Directors.
Organizational Structure
65 OCL INDIA LIMITED
Key Managerial Personnel The key managerial personnel of the Company are as follows: Mridu Hari Dalmia, aged 64 years is a Promoter and the President & CEO of our Company. He has been associated with our Company since 1970. He is a member of the Dalmia industrial family with substantial business interests mostly in India, UK and USA. Dalmia Group is a business conglomerate with interests in cement, industrial ceramics, real estate, information technology, investments, engineering and trading. He has been associated with various industry organizations in the past. He is a member of the Managing Committee of the Associated Chambers of Commerce and Industry He was the President of Indian Refractories Manufacturers Association and of Cement Manufacturers Association. He was also the President of National Council for Cement and Building Materials during 1986-89 and a member of the Managing Committee of the FICCI during 1987-89. Mr. M. H. Dalmia holds a bachelors degree in chemical engineering from Jadavpur University, Kolkata and was awarded a gold medal in 1961 for best engineering student. His remuneration for the current financial year is Rs. 82.17 lacs excluding benefits such as leave travel concession, medical expenses and reimbursement of car expenses. Raghu Hari Dalmia, aged 56 years is the President of our Company. He has been associated with our Company as President for over two and half a decades. He is a member of the Dalmia industrial family with substantial business interests mostly in India, UK and USA. Dalmia Group is a business conglomerate with interests in cement, industrial ceramics, real estate, information technology, investments, engineering and trading. He is also the director of various other group companies like, Hari Machines Limited, Debikay Systems Limited etc. He has been associated with various industry organizations. He has been the President of Indian Refractories Makers Association and is presently an active member of the same. He was the chairman of the Environment Committee PHD Chamber of Commerce Mr. R. H. Dalmia holds a bachelors degree in technology from IIT, New Delhi. His remuneration for the current financial year is Rs. 74.07 lacs excluding benefits such as leave travel concession, medical expenses and reimbursement of car expenses. Gaurav Dalmia, aged 40 years is the Joint President of our Company. He has been associated with our Company as Joint President for around one and half decades. He is a member of the Dalmia industrial family with substantial business interests mostly in India, UK and USA. Dalmia Group is a business conglomerate with interests in cement, industrial ceramics, real estate, information technology, investments, engineering and trading. He had started ‘First Capital’ a private equity investment firm. He had also co-founded ‘Infinity’, India’s first angel investment fund with a corpus of $ 35 million. He is a member of the General Partner of Gujarat Venture Finance Limited, a specific venture capital firm, co- sponsored by CDS/Actis, a private equity firm. Mr. Gaurav Dalmia was selected as the Global Leader for Tomorrow for the year 2000 by the World Economic Forum.. Mr. Gaurav Dalmia holds a bachelors degree in computer science form Salford University, UK and has completed his MBA with Beta Gamma Sigma honors (top 5% class) from Columbia University, USA. .His remuneration for the current financial year is Rs. 25.47 lacs excluding benefits such as leave travel concession, medical expenses and reimbursement of car expenses. Ved Prakash Sood, aged 65 years, is the Whole Time director of our Company. He joined the Company in 1963 and has worked in various capacities including as heading the cement and refractory division. Mr. Sood holds a masters degree in social work from University of Delhi. His remuneration for the current financial year is Rs. 13.84 lacs excluding benefits such as leave travel concession, medical expenses and reimbursement of car expenses. R. P. Shroff, aged 71 years is the Senior Executive Director (Accounts & Taxation) of our Company. He has been with our Company since 1960 and has worked in various capacities. He has rich experience of more than 46 years. Mr. Shroff holds a bachelors degree in commerce from Rajputana University and is also a fellow member of the Institute of Chartered Accountants of India. His remuneration for the current financial year is Rs. 15.63 lacs excluding benefits such as leave travel concession, medical expenses and reimbursement of car expenses. C. P. Sharma, aged 73 years is the Senior Executive Director (Special Duties) of our Company. He has been with the Company for over four decades and has worked in various capacities. He holds a masters degree in business administration (specialization in personnel management) from Faculty of Management Studies, University of Delhi. He also holds diplomas in Company Law & Labour Law from Indian Law Institute (Deemed University), New Delhi. His remuneration for the current financial year is Rs. 6.10 lacs excluding benefits such as leave travel concession, medical expenses and reimbursement of car expenses. Rakesh Malhothra, aged 45 years is the Executive Director (Finance) & the Chief Financial Officer of our Company. He has been with our Company since March 2000. Before joining our Company he was with Ansal Group for fifteen years.
66 Mr. Malhotra started his career with DCM Limited as a management trainee and continued with them for four years. Thereafter, he worked with Samtel Group for two years before joining Ansals. Mr. Malhotra holds a bachelors degree in commerce from Meerut University and is also a member of the Institute of Chartered Accountants of India. His remuneration for the current financial year is Rs. 15.43 lacs excluding benefits such as leave travel concession, medical expenses and reimbursement of car expenses. Dr. S.C. Ahluwalia, aged 65 years is Executive Director (Operations) of our Company. He has been with our Company since 1996. Dr. Ahluwalia holds a bachelors degree and masters degree in science from Punjab University. He is a Ph. D. in Chemistry. He has authored more than 300 research publications, sponsored and R&D project reports. His remuneration for the current financial year is Rs. 8.33 lacs excluding benefits such as leave travel concession, medical expenses and reimbursement of car expenses. H. Bhattacharya, aged 64 years is the Executive Director (Cement) of our Company. He has with our Company since January 1983 and has rich experience of over four decades. Prior to joining our Company he was working in Hari Yantra Udyog. He holds a Bachelor of Mechanical Engineering from Jadavpur University and Member of Institute of Engineers. His remuneration for the current financial year is Rs. 9.45 lacs excluding benefits such as leave travel concession, medical expenses and reimbursement of car expenses. S. Pasupathy, aged 58 years is the Executive Director (Commercial) of our Company. He has been with our Company since January 1995 and has rich experience of over three decades. Prior to joining our Company he was working in Agchem Biosynthesis Inc. in Canada. Mr. Pasupathy holds a bachelors degree in commerce and is also an associate member of the Institute of Chartered Accountants of India. His remuneration for the current financial year is Rs. 10.97 lacs excluding benefits such as leave travel concession, medical expenses and reimbursement of car expenses. He is also a member and associate of the Association of Secretaries & Managers in 1980 and Associate Member of the All India Management Association in 1981. S K Choudhuri, aged 70 years is the Executive Director (Refractory) of our Company. He has been with our Company for over two and a half decades. Mr. Choudhary holds a bachelors degree in science from Koltata University and has done a diploma in ceramics from Bengal Ceramic Institute, Kolkata. His remuneration for the current financial year is Rs. 7.40 lacs excluding benefits such as leave travel concession, medical expenses and reimbursement of car expenses.
Shareholding of Key Managerial Personnel The shareholding of the key managerial employees of the Company as on the date of the Letter of Offer is as given below: Name of Key Managerial Personnel No. of Equity Shares % Shareholding Mr. M.H. Dalmia 2017980 5.28 Mr. R.H. Dalmia 992705 2.60 Mr. Gaurav Dalmia 50000 0.13 Mr. R.P. Shroff 60000 0.16 Mr. Rakesh Malhotra 115 0.00 Mr. V.P. Sood 51847 0.14 Mr. H. Bhattacharya 15000 0.04 Mr. S. Pasupathy 55000 0.14 Mr. S.K. Chowdhury 38850 0.10 Mr. C.P. Sharma 2000 0.005
67 OCL INDIA LIMITED
Changes in Key Managerial Personnel in Last One Year There have been no changes in the key managerial personnel of our Company in last one year except that Mr. S. K. Aggarwal, Executive Director (Taxation and Internal Audit) has resigned from our Company w.e.f. July 31, 2006.
Bonus or Profit Sharing Plan for the Key Managerial Personnel We have a system of performance linked bonus or a profit sharing scheme for our key managerial personnel. The bonus is paid at the discretion of the management. We also pay bonus to our other employees as per the provisions of the Payment of Bonus Act.
Employee Stock Option Scheme The Company does not have any employee stock option scheme as on date.
Non Salary Related Payment or Benefit to Key Managerial Personnel of the Company There has been no other payment or benefit to the employees/key managerial personnel of the Company.
68 OUR PROMOTERS
Currently our Promoters are Mr. Mridu Hari Dalmia, Mr. Raghu Hari Dalmia, Mr. Yadu Hari Dalmia, Mr. Gaurav Dalmia, Mrs. Abha Dalmia, Mrs. Padma Dalmia, Mrs. Usha Devi Jhunjhunwala, M/s. Gautam Dalmia (HUF), Mridu Hari Dalmia Parivar Trust and Sumana Trust. The brief profile of our Promoters are as follows:
Mridu Hari Dalmia, aged 64 years is the President & CEO of our Company. He has been associated with our Company since 1970. He is a member of the Dalmia industrial family with substantial business interests mostly in India, UK and USA. Dalmia Group is a business conglomerate with interests in cement, industrial ceramics, real estate, information technology, investments, engineering and trading. He has been associated with various industry organizations in the past. He is a member of the Managing Committee of the Associated Chambers of Commerce and Industry. He was the President of Indian Refractories Manufacturers Association and of Cement Manufacturers Association He was also the President of National Council for Cement and Building Materials during 1986-89 and a member of the Managing Committee of the FICCI during 1987-89. Mr. M. H. Dalmia holds a bachelors degree in chemical engineering from Jadavpur University, Kolkata. He was awarded a gold medal in 1961 for best engineering student. His voter identity card number is DL/01/002/222133 and driving licence is P02091998101288.
Raghu Hari Dalmia, aged 56 years is the President of our Company. He has been associated with our Company as President for over two and half a decades. He is a member of the Dalmia industrial family with substantial business interests mostly in India, UK and USA. Dalmia Group is a business conglomerate with interests in cement, industrial ceramics, real estate, information technology, investments, engineering and trading. He is also the director of various other group companies like, Hari Machines Limited, Debikay Systems Limited etc. He has been associated with various industry organizations. He has been the President of Indian Refractories Makers Association and is presently and an active member of the same. He was the chairman of the Environment Committee of PHD Chamber of Commerce. Mr. R. H. Dalmia holds a bachelors degree in technology from IIT, New Delhi. His voter identity card number is DL/01/002/231011 and driving licence is P02051999106541.
Yadu Hari Dalmia, aged 58 years is an eminent industrialist having rich and varied experience of over thirty-two years. He is a member of the Dalmia industrial family. Dalmia Group is a business conglomerate with interests in cement, industrial ceramics, real estate, information technology, investments, engineering and trading. Mr. Y. H. Dalmia is the President of Dalmia Cement (Bharat) Limited heading the cement division, finance and taxation of that company. He has been associated with various industry organizations. He was the President of Cement Manufacturers Association for the year ending 1999-2000. He was also the Chairman of National Council for Cement and Building Materials Administration and Finance Committee during 1996-98 and Chairman of the Board of Governors of NCB during 1999 and 2000. Mr. Yadu Hari Dalmia holds a bachelors degree in commerce from Delhi University and is a fellow member of the Institute of Chartered Accountants of India. His voter identity card number is DL/01/002/231091 and driving licence is P02072004133700.
69 OCL INDIA LIMITED
Gaurav Dalmia, aged 40 years is the Joint President of our Company. He has been associated with our Company as Joint President for around one and half decades. He is a member of the Dalmia industrial family with substantial business interests mostly in India, UK and USA. Dalmia Group is a business conglomerate with interests in cement, industrial ceramics, real estate, information technology, investments, engineering and trading. He had started ‘First Capital’ a private equity investment firm. He had also co-founded ‘Infinity’, India’s first angel investment fund with a corpus of $ 35 million. He is a member of the General Partner of Gujarat Venture Finance Limited, a specific venture capital firm, co- sponsored by CDS/Actis, a private equity firm. Mr. Gaurav Dalmia was selected as the Global Leader for Tomorrow for the year 2000 by the World Economic Forum. Mr. Gaurav Dalmia holds a bachelors degree in computer science form Salford University, UK and has completed his MBA with Beta Gamma Sigma honors (top 5% class) from Columbia University, USA. His driving licence is P02102005137927.
Abha Dalmia, aged 60 years is the wife of Mr. Mridu Hari Dalmia. She holds a bachelors degree in Arts from Kolkata University. Her voter identity card number is DL/01/002/222134.
Padma Dalmia, aged 53 years is the wife of Mr. Raghu Hari Dalmia. She holds a bachelors degree in Home Science from Mumbai University. Her voter identity card number is DL/01/ 002/231166.
Usha Devi Jhunjhunwala, aged 62 years is the wife of Mr. Giridhari Lal Jhunjhunwala. She holds a degree in Prabhakar in Hindi from Punjab University. Her driving licence is MH01- 2004-13468.
70 M/s Gautam Dalmia (HUF) M/s Gautam Dalmia is a hindu undivided family recognized under the Indian Law. Mr. Gautam Dalmia is the karta of the HUF and is authorized to take all decisions in relation to the assets and properties of the HUF.
Mridu Hari Dalmia Parivar Trust Mridu Hari Dalmia Parivar Trust was formed pursuant to Trust deed dated May 28, 1999 and is unregistered. The trustees of the trust are Mr. M.H.Dalmia, Mrs. Abha Dalmia, Mr. Y.H.Dalmia, Mr. Parag Dalmia, Mr. Gaurav Dalmia, Mr. Gautam Dalmia and Mr. Puneet Dalmia and the trust was set up for the benefit of the beneficiaries of the trust. The beneficiaries of the Trust are Mr. Mridu Hari Dalmia, Mrs. Abha Dalmia, Mr. Gaurav Dalmia, Mrs. Sharmila Dalmia, Mrs. Kanupriya Somany, Ms. Devanshi Dalmia, Mr. Aryaman Hari Dalmia, Ms. Aanyapriya Dalmia and the spouses and children of persons named above.
Sumana Trust Sumana Trust was formed pursuant to the trust deed dated November 17, 2000 and supplemental deed dated November, 29th 2004 and is unregistered. The trustees of the trust are Mr. J.H.Dalmia, Mrs. Kavita Dalmia, Mr. Gautam Dalmia and Mrs. Anupama Dalmia and the trust was set up for the benefit of the beneficiaries. The beneficiary of the Trust is Ms. Sumana Dalmia. We confirm that the permanent account number, bank account number and passport number of our individual Promoters will be submitted to the NSE Limited and BSE Limited at the time of filing the Letter of offer with them.
Common Pursuits The Promoters are related to each other in the following manner: Mr. Mridu Hari Dalmia, Mr. Raghu Hari Dalmia and Mr. Yadu Hari Dalmia are sons of late Mr.Jaidayal Dalmia, Mrs. Abha Dalmia and Mrs. Padma Dalmia are wives of Mr. Mridu Hari Dalmia and Mr. Raghu Hari Dalmia respectively. Mr. Gaurav Dalmia is the son of Mr. Mridu Hari Dalmia. Mrs. Usha Devi Jhunjhunwala is the wife of. Mr. G.P. Jhunjhunwala a relative of our Prompters. Mr. Gautam Dalmia, a relative of our Promoters is the karta of M/s. Gautam Dalmia (HUF). Except as above there is no other relation between our Promoters, Directors and Key Managerial Personnel. Our Group Companies have main objects similar to that of our Company. To that extent there may be a potential conflict of interests in the companies of the Group. With the exception of Dalmia Cement (Bharat) Limited there are no common pursuits in the business of our Company and our group/associate companies.
Shareholding of Promoters S. No. Name(s) No. of Shares % Holding Average Cost per share (Rs.) 1 Mr. M.H. Dalmia 2,017,980 5.28% 21.19 2 Mridu Hari Dalmia Parivar Trust 7,901,495 20.69% 13.27 3 Mrs. Abha Dalmia 1,682,230 4.41% 16.21 4 Mr. Gaurav Dalmia 50,000 0.13% 21.00 5 Mr. Y.H. Dalmia 9,987,680 26.16% 126.18 6 Mr. R.H. Dalmia 992,705 2.60% 21.11 7 Mrs. Padma Dalmia 558,820 1.46% 21.15 8 Gautam Dalmia (HUF) 94,750 0.25% 10.07 9 Sumana Trust 17,750 0.05% 8.58 10 Mrs. Usha Devi Jhunjhunwala 50,000 0.13% 49.64 Total 23,353,410 61.16
71 OCL INDIA LIMITED
Interest of the Promoters Our Promoters have no interest other than reimbursement of expenses incurred at actuals, remuneration or benefits extended to them for the positions held by them in the Company and their shareholding in the Company. The Promoters may be deemed to be interested to the extent of investment in Equity Shares of the Company held by them, their relatives or friends and returns thereon. For details of shareholding of our Promoters and Promoter Group, kindly refer to the section titled ‘Capital Structure’ on page 10 of the Letter of Offer. The Promoters are not interested in any loan or advance given by the Company, neither are they beneficiary of any such loans or advances. Our Promoters have promoted companies and they may be deemed to be interested in these companies.
Payment or benefit to our Promoters Our Company pays remuneration to Mr. Mridu Hari Dalmia, Mr. Raghu Hari Dalmia, Mr. Gaurav Dalmia, Mrs. Abha Dalmia and Mrs. Padma Dalmia for the positions held by them in the Company. For details of these payments kindly refer to the section titled ‘Related Party Transactions’ on page 87 of the Letter of Offer.
Companies with which the Promoter has disassociated itself in the last three years Our Promoters have not disassociated themselves with any form of business venture during last three years. However, Hari Fertilizers Limited (Hari Fertilizers), an erstwhile wholly owned subsidiary of our Company has ceased to be our subsidiary w.e.f. September 30, 2005. For details regarding this disassociation of our Company with Hari Fertilizers kindly refer to the section titled ‘Our History and Corporate Structure’ on page 51 of the Letter of Offer.
72 OUR SUBSIDIARIES & GROUP COMPANIES
Subsidiary Companies We have three wholly owned subsidiaries, viz, Korank Minerals Limited, Kashmissa Industries Limited and OCL Iron and Steel Limited.
Konark Minerals Limited Konark Minerals Limited (Konark Minerals) was incorporated December 28, 1976 and obtained the certificate of commencement of business on January 19, 1977. The main object of konark Minerals is to manufacture, process and otherwise acquire buy, sell or otherwise dispose of and deal in all types, qualities and descriptions of ores, metal and minerals substances.
Board of Directors of Konark Minerals The following table sets forth current details regarding the directors of konark Minerals: Name of Directors Designation Mr. V.P.Sood Director Mr. Mayadhar Mishra Director Mr. S.Pasupathy Director
Financial Summary of Konark Minerals (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 27 19 2 39 84 PAT 2 2 0 4 8 Equity Capital 3 3 5 5 5 Reserves & Surplus 12 14 14 18 26 EPS (Rs.) 3.84 4.3 0.33 7.57 16.38 Net Worth 14 17 19 23 31 Book Value per share (Rs.) 56.60 66.60 38.86 46.43 62.82
Kashmissa Industries Limited Kashmissa Industries Limited (Kashmissa Industries) was incorporated March 19, 1981 and obtained the certificate of commencement of business on July 18, 1981. The main object of Kashmissa Industries is to purchase, sell, import, export and deal in bauxite, kalonite, magnesite, iron ore, cpal etc.
Board of Directors of Kashmissa Industries The following table sets forth current details regarding the directors of Kashmissa Industries: Name of Directors Designation Mr. Rakesh Malhotra Director Mr. R. P. Shroff Director Mr. V. P. Sood Director
73 OCL INDIA LIMITED
Financial Summary of Kashmissa Industries For the Financial Years 2001, 2002, 2003, 2004 and 2005 no business activity was carried on by Konark Minerals. Hence, the Statement of Profit & Loss for these years has not been prepared.
OCL Iron and Steel Limited Our Company has incorporated a new wholly owned subsidiary Company by name ‘OCL Iron and Steel Limited’ (OCL Iron and Steel). OCL Iron and Steel has been incorporated on February 20, 2006 with the main object of carrying on the business of manufacture of Steel, sponge iron etc. The authorised share capital of OCL Iron and Steel is Rs.5 crores consisting of 5,00,00,000 equity shares of Re.1/- each and subscribed capital of Rs.5,00,000 consisting of 5,00,000 equity shares of Re.1/- each. Registered office of the said subsidiary is also situated at Rajgangpur, District Sundargarh 770 017, Orissa.
Board of Directors of OCL Iron and Steel The following table sets forth current details regarding the directors of OCL Iron and Steel: Name of Directors Designation Mr. R.H.Dalmia Director Mr. S.Pasupathy Director Mr. Sabyasachi Misra Director We were also having one more wholly owned subsidiary, Hari Fertilizers Limited, which has ceased to be a subsidiary of our Company w.e.f. September 30, 2005.
Joint Venture Company We have 50% interest in OCL Global Limited, a Joint Venture Company, incorporated on January 17, 2006 in Mauritius for the purposes of trading of various refractory products. The Company’s share of each of assets, liabilities, income and expenditure in the joint venture for the year-ended 31.03.2006 is as under: (Rs. in lacs) Particulars FY 2006 Current Assets, Loans and Advances Balance with Banks 22 Liabilities Sundry Creditors 1 Income 0 Expenses 1 (As the joint venture company was incorporated during 2005-06, previous year figures are not applicable)
Group Companies There are total 58 companies forming part of the Group, comprising of 21 listed and 37 unlisted companies. None of our group companies are sick or under winding up.
Top Five Listed Companies Out of 21 listed companies that we have in the Group, excpting Dalmia Cement (Bharat) Limited shares of none of the companies are actively traded in the stock exchanges where they are listed. Therefore, excepting Dalmia Cement (Bharat) Limited, we have choosed companies based on their turnover.
74 Dalmia Cement (Bharat) Limited Dalmia Cement (Bharat) Limited (Dalmia Cement) was incorporated under the Companies Act, 1913, on November 1, 1951 to take over the Indian assets including the cement plant at Dalmiapuram at Tamil Nadu of Dalmia Cement Limited, which was promoted by late Mr. Jaidayal Dalmia in 1939. The present promoters of the Company are Mr. J. H. Dalmia and Mr. Y. H. Dalmia. At the time of takeover from Dalmia Cement Limited in 1951, Dalmia Cement had two kilns, one of 250 MT capacity of semi-dry single pass based process and other of 503 MT capacity on wet-dry process. A third kiln of 508 MT capacity on wet-dry process operation was thereafter commissioned. A fourth kiln, a vertical shaft kiln of 200 MT capacity was installed in the year 1981. In 1987, as part of the modernisation programme, two of the kilns based on wet process of 508 TPH capacity were replaced by a dry process kiln of 1500 TPD. The crushing and grinding capacity was also augmented by installation of crushing mill of 400 TPH and raw grinding mill of 150 TPH capacity. During 1997-98, Dalmia Cement took up an expansion of the capacity by installing vertical roller mill and new grinding department. As a consequence, the total installed capacity increased to 1.034 MnTPA. The unit was awarded the ISO 9002 certification on November 16, 1999. Dalmia Cement is in the process of expanding its cement plant by undertaking a brown field project and the total cement capacity with this expansion will be 3.5 million t.p.a. To augment the captive power resources of the cement unit, Dalmia Cement set up a wind farm with a capacity of 16.525 MW at Muppandal, Kanyakumari, Tamil Nadu, in various phases since 1993. Presently, it has 53 wind electric generators. Dalmia Cement acquired the Magnesite Corporation of India Limited in 1958. In 1964, The Magnesite Corporation of India Limited was amalgamated with Dalmia Cement, bringing in its fold the manufacture of dead burnt magnesite. The plant had a capacity of 72,000 tonnes per annum. In 1998, Dalmia Cement installed a magnesia carbon bricks plant with a capacity of 7500 tonnes per annum. In 1970, Dalmia Cement started its travel division under the name and style of Govan Travels. It is a fully accredited IATA approved travel agency with offices at Delhi, Bangalore, Mumbai, Chennai, Cochin and Bangalore. In 1990, Dalmia Cement set up an electronics unit in Keonics City, Bangalore to manufacture Multi Layer Ceramic Chip Capacitors with technical know how from Palomar Systems and Machines of USA. Dalmia Cement also established a Chip Resistor unit at the same site with technical know- how from Pacific InfoTech Corporation, USA. The unit has been accredited with the ISO 9002 certification on January 20, 2000. M/s Vivek Ganna Limited, which possessed a license for manufacture of sugar was amalgamated with Dalmia Cement as per the orders of the High Courts of Calcutta and Madras. In December 1994, Dalmia Cement has set up a 2500 tonnes cane crushing capacity per day at Ramgarh in Sitapur district of Uttar Pradesh under the name and style of ‘Ramgarh Chini Mills’. During FY 2000, Dalmia Cement expanded the capacity of its sugar plant to 5000 tonnes crushing capacity per day.
Shareholding Pattern of Dalmia Cement as on March 31, 2006 Category Number of Equity Shares % of Total Promoter’s Holding India Promoters 17341780 45.33 Foreign Promoters 0 0.00 Persons Acting in Concert 18390 0.05 Sub Total [A] 17360170 45.38 Institutional Investors Mutual Funds and UTI 72500 0.19 Banks, FIs, Insurance Companies etc. 1989081 5.20 FIIs 997338 2.61 Sub Total [B] 3058919 8.00
75 OCL INDIA LIMITED
Others Private Bodies Corporate 5175963 13.53 Indian Public 9788776 25.59 NRIs 2574761 6.73 Any Other 299516 0.78 Sub Total [C] 17839016 46.63 Grand Total [A+B+C] 38258105 100.00
Board of Directors of Dalmia Cement as on September 30, 2005 Under the Articles of Association of Dalmia Cement, the company can not have fewer than 3 directors or more than 15 directors. The following table sets forth current details regarding the directors of Dalmia Cement: Name of Directors Designation Mr. P. K. Khaitan Chairman Mr. N. Khaitan Director Mr. J. S. Baijal Director Mr. M. Raghupathy Director Mr. N. Gopalaswamy Whole-time Director Mr. M. H. Dalmia Director
Financial Summary of Dalmia Cement (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 42712.92 42880.92 47097.71 46541.02 54313.43 PAT 2828.15 2546.1 1818.79 2329.45 3392.89 Equity Capital 765.16 765.16 765.16 765.16 765.16 Reserves & Surplus 24261.52 20566.06 22052.90 23930.92 25748.74 EPS (Rs.) 37.64 33.28 26.00 33.16 40.34 Net Worth 24839.42 21223.00 22788.88 24681.49 26513.90 Book Value per share (Rs.) 324.63 277.37 297.83 322.57 346.51
Stock Market Data Dalmia Cement is listed on NSE Limited, BSE Limited, Madras and Calcutta stock exchanges. The face value of the equity shares of Dalmia Cement was reduced from Rs.10/- per share to Rs.2/- per share pursuant to the resolution passed by the shareholders of the Company in the meeting held on October 17, 2005. The highest and lowest traded price during last six months is Rs. 255/- (Face Value Rs.2/- each) and Rs. 135.25 (Face Value Rs.2/- each) respectively. The closing market price of the shares as on March 17, 2006 is Rs. 251.95 and the market capitalization as on that day is Rs. 526.98 crores. The following are the quotes for the shares for last six months at BSE Limited and NSE Limited: Month High (Rs.) Low (Rs.) High (Rs.) Low (Rs.) BSE Limited NSE Limited February 2006 255.00 225.00 254.70 245.10 March 2006 274.50 246.20 274.40 246.00 April 2006 399.45 262.00 395.80 263.00 May 2006 415.00 285.00 414.80 290.00 June 2006 356.00 222.25 355.95 224.00 July 2006 292.50 232.00 289.40 230.10 Source: Websites of BSE Limited and NSE Limited 76 Hari Machines Limited Hari Machines Limited (Hari Machines) was incorporated on July 13, 1948 and fresh certificate of incorporation was issued on March 19, 1987 due to change of name to Hari Machines Limited from Cement Distributors Limited. Hari Machines is into the business of manufacturing of refractory and ceramic machinery / steel plant equipments.
Shareholding Pattern of Hari Machines Cayegory Number of Equity Shares % of Total Promoters Mr. Mridu Hari Dalmia 34,500 17.25 Mr. Raghu Hari Dalmia 35,000 17.50 Sub Total [A] 69,500 34.75 Promoter Group Mrs. Abha Dalmia & Mr. Mridu Hari Dalmia 38,975 19.48 Mrs. Padma Dalmia & Mr. Raghu Hari Dalmia 38,475 19.23 Sub Total [B] 77,450 38.71 Others Oriental Insurance Co Ltd 4,140 2.07 Individual 48,910 24.46 Sub Total [C] 53,050 26.54 Total [A+B+C] 2,00,000 100
Board of Directors of Hari Machines as on September 30, 2005 Under the Articles of Association of Hari Machines, the company can not have fewer than 2 directors or more than 11 directors. The following table sets forth current details regarding the directors of Hari Machines: Name of Directors Designation Mr. M.H. Dalmia Director Mr. R.H. Dalmia Director Mr. M.L. Dujari Director Mr. Mayadhar Mishra Director Mr. Sunil Kant Choudhari Director Mr. P.K. Swani Nominee of O.S.F.C
Financial Summary of Hari Machines (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 1248.83 1416.65 3312.72 5421.73 13363.24 PAT -36.08 5.52 213.32 418.70 891.21 Equity Capital 20.00 20.00 20.00 20.00 20.00 Reserves & Surplus 291.08 292.14 505.46 924.77 1815.99 EPS (Rs.) -18.04 2.76 106.65 209.35 445.61 Net Worth 311.08 312.14 525.46 944.77 1835.99 Book Value per share (Rs.) 135.00 139.00 262.00 473.00 927.00
77 OCL INDIA LIMITED
Stock Market Data The company is listed on Cacutta Stock Exchange. However, the shares of Hari Machines are not actively traded on the exchange and therefore the market price data cannot be provided.
Kabirdas Investments Limited Kabirdas Investments Limited (Kabirdas Investments) was incorporated on December 27, 1974. Kabirdas Investments is a non-banking finance company. The Promoters of Kabirdas Investments are Mr. M. H. Dalmia and Mr. R. H. Dalmia. Kabirdas Investments is engaged in investment and financing activities as per its main objects, which include carrying on business of an investment Company, to aquire shares and other securities, etc.
Shareholding Pattern of Kabirdas Investments Cayegory Number of Equity Shares % of Total Promoters Mr. M. H. Dalmia 4,83,505 12.22 Mr. R. H. Dalmia 5,11,455 12.92 Sub Total [A] 9,94,960 25.14 Promoter Group Mrs. Abha Dalmia 4,49,739 11.37 Mrs. Padma Dalmia 4,21,790 10.66 Dalmia Agencies Private Limited 2,66,760 6.74 Dapel Investments Private Limited 3,01,100 7.61 Madhukar Investments Limited 80,000 2.02 Konark Investments Limited 10,952 0.28 Dalmia Group Udyog Limited 1,00,000 2.53 Sunflower Merticntiles Limited 1,20,000 3.03 Satya Miners & Transporters Limited 1,00,000 2.53 Epic Merticantiles Limited 1,20,000 3.03 Sub Total [B] 19,70,341 49.79 Others Mr. Sushil N. Shah 79,600 2.01 Mr. Ashok Ruia 75,600 1.91 Others (Less than 1%) 8,36,669 21.14 Sub Total [C] 9,91,869 25.07 Total [A+B+C] 39,57,170 100.00
Board of Directors of Kabirdas Investments as on September 30, 2005 Under the Articles of Association of Kabirdas Investments, the company can not have fewer than 3 directors or more than 11 directors. The following table sets forth current details regarding the directors of Kabirdas Investments: Name of Directors Designation Mrs. Abha Dalmia Director Mr. R.H. Dalmia Director Mr. R.P.Shroff Director Mr. R.K. Agrawal Director
78 Financial Summary of Kabirdas Investments (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 17.9 75.74 91.78 41.04 41.98 PAT 15.22 64.12 71.78 27.4 15.52 Equity Capital 10 39.57 39.57 39.57 39.57 Reserves & Surplus 120.13 483.45 557.93 584.29 598.20 EPS (Rs.) 15.22 1.62 1.81 0.69 0.39 Net Worth 130.13 523.02 597.5 623.86 637.77 Book Value per share (Rs.) 130.13 13.22 15.1 15.76 16.12
Stock Market Data The company is listed on Delhi and Kolkata stock exchanges. However, the shares of Kabirdas Investments are not actively traded on the exchange and therefore the market price data cannot be provided.
Satya Miners & Transporters Limited Satya Miners & Transporters Limited (Satya Miners) was incorporated on December 12, 1975. Satya Miners is a non- banking finance company. Main objects of Satya Miners are NBFC, investments, hire purchase, acquiring of mining lease, etc.
Shareholding Pattern of Satya Miners Cayegory Number of Equity Shares % of Total Promoters Padma Dalmia 9,600 4.80 Hinalayan Natural Products Limited 41,000 20.50 Eik River Ceramics Limited 40,000 20.00 Epic Mercantiles Limited 40,000 20.00 Sub Total [A] 1,30,600 65.30 Promoter Group Sub Total [B] Nil Nil Others 69,400 34.70 Sub Total [C] 69,400 34.70 Total [A+B+C] 2,00,000 100.00
Board of Directors of Satya Miners as on September 30, 2005 Under the Articles of Association of Satya Miners, the company can not have fewer than 3 directors or more than 11 directors. The following table sets forth current details regarding the directors of Satya Miners: Name of Directors Designation Mr. S. N. L Jalan Director Mr. Anurag Saraf Director Mr. M. L. Dujari Director
79 OCL INDIA LIMITED
Financial Summary of Satya Miners (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 31.73 103.84 22.73 32.36 17.64 PAT 6.87 11.25 7.27 26.75 10.00 Equity Capital 20.00 20.00 20.00 20.00 20.00 Reserves & Surplus 153.77 164.79 172.06 198.81 208.81 EPS (Rs.) 3.44 5.51 3.64 13.37 5.00 Net Worth 173.77 184.79 192.06 218.81 228.81 Book Value per share (Rs.) 868.85 923.95 960.30 1094.05 1144.05
Stock Market Data The company is listed on Kolkata stock exchange. However, the shares of Satya Miners are not actively traded on the exchange and therefore the market price data cannot be provided.
Europa Commercial & Trades Limited Europa Commercial & Trades Limited (Europa Commercial) was incorporated on May 21, 1983. Europa Commercial is a non-banking finance company. Main Objects of Europa Commercial are NBFC, Investments, Buy, Sell, Import, Export etc. and Europa Commercial operates in Kolkata.
Shareholding Pattern of Europa Commercial Cayegory Number of Equity Shares % of Total Promoters Mr. M.H. Dalmia 42,500 17.35 Mr. Gaurav Dalmia 32,000 13.06 Dalmia Group Udyog Ltd 35,000 14.29 National Synthetics Limited 60,000 24.49 Sunflower Mercantiles Limited 50,000 20.40 Sub Total [A] 2,19,500 89.59 Promoter Group Sub Total [B] Nil Nil Others 25,500 10.41 Sub Total [C] 25,500 10.41 Total [A+B+C] 2,45,000 100
Board of Directors of Europa Commercial as on September 30, 2005 Under the Articles of Association of Europa Commercial, the company cannot have fewer than 3 directors or more than 12 directors. The following table sets forth current details regarding the directors of Europa Commercial: Name of Directors Designation Mr. R. K. Goenka Director Mr. Sitaram Saraf Director Mr. Shan Lal Gupta Director
80 Financial Summary of Europa Commercial (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 28.45 7.44 5.10 14.15 6.50 PAT 22.14 3.08 1.19 10.41 2.73 Equity Capital 24.50 24.50 24.50 24.50 24.50 Reserves & Surplus 76.56 79.64 80.84 91.25 93.98 EPS (Rs.) 9.04 1.26 0.48 4.25 1.12 Net Worth 101.06 104.14 105.34 115.75 118.48 Book Value per share (Rs.) 41.25 42.51 42.99 47.24 48.36
Stock Market Data The company is listed on Kolkata stock exchange. However, the shares of Europa Commercial are not actively traded on the exchange and therefore the market price data cannot be provided.
Unlisted Companies Out of 37 unlisted companies that we have in the Group, majority of them are merely invetment companies. Hereinunder we have disclosed the details of six unlisted companies based on their turnover.
Himalayan Natural Products Limited Himalayan Natural Products Limited (Himalayan Natural) was incorporated on January 31, 1983. Himalayan Natural is presently engaged in investment activites. Its promoter is Mr.R. H. Dalmia. Its main object include purchase, sell, import, export various products.
Shareholding Pattern of Himalayan Natural Cayegory Number of Equity Shares % of Total Promoters Mr. R.H. Dalmia 19,825 49.56 Mrs. Padma Dalmia 19,825 49.56 Others Less than 1% 350 0.88 Total 40,000 100.00
Board of Directors of Himalayan Natural as on September 30, 2005 Under the Articles of Association of Himalayan Natural, the company can not have fewer than 3 directors or more than 12 directors. The following table sets forth current details regarding the directors of Himalayan Natural: Name of Directors Designation Mr. R.H. Dalmia Director Mr. Anurag Saraf Director Mr. S.L. Singhania Director
81 OCL INDIA LIMITED
Financial Summary of Himalayan Natural (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 569.60 116.73 47.44 46.46 43.61 PAT 11.72 7.12 -28.78 -22.67 41.96 Equity Capital 0.05 4.00 4.00 4.00 4.00 Reserves & Surplus 117.16 96.22 70.83 48.18 90.14 EPS (Rs.) 2604.69 17.80 -71.96 -56.67 104.90 Net Worth 117.21 100.22 74.83 52.18 94.14 Book Value per share (Rs.) 26046.67 250.55 187.09 130.45 235.36
Dapel Investments Private Limited Dapel Investments Private Limited (Dapel Investments) was incorporated on December 18, 1974. Dapel Investments is into the business of rentals and other services including investments.
Shareholding Pattern of Dapel Investments Shareholders Number of Equity Shares % of Total Mr. M.H. Dalmia 17,500 17.50 Mridu Hari Dalmia Parivar Trust 17,500 17.50 Mrs. Abha Dalmia 15,000 15.00 Mr. R.H. Dalmia 19,500 19.50 R.H Dalmia (HUF) 11,000 11.00 Mrs. Padma Dalmia 19,500 19.50 Total 1,00,000 100.00
Board of Directors of Dapel Investments as on September 30, 2005 Under the Articles of Association of Dapel Investments, the company can not have fewer than 2 directors or more than 7 directors. The following table sets forth current details regarding the directors of Dapel Investments: Name of Directors Designation Mr. R.H. Dalmia Director Mr. M.L. Dujari Director Mr. R.K. Agrawal Director
Financial Summary of Dapel Investments (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 78.66 94.64 70.58 76.12 39.19 PAT 6.78 16.75 -6.07 11.21 -2.06 Equity Capital 1.00 1.00 1.00 1.00 1.00 Reserves & Surplus 39.57 23.06 17.29 30.56 28.72 EPS (Rs.) 6.78 16.75 -6.07 11.21 -2.06 Net Worth 40.37 24.06 18.29 31.56 29.72 Book Value per share (Rs.) 40.37 24.06 18.29 31.56 29.72
82 Grandeur Travels & Tours Private Limited Grandeur Travels & Tours Private Limited (Grandeur Travels) was incorporated on 04.04.1989. Grandeur Travels is into the business of tours and travels related services. Its promoter is Mr. M.H. Dalmia. Its main object includes providing tour and travel related services. It is an IATA accredited travel agent company.
Shareholding Pattern of Grandeur Travels Shareholders Number of Equity Shares % of Total Mr. M.H. Dalmia 47,500 19.00 Mridu Hari Dalmia Parivar Trust 47,500 19.00 Mrs. Abha Dalmia 47,500 19.00 Mr. Gaurav Dalmia 33,750 13.50 Sharmila Dalmia Parivar Trust 33,750 13.50 National Synthetics Limited 40,000 16.00 Total 2,50,000 100.00
Board of Directors of Grandeur Travels as on September 30, 2005 Under the Articles of Association of Grandeur Travels, the company can not have fewer than 2 directors or more than 7 directors. The following table sets forth current details regarding the directors of Grandeur Travels: Name of Directors Designation Mrs. Abha Dalmia Director Mr. R.H. Dalmia Director Ms. Sharmila Dalmia Director Ms. Kanupriya Dalmia Director Mr. R. K. Agrawal Director
Financial Summary of Grandeur Travels (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 78.99 120.86 95.88 26.06 25.66 PAT 4.41 9.54 5.42 -1.63 0.73 Equity Capital 25 25 25 25 25 Reserves & Surplus — — 1.72 0.08 0.81 EPS (Rs.) 1.76 3.81 2.17 -0.65 0.29 Net Worth 10.49 20.03 26.72 25.08 25.81 Book Value per share (Rs.) 4.20 8.01 10.69 10.03 10.32
Swank Services Private Limited Swank Services Private Limited (Swank Services) was incorporated on November 18, 1972. Swank Services is into the business of mining. Main objects are NBFC, Investments, Services, Buy, Sell, Import and Export, etc. and it operates in Kolkata
83 OCL INDIA LIMITED
Shareholding Pattern of Swank Services Shareholders Number of Equity Shares % of Total Mr. M. H. Dalmia 180 16.98 Mrs. Abha Dalmia 175 16.51 Sharmila Dalmia Parivar Trust 175 16.51 Mr. R. H. Dalmia 180 16.98 Mrs. Padma Dalmia 175 16.51 Staya Miners & Transporters Limited 175 16.51 Total 1060 100.00
Board of Directors of Swank Services as on September 30, 2005 Under the Articles of Association of Swank Services, the company can not have fewer than 2 directors or more than 9 directors. The following table sets forth current details regarding the directors of Swank Services: Name of Directors Designation Mr. Anurag Saraf Director Mr. S. S. Agarwal Director Mr. M. M. Goyenka Director Mr. B. B. Singh Director
Financial Summary of Swank Services (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 1.69 8.10 10.84 15.15 13.98 PAT -0.47 2.20 -0.44 -3.80 2.19 Equity Capital 1.06 1.06 1.06 1.06 1.06 Reserves & Surplus 103.43 105.66 105.22 101.43 103.63 EPS -44.8 208.04 -41.5 -358.54 207.16 Net Worth 104.52 106.72 106.28 102.49 104.69 Book Value per share (Rs.) 9860.38 10067.92 10026.41 9668.87 9876.41
Rama Investment Company Private Limited Rama Investment Company Private Limited (Rama Investment) was incorporated on 05.08.1972. Rama Investment is an investment company. Its promoters are Mr. J.H. Dalmia and Mr. Y.H. Dalmia, who control the company with other family members and companies as per shareholding pattern given below. Rama Investment is a registered Non- Banking Financial Company with Reserve Bank of India and is engaged in investment and financing activites as per its main objects.
Shareholding Pattern of Rama Investment Shareholders Number of Equity Shares % of Total Mr. J.H. Dalmia 180 7.20 Mr. Y.H. Dalmia 360 14.40 Ms. Kavita Dalmia 280 11.20 Mr. Gautam Dalmia 680 27.20 Mr. Puneet Dalmia 200 8.00 Km. Shrutipriya Dalmia 200 8.00 Others 600 24.00 Total 2500 100.00
84 Board of Directors of Rama Investment as on September 30, 2005 Under the Articles of Association of Rama Investment, the company can not have fewer than 2 directors or more than 7 directors. The following table sets forth current details regarding the directors of Rama Investment: Name of Directors Designation Mr. J.H. Dalmia Director Mr. Y.H. Dalmia Director Mr. Gautam Dalmia Director Mr. Puneet Dalmia Director
Financial Summary of Rama Investment (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 9.22 10.12 12.17 10.53 10.18 PAT 8.99 5.32 10.59 9.74 9.45 Equity Capital 2.50 2.50 2.50 2.50 2.50 Reserves & Surplus 67.39 72.73 74.07 83.82 96.32 EPS (Rs.) 359.56 212.77 423.75 389.77 398.16 Net Worth 69.89 75.23 76.57 86.32 98.82 Book Value per share (Rs.) 2795.79 3009.30 3062.80 3452.67 3952.92
Dalmia Agencies Private Limited Dalmia Agencies Private Limited (Dalmia Agencies) was incorporated on August 31, 1948. Dalmia Agencies is into the business of mining. Its promoters are Mr. M.H. Dalmia and Mr. R.H. Dalmia. Its main objects include operating mines and several others including investments in real estate etc.
Shareholding Pattern of Dalmia Agencies Shareholders Number of Equity Shares % of Total Mr. M.H. Dalmia 33,200 33.20 Mrs. Abha Dalmia 16,400 16.40 Mr. R.H. Dalmia 33,500 33.50 Mrs. Padma Dalmia 16,400 16.40 Others Less than 1% 500 0.50 Total 1,00,000 100.00
Board of Directors of Dalmia Agencies as on September 30, 2005 Under the Articles of Association of Dalmia Agencies, the company can not have fewer than 2 directors or more than 11 directors. The following table sets forth current details regarding the directors of Dalmia Agencies: Name of Directors Designation Mr. R.H. Dalmia Director Mr. Gaurav Dalmia Director Mr. Nikhil Churiwal Director Mr. R.K. Agrawal Director Mr. V. Muralidharan Director
85 OCL INDIA LIMITED
Financial Summary of Dalmia Agencies (Rs. in lacs) Year 2000-01 2001-02 2002-03 2003-04 2004-05 Sales & Other Income 56.32 100.57 14.43 27.42 4.26 PAT 6.13 88.76 9.81 21.26 -2.88 Equity Capital 0.14 1.00 1.00 1.00 1.00 Reserves & Surplus 179.62 163.69 173.51 190.32 187.44 EPS (Rs.) 44.52 88.76 9.81 21.26 -2.88 Net Worth 179.76 164.69 174.51 191.32 188.44 Book Value per share (Rs.) 1304.95 164.69 174.51 191.32 188.44
86 RELATED PARTY TRANSACTIONS
Related Party Disclosures as per Accounting Standard (AS-18) issued by the Institute of Chartered Accountants of India (ICAI)
A. Related parties and their relationship 1. Subsidiary Companies: Konark Minerals Limited, Kashmissa Industries Limited, Hari Fertilizers Limited (Ceased to be a subsidiary Company as on 30.09.2005) and Orissa Iron and Steel Limited 2. Key management personnel: Mr. M H Dalmia, Mr. R H Dalmia, Mr. Y H Dalmia (Non Executive Director), Mr. M. L. Chand (Wholetime director upto 29.02.2004), Mr. V P Sood (Wholetime director). Relatives: Mr. Gaurav Dalmia, Mr. A.H. Dalmia, Mrs. Abha Dalmia, Mrs. Padma Dalmia, Mrs. Shripriya Dalmia Thirani, Km. Anuradha Dalmia, Mrs. Sharmila Dalmia, Mrs. Mohini Sood 3. Associate concern (Joint Venture): OCL Global Limited 4. Enterprises over which key management personnel are able to exercise significant influence: Hari Machines Limited, Himalayan Natural Products Limited, National Synthetics Limited, Dalmia Agencies Private Limited, Vishakha Investment Limited, Dalmia Shiksha Pratisthan, Dalmia Bharat Seva Trust, Satya Miners And Transporters Limited, Dalmia Group Udyog Limited, Kabirdas Investments Limited, First Capital India Limited, Konark Investments Limited, Marathwada Refractories Limited, Debikay Systems Limited, Dapel Investments Private Limited, Dalmia Institute of Scientific & Industrial Research, Dalton International Limited, Madhukar Investments Limited, Swank Services Private Limited, Grandeur Travels & Tours (P) Limited, Parsvnath Landmark Developers (P) Limited, Landmark Koyela Energy Resources (P) Limited, Colonisers (P) Limited, Ansal LAndmark Township (P) Limited, Jiva Design Private Limited, Europa Commercial & Trades Limited, Sunflower Mercantiles Limited, Epic Mercantiles Limited, Eik Rivers Ceramics Limited, Lions Commercial Company Limited and Dalmia Cement (Bharat) Limited
B. Transactions with above in ordinary course of business: (Rs. in lacs) Particular FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 1. Transactions with parties referred in (1) above: a) Amount for purchase and sale of goods and 55 85 59 - 18 fixed assets b) Inter Corporate deposit received and repaid 26 19 43 17 10 c) Purchase of Shares 5 - - - - d) Interest Expense 2 2 4 1 1 e) Amount for service rendered and received 0 - - - - f) Amount receivable at the year end 1 1 21 1 1 g) Amount payable at the year end 0 - 4 - - 2. Transactions with parties referred in (2) above: a) Remuneration 2,12 2,21 4,15 2,16 1,65 b) Purchase of fixed assets - - - 2 2 c) Sale of Shares - - 23 - - d) Rent 20 - - - - e) Amount for service rendered and received 2 - - - - f) Security Deposit received and repaid 13 - 9 - - g) Amount receivable at the year end 6 1 - - - h) Amount payable at the year end - - 2,29 - -
87 OCL INDIA LIMITED
Particular FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 3. Transactions with parties referred in (3) above: a) Investment in Shares 22 - - - - 4. Transactions with parties referred in (4) above: a) Amount for purchase and sale of goods and 5,26 4,83 8,21 5,36 2,15 fixed assets b) Amount for service rendered and received 11,92 3,96 3,73 2,61 1,27 c) Inter corporate deposit received and repaid 20,67 20,27 1,559 1,081 1,016 d) Inter corporate deposit given and received back 17,05 17,70 30 - - e) Interest expense 122 1,25 1,01 71 57 f) Interest income 622 1,18 1 - - g) Advance given for developed plots of land - 983 24,03 6,03 - - real estate operations h) Purchase of shares - - 23 - - i) Contribution to a research institute and donations - 4 1,79 - - j) Amount of security deposit received / paid 13 - 83 - - k) Amount receivable at the year end 53,50 18,76 1,68 62 29 l) Amount payable at the year end 9,24 77 29 28 7 m) Guarantee given 21,00 21,00 - - -
88 REGULATION AND POLICIES
Ministry of Commerce and Industry The Ministry of Commerce and Industry, Government of India, oversees the activities of the cement industry through the Department of Industrial Development.
Licensing Policy Under the New Industrial Policy dated July 24, 1991, all industrial undertakings are exempt from licensing except for certain industries such as distillation and brewing of alcoholic drinks, cigars and cigarettes of tobacco and manufactured tobacco substitutes, all types of electronic aerospace and defense equipment, industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches and hazardous chemicals and those reserved for the small scale sector. An industrial undertaking, which is exempt from licensing is required to file an Industrial Entrepreneurs Memorandum (“IEM”) with the Secretariat for Industrial Assistance, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India, and no further approvals are required. Cement has been exempted from industrial licensing pursuant to Notification Number 477(E) dated July 25, 1991 issued under the Industries (Development and Regulation) Act, 1951. Consequently, the Company does not require an industrial license.
FDI in Cement Sector Foreign investment in Indian securities is regulated through the industrial policy of Government of India and FEMA. While the industrial policy prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the industrial policy, unless specifically restricted, foreign investment is freely permitted in all sectors of Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. The government bodies responsible for granting foreign investment approvals are the FIPB and the RBI. At present, investments in companies manufacturing cement fall under the automatic approval route for FDI/NRI investment up to 100%.
Investment by Foreign Institutional Investors Foreign Institutional Investors (“FIIs”) including institutions such as pension funds, investment trusts, asset management companies, nominee companies and incorporated, institutional portfolio managers can invest in all the securities traded on the primary and secondary markets in India. FIIs are required to obtain a certificate from SEBI and a general permission from the RBI to engage in transactions regulated under FEMA. FIIs must also comply with the provisions of the SEBI (Foreign Institutional Investors) Regulations, 1995, as amended from time to time. The initial registration and RBI’s general permission under A.P. (DIR Series) Circular No.16 dated October 4, 2004, together enable the registered FII to buy (subject to the ownership restrictions discussed below) and sell freely securities issued by Indian companies, to realise capital gains or investments made through the initial amount invested in India, to subscribe or renounce rights issues for shares, to appoint a domestic custodian for custody of investments held and to repatriate the capital, capital gains, dividends, income received by way of interest and any compensation received towards sale or renunciation of rights issues of shares.
Ownership restrictions of FIIs Under the portfolio investment scheme, the overall issue of equity shares to FIIs on a repatriation basis should not exceed 24% of post-issue paid-up capital of the company. However, the limit of 24% can be raised up to the permitted sectoral cap for that company after approval of the board of directors and shareholders of the company. The offer of equity shares to a single FII should not exceed 10% of the post-issue paid-up capital of the Company. In respect of an
89 OCL INDIA LIMITED
FII investing in equity shares of a company on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of the total issued capital of that company.
Laws and Regulations relating to the Cement Industry The applicable cement laws and regulations include the following:
Cement Control (Amendment) Order, 1989 Pursuant to Notification No.1-5/89-Cem, dated March 1, 1989 (S.O. No. 168(E)), the Cement Control Order, 1967 (the “1967 Order”) was amended, resulting in removal of the Government’s control over price and distribution of cement. The amended 1967 Order, also known as the Cement Control (Amendment) Order, 1989, provides for maintenance of books relating to production, removal, sale and transfer of cement (excluding white cement) by the producer and furnishing of returns or such other information as may be specified by the Central Government. The Cement Control (Amendment) Order, 55 1989 also provides for the maintenance of a Cement Regulation Account by the Development Commissioner for the cement industry. The amount credited in this account is to be used, inter alia, for reimbursing the producer towards equalizing freight or concession in the matter of export price.
Cement Cess Rules, 1993 The Cement Cess Rules, 1993, impose a cess on the manufacture of cement. The Cement Cess Rules provide for monthly returns to be filed by the producer with the appropriate authority and the amount due every month to be deposited by the 15th of the subsequent month. The proceeds of the cess are to be utilized for research and development in cement manufacturing and persons engaged in cement industry.
Cement (Quality Control) Order, 2003 The Cement (Quality Control) Order, 2003, has been framed under the Bureau of Indian Standards Act, 1986, as amended, and prohibits sale, manufacture and distribution of cement which does not meet the quality requirements specified by the Bureau of Indian Standards or does not bear the standard mark, and requires a manufacturer of cement to make an application to the Bureau of Indian Standards for obtaining a license for use of the standard mark.
Environmental and Labour Laws and Regulations The environmental and labour laws and regulations that may be applicable to the Company include the following: Contract Labour (Regulation and Abolition) Act, 1970 Industries (Development and Regulation) Act, 1951 Factories Act, 1948 The Indian Boilers Act, 1923 and the Indian Boiler Regulations, 1950 Explosives Act, 1884 Gas Cylinder Rules, 1981 Employees’ State Insurance Act, 1948 Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 Payment of Gratuity Act, 1972 Payment of Bonus Act, 1965 Payment of Wages Act, 1936 Industrial Disputes Act, 1947 and Industrial Disputes (Central) Rules, 1957 Shops and Commercial Establishments Act
90 Environment Protection Act, 1986, and Rules, 1986 Water (Prevention and Control of Pollution) Act, 1974, and Rules, 1975 Water (Prevention and Control of Pollution) Cess Act, 1977 and Rules of 1978 Air (Prevention and Control of Pollution) Act, 1981, and Rules, 1982 Trade Union Act, 1926 Hazardous Waste (Management and Handling) Rules, 1989 Workmen’s Compensation Act, 1923
Other Laws and Regulations Certain other laws and regulations that may be applicable to the Company include the following: Fiscal Laws and Regulations including the I.T. Act, Central Excise Act, 1944, the Customs Tariff Act, 1975, and the Central Sales Tax Act, 1956 Standards of Weights and Measures Act, 1956 · Electricity Act, 2003 The Bihar and Orissa Public Safety (Orissa Repeal) Act, 1938 The Orissa Compulsory Labour Act, 1948
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DIVIDEND POLICY
Dividends, other than interim dividends, will be declared at the annual general meeting of the shareholders based on the recommendation of the Board of Directors. The Board may, at its discretion, recommend dividend to be paid to the members of the Company. The factors that may be considered by the Board before making any recommendations for the dividend, include but are not limited to profits earned during the financial year, liquidity of the Company, obligations towards repayment of debt including maintaining debt service reserves, future expansion plans and capital requirements, applicable taxes including tax on dividend, as well as exemptions under tax laws available to various categories of investors from time to time. The Board may also, from time to time, pay to the members interim dividend, as appears to the Board to be justified by the profits of the Company. Some of the agreements that we have entered into with our lenders require us not to declare dividend except out of profits relating to the year for which dividend is to be declared after making all due and necessary provisions. We cannot declare dividend in case of any default in repayment obligation to our lenders. The following table provides the details of dividends paid by the Company on Equity Shares during last five years: (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Number of Equity Shares 3,81,83,760 59,36,094 59,53,027 71,36,735 71,36,735 Rate of Dividend 50% 50% 100% 25% 10% Amount of Dividend 381.84 297 594 148 72 Note: The Equity Shares of face value of Rs. 10/- each were subdivided into Equity Shares of Rs. 2/- each w.e.f. August 9, 2005.
92 FINANCIAL INFORMATION
AUDITORS’ REPORT
The Board of Directors OCL India Limited 11th Floor, Narain Manzil, 23, Barakhamba Road, New Delhi 100 001 Dear Sirs,
A. Financial Statements 1. We have examined the books of accounts of OCL India Limited for the five financial years ended on March 31, 2006 being the last date up to which the accounts of the Company have been made up and audited by us. 2. In accordance with the requirement of: (i) Paragraph B (1) of Part-II of Schedule-II to the Companies Act, 1956 (the Act); (ii) The Securities and Exchange Board of India (SEBI) (Disclosure and Investors Protection) Guidelines, 2000; (iii) Instruction dated October 31, 2005 received from the Company, requesting us to carry out work relating to the Offer Document / Information Memorendum being issued by the Company in connection with the Rights Issue of Equity Shares by the Company (referred to as the Issue). We report that: a) The Profit and Loss of OCL India Limited for the five financial years ended March 31, 2006, which were drawn-up in accordance with the provisions of the Companies Act, 1956 are as set out in Part I enclosed; b) The Assets and Liabilities of OCL India Limited as at March 31, 2006 and for each of the four financial years ended March 31, 2005 are as set out in Part II enclosed; c) The aforesaid Statements of Profit & Loss and Statements of Assets and Liabilities: i) read together with Significant Accounting Policies and Significant Changes in Accounting Policies as set out in Part-III, Notes on Accounts as set out in Part IV and Notes on Adjustments arising out of qualification in Auditors Report, if any, (being nil) 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 the SEBI (DIP) Guidelines and amendments made thereto. 3. OCL India Limited has three subsidiaries i.e., Konark Minerals Limited, Kashmissa Industries Limited, Orissa Iron and Steel Limited. (Hari Fertilizers Limited ceased to be subsidiary w.e.f. September 30,2005), having shareholding of 100% in each of these companies. The statements of Profit & Loss & Assets and Liabilities of two of the subsidiary companies for each of the five financial years ended on March 31, 2006 or the relevant period / years, as the case may be, in respect of the two subsidiaries read together with the Significant Accounting Policies, Changes in Accounting Policies, Material Notes are as set out in Part V. The Consolidated statements of Profit & Loss, Assets and Liabilities and Cashflows for each of the five financial years ended on March 31, 2006 (Audited) read together with notes are set out in Part VI. We further report that in respect of the five financial years ended March 31, 2006, the amount of dividend paid to the shareholders by OCL India Limited and the dividend paid by the subsidiaries is given in Part VII.
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B. Other Financial Information We have examined the following financial information relating to OCL India Limited, proposed to be included in the Offer Document / Information Memorendum as approved by you and annexed to this report. (i) Summary of accounting ratios based on the adjusted profit relating to earnings per share, cash earnings per share, net asset value and return on net worth enclosed, as Annexure A; (ii) Capitalisation Statement as at March 31, 2006, enclosed as Annexure B; (iii) Deferred tax balance as on March 31, 2006, enclosed as Annexure C; (iv) Cash Flow Statement for the five financial years ended 31st March, 2006, enclosed as Annexure D; (v) Details of outstanding unsecured loans as at March 31, 2006, enclosed as Annexure E; (vi) Details of principal terms of loans and assets charged as security as at March 31, 2006, enclosed as Annexure F; (vii) Details of Contingent Liabilities as on March 31, 2006, enclosed as Annexure G; (viii)Details of other receipts enclosed, as Annexure-H; (ix) Statement of Tax shelter for the six years ended March 31, 2006, enclosed a Annexure I; (x) Statement of market value of investments for each of the five financial year ended on March 31,2006, enclosed as Annexure J In our opinion, the financial statement of the Company as stated in this report as mentioned in the paragraph (A) and (B) above, read with the significant accounting policies and notes to the accounts, have been prepared in accordance with Part II of Schedule II of the Act and the SEBI Guidelines. This report is intended solely for your information and for inclusion in the offer document in connection with the specific rights issue of equity shares and is not to be used, referred to or distributed for any other purpose without our prior written consent.
For V. Sankar Aiyar & Company, Chartered Accountants
(V Rethinam) Partner Membership No.10412
Place: New Delhi Date: June 5, 2006
94 Part I – Statement of Restated Profit and Loss (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 INCOME 1. Sales and Self Consumption i. Sales 69340 56366 44928 36357 30678 ii. Self Consumption 743 634 457 278 301 Total (i+ii) 70083 57000 45385 36635 30979 Less: Excise Duty 10371 8399 6992 5389 4834 Total (1) 59712 48601 38393 31246 26145 2. Other Receipts 1093 586 522 413 430 3. Increase/Decrease in Inventory i. Opening Stock 3500 4175 3633 3180 2907 ii. Closing Stock 3979 3500 4175 3633 3180 Total (ii – i ) 479 (675) 542 453 273 Total Income (1+2+3) 61284 48512 39457 32112 26848 EXPENDITURE 1. Raw Material Consumed 21871 18305 13994 10463 8839 2. Purchases 694 1518 289 32 9 3. Salaries, Wages & Benefits to Employees 2456 2295 2636 2876 2781 4. Power and Fuel 8695 7019 6385 5724 4519 5. Interest & Other Financial Charges i. Interest on Term Loan & Deposits 1460 895 806 582 639 ii. Others 906 669 600 477 395 Less: Interest Received 1031 268 735 287 160 Total (5) 1335 1296 671 772 874 6. Depreciation 2704 2214 1968 1411 1259 7. Other Expenses 17972 12206 10015 8422 7889 Total Expenditure (1+2+3+4+5+6+7) 55727 44853 35958 29700 26170 Net Profit/ (Loss) Before Tax 5557 3659 3499 2412 678 Less: Provision for Tax - Current 475 300 650 222 60 Less: Fringe Benefit Tax 60 Less: Provision for Tax - Deferred 1310 743 588 357 221 MAT Credit available for set off (67) Provision for tax relating to earlier years written back 201 277 Net Profit/ Loss for the Year as per audited statement of accounts 3779 2817 2261 1833 674
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(Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Adjustment on account of changes in Accounting Policies - a. Payment under VRS earlier treated as deferred revenue, being charged to Profit & Loss A/c 430 37 (467) b. Method of depreciation on Plant and Machinery of Sponge Iron Plant changed from SLM to WDV 57 (57) c. Adjustment towards tax provisions (35) 35 Adjusted Profit after tax 3779 2817 2748 1778 242 Add: Profit/ Loss Brought Forward 3561 3835 2557 1396 2165 Profit available for appropriation 7340 6652 5305 3174 2407 Appropriations Transfer to General Reserve 2500 2500 800 450 940 Transfer to Debenture Redemption Reserve 250 250 Transfer to Reserve for Bad & Doubtful Debts Proposed Dividend 382 297 594 148 71 Interim Dividend Tax on Dividend 53 44 76 19 Adjusted Profit carried to Balance Sheet 4155 3561 3835 2557 1396
Notes: 1. There are no other adjustments resulting from audit qualifications, material amounts relating to adjustments for previous year and changes in accounting policies; 2. Other receipts for the year-ended 31.03.2006 includes Rs.270 lacs being Profit on sale of shares of Hari Fertilizers Limited, an erstwhile subsidiary Company. (Since then ceased to be a subsidiary company) 3. The provision for current tax for the year ended 31.03.2006, 31.03.2005 and 31.03.2002 has been made as per Section 115JB of the Income Tax Act, 1961
96 Part II – Statement of Restated Assets and Liabilities (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 A. Fixed Assets i) Gross Block 62532 50916 43984 41146 34275 Less: Accumulated Depreciation 26664 23855 21959 20177 18809 Net Block 35868 27061 22025 20969 15466 Less: Revaluation Reserve 400 423 448 488 520 Net Block after adjustment for revaluation reserve 35468 26638 21577 20481 14946 ii) Capital work in progress 10667 9760 2971 814 1216 Total 46135 36398 24548 21295 16162 B. Investments 63 65 65 41 78 C. Current Assets, Loans & Advances Inventories 11822 10151 10057 7690 7638 Sundry Debtors 8918 8675 8079 7239 6638 Cash & Bank Balances 3429 1479 1371 1698 614 Other Current Assets 573 94 1 16 103 Loans & Advances 9223 6958 3480 2328 1708 Total 33965 27357 22988 18971 16701 D. Liabilities & Provisions Secured Loans 33873 24657 12612 11919 7823 Unsecured Loans 7964 8998 7367 5013 4307 Current Liabilities 9212 7480 7749 5949 5781 Provisions 750 732 1118 432 105 Deferred Tax Balance 6240 4929 4186 3598 3241 Total 58039 46796 33032 26911 21257 E. Net Worth (A+B+C-D) 22124 17024 14569 13396 11684 Net Worth Represented By F. Share Capital 764 594 594 712 712 G. Reserves & Surplus Capital Reserve 60 55 55 55 55 Share Premium Account 2333 717 717 1657 1657 Revaluation Reserve 400 423 448 488 520 General Reserve 14000 11500 9000 8200 7500 Capital Redemption Reserve 125 125 125 6 6 Reserve for Bad & Doubtful Debts 187 222 243 209 108 Profit & Loss A/c 4155 3561 3835 2557 1396 Investment Allowance Reserve 250 Debenture Redemption Reserve 500 250 Less: Revaluation Reserve 400 423 448 488 520 Reserves (Net of Revaluation Reserves) 21360 16430 13975 12684 10972 Total (F+G) 22124 17024 14569 13396 11684 H. Miscellaneous Expenditure to the extent not written off I. Net Worth (F+G-H) 22124 17024 14569 13396 11684
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Part III: A. Significant Accounting Policies (As on March 31, 2006) 1. Accounting Convention The financial statements are prepared under historical cost convention (except for certain fixed assets which are revalued), on a going concern basis and in accordance with applicable accounting standards. 2. Fixed Assets Land, buildings, plant and machinery relating to cement and refractory works acquired/installed up to December 31, 1981 were revalued as at December 31, 1985. All other fixed assets are shown at cost (net of cenvat). Borrowing costs attributable to the acquisition of qualifying assets and all significant costs incidental to the acquisition of assets are capitalised. 3. Depreciation Depreciation on plant and machinery added in cement and refractory works after December 31, 1981 is provided on straight line method and depreciation on all other assets including sponge iron works is provided on reducing balance method. Rates of depreciation adopted are as specified in Schedule XIV to the Companies Act. Depreciation on additions is calculated pro-rata from the month of addition. Depreciation is not provided on deletion of assets as it has no effect on the results of the year. Depreciation on amount added on revaluation of assets is transferred from revaluation reserve. 4. Impairment Impairment losses, if any, are recognized in accordance with the Accounting Standard-28, issued by the Institute of Chartered Accountants of India (ICAI). 5. Investment Investments are valued at cost. Provision for diminution in value is made, if in the opinion of the management, such a decline is considered permanent. 6. Inventories Stocks of finished and partly finished products are valued at lower of cost or net realizable value and for this purpose, cost is determined on absorption costing method. Cost of finished goods includes excise duty. Raw Materials, other inputs, stores and spares are valued at cost (net of cenvat) or after providing for obsolescence. Cost is determined on FIFO / weighted average basis. Stock of iron ore fines has been valued at raw material cost or net realizable value whichever is less. 7. Sales Sales are net of trade discount and sales tax but inclusive of excise duty. Bonus or penalty linked to operating efficiency of products, where applicable, is accounted for upon crystallization. 8. Treatment of Employee Benefits The Company makes regular contributions to duly constituted funds set up for provident fund, family pension, gratuity and Superannuation, which are charged to revenue. Contribution to gratuity fund and provision for leave encashment are made on the basis of actuarial valuation. 9. Research and Development Revenue expenses are charged off in the year in which it is incurred under the natural heads of account. Capital expenditure, when incurred is added to the cost of fixed assets. 10. Foreign Currency Transactions Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction/realization. Current assets/liabilities are restated at rates prevailing at the year-end and resultant exchange differences are recognized in the Profit and Loss Account. In the case of acquisition of fixed assets, the differences are adjusted to the cost of such assets as required by Schedule VI to the Companies Act.
98 11. Deferred Tax In accordance with Accounting Standard-22 ‘Taxes on Income’ issued by the Institute of Chartered Accountants of India (ICAI) deferred tax is recognised, subject to consideration of prudence, being the difference between accounting and taxable income that originate in one year and are capable of reversal in subsequent year. Paet III: B. Significant changes in accounting policies between April 1, 2001 and March 31, 2006 2001-02 Payments under voluntary retirement scheme has been treated as deferred revenue expenditure and amortised equally over a period of two years and followed in the FY 2002-03. 2003-04 The Company has changed the method of providing depreciation on plant and machinery of sponge iron works from straight-line method to reducing balance method. As a result (a) depreciation for the year is higher by Rs. 204 lacs and (b) arrear depreciation of Rs. 57 lacs for earlier year has been provided in compliance with accounting standard (AS-6) issued by ICAI. Consequently, the profit for the year is lower by Rs. 262 lacs
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Part IV: Significant Notes on Accounts (Rs. in lacs) S. No. Particulars FY 2006 FY 2005 1 Claims against the Company not acknowledged as debts 1117 878 2 Other monies for which the Company is contingently liable 18 16 3 In the income tax assessment certain deductions are subject matter of appeals The amount of Tax and interest involved exceeds the provision by 144 — 4 Guarantee given to bank for term loan facility and non fund based facility, on behalf a body corporate relating to real estate operations 2100 2100 5 Estimated amount of contracts remaining to be executed on capital account and not provided for 969 4834 6 Remuneration to Whole-time directors Salary and allowances 10 9 Contribution to provident fund and other funds 1 2 Perquisites 33 7. The Order of Competent Authority, rejecting application for exemption under Section 20 of Urban Land (Ceiling and Regulation) Act, 1976 (the Act) and final statement under Section 9 of the Act, in respect of land at Agarpara costing Rs.4 lakhs has been challenged by filing a writ petition before the Calcutta High Court, which is pending. The Company has entered into an agreement for the sale of the above land subject to the purchaser obtaining no objection certificate from the competent authority. 8. Conveyance deed in respect of immovable properties costing Rs.3 lacs is pending execution in favour of the Company 9. The additions to fixed assets and capital work in progress includes borrowing cost Rs.451 lacs capitalised during the period (previous year Rs. 342 lacs) 10. In accordance with Accounting Standard (AS-11) issued by ICAI, net loss of Rs. 11 lacs (previous year Rs. 9 lacs) due to exchange difference arising on foreign currency transactions has been considered in the Profit and Loss Account 11. As per Delhi High Court Order dated March 11, 2004 disposing off the company’s writ challenging the fixation of retention price for cement, the Company has repaid Rs. 396 lacs, the amount provisionally received/ retained in the years 1981 and 1982. The Court has further directed (a) the matter be decided by the Tariff Commission/ Committee and (b) the question of payment of interest shall be decided after the decision of the said Commission/ Committee. The matter is pending before Tariff Commission. 12. The Supreme Court of India during April 1996 upheld the validity of Jute Packaging Materials (Compulsory use in Packing Commodities) Act, 1987. The Company has been legally advised that the Act is applicable to it only with effect from October 1996. Under the Act, the cement manufacturers are required to use jute packaging material for supply or distribution up to 50% of their total production. The Calcutta High Court has granted stay against the show cause notice received by the Company from the Jute Commissioner. The Union of India, through the jute commissioner has filed petition for transfer of all writ petitions along with order proceedings pending before various High Courts for hearing and disposal on merit by Supreme Court. While the Company may be liable for non- compliance up to an amount equal to double the cost of the jute packaging material, which it should have used, the liability, if any, in this regard is not ascertainable at this stage. However, the Government has not notified the compulsory packing of cement in jute packaging materials for the period effective from 1st July, 1997 13. The uncashed dividend of Rs.26 lacs (previous year Rs. 23 lacs) and deposits (including interest) of Rs. 17 lacs (previous year Rs. 21 lacs), shown under current liabilities do not include any amount due and outstanding to be credited to the ‘Investor Education and Protection Fund’
100 14. Segmental Disclosure (as on March 31, 2006) (Rs. in lacs) Particulars Cement Refractory Sponge Power Real Others Unallowable Total Iron Estate Operations Segment Revenue External 38,348 20,990 10,001 - - 69,339 (3,01,12) (1,59,62) (93,78) (9,14) - (5,63,66) Inter-Segment 114 135 - 249 (23) (1,66) - - - (1,89) Segment Result Profit (Loss) before Tax and Interest 5,168 2,209 650 -62 -10,73 6,892 (42,57) (12,60) (14,90) -(8,04) (12,48) (49,55) Less: Interest (Net) 1,335 1,335 (12,96) (12,96) Profit before Taxation 5,557 (36,59) Provision for Taxation-Current 475 475 (3,00) (3,00) Fringe Benefit 60 60 (0) (0) Deferred 1310 1310 (7,43) (7,43) MAT credit available for -67 -67 set off -- Provision of earlier years no longer required -- (2,01) (2,01) Profit after Taxation 3779 (2817) Other Information Segment Assets 3,98,81 1,96,86 127,56 54,91 24,44 0 3,04 8,05,62 (3,73,94) (1,61,72) (53,02) (5,96) (43,54) (1,09) (3,17) (6,42,44) Segment Liabilities 57,26 20,59 10,63 2,57 0 4,89,34 5,80,39 (51,90) (16,24) (4,87) (41) (34) (394,21) (4,67,97) Capital expenditure including capital-work-in-progress 30,24 19,63 29,24 46,24 125,35 (1,18,29) (9,60) (8,31) (5,90) (1,42,10) Depreciation 18,59 4,75 4,43 27,77 (13,79) (4,45) (4,43) (22,67) Non cash expenses other than depreciation Provision for leave encashment ------(7) (11) (0) (18)
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Notes: a) As per practice consistently followed, inter segment transfers for capital jobs recognized at cost and for other jobs at estimated realizable value. b) Business segment is considered as primary segment and there is only one geographical segment. c) Figures in bracket are for the year-ended 31.03.2005 15. Related Party Disclosures as per Accounting Standard (AS-18) issued by the Institute of Chartered Accountants of India a. Related parties and their relationship 1. Subsidiary Companies: Konark Minerals Limited, Kashmissa Industries Limited, Hari Fertilizers Limited (Ceased to be a subsidiary Company as on 30.09.2005) and Orissa Iron and Steel Limited 2. Key management personnel: Mr. M H Dalmia, Mr. R H Dalmia, Mr. Y H Dalmia (Non Executive Director), Mr. M. L. Chand (Wholetime director upto 29.02.2004), Mr. V P Sood (Wholetime director). Relatives: Mr. Gaurav Dalmia, Mr. A.H. Dalmia, Mrs. Abha Dalmia, Mrs. Padma Dalmia, Mrs. Shripriya Dalmia Thirani, Km. Anuradha Dalmia, Mrs. Sharmila Dalmia, Mrs. Mohini Sood 3. Associate concern (Joint Venture): OCL Global Limited 4. Enterprises over which key management personnel are able to exercise significant influence: Hari Machines Limited, Himalayan Natural Products Limited, National Synthetics Limited, Dalmia Agencies Private Limited, Vishakha Investment Limited, Dalmia Shiksha Pratisthan, Dalmia Bharat Seva Trust, Satya Miners And Transporters Limited, Dalmia Group Udyog Limited, Kabirdas Investments Limited, First Capital India Limited, Konark Investments Limited, Marathwada Refractories Limited, Debikay Systems Limited, Dapel Investments Private Limited, Dalmia Institute of Scientific & Industrial Research, Dalton International Limited, Madhukar Investments Limited, Swank Services Private Limited, Grandeur Travels & Tours (P) Limited, Parsvnath Landmark Developers (P) Limited, Landmark Koyela Energy Resources (P) Limited, Colonisers (P) Limited, Ansal LAndmark Township (P) Limited, Jiva Design Private Limited, Europa Commercial & Trades Limited, Sunflower Mercantiles Limited, Epic Mercantiles Limited, Eik Rivers Ceramics Limited, Lions Commercial Company Limited and Dalmia Cement (Bharat) Limited b. Transactions with above in ordinary course of business: (Rs. in lacs) Particular FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 1. Transactions with parties referred in (1) above: a) Amount for purchase and sale of goods and fixed assets 55 85 59 - 18 b) Inter Corporate deposit received and repaid 26 19 43 17 10 c) Purchase of Shares 5 ---- d) Interest Expense 22411 e) Amount for service rendered and received 0 ---- f) Amount receivable at the year end 1 1 21 1 1 g) Amount payable at the year end 0 - 4 - - 2. Transactions with parties referred in (2) above: a) Remuneration 2,12 2,21 4,15 2,16 1,65 b) Purchase of fixed assets - - - 2 2 c) Sale of Shares - - 23 - - d) Rent 20 ----
102 Particular FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 e) Amount for service rendered and received 2 ---- f) Security Deposit received and repaid 13 - 9 - - g) Amount receivable at the year end 6 1 - - - h) Amount payable at the year end - - 2,29 - - 3. Transactions with parties referred in (3) above: a) Investment in Shares 22 ---- 4. Transactions with parties referred in (4) above: a) Amount for purchase and sale of goods and fixed assets 5,26 4,83 8,21 5,36 2,15 b) Amount for service rendered and received 11,92 3,96 3,73 2,61 1,27 c) Inter corporate deposit received and repaid 20,67 20,27 1,559 1,081 1,016 d) Inter corporate deposit given and received back 17,05 17,70 30 - - e) Interest expense 122 1,25 1,01 71 57 f) Interest income 622 1,18 1 - - g) Advance given for developed plots of land - real estate operations 983 24,03 6,03 - - h) Purchase of shares - - 23 - - i) Contribution to a research institute and donations - 4 1,79 - - j) Amount of security deposit received / paid 13 - 83 - - k) Amount receivable at the year end 53,50 18,76 1,68 62 29 l) Amount payable at the year end 9,24 77 29 28 7 m) Guarantee given 21,00 21,00 - - - 16. The Company has 50% interest in OCL Global Limited, a Joint Venture Company, incorporated in Mauritius. The Company’s share of each of assets, liabilities, income and expenditure sin the joint venture for the year-ended 31.03.2006 (as the joint venture company was incorporated during 2005-06, previous year figures are not applicable) is as under: (Rs. in lacs) Particulars FY 2006 Current Assets, Loans and Advances Balance with Banks 22 Liabilities Sundry Creditors 1 Income 0 Expenses 1
103 OCL INDIA LIMITED
17. Earning per Equity Share (EPS) as per Accounting Standard 20 Particular FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Restated Profit after tax 37,79 28,17 27,48 17,78 2,42 Weighted average number of Equity Shares of Rs. 2/- each as on 31.03.2006 Basic 3,51,31,894 2,96,90,212 3,01,58,630 3,55,75,395 3,57,91,895 Diluted - 3,60,90,210 3,24,08,630 3,78,25,395 3,80,41,895 EPS (Rs.) Basic 10.76 9.49 9.11 5.00 0.68 Diluted - 7.81 8.48 4.70 0.64 (The existing Equity Shares of Rs. 10 each were sub-divided into 5 Equity Shares of Rs. 2 each w.e.f. 09.08.2005. Consequently weighted average number of Equity Shares for earlier periods, have been adjusted for share split for computing EPS in accordance with Accounting Standard-20 issued by ICAI) 18. The wagons given on lease to railways under ‘Own Your Own Wagon Scheme’ were prior to 01.04.2001 and therefore AS - 19 on leases is not applicable. 19. Sales include following turnover of goods traded in by the Company: (Rs. in lacs) Particular FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Refractory 694 676 94 31 7 Sponge Iron Fines - 914 - - - 20. Statement of Sundry Debtors as on March 31, 2006 (Considered good) (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Exceeding Six Months 941 890 819 978 1,050 Other Debts 7,977 7,785 7,260 6,261 5,588 Total 8,918 8,675 8,079 7,239 6,638 Note: No Promoter /Promoter Group/Directors are beneficiaries of these outstanding balances. 21. Statement of Loans and Advances as on March 31, 2006 (Rs. in lacs) Particulars Amount Exceeding Six Months 6,328 Others 2,895 Total 9,223 22. Statement of Foreign Exchange Earnings/ Expenditure (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Total Foreign Exchange Used 4,304 6,146 3,187 3,241 2,214 Total Foreign Exchange Earned 2,561 1,661 1,362 575 1,005
104 23. Statement of Remuneration paid to Whole Time Director (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Salary and Allowances 9.67 8.59 42.68 8.17 7.48 Contribution to Provident fund and other funds 1.12 2.16 3.55 2.11 1.98 Perquisities 3.06 3.10 4.76 2.23 2.23 Total 13.85 13.85 50.99 12.51 11.69
105 OCL INDIA LIMITED
PART V: Details of subsidiaries of OCL India Limited
1. Konark Minerals Limited
Statement of Profit and Loss (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 I) INCOME i. Sales 48 81 37 0 17 ii. Other Receipts 6 3 2 2 2 TOTAL 548439219 II) EXPENDITURE i. Salaries, Wages & Benefits to employees 1 1 1 - 0 ii. Payment to Contractors 33 56 26 0 12 iii Depreciation 1 2 1 - - iv Other Expenses 9 12 5 1 3 TOTAL 447133115 Profit/ (Loss) for the Year 10 13 6 1 3 Less: Provision for Tax – Current 3 7 2 0 0 Less: Provision for Tax – Fringe Benefit Tax 0 Less: Provision for Tax – Deferred 0 (2) 0 0 1 Net Profit/ Loss for the Year 7 8 4 0 2 Add: Excess Provision of Tax written back - - - - - Add: Profit/ Loss Brought Forward 15 8 4 4 3 Profit available for appropriation 22 16 8 4 6 Appropriations Transfer to General Reserve 1 1 0 - 0 Proposed Dividend - - - - 1 Balance Carried to Balance Sheet 21 15 8 4 4
106 Statement of Assets and Liabilities (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 A. Fixed Assets Gross Block 7 7 7 1 1 Less: Accumulated Depreciation 4 3 1 - - Net Block 3 4 6 1 1 B. Current Assets, Loans & Advances Inventories 206 206 200 - - Sundry Debtors 0 0 8 - - Cash & Bank Balances 47 42 25 19 19 Other Current Assets 0 0 0 0 - Loans & Advances 2 2 2 0 0 Total 255 250 235 19 19 C. Liabilities & Provisions Current Liabilities 222 225 218 1 2 Provisions 0 0 - 0 2 Total 222 225 218 1 4 D. Deferred Tax Balance 2 2 0 0 1 E. Net Worth (A+B-C+D) 38 31 23 19 17 Net Worth Represented By F. Share Capital 5 5 5 5 3 G. Reserves & Surplus General Reserve 12 11 10 10 10 Capital Redemption Reserve - - - - 0 Profit & Loss A/c 21 15 8 4 4 Total 33 26 18 14 14 H. Net Worth (F+G) 38 31 23 19 17
107 OCL INDIA LIMITED
Significant Accounting Policies 1. Accounting Convention: The financial statements are prepared under historical cost convention on going concern basis and in accordance with applicable accounting standards. 2. Fixed Assets: All fixed assets are shown at cost. 3. Depreciation a. Depreciation is provided on written down value method. Rates of depreciation adopted are as specified in Schedule XIV of the Companies Act. b. Depreciation on additions is calculated on monthly pro-rata from the month of addition. 4. Sales: Sales are net of sales tax & entry tax. 5. Inventory: Stock in Trade are being valued at cost or realisable value whichever is less. 6. Interest on Post Office Savings Bank Accounts are accounted for when received. 7. Deferred Tax: In accordance with Accounting Standard-22 ‘Taxes on income’, deferred tax is recognised, subject to consideration of prudence, being the difference between accounting and taxable income that orginate in one year and are capable of reversal in subsequent year.
Notes to Accounts (Rs. in lacs) Particulars FY 2006 FY 2005 1. Claims against the Company not acknowledge as debt 17,749 17,749 2. Other Receipts includes Rs.88,800/- towards vehicle hiring charges (Previous Year - 88,800 ) 3. Stock in trade includes land worth Rs.20572495 (Valued at cost) 4. Computation of commission payable to Directors Net Profit before tax as per Profit and Loss Account 9,88,069 12,88,727 Add: Directors Commission 7,500 7,500 Net Profit for Calculating Directors Commission 9,95,569 12,96,227 Directors Commission @3% on above 29,867 38,887 Commission restricted to Rs.2,500/- per Director 7,500 7,500 5. Remuneration to Auditors and Expenses Auditors Audit Fees including service tax thereon 7,300 7,163 Expense Reimbursement 300 200 In other Capacities Tax Audit 3,367 3,306 For Certification of Statements 6. Related Party Disclosure as per Accounting Standard-18 A) Related parties and their relationship 1) Holding Company :OCL India Limited 2) Key management personnel: Mr. V P Sood, Mr. Mayadhar Mishra and Mr. S. Pasupathy
108 (Rs. in lacs) Particulars FY 2006 FY 2005 B) Transactions with above in ordinary course business 1) Transactions with parties referred in (1) above a) Sale of goods 48,19,148 80,69,995 b) Services received 33,060 32,730 c) Intercorporate deposits 26,00,000 18,00,000 d) Interest Received 1,74,335 1,53,025 e) Vehicle Hire Charges received 88,800 88,800 C) Closing Balance of Related Parties Payable Security Deposit with OCL India Limited 4,16,800 5,15,200 Receivable For Hire Charges of Vehicle 7,400 7,400 7. Earning per share (EPS) as per Accounting Standard - 20 Particulars FY 2005-06 FY 2004-05 Profit after current and deferred tax 6,20,334 8,19,139 Weighted average number of equity share of Rs.10/- each as on 31.03.2006 50,000 50,000 EPS (Rs.) (Basic) 12.41 16.38 8. Computation of Deferred Tax Particulars Opening as on Adjusted during Arose during the Balance as on 01.04.05 the year year 31.03.06 Asset Liability Asset Liability Asset Liability Asset Liability Royalty 10,81,833 4,39,698 3,77,385 4,39,698 5,16,344 6,21,950 12,20,792 6,21,950 Depreciation 23,609 52,888 44,798 68,407 52,888 Total 11,05,442 492,586 3,77,385 4,39,698 5,61,142 6,21,950 12,89,199 6,74,838 Net asset 6,12,856 6,14,361 Deferred Tax @ 36.59% 2,24,259 @ 33.66% 2,06,794
9. Particulars FY 2005-06 FY 2004-05 Production (MT) 8,168 13,678 Sales (MT) 8,168 13.678 10. Previous year figures have been regrouped where necessary to correspond with current year figures.
2. Kashmissa Industries Limited
Statement of Profit and Loss For the Financial Years 2001-2002, 2002-03, 2003-04, 2004-05 and 2005-06, no business activity was carried on by the Company. Hence, the Statements of Profit & Loss for these years have not been prepared.
109 OCL INDIA LIMITED
Statement of Assets and Liabilities (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 A. Fixed Assets Gross Block - - - - - Less: Accumulated Depreciation - - - - - Net Block - - - - - B. Investments 5 5 5 5 85 C. Current Assets, Loans & Advances Inventories - - - - - Sundry Debtors - - - - - Cash & Bank Balances 0 0 1 1 0 Loans & Advances - - 0 0 0 Total 0 0 1 1 1 D. Liabilities & Provisions Current Liabilities 1 - 1 1 1 Provisions - - - - - Total 1 - 1 1 1 E. Net Worth (A+B+C-D) 4 5 5 5 85 Net Worth Represented By F. Share Capital 25 25 25 25 25 Share Application Money - - - - 80 Total 25 25 25 25 105 G. Reserves & Surplus Profit & Loss A/c (21) (20) (20) - - Total (21) (20) (20) - - Total (F+G) 4 5 5 25 105 H. Miscellaneous Expenditure to the - - - 20 20 extent not written off I. Net Worth (F+G-H) 4 5 5 5 85
Notes forming part of the Balance Sheet 1. The company has not done any business during the year 2005-06. However, the accounts have been prepared on the concept of going concern and in accordance with the applicable Accounting Standards. 2. Investments intended to be held for long term are stated at cost. Cost includes acquisition charges such as brokerage, fees and duties. 3. The deferred tax asset is not considered as a prudent measure in terms of Accounting Standard (AS-22) Accounting for Taxes on Income. 4. Particulars FY 2005-06 FY 2004-05 Arrears of Dividend on Preference Shares (Rs.) 2,350 2,256
110 5. Related Party disclosure as per Accounting Standard (AS-18) issued by the ICAI Holding Company - OCL India Limited Nature of Transactions FY 2005-06 FY 2004-05 Amount payable at year end (Rs.) 87,769 87,769 6. Earning per share (EPS) as per Accounting Standard - 20 Particulars FY 2005-06 FY 2004-05 Profit / (Loss) (Rs.) -6,791 -26,222 No. of equity shares of Rs. 10/- each as on 31.03.2006 2,49,915 2,49,915 EPS (Rs.) (Basic and Dilutaed) -0.03 -0.10 7. Previous years figures have been regrouped/rearranged wherever necessary to correspondence with current years figures.
3. Orissa Iron and Steel Limited Orissa Iron and Steel Limited was incorporated on February 20, 2006, hence the Statement of Profit and Loss and Statement of Assets and Liabilities for the FY 2005-06 alone is avaliable.
Statement of Profit and Loss (Rs. in lacs) Particulars FY 2006 I) INCOME i. Sales - ii. Other Receipt - TOTAL - II) EXPENDITURE Other Expenditure i) Rates and Taxes 4 ii) Printing ans Stationery 0 iii) Audit Fees 0 iv) Bank Charges - TOTAL 4 Profit/ (Loss) for the Year (4) Less: Provision for Tax - Less: Provision for Deferred Tax 0 Net Profit/ Loss for the Year (4) Add : Provision for tax relating to earlier years written back 0 Add: Profit/ Loss Brought Forward - Balance Carried to Balance Sheet (4)
111 OCL INDIA LIMITED
STATEMENT OF ASSETS AND LIABILITIES (Rs. in lacs) Particulars FY 2006 A. Fixed Assets Gross Block - Less: Accumulated Depreciation - Net Block - B. Current Assets, Loans & Advances Sundry Debtors 0 Cash & Bank Balances 1 Loans and Advances - Total 1 C. Liabilities & Provisions Current Liabilities 0 Provisions - Total 0 D Deferred Tax Asset 0 E. Net Worth (A+B+D-C) 1 Net Worth Represented By F. Share Capital 5 G. Reserves & Surplus Profit & Loss A/c (4) Total (4) Total (E+F) 1 H. Miscellaneous Expenditure to the extent not written off - I. Net Worth (F+G-H) 1
Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit & Loss Account
A. Accounting Policies Basis of Accounting The Financial statements are prepared under historical cost convention on a going concern basis and in accordance with applicable accounting standards. B. Deferred Tax In accordance with Accounting Standard-22 ‘Taxes on Income’, deferred tax is rocognised, subject to consideration of prudence, being the difference between accounting and taxable income that originate in one year and are capable of reversal in subsequent years. C. Notes to the Accounts 1. Since the Company was incorporated on 22.02.2006 so previous year figures are not applicable. 2. Contingent liability of the Company is : Nil 3. Related Party Disclosure OCL India Limited: Holding Company
112 Subscription to the ahre capital: Rs. 5,00,000/- D. Computation of Deferred Tax Particulars Opening as on Arose during Balance as on 01.04.05 the year 31.03.06 Asset Liability Asset Liability Asset Liability Incorporation Expnses - - 25,000 - 25,000 - Net asset - - 25,000 - 25,000 - Deferred Tax @ 33.66% 8,415
4. Hari Fertilizers Limited Hari Fertilizers Limited has ceased to be a subsidiary of OCL India Limited w.e.f. September 30, 2005. For the FY 2001- 2002, no business activity was carried on by Hari Fertilizers Limited, hence the Statement of Profit and Loss for that year was not been prepared.
Statement of Profit and Losss (Rs. in lacs) Particulars FY 2005 FY 2004 FY 2003 I) INCOME i. Storage charged received # 5 - - ii. Fruits and Matured Trees 1 - - iii. Interest Received 1 3 0 iv. Other Income 0 - - TOTAL 730 II) EXPENDITURE i. Salary Wages and Benefits 6 - - ii. Electricity Consumed 1 - - iii. Professional & service Charges 0 1 - iv. Preliminary Expenses written off - 0 - v. Depreciation 2 0 - vi. Other Expenses 4 0 0 TOTAL 13 1 0 Profit/ (Loss) for the Year (5) 2 0 Less: Provision for Tax - 1 0 Net Profit/ Loss for the Year (5) 1 0 Add: Provision for tax relating to earlier years written back 0 - - Add: Profit/ Loss Brought Forward 1 (0) (0) Balance Carried to Balance Sheet (4) 1 (0)
# Tax deducted at source Rs. 0.51 lacs
113 OCL INDIA LIMITED
Statement of Assets and Liabilities (Rs. in lacs) Particulars FY 2005 FY 2004 FY 2003 FY 2002 A. Fixed Assets Gross Block 30 30 - - Less: Accumulated Depreciation 2 0 - - Net Block 28 30 - - B. Current Assets, Loans & Advances Sundry Debtors 0 - - - Cash & Bank Balances 2 31 5 - Loans and Advances 1 1 0 - Total 3 32 5 - C. Liabilities & Provisions Current Liabilities 6 30 0 0 Provisions - 1 0 - Total 6 31 0 0 D. Net Worth (A+B-C) 26 31 5 (0) Net Worth Represented By E. Share Capital 30 30 5 0 F. Reserves & Surplus Profit & Loss A/c (4) 1 (0) (0) Total (4) 1 (0) (0) Total (E+F) 26 31 5 (0) G. Miscellaneous Expenditure to the extent not written off - - 0 0 H. Net Worth (E+F-G) 26 31 5 (0)
Significant Accounting Policies and Notes forming part of the Balance Sheet and Profit & Loss Account as on 31.03.2005
A. Accounting Policies
Basis of Accounting The accounts are prepared under the historical cost convention and in accordance with the applicable Accounting Standards. For recognition of Income and expenses, mercantile system of accounting is followed.
Fixed Asset Fixed Assets are shown at cost.
Depreciation Depreciation on assets other than Land is provided on written down value method at the rates specified in the Schedule XIV to the Companies Act, 1956.
114 Employees Benefits Provision for gratuity to employees is made as per the provisions of the Payment of Gratuity Act, 1972.
B. Notes to the Accounts a) Company had acquired Land and other Immovable assets costing Rs.27,28,749.87 from its holding Company in the year 2003-04. Conveyance deed, duly executed, in respect of above is pending with registration authorities for registration. b) As the liability for gratuity to employees under Payment of Gratuity Act, 1972 and leave encashment as on 31.03.2005 is NIL, accordingly no provision is required to be made in respect of the above. c) Deferred Tax asset has not been recognised as a measure of prudence in terms of Accounting Standard (AS-22) Accounting of Taxes on Income. d.) Auditor’s Remuneration FY 2003-04 FY 2004-05 Audit Fees (Rs.) 1,620 2,755 e) Information pursuant to the provisions of paragraphs 3C, 4C and 4D of part II of Schedule VI of the Companies Act: - NIL f) Related Party disclosure as per Accounting Standard (AS-18) issued by the ICAI Holding Company - OCL India Limited
Nature of Transactions FY 2003-04 FY 2004-05 a) ICD given and received (Rs.) 29,40,000 1,00,000 b) Interest received (Rs.) 2,65,532 2,260 c) Purchase and sale of Goods & Fixed Assets (Rs.) 20,03,325 Nil d) Amount payable at year end (Rs.) 20,03,325 1,39,745 g) Earning Per Share (EPS) as per Accounting Standard-20 issued by the Institute of Chartered Accountants of India. Particulars FY 2003-04 FY 2004-05 Profit/(-) Loss (Rs.) 2,15,918 -5,21,202 No.of equity shares of Rs.10/- each as on 31.03.05 3,00,000 3,00,000 EPS (Rs.) - Basic and diluted 0.72 -1.74 h) Previous year’s figures have been regrouped/rearranged wherever necessary.
115 OCL INDIA LIMITED
Part VI – A: Statement of Consolidated Statement of Profit and Loss (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Income 1. Sales and Self Consumption i. Sales 69340 56366 44965 36357 30695 ii. Self Consumption 743 634 457 278 301 Total (i+ii) 70083 57000 45422 36635 30996 Less: Excise Duty 10371 8399 6992 5389 4834 Total (1) 59712 48601 38430 31246 26162 2. Other Receipts 1100 592 522 412 429 3. Increase/Decrease in Inventory i. Opening Stock 3500 4175 3633 3180 2907 ii. Closing Stock 3979 3500 4175 3633 3180 Total (ii – i ) 479 (675) 542 453 273
Total Income (1+2+3) 61291 48518 39494 32111 26864 Expenditure 1. Raw Material Consumed 21823 18224 13994 10462 8839 2. Purchases 694 1518 289 32 9 3. Salaries, Wages & Benefits to Employees 2457 2302 2638 2876 2781 4. Power and Fuel 8695 7020 6385 5725 4519 5. Interest & Other Financial Charges i. Interest on Term Loan & Deposits 1460 895 807 580 639 ii. Others 904 667 600 477 393 Less: Interest Received 1032 268 740 287 160 Total (5) 1332 1294 667 770 872 6. Depreciation 2706 2218 1969 1411 1259 7. Other Expenses 18017 12276 10046 8423 7912 Total Expenditure (1+2+3+4+5+6+7) 55724 44852 35988 29699 26191
Net Profit/ (Loss) Before Tax 5567 3666 3506 2412 673 Less: Provision for Tax - Current 479 306 653 222 60 Less: Fringe Benefit Tax 60 - Less: Provision for Tax - Deferred 1310 741 588 358 223 MAT credit available for set off (67) Provision for tax relating to earlier - (201) (277) years written back Net Profit/ Loss for the Year as per audited 3785 2820 2265 1832 667 statement of accounts
116 (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Adjustment on account of changes in Accounting Policies - a. Payment under VRS earlier treated as deferred revenue, being charged to Profit & Loss A/c 430 37 (467) b. Method of depreciation on Plant and Machinery of Sponge Iron Plant changed from SLM to WDV 57 (57) c. Adjustment towards tax provisions (35) 35 Adjusted balance of Profit after tax 3785 2820 2752 1777 235 Add: Profit/ Loss Brought Forward 3552 3823 2541 1381 2157 Add:Loss of Subsidiary of earlier year reversed on sale Profit available for appropriation 7337 6643 5293 3158 2392 Appropriations Transfer to General Reserve 2501 2501 800 450 940 Transfer to Debenture Redemption Reserve 250 250 Transfer to Reserve for Bad & Doubtful Debts Proposed Dividend 382 297 594 148 71 Interim Dividend Tax on Dividend 53 43 76 19 Adjusted balance of Profit carried to Balance Sheet 4151 3552 3823 2541 1381 Notes: 1. Fully owned subsidiaries of OCL India Limited, namely Konark Minerals Limited, Kashmissa Industries Limited, Orissa Iron and Steel Lid. and Hari Fertilizers Limited have been consolidated in these accounts except that in the case of Hari Fertilizers Limited, it has since ceaed to be a subsidiary on 30.09.2005 and hence for the year ended 31st March , 2006 its accounts are not included. 2. Other receipts for the year ended 31st March , 2006 includes Rs.270 lacs being Profit on sale of shares of Hari Fertilizers Limited. 3. There are no other adjustments resuting from audit qualifications, material amounts relating to adjustments for previous year and changes in accounting policies.
117 OCL INDIA LIMITED
Part VI – B: Statement of Consolidated Statement of Assets and Liabilities (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 A. Fixed Assets i) Gross Block 62539 50953 44021 41147 34275 Less: Accumulated Depreciation 26668 23860 21960 20177 18809 Net Block 35871 27093 22061 20970 15466 Less: Revaluation Reserve 400 423 448 488 520 Net Block after adjustment for 35471 26670 21613 20482 14946 revaluation reserve ii) Capital work in progress 10667 9761 2971 814 1216 Total 46138 36431 24584 21296 16162 B. Investments 11 11 11 11 136 C. Current Assets, Loans & Advances Inventories 12025 10355 10256 7690 7638 Sundry Debtors 8918 8675 8079 7239 6638 Cash & Bank Balances 3500 1523 1427 1723 633 Other Current Assets 573 94 2 16 104 Loans & Advances 9220 6954 3455 2327 1707 Total 34236 27601 23219 18995 16720 D. Liabilities & Provisions Secured Loans 33873 24657 12612 11919 7823 Unsecured Loans 7964 8998 7367 5013 4307 Current Liabilities 9431 7705 7964 5950 5784 Provisions 750 732 1119 432 104 Deferred Tax Balance 6238 4927 4186 3598 3241 Total 58256 47019 33248 26912 21259 E. Net Worth (A+B+C-D) 22129 17024 14566 13390 11759 Net Worth Represented By F. Share Capital 764 594 594 712 712 Share application money - 80 G. Reserves & Surplus Capital Reserve 60 55 55 55 55 Share Premium Account 2333 717 717 1657 1657 Revaluation Reserve 400 423 448 488 520 General Reserve 14012 11511 9010 8210 7510 Capital Redemption Reserve 125 125 125 6 6 Reserve for Bad & Doubtful Debts 187 222 243 209 108 Profit & Loss A/c 4151 3552 3823 2541 1381 Stock Reserve (3) (2) (1) Investment Allowance Reserve(Utilised) - 250 Debenture Redemption Reserve 500 250 Less: Revaluation Reserve 400 423 448 488 520 Reserves (Net of Revaluation Reserves) 21365 16430 13972 12678 10967 Total (F+G) 22129 17024 14566 13390 11759 H. Miscellaneous Expenditure to the extent not written off I. Net Worth (F+G-H) 22129 17024 14566 13390 11759
118 Notes to Consolidated Accounts 1. Significant Accounting Policies and Notes to Consolidated Accounts A) Principles of Consolidation (i) The Consolidated Financial Statements have been prepared in accordance with the Accounting Standard 21 (AS-21) - “Consolidated Financial Statements” and Accounting Standard 27 (AS-27) - “Financial Reporting of Interests in Joint Ventures”, issued by the Institute of Chartered Accountants of India. (ii) The Consolidated Financial Statements relate to OCL India Limited (the Company) and its wholly owned subsidiary companies and interest in joint venture. The Subsidiary companies, all incorporated in India, considered in the Consolidated Financial Statements are: Konark Minerals Limited (KML) Kashmissa Industries Limited Hari Fertilizers Limited (Ceased to be a subsidiary w. e. f. 30.09.2005) OCL Iron & Steel Limited (OSL) Interests (50%) in joint venture incorporated in Mauritius considered in Consolidated Financial Statements: OCL Global Limited (OGL) (iii) The Consolidated Financial Statements have been prepared on the following basis: The Financial Statements of the Company and its subsidiary companies have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances and intra-group transactions in accordance with Accounting Standard (AS-21) - “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India. The difference between the Cost of Investments in the subsidiaries, over the net assets at the time of acquisition of shares in the subsidiaries is recognised in the Consolidated Financial Statements as Goodwill or Capital Reserve as the case may be. The difference between the proceeds from disposal of investments in a subsidiary company and the carrying amount of its assets less liabilities as of the date of disposal is recognised in the Consolidated Profit and Loss Account as the profit or loss on disposal of investment in subsidiary. In case of foreign joint venture, all assets and liabilities are translated at exchange rate prevailing at the end of the year and revenue items are consolidated at the average rate prevailing during the year. The Consolidated Financial Statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the Company’s separate Financial Statements. · The Financial Statements of the subsidiary companies and joint venture company are drawn up to March 31, 2006.
119 OCL INDIA LIMITED
Other Significant Accounting Policies 1. There are set out in the notes to accounts under “Significant Accounting Policies” of the Financial Statement of the Company, KML, Kabirdas Investments and OSL. Particulars Cement Refractory Sponge Power Real Others Unallowable Total Iron Estate Operations Segment Revenue External 38,348 20,990 10,000 - - 69,339 (3,01,12) (1,59,62) (93,78) (9,13) - (5,63,66) Inter-Segment 114 135 - 249 (23) (1,66) - - - (1,89) Segment Result Profit (Loss) before 5,168 2,209 650 -62 -10,73 6,892 Tax and Interest (42,57) (12,60) (14,90) -(8,04) (12,48) (49,55) Less: Interest (Net) 1,335 1,335 (12,96) (12,96) Profit before Taxation 5,557 (36,59) Provision for 478 478 Taxation-Current (3,06) (3,06) Fringe Benefit 60 60 (0) (0) Deferred 1310 1310 (7,41) (7,41) MAT credit available -67 -67 for set off -- Provision of earlier -- years no longer required (2,00) (2,00) Profit after Taxation 3785 (2819) Other Information Segment Assets 3,98,81 1,96,86 127,56 54,90 24,44 0 5,26 8,07,84 (3,73,94) (1,61,72) (53,02) (5,96) (43,54) (1,09) (3,17) (6,42,44) Segment Liabilities 57,26 20,59 10,63 2,57 0 4,91,50 5,82,55 (51,90) (16,24) (4,87) (41) (34) (396,43) (4,70,19) Capital expenditure 30,24 19,63 29,24 46,24 125,35 including capital- (1,18,29) (9,60) (8,31) (5,90) (1,42,10) work-in-progress Depreciation 18,59 4,75 4,43 27,77 (13,79) (4,45) (4,43) (22,67) Non cash expenses other than depreciation Provision for leave ------encashment (7) (11) (0) (18)
120 2. Related Party Disclosures as per Accounting Standard (AS-18) issued by the Institute of Chartered Accountants of India a. Related parties and their relationship 1. Key management personnel: Mr. M H Dalmia, Mr. R H Dalmia, Mr. M. L. Chand (Wholetime Director up to 29.02.2004), Mr. Y H Dalmia (Non Executive Director), and Mr. V P Sood (Wholetime director). Relatives: Mr. Gaurav Dalmia, Mr. A.H. Dalmia, Mr. Y H Dalmia, Mrs. Abha Dalmia, Mrs. Padma Dalmia, Mrs. Sharmila Dalmia, Mrs. Mohini Sood, Mrs. Kanupriya Somany 2. Enterprises over which key management personnel are able to exercise significant influence: Hari Machines Limited, Himalayan Natural Products Limited, National Synthetics Limited, Dalmia Agencies Private Limited, Vishakha Investment Limited, Dalmia Shiksha Pratisthan, Dalmia Bharat Seva Trust, Satya Miners and Transporters Limited, Dalmia Group Udyog Limited, Kabirdas Investments Limited, First Capital India Limited, Konark Investments Limited, Marathwada Refractories Limited, Debikay Systems Limited, Dapel Investments Private Limited, Dalmia Institute of Scientific & Industrial Research, Dalton International Limited, Madhukar Investments Limited, Swank Services Private Limited, Grandeur Travels & Tours (P) Limited, Parsvnath Landmark Developers (P) Limited, Landmark Koyela Energy Resources (P) Limited, Colonisers (P) Limited, Ansal LAndmark Township (P) Limited, Jiva Design Private Limited, Europa Commercial & Trades Limited, Sunflower Mercantiles Limited, Epic Mercantiles Limited, Eik Rivers Ceramics Limited, Lions Commercial Company Limited, Artech Infosystems (P) Limited, Agrico Limited, Dalmia Cement (Bharat) Limited, Astir Properties Private Limited and Shri Natraj Ceramic and Chemicals Limited b. Transactions with above in ordinary course of business: (Rs. in lacs) Particular FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 1. Transactions with parties referred in (1) above: a) Remuneration 2,12 2,21 4,15 2,16 1,65 b) Purchase of fixed assets - - - 2 2 c) Sale of Shares - - 23 - - d) Rent 20 - - - - e) Amount for service rendered and received 2 - - - - f) Security Deposit received and repaid 13 - 9 - - g) Amount receivable at the year end 6 1 - - - h) Amount payable at the year end - - 2,29 - - 2. Transactions with parties referred in (2) above: a) Amount for purchase and sale of goods 5,26 4,83 8,21 5,36 2,15 and fixed assets b) Amount for service rendered and received 11,92 3,96 3,73 2,61 1,27 c) Inter corporate deposit received and repaid 20,67 20,27 1,559 1,081 1,016 d) Inter corporate deposit given and received 17,05 17,70 30 - - back e) Interest expense 122 1,25 1,01 71 57 f) Interest income 622 1,18 1 - - g) Advance given for developed plots of 983 24,03 6,03 - - land - real estate operations h) Purchase of shares - - 23 - - i) Contribution to a research institute and - 4 1,79 - - donations j) Amount of security deposit received / paid 13 - 83 - - k) Amount receivable at the year end 53,50 18,76 1,68 62 29 l) Amount payable at the year end 9,24 77 29 28 7 m) Guarantee given 21,00 21,00 - - -
121 OCL INDIA LIMITED
3. Earning per Equity Share (EPS) as per Accounting Standard 20 Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Restated Profits after tax 37,85 26,19 22,65 18,32 3,90 Weighted average number of Equity Shares of Rs. 2/- each as on 31.03.2006 Basic 3,51,31,894 2,96,90,212 3,01,58,630 3,55,75,395 3,57,91,895 Diluted - 3,60,90,210 3,24,08,630 3,78,25,395 3,80,41,895 EPS (Rs.) Basic 10.77 8.82 7.51 5.15 1.09 Diluted - 7.26 6.99 4.84 1.03 (The existing Equity Shares of Rs. 10 each were sub-divided into 5 Equity Shares of Rs. 2 each w.e.f. 09.08.2005. Consequently weighted average number of Equity Shares for earlier periods, have been adjusted for share split for computing EPS in accordance with Accounting Standard-20 issued by ICAI) 4. Other notes are as set out in the notes to the accounts of the Company, Konark Minerals Limited, Kashmissa Industries Limited and OCL Iron & Steel Limited 5. Previous year figures have been regrouped where necessary to correspond with current year figures. 6. Statement of Sundry Debtors as on March 31, 2006 (Considered good) (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Exceeding Six Months 941 890 819 978 1,050 Other Debts 7,977 7,785 7,260 6,261 5,588 Total 8,918 8,675 8,079 7,239 6,638
Note: No Promoter /Promoter Group/Directors are beneficieries of these outstanding balances. 7. Statement of Loans and Advances as on March 31, 2006 (Rs. in lacs) Particulars Amount Exceeding Six Months 6,325 Others 2,895 Total 9,219
122 Part VI – C: Statement of Consolidated Cash Flow (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 A. Cash Flow from Operating Activities Net profit before Taxes 5,566 3,666 3,506 2,412 673 (As per audited Statements of Accounts) Adjustment for: Depreciation 2,809 2,295 2,024 1,465 1,321 Stock Reserve (1) (1) (1) - - Translation Reserve - - - - - Deferred Revenue Expenditure - - 430 37 (467) Preliminary expenses - - - - - Other Expenses - - - - - Interest (Net) 1,332 1,294 667 770 872 Investment Written Off - - - - - Dividend on Investment (2) (1) (3) (1) (6) Profit on sale of Investments (276) - - - - Profit (Loss) on sale/write off of Fixed Assets 82 150 88 1 Operating profit before working capital changes 9428 7335 6773 4771 2394 Adjustments for Working Capital changes Inventories (1,670) (99) (2,566) (52) (739) Trade and other payables 1,570 (446) 1,640 102 847 Trade and other Receivables (1,100) (2,767) (1,904) (697) - Cash generated from Operations 8,228 4,023 3,943 4,124 2,502 Tax Paid / Refund Received (Net) (615) (181) (483) 7 17 Net Cash from Operating Activities 7613 3842 3460 4131 2519 B. Cash Flow from Investing Activities Purchase of Fixed Assets (12,610) (14,275) (5,543) (6,332) (1,841) Sale/write off of Fixed Assets 95 51 138 6 59 Sale/Purchase of Investment (Net) 277 - - 125 (5) Dividend on Investments 2 1 3 1 5 Increase in Loans Given (1,702) (1,235) 372 (721) 67 Net Cash generated / (-) used in (13938) (15458) (5030) (6921) (1715) Investing Activities C. Cash Flow from Financing Activities Arrear of Share Capital including Share premium received 1,786 - 8 - - Share Application Money - - - (80) 80 Shares bought back - - (947) - (36) Capital Investment Subsidy Received 5 - - - - Increase in Capital Reserve - - - - -
123 OCL INDIA LIMITED
(Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Secured Loans 9,216 12,045 693 4,095 (709) Unsecured Loans (1,034) 1,632 2,354 706 415 Dividend Paid (297) (594) (148) (71) - Taxes on Dividend Paid (42) (78) (19) - - Interest (Net) (1,332) (1,293) (667) (770) (872) Net Cash from Financing Activities 8302 11712 1274 3880 (1122) Net changes in Cash and Cash equivalents 1977 96 (296) 1090 (318) Net Increase / (-) Decrease in Cash and Cash equivalents Balance at the end of the year/period 3500 1523 1427 1723 633 Balance at the beginning of the year/period 1523 1427 1723 633 951 1977 96 (296) 1090 (318)
124 Part VII: Statement of Dividend declared by the Company and its Subsidiaries
Holding Company: OCL India Limited Year / Period Ended FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Number of Equity Shares 3,81,83,760 59,36,094 59,53,027 71,36,735 71,36,735 Rate of Dividend 50% 50% 100% 25% 10% Amount of Dividend (Rs. in Lakhs) 381.84 297 594 148 72 Note: The Equity Share of Rs.10 each was sub divided into 5 Equity Shares of Rs. 2 each w.e.f. 09.08.2005
Subsidiaries a. Konark Minerals Limited Year Ended FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Number of Equity Shares 50,000 50,000 50,000 50,000 49,910 Rate of Dividend Nil Nil Nil Nil 50% Amount of Dividend (Rs. in lakhs) Nil Nil Nil Nil 1.25 b. Kashmissa Industries Limited Year Ended FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Number of Equity Shares 249,915 249,915 249,915 249,915 249,915 Rate of Dividend Nil Nil Nil Nil Nil Amount of Dividend (Rs. in lakhs) Nil Nil Nil Nil Nil c. Hari Fertilizers Limited (Ceased to be a subsidiary w.e.f. September 30, 2005) Year Ended FY 2005 FY 2004 FY 2003 FY 2002 Number of Equity Shares 3,00,000 3,00,000 50,010 10 Rate of Dividend Nil Nil Nil Nil Amount of Dividend (Rs. in lakhs) Nil Nil Nil Nil d. Orissa Iron and Steel limited (Incorporated on 20.02.2006) Year Ended FY 2006 Number of Equity Shares 5,00,000 Rate of Dividend Nil Amount of Dividend (Rs. in lakhs) Nil
Annexure ‘A’: Key Accounting Ratios For the Year ended FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Earnings Per Share (EPS) (Rs.) (Basic) 10.76 9.49 9.11 5.00 0.68 Cash Earnings Per Share (CEPS) (Rs.) 18.75 17.2 15.82 9.12 4.37 Net Asset Value Per Share (Rs.) 57.94 57.36 49.05 37.66 32.84 Return on Networth (%) 17.08% 16.55% 18.86% 13.27% 2.07%
125 OCL INDIA LIMITED
Definitions of Key Ratios Earnings Per Share Profit After Tax/Weighted Number of Equity Shares Cash Earnings Per Share (Profit After Tax + Depreciation)/Weighted Number of Equity Shares Net Asset Value Per Share Networth at year end/ Number of Equity Shares Return on Networth (%) Net Profit/ Net Worth Note: The Equity Share of Rs.10 each was sub-divided into 5 Equity Shares of Rs. 2 each w.e.f. August 9, 2005. Consequently number of Equity Shares for earlier years have been adjusted for share split for computing EPS, CEPS and Net Assets value per Equity Share.
Annexure ‘B’: Capitalisation Statement as at March 31, 2006 (Rs. in lacs) Particulars Pre-Issue as on Post-Issue March 31, 2006 Loan Funds Long Term 24,186 24,186 Short Term 17,651 17,651 Total Debt [A] 41,837 41,837 Shareholders’ Funds Share Capital 764 890.95 Reserves and Surplus 21,760 29,269.47 Total Equity [B] 22,524 30,160.42 Long Term Debt/ Equity Ratio [A/B] 1.89 1.39
Annexure ‘C’: Deferred Tax Balance (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Liabilities Depreciation 6448.08 5254.15 4785.27 4215.96 3858.67 Assets Voluntary Retirement Expenses 59.45 179.5 364.11 383.4 241.01 Expenses allowable in computing Taxable income on payment basis 43.94 44.9 146.58 172.44 39.68 Unabsorbed Depreciation - - - - 241.36 Others 105.16 100.54 88.37 61.91 95.59 208.55 324.94 599.06 617.75 617.64 Net liability 6239.53 4929.21 4186.21 3598.21 3241.03
126 Annexure ‘E‘: Details of outstanding Unsecured Loans, considered good (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Fixed Deposits (in terms of the Scheme 993 1111 1139 1223 1274 under theCompanies (Acceptance of Deposit) Rules, 1975 Short Term Loans from Bank 2502 Commercial Papers (Short Term Loans) 3800 3500 4000 1000 Sales Tax Deferment Loan – Interest Free 1170 1885 2228 2790 3033 Other/Miscellaneous (at short notice – 2001 currently at about 8.25% p.a.) Total 7964 8998 7367 5013 4307 Note: No Promoter /Promoter Group/Directors are beneficieries of unsecured loans.
Annexure ‘D’: Statement of Cash Flow (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 A. Cash Flow from Operating Activities Net profit before Taxes(As per audited 5557 3659 3499 2412 678 Statements of Accounts) Adjustment for Depreciation 2808 2291 2024 1465 1321 Deferred Revenue Expenditure 430 36 (467) Interest (Net) 1334 1296 671 772 874 Investment Written Off 0 Dividend on Investment (2) (1) (3) (2) (5) Profit on sale of Investments (273) Profit / Loss on sale/write off of Fixed Assets (Net) 0 82 150 88 (6) Operating profit before working capital changes 9425 7326 6770 4772 2395 Adjustments for Working Capital changes Inventories (1670) (94) (2367) (52) (739) Trade and other payables 1574 (450) 1629 103 925 Trade and other Receivables (1100) (2751) (2130) (697) (2) Cash generated from Operations 8229 4031 3903 4125 2579 Tax Paid / Refund Received (Net) (610) (175) (481) 8 17 Net Cash from Operating Activities 7619 3856 3422 4133 2596 B. Cash Flow from Investing Activities Purchase of Fixed Assets (12610) (14275) (5507) (6332) (1841) Sale/write off of Fixed Assets 67 51 138 6 59 Sale/Purchase of Investment (Net) 275 (25) 38 (5) Dividend on Investments 2 1 3 2 5 Increase in Loans Given (1702) (1235) 372 (721) 67 Net Cash generated / (-) used in Investing (13968) (15458) (5019) (7008) (1715) Activities
127 OCL INDIA LIMITED
(Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 C. Cash Flow from Financing Activities Arrears of Share Capital including Share 1786 0 8 0 0 premium received Shares bought back (947) (36) Capital Investment Subsidy Received 5 Secured Loans 9216 12045 693 4095 (709) Unsecured Loans (1034) 1632 2354 706 415 Dividend Paid (297) (594) (148) (71) Taxes on Dividend Paid (42) (78) (19) Interest (Net) (1335) (1296) (671) (772) (874) Net Cash from Financing Activities 8299 11710 1270 3959 (1204) Net changes in Cash and Cash equivalents 1950 109 (328) 1084 (322) Net Increase / (-)Decrease in Cash and Cash equivalents Balance at the end of the year/period 3429 1479 1371 1698 614 Balance at the beginning of the year/period 1479 1371 1698 614 936 1950 109 (328) 1084 (322)
Annexure ‘F’: Statement of Secured Loans as on March 31, 2006 (Rs. in lacs) S. No. Description of Loan Sanctioned Amount FY FY FY FY FY Assets Charged as Security Amount Outstnading 2007 2008 2009 2010 2011 (Repayment Schedule) 1 UTI Bank Limited 5,000 3438 1250 1250 938 0 0 Exclusive charge on movable fixed assets acquired out of loan and second charge on Land and building of cement division and charge on fixed assets of second cement vertical roller mill. 2 UTI Bank Limited 600 187 150 37 0 0 0 Hypothecation of all immovable and movable assets of sponge iron division 3 UTI Bank Limited 400 200 133 67 0 0 0 Exclusive first charge equipments acquired out of the loan and first pari-passu charge on land of sponge iron division 4 UTI Bank Limited 540 450 180 180 90 0 0 Exclusive charge on the movable fixed assets of Sponge Iron Division (Kiln-4). 5 UTI Bank Limited 1600 1600 100 400 400 400 300 Exclusive first charge on fixed Assets of Steel/Sponge iron division funded out of the loan
128 Annexure ‘F’: Statement of Secured Loans as on March 31, 2006 (Rs. in lacs) S. No. Description of Loan Sanctioned Amount FY FY FY FY FY Assets Charged as Security Amount Outstnading 2007 2008 2009 2010 2011 (Repayment Schedule) 6 State Bank of India 3800 2850 760 760 760 570 0 Secured by Hypothecation of second cement vertical roller mill and first charge on the land on which said plant is situated and second charge on cement division of the company 7 State Bank of India 500 325 100 100 100 25 0 Hypothecation of plant and machinery and other fixed assets of Kiln-III of sponge iron division and pari-passu charge on the land on which the sponge iron plant is situated 8 State Bank of India 550 275 110 110 55 0 0 Hypothecation of plant and machinery and other fixed assets of Second sponge iron unit and first pari-passu charge on the land on which the sponge iron plant is situated 9 State Bank of India 7979 7631 1589 1589 1589 1394 1200 1st charge over the Plant and Machinery of CVRM-III plant of the Company and EM over the landed properties over which CVRM Plant is located on pari- passu basis with UTI Bank Limited 10 State Bank of India 1200 700 225 300 300 300 75 Exclusive 1st charge on Plant and Machinery of the Concast Plant of Refractory Division and equitable mortgage over the landed properties on which the plant is located 11 State Bank of India 3800 3800 713 950 950 950 237 Exclusive 1st charge on Plant and Machinery of the Captive Power Plant and equitable mortgage over the landed properties over which Captive Power Plant is located on pari-passu basis with UTI Bank Limited 12 UTI Bank Limited 3000 3000 0 0 1000 1000 1000 Secured by equitable mortgage (Debentures) of immovable properties of Refractory Division of the Company and hypothecation of movable assets of this division save and except the prior charge in favour of banks over inventories and book debts to secure working capital limits
129 OCL INDIA LIMITED
(Rs. in lacs) S. No. Description of Loan Sanctioned Amount FY FY FY FY FY Assets Charged as Security Amount Outstnading 2007 2008 2009 2010 2011 (Repayment Schedule) B. Working Capital Loans 11900 9687 — — — — — Secured by hypothecation of raw from Banks materials, finished and partly finished goods, consumable stores and book debts of the Company. These facilities are further secured by second charge over the fixed assets of the Cement Unit of the Company
Total 33,873
Annexure ‘G’: Contingent Liabilities (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Claims against companies not 1117 878 705 679 537 acknowledged as debts Others 18 16 14 42 35 Total 1135 894 719 721 572
Annexure ‘H’: Details of Other Income (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Remarks Dividend Receipts 2 1 3 2 5 Recurring Lease Rent from Railways on Wagons 84 89 89 87 86 Recurring Excess Provision written back 91 74 55 57 72 Recurring Profit on Sale of Investments 273 - - - - Non-recurring Miscellaneous Income 643 422 375 267 267 Recurring Total 1093 586 522 413 430
130 Annexure ‘I’: Statement of Tax Shelter (Rs. in lacs) Particulars FY 2006* FY 2005 FY 2004 FY 2003 FY 2002 Profit before tax 5557 3659 3499 2412 678 Tax Rates 33.66% 36.59% 35.88% 36.75% 35.70% Tax at Notional Rates 1870 1339 1255 886 242 Adjustments Difference between Tax and Book depreciation 3627 2261 1589 972 (7) Reversal of deferred tax assets including 357 757 126 414 (155) VRS Payment Set Offs against brought forward: - Unabsorbed Depreciation - - - 527 914 - Long Term Capital Loss 273 - - - (20) Others 112 (103) (28) (105) (54) Total Adjustments 4369 2914 1687 1808 678 Tax savings on above 1470 1066 605 664 242 Tax after adjustments 400 273 650 222 - - MAT 475 287 268 190 60 Current Tax - higher of above two 475 287 650 222 60 * Return of Income Tax has not been filed. Tax liabilities for FY 2006 are estimates.
Annexure ‘J’: Market Value of Investments (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 Quoted Investments 4 4 5 5 5 Unquoted Investments 59 61 60 36 73 Total 63 65 65 41 78 Market Value of Quoted Investments 138 80 67 39 41
131 OCL INDIA LIMITED
MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF THE OPERATIONS
You should read the following discussion and analysis of the Companies financial condition and results of operations together with the Companies financial statements included in this report. You should also read the section titled “Risk Factors” beginning on page vi, which discusses a number of factors and contingencies that could impact the Companies financial condition and results of operations. The following discussion relates to the Company on a standalone basis and is based on our restated financial statements, which have been prepared in accordance with Indian GAAP and the RBI guidelines. The Companies fiscal year ends on March 31 of each year so all references to a particular fiscal year are to the twelve months ended March 31 of that year. Overview Our Company is into the business of manufacture of cement, refractories and sponge iron. Our cement factory was started with an objective of setting up a superior grade cement manufacturing facility at Rajgangpur in Orissa at the request of the Government of Orissa for use in the construction of Hirakud Dam, now we are a company with annual turnover exceeding Rs. 650 crores. We have experience of over five decades in the manufacture of cement and refractories. Sponge iron division of the Company is relatively new and we are into this segment of the business since 2002. We sell cement mainly in Eastern India under the brand ‘Konark’. Our Company is the largest manufacturer and seller of grey cement in the State of Orissa and one of the most prominent players in the Eastern India. Over the period of time ‘Konark’ has been able to establish itself as premium quality grey cement. Our cements are certified under ISO 9001(Version 2000). Our refractories manufacturing capacity is approximately 80,000 metric tonnes per annum. In the year 1994, we obtained ISO 9001 certification for our entire range of refractories works, the first ever company to do so in India. Going ahead, besides continuously adding to the capacities of cement, refractories and sponge iron, we intend to venture into steel manufacturing. We have already entered in to a memorandum of understanding with the Government of Orissa for setting up a 0.25 MnTPA of steel plant and 14 MW capacity power plant. Significant developments subsequent to the last financial year In our opinion there are no significant developments that have taken place from the date of the last financial statements disclosed in the Letter of Offer that have an adverse material impact on our operation or financial conditions. Sector Outlook - Cement There was no major announcement for the cement sector in the Union Budget 2006-07. Thus, cement industry is expected to continue to grow at 8% to 9% in the medium to long term. Government’s initiatives on the infrastructure and housing sector fronts would continue to remain the key drivers. With no major capacity expansion in the pipeline in the country, the demand supply equation is expected to continue to remain favourable for cement manufacturers and this will help in the improvement of prices. Customs duty on cement reduced from 15% to 12.5% in line with the reduction in peak customs duty. Factors affecting operations The factors that may affect our business operations are: Availability of raw materials and the Company’s ability to mine these raw materials; Access to cheap source of power; Ability of the Company to continue to maintain the plants; Ability of the Company to continue to retain skilled personnel; Ability of the Company to successfully implement the upcoming steel plant.
132 Abridged Statement of Profit & Loss (Rs. in lacs) Particulars FY 2006 FY 2005 FY 2004 FY 2003 INCOME Net Sales 59712 48601 38393 31246 Other Receipts 1093 586 522 413 Net Change in Inventory 479 -675 542 453 Total Income 61284 48512 39457 32112 EXPENDITURE Raw Material Consumed 21871 18305 13994 10463 Purchases 694 1518 289 32 Salaries, Wages & Benefits to Employees 2456 2295 2636 2876 Power and Fuel 8695 7019 6385 5724 Other Expenses 17972 12206 10015 8422 EBDIT 9596 7169 6138 4595 Depreciation 2704 2214 1968 1411 EBIT 6892 4955 4170 3184 Net Interest 1335 1296 671 772 Total Expenditure 55727 44853 35958 29700 Net Profit/ (Loss) Before Tax 5557 3659 3499 2412 Less: Provision for Tax - Current 475 300 650 222 Less: Fringe Benefit Tax 60 0 0 0 Less: Provision for Tax - Deferred 1310 743 588 357 Provision for tax relating to earlier years /written back - 201 0 0 Net Profit/ Loss for the Year as per audited statement 3779 2817 2261 1833 of accounts Adjustments & Appropriations 376 744 1574 724 Adjusted balance of Profit carried to Balance Sheet 4155 3561 3835 2557
Segment wise Revenue (Rs. in lacs) Particulars FY 2006 FY2005 FY2004 FY2003 Cement 38348 30112 26392 25086 Refractory 20990 15962 13234 10046 Sponge Iron 10001 9378 5302 1225 Mercandise Export - 914 - - Other Reciept 1093 586 522 413
133 OCL INDIA LIMITED
Segment wise Revenue as a percentage of Total Sales Particulars FY 2006 FY 2005 FY 2004 FY 2003 Cement 55% 53% 58% 68% Refractory 30% 28% 29% 27% Sponge Iron 14% 16% 12% 3% Merchandise Export - 2% - - Other Receipts 1% 1% 1% 1%
Profit Increase over the previous year Particulars FY 2006 FY 2005 FY 2004 FY 2003 EBDITA 33.85% 16.80% 33.58% 63.46% EBIT 39.09% 18.82% 30.97% 105.15% PBT 51.87% 4.57% 45.07% 255.75% PAT 34.15% 24.59% 23.35% 171.96%
REVIEW OF RESULTS OF OPERATIONS
Year ended March 31, 2006 compared with the year ended March 31, 2005
Revenue and Operating Margins The net sales have increased by 23% from Rs. 48,601 lacs to Rs. 59,712 lacs. The revenue from cement increased by 27% from Rs. 30,112 lacs to Rs. 38,348 lacs, refractory by 31% from Rs. 15,962 lacs to 20,990 lacs and Sponge Iron by 7% from Rs. 9,378 lacs to 10,001 lacs. During the year the capacity of Cement Division has increased from 1.45 MT to 1.8 MT per annum. The increased revenue and better profit margin were mainly due to incrase in demand for refractory in the domestic and export market. The revenue for the year ended March 31, 2006 comprise of cement 55%, refractory 30% and sponge iron 14% as compared to revenue in last year – cement 58%, refractory 29% and sponge iron 16%.
Raw Material Consumption and other Manufacturing Expenditure Raw materials consumed (including purchases) increased by 14% mainly due to increase in purduction, increase in cost of raw material and change of product mix. The increase in power and fuel is 24%, depreciation 22% and other expenses by 47%. The increase in other expenses is mainly due to replacement of non-recurring spares/stores in plant and machinery and relining of kilns in refractory division. The increase in interest paid is 51%. The interest income in this year is higher by 198% on account of interest on refund of Cess, income tax and on ICD given. As a percentage of total expenditure, raw material consumed has reduced from 41% to 40%, salary and wage to employees have reduced from 5% to 4%. Power and fuel reduced from 16% to 15% and other expenses from 27% to 23%, depreciation remained constant at 5%.
Profit Margin EBDIT has increased by 34%, EBIT has increased by 39%, PBT has increased by 52% and PAT has increased by 34%. The operating results show increased profit margins in all the segments of the business of the Company.
134 Year ended March 31, 2005 compared with the year ended March 31, 2004
Revenue and Operating Margins The net sales has increased by 27% from Rs. 38393 lacs to Rs. 48601 lacs.. The revenue from cement increased by 14% from Rs. 26392 lacs to Rs. 30112 lacs, refractory by 21% from Rs.13234 lacs to Rs.15962 lacs and Sponge Iron by 77% from Rs. 5302 lacs to Rs. 9378 lacs. During the year the capacity of Sponge Iron has increased from 0.90 lacs to 1.20 lacs tonnes per annum. The increased revenue and better profit margin were mainly due to increase in demand for refectories in domestic sales and export market. During this year, the Company incurred a loss of Rs.804 lacss on merchandise exports. Thereafter, the Company has ceased to undertake this export activity. The revenue for the year ended 31st March 2005 comprises of Cement 53%, refractory 28%, Sponge Iron 16% as compared to revenue in last year – Cement 58%, refractory 29% and Sponge Iron 12%.
Raw Material Consumption and other Manufacturing Expenditure Raw material consumed (including purchases) increased by 39% mainly due to increase in production, increase in cost of raw material and change of product mix.. The increase in power and fuel is 10%, depreciation 12.50% and other expenses by 22%. The increase in other expenses is mainly due to substantial repair and maintenance in refractory division. The increase in interest paid is about 11%. The interest income in this year is lower, as in the last year interest on Income Tax refunds (amounting to Rs.578 lacss) was received. Consequently, the net interest paid appears higher by 93% as compared to last year. As a percentage of total expenditure, raw material consumed has increased from 39% to 41%, salary and wages to employees have reduced from 7% to 5% ( due to VRS in the last year). Power and fuel reduced from 18% to 16% and other expenses from 28% to 27%, depreciation remained constant at 5%.
Profit Margin EBDIT has increased by 17%, EBIT has increased by 19%, PBT has increased by 5% and PAT has increased by 25%. This shows that while increase in EBIT and PBT is lower over the previous year, PAT margins have marginaly increased.
Year ended March 31, 2004 compared with the year ended March 31, 2003
Revenue from operations The net sales has increased by 23% from Rs. 31246 lacs to Rs. 38393 lacs. The revenue from cement has increased by 5% from Rs. 25086 lacs to Rs. 26392 lacs, refractory by 32% from Rs. 10046 lacs to Rs. 13234 lacs and Sponge Iron by 333% from Rs. 1225 lacs to Rs. 5302 lacs.. During this year the capacity of Sponge Iron unit was increased from Rs. 0.60 lacs to 0.90 lacs tonne per annum, which accounts for the substantial increase in the revenue from sponge iron. The increased revenue and better profit margin were mainly due to substantial increase in revenue and margins in refractory and sponge iron divisions. The revenue for the year ended 31st March 2004 comprises of cement 58%, refractory 29%, Sponge Iron 12% as compared to revenue in last year - Cement 68%, Refractory 27% and Sponge Iron 3%.
Raw Material Consumption and other Manufacturing Expenditure Raw material consumed (including purchase) increased by 36% mainly due to increase in production, increase in cost of raw material and change of product mix. The production of sponge iron has gone up from 21,519 tonnes to 68,832 tonnes and turnover has increased by 333%, reflecting the increased operations of Sponge Iron. The increase in power and fuel is 12% depreciation 40% and ‘other expenses’ by 19 %. Amount paid under voluntary retirement scheme (VRS) and treated as deferred revenue expenditure last year amounting to Rs. 424 lacs has been written off in this year and included under the head Salaries and Wages. The increase in other expenses is mainly due to repair and maintenance of buildings, irrecoverable balances written off and contribution to research institutes etc. The increase in interest paid is about 33% due to increased borrowings for capital expenditure/expansion of manufacturing units. In this year interest received includes interest on income tax refunds amounting to Rs. 578 lacss and consequently there is decrease in net interest paid by 13%. As a percentage of total expenditure, raw material consumed has increased from 35% to 39%, salary and wages to employees has reduced from 10% to 7% (due to higher amount of VRS in the last year), Power and fuel reduced from 19% to 18%, ‘other expenses’ remained at 28%, depreciation at 5% and net interest revised from 3% to 2%.
135 OCL INDIA LIMITED
Profit EBDIT has increased by 34%, EBIT has increased by 31%, PBT has increased by 45% & PAT has increased by 23%. The operating results show buoyancy and increased profit margins in all the segments of the business of the Company.
Other Disclosures
Unusual or Infrequent Events or Transactions
There are no unusual or infrequent events or transactions, which has had significant impact on the operations of the Company. Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known Nil The extent to which material increases in net sales or revenue is due to increased sales volume, introduction of new products or services or increased sales prices The growth in revenues is in line with the normal growth in the industry.
Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue, or income from continuing operations No known trends and uncertainties are envisaged from continuing operations.
Significant economic changes that materially affected or are likely to affect income from continuing operations Inability on our part to pass on any increase in VAT, sales tax and customs duty to end users on account of competitive pressures may have adverse impact on our business.
Status of any publicly announced new products or business segment Our Company has not publicly announced any new products or segments.
The extent to which the business is seasonal Our Company’s business is not seasonal.
Any significant dependence on a single or few suppliers or customers We are not significantly dependent on any single or few suppliers or customers.
Competitive conditions Cement accounts for over 50% of our revenues. We sell cement that we manufacture mainly in the Eastern India under the brand name ‘Konark’. Over the period of time ‘Konark’ cement has been able to establish itself as premium quality grey cement. ‘Konark’ is a strong brand name for superior grade grey cement in the Eastern India, more particularly in the state of Orissa. The other promonent manufacturers of cement in the Eastern India are Ultratech Cement and Bargarh Cement. Chattisgarh is also a cluster of cement manufacturers and grinding units. We face competiton from other cement manufacturers and grinding units based in these areas. Refractories accounts for around 30% of our revenues. We sell our products of refractories both in the domestic and international market. We face competiton both from the local manufacturers of refrcatories as well as manufacturers based in China.
136 STATUTORY AND OTHER INFORMATION
Authority for the Issue The Rights Issue has been authorized by the Board of Directors at its meeting held on October 29, 2005. The Committee of Directors authorized by the Board of Directors of the Company to decide on various matters related to the Rights Issue has in its meting held on August 19, 2006 determined the Rights Issue price at Rs. 120 per Equity Share.
Prohibition by SEBI Our Company, our Directors, our Promoters, other companies/entities promoted by our Promoters and companies/entities with which our Directors are associated as directors, have not been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI. Our Company, our Directors, our Promoters, other companies/entities promoted by our Promoters have not been detained as wilful defaulters by RBI or Government authorities and there are no violation of securities laws committed by them in the past or pending against them.
Eligibility for the Issue OCL India Limited is an existing listed company. This being a Rights Issue, we are exempt from the eligibility norms under clause 2.4.1 (iv) of SEBI (DIP) Guidelines.
Disclaimer Clause AS REQUIRED, A COPY OF THE LETTER OF OFFER HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF LETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED/ CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPOSIBILITY 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 LETTER OF OFFER. THE LEAD MANAGER, UTI BANK LIMITED HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI GUIDELINES FOR DISCLOSURE AND INVESTOR PROTECTION IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE 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 OFFER DOCUMENT, THE LEAD MANAGER ARE EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER, UTI BANK LIMITED, HAVE FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED MARCH 20, 2006 IN ACCORDANCE WITH SEBI (MERCHANT BANKERS) REGULATIONS, 1992, WHICH READS AS FOLLOWS: “1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIALS IN CONNECTION WITH THE FINALISATION OF THE LETTER OF OFFER PERTAINING TO THE ISSUE. 2. ON THE BASIS OF SUCH EXAMINATION AND DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND OTHER PAPERS FURNISHED BY THE COMPANY. WE CONFIRM THAT: (A) THE LETTER OF OFFER FORWARDED TO SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE; (B) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE 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
137 OCL INDIA LIMITED
(C) THE DISCLOSURES MADE IN THE LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE ISSUE. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE LETTER OF OFFER ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATIONS ARE VALID. WHEN UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE NET WORTH OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS. THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 AND SECTION 68 OF THE ACT OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY AND OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP AT ANY POINT OF TIME, WITH THE LEAD MANAGER, ANY IRREGULARITIES OR LAPSES IN THE LETTER OF OFFER.
General Disclaimer The Company and the Lead Manager accepts no responsibility for statements made otherwise than in the Letter of Offer or in any advertisement or other material issued by the Company or by any other persons at the instance of the Company and anyone placing reliance on any other source of information would be doing so at his own risk. The Lead Manager and the Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports, etc. after filing of the Letter of Offer with SEBI. The Lead Manager and the Company shall update the Letter of Offer and keep the public informed of any material changes till the listing and trading commences.
Disclaimer in respect of Jurisdiction The Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and regulations hereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in New Delhi only. The Draft Letter of Offer has been filed with SEBI, Mittal Court, ‘A’ Wing, Nariman Point, Mumbai 400 021 for its observations. The Letter of Offer shall be filed with the Designated Stock Exchange as per the provisions of the Act.
Designated Stock Exchange The Designated Stock Exchange for the purpose of the Issue will be Bombay Stock Exchange Limited.
Disclaimer Clause of the National Stock Exchange of India Limited As required, a copy of the Letter of Offer has been submitted to National Stock Exchange of India Limited (hereinafter referred to as NSE Limited). NSE Limited has given vide its letter dated May 12, 2006 permission to the Issuer to use the Exchange’s name in the Letter of Offer as one of the stock exchanges on which the Company’s securities are proposed to be listed. The Exchange has scrutinized the Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the Issuer. It is to be distinctly understood that the aforesaid permission given by NSE Limited does not warrant that the Letter of Offer has been cleared or approved by NSE Limited; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of the Letter of Offer nor does it warrant that the Issuer’s securities will be listed or will continue to be listed on NSE Limited nor does it take any responsibility for the financial or other soundness of the Company, its promoters, its management or any scheme or project of the Issuer.
Disclaimer Clause of Bombay Stock Exchange Limited Bombay Stock Exchange Limited (hereinafter referred to as BSE Limited) has vide its letter dated May 4, 2006 given permission to the Company to use the BSE’s name in the Letter of Offer as one of the stock exchanges on which this Company’s securities are proposed to be listed. The BSE Limited has scrutinized the Letter of Offer for its limited internal
138 purpose of deciding on the matter of granting the aforesaid permission to this Company. BSE Limited does not in any manner: a) warrant, certify or endorse the correctness or completeness of any of the contents of the Letter of Offer; or b) warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or c) take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of the Company; and it should not for any reason be deemed or construed that the Letter of Offer has been cleared or approved by the BSE Limited. Every person who desires to apply for or otherwise acquires any securities of the Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against BSE Limited 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 for any other reason whatsoever.
Undertaking from the Promoters and Directors The Company accepts full responsibility for the accuracy of the information given in the Letter of Offer and confirms that to the best of their knowledge and belief, there are no other facts, their omission of which make any statement in the Letter of Offer misleading and they further confirm that they have made all reasonable inquiries to ascertain such facts. The Company further declares that the Stock Exchanges to which an application for official quotation is proposed to be made do not take any responsibility for the financial soundness of the Issue or for the price at which the Equity Shares are offered or for the correctness of the statement made or opinions expressed in the Letter of Offer. The Promoters/ Directors declare and confirm that no information/material likely to have a bearing on the decision of investors in respect of the Equity Shares offered in terms of the Letter of Offer has been suppressed, withheld and/or incorporated in the manner that would amount to misstatement, misrepresentation and in the event of its transpiring at any point of time till allotment/refund, as the case may be, that any information/material has been suppressed /withheld and/or amounts to a misstatement/ misrepresentation, the Promoters/Directors undertake to refund the entire application monies to all the subscribers within 7 days thereafter without prejudice to the provisions of Section 63 of the Companies Act.
Filing The Letter of Offer was filed with SEBI, Mittal Court, Nariman Point, Mumbai 400 021. The Letter of Offer has been filed with the Stock Exchanges. All the legal requirements applicable till the date of filing the Letter of Offer with the Stock Exchanges has been complied with.
Dematerialised Dealing The Company has agreements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and its Equity Shares bear the ISIN No. INE290B01025.
Listing The existing Equity Shares of the Company are listed on the NSE Limited, BSE Limited and Bhubaneswar Stock Exchange. The Equity Shares of the Company were also listed on Delhi Stock Exchange and Kolkata Stock Exchange. As the Equity Shares of our Company were mainly traded on NSE Limited and BSE Limited and virtually negligible trading was taking place at Kolkata Stock Exchnage, Bhuabeswar Stock Exchange and Delhi Stock Exchange, we had applied to these three stock exchanges for getting our Equity Shares voluntarily delisted. Pursuant to our application, we have been delisted from Delhi Stock Exchange and Kolkata Stock Exchange w.e.f. July 12, 2004 and April 25, 2005 respectively. However, our application for delisting from Bhubaneswar Stock Exchange is pending. The Company has made applications to BSE Limited and NSE Limited for permission to deal in and for an official quotation in respect of the Equity Shares being offered in terms of the Letter of Offer. The Company has received in principle approval from BSE Limited and NSE Limited vide letters dated May 4, 2006 and May 12, 2006 respectively. If the permission to deal in and for an official quotation of the securities is not granted by NSE Limited or BSE Limited within six weeks from the Issue Closing Date, the Company shall forthwith repay, without interest, all monies received
139 OCL INDIA LIMITED from applicants in pursuance of the Letter of Offer. If such money is not paid within eight days after the Company becomes liable to repay it, then the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest at the rate of 15% per annum as prescribed under the Section 73 of the Act.
Consents The written consents of Promoters, Directors, Complaince Officer, Company Secretary, Auditors, Legal Advisors, Lead Manager, Registrar to the Issue, Bankers to the Company and Banker to the Issue to act in their respective capacities, have been obtained and such consents have not been withdrawn up to the time of delivery of the Letter of Offer for registration. The Auditors of the Company have given their written consent for the inclusion of their Report in the form and content as appearing in the Letter of Offer and such consents and reports have not been withdrawn up to the time of filing of the Letter of Offer with the Stock Exchanges. To the best of our knowledge there are no other consents required for making the Issue. However, should the need arise, necessary consents shall be obtained by us.
Fees Payable to the Lead Manager to the Issue The fees payable to the Lead Manager to the Issue are set out in the Memorandum of Understanding entered into by the Company with UTI Bank Limited, copy of which is available for inspection at the Registered Office of the Company. Fees Payable to the Registrars to the Issue The fee payable to the Registrars to the Issue is as set out in the relevant documents, copies of which are kept open for inspection at the Registered Office of the Company. Impersonation As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of subsection (1) of Section 68A of the Companies Act, 1956 which is reproduced below: “Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any Equity Shares therein, or otherwise induces a Company to allot, or register any transfer of Equity 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” Expert Opinion Save and except the ‘Statement of Tax Benefits’ and ‘Report of the Auditor’ disclosed on page 23 and 93 respectively of the Letter of Offer, the Company has not obtained any expert opinions. Underwriting The Issue is not underwritten. If the Company does not receive the minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the applicants within forty-two days from the date of closure of the Issue. If there is a delay in the refund of subscription by more than 8 days after the Company becomes liable to repay the subscription amount, (i.e. forty two days after closure of the Issue), the Company will pay interest for the delayed period, at prescribed rates in sub-section (2) and (2 A) of Section 73 of the Act. The Rights Issue will become undersubscribed after considering the number of Equity Shares applied as per entitlement plus additional Equity Shares. Expenses of the Issue The expenses for the Rights Issue are estimated to be around Rs. 42.50 lacs, i.e., at approximately 0.55 % of the Issue Size. The expenses for the Issue will include issue management and marketing fees payable to the Lead Manager Rs. 20 lacs, Registrar’s fees of Rs. 0.50 lacs, Legal Advisor’s fees of Rs. 3 lacs, Auditor’s fees of Rs. 1 lac, printing and distribution costs estimated at Rs. 8 lacs, advertisement cost estimated at Rs. 5 lacs, other expenses and contingencies estimated at Rs. 5 lacs. The expenses for the Issue will be borne out of the proceeds of the Issue.
140 Previous Public or Rights Issues We have not made any public or rights Issues during last five years. The following is the details of other Issues made by the Company:
Previous Issue of Shares Otherwise than for Cash We have made following allotments of Equity Shares for consideration other than cash: Date of Allotment Number of Equity Shares Face Value Nature of Allotment January 28, 1967 4,50,000 10 Bonus in the ratio of 1:5 September 23, 1987 27,00,000 10 Bonus in the ratio of 1:1 Particulars in Regard to the Company and Other Listed Companies under the Same Management within the meaning of Section 370(1)(B) of the Companies Act, 1956, which made any Capital Issue during last three years There are no listed companies under the same management within the meaning of section 370 (1)(B) of the Companies Act that made any capital issue during the last three years.
Outstanding Bonds/ Debentures In January 2005 our Company had issued 30 (thirty) 7.75% Secured Redeemable Non Convertible Debentures (NCDs) of face value of Rs. 1 crore each totaling to Rs. 30 crores. These NCDs have tenure of 5 years and are to be redeemed at par in three equal installments at the end of 3rd, 4th and 5th year. The NCDs are listed at the whole debtmarket segment of BSE Limited. Except as above there are no outstanding debentures or bonds or redeemable preference shares or any other instruments issued by the issuer company outstanding as on the date of the Letter of Offer. Further, our Board in it’s meeting held on July 17, 2006 has approved the issue of secured redeemable non-convertible debentures aggregating to Rs. 50 crores on a private placement basis.
Stock Market Data for our Equity Shares For stock market data of our Company refer to the section titled ‘Stock Market Data’ on page 144 of the Letter of Offer.
Mechanism evolved for Redressal of Investor Grievances Investor’s grievances will be settled expeditiously and satisfactorily by our Company. The agreement between the Company and the Registrar to the Issue will provide for retention of records with the Registrar to the Issue for a period of at least one year from the last date of dispatch of letters of allotment, refund orders, demat credit, to enable the investors to approach the Registrar to the Issue for redressal of their grievances. All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details including name, address of the applicant, number of Equity Shares applied for, amount paid on application and the bank branch or collection center where the application was submitted. Investors may contact the Compliance Officer in case of any Pre-Issue or Post-Issue related complaints such as non- receipt of allotment advice, refund orders, demat credit, etc.
Shareholders/Investor Grievance Committee The Shareholders/Investor Grievance Committee consists of four Directors with Mr. D N Davar as its Chairman and Mr. V D Jhunjhunwala, Mr. V.P.Sood and Dr. S R Jain as its members.
Disposal of Investor Grievances We estimate that the average time required by us or the Registrar to the Issue for the redressal of routine investor grievances shall be seven working days from the date of receipt of the complaint. In case of non-routine complaints and
141 OCL INDIA LIMITED where external agencies are involved, we or the Registrar to the Issue will strive to redress these complaints as expeditiously as possible.
Confirmations of Stock Exchanges The Company has been issued a letter dated April 20, 2005 from the Investor Grievance Cell of NSE Limited that as on date of issue of the said letter, there were no investor complaints pending redressal from the Company.
Status of Investor Grievances Particulars FY 2006 FY 2005 FY 2004 Investor grievances outstanding at beginning of the year Nil Nil Nil Received during the year 5 3 12 Resolved during the year 4 3 12 Investor grievances outstanding at end of the year 1 Nil Nil
Mechanism evolved for Redressal of Investor Grievances at Dalmia Cements, our listed Group Company To redress the drievances of shareholders of the Company, the BOD has constituted a Shareholders Committee, which looks into the grievances of shareholders in consultation the Regiatrar and Share Transfer Agent of the Company. Further the power of transfer of shares/debentures has been delegated to the Senior officials of the company for speedy disposal of the transfer work.
Changes in the Auditors during the last Three Years and Reasons thereof There have been no changes in the auditors of the Company during past three years.
Capitalization of Reserves or Profits We have not capitalized our reserves or profits during the last five years. However, we have twice capitalized our reserves, details of which are given as under: Date of Allotment Number of Equity Shares Face Value Nature of Allotment January 28, 1967 4,50,000 10 Bonus in the ratio of 1:5 September 23, 1987 27,00,000 10 Bonus in the ratio of 1:1
Revaluation of Assets during the last Five Years We have not revalued the assets during the last five years. However, assets of the Company were revalued in the past and there was a credit balance of Rs. 400.32 lacs in the Revaluation Account as on March 31, 2006. The following table sets forth details of the assets revalued in past: (Rs. in lacs) S. No. Financial Year/Date Details of Amount Amount Standing Fixed Assets Added on as on Revalued Revaluation March 31, 2006 1 1985 (Assets acquired up to 31.12.1981) Land 134 131.65 2 1985 (Assets acquired up to 31.12.1981) Building 1329 243.60 3 1985 (Assets acquired up to 31.12.1981) Plant & Machinery 2487 25.07 TOTAL 3950 400.32
142 IMPORTANT The Issue is pursuant to the resolution passed by the Board of Directors at its meeting held on October 29, 2005 authorizing the Issue. The Issue is applicable to Eligible Equity Shareholders of our Company, whose name stands registered on our Company’s register of members: 1. As beneficial owners as at the end of business hours on September 4, 2006 as per the list to be furnished by NSDL and CDSL in respect of Equity Shares held in electronic form; and 2. As members in the register of members of our Company after giving effect to valid share transfers in physical form lodged with our Company on or before September 4, 2006 Your attention is drawn to the section on “Risk Factors” appearing on Page vi of the Letter of Offer. Please ensure that you have received the CAF along with the Letter of Offer. Please read the Letter of Offer and the instructions contained herein and in the CAF carefully before filling in the CAFs. The instructions contained in the CAF are an integral part of the Letter of Offer and must be carefully followed. An application is liable to be rejected for any non-compliance of the Letter of Offer or the CAF. All enquiries in connection with the Letter of Offer or CAFs should be addressed to the Registrar to the Issue, quoting the Registered Folio number/ DP and Client ID number and the CAF numbers as mentioned in the CAFs. The Lead Manager and the Company will make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of the Letter of Offer with SEBI. The Lead Manager and the Company shall update the Letter of Offer and keep the public informed of any material changes till the listing and trading commences. All the legal requirements as applicable till the filing of the Letter of Offer with the Stock Exchanges have been complied with.
All the Eligible Equity Shareholders have been sent the Abridged Letter of Offer. However, the Letter of Offer shall be made available on receipt of specific request from any Eligible Equity Shareholder. Such request for the Letter of Offer must be sent to the compliance officer or the Registrar to the Issue before closure of the Issue.
143 OCL INDIA LIMITED
STOCK MARKET DATA
The existing Equity Shares of the Company are listed on the NSE Limited, BSE Limited and Bhubaneswar Stock Exchange. The Equity Shares of the Company were also listed on Delhi Stock Exchange and Kolkata Stock Exchange. As the Equity Shares of our Company were mainly traded on NSE Limited and BSE Limited and virtually negligible trading was taking place at Kolkata Stock Exchnage, Bhuabeswar Stock Exchange and Delhi Stock Exchange, we had applied to these three stock exchanges for getting our Equity Shares voluntarily delisted. Pursuant to our application, we have been delisted from Delhi Stock Exchange and Kolkata Stock Exchange w.e.f. July 12, 2004 and April 25, 2005 respectively. However, our application for delisting from Bhubaneswar Stock Exchange is pending. The following is the movement in the share price of Equity Shares of the Company at the NSE Limited: FY High Low Average Date Trading Price Volume Date Trading Price Volume Price 2004 Dec 23rd 472.05 2225 Nov 2nd 332 2328 277.25 2005 Apr 25th 730 606068 Nov 2nd 121.2 20674 425.6 2006 May 2nd 214 77480 June 9th 115 22694 164.5 (Source: NSE Website) W.e.f. June 25, 2005 Equity Share of Rs.10/- each were subdivided into 5 Equity Shares of Rs. 2/- each The following is the movement in the share price of Equity Shares of the Company at BSE Limited: FY High Low Average Date Trading Price Volume Date Trading Price Volume Price (Rs.) 2004 Oct 11th 464.95 2881 Jan 23rd 192.95 2406 328.95 2005 Apr 25th 700 3088 Nov 1st 120 4080 410 2006 May 2nd 220 61957 June 9th 110.05 11889 165.03 (Source: BSE Website) W.e.f. June 25, 2005 Equity Share of Rs.10/- each were subdivided into 5 Equity Shares of Rs. 2/- each The closing market price of the Equity Shares of the Company on BSE Limited on the day immediately preceding the day on which the Board approved the Issue (i.e. October 28, 2005) was Rs. 127 per Equity Share. (Source: BSE Website) Monthly high and low prices of Equity Shares of our Company for the preceding six months and volume of transactions on the respective dates of high and low on the NSE Limited is as follows: Period High Low Trading Price Date Volume Trading Price Date Volume February 2006 151 1st 12625 135.10 28th 13024 March 2006 162 2nd 47617 140 27th 100596 April 2006 207 10th 253263 149 3rd 81258 May 2006 214 2nd 77480 130 22nd 14409 June 2006 170 1st 10807 115 9th 22694 July 2006 162.7 27th 9662 134 24th 9936 (Source: NSE Website)
144 Monthly high and low prices of Equity Shares of our Company for the preceding six months and volume of transactions on the respective dates of high and low on BSE Limited is as follows: Period High Low Trading Price Date Volume Trading Price Date Volume February 2006 151 1st 5584 136.25 28th 10487 March 2006 161.80 2nd 33671 140.90 27th 48633 April 2006 208.35 10th 189878 148.95 3rd 74038 May 2006 220 2nd 61957 135 22nd 11460 June 2006 159.95 1st 5369 110.05 9th 11889 July 2006 165 27th 15933 133.3 24th 4514 (Source: BSE Website)
145 OCL INDIA LIMITED
GOVERNMENT APPROVALS AND LICENCING ARRANGEMENTS
In view of the approvals listed below, we can undertake the Issue and our current business activities and no further material approvals are required from any Government authority or the RBI to continue such activities. We have received the following Government approvals that are material to our business:
General Compliances S. No. Issuing Authority Registration No./ Nature of Issued on / Validity Remarks Licence No. Registration w. e.f. Period 1 RoC Cuttack 15-00185 Certificate of 11.10.1949 - Fresh certificate of Incorporation incorporation consequent Original registration upon name change from number given to Company Orissa cement Limited to was 10 - 1949-50 which OCL India Limited was was changed on new issued to Company on number pattern followed 15.01.1996 by the Department of Company Affairs 2 RoC Cuttack - Certificate of commence- 10.02.1950 - - ment of business 3 Income Tax Department AAACO1354J PAN 22.02.1999 - - 4 Income Tax Department BBNO00013G TAN 19.06.2002 - - 5 Commercial Tax Officer 21122000024 TIN 01.04.2005 - - 6 Central Sales Tax RL-II-C-I/ R.L.C.2 Registration under 01.07.1957 - - Department (CENTRAL) section 7(1) /7(2) of Central Sales Tax Act 7 Orissa Sales Tax R L 297 Registration under Orissa 20.05.1952 2005-06 - Department Sales Tax Act 8 Orissa Entry Tax RL-II-14 ET Registration under Orissa 07.12.1999 2005-06 As per provision under Department Entry Tax Act OET Act, in the RC under OST, Sales tax Officer has endorsed as “RL-II-14 ET” on 7/12/1999 for Orissa Entry Tax Act, 1999 (OET Act, 1999). No separate RC has been issued under OET Act 9 Jt. Director General of 2388000050 Certificate of Importer- 29.03.1988 - - Foreign Trade Office Exporter Code (original) fresh certificate issued on 30.10.2000 10 Chemicals and Allied CAPEXIL:ER:REG: Registration under Export 19.04.2006 31.03.2007 - Products Export CERAMICS:LM-113 promotion council Promotion Council (CAPEXIL) 11 Federation of Indian FIEO: 65/2004-05 Registration under Export 05.05.2005 31.03.07 - Export Organisation promotion council. (FIEO)
146 S. No. Issuing Authority Registration No./ Nature of Issued on / Validity Remarks Licence No. Registration w. e.f. Period 12 State Electricity Board - Agreement with Western 01.04.2005 31.03.10 This agreement is for the for the use of electricity Electricity Supply Company period of 5 years Board (WESCO) of Orissa Limited for supply of electricity energy to the premises of Company at Rajgangpur. 13 Orissa State Pollution 590 Registration under 13.01.2006 12.01.2008 - Control Board Hazardous Waste (Management and Handling) Rules, 1989 14 Orissa State Pollution 4274 Registration under Air 03.03.2006 31.03.2006 Renewal application made Control Board (Prevention & Control of on 14.03.2006 Pollution) Act, 1974 u/s 21 to operate an industrial plant to discharge the emissions arising out of the premises 15 Orissa State Pollution 4276 Registration under Water 03.03.2006 31.03.2006 Renewal application made Control Board (Prevention & Control of on 14.03.2006 Pollution) Act, 1974 u/s 25 & 26 of the Act for discharge of effluents arising out of the premises Cement Manufacturing Division S. No. Issuing Authority Registration No./ Nature of Registration ssued on / Validity Remarks Licence No. Iw.e.f period 1 Bureau of Indian IS/ISO 9001:2000– Licence for the quality 15.04.2004 14.04.2007 - Standard QSC/L 003662.2 management systems certification 2 Bureau of Indian ISS NO 8229-1986 Quality Control Licences 16.04.2006 30.09.2007 - Standard For Oil Well Cement 3 Bureau of Indian ISS NO 8112-1989 Quality Control Licences 1.10.2005 30.09.2006 - Standard For ordinary port land Cement 4 Bureau of Indian ISS NO 12330- Quality Control Licences 1.10.2005 30.09.2006 - Standard 1988 For Sulphate resisting Portland Cement 5 Bureau of Indian ISS NO 1489 Quality Control Licences 1.10.2005 30.09.2006 - Standard (Pt-1) -1991 For Portland Pozzolana Cement fly ash based 6 Bureau of Indian ISS NO 455 -1989 Quality Control Licences 1.10.2005 30.09.2006 - Standard For Portland slag cement 7 Bureau of Indian ISS NO 12269 - Quality Control Licences 16.10.2005 15.10.2006 - Standard 1987 For Portland slag cement
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S. No. Issuing Authority Registration No./ Nature of Registration ssued on / Validity Remarks Licence No. Iw.e.f period 8 Secretariat of Industrial 714/SIA/IMO/2004 Industrial Entrepreneur 01.03.2004 - - Assistance, Ministry of Memorandum for Commerce & Industry manufacture of Portland cement, aluminous cement, slag cement and similar hydraulic cements 9 Secretariat of Industrial 819/SIA/IMO/2003 Industrial Entrepreneur 27.03.2003 - - Assistance, Ministry of Memorandum for Commerce & Industry manufacture of Portland cement, aluminous cement, slag cement and similar hydraulic cements 10 Secretariat of Industrial 133/SIA/IMO/2004 Industrial Entrepreneur 13.01.2004 - - Assistance, Ministry of Memorandum for Commerce & Industry manufacture of clinkers 11 Director of Factories & SG:19 Licence to work a factory 03.03.2004 31.12.2005 Issue of renewal certificate Boilers Orissa for employing not more is under process than 2000 persons on any one day during the year and using motive power not exceeding 67903.88 KW subject to the provisions of the Factories Act 1948 and rules made thereunder 12 The Directorate of OR-475 The certificate for 06.06.2005 05.06.2006 Issue of renewal certificate Factories & Boilers, registration of Waste Heat is under process Bhubaneshwar, Orissa. Boiler 13 Regional Provident OR/8 Registration under 29.11.1954 - Funds Commissioner, Employees Provident Funds Rourkela and Miscellaneous Provisions Act, 1952 14 Employees’ State 44-1167-46 Registration under 30.01.1960 - Insurance Corporation Employees’ State Insurance Act, 1948 15 Central Excise & AAACO1354JX Central Excise Registration 31.12.2001 - - Customs Department MOO1 certificate under rule 9 of Central Excise Rules 2001 16 Contract Labour 14/87 Registration under Contract 21.07.1987 - - (Regulation & Abolition) labour (Regulation & Act, 1970 Abolition) Act, 1970 17 State Pollution Control Ind/IV/HW- 86 Registration under 27.05.2005 26.05.2007 - Board (79) 16477 Environment (Protection) Act 1986 for collection and storage of hazardous wastes
148 S. No. Issuing Authority Registration No./ Nature of Registration issued on / Validity Remarks Licence No. w.e.f period 18 State Pollution Control 37024 Registration under Air 31.12.2005 31.03.2006 Application for renewal was Board (Prevention & Control of submitted on 20.02.2006 Pollution) Act, 1974 u/s 21 to operate an industrial plant to discharge the emissions arising out of the out of the premises 19 State Pollution Control 37026 Registration under Water 31.12.2005 31.03.2006 Application for renewal was Board (Prevention & Control of submitted on 20.02.2006 Pollution) Act, 1974 u/s 25 & 26 of the Act for discharge of effluents arising out of the premises 20 Registrar of 210481 Trademark of Cement 8.08.2004 07.08.2014 - Trademarks (class 19) for building & Roads (under the brand name Konark) 21 Registrar of 414560 All types of cement 16.12.2004 15.12.2014 - Trademarks (class 19) (under the brand name Konark) 22 Registrar of 370063 Trademark of Cement 23.12.1980 22.12.2008 - Trademarks under the Brand name “Rath” 23 Central Excise AAACO 1354 Service Tax Registration - - - Department (Service ST 03 ‘The Certificate mentioned Tax Department) relates to category of service “Goods Transport Agency” where OCL (CEMENT) is registered as an assessee for payment of Service Tax on Goods Transport services received by them.’The above registration has been taken in terms of Rule 4 of Service Tax Rules, 1994. ‘There is no validity period specified in the service tax rules for the Service Tax Registration certificates issued by the Excise Department.
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Refractory Works S. No. Issuing Authority Registration No./ Nature of Registration issued on / Validity Remarks Licence No. w.e.f period 1 Bureau of Indian IS/ISO 9001:2000 – Licence for the quality - 21.09.2006 The Company Has Been Standard ANSI/ASQC Q management systems Certified Since 1994 9001:2000 – certification For Refractory 041004268 2 Director of Factories SG:7 Licence to work a factory 24.01.2006 31.12.2006 & Boilers Orissa for employing not more than 3000 persons on any one day during the year and using motive power not exceeding 16129.56 KW subject to the provisions of the Factories Act 1948 and rules made thereunder 3 The Directorate of OR-146 Provisional order Under 15.09.2005 14.09.2006 - Factories and boilers, section 9 of Indian Boilers Bhubaneshwar, Orissa Act, 1923. 4 The Directorate of OR-147 Provisional order Under 26.11.2005 25.11.2006 - Factories & Boilers, section 9 of Indian Boilers Bhubaneshwar, Orissa. Act, 1923. 5 The Directorate of OR-148 Certificate to operate a 04.08.2005 03.08.2006 - Factories & Boilers, boiler Under section 7/8 of Bhubaneshwar, Orissa. Indian Boilers Act, 1923. 6 The Directorate of OR-198 Provisional order Under 10.01.2006 09.01.2007 - Factories & Boilers, section 9 of Indian Boilers Bhubaneshwar, Orissa. Act, 1923. 7 The Directorate of OR-522 Certificate to operate a 13.04.2006 12.04.2007 - Factories & Boilers, boiler Under section 7/8 of Bhubaneshwar, Orissa. Indian Boilers Act, 1923. 8 The Directorate of OR-552 Provisional order Under 10.01.2006 09.01.2007 - Factories & Boilers, section 9 of Indian Boilers Bhubaneshwar, Orissa. Act, 1923. 9 The Directorate of OR-553 Provisional order Under 19.07.2005 18.07.2006 Factories & Boilers, section 9 of Indian Boilers Bhubaneshwar, Orissa. Act, 1923 10 The Directorate of OR-598 Certificate to operate a 12.06.2006 11.12.2006 - Factories & Boilers, boiler Under section 7/8 of Bhubaneshwar, Orissa. Indian Boilers Act, 1923. 11 Regional Provident OR/107 Registration under 29.03.1988 - Funds Commissioner, Employees Provident Funds Rourkela and Miscellaneous Provisions Act, 1952 12 Employees’ State 44-1281-43 Registration under 30.01.1960 - Insurance Corporation Employees’ State Insurance Act, 1948
150 S. No. Issuing Authority Registration No./ Nature of Registration issued on / Validity Remarks Licence No. w.e.f period 13 Central Excise & AAACO1354JXMOO2 Central Excise Registration 31.12.2001 - - Customs Department certificate under rule 9 of Central Excise Rules 2001 14 Customs Department 04/2000 Registration under Customs 18.03.2002 - - (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules 1996 15 Contract Labour 2 Licences and Registration 09.02.1998 31.12.2006 Last amended on (Regulation & Abolition) Contract labour (Regulation 19.11.2005 Act, 1970 & Abolition) Act, 1970 16 State Pollution Control Ind/IV/HW-61(29) Environment (protection) 28.08.2000 27.08.2005 Renewal application made Board 16282 Act 1986 for collection and on 14.4.2005 and the same storage of hazardous wastes is pending for collection and storage of hazardous wastes 17 State Pollution Control 22970 Air (Prevention & Control of 03.02.2006 26.05.2007 Board Pollution) Act, 1974 u/s 21 to operate an industrial plant to discharge the emissions arising out of the premises 18 State Pollution Control 22968 Water (Prevention & Control 03.02.2006 31.03.2006 Renewal application made Board of Pollution) Act, 1974 u/s on 20.02.2006 25 & 26 of the Act for discharge of effluents arising out of the premises 19 Controller of Patents 176056 Patent for the process of 23.03.1992 23.03.2006 Validity period of patents manufacturing refractory extended to 20 years gunning material instead of 14 years 20 Central Excise AAACO 1354JST Service Tax Registration - - - Department (Service 004 ‘The Certificate mentioned Tax Department) relates to category of service “Goods Transport Agency” where OCL (REFACTORY) is registered as an assessee for payment of Service Tax on Goods Transport services received by them. ‘The above registration has been taken in terms of Rule 4 of Service Tax Rules, 1994. ‘There is no validity period specified in the service tax rules for the Service Tax Registration certificates issued by the Excise Department
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S. No. Issuing Authority Registration No./ Nature of Registration issued on / Validity Remarks Licence No. w.e.f period 21 Central Excise AAACO 1354 Service Tax Registration - - - Department (Service JST001 ‘The Certificate mentioned Tax Department) relates to category of service “Commissioning & Installation Service” 22 Central Excise AAACO 1354JST Service Tax Registration - - - Department (Service 002 ‘The Certificate mentioned Tax Department) relates to category of service “Management Consultant” Sponge Iron Works S. No. Issuing Authority Registration No./ Nature of Registration ssued on / Validity Remarks Licence No. w.e.f period 1 Secretariat of Industrial 1768/SIA/IMO/2005 Industrial Entrepreneur 11.04.2005 - - Assistance, Ministry of Memorandum for manufacture Commerce & Industry of steel billet 2 Secretariat of Industrial 900/SIA/IMO/2004 Industrial Entrepreneur 18.03.2004 - - Assistance, Ministry of Memorandum for manufacture Commerce & Industry of electricity 3 Secretariat of Industrial 134/SIA/IMO/2004 Industrial Entrepreneur 13.01.2004 - - Assistance, Ministry of Memorandum for manufacture Commerce & Industry of electricity 4 Secretariat of Industrial 132/SIA/IMO/2004 Industrial Entrepreneur 13.01.2004 - - Assistance, Ministry of Memorandum for manufacture Commerce & Industry of direct reduced iron and other spongy ferrous products 5 Secretariat of Industrial 2936/SIA/IMO/2002 Industrial Entrepreneur 10.12.2002 - - Assistance, Ministry of Memorandum for manufacture Commerce & Industry of sponge iron lumps/ pellets 6 Secretariat of Industrial 2814/SIA/IMO/2001 Industrial Entrepreneur 13.12.2001 - - Assistance, Ministry of Memorandum for manufacture Commerce & Industry of sponge iron lumps/ pellets 7 Secretariat of Industrial 2097/SIA/IMO/2002 Industrial Entrepreneur 04.09.2002 - - Assistance, Ministry of Memorandum for manufacture Commerce & Industry of crushed and size iron ore 8 Director of Factories & SG:481 Licence to work a factory for 01.01.2006 31.12.2006 Boilers Orissa employing not more than 491 persons on any one day during the year and using motive power not exceeding 4642.98 KW subject to the provisions of the Factories Act 1948 and rules made thereunder 9 Employees’ State OR/REV/44-5006/ Registration under Employees’ 17.03.2003 - - Insurance Corporation 52/2689 State Insurance Act, 1948
152 S. No. Issuing Authority Registration No./ Nature of Registration ssued on / Validity Remarks Licence No. w.e.f period 10 Central Excise & AAACO1354JXM Central Excise Registration 31.12.2001 - - Customs Department OO3 certificate under rule 9 of Central Excise Rules 2001 11 Regional Provident II/1281/03/OR/RL/ Registration under 03.06.2003 - - Funds Commissioner, 788D/2741 Employees Provident Funds Rourkela and Miscellaneous Provisions Act, 1952 12 State Pollution Control 25400 Air (Prevention & Control 20.08.2005 31.03.2006 Renewal application made Board of Pollution) Act, 1974 u/s on 14.03.2006 21 to operate an industrial plant to discharge the emissions arising out of the out of the premises 13 State Pollution Control 25402 Water (Prevention & Control 20.08.2005 31.03.2006 Renewal application made Board of Pollution) Act, 1974 u/s 25 on 14.03.2006 & 26 of the Act for discharge of effluents arising out of the premises 14 Central Excise AAACO1354JST005 Service Tax Registration - - Sub-rule (7) of Rule 4 Department (Service ‘The Certificate mentioned provides that every Tax Department) relates to category of registered assessee, who service “Goods Transport ceases to provide the Agency” where OCL (SIW) taxable service for which he is registered as an is registered, shall surrender assessee for payment of his registration certificate Service Tax on Goods immediatelySince OCL has Transport services received not surrendered the certifi- by them. ‘The above cate of registration, it is registration has been taken valid on date in terms of Rule 4 of Service Tax Rules, 1994. ‘There is no validity period specified in the service tax rules for the Service Tax Registration certificates issued by the Excise Department
Approvals regarding the upcoming Steel Plant Our Company has signed an MOU with Government of Orissa to set up facilities for manufacture of .25MnTPA of finished value added steel in the District Sundergarh, Orissa with an estimated investment of Rs.204 Crores. Approvals of the said plant are pending.
153 OCL INDIA LIMITED
OUTSTANDING LITIGATION
Except as described below, there are no outstanding litigation, suits or criminal or civil prosecutions, proceedings or tax liabilities against our Company, our Directors, our Promoters or group companies and there are no defaults, non payment of statutory dues, over dues to banks/ financial institutions, defaults against banks/ financial institutions, defaults in dues payable to holders of any debentures, bonds or fixed deposits, issued by our Company.
SUPREME COURT CASE
SLP (CIVIL) NO.5113/2003 Filed by the Company challenging the final order passed by Hon’ble High Court of Orissa dismissing the writ petition bearing OJC No. 14424 / 1999 (OCL Vs. State of Orissa and others) declaring that the State legislature has power and authority to extend operation of the Orissa Entry Tax Act, 1999 through out the state including an industrial township.
The case is pending.
HIGH COURT CASES
A) Cases filed against the Company 1. Ms. Brundabati Goudani Vs Orissa Cement Limited, Rajgangpur [F. A. NO. 92/1992] The Company purchased 2.77 acres of land from Ms. Brundabati Goudani by a registered sale deed dated 27.06.1983 and paid Rs.22,160/- towards cost of the land. She filed suit No.125/1987 before the Sub Judge, Sundargarh contending that she sold only one acre and the sale deed was executed fraudulently for 2.77 acres. On 05.05.1990 Sub Judge, Sundargarh observed that no fraud or misrepresentation has been exercised by the Company and declared the Sale Deed as valid. Aggrieved by the order of the Sub Judge, Ms. Brundabati Goudani filed an appeal in the High Court of Orissa against State of Orissa and Others challenging the said order. The Hon’ble Orissa High Court passed an order injuncting the Company from making any construction or to change the nature of the suit land during the pendency of the appeal. The case is pending. 2. Pravash Chandra Chakra Vs. Labour Commissioner, Orissa and others [OJC NO. 7381/1994] Mr. Pravash Chandra Chakra (ex- Mechanist, Refractory Works) was superannuated with effect from 10.11.1994 on attaining the age of 55 years in terms of the standing orders of the Company. As per tripartite settlement dated 21.11.1990 the retirement age of employees was increased to 58 years. However this benefit was not given to him, as the standing order was not amended. He challenged the order of superannuation by filing this case. The case is pending. The maximum liability in this case may be Rs.1,56,254/-. 3. Sundargarh Industrial Mazdoor Union Vs. Union of India and others [OJC NO.2215/1996] Filed by Sundargarh Industrial Mazdoor Union (SIMU) against Union of India and Others for quashing “The Employees Provident Funds and Miscellaneous Provisions (Amendment Ordinance) 1995 making the Company as one of the Opposite Parties. The Union contends that the Family Pension scheme framed through the ordinance is not only arbitrary and unconstitutional but is highly detrimental to the employees. The case is pending. 4. Workman of OCL Vs. Union of India [OJC NO. 7741/1997] Jute Packaging Materials (Compulsory use in packing commodities) Act, 1987 requires the Cement manufacturers to use jute packaging materials for supply and distribution up to 50% of their production. Sundargarh Industrial Mazdoor Union (SIMU) challenged the notification dated 15.03.1995 regarding compulsory use of 50% of jute bags as use of jute bags is hazardous to the health of workmen. The Company has been made one of the Opposite Parties. Stay has been granted by the Hon’ble High Court of Orissa. The case is pending.
154 5. GM (Claims), South Eastern Railway Vs. OCL and another [MA N0.436/1998] Filed by South Eastern Railway against the Company and NEF Railway challenging the order dated 21.04.1998 passed by the Railway Claims Tribunal in favour of the Company in case OA No. 55/1993. The case relates to a claim of Rs.23,139/- as compensation for damages to the consignment of cement despatched by the Company to New Guwahati goods shed. The case is pending. 6. GM (Claims), South Eastern Railway Vs. OCL and another [M A N0.437/1998] Filed by South Eastern Railway against the Company and NEF Railway challenging the order dated 21.04.1998 passed by the Railway Claims Tribunal in favour of the Company in case OA No. 75/1994. The case relates to a claim of Rs.14,007/- as compensation for damages to the consignment of cement despatched by the Company to New Guwahati goods shed. The case is pending. 7. GM (Claims), South Eastern Railway Vs. OCL and another [MA N0.438/1998] Filed by South Eastern Railway against the Company and NEF Railway challenging the order dated 21.04.1998 passed by the Railway Claims Tribunal in favour of the Company in case OA No. 40/1995. The case relates to a claim of Rs.1,02,479/- as compensation for damages to the consignment of cement despatched by the Company to New Guwahati goods shed. The case is pending. 8. Jema Behera Vs. Regional PF Commissioner, Rourkela and OCL [OJC NO.10055/1998] Mr. Suresh Chandra Behera, an employee of the Company died on 20.11.1996. During his life time contributions were made by both the employer and the employee to the Provident Fund and Family Pension Fund. As the legal heirs were not paid pension as per Employees Pension scheme, 1995, Ms. Jema Behera wife of Late Suresh Chandra Behera filed writ against Regional Provident Fund Commissioner, Rourkela making the Company as one of the Opposite Parties. The case is pending. 9. Purna Chandra Das Vs. Union of India and others [OJC NO. 12034/1998] Demanding reinstatement in service after acquittal from the criminal case, Mr. Purna Chandra Das raised an industrial dispute which was referred by the Government to the Presiding Officer, Industrial Tribunal, Rourkela for adjudication. The said case was registered as Industrial Dispute Case No. 12/1997. As Mr. Das was not satisfied with the reference of the case, filed this case in Orissa High Court for changing the reference and obtained stay of the proceedings in Tribunal. The case is pending. 10. Utkal Shramik Sangh Vs. Union of India and others [OJC NO. 12170/1999] Filed by Utkal Shramik Sangh(USS) seeking direction from the Hon’ble High Court of Orissa to State Government of Orissa to issue notification U/s 10(1) of “ The Contract Labour (R&A) Act,1970 pursuant to the recommendations made by the State Advisory Board. The notification dated 28.04.2000 has already been published, hence the writ becomes infructous. The case is pending 11. Sundargarh Industrial Mazdoor Sangh Vs. State of Orissa and others [OJC NO. 10854/2000] Filed by Sundargarh Industrial Mazdoor Union (SIMU) challenging the notification dated 28.04.2000 issued by the State Government of Orissa for not abolishing contract labour system in all the jobs recommended by the State Labour Advisory Board. The case is pending 12. Mr. Jagdish Chandra Das Vs Orissa Cement Limited [OJCN0.4797/2000] The Company appointed Mr. Jagdish Chandra Das as Apprentice Electrician on 12.05.1987 and he was given extension from time to time as an Apprentice Trainee. On 02.04.1990, he was given appointment on temporary basis for a period of one year only subject to the condition that he has to obtain B- Class Lineman’s Licence within six months. He failed to obtain the Licence within the time period, therefore Company terminated his services. He raised an Industrial Dispute before the Presiding Officer, Labour Court, Sambalpur vide No. 50/1993, challenging his termination. On 30.12.1999 the Presiding Officer, Labour Court, Sambalpur passed the award, stating that the termination of Mr. Jagdish Chandra Das was legal and justified and he is not entitled to get any relief.
155 OCL INDIA LIMITED
Aggrieved by the said order, Mr. Jagdish Chandra Das filed an Application under Article 226 of the Constitution of India vide No. OJC 4797/2000 in the High Court of Orissa, challenging the award of the Presiding Officer, Labour Court, Sambalpur. The case is pending. 13. Gopal Pareek Vs OCL India Limited [OJC NO.12234/2001] The Company appointed Mr. Gopal Pareek through appointment letter dated 16.08.1995 as a trainee Engineering Assistant. On 03.01.1996, he entered into a Service agreement with the Company. On completion of term of service contract, the Company terminated his services by giving notice as per the terms of the agreement. Aggrieved by the aforesaid order of the Company Mr. Gopal Pareek challenged the termination of his services by filing an application under Articles 226/227 of the Constitution of India vide No. OJC 12234/2001 in the High Court of Orissa. Mr. Gopal Pareek died in an accident and further follow up of the case is unlikely by his Legal representatives. The case is pending. The maximum liability may be Rs. 3,72,920/-. 14. Ms. Berronica Belung & Others Vs OCL India Limited [OJCNO.4473/2002] Ms. Beronica Bilung and eight others of Lanjiberna Quarry, employees of Contractor M/s Bhagawati Miners, filed the writ Application under Article 226 & 227 of the Constitution of India in the High Court of Orissa, praying the Hon’ble High Court for a direction to the Company to settle their statutory dues and eligible amount as per VR Scheme. The contractor paid them as per VR scheme but they are disputing the basis adopted for payment The writ is not maintainable since the Company and the Contractor are not a State within the meaning of Article 12 of Constitution of India. The case is pending for further proceedings. 15. Ms. Jamini Kujur & Others Vs OCL India Limited [OJC NO. 4474/2002] Ms. Jamini Kujur and five others of Lanjiberna Quarry, employees of Contractor M/s Vaishnoo Minerals, filed the writ Application under Article 226 & 227 of the Constitution of India vide OJC No. 4474 of 2002 in the High Court of Orissa, praying the Hon’ble High Court for a direction to the Company to settle their statutory dues and eligible amount as per VR Scheme. The contractor paid them as per VR scheme but they are disputing the basis adopted for payment. The writ is not maintainable since the Company and the Contractor are not a State within the meaning of Article 12 of Constitution of India. The case is pending for further proceedings. 16. Ms. Norm Binz & Others Vs OCL India Limited [OJC N0.4475/2002] Ms. Norm Binz and three others of Lanjiberna Quarry employees of Contractor M/s Swastic Traders filed the writ Application under Article 226 & 227 of the Constitution of India vide OJC No. 4475 of 2002 in the High Court of Orissa, praying the Hon’ble High Court for a direction to the Company to settle their statutory dues and eligible amount as per VR Scheme. The contractor paid them as per VR scheme but they are disputing the basis adopted for payment The writ is not maintainable since the Company and the Contractor are not a State within the meaning of Article 12 of Constitution of India. The case is pending for further proceedings. 17. Ms. Agneh Ekka & another Vs OCL India Limited [OJC N0.4476/2002] Ms. Agnesh Ekka and another of Lanjiberna Quarry employees of Contractor M/s Pashupati Enterprises filed the writ Application under Article 226 & 227 of the Constitution of India vide OJC No. 4476 of 2002 in the High Court of Orissa, praying the Hon’ble High Court for a direction to the Company to settle their statutory dues and eligible amount as per VR Scheme. The contractor paid them as per VR scheme but they are disputing the basis adopted for payment The writ is not maintainable since the Company and the Contractor are not a State within the meaning of Article 12 of Constitution of India. The case is pending for further proceedings. 18. Bellary Steels Limited Vs. OCL India Limited [CRP NO. 159/2002] The Company supplied refractory bricks to M/s Bellary steels Limited, Bellary (Karnataka). As the party failed to pay the outstanding dues, The Company filed a Money Suit No. 35/1999 in the Court of Civil Judge, Senior Division, Sundargarh for realisation Rs.12,11,822/-. M/s Bellary Steels appeared in the Court and challenged the jurisdiction of the Court to try the suit. But the Learned Civil Judge, Senior Division, as preliminary issue considered the matter of jurisdiction and rejected the contention of the Defendant and directed filing of written statement vide order dated 16.08.2002. Aggrieved with the said order M/s Bellary Steels Limited filed this case in the Hon’ble High Court of Orissa. Argument from both the sides on the case is over. Judgment is reserved.
156 19. United Insurance Company Limited Vs. Mangal Ekka and others [MISC. APPEAL NO.330/2000] Mr. Mangal Ekka driver of Contractor M/s Sadique Ahamed met with an accident and sustained injuries. He filed a claim for Rs.1,00,000/- under the Workman’s Compensation Act bearing No. WC Case - 6/1997 impleading the Contractor, the Company and the United India Insurance Company Limited. The WC Commissioner by his order dated 29.03.2000 decided that the compensation payable was Rs.57,696/- and not Rs.1,00,000/- as claimed by the workman. He directed the Insurance Company to deposit compensation amount of Rs.57,696/-. Aggrieved with the order United India Insurance Company file this appeal in Orissa High Court. The case is pending. The maximum liability in this case may be Rs.57,696/-. 20. Jairam Sahoo Vs. Presiding Officer, Labour Court, Sambalpur and Others [OJC NO.15583/2001] Mr. Jairam Sahoo raised an Industrial dispute, which was registered as I D Case No. 48/1996, challenging his dismissal order and the Labour Court awarded lumpsum amount of Rs.1,50,000/- to Mr. Jairam Sahoo ex-Pipe Fitter (Refractory Works) towards final settlement instead of ordering re-instatement. The Company paid the said awarded sum to the workman. However he filed a writ petition even after receiving the awarded sum from the Company for quashing the award passed by the Presiding Officer, Labour Court, Sambalpur. The case is pending. 21. Union of India represented through G M (Claims), N F Railway Vs. OCL and other [F A O NO.84/2005] North Frontier Railway filed the Appleal against the order dated 28.05.2004 of Railway Claims Tribunal, Bhubaneswar in OA No.66/1994 and 67/1994 directing refund of Rs. 66,230/- alongwith 6% interest from the date of filing of the claim to the Company. The claims were filed by the Company for claiming refund of excess freight charges collected at the destination station on the bais of circular dated 14.06.1991 which was not in existence at the time of booking of the consignment. 22. M/s Shiva Cement Limited Vs. State of Orissa and others [W P (C) NO.80/2006) Filed by M/s Shiva Cement Limited challenging the action of the DRDA, Balasore in terminating the agreement for supply of cement @Rs.141/- per bag and awarding the same contract to the Company @ Rs.158.50 per bag.
B) Cases filed by the Company 1. OCL India Limited Vs State of Orissa & Others [OJC NO. 2480/1989] Filed by the Company against State of Orissa & Others Challenging the order dated 18th/19th October 1983 of the Tehsildar, Rajgangpur charging water rates under the provisions of Orissa Irrigation Act, 1959 by notice dated February 12, 1988 of Rs. 2,39,538/- for the years 1980-81 to 1987-88. The contention of the Company is that the Tahsildar is not vested with the power under the Irrigation Act, to levy water rate as the water drawn by the Company was from a natural source and not from any irrigated source and praying for the interim injunction to restrain the effect of the aforesaid order and notice. The Orissa High Court passed an interim order “No coercive measures be taken for realisation of water charges until further orders” which was made absolute on 16.10.1989. The case is pending for further proceedings. 2. OCL India Limited Vs State of West Bengal & Others [A P NO.1878/1991] Filed by the Company in Calcutta High Court against State of West Bengal and others, challenging the order of the Competent Authority, rejecting the Company’s application for exemption under Section 20 of the Urban Land (Ceiling and Regulation) Act, 1976 and final statement under Section 9 of the said Act in respect of Agarpara land. The Company sought for a direction to the Competent Authority to withdraw/ revoke/ recall/cancel the purported final settlement under Section 9 of the Urban Land (Ceiling and Regulation) Act, 1976 and also to grant injunction to restrain the Competent Authority from giving effect to/taking steps in terms of its final settlement for vesting of land. The cost of the land involved in the matter is Rs.3.58 lacs. The case is pending.
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3. OCL Vs. Union of India and others [OJC NO. 4696/1993] The Company challenged the notification dated 17.03.1993 prohibiting the employment of contract labour in limestone and dolomite mines in the activities covering raising of and transportation of limestone including loading and unloading from mine site to factory. The Hon’ble High Court of Orissa by its order dated 02.08.1993 granted stay until further orders. The case is pending. 4. OCL India Limited Vs Union of India & Others [OJC NO. 8106/1995] Filed by the Company against Union of India and Others challenging the validity of Bonus (Amendment Act) 1995 which gave retrospective effect from 01.04.1993 to amendment relating to eligibility criteria for earning bonus i.e raising of limit of monthly salary from Rs. 2,500/- per month to Rs. 3,500/- per month. Also challenged the salary limit for computation of bonus, which was enhanced from Rs 1600/ per month to Rs 2500/- per month. The Company has obtained stay. The maximum liability on this account may be Rs. 21.92 lacs. The case is pending. 5. OCL Vs. Union of India and others [OJC NO. 9371/1995] The Company’s consignments were sent from O C Siding, Rajgangpur to Dimapur, New Bongaigaon, Silchar, New Guwahati via longer route without the instruction of the Company. In the process Railways collected excess freight. The Company filed a writ against Union of India and Others for refund of Rs.1,33,85,384/- being the excess freight collected by Railways on the basis of longer route used for delivery of the consignment instead of the shortest route to destination.. The Company’s contention is that Railway Board is not authorised to issue General Order No. 1 of 1990 for rationalisation of longer route as such power is vested with Central Government only. The case is pending. 6. OCL Vs. Union of India and others [OJC NO. 8767/ 1996] The Company challenged the notification dated 04.07.1996 prohibiting the employment of contract labour in limestone and dolomite mines in the activities covering raising and transportation of limestone including loading and unloading within mine site. The Hon’ble High Court of Orissa by its order dated 09.09.1996 granted stay until further orders. 7. OCL Vs. State of Orissa and Others [OJC NO. 12894/1997 ] The Company executed a lease deed with State Government of Orissa for grant of mining lease for Limestone and Dolomite. The Company paid under protest Rs.15.55 lacs towards stamp duty and registration fee of Rs.7.41 lacs. The said stamp duty was collected on the basis of estimated royalty on limestone and dolomite expected to be raised by the Company. The Company contends that the stamp duty should have been calculated on the basis of annual dead rent in terms on Section 9(A)(2) of Indian Stamp Act read with IIIrd schedule to Mines and Minerals (Regulation & Development) Act, 1957 and not on the basis of estimated royalty. As such the Company filed this case against State of Orissa & Others claiming refund of excess stamp duty of Rs.15.50 lacs and registration charges of Rs. 7.38 lacs total amounting to Rs.22.88 lacs paid on execution of mining lease for Lanjiberna Lime Stone area. The case is pending. 8. OCL India Limited Vs State of Orissa & Others [OJC NO.10599/1998] Filed by the Company against State of Orissa and others seeking stay of demand raised by Regional Transport Officer for payment of Rs 16,36,240 as road tax on 11 dumpers having capacity of 35 tonne. The Company relied upon the Supreme Court judgement, which clearly states that the dumpers are not “Motor Vehicles” within the meaning of Section 2 (28) of The Motor Vehicles Act, 1988 and Section 22 (b) of the Orissa Motor Vehicles Taxation Act, 1975. The Hon’ble High Court of Orissa granted stay subject to payment of 50% of the tax demanded. The Company paid Rs.23 lacs till 31st March 2001 being 50% of the tax demanded. Subsequently on demand from the Regional Transport Officer, Sundargarh, the balance 50% was also paid under protest. As the Company has been paying for each quarter the full amount of tax under protest, the Company has no liability. On the contrary refund may arise, if the case is decided in favour of the Company. The Case is pending.
158 9. OCL Vs. Union of India and Others [OJC No. 2863/1999] Filed by the Company against Union of India and Others challenging the notification No. S.O. 1255(E) dated 30.12.1988 issued by Govt. of India increasing the coal prices and a premium of 10% on coal supplies by some of the collieries of Coal India Limited. Collieries are supplying different grades of coal. On the basis of quality coal is graded and prices are accordingly fixed. However SECL has been charging 10% premium on it’s different grades of coal in comparison to same grades of coal supplied by other collieries. The Company contended that the premium of 10% charged by selected coal fields like ECL on the basis of A,B,C and D grade coal is ultra vires the Constitution and hit by Article 14 of the Constitution. The Company demanded refund of Rs.36 lacs premium collected for the period from 01.01.1989 to 31.03.1993. The case is pending 10. OCL India Limited Vs Union of India & Others [OJC No 8891/2000] Filed by the Company challenging the Notification No. 35/99-CE dated 17.03.1999 i.e. levy and collection of Anti dumping duty on Fused Magnesia imported from PR China at Vizag port on the basis of the CEGAT order vide dated 19.01.2000, which clearly states that anti dumping duty can not be imposed. On 27.03.2000 the Designated Authority filed Civil Appeal No. 3267-3268 of 2000 in the Hon’ble Supreme Court of India inter-alia challenging the order of the CEGAT. Supreme Court by passing two orders vide dated 12.05.2000 and 31.07.2000 stayed the refund arising out of the order of the CEGAT but has not stayed the judgement of the CEGAT. Therefore, the Hon’ble High court of Orissa by its order dated 14.09.2000 directed Custom officials not to collect anti-dumping duty until further orders. Pursuant to the directions of the Supreme Court the Designated Authority in its final findings, on review, has recommended for discontinuance of the anti dumping duty imposed on imports of fused magnesia and retrospective withdrawal of anti dumping duty on fused magnesia with effect from 01.10.1999 and Circular No. MF(DR) 75/2003-Cus dated 28.08.2003 to that effect has been issued. The case is pending for disposal by the Orissa High Court. 11. OCL India Limited Vs Union of India & Others [OJC NO.9487/2000] Filed by the Company challenging levy and collection of Anti dumping duty on Fused Magnesia imported from PR China at Calcutta port on the basis of the Tribunal order in favour of IRMA. The Court by its order dated 26.09.2000 directed Custom officials not to collect anti-dumping duty until further orders. Pursuant to the directions of the Supreme Court the Designated Authority in its final findings, on review, has recommended for discontinuance of the anti dumping duty imposed on imports of fused magnesia and retrospective withdrawal of anti dumping duty on fused magnesia with effect from 01.10.1999 1999 and Circular No. MF (DR) 75/2003-Cus dated 28.08.2003 to that effect has been issued. The case is pending for disposal by the Orissa High Court. 12. OCL India Limited Vs Union of India & Others [OJC NO.12041/2000] Filed by the Company challenging levy and collection of Anti dumping duty on. Fused Magnesia imported ‘from PR China at Paradip port on the basis of the Tribunal order in favour of IRMA. The Court by its order dated 24.11.2000directed Custom officials not to collect anti-dumping duty until further orders. Pursuant to the directions of the Supreme Court the Designated Authority in its final findings, on review, has recommended for discontinuance of the anti dumping duty imposed on imports of fused magnesia and retrospective withdrawal of anti dumping duty on fused magnesia with effect from 01.10.1999 and Circular No. MF(DR) 75/2003-Cus dated 28.08.2003 to that effect has been issued. The case is pending for disposal by the Orissa High Court. 13. OCL Vs. State of Orissa [WP (C) NO. 4273/2002] Mr. Rabi Narayan Behera, Sr. Clerk, Share and Law Department raised an industrial dispute challenging the termination of his service on the ground of disobedience. The said case was registered as ID Case No. 6/2001 in the Labour Court, Sambalpur. State Govt. on request of Mr. Behera transferred the said case to Labour Court, Bhubaneswar without giving an opportunity of hearing to the Company. The Company filed writ in Orissa High Court challenging the order of Government of Orissa transferring the ID Case from Labour Court, Sambalpur to
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Labour Court, Bhubaneswar. Stay is granted by Orissa High court. During the pendency of the said writ Mr. Behera entered into a settlement with the Company in Form -K and received Rs.1,50,000/- towards full and final settlement of his claim. In view of this development the Company filed withdrawal petition in the High Court for withdrawal of the writ. The ID case in the Labour Court will accordingly be disposed off in terms of the settlement. The case is pending 14. OCL India Limited Vs The Jute Commissioner, Kolkata [WP(W)NO.14732/2002] As per the Jute Packaging Materials (Compulsory use in packaging commodities) Act, 1997 Cement manufacturers are required to use jute packaging materials for supply or distribution upto 50% of their total production. Show cause notice dated 20.08.2002 was issued by the Jute Commissioner, Calcutta alleging violation of two orders dated March15, 1995 and June 30, 1997. By the said notice, the Company was required to show cause as to why penal action should not be taken against it for violation of the said orders. The Company filed a writ Petition in Calcutta High Court challenging the said show cause notice and stay was granted by the Court against the show cause notice. The Union of India through Jute Commissioner filed petition for transfer of all writ petitions alongwith other proceedings pending before various High Courts for hearing and disposal on merit by the Supreme Court. While the Company may be liable for non-compliance upto an amount equal to double the cost of the jute packaging material, which ought to have been used, liability, if any, in this regard is not ascertainable. The case is pending in Calcutta High Court. 15. OCL Vs. Presiding Officer, Industrial Tribunal, Rourkela and others [WP (C) NO.521/2003] Utkal Shramik Sangh a registered union raised an Industrial Dispute for regularisation of Abdul Sabur Khan and 18 others. The said case was registered as ID Case No. 27/2001 in the Industrial Tribunal, Rourkela. The Hon’ble Tribunal passed an award ignoring the additional documents filed by the Company as evidence. When the award was pending for publication, the Company filed a writ for staying the publication of the award. The High Court stayed the publication of the award till disposal of the case. Subsequently the Company entered into amicable settlement in Form -K with the workmen and paid the agreed compensation amount. The Company is taking steps to file withdrawal of the writ. The case is pending 16. JPN Thakur and others Vs. Gopal Pareek [CRIMINAL MISC. CASE NO. 699/2003] Mr. Gopal Pareek an ex-employee of the Company filed a false FIR alleging misbehavior, physical assault S/o M L Chand, P L Pareek and J P N Thakur all are employees of the Company. The Police submitted a final report to the Judicial Magistrate First Class (JMFC) holding that the FIR was false. On the basis of police final report the learned JMFC closed the case. Aggrieved with the order Mr. Gopal Pareek filed a protest petition with the JMFC which was registered as a complaint case bearing 1(C)CC No.23/2002. The Company filed petition in Orissa High Court under Section 482 of Criminal Procedure Code for quashing the order dated 30.07.2002 of JMFC, Rajgangpur in the High Court of Orissa. Hon’ble High Court stayed further proceedings in 1(C)CC No.23/2002 pending before the JMFC, Rajgangpur. The case is pending 17. OCL Vs. Laxmi Dhar Roul [R S A NO. 530/2003] Mr. Laxmi Dhar Roul, a former employee of the Company un-authorisedly constructed a house on the land acquired by the Company for clay extraction. The Company filed a civil suit in the Court of Civil Judge, Senior Division, Sundargarh for declaration of right, title, interest and for recovery of possession 0.02 acres of the Company land encroached by Mr. Roul. The learned Civil Judge, Sr. Division passed the order in favour of the Company. The said order was challenged by Mr. Roul by filing a Title Appeal No.10/1997 in the Court of District Judge, Sundargarh which set aside the order of lower court by judgment dated 07.08.2003. The Company challenged the said judgment by this Second Appeal. The case is pending.
160 18. OCL India Limited Vs State of Orissa & Others [WP(C ) NO. 1131/2004] Mr. Gayadhar Sahoo, Mason was dismissed from services on the grounds of disobedience, misbehavior and absence from duty. He raised an industrial dispute and was registered with the Labour Court, Sambalpur as Industrial Dispute Case No. 1/2003. Vide order dated 01.01.2004 the said case has been transferred from the registry of Labour Court, Sambalpur to the Registry of Industrial Tribunal, Rourkela for adjudication. Being aggrieved by the said order, the Company filed the writ Application under Article 226 and 227 of the Constitution of India in the Hon’ble High Court of Orissa. The Hon’ble Court vide order dated 09.02.2004 stayed the proceedings of the ID case No.1/2003. The case is pending for further proceedings. 19. OCL Vs. Duryodhan Behera [RSA NO. 85/2004] Mr. Duryodhan Behera, a former employee of the Company un-authorisedly constructed a small hut on the land acquired by the Company for clay extraction. The Company filed a civil suit in the Court of Civil Judge, Senior Division, Sundargarh for declaration of right, title, interest and for recovery of possession of area admeasuring 17'.6" X 12'.6" of the Company’s land encroached by Mr. Behera. The learned Civil Judge, Sr. Division passed the order in favour of the Company. The said order was challenged by Mr. Behera by filing a Title Appeal No.4/1994 in the Court of District Judge, Sundargarh which set aside the order of lower court by judgment dated 18.12.2003. The Company challenged the said judgment. The case is pending. 20. OCL India Limited Vs The Cess Appellate Committee and another [WP (C) NO. 9168/2004] The Assessing Authority of State Pollution Control Board, Orissa by it’s order dated 12.09.2000 assessed the water cess for the period from September -1999 till July-2000 as Rs. Rs.1,81,349/- which includes Rs.1,78,764/- towards cess on water merely pumped out from the bottom of the mines pit to the surface area. The Company has preferred an appeal before the Cess Appellate Committee against the assessment order cum demand notice dated 12.09.2000, which was outrightly rejected by the Appellate Authority on the ground that the appeal was time barred. Against this order Company filed the writ petition in the High Court of Orissa challenging the assessment -cum- demand notice dated 12.09.2000 for Rs. 1,81,349/- passed by Orissa Pollution Control Board and order dated 15.04.2004 passed by the Cess Appellate Committee of State Pollution Control Board, Orissa. The main’ contention of the Company is that mine drainage water pumped out by the Company from mines pit to mines surface does not amount to consumption/pollution and hence not liable for Cess. The matter is pending for further proceedings. 21. OCL India Limited Vs The Regional Director, Employees State Insurance Corporation and another [FAO NO. 53/2005] The Company disputed payment of contribution on overtime wages, cycle allowance, LTA etc. The Company received demand notice dated 27.06.1995 to pay a sum of Rs.2,06,883/- on account of non- payment of contribution on account of “overtime” allowance for the period 01.02.1993 to 31.01.1994. Company filed Misc. case under section 75 of the Employees State insurance Act, 1948 in the Court of District Judge, Puri. Ld. District Judge was pleased to stay the demand notice vide its order dated 27.01.2000. Subsequently the case was transferred to the Ld. District Judge, Khurda, Bhubaneswar and renumbered as Misc. Case No. 267 of 2001. Pursuant to interim order of the Dist. Judge, Khurda the Company deposited the ESI contribution on overtime time wages leaving contribution on cycle allowance and LTA. On 24.12.2004 the Ld. District Judge, Khurda, Bhubaneswar was pleased to dispose the matter by directing the Company to deposit the ESI contribution on Cycle allowance alongwith interest on the contribution from due date. Aggrieved by this order the Company filed this Appeal and Hon’ble High Court by its order dated 11.02.2005 stayed the order of the lower Court till 29.04.2005. On 29.04.2005 Orissa High Court again stayed the matter till further order. The case is pending for further orders. The Company may be liable to pay interest @ 12% PA on Rs.2,06,883/- from 28.02.1990 being the date of demand till date of payment of ESI contribution.
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22. OCL India Limited Vs The Regional Director, Employees State Insurance Corporation and another [FAO NO. 54/2005] Filed by the Company challenging the judgment dated 24.12.2004 passed by the District Judge -Cum- ESI Court, Khurda at Bhubaneswar in ESI Misc. Case No. 241/2001 directing payment of interest from the date of demand of ESI contribution on overtime wages. High Court by it’s order dated 11.02.2005 has stayed the order of the lower Court till 29.04.2005. On 29.04.2005 Orissa High Court again stayed the matter till further order. The Company may be liable to pay interest @ 12% PA on Rs.72,185/- from 28.02.1990 being the date of demand till date of date of payment of ESI contribution. 23. OCL India Limited Vs The Regional Director, Employees State Insurance Corporation and another [FAO NO. 55/2005] Filed by the Company challenging the judgment dated 24.12.2004 passed by the District Judge -Cum- ESI Court, Khurda at Bhubaneswar in ESI Misc:’ Case No. 242/2001 directing payment of interest from the date of demand of ESI contribution on overtime wages. High Court by it’s order dated 11.02.2005 has stayed the order of the lower Court till 29.04.2005. On 29.04.2005 Orissa High Court again stayed the matter till further order. The Company may be liable to pay interest @ 12% PA on Rs.60,728/- from 28.02.1990 being the date of demand till date of date of payment of ESI contribution. 24. OCL India Limited Vs The Regional Director, Employees State Insurance Corporation and another [FAO NO. 56/2005] Filed by the Company challenging the judgment dated 24.12.2004 passed by the District Judge -Cum- ESI Court, Khurda at Bhubaneswar in ESI Misc. Case No. 243/2001, directing payment of interest from the date of demand of ESI contribution on overtime wages. High Court by it’s order dated. 11.02.2005 has stayed the order of the lower Court till 29.04.2005. On 29.04.2005 Orissa High Court again stayed the matter till further order. The Company may be liable to pay interest @ 12% PA on Rs.2,11,631/- from 25.09.1991 being the date of demand till date of date of payment of ESI contribution. 25. OCL India Limited Vs The Regional Director, Employees State Insurance Corporation and another [FAO NO. 57/2005] Filed by the Company challenging the judgment dated 24.12.2004 passed by the District Judge -Cum- ESI Court, Khurda at Bhubaneswar in ESI Misc. Case No. 246/2001 directing payment of interest from the date of demand of ESI contribution on overtime wages. High Court by its order dated 11.02.2005 has stayed the order of the lower Court till 29.04.2005. On 29.04.2005 Orissa High Court again stayed the matter till further order. The Company may be liable to pay interest @ 12% PA on Rs.1,60,734/- from 10.06.1991 being the date of demand till date of date of payment of ESI contribution. 26. OCL India Limited Vs The Regional Director, Employees State Insurance Corporation and another [FAO NO. 58/2005] Filed by the Company challenging the judgment dated 24.12.2004 passed by the District Judge -Cum- ESI Court, Khurda at Bhubaneswar in ESI Misc. Case No. 252/2001directing payment of interest from the date of demand of ESI contribution on overtime wages. High Court by it’s order dated 11.02.2005 has stayed the order of the lower Court till 29.04.2005. On 29.04.2005 Orissa High Court again stayed the matter till further order. The Company may be liable to pay interest @ 12% PA on Rs.1,21,495/- from 26.06.1992 being the date of demand till date of date of payment of ESI contribution. 27. OCL India Limited Vs The Regional Director, Employees State Insurance Corporation and another [FAO NO. 59/2005] Filed by the Company challenging the judgment dated 24.12.2004 passed by the District Judge -Cum- ESI Court, Khurda at Bhubaneswar in ESI Misc. Case No.261/2001 directing payment of interest from the date of demand of ESI contribution on overtime wages. High Court by it’s order dated 11.02.2005 has stayed the order of the lower
162 Court till 29.04.2005. On 29.04.2005 Orissa High Court again stayed the matter till further order. The Company may be liable to pay interest @ 12% PA on Rs.1,79,962/- from 21.03.1994 being the date of demand till date of date of payment of ESI contribution. 28. OCL India Limited Vs The Regional Director, Employees State Insurance Corporation and another [FAO NO. 60/2005] Filed by the Company challenging the judgment dated 24.12.2004 passed by the District Judge -Cum- ESI Court, Khurda at Bhubaneswar in ESI Misc. Case No.261/2001 directing payment of interest from the date of demand of ESI contribution on overtime wages. High Court by it’s order dated 11.02.2005 has stayed the order of the lower Court till 29.04.2005. On 29.04.2005 Orissa High Court again stayed the matter till further order. The Company may be liable to pay interest @ 12% PA on Rs.1,79,962/- from 21.03.1994 being the date of demand till date of date of payment of ESI contribution. 29. OCL India Limited Vs The Regional Director, Employees State Insurance Corporation and another [FAO NO. 61/2005] Filed by the Company challenging the judgment dated 24.12.2004 passed by the District Judge -Cum- ESI Court, Khurda at Bhubaneswar in ESI Misc. Case No. 251/2001directing payment of interest from the date of demand of ESI contribution on overtime wages. High Court by it’s order dated 11.02.2005 has stayed the order of the lower Court till 29.04.2005. On 29.04.2005 Orissa High Court again stayed the matter till further order. The Company may be liable to pay interest @ 12% PA on Rs.2,07,911/- from 26.07.1992 being the date of demand till date of date of payment of ESI contribution. 30. OCL India Limited Vs The Regional Director, Employees State Insurance Corporation and another [FAO NO. 62/2005] Filed by the Company challenging the judgment dated 24.12.2004 passed by the District Judge -Cum- ESI Court, Khurda at Bhubaneswar in ESI Misc. Case No. 262/2001directing payment of interest from the date of demand of ESI contribution on overtime wages. High Court by it’s order dated 11.02.2005 has stayed the order of the lower Court till 29.04.2005. On 29.04.2005 Orissa High Court again stayed the matter till further order. The Company may be liable to pay interest @ 12% PA on Rs.3,77,261/- from 02.11.1993 being the date of demand till date of date of payment of ESI contribution. 31. OCL India Limited Vs State of Orissa & Others [WP (C) N0.4778/2005] Filed by the Company challenging the demand notice No.434 dated 23.03.2005 for Rs.4,17,172/- and demand notice No. 435 dated 24.03.2005 for Rs.5,95,100/- both issued by the Regional Transport Officer(RTO), Sundargarh demanding payment of road tax and penalty in respect of seven pay loaders and one pick and carry Hydraulic crane operated in the factory premises of the Company. The Company in it’s reply to the RTO contended that the said pay loaders and pick and carry Hydraulic crane are not motor vehicles within the meaning of under Section 2(28) of The Motor Vehicles Act, 1988. Hon’ble Orissa High Court by its order dated 10.05.2005 restrained the RTO, Sundargarh for giving any further effect to the demand notice till further orders. 32. OCL India Limited Vs Union of India & Others [WP(C) NO 7529/2005] Filed by the Company challenging the letter dated 25.04.2005 issued by the Chief Sales Manager, MCL directing the Company to lift coal for it’s Refractory unit by E-auction or to pay the average E-auction price of particular grade of coal in violation of the terms and conditions of the agreement dated 07.01.2004 entered into between the Company and Mahanadi Coalfields Limited. By interim order dated 21.06.2005 Hon’ble Orissa High Court directed MCL to supply coal as per agreement but at enhanced price. The differential amount shall be kept in a separate interest bearing account till disposal of the case. The case is pending.
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33. OCL Vs. State of Orissa and others [WP (C) NO.9471/2005] Filed by the Company challenging the constitutional validity of The Orissa Rural Infrastructure And Socio-Economic Development Act, 2004 (ORISED Act). The Hon’ble Orissa High Court by it’s order dated 12.09.2005 directed the Authorities not to take coercive action to recover the tax and the mining companies to collect tax in cash or though bank guarantee. The Hon’ble High Court of Orissa struk down the validity of the act by it’s order dated 05.12.2005. 34. OCL Vs. Mahanadi Coal Fields Limited and others [WP (C) NO. 10551/2005] Filed by the Company challenging the memo No. MCL/SBP/S&M/E-auction/2005/769 dated 04.08.2005 and notice No. MCL/SBP/GM(S&M)/ Pricing/2005 dated 08.08.2005 of MCL seeking to realise the ORISED tax on basic coal value including crushing and sizing charges. The Hon’ble Orissa High Court by it’s order dated 12.09.2005 directed the Authorities not to take coercive action to recover the tax and the mining companies to collect tax in cash or though bank guarantee. The Hon’ble High Court of Orissa struk down the validity of the act by it’s order dated 05.12.2005. 35. OCL Vs. Union of India and others [W P (C) NO. 3266/2006] The Chief Goods Supervisor, OC Siding, Rajgangpur, S E Railway, levied overloading punitive charges for Rs.7,25,070/- alleging overloading of iron ore loaded from Barsuan and Nuamundi station and consigned to OC Siding, Rajgangpur (S E Railway). The action of the Company was based on the Special rate circular bearing Sl. No. 79(G)2005 dated 11.05.2005 which revised the permissible capaciry of BOXN wagos, with effect from 15.05.2005. This circular permits carrying capacity of CC+8 tonnes in place of CC+4 tonnes in respect of specified materials like iron ore in designated routes. The Railways action is based on the withdrawal of the said circular with retstropective effect i.e. with effecrt from 15.05.2005. The Company challenged the levy on the ground that withdrawal of the previous circular dated 11.05.2005 with retrospective effect is illegal. The Hon’ble Orissa High Court by it’s order dated 08.03.2006 stayed the said demand till the next date. 36. OCL Vs. Union of India and others [W P (C) NO. 4214/2006] The Chief Goods Supervisor, OC Siding, Rajgangpur, S E Railway, levied overloading punitive charges for Rs.9,67,613/- alleging overloading of coal despatched from Akaltara and consigned to OC Siding, Rajgangpur. The Company filed writ petition challenging the levy on the ground that weigment of the wagons is incorrect due to faulty weighbridge of the Railways. The Hon’ble Orissa High Court by it’s order dated 31.03.2006 stayed the said demand till the next date. 37. OCL Vs. Union of India and others [W P (C) NO.6628/2006] The Company was alotted a coal block for captive mining of coal jointly with M/s Rungta Mines(leader) and M/s Ocean Ispat Ltd. The Ministry of coal and mines indicated three options. The leader of the joint allottees opted for Option III. It is clarified by the Ministry of Coal that the draft agreement proposed under Option III is only model form and the same can be altered/modified by mutual agreemnt.The Company intimated it’s preference to work the coal mine through a joint venture company to ensure equal represeantation to the joint allottees in activities of the venture and sharing of the coal raised in proportion of their coal entitlement stands interse. In the event the Ministy directs to adopt Option III, a draft has been sugested with modification to Option III. However the Government refused to accept the proposal and directed the parties that Radhikapur coal block shall be worked only by the leader M/s Rungta Mines and joint allottees shall surrender their right to the leader. The Company filed a writ challenging the said letter dated 25.04.2006 which ignored the proposal of the joint alottees. Orissa High Court by its’ order dated 18.05.2006 directed the Minstry of Coal not to take any decision prejudicial to the interest of the Company in respect of the coal block in question unless all of them agree to sign the draft agreement as proposed by the Government. 38. OCL Vs. State of Chhatishgarh and others [W P NO.2632/2006] Filed by the Company challenging legality and validity of Chhatishgarh (Adhosanrachna Vikas avam Paryavaran) Upkar Adhiniyam,2005 and Rules made thereunder. The aforesaid Act provides for levy of cess ion land for raising funds to implement infrastructure development projects and environment projects. The Hon’ble Chhatisgarh High
164 Court by it’s order dated 07.06.2006 held that the cess that may be recovered under the impugned enactment shall be subject to the final result of the writ petition and directed listing of the case for final hearing in second week of July. 39. OCL Vs. State of Chhatishgarh and other [W P NO.2633/2006] South Eastern Coal Fields Limited supplied 11093 MT of coal from the mines of SECL, Corba Raigarh during the period 04.04.2006 to 05.05.2006.and demanded cess under Chhatishgarh (Adhosanrachna Vikas avam Paryavaran) Upkar Adhiniyam,2005 and Rules made thereunder. The Company filed writ petition for staying the said demand. The Hon’ble Chhatisgarh High Court by it’s order dated 07.06.2006 held that the cess that may be recovered under the impugned enactment shall be subject to the final result of the writ petition and directed listing of the case for final hearing in second week of July. 40. OCL Vs. State of Orissa and others [W P (C) NO. 8683/2006] An industrial dispute arose between the workmen and it’s contractor M/s Rattan Enterprises with regard to entitlement of wages at higher rate. The State Government while referring the dispute wrongly impleaded the Company as a party to the dispute and the said reference was registered as Industrial Dispute case No. 16 of 2005 in Industrial Tribunal, Rourkela. The Company challenged the said illegal reference dated 26.11.2005 of Government of Orissa, Labour and Employment Department on the ground that the dispute is between the workmen and the Contractor and is contrary to the Section 12(5) read with Section 10(1)(d) of the Industrial Disputea Act, 1947.
PROVIDENT FUND CASES OCL Vs. Asst. P.F Commissioner, Rourkela [ATA NO.390(8)2002] Filed by the Company challenging the order dated 31st July 2002 of Assistant Provident Fund Commissioner, Sub Regional Office, Rourkela demanding PF contribution on Special Allowance and Additional Special Allowance paid to all workmen amounting to Rs.89,03,046/- for the wage period from 01.01.2000 to 31.12.2001 and interest of Rs.16,33,441/-. The contention of the Company is that Section 2(b) of the Provident Fund Act specifically excludes certain allowances like house rent allowance, overtime allowance, any other similar allowance from the purview of the basic wages. The element of special allowance falls within the exclusion clause. The Hon’ble Tribunal by it’s order dated 27.07.2005 directed the Company to deposit 25% of the determined amount within two weeks for admission of the case for hearing. Accordingly the Company deposited Rs.14,05,944/-. The next date of hearing is fixed on 18.08.2006.
EMPLOYEES’ STATE INSURANCE CASES 1. OCL India Limited VS E S I Corporation [ESI Misc. No. 342/2004] The Company disputed the demand of ESI contribution on overtime wages as there were divergent views of various High Courts on the issue. The Company contended that the decision of Hon’ble Orissa High Court in the case of The Regional Director, ESI Corporation Vs. P B Gupta reported in 76(1993) CLT-893 which held overtime wages do not form part of wages was binding on the ESI. The Company obtained stay from the Court of District Judge, Puri. However the Company paid the contribution during the pendency of the case as the Supreme Court finally held that overtime wages form part of the wages in the case of Indian Drug & Chemicals Limited Vs. Employees State Insurance Corporation Limited (ESIC) reported in 1997 (II) LLJ-700. Regional Director, Employees’ State Insurance Corporation, Bhubaneswar passed an order bearing No. OR/REV/44-1167-46-19-11893 issued on 24/26.05.2005 imposing damages totaling to Rs.1,59,969/- under Section 85(B) of the ESI Act, 1948 for delayed payment of ESI contribution on over time wages for periods from 01.01.1990 to 31.01.1991. The Company challenged the said demand notice and the Hon’ble District Judge, Bhubaneswar granted stay vide order dated 21.07.2005. 2. OCL India Limited VS E S I Corporation [ESI Misc. No. 343/2004] The Company disputed the demand of ESI contribution on overtime wages as there were divergent views of various High Courts on the issue. The Company contended that the decision of Hon’ble Orissa High Court in the case of The Regional Director, ESI Corporation Vs. P B Gupta reported in 76(1993) CLT-893 which held overtime
165 OCL INDIA LIMITED
wages do not form part of wages was binding on the ESI. The Company obtained stay from the Court of District Judge, Puri. However the Company paid the contribution during the pendency of the case as the Supreme Court finally held that overtime wages form part of the wages in the case of Indian Drug & Chemicals Limited Vs. Employees State Insurance Corporation Limited (ESIC) reported in 1997 (II) LLJ-700. Regional Director, Employees’ State Insurance Corporation, Bhubaneswar passed an order bearing No. OR/REV/ 44-1167-46-20-11896 issued on 24/26.05.2005 imposing damages totaling to Rs.1,51,035/- under Section 85(B) of the ESI Act, 1948 for delayed payment of ESI contribution on over time wages for periods from 01.02.1991 to 31.01.1993. The Company challenged the said demand notice and the Hon’ble District Judge, Bhubaneswar granted stay vide order dated 21.07.2005. 3. OCL India Limited VS E S I Corporation [ESI Misc. No. 344/2004] The Company disputed the demand of ESI contribution on overtime wages as there were divergent views of various High Courts on the issue. The Company contended that the decision of Hon’ble Orissa High Court in the case of The Regional Director, ESI Corporation Vs. P B Gupta reported in 76(1993) CLT-893 which held overtime wages do not form part of wages was binding on the ESI. The Company obtained stay from the Court of District Judge, Puri. However the Company paid the contribution during the pendency of the case as the Supreme Court finally held that overtime wages form part of the wages in the case of Indian Drug & Chemicals Limited Vs. Employees State Insurance Corporation Limited (ESIC) reported in 1997 (II) LLJ-700. Regional Director, Employees’ State Insurance Corporation, Bhubaneswar passed an order bearing No. OR/REV/44-1167-46-18-11890 issued on 24/26.05.2005 imposing damages totaling to Rs.60,728/- under Section 85(B) of the ESI Act, 1948 for delayed payment of ESI contribution on over time wages for periods from 01.02.1989 to 31.12.1989. The Company challenged the said demand notice and the Hon’ble District Judge, Bhubaneswar granted stay vide order dated 21.07.2005. 4. OCL India Limited Vs Employees’ State Insurance Corporation [ESI Misc. No. 179/2004] The Company disputed the demand of ESI contribution on overtime wages as there were divergent views of various High Courts on the issue. The Company contended that the decision of Hon’ble Orissa High Court in the case of The Regional Director, ESI Corporation Vs. P B Gupta reported in 76(1993) CLT-893 which held overtime wages do not form part of wages was binding on the ESI. The Company obtained stay from the Court of District Judge, Puri. However the Company paid the contribution during the pendency of the case as the Supreme Court finally held that overtime wages form part of the wages in the case of Indian Drug & Chemicals Limited Vs. Employees State Insurance Corporation Limited (ESIC) reported in 1997 (II) LLJ-700. Regional Director, Employees’ State Insurance Corporation, Bhubaneswar passed an order bearing No. OR/REV/44-1281-43-9-5258 issued on 09.11.2003 imposing damages totaling to Rs.10,52,468/- under Section 85(B) of the ESI Act, 1948 for delayed payment of ESI contribution on over time wages for periods from 16.02.1994 to 15.05.1996. The Company challenged the said order and the Hon’ble District Judge, Bhubaneswar granted stay vide order dated 15.04.2004. 5. OCL India Limited Vs Employees’ State Insurance Corporation [ESI Misc. No. 418/2004] The Company disputed the demand of ESI contribution on overtime wages as there were divergent views of various High Courts on the issue. The Company contended that the decision of Hon’ble Orissa High Court in the case of The Regional Director, ESI Corporation Vs. P B Gupta reported in 76(1993) CLT-893 which held overtime wages do not form part of wages was binding on the ESI. The Company obtained stay from the Court of District Judge, Puri. However the Company paid the contribution during the pendency of the case as the Supreme Court finally held that overtime wages form part of the wages in the case of Indian Drug & Chemicals Limited Vs. Employees State Insurance Corporation Limited (ESIC) reported in 1997 (II) LLJ-700. Regional Director, Employees’ State Insurance Corporation, Bhubaneswar passed an order bearing No. OR/REV/44-1281-43-2-18671 issued on 09.08.2004 imposing damages totaling to Rs.32,333/- under Section 85(B) of the ESI Act, 1948 for delayed payment of ESI contribution on over time wages for periods from 16.01.1991 to 15.12.1992. The Company challenged the said demand notice and the Hon’ble District Judge, Bhubaneswar granted stay vide order dated 06.10.2004.
166 6. OCL India Limited Vs Employees’ State Insurance Corporation [ESI Misc. No. 416/2004] The Company disputed the demand of ESI contribution on overtime wages as there were divergent views of various High Courts on the issue. The Company contended that the decision of Hon’ble Orissa High Court in the case of The Regional Director, ESI Corporation Vs. P B Gupta reported in 76(1993) CLT-893 which held overtime wages do not form part of wages was binding on the ESI. The Company obtained stay from the Court of District Judge, Puri. However the Company paid the contribution during the pendency of the case as the Supreme Court finally held that overtime wages form part of the wages in the case of Indian Drug & Chemicals Limited Vs. Employees State Insurance Corporation Limited (ESIC) reported in 1997 (II) LLJ-700. Regional Director, Employees’ State Insurance Corporation, Bhubaneswar passed an order bearing No. OR/REV/44-1281-43-1-18674 issued on 09.08.2004 imposing damages totaling to Rs.1,95,579/- under Section 85(B) of the ESI Act, 1948 for delayed payment of ESI contribution on over time wages for periods from 16.12.1989 to 15.01.1991. The Company challenged the said demand notice and the Hon’ble District Judge, Bhubaneswar granted stay vide order dated 06.10.2004. 7. OCL India Limited Vs Employees’ State Insurance Corporation [ESI Misc. No. 417/2004] The Company disputed the demand of ESI contribution on overtime wages as there were divergent views of various High Courts on the issue. The Company contended that the decision of Hon’ble Orissa High Court in the case of The Regional Director, ESI Corporation Vs. P B Gupta reported in 76(1993) CLT-893 which held overtime wages do not form part of wages was binding on the ESI. The Company obtained stay from the Court of District Judge, Puri. However the Company paid the contribution during the pendency of the case as the Supreme Court finally held that overtime wages form part of the wages in the case of Indian Drug & Chemicals Limited Vs. Employees State Insurance Corporation Limited (ESIC) reported in 1997 (II) LLJ-700. Regional Director, Employees’ State Insurance Corporation, Bhubaneswar passed an order bearing No. OR/REV/44-1281-43-3-18668 issued on 09.08.2004 imposing damages totaling to Rs.72,182/- under Section 85(B) of the ESI Act, 1948 for delayed payment of ESI contribution on over time wages for periods from 16.01.1989 to 15.12.1989. The Company challenged the said demand notice and the Hon’ble District Judge, Bhubaneswar granted stay vide order dated 06.10.2004. 8. OCL India Limited Vs Employees’ State Insurance Corporation [ESI Misc. No. 260/2004] The Company disputed the demand of ESI contribution on overtime wages as there were divergent views of various High Courts on the issue. The Company contended that the decision of Hon’ble Orissa High Court in the case of The Regional Director, ESI Corporation Vs. P B Gupta reported in 76(1993) CLT-893 which held overtime wages do not form part of wages was binding on the ESI. The Company obtained stay from the Court of District Judge, Puri. However the Company paid the contribution during the pendency of the case as the Supreme Court finally held that overtime wages form part of the wages in the case of Indian Drug & Chemicals Limited Vs. Employees State Insurance Corporation Limited (ESIC) reported in 1997 (II) LLJ-700. Regional Director, Employees’ State Insurance Corporation, Bhubaneswar started a certificate case bearing No. 44/Y/11/15/44-1281-RR dated 29.04.2004 for realisation of interest totaling to Rs.8,33,901/- under Section 45 of the ESI Act, 1948 for delayed payment of ESI contribution on over time wages for periods from 16.02.1994 to 15.05.1996. The Company challenged the said certificate proceeding and the Hon’ble District Judge, Bhubaneswar granted stay vide order dated 10.06.2004.
CONSUMER CASES Ms. Susani Kawa vs. Asst. PF Commissioner and OCL [Consumer Dispute No. 201/1998] Filed by Ms. Susani Kawa wife of Late Simon Kawa and Mr. Libnus Kawa son of Late Simon Kawa against The Regional PF Commissioner, Bhubaneswar, Asst. PF Commissioner, Rourkela and OCL India Limited praying for release of provident fund dues accumulated in the account of Late Simon Kawa maintained with Asst. PF Commissioner, Rourkela. The Company deposited it’s share of PF contribution as well as employee’s contribution with the PF authorities. The Company has no liability towards payment of the PF dues to the legal heirs of Late Simon Kawa.
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INDUSTRIAL DISPUTE CASES 1. MR. P C Das Vs. OCL [Case No. 12/1997] Demanding reinstatement in service after acquittal from the criminal case Mr. Purna Chandra Das raised an industrial dispute, which was referred by the Government to the Presiding Officer, Industrial Tribunal, Rourkela for adjudication. The said case was registered as Industrial Dispute Case No. 12/1997. Mr. Das was not satisfied with the reference of the case and filed a writ bearing OJC No.12034/1998 in Orissa High Court for changing the reference and further proceedings in Tribunal are stayed. 2. Mr. P K Mohapatra Vs. OCL [Case No. 21/1997] Challenged the order of dismissal. He was dismissed for disobeying the order of his superiors. Subsequently on the petition of Mr. Mohapatra Govt. transfer this case from Sambalpur to Bhubaneswar and the said transfer was challenged by the Company and proceedings are stayed. Subsequently on the request of Mr. Mohapatra, the matter was settled out of court by entering into an agreement in Form-K. In view of the settlement, the writ filed by the Company was withdrawn and Labour Court, Bhubaneswar was approached for passing a no dispute award. The case is pending. 3. Mr. Gokuldas Vs OCL [Case No. 72/2002] Dispute regarding date of birth. The date of birth is recorded as 35 years on the date of joining and superannuated on that basis. Subsequently on the petition of Mr. Das Government transfer this case from Sambalpur to Rourkela and the reference was also changed. The said transfer and change in reference were challenged by the Company in Orissa High Court and proceedings are stayed. Thereafter Orissa High Court disposed of the case directing the Government to again transfer the case to Sambalpur and the hearing will be on the old reference. The ID case, which is pending at Rourkela has been transferred to Labour Court Sambalpur for adjudication. The maximum liability in this case may be Rs. 4,24,593/-. 4. Mr. Gayadhar Sahoo Vs OCL [Case No. 1/2003] Mr. Gayadhar Sahoo, Mason was dismissed from services on the grounds of disobedicnce, misbehaviour and absence from duty. He raised an Industrial Dispute and was registered with thw Labour Court, Sambalpur as Industrial Dispute Case No. 1/2003. Vide order dated 01.01.2004 the said case has been transferred from the registry of Labour Court, Sambalpur to the Registry of Industrial Tribunal, Rourkela for adjudication. Being aggrived by the said order dated 01.01.2004, the Company filed the writ application WP (C ) No. 1131/2004 under Article 226 and 227 of the Constitution of India in the Hon’ble High Court of Orissa. The Hon’ble High Court vide order dated 09.02.2004 stayed the proceedings of the case No. 1/2003 pending before the Industrial Tribunal, Rourkela. The case is pending for further proceedings. The maximum liability in this case may be Rs. 3,00,827/-. 5. Mr. R. N. Behera Vs OCL [Case No. 6/2001] Mr. Rabi Narayan Behera, Sr. Clerk, Share and Law Department raised an Industrial Dispute challenging the termination of his service on the ground of disobedience. The said case was registered as ID case No. 6/2001 in the Labour Court, Sambalpur. State Government on request of Mr. Behera transferred the said case to Labour Court, Bhubaneswar without givig an opportunity of hearig to the Company. The Company filed writ in Orissa High Court challenging the order of Government of Orissa transferring the ID case from Labour Court, Sambalpur to Labour Court, Bhubaneswar. Stay is granted by Orissa High Court. During the pendency of the said writ Mr. Behera entered into a settlement with the Company in Form-K and received Rs. 1,50,000/- towards full and final settlement of his claim. In view of this development the Company filed withdrawal petition in the High Court for withdrawal of the writ. The ID case in the Labour Court will accordingly be disposed off in terms of the settlement. The case is pending.
CIVIL CASES 1. M/s IFGL Refractories Limited Vs OCL India Limited [Civil Suit No. 139 of 2004] IFGL filed Civil suit in the Court of Civil Judge, Senior Division, Rourkela claiming damages of Rs.5,00,000/- from Mr. Basak and Rs.50,000/- from the Company as Mr. Basak committed breach of secrecy agreement entered into
168 between the IFGL and Mr. Basak. Misc. Case No.51/2005 was also filed by IFGL praying for injunction against Mr. Basak to restrain him from divulging and disclosing any technical know how and secrecy which he has acquired from IFGL and also to restrain the Company from procuring and using the technical know how and trade secrecy from Mr. Basak. The Company filed its objection opposing the grant of injunction on the ground that the Company is not a party to the Secrecy agreement and not liable for damages. Miscellenous case has been disposed off in favour of the defendants. Suit hearing is in progress with next date of hearing is July 31, 2007. 2. Pareswar Ganda & Others Vs. M/s OCL India Limited [Civil Suit No. 43 of 2005] Plaintiff is the owner of the plot bearing No. 1560 out of Khata No. 135, in the Badgudhiali village, Rajgangpur, District Sundergarh. Defendant Company has established its Sponge Iron unit adjacent to the Plot of the Plaintiff. On 20th November, 2004 the Defendant Company dug the foundation over the Company’s land and started raising a boundary wall. The Plaintiff alleges that the Company is constructing the Boundary wall in his land. Being aggrieved by the act of the Defendant Company the Plaintiff filed a civil suit in the court of Civil Judge (Senior Division) for declaration of right, title and eviction with injunction to restrain the Defendant Company from construction. The Construction of the boundary wall was completed before the summon of the case was served on the Company as such the prayer for injunction becomes infructuous. The case has been fixed for hearing on 22.07.2006. 3. Mr. Ishar Alloy Steels Limited Vs M/s OCL India Limited [CIVIL SUIT NO. 20B of 1991] Mr. Ishar Alloy Steels Limited (Plaintiff No.1) placed an order vide Purchase Order No. 35, dated 07.02.1989 to M/ s S.K. Tulsayan Trading Company Private Limited (Defendant No.1) amounting to Rs.1,25,645.92 for supply of magnetic bricks. Defendant No. 1 to fulfill the supply of magnetic bricks forwarded the order to the M/s OCL India Limited (Defendant No.2). Defendant No. 2 delivered the goods to Orissa Goods Carriers (Defendant no. 3) being the public carrier for delivering the consignment of the aforesaid goods to the Plaintiff No. 1.On 14.06.1989 the Plaintiff No.1 received the delivery of the goods by endorsing the remark on the receipt that “Consignment was received in wet condition”. The Driver of the carrier alleged that the magnetic bricks were packed in wet grass hence the delivery was affected in wet condition. Plaintiff No.1 intimated this fact to the Defendant No. 1 & 2. Defendant No.2 denying the allegation of Plaintiff No.1 and submitted that they have supplied the goods to Defendant No. 3 in their perfect condition and the goods were damaged in transit. However, the estimated value of loss is Rs.97,286/- as per the report of the surveyor. To claim the amount of Rs.97,286/-, Plaintiff No. 1 filed the suit against all the Defendants under order 7 rule 1-2 of Civil Procedure Code, in the court of District Judge, Indore. The next date of hearing is not notified by the Court.
ARBITRATION PROCEEDINGS 1. OCL and Neelachal Ispat Nigam Limited Company has entered into an agreement on 12.05.1998 with Neelachal Ispat Nigam Limited (formerly Konark Met Coke Limited which merged into the present Respondent by virtue of the order of the Hon’ble High Court of Orissa under section 394(2) of the Companies Act, 1956) for supply of 14081 MTs of different types of silica refractory bricks and 1250 MTs of mortar for a total price of Rs. 31.26 Crores. As per the agreement the Claimant was required to manufacture the goods in accordance with the specification of the order and offer the same for inspection to the Respondent. After satisfying, with the quality of goods Respondent Company issued a certificate and dispatch clearance to the Claimant Company. Thereafter, The Claimant Company delivered the goods to the Respondent Company. The Claimant Company manufactured the goods in accordance with the specification of the order of the Respondent and the same was offered to the Respondent for inspection and test and issuance of dispatch clearance but the Respondent did not issue the dispatch clearance with in a reasonable period and thus prevented the Claimant from dispatching the goods by adhering to the time schedule.
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Being aggrieved with the act of the Respondent Company, The Claimant Company has filed the claim before the Arbitral Tribunal and claimed damages of Rs. 128741119 on account of loss sustained by them for such delay in dispatch of goods manufactured and consequent delay in payment of the price thereof. The Respondent Company has also raised three counter claims totaling Rs. 98129843 against the Claimant Company. The hearing has already been concluded. Award is awaited.
MOTOR ACCIDENT CLAIM CASES 1. Lubhabati Choudhury and three others vs. Awtar Singh & Others [CASE No. 27/2004 & 28/2004] The Company’s tanker OR-16A-9825 met with an accident on 03.12.2003 in which Mr. Purna Chandra Choudhury resident of Sundargarh died. His legal heirs lodged a claim for payment of Rs.5,00,000/- and Rs.50,000/- under Section 166 and 140 of the Motor Vehicles Act in the Court of Motor Accident Claims Tribunal-1, Sundargarh . The vehicle is insured with The Oriental Insurance Company, as such the liability will be on the insurance Company. The case is pending. 2. Haripriya Puran and four others vs. Ramesh lakra & others [CASE No. 184/2004 & 185/2004] The Company’s truck No. OR-09C-7062, which was carrying cement met with an accident on 21.03.2004 and in which Mr. Chaitanya Puran died. His legal heirs lodged a claim for payment of Rs.50,000/- and Rs.20,00,000/- under Section 166 and 140 of the Motor Vehicles Act in the Court of Motor Accident Claims Tribunal, Rourkela. The vehicle is insured with The Oriental Insurance Company, as such the liability will be on the insurance Company. The Tribunal while disposing of the case directed the Oriental Insurance company to pay Rs.50,000/- as compensation to the petetioners.
170 SALES TAX CASES
Details of Sales Tax Litigations against the Company
OCL INDIA LIMITED Detials of contingent liability with respect to cases pending before sales tax / entry tax various authority
RAJGANGPUR Total Amount involved Sl. Type of Title of the Name of the Brief facts and Next Copy of Copy of Amount Amount (Rs. in lacs) No. Litigation case Authority / current status date of the last interim paid outstand- Judge hearing order order ing (Current status i.e. case pending before)
Cement Refrac- Sponge Total tory Iron Sales Tax 2003-04 - OST Orissa Sales Tax Contravention of Form IV for 1st Appeal Demand 1.07 1.15 3.00 3.00(refund 1 No 0.78 (2nd Appeal) Tribunal self consumption of Refractory, intimation / Order retained in of excess 1st appeal Non-submission/defective notice 1st Appeal is tax applied has been declaration forms, conse- received covered by for) disposed off quential surcharge etc. amount and against paid. 1st Appeal order we filed 2nd appeal whereever relief not allowed. 2 Sales Tax (2nd 2003-04 - CST Orissa Sales Tax Non-submission declaration No 1st Appeal Demand 0.87 57.05 57.92 57.92 Appeal)1st Tribunal forms-C /H/EI, surcharge is intimation / Order retained in appeal has considered as rate of sales tax notice 1st Appeal been under State law and levied received is covered disposed of on sales under CST to not by amount and against 1st covered by ‘C” Forms and paid. Appeal order Stock tranfer of Sponge Iron we filed 2nd to consignment Agents appeal disallowed and treated as whereever inte-state sale. relief not allowed 3 Sales Tax (2nd 1995-96 - OST Orissa Sales Tax Quantity discount on cement, No 1st Appeal Stay Order 39.17 34.26 73.43 20.00 53.43 Appeal) Tribunal Notional value of duty free intimation/ Order advance license on DBM by notice SAIL treated as turnover, received Interest on monthly availment of deferment, Contravention of Form IV, Sale of Rejected boulder treated as mineral and taxed at S.T. rate of mineral, non-submission of Forms, consequential surcharge. 4 Sales Tax (2nd 1995-96 - CST Orissa Sales Tax Freight Separately charged No 1st Appeal Stay Order 48.82 44.37 - 93.19 40.00 53.19 Appeal) Tribunal treated as sale price, Export intimation/ Order to TYK Japan treated as CST notice sale, penal interest on monthly received availment of deferment, surcharge is considered as rate of sales tax under State law and levied on sales under CST to not covered by ‘C” Forms. Sales Tax (2nd 1997-98 - OST Orissa Sales Tax Quantity discount on cement, No 1st Appeal Stay Order 58.43 1.58 - 60.01 40.00 5 20.01 Appeal) Tribunal Penal Interest on monthly intimation/ Order availment of deferment, notice Contravention of Form IV, received Declaration treated as defective, consequential surcharge 171 OCL INDIA LIMITED
SALES TAX CASES
Details of Sales Tax Litigations against the Company
OCL INDIA LIMITED Detials of contingent liability with respect to cases pending before sales tax / entry tax various authority
RAJGANGPUR Total Amount involved Amount Amount Sl. Type of Title of the Name of the Brief facts and Next Copy of Copy of (Rs. in lacs) paid outstand- No. Litigation case Authority / current status date of the last interim ing Judge hearing order order (Current status i.e. case pending before)
Cement Refrac- Sponge Total tory Iron Sales Tax 1998-99 - OST Orissa Sales Tax Quantity discount on cement, No 1st Appeal Stay Order 26.54 2.46 - 29.00 15.00 14.00 6 (2nd Appeal) Tribunal Contravention of Form IV, intimation/ Order Non-submission / defective notice declaration forms, received consequential surcharge. Sales Tax 1999-2000 - Orissa Sales Tax Quantity discount on cement, No 1st Appeal Stay 50.32 1.04 - 51.36 15.00 36.36 7 (2nd Appeal) OST Tribunal Contravention of Form IV, Non- intimation/ Order Order submission / defective notice declaration forms, received consequential surcharge. 8 Sales Tax 1982-83 - CST Orissa Sales Tax High Court has directed the No 1st Stay Order 1.40 1.23 - 2.63 2.63 (2nd Appeal) Tribunal Tribunal to allow deduction of intimation/ Appeal freight in case the same is notice Order separately charged. received Sales Tax 2000-2001 - Orissa Sales Tax Quantity discount on cement, No 1st Appeal 87.33 3.51 - 90.84 52.00 9 Stay Order 38.84 (2nd Appeal) OST Tribunal Contravention of Form IV, Non- intimation/ Order submission declaration forms, notice sale of scrap taxed at higher received rate of 12%, consequential surcharge. 10 Sales Tax 2002-03 - Orissa Sales Tax Non-submission/defective No 1st Appeal Stay Order 2.90 0.56 10.04 13.50 12.50 1.00 (2nd Appeal) CST Tribunal declaration forms-C/F/H/EI, intimation/ Order surcharge is considered as rate notice of sales tax under State law received and levied on sales under CST to not covered by ‘C” Forms and Stock tranfer of Sponge Iron disallowed and treated as inte-state sale. nd Disallowances of ET paid/ st 11 Entry Tax (2 2003-04- ET Orissa Sales Tax No 1 Appeal Demand 0.79 - 1.05 1.84 1.84 Appeal)1st Tribunal suffered goods as purchased intimation/ Order retained in (refund appeal has from unregistered dealers of notice 1st Appeal of excess been disposed Orissa Form E-15 w.r.t. SIW, received is covered tax of and against etc. by amount applied 1st Appeal paid for) order we filed 2nd appeal whereever relief not allowed
12 Entry Tax (2nd 1999-2000 Orissa Sales Tax Quantity discount, sale of No 2nd Stay 4.04 0.19 4.23 - 3.50 0.73 Appeal) (Dec 99 to Mar Tribunal cement to non-dealers like intimation/ Appeal Order 2000) B.D.Os, disallowances of ET notice Order paid/suffered goods as received purchased from unregistered dealers of Orissa, etc.
172 SALES TAX CASES
Details of Sales Tax Litigations against the Company
OCL INDIA LIMITED Detials of contingent liability with respect to cases pending before sales tax / entry tax various authority
RAJGANGPUR Total Amount involved Amount Amount Sl. Type of Title of the Name of the Brief facts and Next Copy of Copy of (Rs. in lacs) paid outstand- No. Litigation case Authority / current status date of the last interim ing Judge hearing order order (Current status i.e. case pending before)
Cement Refrac- Sponge Total tory Iron 13 Entry Tax 2000-01 Orissa Sales Tax Quantity discount, sale of No 2nd Stay Order 7.57 - - 7.57 5.50 2.07 (2nd Appeal) Tribunal cement to non-dealers like intimation/ Appeal B.D.Os, disallowances of ET notice Order paid/suffered goods as received purchased from unregistered dealers of Orissa, etc. Entry Tax Orissa Sales Tax Quantity discount special cash No 2nd 0.67 14 2001-02 Stay Order 2.47 - - 2.47 1.80 (2nd Appeal) Tribunal discount, disallowances of ET intimation/ Appeal paid/suffered goods as notice Order purchased from unregistered received dealers of Orissa, etc. Orissa Sales Tax Quantity discount special cash 2nd Stay Order 1.41 - 3.43 0.08 15 Entry Tax 2002-03 No 2.02 3.35 (2nd Appeal) Tribunal discount, disallowances of ET intimation/ Appeal paid/suffered goods as notice Order purchased from unregistered received dealers of Orissa, Enhancement of turnover of Sponge Iron, Non-submission of Form E-15 w.r.t. SIW, etc.
Sales Tax 2004-05 - OST Asst.Quantity discount and Special Date is Assessment Stay Order (13.89) 1.35 29.19 16.65 6.00 10.65 16 (1st Appeal) Commissioner of cash Discount on cement, fixed on Order Sales Tax, Enhancement of turnover of 31.07.2006 Sundargarh Sponge Iron on basis of calculation of iron ore Range, Rourkela consumption at 1.65 Mt. per mt of sponge iron instead of accepting actual consumption, Contravention of Form IV for self consumption of Refractory, Non-submission declaration forms/certificate etc and consequential surcharge etc. 17 Sales Tax 2004-05 - CST Asst.Non-submission/defective Date is Assessment Stay Order 69.30 23.51 260.06 352.87 145.00 207.87 (1st Appeal) Commissioner of declaration forms-C/F/H/EI, fixed on Order Sales Tax, surcharge is considered as rate 31.07.2006 Sundargarh of sales tax under State law Range, Rourkela and levied on sales under CST to not covered by ‘C” Forms and Stock tranfer of Sponge Iron to Raipur Depot and consignment Agents disallowed and treated as inte- state sale. TOTAL 411.47 116.08 360.19 887.74 430.34 457.40
173 OCL INDIA LIMITED
Outstanding Litigations by & against the Directors
As per the certificates given by the directors of the company there are no litigations pending against them except Mr. Pradip (Pinto) Khaitan, details of same is herein below:
SI. No. PartiesInvolved Brief Summary of Case Date of Institution Current Status of Date ofResolution Court /Tribunal Amount involved Penalty Imposed (if Case (if applicable) (INR) any)
Default Cases Mcleod Russel (India) Show Cause Notice dated 17/1012002 bearing no. October 17,2002 The Company Not Applicable Not ApplicableNot Ascertained Not Applicable 1 Limited and its 18/338/2003- 2004/ECAICALLALS- H/00031AM 92 has submitted Directors issued by the Joint Director General of Foreign Trade all the necessary Government of India, Ministry of Commerce, Office documents and of the Joint Director General of Foreign Trade, under is awaiting the Section 11 of the Foreign Trade (Development & response of the Regulation) Act, 1992 Joint Director General ofForeign Trade. Litigation CESC Limited andits Complaint Case no. 264 of 2000 for alleged 2000 All the Not Applicable Before the court Not Ascertained Not Applicable 2 officials and Directors offence under Section 406, 420, 465, 467 and 468 proceedings of the Ld. Addl. read with 120B of the IPC’ against the Company have been Chief Judicial and itsDirectors / officials was filed by Bengal Ispat stayed by the Magistrate Udyog (Mr. Suresh Agarwal) before the Court of High Court at Alipore. the Ld. Add!. Chief Judicial Magistrate, Alipore. Calcutta in Criminal Revision No. 3159 of 2000. Complaint Case no. 4979 of 2000 for alleged All the Not Applicable 3 CESC Limited and 2000 Before the Court Not ascertained Not Applicable its officials and offence under Section 406, 420, 465, 467 and 468 proceedings of the Ld Directors read with 120B of the IPC against the Company have been Metropolitan and its Directors/officials was filed by Continental stayed by the Magistrate, Steel Star High Court at Kolkata (Mr. Suresh Agarwal) before the .Court of the Ld. Calcutta in 7thMetropolitan Magistrate, Kolkata. Criminal Revision No. 254 of 2001.
The Officialsand CRR No. 2226 of 2005;Before the Hon’ble High 2005 The Criminal NotApplicable Hon’ble High Not Ascertained Not Applicable 4 Directorsof CESC Courtat Calcutta.Bengal Metal Industries -vs- Mr. Revision is Court at Calcutta Limited R.P. Goenka & OthersThe Criminal Revision has being contested been filed againt the order dated July 19, 2005 by CESC passed by the Ld Chief Metropolitan Magistrate, Howrah in Case No. 775C of2005 whereby the Ld.Magistrate dismissed theComplaint Petition
The Officials and CRR No. 2284 of 2005 Before the Hon’ble High 2005 The Criminal Not Applicable Hon’ble High Not Ascertained Not Applicable 5 Directors of CESC Court at CalcuttaBengal Metal Industries -vs- Mr. Revision is Court at Calcutta Limited P. Goenka and Others being contested by CESC.
174 DETAILS OF LITIGATIONS AGAINST THE GROUP COMPANY
DALMIA CEMENT (BHARAT) LIMITED
CRIMINAL LITIGATION a) There are 30 criminal cases filed under section 138 of the Negotiable Instruments Act, 1881 (regarding dishonour of cheques) for which the aggregate amount under litigation is Rs. 313.74 lacs. b) Criminal complaint no. 61 of 1997 dated February 5, 1997 under section 138 of the Negotiable Instrument Act, 1881 filed against M/s. Western Paques (India) Limited. The principal amount involved is Rs. 75 lacs. The case is pending before the Metropolitan Magistrate, New Delhi, has been adjourned sine die as the accused is not traceable. No other proceedings can be initiated against M/s. Western Paques (India) Limited since the it is under winding up and the Company has filed a claim for Rs. 2.39 crores with the Official Liquidator of M/s. Western Paques (India) Limited. c) Criminal complaint no. 62 of 1997 dated February 5, 1997 under section 138 of the Negotiable Instrument Act, 1881 filed against M/s. ROM Industries Limited. The principal amount involved is Rs. 50 lacs. The case is pending before the Metropolitan Magistrate, New Delhi. No other proceedings can be initiated against M/s. ROM Industries Limited as the proceedings are pending before the BIFR for its rehabilitation. Meanwhile the Company has received amounts aggregating to Rs. 26.30 lacs from the aforesaid party. d) Criminal case pending before the High Court of Madras, under Section 138 of the Negotiable Instruments Act, 1881 (regarding dishonour of cheques) against Mr. Sangupani Timber Depot, a cement stockist involving an amount of 47.52 lacs. e) Criminal complaint no. 1046/1 of 1996 dated October 8, 1996 under section 138 of the Negotiable Instrument Act, 1881 filed against M/s. Jauss Polymers Limited. The principal amount involved is Rs. 25 lacs. The case is pending before the Metropolitan Magistrate, New Delhi. The Company has received the entire amount from the aforesaid party. f) Criminal Complaint dated December 29, 2000, filed before the Court of Additional Chief Metropolitan Magistrate at Bombay, against Ispat Profiles (India) Limited under section 138 of the Negotiable Instruments Act, 1881, for dishonouring six cheques amounting to Rs. 14.97 lacs. g) There are 4 criminal cases filed under various provisions of the Indian Penal Code, 1860 against employees/ex- employees. h) There are 5 cases relating to encroachment of the company’s premises at Salem, pending before various court’s at Salem.
CIVIL LITIGATION a) Recovery suit filed against M/s. Indian Seamless Steels & Alloys Limited, Pune, involving an amount of Rs. 116.01 lacs. This amount is due to the Company on account of value of goods supplied and interest @ 20% p.a, has been decreed in favour of the Company and the amount has been recovered through the Court. However, the party has filed an appeal which is presently pending. b) Winding up petition dated March 12, 2000, filed against M/s. Bellary Steels & Alloys Limited, Bellary before the High Court of Karnataka at Bangalore involving an amount of Rs. 34.97 lacs on account of unpaid value of goods plus interest thereon. This petition has been admitted and the High Court has ordered the advertisement of the petition in newspapers before passing appropriate orders for winding up. The Company has also filed a Civil Suit for recovery of the same which is pending before the City Civil Judge, Bangalore. c) There are 26 legal cases pertaining to various labour related matters, where the amounts under litigation aggregate to Rs. 33.84 lacs d) The Company has filed a Civil Suit against M/s Marmagoa Steels Limited, in Goa for recovery of Rs. 9.12. Lacs
175 OCL INDIA LIMITED
together with interest @ 20% per annum in respect of sales and supplies made to them between the period October, 1998 to June, 2000. The matter is pending as on date. e) The Company was using 65.67 acres of land as a road from its Salem factory leading to the National Highway. This road was also used by the general public for transportation of men and materials. The State Government initially proposed to give the said area on lease to the Company and demanded rental of about Rs. 26 lacs for the period from 1977 onwards. Being aggrieved by this demand the Company has filed a Writ Petition before the Madras High Court, which is pending. Against interim orders of the High Court the Company has furnished a Company guarantee to the State Government for like amount. f) Winding up petition dated February 9, 2000, filed against M/s. Bharat Refractories Limited before the High Court of Judicature at Ranchi, involving an amount of Rs. 17.48 lacs. This amount is due to the Company on account of value of goods supplied and interest @ 20% p.a. The case has been referred to BIFR. g) Suits filed before the Railway Tribunal, etc. for claiming variance in distance of Western Coal fields and train wagon load in respect of Eastern Coals fields involving an amount of Rs. 1.39 lacs. h) Suit No. 996 of 1986 filed on March 31, 1986 before the Delhi High Court against M/s. Max Crona Consolidated for non-completion of repair work of the Ballabgarh factory roofs, for an amount of Rs. 6.16 lacs. M/s. Max Crona Consolidated has filed a counter claim in the said suit on April 10, 1987 with the Delhi High Court for an amount of Rs. 2.42 lacs. The case is now transferred to the District Court where it is presently pending. i) The Company has received a decree dated July 7, 1999 from Additional Sub-Judge, Salem for recovery of an amount of Rs. 5.09 lacs in respect of the goods supplied, against M/s. Sansid Polbbro Chemicals (India) Limited, Pune. Since the party is situated at Pune, the decree for execution, which is pending. j) Suits filed before the High Court, Kolkatta for claiming variance in distance of Western Coal fields and train wagon load in respect of Eastern Coals fields involving an amount of Rs. 0.55 lacs. k) There are 14 legal cases pertaining to various labour related matters, where the amount is not ascertainable. l) There are 4 separate legal cases filed against Hansalaya Properties before the Delhi High Court (i) suit for damages of Rs. 9.26 lacs for late delivery of 11th and 12th floor of Hansalaya Building; (ii) suit for claiming title of premises in respect of 11th & 12th floors and the basement area of that building; (iii) demanding formation of Society and execution and Deed of Apartment under Apartment Ownership Act, 1986and (iv) suit filed for declaration and seeking right to install it’s own cooling tower. All these cases have now been transferred to the District Court. m) There are 3 petitions filed before the Secretary, Cane Development & Sugar, regarding order for establishment/ new cane purchase centre for the season 2003-04. n) There are 6 cases filed before the Cane Commissioner and other authorities at Sitapur pertaining to reservation/ de-reservation centres in respect of Ramgarh Chini Mills for weighing the sugarcane brought by cane growers. o) There are 28 writ petitions filed before the Madras High Court against the orders of land acquisition issued by the State of Tamil Nadu in respect of lands in and around Vallajanagaram and other villages in the State of Tamil Nadu. These lands are mineral bearing and are required for mining operations by the Company. These petitions were dismissed and the Company has preferred a Writ Appeal before the Madras High Court. The amounts are not ascertainable and the Company is yet to receive the awards for land acquisition proceedings. p) Two writ petitions filed on April 30, 1992, before the High Court of Madras one against rejection of the Company’s Mining Lease application for the Vallajaanagaram area (an area of 714.14 acres), and against the order of the State Government dated August 25, 1986 and the other Writ Petition in respect of order for reservation of area in and around Vallaganagam Village in Tamil Nadu. This matter is pending in Madras High Court and the Company is not mining in this area. Note: Mining leases under litigation relate to areas where mining lease applications of the Company have been rejected on the ground that these areas have been reserved by the State Government for State exploitation under Rule 58 of the Mineral Concession Rules, 1960. Based on legal opinion obtained by the Company, the reservations made are no more valid after the deletion of Rule 58 of the Mineral Concessions Rules, 1960, without any savings clause.
176 q) Mining lease for the Perianagalur area (an area of 172.99 acres) is under litigation and pending before Madras High Court. The Company is, however, mining in this area under High Court Order of stay dated July 21, 1998. Note: Mining leases under litigation relate to areas where mining lease applications of the Company have been rejected on the ground that these areas have been reserved by the State Government for State exploitation under Rule 58 of the Mineral Concession Rules, 1960. Based on legal opinion obtained by the Company, the reservations made are no more valid after the deletion of Rule 58 of the Mineral Concessions Rules, 1960, without any savings clause. r) Arbitration proceeding for damages before the International Chamber of Commerce between the Company and the claimants – South India Corporation, Chennai and Rich Group International and/or Arko Trading Limited, Hongkong – the respondents, for non-supply of steam coal of Indonesian origin against the Company’s contract dated October 28, 1999 with them has been completed in favour of the Company. As the respondents have gone into liquidation, the Company has filed necessary claims with the Official Liquidator. s) The Tamil Nadu Government has raised demands aggregating to Rs. 18.51 crores towards short payment of royalty on the basis of quantity of cement produced. Writ Petition has been filed before the Madras High Court, which is pending. t) The Tamil Nadu Government has raised demand for enhanced charges for drawal of water from the Coleroon River. The Company has filed a Writ Petition before the Madras High Court. The amount is not ascertainable.
STATUTORY LITIGATION a) Tamil Nadu Electricity Board has levied an electricity generation tax on self-generated electricity by using Furnace Oil. The Company had filed Writ Petitions in the Madras High Court challenging the levy of such tax, on the basis of notifications issued in respect of certain industries using other Petroleum products, which has been decided against the Company. The Company has filed Writ Appeals against the said order of the learned Single Judge. The demands had been made at 15% of the unit charges applicable from time to time. In the interim orders on the Writ Appeal filed by the Company, the Madras High Court has directed the Company to pay the said tax at the admitted rate of 5.5% of the unit charges together with 50% of the disputed amount of the demand of the unit charges. The aggregate liability for such disputed demand is Rs. 289.90 lacs, which has not been provided for in the accounts. The Company has also challenged the levy and validity of the Tamil Nadu Electricity Act, 2003 before the Madras High Court, which was dismissed. Against this order, the Company has preferred a Writ Appeal before the Madras High Court, which is presently pending. b) Claim for refund of excise duty on equalised freight for sale of cement pending before the Delhi High Court as a Reference Petition amounting to Rs. 2.64 crores. Meanwhile the amount has been refunded to the Company. c) Appeals pending before the STAT, Madurai, for use of Form XVII for purchase of lubricants and furnace oil and explosives at concessional rates for FY 1996 amounting to Rs. 14.46 lacs, for FY 1997 amounting to Rs. 40.55 lacs and for FY 1998 amounting to Rs. 3.64 lacs. d) Case pending before the Deputy Commissioner Tax Officer, Lalgudi filed by the Sales Tax Department, Tamil Nadu, regarding determination of sales tax on packaging charges in the sale of cement for FY 1978 amounting to Rs. 13 lacs, for FY 1979 amounting to Rs. 14.26 lacs and for FY 1980 amounting to Rs. 17.95 lacs. e) 4 matters filed and pending before Commissioner (Appeals), Joint Commissioner and Assistant Commissioner against orders passed by Asst. Commissioner, Sitapur in Show Cause Notices issued by Excise Authorities demanding payment of excise duty on Bagasse amounting to Rs. 67.78 lacs. f) Appeals filed by the Sales Tax Department, Tamil Nadu is pending with the Sales Tax Appellate Tribunal/TNTST, against the order of AAC/STAT granting exemption of Purchase Tax on purchases of Explosives and Fire Bricks amounting to Rs. 4.22 lacs. g) 3 matters relating to cenvat credit, one matter on baggase chain carrier and welding electrodes and 2 matters relating to cenvat credit on welding elctrodes amounting to 4.26 lacs. 2 matters relating to welding electrodes pending before CESTAT.
177 OCL INDIA LIMITED h) Under the Jute Packaging Materials (Compulsory use of Packaging Commodities) Act, 1987, 50% of the cement produced should be supplied in jute bags. Failure to do so attracts a maximum fine equal to twice the cost of jute bags not used as required by the Act. The Company has not been using the jute bags. The Supreme Court has upheld the constitutional validity of the above Act. As per the order, the percentages of using jute bags for packing the various commodities will be prescribed by the Government of India. The Madras High Court has stayed the use of jute bags by the cement industry, in the writ petitions filed by the trade unions. Vide Notification dated December 15, 1998, the Governments’ order prescribing percentages for use of jute bags in packing various commodities, cement has been excluded. The amount that may become payable by the Company as penalty in case it is ultimately held that penalty is leviable for non-compliance of the Act is presently is not quantifiable. i) Appeal pending with CESTAT, Chennai, regarding refund of service tax of Rs. 15.88 lacs on services availed from goods transport operators. j) Special Leave Petition filed with the Supreme Court of India contesting payment of 100% royalty on new leases of Patta Lands. The amount involved is Rs. 27.74 lacs. k) Nine appeals against the disallowance of Modvat credit, involving an amount of Rs. 187.45 lacs were filed in the CESTAT, Chennai. The CESTAT has passed favourable orders. However, the CESTAT is to make a reference to the High Court following the Orders of the Madras High Court on the appeal filed by the Commissioner of Central Excise. l) The ESI Corporation has raised a demand for payment of contribution with damages in respect of certain employees engaged in the canteen, rest house and gardens at Salem. This demand has been contested by filing a suit in the local Court at Salem.
CIVIL LITIGATION AGAINST THE COMPANY a) Labour disputes pending before the High Court of Madras, involving an amount of Rs. 8.16 lacs with respect to claim for permanent employment by 4 contract workmen and also a dispute regarding retirement age of an employee. b) The State of Tamil Nadu while renewing Mining Leases of the Company directed payment of compensation for the surface rights on the Government Lands on which the Mining Leases were to be renewed or granted in favour of the Company. Although the Company has succeeded in its Revision Petition before the Central Government, the State Government of Tamil Nadu has filed Writ Petitions before the Madras High Court challenging the said orders of the Central Government. The compensation amount is yet to be determined. c) Haryana Government vide order dated December 14, 1989 proposed to acquire vacant factory land admeasuring 15.32 acres of Dalmia Electronics Corporation unit of the Company at Ballabhgarh. The Company has obtained a Stay order from the Punjab and Haryana High Court restraining the State Government from dispossessing the land. In the meanwhile the Company has filed appropriate proceedings before the District Judge, Faridabad, for enhancement of the quantum of the award, which is still pending. Till date the award has not been disbursed. d) Dalmia Cements had entered into a contract with M/s Bulk Trading for sale of 36,000 metric tons of South African steam coal delivery at Chennai port. The contract provided that M/s Bulk Trading to secure vessel to effect delivery. Bulk Tading was also to furnish complete particulars of the vessel nominated by them, which would be within the restrictions prevailing at the discharge port i.e. Chennai. Demmurrage was to be Dalmia Cement’s account. Vessel reached port however berthing could not as no berth was designed to handle the vessel which exceeded 633 ft as the vessel was 699 ft. Delay resulted in demurrage of 7 days and Bulk Trading initiated arbitrations proceedings under ICC Rules at London. Sole Arbitrator conducted the proceedings and passed an award for USD 36, 584.74 plus simple interest on the sum from 1.11.1999. Dalmia Cements was also asked to pay costs amounting to GBP 14,484.70 plus USD 220,000 along with simple interest of 4% from the sate of Award till payment (Approximately 45 lacs plus 4% interest). Dalmia Cements challenged the Award under section 34 of Arbitration and Conciliation Act, 1996 before the District Court, Trichy which is pending. e) Dalmia Cements had entered into an agreement for access and services with Ariba India Private Limited to provide sourcing of various commodities / items through e-sourcing using internet. Ariba to be paid fixed fee and variable performance fee. 2 year contract w.e.f. December 2003 to December 2005. Ariba to be paid fixed fee of Rs. 3 lacs
178 for 1st month and Rs. 2 lac each for entire remaining contract period. Ariba provided certain services. Dalmia Cements paid 19 lacs however, services not satisfactory further payents stopped. Ariba filed a summary suit for balance fixed fee including variable performance fee amounting to Rs. 67 lacs with interest. Dalmia Cements has contested the suit claiming arbitration. The Court has appointed retired Justice P. K. Bahri as sole arbitrator before whom the matter is pending.
Hari Machines Limited As per the information provided by Hari Machines there is a diputed demand of Central & Sales Tax to the extent of Rs. 45.16 lacs and other disputed liabilities to the extent of Rs. 10.85 lacs towards ESIC and SECL.
Dalmia Agencies Private Limited As per the information provided by Dalmia Agencies there is a diputed demand of intrest on Central Excise to the extent of Rs. 7.03 lacs and there is one Income Tax Reference is pending in High Court involving a sum of Rs. 1.71 lacs for the assessment years 1974-75 & 1982-83. There is also a Sales Tax demand for 1996-97 amounting to Rs.0.97 lacs pursuant to Tribunal’s order.
179 OCL INDIA LIMITED
MATERIAL DEVELOPMENTS
In the opinion of our Board of Directors, there have not arisen, since the date of the last financial statements disclosed in the Letter of Offer, any circumstances that materially or adversely affect or are likely to affect the profitability of the Company or our ability to pay material liabilities within the next twelve months. 1. A captive power plant of 14 MW capacity has been commissioned w.e.f. May 13, 2006. The power plant will partly run on waste heat available at the sponge iron plant and partly coal based. The captive power plant is expected to decrease the cost of power substantially. 2. Our Board in it’s meeting held on May 15, 2006 has approved capital expenditure of Rs. 700 crores +/- 10% for increase in the cement capacity from existing 1.8 million tonne per annum to 3.8 million tonne per annum. To part fund this capital expenditure the Company may issue further Equity Shares or instrumemnts convertible in Equity Shares at a future date. 3. Our Board in it’s meeting held on July 17, 2006 has approved the issue of secured redeemable non-convertible debentures aggregating to Rs. 50 crores on a private placement basis. The Company and the Lead Manager are obliged to update the Letter of Offer and keep the public informed of any material changes till the listing and trading commencement of the Equity Shares being offered through the Issue.
180 TERMS OF THE ISSUE
The Equity Shares now being offered are subject to the provisions of the Companies Act and terms and conditions of the Letter of Offer, the CAF, Memorandum and Articles of Association of the Company, approvals from the Government of India, FIPB and RBI, if applicable, guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies from time to time, listing agreements entered into by the Company with Stock Exchanges, rules and regulations framed under FEMA and terms and conditions as stipulated in the allotment advise or letter of allotment or Security Certificate and rules as may be applicable and introduced from time to time.
Basis of the Issue The Equity Shares are being offered for subscription for cash on rights basis (1 Equity Share for every 6 Equity Shares) to Eligible Equity Shareholders of our Company and your name stands registered on our Company’s register of members: As beneficial owners as at the end of business hours on September 4, 2006 as per the list to be furnished by NSDL and CDSL in respect of Equity Shares held in electronic form; and As members in the register of members of our Company after giving effect to valid share transfers in physical form lodged with our Company on or before September 4, 2006 The Company has in consultation with the Designated Stock Exchange has fixed the Book Closure Dates for determining the shareholders who are entitled to receive this offer for Equity shares on a rights basis.
Ranking of the Equity Shares The Equity Shares shall be subject to the Memorandum and Articles of Association of the Company. The Equity Shares allotted pursuant to this offer shall rank pari-passu in all respects with the existing Equity Shares of the Company including in respect of dividends.
Principal Terms and Conditions of the Issue
Face value of Equity Shares Each Equity Share shall have the face value of Rs.2 /- each.
Issue Price Each Equity Share is of face value of Rs. 2 each and is being offered at a premium of Rs. 118 per Equity Share (Issue Price of Rs. 120 per Equity Share).
Terms of payment 100% of the Issue Price per Equity Share shall be payable on application. Only one mode of payment per application should be used. The payment must be either in cash or by cheque/demand draft drawn on any of the banks (including a co-operative bank), which is situated at and is a member or a sub member of the Banker Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted. A separate cheque/draft must accompany each CAF. Outstation/post-dated cheques or demand drafts and postal/money orders will not be accepted and applications accompanied by such demand drafts/cheques/money orders or postal orders will be rejected. The Registrar will not accept cash along with the CAF. Cash shall not be accepted at other collection centres.
Rights Entitlement As yourare an Eligible Equity Shareholder of our Company, whose name stands registered on our Company’s register of members:
181 OCL INDIA LIMITED
As beneficial owners as at the end of business hours on September 4, 2006 as per the list to be furnished by NSDL and CDSL in respect of Equity Shares held in electronic form; and As members in the register of members of our Company after giving effect to valid share transfers in physical form lodged with our Company on or before September 4, 2006 You are entitled to the offer under the Rights Issue. The number of Equity Shares to which you are entitled is shown in Block I of Part A of the enclosed CAF.
Fractional Entitlement If the shareholding of any of the Equity Shareholders is less than six or is not in multiples of six, then the fractional entitlement of such holders of Equity Shares shall be ignored. Equity Shareholders whose fractional entitlements are being ignored would be given preferential allotment of one additional Equity Share each if they apply for additional Equity Shares. Those Equity Shareholders having holding of less than 6 Equity Shares and therefore are entitled to zero Equity Shares under the Rights Issue shall be dispatched a CAF with zero entitlement. Such Equity Shareholders are entitled to apply for additional Equity Shares. However, they can not renunciate the same to third parties. CAF with zero entitlement shall be non-negotiable/ non-renunciable.
Market lot The Equity Shares of the Company are tradable only in dematerialized form. The market lot for the Equity Shares in dematerialised mode is one. In case of physical certificates, the Company would issue one consolidated certificate for the Equity Shares allotted to one folio. In respect of the Consolidated Certificate, the Company will upon receipt of a request from the Equity Shareholder, be returning the share certificates issued for the entire holding, duly split as desired by the shareholders within a week’s time from the request of the Equity Shareholder. No fee would be charged by the Company for splitting the consolidated certificate. Investors may please note that the Equity Shares of the Company can be traded on the Stock Exchanges only in dematerialized form
Nomination Facility In terms of Section 109A of the Act, nomination facility is available in case of Equity Shares. The applicant can nominate any person by filling the relevant details in the CAF in the space provided for this purpose. The sole Equity Shareholder or first Equity Shareholder, along with other joint Equity Shareholders (being individual(s) may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Equity Shares. Person(s), being a nominee, becoming entitled to the Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same rights to which he would be entitled if he/she were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale/disposal of the Equity Share by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. When two or more persons hold the Equity Share(s), the nominee shall become entitled to receive the shares only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on request at the Registered Office of the Company or such other place at such addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant portion in the CAF. Only one nomination would be applicable for one folio. Hence, in case the shareholder(s) has (have) already registered the nomination with the Company, no further nomination need to be made for Equity Shares to be allotted in the Issue under the same folio.
182 In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination for the Equity Shares to be allotted in the Issue. Nominations registered with respective Depository Participant of the applicant would prevail. If the applicant requires to change the nomination, they are requested to inform their respective Depository Participant. Minimum Subscription If the Company does not receive the minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the applicants within forty-two days from the date of closure of the Issue. If there is a delay in the refund of subscription by more than 8 days after the Company becomes liable to repay the subscription amount, (i.e. forty two days after closure of the Issue), the Company will pay interest for the delayed period, at prescribed rates in sub-section (2) and (2 A) of Section 73 of the Act. The Rights Issue will become undersubscribed after considering the number of Equity Shares applied as per entitlement plus additional Equity Shares. Arrangement for Odd Lot Equity Shares The Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of the Issue. The Company will issue certificates of denomination equal to the number of Equity Shares being allotted to the Equity Shareholder. Option to subscribe The Equity Shareholders are given the option to receive the share certificates or hold securities in dematerialised form with a depository. Joint-Holders Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint-tenants with benefits of survivorship subject to provisions contained in the Articles of Association of the Company. Offer to Non-Resident Equity Shareholders/ Applicants As per regulation 6 of notification number FEMA/20/200-RB dated May 3, 2000, the RBI has given general permission to Indian companies to issue rights shares to non-residents shareholders including additional shares. Applications received from NRIs and non-residents for allotment of Equity Shares shall inter-alia be subject to the conditions imposed from time to time by the RBI under the Foreign Exchange Management Act, 1999 (FEMA) in the matter of refund of application money, allotment of Equity Shares, issue of letter of allotment / share certificates, payment of dividend etc. The Board of Directors may at its absolute discretion, agree to such terms and conditions as may be stipulated by the RBI while approving the allotment of Equity Shares, payment of dividends etc. to the non-resident shareholders. The right shares purchased by non-residets shall be subject to the same conditions including restrictions in regard to the repatriability as are applicable to the original shares against which right shares are being offered. By virtue of circular number 14 dated September 16, 2003 issued by the RBI, overseas corporate bodies (OCBs) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003. Accordingly, OCBs shall not be eligible to subscribe to the Equity Shares. The RBI has however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003 that OCBs which are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh investments as incorporated non-resident entities. Thus, OCBs desiring to participate in the Issue must obtain prior approval from the RBI. On providing such approval to the Company at its registered office, the OCB shall receive the Letter of Offer and the CAF. Letter of offer and CAF shall be dispatched to non-resident Equity Shareholders in India only.
Notices All notices to the Equity Shareholder(s) required to be given by the Company shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation, and one Oriya paper with wide circulation and /or, will be sent by ordinary post to the registered holders of the Equity Share(s) from time to time.
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Issue of Duplicate Equity Share Certificate If any Equity Share Certificate(s) is/are mutilated or defaced or the pages for recording transfers of Equity Shares are fully utilized, the Company against the surrender of such Certificate(s) may replace the same, provided that the same will be replaced as aforesaid only if the Certificate numbers and the Distinctive numbers are legible. If any Equity Share Certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to the satisfaction of the Company and upon furnishing such indemnity/ surety and/or such other documents as the Company may deem adequate, duplicate Equity Share Certificate(s) shall be issued.
Printing of Bank Particulars on refund orders As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the applicant’s bank account are mandatorily required to be given for printing on refund orders. Bank account particulars will be printed on the refund orders / refund warrants, which can then be deposited only in the account specified. The Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud.
Option Available to the Equity Shareholders The Composite Application Form clearly indicates the number of Equity Shares that the Equity Shareholder is entitled to. If the Equity Shareholder applies for an investment in Equity Shares, then he can: Apply for his entitlement in part Apply for his entitlement in part and renounce the other part Apply for his entitlement in full Apply for his entitlement in full and also apply for additional Equity Shares Renounce the entire entitlement (or part of entitlement). Adiitional Equity Shares can be applied for provided you have applied for all the Equity Shares offered to you under the Issue without renouncing them in full or in part. Renouncees for Equity Shares can apply for the Equity Shares renounced to them and also apply for additional Equity Shares.
How to Apply The prescribed colour of the CAF for various shareholder categories is as follows: Category Colour of Composite Application Form Residents, NRI applying on a non-repatriation basis CAF Printed with Black Ink NRI, or FII applying on a repatriation basis CAF Printed with Black Ink with separate advise for NRI holders
The CAF consists of four parts Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares Part B: Form for renunciation Part C: Form for application for renouncees Part D: Form for request for split application forms
184 Acceptance of the Rights Issue You may accept the Offer and apply for Equity Shares offered, either in full or in part by filling Block III of Part “A” of the enclosed CAF and submit the same along with the application money payable to the “Banker to the Issue” on any of the branches as mentioned on the reverse of the CAF before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board thereof in this regard. Applicants at centers not covered by the branches of collecting banks can send their CAF together with the cheque drawn on a local bank at Mumbai / demand draft payable at Kolkata (net of demand draft charges and postal charges) to the Registrar to the Issue by registered post.
Renunciation The Issue includes a right exercisable by you to renounce the Equity Shares offered to you either in full or in part in favour of any other person or persons subject to the approval of the Board. Such renouncees can only be Indian Nationals (including minor through their natural/legal guardian)/limited companies incorporated under and governed by the Act, statutory corporations/institutions, trusts (registered under the Indian Trust Act), societies (registered under the Societies Registration Act, 1860 or any other applicable laws) provided that such trust/society is authorized under its constitution/bye laws to hold equity shares in a company and cannot be a partnership firm, foreign nationals or nominees of any of them (unless approved by RBI or other relevant authorities) or to any person situated or having jurisdiction where the offering in terms of the Letter of Offer could be illegal or require compliance with securities laws of such jurisdiction or any other persons not approved by the Board. Any renunciation from Resident Indian Shareholder(s) to Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to other Non-Resident Indian(s) or from Non-Resident Indian Shareholder(s) to Resident Indian(s) is subject to the renouncer(s)/renouncee(s) obtaining the approval of the FIPB and/ or necessary permission of the RBI under the FEMA and other applicable laws and such permissions should be attached to the CAF. Applications not accompanied by the aforesaid approval are liable to be rejected. By virtue of the circular number 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (OCBs) have been derecognized as an eligible class of investors and the RBI has subsequently issued (OCBs)) Regulations, 2003. Accordingly, the Eligible Equity Shareholders of the Company who do not wish to subscribe to the Equity Shares being offered but wish to renounce the same in favour of renounces shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s). Your attention is drawn to the fact that the Company shall not allot and/or register any Equity Shares in favor of: More than three persons including joint holders Partnership firm(s) or their nominee(s) Minors Hindu Undivided Family Any Trust or Society (unless the same is registered under the Societies Registration Act, 1860 or any other applicable Trust laws and is authorized under its Constitutions to hold Equity Shares of a Company) The right of renunciation is subject to the express condition that the Board/ Committee of Directors shall be entitled in its absolute discretion to reject the request for allotment to renouncee(s) without assigning any reason thereof. Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid. Submission of the enclosed CAF to the Banker to the Issue at its collecting branches specified on the reverse of the CAF with the Form of Renunciation (Part B of the CAF) duly filled in shall be conclusive evidence in favour of the Company of the person(s) applying for Equity Shares in Part C to receive allotment of such Equity Shares. The renouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. Part ‘A’ must not be used by the renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to renounce any shares in favour of any other person.
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Procedure for Renunciation
To renounce the whole offer in favour of one renouncee If you wish to renounce this offer in whole, please complete Part B of the CAF. In case of joint holders, all joint holders must sign this part of the CAF in the same order as per the specimen signatures recorded with the Company. The person in whose favour renunciation has been made should complete and sign Part C of the CAF. In case of joint renouncees, all joint renounces must sign this part of the CAF.
To renounce in part/or renounce the whole to more than one person(s) If you wish to either accept this offer in part and renounce the balance or renounce the entire offer in favour of two or more renouncees, the CAF must be first split by applying to the Registrars to the Issue. Please indicate your requirement for Split Forms in the space provided for this purpose in Part D of the CAF and return the entire CAF to the Registrars to the Issue so as to reach them latest by the close of business hours on October 9, 2006. On receipt of the required number of split forms from the Registrars, the procedure as mentioned in para (a) above shall have to be followed. In case the signature of the Equity Shareholder(s), who has/have renounced the Equity Shares, does not match with the specimen signature(s) as per the records of the Company, the application is liable to be rejected.
Change and/or introduction of additional holders If you wish to apply for Equity Shares jointly with any other person, or persons, not more than three, who is/are not already joint holders with you, it shall amount to renunciation and the procedure as stated above shall have to be followed. Even a change in the sequence of the joint holders shall amount to renunciation and the procedure for renunciation, as stated above shall have to be followed.
Renouncee(s) The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part C of the Application Form and submit the entire Application Form to the Banker to the Issue on or before the Issue Closing Date along with the application money. However, any right of renunciation is subject to the express condition that the Board/Committee of Directors of the Company shall be entitled in its absolute discretion to reject the request for allotment from the renouncees without assigning any reasons therefor.
Please note that (a) Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid. (b) Only the person to whom the Letter of Offer has been addressed to and not the renouncee(s) shall be entitled to renounce and to apply for Split Application Forms. Forms once split cannot be split again. (c) Split form(s) will be sent to the applicant(s) by post at the applicant’s risk.
Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares you are entitled to, provided that you have applied for all the Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be made in the manner prescribed in the under the paragraph titled “Basis of Allotment” on page 193 of the Letter of Offer. The renouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. In case of application for additional Equity Shares by non-resident Equity Shareholders, the allotment of additional securities will be subject to the permission of the Reserve Bank of India.
186 Where the number of additional Equity Shares applied for exceeds the number available for allotment, the allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange. You may exercise any of the following options with regard to the Equity Shares offered to you, using the enclosed CAF. S. No. Options Available Actions Required 1 Accept your entitlement to all the Equity Fill in and sign ‘Part A’ of the CAF Shares offered to you 2 Accept your entitlement to all the Equity Shares Fill in and sign ‘Part A’ of the CAF after offered to you and apply for additional Shares indicating in Block IV the number of additional Equity Shares applied for 3 Accept only a part of your entitlement of the Equity Fill in and sign ‘Part A’ of the CAF Mention Shares offered to you (without renouncing the balance) in column no. III the number of shares applied for 4 Renounce all the Equity Shares offered to you to Fill in and sign ‘Part B’ of the CAF indicating one person (Renouncee) (Joint Renouncees are the number of Equity Shares renounced and considered as one renouncee) (Joint renouncee hand over the entire CAF to the renouncee. cannot exceed more than three) without applying The renouncee must fill in and sign ‘Part for any equity shares offered to you C’ of the CAF 5 Accept a part of the Equity Shares offered to you Fill in and sign ‘Part D’ of the CAF for Split and then renounce the balance to one Renouncee Forms after indicating the required number or renounce all the Equity Shares offered to you to of Split Application Forms and send the more than one renounce entire CAF to the Registrars to the Issue so as to reach them on or before the last date for receiving requests for Split Forms indicated in the CAF. On receipt of the Split Forms take action as indicated below: i) For the Equity Shares, if any, which you want to accept, fill in and sign ‘Part A’ of one Split Composite Application Form ii) For the Equity Shares you want to renounce, fill in and sign ‘Part B’ in the required number of Split Composite Application Forms indicating the number of Equity Shares renounced to each renouncee iii) Each of the renouncee should then fill in and sign ‘Part C’ of the respective Split Composite Application Form for the Equity Shares accepted by the renouncee 6 Accept a part of the Equity Shares offered to you Follow the procedures stated in (5) above and renounce the balance to more than one for obtaining the required number of Split renounce (Joint renounces are considered as one) Composite Application Forms and on receipt of Split Composite Application Forms follow the procedure as stated in (5) (ii) and (iii) above 7 Introduce a joint holder or change the sequence of This will be treated as a renunciation. Fill joint holders in and sign Part B and the renouncees must fill in and sign Part C
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Applications for Equity Shares should be made only on the CAF, which are provided by the Company. The CAF should be completed in all respects as explained under the head “INSTRUCTIONS” indicated on the reverse of the CAF before submission to the Banker to the Issue at its collecting branches mentioned on the reverse of the CAF on or before the closure of the subscription list. Non-resident shareholders/ Renouncee should forward their applications to Banker to the Issue as mentioned in the CAF for Non Resident Equity Shareholders. No part of the CAF should be detached under any circumstances.
For Resident Indian Shareholders Application should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be completed in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by the Lead Manager or by the Registrar to the Issue or by the Company at any offices except in the case of postal applications as per instructions given in the Letter of Offer. Payment should be made in cash (not more than Rs. 20,000) or by cheque/bank draft/ drawn on any bank (including a cooperative bank) which is situated at and is a member or a sub-member of the banker clearing house located at the centre where the CAF is submitted and which is participating in the clearing at the time of submission of the application. Outstation cheques/money orders/postal orders will not be accepted and CAFs accompanied by such cheques/money orders/postal orders are liable to be rejected.
For Non-Resident Shareholders Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter alia, be subject to the conditions as may be imposed from time to time by the Reserve Bank of India, in the matter of Refund of application moneys, allotment of Equity Shares, issue of Letters of Allotment/ certificates/ payment of dividends etc. All cheques/drafts submitted by non-residents should be drawn in favour of the Banker to the Issue and marked “OCL India Rights Issue-NR” payable at Kolkata and must be crossed “A/c Payee only” for the amount payable. The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on the Issue Closing Date. A separate cheque or bank draft must accompany each CAF. Applicants may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO accounts as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/ FCNR/ NRO account should be enclosed with the CAF. Otherwise the application shall be considered incomplete and is liable to be rejected.
Application with repatriation benefits (a) By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad (submitted along with Foreign Inward Remittance Certificate); or (b) By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in Kolkata; or (c) By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable at Kolkata; or (d) FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.
Application without repatriation benefits As far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in Kolkata or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Kolkata. In such cases, the allotment of Equity Shares will be on non-repatriation basis. Note: In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to Income Tax Act, 1961.
188 In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares cannot be remitted outside India. The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on the aforesaid Issue Closing Date. A separate cheque or bank draft must accompany each CAF. In case application received from Non-Residents, allotment, refunds and other distribution, if any, will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to necessary approvals.
Disposal of Application and Application Money No acknowledgment will be issued for the application moneys received by the Company. However, the Banker to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares allotted, will be refunded to the applicant within six weeks from the close of the Issue.
For applicants residing at places other than designated Bank Collecting branches Applicants residing at places other than the cities where the bank collection centers have been opened should send their completed CAF by registered post to the Registrars to the Issue alongwith bank drafts net of demand draft and postal charges payable at Kolkata in favour of “OCL India Rights Issue” crossed “A/c Payee only” so that the same are received on or before Closure of the Issue, i.e., October 27, 2006. The Company will not be liable for any postal delays and applications received through mail after the closure of the Issue, are liable to be rejected and returned to the applicants. Applications by mail should not be sent in any other manner except as mentioned above: All application forms duly completed together with cash/cheque/demand draft for the application money must be submitted before the close of the Subscription List to the Banker to the Issue named herein or to any of its branches mentioned on the reverse of the CAF. The CAF along with application money must not be sent to the Company or the Lead Managers to the Issue or the Registrars to the Issue except as mentioned above. The applicants are requested to strictly adhere to these instructions. Failure to do so could result in the applications being liable to be rejected with the Company, the Lead Manager and the Registrar not having any liability to such applicants. In case the original CAF is not received by the applicant or is misplaced by the applicant, the applicant may request the Registrars to the Issue for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address. In case the original and duplicate CAFs are lodged for subscription, allotment will be made on the basis of the duplicate CAF and the original CAF will be ignored.
Availability of Duplicate CAF In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a duplicate CAF on the request of the applicant who should furnish the registered folio number/ DP and Client ID no. and his / her full name and address to the Registrar to the Issue. Please note that those who are making the application in the duplicate form should not utilise the original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the applicant violates any of these requirements, he/ she shall face the risk of rejection of both the applications as well as forfeiture of amounts remitted along with the applications.
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Applications under Power of Attorney In case of applications made under a Power of Attorney or by limited companies or bodies corporate or registered societies or mutual fund or trust, the relevant Power of Attorney or the relevant resolution or authority to make the application, as the case may be, together with a certified true copy thereof along with a copy of the Memorandum and Articles of Association and/or Bye-Laws must be attached to the CAF and the banks branch where the application has been submitted at the time of making the application or lodged for scrutiny separately indicating the serial number of the CAF with the Registrars to the Issue after submission of the CAF to the Banker to the Issue or any of the designated branches as mentioned on the reverse of the CAF, failing which the applications are liable to be rejected. Such authority should reach the Registrar to the issue within 3 days from the date closure of the subscription list and such authority received be thereafter, may not be considered. The original(s) will be returned to the applicant after retaining the certified copy thereof.
Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Rights Issue on plain paper, along with an Account Payee Cheque drawn on a local bank at Kolkata/ Demand Draft payable at Kolkata which should be drawn in favour of “OCL India Limited – Rights Issue” and send the same by registered post directly to the Registrar to the Issue. The envelope should be superscribed “OCL India Limited – Rights Issue”. The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Date of Closure of the Issue and should contain the following particulars: Name of Issuer Name and address of the Equity Shareholder including joint holders Registered Folio Number/ DP and Client ID no. Number of Equity Shares held t(o be decided on the basis of the Book Closure Dates) Number of Rights Equity Shares entitled Number of Rights Equity Shares applied for Number of additional Equity Shares applied for, if any Total number of Equity Shares applied for Total amount paid @ Rs. 120 per Equity Share Particulars of Cheque/ Draft Savings/ Current Account Number and name and address of the bank where the Equity Shareholder will be depositing the refund order PAN/GIR number and Income Tax Circle/Ward/District where the application is for Equity Shares of a total value of Rs. 50,000/- or more for the applicant and for each applicant in case of joint names, and Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the Company Payments in such cases, should be through a cheque/ demand draft payable at Mumbai be drawn in favour of the Banker to the Issue marked “A/c Payee” and marked “OCL India Rights Issue”. Please note that those who are making the application otherwise than on original CAF shall not be entitled to renounce their Rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications as well as forfeiture of amounts remitted along with the applications.
190 Last Date of Application The last date for submission of CAF is October 27, 2006. The Board/ Committee of Directors will have the right to extend the said date for such period as it may determine from time to time but not exceeding sixty days from the date the Issue opens. If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/ Committee of Directors, the offer contained in the Letter of Offer shall be deemed to have been declined and the Board/ Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under the heading “Basis of Allotment”.
Unique Identification Number – MAPIN With effect from July 1, 2005, SEBI has decided to suspend all fresh registrations for obtaining Unique Identification Number (MAPIN) and the requirement to quote MAPIN under MAPIN Regulations/Circulars vide its circular MAPIN/ Circular-13/2005.
General Instructions for Applicants a) Please read the instructions printed on the enclosed CAF carefully b) Application should be made on the printed CAF, provided by the Company and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of the Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest if refunded within stipulated period. The CAF must be filled in English and the names of all the applicants, details of occupation, address, and father’s / husband’s name must be filled in block letters c) The CAF together with cheque /demand draft should be sent to the Banker to the Issue / Collecting Bank and not to the Company or Lead Manager to the Issue. Applicants residing at places other than cities where the branches of the Banker to the Issue have been authorised by the Company for collecting applications, will have to make payment by Demand Draft payable at Kolkata (net of demand draft charges and postal charges) and send their application forms to the Registrar to the Issue by registered post. If any portion of the CAF is / are detached or separated, such application is liable to be rejected. d) Applications for a total value of Rs.50,000/- or more, i.e. where the total number of securities applied for multiplied by the Issue price, is Rs.50,000/- or more the applicant or in the case of application in joint names, each of the applicants, should mention his/ her permanent account number allotted under the Income-Tax Act, 1961 or where the same has not been allotted, the GIR number and the Income-Tax Circle / Ward / District. In case where neither the permanent account number nor the GIR number has been allotted, the fact of non-allotment should be mentioned in the CAFs. Forms without this information will be considered incomplete and are liable to be rejected e) Applicants are advised to provide information as to their savings/ current account number and the name of the Bank with whom such account is held in the CAF to enable the Registrar to print the said details in the Refund Orders, if any, after the names of the payees. Application not containing such details is liable to be rejected f) The payment against the application should not be effected in cash if the amount to be paid is Rs.20,000/- or more. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon. Payment against the application if made in cash, subject to conditions as mentioned above, should be made only to the Banker to the Issue g) Signatures should be either in English or Hindi or in any other language specified in the 8th Schedule of the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company h) In case of an application under power of attorney or by a body corporate or by a society, a certified true copy of the relevant power of attorney or relevant resolution or authority to make investment and sign the application along with a copy of the Memorandum & Articles of Association and / or bye laws must be lodged with the Registrar to
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the Issue witnin three days of closure of the Issue giving reference of the serial number of the CAF. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the date mentioned above, the application is liable to be rejected i) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with the Company. Further, in case of joint applicants who are renouncees, the number of applicants should not exceed three. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant j) Application(s) received from Non-Residents / NRIs, or persons of Indian origin residing abroad for allotment of Equity Shares shall, interalia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the matter of refund of application money, allotment of Equity Shares, subsequent issue and allotment of Equity Shares, interest, export of Equity Share certificates, etc. In case a Non-Resident or NRI Equity Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF k) All communication in connection with application for the Equity Shares, including any change in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first / sole applicant Equity Shareholder, folio numbers and CAF number. Please note that any intimation for change of address of Equity Shareholders, after the date of allotment, should be sent to the Registrar and Transfer Agents of the Company or Registrar to Issue (C B Management Services (Private) Limited) in the case of equity shares held in physical form and to the respective DP, in case of equity shares held in dematerialised form l) Split forms cannot be re-split m) Only the person or persons to whom Equity Shares have been offered and not renouncee(s) shall be entitled to obtain split forms n) Applicants must write their CAF number at the back of the cheque / demand draft o) Only one mode of payment per application should be used. The payment must be either in cash or by cheque / demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub member of the Banker Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted p) A separate cheque /draft must accompany each CAF. Outstation cheques or post-dated cheques and postal / money orders will not be accepted and applications accompanied by such cheques / demand drafts / money orders or postal orders will be rejected. The Registrar will not accept payment against application if made in cash. (For payment against application in cash please refer point (f) above) q) No receipt will be issued for application money received. The Banker to the Issue / Collecting Bank will acknowledge receipt of the same by stamping and returning the acknowledgement slip at the bottom of the CAF r) An applicant which is a mutual fund can make a separate application in respect of each scheme of the fund and such applications shall not be treated as multiple applications. The application made by the asset management company or custodians of a mutual fund shall clearly indicate the name of the concerned scheme for which application is being made
Grounds For Technical Rejections Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following: Amount paid does not tally with the amount payable for; Bank account details (for refund) are not given; Age of first applicant not given; PAN photocopy/ PAN Communication/ Form 60 / Form 61 declaration not given if Application is for Rs. 50,000 or more;
192 In case of Application under power of attorney or by limited companies, corporate, trust, etc., relevant documents are not submitted; If the signature of the existing shareholder does not match with the one given on the Application Form and for renouncees if the signature does not match with the records available with their depositories; If the Applicant desires to have shares in electronic form, but the Application Form does not have the Applicant’s depository account details; Application Forms are not submitted by the Applicants within the time prescribed as per the Application Form and the Letter of Offer; Applications not duly signed by the sole/joint Applicants; Applications by OCBs unless accompanied by specific approval from the RBI permitting the OCBs to invest in the Issue; Applications accompanied by Stockinvest; In case no corresponding record is available with the Depositaries that matches three parameters, namely, name of Applicants (including the order of names of joint holders), the Depositary Participant’s indentity (DP ID) and the benefeciary’s indentity; Application by US persons; Applications by ineligible Non-residents (including on account of restriction or prohibition under applicable local laws) and where last available address in India has not been provided
Payment by Stockinvest In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the Stockinvest Scheme has been withdrawan with immediate effect. Hence, payment through Stockinvest would not be accepted in the Issue.
Basis of Allotment 1. Subject to provisions contained in the Letter of Offer, the Articles of Association of the Company and approval of the Designated Stock Exchange, the Board will proceed to allot the Equity Shares in the following order of priority: a) Full allotment to those Equity Shareholders who have applied for their rights entitlement either in full or in part and also to the renouncee(s) who has/ have applied for Equity Shares renounced in their favour, in full or in part b) If the shareholding of any of the Equity Shareholders is less than six or is not in multiples of six, then the fractional entitlement of such holders of Equity Shares shall be ignored. Equity Shareholders whose fractional entitlements are being ignored would be given preferential allotment of one additional Equity Share each if they apply for additional Equity Shares c) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as rights and have also applied for additional Equity Shares. The allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them to be decided on the basis of the Book Closure Dates, provided there is an under-subscribed portion after making full allotment in (a) and (b) above. The allotment of such Equity Shares will be at the sole discretion of the Board/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the rights Issue and not preferential allotment. d) Allotment to the renouncees who having applied for the Equity Shares renounced in their favour have also applied for additional Equity Shares, provided there is an under-subscribed portion after making full allotment in (a), (b) and (c) above. The allotment of such additional Equity Shares will be made on a proportionate basis at the sole discretion of the Board/ Committee of Directors but in consultation with the Designated Stock Exchange, as a part of the rights Issue and not preferential allotment
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e) Allotment to any other person as the Board may in its absolute discretion deem fit provided there is surplus available after making full allotment under (a), (b), (c) and (d) above 2. The Company shall retain no over subscription 3. After taking into account allotment to be made under (a) and (b) above, if there is any unsubscribed portion, the same shall be deemed to be ‘undersubscribed’ for the purpose of regulation 3(1)(b) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the Takeover Code) which would be available for allocation under (c), (d) and (e) above. The Promoters have undertaken to apply for additional Equity Shares, if the Issue does not receive subscription to the extent of 90% of the Issue size, after considering the above allotment. This acquisition of additional Equity Shares, if allotted to the Promoter shall be in terms of proviso to regulation 3(1)(b)(ii) of the Takeover Code and will be exempt from the applicability of regulation 11 and 12 of the Takeover Code. This disclosure is made in terms of the requirement of regulation 3(1)(b) of the Takeover Code. Further, this acquisition will not result in change of control of management of the Company. After such allotments as above and to the Promoters, including the application for rights/renunciation and additional equity shares, any additional Equity Shares shall be disposed off by the Board or the committee of the Board authorized in this behalf by the Board of the Company, in such manner as they think most beneficial to the Company and the decision of the Board or committee of the Board of the Company in this regard shall be final and binding. Allotment to the Promoters over and above their entitlement, out of the undersubscribed portion, shall be done in compliance with clause 40A of the Listing Agreement and other applicable laws prevailing at that time. Allotment to promoters of any unsubscribed portion, over and above their entitlement shall be done in compliance with Clause 40A of the Listing Agreement.
Allotment Letters / Refund Orders The Company will issue and dispatch letters of allotment/ share certificates and/ or letters of regret along with refund order/credit of refund amount payable or credit the allotted securities to the respective beneficiary accounts, if any within a period of six weeks from the date of closure of the Issue. If such money is not repaid within 8 days from the day the Company becomes liable to pay it, the Company shall pay that money with interest at the rate of 15% per annum as stipulated under Section 73 of the Act. The Company shall effect payment of refund amount by following mode: 1. In case of applicants residing at Ahmedabad, Bangalore, Bhubneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvanthapuram – refunds shall be credited through electronic transfer of funds by using ECS (Electronic Clearing Service), Direct Credit, RTGS (Real Time Gross Settlement) or NEFT (National Electronic Funds Transfer); 2. In case of applicants residing at places other than those specified in (a) above and where the value of refund order is Rs. 1500/- or more, refund orders will be dispatched to the applicants by registered post/speed post; and 3. In case of applicants residing at places other than those specified in (a) above and where the value of refund order is less than Rs. 1500/-, refund orders will be dispatched under certificate of posting. Cheques or pay orders to be sent by registered post / speed post / under certificate of posting will be payable at par at all the centres where the applications were originally accepted and will be marked “A/c payee” and would be drawn in the name of the sole/ first applicant. Adequate funds would be made available to the Registrar to the Issue for dispatch of the Letters of allotment/ security certificates / refund orders. In case the Company issues Letters of Allotment, the corresponding share certificates will be kept ready within three months from the date of allotment thereof or such extended time as may be approved by the Company Law Board under Section 113 of the Act or other applicable provisions, if any. Allottees are requested to preserve such Letters of Allotment, which would be exchanged later for the share certificates.
194 Allotment / Refund Where an applicant has applied for additional shares and is allotted lesser number of equity shares than applied for, the excess application money paid shall be refunded to the applicant. The Company will issue and dispatch letters of allotment/ securities certificates and/ or letters of regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any within a period of six weeks from the Date of Closure of the Offer. If such money is not repaid within 8 days from the day the Company becomes liable to pay it, the Company shall pay that money with interest at the rate of 15% per annum as stipulated under Section 73 of the Act. Equity Share certificates / Letters of Allotment or Letter(s) of Regret together with refund orders exceeding Rs 1,500/-, if any, will be despatched by registered post/ speed post at the sole/first named applicant’s address within 42 days from the date of the closing of the subscription list. Such cheques or pay orders will be payable at par at all the centres where the applications were originally accepted and will be marked “A/c payee” and would be drawn in the name of the sole/ first applicant. Refund orders upto Rs 1,500/- will be despatched under the Certificate of Posting. Adequate funds will be made available to the Registrars for the purpose. In case of those shareholders who have opted to receive their Right Entitlement Shares in dematerialised form by using electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately. In case the Company issues Letters of allotment, the corresponding Security Certificates will be kept ready within three months from the date of allotment thereof or such extended time as may be approved by the Company Law Board under Section 113 of the Companies Act, 1956 or other applicable provisions, if any. Allottees are requested to preserve such Letters of Allotment, which would be exchanged later for the Security Certificates. As regards allotment/ refund to Non-Residents, the following further conditions shall apply In case of Non-Residents, who remit their application monies from funds held in NRE/ FCNR accounts, refunds and/ or payment of interest/ dividend and other disbursement, if any, shall be credited to such accounts, details of which should be furnished in the CAF. Subject to the approval of the RBI, in case of non-residents, who remit their application monies through Indian Rupee draft purchased from abroad, refund and/ or payment of dividend/ interest and any other disbursement, shall be credited to such accounts (details of which should be furnished in the CAF) and will be made net of bank charges/ commission in US Dollars, at the rate of exchange prevailing at such time. The Company will not be responsible for any loss on account of exchange fluctuations for converting the Indian Rupee amount into US Dollars. The Equity Share certificate(s) will be sent by registered post / speed post at the Indian address of the non-resident applicant. Letters of Allotment / Equity Share Certificates Letter(s) of Allotment/ Equity Share certificates or Letters of Regret alongwith refund orders will be dispatched to the registered address of the first named applicant or respective beneficiary accounts will be credited within six weeks, from the date of closure of the subscription list. In case the Company issues Letters of Allotment, the relative Equity Share certificates will be dispatched within three months from the date of allotment. Allottees are requested to preserve such Letters of allotment (if any) to be exchanged later for Equity Share certificates. Export of Letters of Allotment (if any)/ Equity Share certificates to non-resident allottees will be subject to the approval of RBI. For Non-Resident applicants, refunds, if any, will be made as under Where applications are accompanied by NRE/ FCNR/ NRO cheques, refunds will be credited to NRE/ FCNR/ NRO accounts respectively, on which such cheques were drawn and details of which were provided in the CAF. Indian Rupee Drafts purchased abroad and payable at Kolkata, India, refunds will be made in convertible foreign exchange equivalent to Indian Rupees to be refunded. Indian Rupees will be converted into foreign exchange at the rate of exchange, which is prevailing on the date of refund. The exchange rate risk on such refunds shall be borne by the concerned applicant and the Company shall not bear any part of the risk. Equity Shares in Dematerialised Form Applicants to the Equity Shares of the Company issued through this Rights Issue shall be allotted the securities in dematerialised (electronic) form at the option of the applicant. The Company and C B Management Services (Private) Limited Registrar to the Company, have signed a tripartite agreement with CDSL on April 9, 2001 and with NSDL on April 24, 2001, which enables the investors to hold and trade in securities in a dematerialised form, instead of holding the securities in the form of physical certificates.
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In this Rights Issue, the allottees who have opted for Equity Shares in dematerialised form will receive their Equity Shares in the form of an electronic credit to their beneficiary account with a depository participant. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Applications, which do not accurately contain this information, will be given the securities in physical form. No separate applications for securities in physical and dematerialised form should be made. If such applications are made, the application for physical securities will be treated as multiple applications and is liable to be rejected. In case of partial allotment, allotment will be done in DEMAT option for the shares sought in DEMAT and balance, if any, will be allotted in physical shares. Procedure for availing this facility for allotment of Equity Shares in this Issue in the electronic form is as under: 1. Open a Beneficiary Account with any Depository Participant (care should be taken that the Beneficiary Account should carry the name of the holder in the same manner as is exhibited in the records of the Company. In case of joint holding, the Beneficiary Account should be opened carrying the names of the holders in the same order as with the Company). In case of Investors having various folios in the Company with different joint holders, the investors will have to open separate accounts for such holdings. Those Equity Shareholders who have already opened such Beneficiary Account (s) need not adhere to this step. 2. For Equity Shareholders already holding Equity Shares of the Company in dematerialized form as on the end of business hours on September 4, 2006, the beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Rights Equity Shares by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the allotment of securities arising out of this Issue may be made in dematerialized form even if the original equity shares of the Company are not dematerialized. Nonetheless, it should be ensured that the Depository Account is in the name(s) of the Equity Shareholders and the names are in the same order as in the records of the Company. 3. Responsibility for correctness of applicant’s age and other details given in the CAF vis-à-vis those with the applicant’s Depository Participant would rest with the applicant. Applicants should ensure that the names of the applicants and the order in which they appear in CAF should be same as registered with the applicant’s Depository Participant. 4. If incomplete / incorrect Beneficiary Account details are given in the CAF the applicant will get Equity Shares in physical form. 5. The Rights Equity Shares allotted to investors opting for dematerialized form, would be directly credited to the Beneficiary Account as given in the CAF after verification. Allotment advice, Refund Order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant’s Depository Participant will provide to him the confirmation of the credit of the Rights Equity Shares to the applicant’s Depository Account. 6. Renouncees will also have to provide the necessary details about their Beneficiary Account for allotment of securities in this Issue. In case these details are incomplete or incorrect, the applicant will get the Equity Shares in physical form.
Last Date for Submission of Composite Application Form The last date for receipt of the CAF, by the Banker to the Issue and its Collecting Branches, together with the amount payable, is on or before the close of banking hours, on October 27, 2006. If the CAF together with the amount payable is not received by the banker to the Issue at its Collection Branches on or before the close of banking hours on or before October 27, 2006, the offer contained in the Letter of Offer shall be deemed to have been declined, and the Board shall utilise this entitlement for allotting the Equity Shares as mentioned under the heading “Basis of Allotment”.
Undertakings by the Company The complaints received in respect of the captioned Rights Issue shall be attended to by the Company expeditiously and satisfactorily. All steps for completion of the necessary formalities for listing and commencement of trading at all stock exchanges where the shares are to be listed will be taken within seven working days of finalisation of basis of allotment. The funds required for dispatch of refund orders/ allotment letters/ certificates by registered post / speed post / under certificate of posting shall be made available to the Registrar to the Issue by the Company.
196 The share certificates / refund orders to the non-resident Indians shall be dispatched within the specified time. No further issue of securities shall be made till the securities issued/ offered through the captioned Rights Issue are listed or till the application moneys are refunded on account of non-listing, under-subscription etc. The Company accepts full responsibility for the accuracy of information given in the Letter of Offer and confirms that to best of its knowledge and belief, there are no other facts the omission of which makes any statement made in the Letter of Offer misleading and further confirms that it has made all reasonable enquiries to ascertain such facts. All information shall be made available by the Lead Manager and the Issuer to the investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc.
Utilisation of Issue Proceeds The Board of Directors declares that: 1. The funds received against this Issue will be transferred to a separate bank account other than the bank account referred to sub-section (3) of Section 73 of the Act; 2. Details of all moneys utilised out of the Issue shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the purpose for which such moneys has been utilized; and 3. Details of all such unutilised moneys out of the Issue, if any, shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the form in which such unutilised moneys have been invested. The funds received against this Issue will be kept in a separate bank account and the Company will not have any access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90% of the Issue has been received by the Company.
Important Please read the Letter of Offer carefully before taking any action. The instructions contained in the accompanying CAF are an integral part of the conditions of the Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected. All inquiries in connection with the Letter of Offer or accompanying CAF and requests for Split Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID no., the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and superscribed “OCL India - Rights Issue” on the envelope) to the Registrar to the Issue at the following address:
C B Management Services (Private) Limited P – 22, Bondel Road Kolkata 700 019 Ph : (033) 2280 6692/93/94/2486
1. It is to be specifically noted that this Issue of Equity Shares is subject to Risk Factors appearing on Page v of the Letter of Offer. 2. The Rights Issue will be kept open for 30 days unless extended, in which case it will be kept open for a maximum of 60 days.
All the Eligible Equity Shareholders have been sent the Abridged Letter of Offer. However, the Letter of Offer shall be made available on receipt of specific request from any Eligible Equity Shareholder. Such request for the Letter of Offer must be sent to the compliance officer or the Registrar to the Issue before closure of the Issue.
197 OCL INDIA LIMITED
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts (not being contracts entered into in the ordinary course of business carried on by the Company or contracts entered into more than two years before the date of the Letter of Offer) which are or may be deemed material have been entered or to be entered into by the Company. These contracts and also the documents for inspection referred to hereunder, may be inspected at the Registered Office of our Company, from 10.00 a.m. to 4.00 p.m. on working days from the date of the Letter of Offer until the date of closure of the Issue.
MATERIAL CONTRACTS 1. Letter of Mandate dated October 31, 2005 from the Company appointing UTI Bank Limited as the Lead Manager to the Issue and their acceptance thereto; 2. Memorandum of Understanding dated March 14, 2006 between the Company and the Lead Manager to the Issue; 3. Letter dated October 31, 2005 appointing M/s Corporate Professionals as the Legal Counsel to the Issue and their acceptance thereto; 4. Memorandum of Understanding dated February 6, 2006 between the Company and the Registrar to the Issue. 5. Collection Agreement dated August 4, 2006 entered into between the Company, the Banker to the Issue, the Lead Manager to the Issue and the Registrar to the Issue.
DOCUMENTS FOR INSPECTION 1. The Memorandum and Articles of Association of the Company, as amended from time to time; 2. Certificate of Incorporation of the Company dated October 11, 1949 and certificate for commencement of business dated February 10, 1950; 3. Certificate of change of name dated January 15, 1996; 4. Resolution of the Board of Directors of the Company passed at its meeting held on October 29, 2005 authorizing the Issue; 5. Resolution of the Board of Directors approving the Draft Letter of Offer on March 14, 2006 and the Letter of Offer on August 19, 2006. 6. The offer document issued by the Company for rights issue in 1997; 7. The report of V. Sankar Aiyar & Company, the Statutory Auditors, dated June 5, 2006 prepared as per Indian GAAP and mentioned in the Letter of Offer; 8. Consent dated January 12, 2006 from V. Sankar Aiyar & Company for inclusion of their names as the Statutory Auditors and of their reports on accounts in the form and context in which they appear in the Letter of Offer; 9. The Tax Benefit Report dated June 5, 2006 from the Statutory Auditors; 10. Annual Report of the Company for last five financial years, viz, FY 2005, FY 2004, FY 2003, FY 2002 and FY 2001; 11. Consent of the Promoters, the Directors, Lead Manager to the Issue, Legal Advisor to the Issue, Registrar to the Issue, Banker to the Issue, Bankers to the Company, the Compliance Officer, the Company Secretary in their specific capacities; 12. General Power of Attorney executed by Directors of the Company in favour of person(s) for signing and making necessary changes to the Letter of Offer;
198 13. Due Diligence Certificate dated March 20, 2006 addressed to SEBI from UTI Bank Limited, SEBI observation Letter No. CFD/DIL/JAK/70602/2006 dated June 30, 2006, in-seriatim reply dated August 10, 2006 and fresh Due Diligence Certificate dated September 12, 2006; 14. Tripartite Agreement between the Company, NSDL and C B Management Services (Private) Limited dated April 24, 2001; 15. Tripartite Agreement between the Company, CDSL and C B Management Services (Private) Limited dated April 9, 2001; 16. Application from the Company to NSDL and CDSL, respectively, to admit the shares offered in terms of the Letter of Offer into their depository system; 17. Letter of intent for subscribing to rights entitlement received from the Promoters; 18. In-principle listing approval letters dated May 4, 2006 and May 12, 2006 issued by BSE Limited and NSE Limited respectively. Any of the contracts or documents mentioned in the Letter of Offer may be amended or modified at any time if so required in the interest of the Company or if required by the other parties, without reference to the shareholders subject to compliance of the provisions contained in the Companies Act and other relevant statutes.
199 OCL INDIA LIMITED
DECLARATION BY THE COMPANY
All the relevant provisions of the Companies Act, 1956, and the guidelines issued by the Government of India or the guidelines issued by Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in the Letter of Offer is contrary to the provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992 or the rules and regulations made there under or guidelines issued there under, as the case may be. We further certify that all the statements in the Letter of Offer are true and correct.
SIGNED BY ALL THE DIRECTORS
Mr. Pradip (Pinto) Khaitan Chairman
Mr. Vishnu Dayal Jhunjhunwala* Director
Dr. Sheo Raj Jain Director (Independent)
Mr. Dhramendra Nath Davar Director (Independent)
Mr. Harsh Vardhan Lodha Director (Independent)
Dr. Ramesh C Vaish Director (Independent)
Mr. Yadu Hari Dalmiya Director
Mr. Ved Prakash Sood Whole Time Director
* Signed by Mr. Dhramendra Nath Davar as attorney holder
SIGNED BY THE HEAD OF FINANCE AND COMPLIANCE OFFICER
Mr. Rakesh Malhotra Executive Director (Finance)
Date : August 19, 2006 Place : New Delhi
Encl: Composite Application Form
200