For Private Circulation to the Equity Shareholders of the Company only MAWANA SUGARS LIMITED (Incorporated on 26th December, 2002 under the Companies Act, 1956 as Siel Sugar Limited and then renamed as Mawana Sugars Limited w.e.f. 16th June, 2004. The Sugar business of Siel Limited vested with the Company retrospectively w.e.f. 1st October, 2002 pursuant to the Scheme of Arrangement approved by Hon’ble High Court of Delhi vide Order dated 26th August, 2003 under Sec. 391/394 of the Companies Act, 1956) Regd. Office: 6th Floor, Kirti Mahal, 19, Rajendra Place, New Delhi-110008 Tel. : (011) 25739103 Fax: (011) 25743659 Email: [email protected] Website : sielsugar.com LETTER OF OFFER ISSUE OF 84,98,976 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT PAR AGGREGATING TO RS. 8,49,89,760 ON RIGHTS BASIS TO THE EQUITY SHAREHOLDERS IN THE RATIO OF ONE EQUITY SHARE FOR EVERY FOUR EQUITY SHARES HELD (1:4) AS ON 13th AUGUST, 2004 (I.E. THE RECORD DATE) GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The Securities have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. NOTE: The attention of the investors is drawn to the statement of Risk Factors appearing on Page no. i of the Letter of Offer. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in this Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing equity shares of the company are listed on The Stock Exchange, Mumbai (BSE). The Company has made an application to the Stock Exchange, Mumbai for its permission to deal in Equity Shares arising from the Issue. In-principle approval from BSE has been received vide its letter dated 2nd July, 2004. ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR RECEIVING ISSUE CLOSES ON REQUESTS FOR SPLIT FORMS 27TH AUGUST, 2004 11TH SEPTEMBER, 2004 27TH SEPTEMBER, 2004 LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE Allianz Securities Limited MAS Services Private Ltd. (UIN-100001008) AB-4, Safdarjung Enclave, 2nd Floor, 3 Scindia House, Janpath, New Delhi – 110029 New Delhi-110 001 Phone: 011 - 26104142, 26104326 Tel: 011 – 51514666 Fax : 011- 26181081 Fax: 011 - 51514665 E-Mail: [email protected] E-mail: [email protected] E-Ma TABLE OF CONTENTS S.NO. TOPIC Page No. GLOSSARY OF TERMS/ABBREVIATIONS RISK FACTORS & MANAGEMENT PERCEPTIONS THEREOF i I. GENERAL INFORMATION 1 II. CAPITAL STRUCTURE 8 III. TERMS OF THE PRESENT ISSUE 12 IV. TAX BENEFITS 19 V. PARTICULARS OF THE ISSUE 21 VI. COMPANY & MANAGEMENT 22 VII. INDUSTRY, MARKET AND COMPETITIVE ENVIRONMENT 41 VIII. FINANCIAL PERFORMANCE OF THE COMPANY 42 IX. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL INFORMATION 59 X. OUTSTANDING LITIGATIONS & DEFAULTS 61 XI. PROMISES VS PERFORMANCE 88 XII. BASIS OF ISSUE PRICE 90 XIII. STOCK MARKET DATA 90 XIV. DETAILS REGARDING LISTED COMPANIES UNDER THE SAME MANAGEMENT WHICH HAVE MADE CAPITAL ISSUES DURING THE LAST 3 YEARS. 91 XV. NAMES OF THE SMALL SCALE UNDERTAKINGS TO WHOM THE COMPANY OWES A SUM EXCEEDING RS.1 LAKH WHICH IS OUTSTANDING FOR MORE THAN 30 DAYS 91 XVI. UNAUDITED WORKING RESULTS FOR THE LATEST PERIOD 91 XVII. MECHANISM EVOLVED BY THE COMPANY FOR THE REDRESSAL OF INVESTOR GREIVANCES 92 XVIII. DETAILS OF ADVERSE EVENTS AFFECTING THE COMPANY SINCE THE LAST AUDITED FINANCIAL STATEMENTS 93 XIX. EXPERT OPINION 93 XX. OPTION TO SUBSCRIBE 93 XXI. STATUTORY AND OTHER INFORMATION 104 XXII. MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS 105 XXIII. DECLARATION 106 GLOSSARY OF TERMS / ABBREVIATIONS Act / The Act The Companies Act, 1956 and subsequent amendments thereto Articles/AOA Articles of Association of the Company AS Accounting Standard AY Assessment Year Board / BOD Board of Directors of MSL BSE The Stock Exchange, Mumbai BIFR Board for Industrial & Financial Reconstruction CAF Composite Application Form CDR Corporate Debt Restructuring CDSL Central Depository Services (India) Limited CC Criminal Complaint CIT Commissioner of Income Tax CESTAT Customs, Excise & Service Tax Appellate Tribunal CENVAT Central Value Added Tax CJM Chief Judicial Magistrate CMP Current Market Price Demat Dematerialized (Electronic/Depository – as the context may be) Depositories NSDL and CDSL DGI&R Director General (Investigation & Research) DICGC Deposit Insurance and Credit Guarantee Corporation DLC District Labour Commissioner DP Depository Participant DRT Debt Recovery Tribunal ECGC Export Credit Guarantee Corporation EGM Extra-ordinary General Meeting Employees Employees of the Company EPCG Export Promotion Capital Goods Scheme EPS Earnings Per Share Equity Shareholders Equity Shareholders whose names appear as • beneficial owners as per the list to be furnished by the depositories in respect of the shares held in the electronic form and • on the Register of Members of the Company in respect of the shares held in physical form at the close of business hours on the Record Date i.e., 13th August, 2004, and to whom this issue is being made. Equity Shares 84,98,976 Equity Shares of Rs.10/- each offered through this Letter of Offer FCNR Foreign Currency (Non-Resident) Account FEDAI Foreign Exchange Dealers Association of India FEMA Foreign Exchange Management Act, 1999 FII(s) Foreign Institutional Investors registered with SEBI under applicable laws FIPB Foreign Investment Promotion Board FY Financial Year GoI Government of India Gsm Grams per square meter ICAI Institute of Chartered Accountants of India ID Act Industrial Disputes Act, 1947 IDBI Industrial Development Bank of India Issue / Rights Issue Issue of 84,98,976 Equity Shares of Rs.10/- each for cash at par on rights basis to the existing Equity Shareholders of the Company in the ratio of 1:4 held as on Record Date IT Act Income Tax Act, 1961 ITAT Income Tax Appellate Tribunal ISMA Indian Sugar Mills Association Ktpa Kilo (thousand) tons per annum Lead Managers Allianz Securities Limited LOO/Offer Document Letter of Offer circulated to the Equity Shareholders of the Company MSL Mawana Sugars Limited Members/Shareholders Holders of the equity shares of the Company whose names appear in the Register of Members or Register of Beneficial Shareholders as on the Record Date Memorandum Memorandum & Articles of Association of the Company MOU Memorandum of Understanding MSW Mawana Sugar Works MRTP Monopolies & Restrictive Trade Practices Mn Million MT Metric Ton MW Mega Watt MODVAT Modified Value Added Tax NBFC Non-Banking Financial Company NAV Net Asset Value NI Act The Negotiable Instruments Act, 1881 NPA(s) Non Performing Asset(s) NRE A/c. Non-Resident (External) Rupee Account NRI(s) Non-Resident Indian(s) NRO Non-Resident Ordinary Rupee Account NSDL National Securities Depository Limited OCBs Overseas Corporate Bodies PAN Permanent Account Number PAT Profit After Tax PBIT Profit Before Interest and Tax RBI Reserve Bank of India Record Date The relevant date which is reckoned for determining the Rights entitlement to the Members which is 13th August, 2004 Registrars Registrars to the Issue MAS Services Private Limited Repatriation “Investment on repatriation basis” means an investment the sale proceeds of which are, net of taxes, eligible to be repatriated out of India, and the expression ‘Investment on non- repatriation basis’, shall be construed accordingly. RONW Return on Net Worth SFFI Siel Foods and Fertilizer Industries SRI Shriram Refrigeration Industries SSL Siel Sugar Limited SEBI / The Board Securities and Exchange Board of India Securities Equity Shares issued through this Letter of Offer SLR Statutory Liquidity Ratio The Company / Issuer / MSL Mawana Sugars Limited TSC Titawi Sugar Complex Tpa Tons per annum Tpd Tons per day UTI Unit Trust of India WDV Written Down Value In this Letter of Offer, all references to “Rs.” refers to Rupees, the lawful currency of India, “USD” or “US$” refers to the United States Dollar, the lawful currency of the United States of America. References to the singular also refer to the plural and one gender also refers to any other gender wherever applicable. RISK FACTORS AND MANAGEMENT PERCEPTION THEREOF The investors should consider the following risk factors together with all other information included in this Letter of Offer carefully, in evaluating the Company and its business before making any investment decision. Any projections, forecasts and estimates contained herein are forward looking statements and are based on certain assumptions that the Company considers reasonable. This Letter of Offer contains forward-looking statements that involve risks and uncertainties. Such statements use forward looking terminology like “may”, “believes”, “will”, “expect”, “anticipate”, “estimate”, “continue”, “plan”, “likely” or such similar words. The Company’s actual results could differ from those anticipated in these forward-looking statements as a result of certain factors including those, which are set forth in the “Risk factors” and elsewhere in this Letter of Offer and general economic and business conditions, our ability to successfully implement our strategy, growth and expansion plans, and increasing competition in sugar industry.