C M Y K LETTER OF OFFER Date: October 07, 2009 For the Equity Shareholders of the Company Only IMPEX FERRO TECH LIMITED Registered Office: 35, Chittaranjan Avenue, 4th Floor, Kolkata - 700 012 (W. B.) TeleFax.: +91 33 2211 9805/9806/8807/9729, 2215 5134, 2211 9834 Website: www.impexferrotech.com E-mail: [email protected] Contact Person: Mr. Pradip Kumar Agarwal (Company Secretary & Compliance officer) (The Company was incorporated as Impex Ferro Tech Limited on 07th June 1995 with the Registrar of Companies, West Bengal as a Public Limited Company with the registration number 21-71996 and obtained the Certificate of Commencement of Business on 15th June 1995.) LETTER OF OFFER FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF THE COMPANY ONLY ISSUE ON A RIGHTS BASIS OF 25,000,000 EQUITY SHARES WITH A FACE VALUE OF RS. 10/- EACH FOR CASH AT A PREMIUM OF RS. 6/- PER EQUITY SHARE AGGREGATING RS. 4000.00 LACS TO THE EXISTING EQUITY SHAREHOLDERS IN THE RATIO OF 1(ONE) EQUITY SHARE FOR EVERY 1(ONE) EQUITY SHARE HELD BY THE EXISTING SHAREHOLDER ON THE BOOK CLOSURE DATE i.e. SEPTEMBER 19, 2009 ON FULLY PAID BASIS IN TERMS OF THIS LETTER OF OFFER ('ISSUE'). THE ISSUE PRICE IS 1.6 TIMES THE FACE VALUE OF THE EQUITY SHARE (FOR MORE DETAILS SEE "TERMS OF THE ISSUE" ON PAGE 181 OF THIS LETTER OF OFFER). PROMOTERS OF THE COMPANY Mr. Vimal Kumar Patni, Mr. Suresh Kumar Patni, Mr. Virendra Kumar Jain, VSN Agro Product Limited, Dhodwala Enterprises Limited, Impex Cements Limited and Patni Metals & Ferro Alloys Limited. GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely on their own examination of the issuer and the offer including the risks involved. The equity shares have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of the investors is invited to the Statement of Risk Factors beginning on page no. 7 of this 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 the 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 makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing Equity Shares of the Company are listed on Bombay Stock Exchange Limited (Designated Stock Exchange) (BSE) and The National Stock Exchange of India Limited (NSE). The Company has received "in-principle' approvals" of BSE and NSE for listing the Equity Shares arising from this issue pursuant to letters dated March 17, 2008 and May 5, 2008 respectively. LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE MICROSEC CAPITAL LIMITED MAHESHWARI DATAMATICS PVT LTD Azimganj House, 2nd Floor 6, Mangoe Lane 2nd Floor 7, Camac Street, Kolkata 700 017 Kolkata - 700 001 Tel: 91-33-2282 9330 (5 Lines) Tel: 91-33-2243-5809 Fax: 91-33-2282 9335 Fax: 91-33-22484787 E-mail: [email protected] Investor Grievance Email: [email protected] E-Mail: [email protected] Website: www.microsec.in Website: www.mdpl.in Contact Person: Mr. Pankaj Harlalka Contact Person: Mr. Rajagopalan ISSUE PROGRAMME LAST DATE FOR REQUEST ISSUE OPENS ON ISSUE CLOSES ON FOR SPLIT FORMS OCTOBER 16, 2009 OCTOBER 23, 2009 OCTOBER 30, 2009 C M Y K TABLE OF CONTENTS TITLE PAGE NO. Definitions and Abbreviations 3 I. Risk Factors 1. Forward-Looking Statements and Market Data 6 2. Risk Factors 7 II. Introduction 1. Summary 18 2. General Information 23 3. Capital Structure 27 4. Objects of the Issue 36 5. Basic Terms of the Issue 40 6. Basis for Issue Price 41 7. Statement of Tax Benefits 43 III. About Impex Ferro Tech Limited 1. Industry Overview 49 2. Business Overview 55 3. History and Corporate Structure 65 4. Management 70 5. Promoters 78 6. Currency of Presentation 85 7. Dividend Policy 85 8. Group Companies 86 IV. Financial Statements 1. Auditors Report 113 2. Latest Un-audited Quarterly Result 144 3. Management Discussion and Analysis of Financial Condition and 145 Results of operations as reflected in the Financial Statements 4. Financial Indebtedness 154 V. Legal and other Information 1. Outstanding Litigation And Material Developments 157 2. Government Approvals/Licensing Arrangements 164 VI. Other Regulatory and Statutory Disclosures 166 VII. Issue Information 1. Terms of the Issue 181 VIII. Main Provisions of the Articles of Association 204 IX. Other Information 1. Material Contracts and Documents for Inspection 212 2. Declaration 214 Impex Ferro Tech Limited DEFINITIONS AND ABBREVIATIONS 1. Conventional/General Terms Term Description AGM Annual General Meeting CAGR Compounded Annual Growth Rate Capex Capital Expenditure EGM Extra Ordinary General Meeting EPS Earning Per Share GIR General Index Register HUF Hindu Undivided Family NAV Net Asset Value PAN Permanent Account Number PAT Profit After Tax P/E Price Earning Ratio PLR Prime Lending Rate RONW Return on Net Worth SSI Small Scale Industries WTO World Trade Organization 2. Issue Related Terms Term Description Allotment Issue or transfer, as the context requires, of Equity Shares pursuant to the Offer to the successful applicants as the context requires Allottee The successful applicant to whom the Equity Shares are being/have been issued or transferred Applicant Any prospective investor who makes an application for Equity Shares in terms of this Letter of Offer Articles/Articles of The Articles of Association of Impex Ferro Tech Limited Association ASBA Application Supported by Blocked Amount Auditors The statutory auditors of the Company, viz. S. Jaykishan, Chartered Accountants Board of The Board of Directors of Impex Ferro Tech Limited or a committee Directors/Board thereof BSE Bombay Stock Exchange Limited CAF Composite Application Form Companies Act / the The Companies Act, 1956, as amended from time to time Act Depositories Act The Depositories Act, 1996, as amended Depository A depository registered with SEBI under the SEBI (Depositories and Participants) Regulations, 1996, as amended from time to time Depository A depository participant as defined under the Depositories Act Participant/DP Designated Stock Bombay Stock Exchange Limited Exchange Directors /Board of Directors of Impex Ferro Tech Limited from time to time, unless otherwise Directors specified LOF/ letter of offer Letter of Offer dated October 07, 2009 as filed with the Stock Exchanges after incorporating SEBI comments on the Draft Letter of Offer. Equity Shares Equity shares of the Company of Rs. 10/- each unless otherwise specified in the context thereof First Applicant The Applicant whose name appears first in the Application Form Fiscal or FY or Twelve months ending March 31st of a particular year Financial Year “Impex Ferro Tech Unless the context otherwise requires, refers to Impex Ferro Tech Limited, Limited.” or the a public limited company incorporated under the Companies Act and “Issuer” or the having its registered office at 35, Chittaranjan Avenue, 4th Floor, Kolkata – “Company”, “we”, 700 012 “us”, “our” and “IFTL” 3 Impex Ferro Tech Limited Indian GAAP Generally Accepted Accounting Principles in India Issue Opening Date October 16, 2009 Issue Closing Date October 30, 2009 Issue Price Rs. 16 per Equity Share Investors Shall mean the holder(s) of Equity Shares of Rs. 10/- at the Issue Price by the Company pursuant to this Letter of Offer. Lead Manager/LM Being the Lead Manager appointed for the Issue. In this case being Microbe Capital Limited Memorandum/MoA/ The Memorandum of Association of Impex Ferro Tech Limited Memorandum of Association MCL/Microsec Microsec Capital Limited, a public limited company incorporated under the provisions of the Companies Act and with its registered office at Shivam Chambers, 1st Floor, 53, Syed Amir Ali Avenue, Kolkata-700 019 Non Resident A person who is not a NRI, FII or a person resident in India NSE National Stock Exchange of India Limited OCB / Overseas A company, partnership, society or other corporate body owned directly or Corporate Body 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 Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 Promoters Shall mean jointly Mr. Vimal Kumar Patni, Mr. Suresh Kumar Patni, , Mr. Virendra Kumar Jain, Dhodhwala Enterprises Ltd., VDN Agro Products Ltd., Impex Cements Ltd. & Patni Metal & Ferro Alloys Ltd. Book Closure Date September 19, 2009 Rights Issue/ The issue of 2,50,00,000 Equity Shares of Rs.10/- each at the Issue Price Present Issue by the Company pursuant to this Letter of Offer Registrar of Registrar of Companies at Kolkata, West Bengal Companies or RoC Registrar or Maheshwari Datamatics Private Limited, a company incorporated under the Registrar to the Companies Act, having its registered office at 6, Mangoe Lane, 2nd Floor, Issue Kolkata – 700 001 SCSB Self Certified Syndicate Bank Stock Exchanges BSE and NSE 3.