INFORMATION MEMORANDUM INDIAN METALS & FERRO ALLOYS LIMITED Regd Office: IMFA Building, Bomikhal, P.O.Rasulgarh, Bhubaneswar 751 010, Orissa Phone:0674-2580100-125 Fax No.2580020, Website: www.imfa.in Contact Person: Mr. S. R. Ray, Email: [email protected] Indian Metals & Ferro Alloys Limited was incorporated on 20th November, 1961 under the Companies Act, 1956 and obtained the certificate of commencement of business on 7th May, 1962. In terms of the Composite Scheme of Arrangement & Amalgamation between Indian Metals & Ferro Alloys Limited and Indian Charge Chrome Limited & their respective shareholders and creditors sanctioned by the Hon’ble High Court of Orissa at Cuttack vide their Order dated 13th October, 2006, Indian Charge Chrome Limited has merged with Indian Metals & Ferro Alloys Limited with effect from 1st April, 2005 being the appointed date under the Scheme. INFORMATION MEMORANDUM FOR LISTING OF 2,13,14,765 EQUITY SHARES OF RS. 10 EACH NO EQUITY SHARES ARE PROPOSED TO BE SOLD OR OFFERED PURSUANT TO THIS INFORMATION MEMORANDUM GENERAL RISKS Investments in equity and equity related securities involve a high degree of risk and investors should not invest in the equity shares of Indian Metals & Ferro Alloys Limited unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors beginning on page 5 of this Information Memorandum carefully before taking an investment decision in the shares of Indian Metals & Ferro Alloys Limited. For taking an investment decision, investors must rely on their own examination of the Company including the risks involved. ABSOLUTE RESPONSIBILITY OF INDIAN METALS & FERRO ALLOYS LIMITED Indian Metals & Ferro Alloys Limited having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all information with regard to Indian Metals & Ferro Alloys Limited, which is material, that the information contained in this Information Memorandum is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The Equity Shares of Indian Metals & Ferro Alloys Limited are proposed to be listed on the Bombay Stock Exchange Limited (BSE). The Company has submitted this Information Memorandum to BSE and the same has been made available on the Company’s website viz. www.imfa.in The Information Memorandum would also be made available in the website of BSE (www.bseindia.com). REGISTRAR AND SHARE TRANSFER AGENT Indian Metals & Ferro Alloys Limited Shares Department IMFA Building, Bomikhal, P.O.Rasulgarh, Bhubaneswar – 751 010, Orissa Tel :0674-2580100,2580125 Fax : 0674-2580020,2580145 Website : www.imfa.in Email : [email protected] Contact Person : Mr. S. K. Padhi, Assistant Secretary TABLE OF CONTENTS Section Particulars Page No. I DEFINITIONS AND ABBREVIATIONS CERTAIN CONVENTIONS: USE OF MARKET DATA 03 FORWARD-LOOKING STATEMENTS II RISK FACTORS 05 III SUMMARY 09 IV GENERAL INFORMATION 10 V CAPITAL STRUCTURE OF THE COMPANY 14 VI COMPOSITE SCHEME OF ARRANGEMENT AND AMALGAMATION BETWEEN ICCL AND IMFA AND THEIR RESPECTIVE MEMBERS 25 AND CREDITORS VII STATEMENT OF POSSIBLE TAX BENEFITS 29 VIII BUSINESS INDUSTRY OVERVIEW 39 BUSINESS OVERVIEW 40 IX HISTORY OF IMFA 45 SUBSIDIARIES 46 X BOARD OF DIRECTORS 51 COMPENSATION 59 CORPORATE GOVERNANCE 64 XI PROMOTERS 67 XII FINANCIAL INFORMATION OF IMFA 68 GROUP COMPANIES FINANCIAL & OTHER INFORMATION 82 XIII MANAGEMENT DISCUSSION & ANALYSIS 89 XIV OUTSTANDING LITIGATIONS 92 XV GOVERNMENT APPROVALS 100 XVI REGULATORY AND STATUTORY DISCLOSURES 100 XVII RIGHTS OF MEMBERS AND MISCELLANEOUS 104 XVIII MAIN PROVISIONS OF ARTICLES OF ASSOCIATION 105 XIX DOCUMENTS FOR INSPECTION 125 XX DECLARATION 126 2 SECTION I DDEEFFIIINNIIITTIIIOONNSS AANNDD AABBBBRREEVVIIIAATTIIIOONNSS Term Description “Act” or “Companies The Companies Act, 1956 and subsequent amendments thereto Act” “Acquirer/ Indmet” Indmet Commodities Pvt. Ltd. “AGM” Annual General Meeting “Articles” / “AOA” Articles of Association of Indian Metals & Ferro Alloys Limited “Auditors” The Statutory Auditors of Indian Metals & Ferro Alloys Limited “Bankers to the Bankers of Indian Metals & Ferro Alloys Limited Company” “Barabati” Barabati Investment & Trading Company Private Limited “Board” or “Board of Board of Directors of Indian Metals & Ferro Alloys Limited Directors” “BPCo.” B.Panda & Co. Private Limited “BSE” Bombay Stock Exchange Limited “CCP” Charge Chrome Plant “CDSL” Central Depository Services (India) Limited “Company/our Indian Metals & Ferro Alloys Limited Company /IMFA/Transferee Company” “CPP” Captive Power Plant “DCA” Department of Company Affairs “Depositories Act” The Depositories Act, 1996 as amended from time to time “Depository” A Depository registered with SEBI under the SEBI (Depositories & Participants) Regulations, 1996 as amended from time to time “Directors” Directors on the Board of Indian Metals & Ferro Alloys Limited “DP” Depository Participant “EPS” Earnings Per Equity Share {EPS = Profit After Tax / No. of Equity Shares} “Equity Shares” Fully paid-up shares of Rs. 10/- each of the Company “Equity Shareholders” Equity Shareholders of the Company “FEMA” Foreign Exchange Management Act, 1999 read with rules and regulations thereunder and amendments thereto “FI” Financial Institution “FII (s)” Foreign Institutional Investor(s) registered with SEBI under applicable laws “ICCL/Transferor Indian Charge Chrome Limited Company” “IMCL” Indian Metals & Carbide Limited “Information This Information Memorandum Memorandum”or “IM” “I T Act” Income Tax Act, 1961 and subsequent amendments thereto “KAL” Kalinga Airways Limited “KB” K.B.Investments Private Limited “Madhuban” Madhuban Investments Private Limited “MOA” Memorandum of Association of Indian Metals & Ferro Alloys Limited 3 “NA” Not Applicable “NAV” Net Asset Value {NAV = Net worth / No. of equity shares} “NSDL” National Securities Depository Limited “Paramita” Paramita Investment & Trading Company Private Limited “PAT” Profit After Tax “P/E Ratio” Price/Earnings Ratio “RBI” Reserve Bank of India “Record Date” Record Date of Indian Metals & Ferro Alloys Limited, 27th November, 2006 “RTA” Registrar & Share Transfer Agents “ROC” Registrar of Companies, Orissa at Cuttack “Scheme”/“Scheme of Composite Scheme of Arrangement (“the Scheme”) entered between Indian Arrangement”/“Scheme Charge Chrome Limited and Indian Metals & Ferro Alloys Limited and of Amalgamation” Their Respective Shareholders and Creditors. The Hon’ble High Court of Orissa at has sanctioned the Scheme vide its Order dated October 13, 2006 which was filed with the Registrar of Companies, Orissa at Cuttack on October 17, 2006 “SEBI” Securities and Exchange Board of India “SEBI Act” Securities and Exchange Board of India Act, 1992 “SEBI Guidelines” Extant Guidelines for Disclosure and Investor Protection issued by Securities and Exchange Board of India, constituted under the Securities and Exchange Board of India Act, 1992 (as amended), called Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, as amended, including instructions and clarifications issued by SEBI from time to time. “Security (ies)” Equity Share(s) “Share Certificate(s)” Equity Share Certificate(s) “SSP” Structured Settlement Plan of debts approved by the Secured Lenders Stock Exchange BSE or Bombay Stock Exchange “UCL” Utkal Coal Limited “UMSL” Utkal Manufacturing & Services Limited “UPL” Utkal Power Limited “We” or “us” or “our” Refers to Indian Metals & Ferro Alloys Limited CERTAIN CONVENTIONS: USE OF MARKET DATA Unless stated otherwise, the financial data in this Information Memorandum is derived from our financial statements prepared in accordance with Indian GAAP. Our last financial year commenced on 1st April, 2007 and ended 31st March, 2008. In this Information Memorandum, any discrepancies in any table between the total and sums of the amounts listed are due to rounding- off. For definitions, please see the section titled “Definitions and Abbreviations”. 4 All references to “India” contained in this Information Memorandum are to the Republic of India. All references to “Rupees” or “Rs.” are to Indian Rupees, the legal currency of the Republic of India. Unless stated otherwise, industry data used throughout this Information Memorandum has been obtained from industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but their accuracy and completeness is not guaranteed and their reliability cannot be assured. Although we believe that industry data used in this Information Memorandum is reliable, it has not been independently verified. The information included in this Information Memorandum about the various other Companies is based on their respective Annual Reports and information made available by the respective companies. FFOORRWWAARRDD---LLOOOOKKIIINNGG SSTTAATTEEMMEENNTTSS We have included statements in this Information Memorandum that contain words or phrases such as “will”, “aim”, “will likely result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”,