C M Y K DRAFT LETTER OF OFFER Dated: September 24, 2012 Private & Confidential For Equity Shareholders of the Company only KALYANPUR CEMENTS LIMITED (We were originally incorporated as Kalyanpur Lime & Cement Works Limited on 11th August 1937. The name of our company was changed to Kalyanpur Cements Limited with effect from 9th March 1988) For details of changes in the name and registered office of the Company, see ―”History and Certain Corporate Matters” on page 83. Registered Office:2 & 3, Dr. Rajendra Prasad Sarani, Kolkata – 700001 Tel.: +91 33 2230 2977/6470, Fax: +91 33 22301909 Corporate Office: Maurya Centre, 1, Fraser Road, Patna 800 001, Tel.: +91 612 2221551, Fax: +91 612 2332884 Website: www.kalyanpur.com; E-mail: [email protected] Contact Person: Mr. P. K. Chaubey (President (Finance) & Company Secretary) FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF THE COMPANY ONLY PROMOTERS OF THE COMPANY MR. SATYADEVA PRAKASH SINHA, MR. SHAILENDRA PRAKASH SINHA AND MAURYA MANAGEMENT PRIVATE LIMITED DRAFT LETTER OF OFFER ISSUE OF 1,06,24,527 EQUITY SHARES OF ` 10 EACH (“EQUITY SHARES”) FOR CASH AT PAR AGGREGATING TO ` 1,062.45 LACS (“THE ISSUE”) BY KALYANPUR CEMENTS LIMITED (THE “COMPANY” OR THE “ISSUER”) TO THE EXISTING EQUITY SHAREHOLDERS OF THE COMPANY ON RIGHTS BASIS IN THE RATIO OF 1 EQUITY SHARE FOR EVERY 2 EQUITY SHARES HELD ON THE RECORD DATE I.E. [●]. THE ISSUE PRICE FOR THE EQUITY SHARES IS ` 10, WHICH IS AT PAR WITH THE FACE VALUE OF THE EQUITY SHARES. For further details, please see “Terms of the Present Issue” on Page 204. 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 Company and the Issue including the risks involved. The securities being offered in this Issue have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this document. Investors are advised to refer to “Risk Factors” on page 11 before making an investment in this Issue. ISSUER’S ABSOLUTE RESPONSIBILITY The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to the Company and the Issue, which is material in the context of this Issue, that the information contained in this Draft 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 Draft 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 BSE Limited (“BSE”) and Calcutta Stock Exchange Limited (“CSE”). The Equity Shares offered through this Draft Letter of Offer are proposed to be listed on the BSE and CSE. The Company has received “in- principle” approval from BSE for listing the Equity Shares to be allotted pursuant to the Issue vide letter dated [●]. For the purposes of the Issue, the Designated Stock Exchange shall be BSE. LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE MICROSEC CAPITAL LIMITED LINK INTIME INDIA PRIVATE LIMITED Azimganj House, 2nd Floor 59C, Chowringhee Road, 3rd Floor 7 Camac Street, Kolkata- 700 017 Kolkata – 700 020 Tel: + 9133 2282 9330 Tel: + 9133 2289 0540 Fax: + 9133 2282 9335 + 9133 2289 0539 E-mail: [email protected] Fax: Investor Grievance Email: [email protected] Investor grievance e-mail: [email protected] Website: www.microsec.in Website: www.linkintime.co.in Contact Person: Mr. Manav Goenka Contact Person: Mr. Subhabrata Biswas SEBI Registration No: INM000010791 SEBI Registration No.: INR000004058 ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR REQUEST ISSUE CLOSES ON FOR SPLIT APPLICATION FORMS [] [] [] C M Y K Kalyanpur Cements Limited TABLE OF CONTENTS TITLE PAGE NO. I. General 1. Definitions and Abbreviations 3 2. Overseas Shareholders 7 3. Presentation of Financial Information and Use of Market Data 9 4. Forward-Looking Statements 10 II. Risk Factors 11 III. Introduction 1. Summary of Industry Overview 24 2. Summary of Our Business 26 3. Summary of Financial Information 30 4. The Issue 33 5. General Information 34 6. Capital Structure 38 7. Objects of the Issue 47 8. Basis for Issue Price 50 9. Auditors’ Report on Statement of Tax Benefits 53 IV. About the Company 1. Industry Overview 61 2. Our Business 66 3. Regulations and Policies 77 4. History and Certain Corporate Matters 83 5. Dividend Policy 89 6. Our Management 90 7. Our Promoter and Group Companies 104 8. Related Party Transactions 122 V. Financial Information 1. Financial Statements 123 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 145 3. Financial Indebtedness 159 4. Stock Market Data For Equity Shares of the Company 162 VI. Legal and other Information 1. Outstanding Litigation and Material Developments 163 2. Government and Other Approvals 190 3. Statutory and Other Information 195 VII. Terms of the Present Issue 204 VIII. Main Provisions of Articles of Association 227 IX. Other Information 1. Material Contracts and Documents for Inspection 257 2. Declaration 259 2 Kalyanpur Cements Limited SECTION I – GENERAL DEFINITIONS AND ABBREVIATIONS Definitions of certain capitalized terms used in this Draft Letter of Offer are set forth below: 1. Company/Industry Related Terms Term Description “KCL”, “the Kalyanpur Cements Limited, a public limited company incorporated under the Indian Company”, or “the Companies Act, 1913, with its registered office at 2 & 3, Dr. Rajendra Prasad Sarani, Issuer” Kolkata – 700001, West Bengal Articles / Articles of The articles of association of the Company Association Auditors The statutory auditors of the Company, being M. Mukherjee & Co., Chartered Accountants Board of The board of directors of the Company or any duly constituted committees thereof Directors/Board Equity Shares Equity shares of the Company of face value of ` 10 each Memorandum / The memorandum of association of the Company Memorandum of Association Registered Office The registered office of the Company located at 2 & 3, Dr. Rajendra Prasad Sarani, Kolkata – 700001, West Bengal CAGR Compounded Annual Growth Rate FDI Foreign Direct Investment GDP Gross Domestic Product JV Joint Venture KMDA Kolkata Municipal Development Authority KW Kilo Watt MW Mega Watt BIFR Board for Industrial & Financial Reconstruction AAIFR Appellate Authority For Industrial & Financial Reconstruction DRT Debt Recovery Tribunal JNIL Jenson & Nicholson (India) Limited JNFSL Jenson & Nicholson Financial Services Limited 2. Issue Related Terms Term Description Allotment Issue of Equity Shares pursuant to the Issue to the successful applicants Allottee The successful applicant to whom the Equity Shares are being/have been issued Applicant(s) Eligible Equity Shareholders and/or Renouncees who are entitled to apply or have applied for Rights Equity Shares under the Issue, as the case may be ASBA An application, whether physical or electronic, used by all applicants to make a application authorising an SCSB to block the Amount in their ASBA account maintained with the SCSB Auditors The statutory auditors of the Company, viz. M. Mukherjee & Co., Chartered Accountants BSE BSE Limited CAF Composite Application Form Companies Act / the The Companies Act, 1956, as amended from time to time Act CSE Calcutta Stock Exchange Limited 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 3 Kalyanpur Cements Limited Depository A depository participant as defined under the Depositories Act Participant/DP Designated Stock BSE Limited Exchange Strategic Investor Vivid Colour Private Limited Equity Shares Equity shares of the Company of ` 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 Indian GAAP Generally Accepted Accounting Principles in India Issue Opening Date [●] Issue Closing Date [●] Issue Price ` 10 Per Equity Share Investors Shall mean the holder(s) of Equity Shares of ` 10/- at the Issue Price by the Company pursuant to this Draft Letter of Offer. Lead Manager/LM Being the Lead Manager appointed for the Issue. In this case being Microsec Capital Limited LOF/ letter of offer The Letter of Offer dated [●] as filed with Stock Exchange 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 OCB / Overseas A company, partnership, society or other corporate body owned directly or indirectly to Corporate Body the extent of at least 60% by NRIs, including overseas trusts in which not less than 60% of beneficial interest is irrevocably held