WELSPUN INVESTMENTS AND COMMERCIALS LIMITED INFORMATION MEMORANDUM Registered Office: Welspun City, Village Versamedi, Tal : Anjar, Dist. Kutch, Gujarat -370 110. Tel: 0091-2836- 661111 Fax: 0091-2836-279010 E-mail: [email protected] Website: www.welspuninvestments.com Contact Person: Mr. Jeevan Mondkar, Company Secretary and Compliance Officer Welspun Investments and Commercials Limited was originally incorporated as Welspun Investments Private Limited on 7th October 2008 under the Companies Act, 1956. The status of the Company was changed from “private company” to “public company” by passing the necessary resolution on 10th October 2008 and having obtained fresh certificate of incorporation from the Registrar of Companies, Gujarat on 21st October 2008. The name of the Company was further changed to Welspun Investments and Commercials Limited w.e.f. 31st March, 2010. The Hon‟ble High Court of Gujarat at Ahmedabad by its order dated 8th May 2009 has approved a Scheme of Arrangement between Welspun India Limited, Welspun Global Brands Limited and Welspun Investments Limited (Now known as Welspun Investments and Commercials Limited) and their respective members and creditors, pursuant to which, inter alia, Investment and Treasury Division of Welspun India Ltd(“Investment & Treasury Division”) was transferred to Welspun Investments Ltd (Now known as Welspun Investments and Commercials Limited) and in consideration thereof, 1 (One ) equity share of WINL was issued for every 20 (twenty) equity shares of Welspun India Ltd held on the Record Date fixed for the purpose and accordingly, 36,54,476 equity shares of Rs.10/- each were allotted to the shareholders of Welspun India Ltd. Board of Directors of the Company subject to necessary approvals has decided to diversify into the business of trading in commodities (other than Home Textiles) to enlarge scale of business of the Company and to change the name of the Company to “Welspun Commercials and Investments Ltd” or any other variant thereof to reflect combination of trading and investment holding business of the Company with major size to be of trading business. Your company is formulating plans to go ahead with a large scale trading activity including exports of commodities, for which, interalia, Company has initiated action to enlarge the Object Clause of the Memorandum of Association. INFORMATION MEMORANDUM FOR LISTING OF 36,54,476 EQUITY SHARES OF RS.10/- EACH. NO EQUITY SHARES ARE PROPOSED TO BE SOLD OR OFFERED PURSUANT TO THIS INFORMATION MEMORANDUM. S.No Particulars 1. Definitions, Abbreviations & Industry related terms 2. Forward Looking Statements 3. Risk Factors 4. Industry and Business Overview. 5. General Information 6. Composition of Board of Directors 7. Authority for Listing 8. Capital Structure 9. Scheme of Arrangement of Demerger 10. Report of Auditors on Tax Benefits 11. Statement of Tax Benefits 12. About Welspun Investments and Commercials Limited 13. Management 14. Promoters 15. Financial Information 16. Group Companies – Financial and Other Information 17. Management Discussion and Analysis. 18. Outstanding Litigations and Material Developments 19. Regulatory and Statutory Disclosures 20. Clauses of Articles of Association of the Company 21. Other Information 22. Declaration 1. DEFINITIONS, ABBREVIATIONS & INDUSTRY RELATED TERMS: Term Description The Companies Act, 1956 as amended from Act / Companies Act time to time. Articles/Articles of Articles of Association of the Company Association Appointed Date as defined in the Scheme i.e. Appointed Date April 1, 2009 Accounting Standard notified under sub- AS section (3C) of Section 211 of the Companies Act. Auditor refers to M/s. Suresh Surana & Associates Auditor 602/603, Regent Chambers, 6th Floor, 208, Nariman Point, Mumbai - 400 021, India Board / Board of Directors Board of Directors of the Company BSE The Bombay Stock Exchange Limited CDSL Central Depository Services (India) Limited Demerged Company Welspun India Limited The designated stock exchange for the Issue Designated Stock Exchange shall be National Stock Exchange of India Limited The Depositories Act, 1996 and amendments Depositories Act thereto DP Depository Participant EGM Extra-ordinary General Meeting FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 Period of twelve months ended March 31 of Financial Year that particular year, unless otherwise stated GOI Government of India For the purpose of this Information Memorandum except Articles of Association Investor(s) reproduced therein, shall mean the holder(s) of Equity Shares of the Company as on the Record Date. The Income Tax Act, 1961 and amendments IT Act thereto Memorandum/Memorandum Memorandum of Association of the of Association Company NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited Record Date June 26, 2009 Registrar of Companies, Gujarat at ROC Ahmedabad Scheme Scheme as defined in clause no. ______ SEBI Securities and Exchange Board of India Regulations notified by Securities and Exchange Board of India called Securities and Exchange Board of India (Issue of ICDR Regulations Capital and Disclosure Requirements) Regulations, 2009, as amended, including instructions and clarifications issued by SEBI from time to time. Stock Exchange(s) BSE and NSE Welspun Investments and Commercials WINL/The Company Limited Welspun Global Brands Limited WGBL WIL Welspun India Limited 2. FORWARD LOOKING STATEMENTS: We have included statements in this Information Memorandum which contain words or phrases such as “will”, “aim”, “will likely result‟, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend‟, “plan” “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should” “will pursue” and similar expressions or variations of such expressions, that are “forward looking statements”. Similarly, statements that describe our objectives, plans or goals also are forward-looking statements, actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to: • General economic and business conditions in India and other countries; • Regulatory changes and our ability to respond to them; • Our ability to successfully implement our strategy, our growth and expansion plans; • Technological changes; • Exposure to market risks, general economic and political conditions in India which have an impact on our business activities or investments; • Monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates of prices, the performance of the financial markets in India and globally; • Changes in domestic and foreign laws, regulations and taxes and changes in competition in our industry. For further discussion of factors that could cause our actual results to differ, see the section titled “Risk Factors” of this Information Memorandum. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. We do not have any obligation to, and do not intend to, update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not materialise. 3. RISK FACTORS: 1. Our business is directly linked to health of economic conditions prevailing in the market and therefore recession/slowdown in major consuming countries can hit the demand as well as price realisation. 2. Our business will be dependent on maintaining a continuing relationship with our customers. Any inability on our part to maintain the same could adversely impact our operations and profitability. 3. Our future profitability will be difficult to predict. Any unfavorable changes in the following factors may adversely affect our operations and profitability: extended sales cycle for our products; timing and integration of acquired businesses, if any; economic downturns or stagnant economies and global markets; a decrease in international prices for our products; adverse changes in purchasing practices of our customers; the ability to raise the finance required for business; and/or an increase in interest rates at which we can raise debt financing; changes in government policies, including introduction of or adverse changes in tariff or non-tariff barriers, affecting the textile industry globally; the time required to train new employees in order to use their skills effectively to achieve orders and maintain relationship with the intermediaries/customs. All of the above factors may affect our business and therefore have an impact on our results. 4. Our proposed operating expenses include significant amount fixed costs mainly remuneration to sales personnel and other personnel that are not dependent upon our proposed business volume. As a result, any decline in our trading volume may be magnified because we may be unable to reduce expenses immediately in response to a potential shortfall in trading volumes. 5. We have planned to trade in highly competitive markets. Inability to compete effectively may lead to lower business volume or reduced operating margins, and adversely affect our operations and profitability. 6. Our success will significantly