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Draft Letter of Offer
April 20, 2009
For Equity Shareholders of the Company Only
MORARJEE TEXTILES LIMITED
We were incorporated on July 14, 1995 as Morarjee Brembana Private Limited under the provisions of the Companies Act, 1956.
Our registered office was changed from 106, Peninsula Centre, Dr. S.S.Rao Road, Parel, Mumbai 400 012, India to Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013, Maharashtra by a resolution of the Board dated January 24, 2007. We became a public company on December 18, 1996. (For further details, please refer to the chapter titled “History of
our Company and Other Corporate Matters” on page 66 of this Draft Letter of Offer.) Registered and Corporate office: Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013.
Tel: + 91 22 6615 4651-53; Fax: + 91 22 6615 4593
Contact Person: Mr. S.C. Kashimpuria, Company Secretary E-mail: [email protected]; Website: www.morarjeetextiles.com
For private circulation to the Equity Shareholders of the Company only
DRAFT LETTER OF OFFER
ISSUE OF [●] FULLY PAID EQUITY SHARES OF RS. 10 EACH (“RIGHTS EQUITY SHARES”) AT A PREMIUM OF RS.
[●] PER FULLY PAID EQUITY SHARE FOR AN AMOUNT AGGREGATING RS.[●] LAKHS TO THE EXISTING EQUITY
SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF ONE FULLY PAID EQUITY SHARE FOR EVERY ONE EXISTING EQUITY SHARE HELD BY THE EXISTING SHAREHOLDERS ON THE RECORD DATE, i.e., [●], 2009.
(“RIGHTS ISSUE”). THE ISSUE PRICE IS [●] TIMES THE FACE VALUE OF THE SHARES OF THE COMPANY
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 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 the chapter titled “Risk
Factors” on page ix of this Draft Letter of Offer before making an investment in this Issue.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to the Issuer 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 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 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 Bombay Stock Exchange Limited (“BSE”) and National Stock Exchange of
India Limited (“NSE”). The Company has received “in-principle” approval from BSE and NSE for listing the Rights Equity Shares arising from this Issue vide letters dated [●] and [●] respectively. [●] is the Designated Stock Exchange for this Issue.
LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE
Enam Securities Private Limited
801, Dalamal Towers Nariman Point Mumbai 400021
Tel: + 91 22 6638 1800 Fax + 91 22 2284 6824 Contact person: Mr. Anurag Byas Email: [email protected] Website: www.enam.com Investor grievances email-id: [email protected] SEBI Registration Number: INM000006856
Link Intime India Private Limited C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup ( West) Mumbai 400 078 Tel.: +91 22 2596 0320 Fax: +91 22 2596 0328 / 29 Contact Person: Mr. Pravin Kasare Email: [email protected] Website: www.linkintime.co.in SEBI Registration Number: INR 000003761
ISSUE PROGRAMME
ISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT
APPLICATION FORMS
ISSUE CLOSES ON
[●] [●] [●]
TABLE OF CONTENTS
ABBREVIATIONS & TECHNICAL TERMS II
PRESENTATION OF FINANCIAL AND MARKET DATA V
EXCHANGE RATES VI
FORWARD LOOKING STATEMENTS VII
NOTICE TO OVERSEAS SHAREHOLDERS VIII
RISK FACTORS IX
SUMMARY 1
THE ISSUE 5
SELECTED FINANCIAL INFORMATION 6
GENERAL INFORMATION 13
CAPITAL STRUCTURE 18
OBJECTS OF THE ISSUE 31
BASIS FOR ISSUE PRICE 34
STATEMENT OF TAX BENEFITS 36
INDUSTRY OVERVIEW 39
OUR BUSINESS 46
FINANCIAL INDEBTEDNESS 58
REGULATIONS AND POLICIES 62
HISTORY OF OUR COMPANY AND OTHER CORPORATE MATTERS 66
DIVIDENDS 80
MANAGEMENT 81
PROMOTER AND PROMOTER GROUP 98
RELATED PARTY TRANSACTIONS 154
FINANCIAL STATEMENTS 155
STOCK MARKET DATA FOR EQUITY SHARES OF OUR COMPANY 156
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULT OF OPERATIONS 157
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS 181
GOVERNMENT APPROVALS 199
STATUTORY AND OTHER INFORMATION 203
TERMS AND PROCEDURE OF THE ISSUE 214
MAIN PROVISIONS OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION 236
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 246
DECLARATION 247
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ABBREVIATIONS & TECHNICAL TERMS
In this Draft Letter of Offer, the terms “we”, “us”, “our”, “the Company”, “our Company”, Morarjee Textiles, Morarjee or “MTL”, unless the context otherwise implies, refer to Morarjee Textiles Limited. All references to “Rs.”or “INR” refer to Rupees, the lawful currency of India, “USD” or “US$” refer to the United States Dollar, the lawful currency of the United States of America, references to the singular also refers to the plural and one gender also refers to any other gender, wherever applicable, and the words “Lakh” or “Lac” means“100 thousand” and the word “million” or “mn” means “10 lakh” and the word “crore” means “10 million” or “100 lakhs” and the word “billion” means “1,000 million” or “100 crores”. Any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off.
Conventional/ General Terms
Act The Companies Act, 1956 and amendments thereto.
AoA / Articles / Articles of Association
Articles of Association of the Company.
AS Indian Accounting Standard.
Auditor Refers to Shah & Co., having their office at Maker Bhawan, No. 2, 18, New Marine Lines, Mumbai 400 020, unless otherwise specified.
Capital or Share Capital Share Capital of the Company.
CIS Countries / CIS Commonwealth of Independent States.
Depository A depository registered with SEBI under the SEBI (Depository and Participant) Regulations, 1996, as amended from time to time.
Employees’ Provident Fund Act
Employees’ Provident Fund Act & Miscellaneous Provisions Act, 1952.
FY / Fiscal Financial Year ending March 31.
FOB Free on Board.
Karnataka Value Added Tax Act
Karnataka Value Added Tax Act, 2003.
SEBI Act, 1992 Securities and Exchange Board of India Act, 1992 and amendments thereto.
SEBI DIP Guidelines The SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on January 19, 2000 read with amendments issued subsequent to that date.
Takeover Code The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 as amended to date.
Issue/ Offer Related Terms
Abridged Letter of Offer The abridged letter of offer to be sent to Eligible Equity Shareholders of our Company with respect to this Issue in accordance with SEBI DIP Guidelines.
Bankers to the Issue [●].
CAF Composite Application Form.
Consolidated Certificate In case of physical certificates, the Company would issue one certificate for the Rights Equity Shares allotted to one folio.
Designated Stock Exchange The designated Stock Exchange for the Issue shall be [●].
Draft Letter of Offer Draft Letter of Offer dated April 20, 2009 as filed with SEBI.
Eligible Equity Shareholders The Equity Shareholders of our Company as on the Record Date.
ENAM ENAM Securities Private Limited.
Equity Share(s) or Share(s) means the Equity Share of the Company having a face value of Rs. 10 unless otherwise specified in the context thereof.
Equity Shareholder Means investors holding the Equity Shares of the Company.
Issue Issue of [●] Rights Equity Shares of Rs. 10 each for cash at a premium of Rs. [●] per share on rights basis to existing Equity Shareholders of the Company in the ratio of one Equity Share for every one Equity Share held on the Record Date i.e. [●] aggregating Rs. [●] lakhs.
Issue Closing Date [●].
Issue Opening Date [●].
Issue Price Rs. [●] per Equity Share.
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Investor(s) Means the holder (s) of Equity Shares of the Company as on the Record Date i.e. [●], 2009 and Renouncees.
Lead Manager to the Issue ENAM Securities Private Limited.
Letter of Offer / LOF Letter of Offer dated [●], 2009 as filed with the Stock Exchange after incorporating SEBI comments on this Draft Letter of Offer.
Record Date [●].
Registrar to the Company Freedom Registrar Limited (formerly known as Amtrac Management Services Limited).
Registrar to the Issue Link Intime India Private Limited.
Renouncees Shall mean the persons who have acquired Rights Entitlements from Equity Shareholders.
Rights Entitlement The number of Rights Equity Shares that a shareholder is entitled to in proportion to his/her shareholding in the Company as on the Record Date.
Rights Issue The Issue of Rights Equity Shares in terms of this Draft Letter of Offer.
Stock Exchange(s) The BSE and the NSE where the Equity Shares of our Company are listed and where the Rights Equity Shares are proposed to be listed.
Company/ Industry Terms
ATC Agreement on Textiles and Clothing.
AIR of DBK All Industry Rates of Duty Drawback.
APES Apparel Parks for Exports Scheme.
Board or Board of Directors Board of Directors of Morarjee Textiles Limited.
CLCS Credit Linked Capital Subsidy.
CMC Carboxymethyl Cellulose.
CVD Counter Vailing Duties.
DEPB Duty Exemption Pass Book Scheme.
Director A director on the Board of Directors.
EPCG Scheme Export Promotion Capital Goods Scheme.
ESOS The employee stock option approved by the shareholders through a postal ballot dated June 14, 2006.
Fabritex Plant Krishna Reddy Industrial Area, 7th Mile Kudlu Gate, Hosur Road, Bengaluru 560 – 068.
GATT General Agreement on Trade and Tariff.
Integra Plant Survey No. 36/F, Haralkunte Village, 27th Main, HSR Layout, Somasundarapalaya, Bengaluru 560 102.
ITC (HS) Indian Trade Classification (Harmonised System).
FTA Free Trade Agreements.
LTA Long Term Agreement regarding International Trade in Cotton Textiles.
Memorandum / MoA Memorandum of Association of the Company.
MFA Multi Fiber Agreement.
Nagpur Plant Manufacturing unit owned by our Company located at Maharashtra Industrial Development Corporation, Plot G-2, Butibori Industrial Area, Nagpur District.
NIFT National Institute of Fashion Technology.
Our Company / the Company / Issuer / Morarjee /MTL / We / Us / Our / Morarjee Textiles
Morarjee Textiles Limited, a company incorporated under the Act having its registered office at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013, India.
PLL Peninsula Land Limited (formerly known as Morarjee Realties Limited).
PFY Polyester Filament Yarn.
PLR Prime Lending Rate.
Promoter Ms. Urvi A. Piramal.
Promoter Group Individuals, companies and entities enumerated in the chapter titled “Promoter and Promoter Group” beginning on page 98 of this Draft Letter of Offer.
PTA Preferential Trade Agreements.
PTY Polyester Texturised Yarn.
SITP Scheme for Integrated Textiles Parks.
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SSI Small Scale Industry.
Subsidiary Refers to the subsidiaries of the Company.
TCIDS Textile Centres Infrastructure Development Scheme.
TUFS Technology Upgradation Funds Scheme.
Abbreviations
AGM Annual General Meeting.
AS Indian Accounting Standard.
BSE Bombay Stock Exchange Limited.
CAGR Compounded Annual Growth Rate.
CDSL Central Depository Services (India) Limited.
CESTAT Custom, Excise and Service Tax Appellate Tribunal.
CIT(A) Commissioner of Income Tax (Appeals).
CVD Countervailing Duties.
CENVAT Central Value Added Tax.
DP Depository Participant.
EGM Extra-ordinary general meeting.
EPS Earning Per Share.
FDI Foreign Direct Investment.
FEMA Foreign Exchange Management Act, 1999.
FI Financial Institutions.
FII(s) Foreign Institutional Investors registered with SEBI under applicable laws.
GAAP Generally Accepted Accounting Principles. GDP Gross Domestic Product. GOI Government of India. HUF Hindu Undivided Family. ISIN International Securities Identification Number allotted by the Depository. IT Act The Income Tax Act, 1961 and amendments thereto. ITA Income Tax Appeal.
ITAT Income Tax Appellate Tribunal. MoU Memorandum of Understanding. MIDC Maharashtra Industrial Development Corporation. MODVAT Modified Value Added Tax. MRTU and PULP Act Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour
Practices Act, 1971.
NA / N.A. Not applicable. NCCD National Calamity Contingent Duty. NAV Net Asset Value. NBFC Non Banking Financial Companies. NR Non Resident. NRI(s) Non Resident Indian(s). NSE National Stock Exchange of India Limited. NSDL National Securities Depository Limited. OCB Overseas Corporate Bodies. OGL Open General License. PPP Public Private Partnership.
R & D Research and Development.
RBI The Reserve Bank of India.
ROC Registrar of Companies at Mumbai, Maharashtra located at 100 Everest, New Marine Lines, Mumbai 400 002.
ROI Return on Investments.
RONW Return on Net Worth.
SEBI Securities and Exchange Board of India.
SPV Special Purpose Vehicle.
WTO World Trade Organisation.
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PRESENTATION OF FINANCIAL AND MARKET DATA
Financial Data
Unless indicated otherwise, the financial data and other financial information in this Draft Letter of Offer is derived from the restated standalone and consolidated financial statements of the Company prepared in accordance with Indian GAAP and the Act and restated in accordance with the SEBI DIP Guidelines. The fiscal year of the Company commences on April 1 and ends on March 31 of each year, so all references to a particular fiscal year are to the twelve-month period ended March 31 of that year. The revenue of the Company is referred to herein and in the financial statements as income. This discussion contains forward-looking statements and reflects the current views of the Company with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward looking statements as a result of certain factors such as those set forth in the chapter titled “Risk Factors” beginning on page ix of this Draft Letter of Offer. The Company has included standalone and consolidated financial statements as at and for the nine months ended December 31, 2008 and the years ended March 31, 2008, 2007, 2006, 2005 and 2004 for the Company. We have not prepared any pro forma financial statements for the entire period of presentation. For more information on the results of operations and financial condition of the Company, see the chapter titled “Financial Statements” beginning on page 155 of this Draft Letter of Offer.
Market Data
Unless stated otherwise, industry data used throughout this Draft Letter of Offer has been obtained from industry publications and certain public sources. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although the Company believes that the industry data used in this Draft Letter of Offer is reliable, it has not been verified by us or any independent sources. Presentation of Currency
This Draft Letter of Offer contains translations of certain U.S. Dollar and other currency amounts into Indian Rupees that have been presented solely to comply with the requirements of Clause 6.9.7.1 of the SEBI DIP Guidelines. These convenience translations should not be construed as a representation that those U.S. Dollar or other currency amounts could have been, or can be, converted into Indian Rupees, at any particular rate, at the rates stated below or at all. All references to “India” contained in this Draft Letter of Offer are to the Republic of India. All references to “Rupees” or “Rs.” are to Indian Rupees, the official currency of the Republic of India. All references to “US$”, “U.S. Dollar(s)” or “USD” are to United States Dollars, the official currency of the United States of America. All references to “€” or to “Euro” are to Euro’s, the official currency of the European Union. The currency of presentation in this Draft Letter of Offer is Rupees unless otherwise specified.
In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off.
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EXCHANGE RATES
The following table sets forth, for the periods indicated, information with respect to the exchange rate between the rupee and USD (in Rupees per USD), Great Britain Pound (in Rupees per US Great Britain Pound) and Euro (in Rupees per Euro). No representation is made that the rupee amounts actually represent such US Dollar, GBP, Euro amounts or could have been or could be converted into US Dollar, GBP, Euro at the rates indicated, any other rate or at all.
DATE USD
Great
Britain
Pound
Euro
March 31, 2005 43.75 82.08 56.58
March 31, 2006 44.61 77.80 54.20
March 31, 2007 43.59 85.53 58.14
March 31, 2008 39.97 79.53 63.09
December 31, 2009 48.45 70.01 68.22
Source: Reserve Bank of India
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FORWARD LOOKING STATEMENTS
We have included statements in this Draft Letter of Offer which contain words or phrases such as “will”, “aim”, “is likely to result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “seek to”, “future”, “objective”, “goal”, “project”, “should” and similar expressions or variations of such expressions, that are “forward looking statements”. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include but are not limited to: � General economic and business conditions in the markets in which we operate and in the local, regional and
national economies; � Increasing competition in or other factors affecting the industry segments in which our Company operates; � Our ability to obtain sufficient financing on terms satisfactory to us; � Fluctuations in operating costs and impact on the financial results; � Our ability to attract and retain qualified personnel; � Changes in technology in future; � Changes in political and social conditions in India or in countries that we may enter, the monetary policies
of India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;
� Variations in exchange rates; � The performance of the financial markets in India and globally; and � Any adverse outcome in the legal proceedings in which we are involved. For a further discussion of factors that could cause our actual results to differ, please refer to the chapters titled “Risk Factors”, “Our Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page numbers ix, 46 and 157 respectively of this Draft Letter of Offer. 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. Neither the Company nor the Lead Manager nor any of their respective affiliates have any obligation 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 come to fruition. In accordance with SEBI / Stock Exchange requirements, the Company and the Lead Manager will ensure that investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock Exchanges.
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NOTICE TO OVERSEAS SHAREHOLDERS
The distribution of this Draft Letter of Offer and the Issue may be restricted by law in certain jurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. The Company is making this Issue on a rights basis to the Equity Shareholders of the Company and will dispatch this Draft Letter of Offer/Abridged Letter of Offer and CAFs to such Equity shareholders who have a registered address in India only. This Draft Letter of Offer does not constitute and may not be used for in connection with an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has been or will be taken by the Company or the Lead Manager to permit an offering of the Rights Equity Shares or distribution of this Draft Letter of Offer in any jurisdiction, other than India, where action for that purpose is required. Accordingly, the Rights Equity Shares may not be offered or sold, directly or indirectly, and neither this Draft Letter of Offer nor any offering material in connection with the Rights Equity Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction. Persons receiving a copy of this Draft Letter of Offer should not distribute or send the same in any jurisdiction where to do so would or may contravene local laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Rights Equity Shares or the rights entitlements referred to in this Draft Letter of Offer. The Rights Equity Shares have not been and will not be registered under the US Securities Act of 1933, as amended, and may not be offered or sold within the United States or to US persons except in transactions not requiring registration thereunder. Any CAFs bearing an address in the United States will not be accepted.
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RISK FACTORS
An investment in our Rights Equity Shares involves a high degree of risk. Prior to making a decision to invest in
our Rights Equity Shares, prospective investors and purchasers should carefully consider all the information
contained in this Draft Letter of Offer, including the risks and uncertainties described below and the chapter
titled “Our Business” and “Management’s Discussion and Analysis of Financial Conditions and Results of
Operations” beginning on pages 46 and 157, respectively, of this Draft Letter of Offer as well as other financial
information contained in this Draft Letter of Offer.
The risks set out in this Draft Letter of Offer may not be exhaustive and additional risks and uncertainties not
presently known to us, or which we currently deem to be immaterial, may arise or may become material in the
future. Further, some events may have a material impact from a qualitative perspective rather than a quantative
perspective and may be material collectively rather than individually. This section has been numbered solely for
convenience and the order in which the risks appear does not reflect the prioritization of any risk.
This Draft Letter of Offer also contains forward-looking statements that involve risks and uncertainties. The
Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the considerations described below and in the chapter titled “Forward
Looking Statements” beginning on page vii of this Draft Letter of Offer. All the figures included in this chapter
are taken from the consolidated financial statements of the Company, unless otherwise specified.
INTERNAL RISK FACTORS
1. Criminal litigation against our Promoter, Director and a member of our Promoter Group
The following four criminal cases have been filed against our Promoter, certain of our Promoter Group entities and others: a. The Pune Municipal Corporation issued a show cause notice numbers HLO/PFA/1471 and
HLO/PFA/1470 both dated July 9, 2008 to Ms. Urvi A. Piramal and Mr. Nandan A. Piramal respectively regarding compliance of Section 14 A of the Prevention of Food Adulteration Act, 1954, which makes it obligatory for the vendor to disclose certain details such as the name and address of the person from whom article of food was purchased and to give information of sale and purchase bills and samples of food. The matter is currently pending.
b. The Government of Madhya Pradesh acting through Mr. Sachin Lougariya, Food Inspector, Indore, has
filed a criminal complaint numbers 33965/ 2008 dated December 26, 2008 in the Court of Judicial Magistrate, First Class (Special Court Municipal), Indore against Ms. Urvi A. Piramal, Mr. Nandan A. Piramal and Mr. Jaydev Mody (“Accused”) being the erstwhile directors of the Piramyd Retail Limited (now known as Indiabulls Retail Services Limited). The complaint has been filed for alleged offences under Sections 7 and 16 of the Prevention of Food Adulteration Act, 1954 which involve sale of adulterated food samples. The Accused have filed a criminal complaint no. 1542/2009 dated February 19, 2009 in the High Court of Madhya Pradesh under Section 482 of the Code of Criminal Procedure, 1973. The High Court has granted a stay order in favour of the Accused. The matter is currently pending.
c. Mr. R.B.Jhunjunwala and others have filed a complaint no. 246/M/05 of 2005 in August 19, 2005
against Ms. Urvi A. Piramal (in her capacity as Director of Piramal Healthcare Limited (formerly known as Nicholas Piramal India Limited)), Mr. Mahesh Gupta (in his capacity as chief financial officer and company secretary of Piramal Healthcare Limited (formerly known as Nicholas Piramal India Limited))and others in the Court of Additional Metropolitan Magistrate 40th Court, Girgoan on a charge under Sections 403, 406, 409, 417, 420, 120B read with Section 34 of the Indian Penal Code, 1860. Ms. Urvi A. Piramal, Mr. Mahesh Gupta and others have filed a criminal application number 428/ 2009 dated January 29, 2009 against the order of the issue of process. The matter is still pending.
d. A complaint number 43 of 2008 has been filed against Ms. Urvi A. Piramal and Mr. Nandan A.
Piramal for alleged offences under Section 2 (ia) (a), Section 7 (i), Section 7 (v) of the Prevention of Food Adulteration Act, 1954 read with Rule 29 and Rule 32 (e), Rule 50 of the Prevention of Food Adulteration Rules, 1955. Ms. Urvi A. Piramal and Mr. Nandan A. Piramal have filed a revision application No. 971 of 2008 in the Sessions Court, Pune, against the proceeding being carried out by
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the Judicial Magistrate, First Class, (PMC), Pune in relation to the regular complaint number 43 of 2008. The matter is currently pending.
One criminal case has been filed against a member of our Promoter Group and Director, Mr. Harshvardhan A. Piramal. Details of this case is as follows:
A former distributor of Piramal Healthcare Limited (formerly known as Nicholas Piramal India Limited) (“PHL”), Medilink Agencies has filed a criminal complaint against Mr. Harshvardhan A. Piramal before the Judicial Magistrate, First Class, Patna under sections 420, 120, 387 and 506 of the Indian Penal Code, 1860. To ensure proper performance of its obligation, Medilink Agencies had deposited two post dated cheques with PHL. Subsequently, when Medilink Agencies terminated its distributorship arrangement with PHL, Medlink Agencies requested PHL to return the two post dated cheques that had been retained by PHL. PHL delayed in acting upon the said request and returning the cheques to Medilink Agencies and consequently Medilink Agencies has filed a criminal complaint against Mr. Harshvardhan A. Piramal before the Judicial Magistrate, First Class, Patna. Mr. Harshvardhan A. Piramal has been exempted from appearance in the matter. The next date in the matter is yet to be announced. The matter is still pending before the Judicial Magistrate First Class, Patna.
Our business prospects may be severely hampered if the aforesaid cases are decided against our Promoter, Director and the member of our Promoter Group / Director.
2. Any decrease in demand of fabrics / decrease in the price of garments or fabrics will impact our
business.
Our profits are dependant on the prices and demand for the fabric and garments in the domestic and international market. If there is a decrease in demand, there would be a corresponding decrease in prices and our profit margins might decline as a result. This may result in certain operational and financial difficulties including cash flow restrictions.
3. Our Company has been in default in terms of one of its loans in the past.
Our Company has defaulted in its payments to Axis Bank Limited, one of its lenders, in the recent past. Details of the same are set out below:
(Rs. in lakhs)
Particulars Amounts
Principal amount Cash Credit 1300
Cash Credit Interest amount in default (as on 31.03.2009) 12
Principal amount advanced (Term Loan) 2400
Principal amount in default (Term Loan) 43
Interest amount in default (Term Loan) 25
Date from which principal is in default February 26, 2009
Date from which interest is in default March 31, 2009
Total amount in default 80
Though, we have repaid the outstanding amount as on date owed by us to Axis Bank Limited, and the account has been regularised, we cannot assure you such default in payments will not occur again or that our cost of borrowings from Axis Bank Limited will not increase.
4. Our failure to compete effectively in the highly competitive global textile market could result in the loss
of customers, which could have an adverse impact on our operations.
Our customers have global standards for product quality and delivery schedules and we need to compete on a global scale to gain and retain market share. Certain countries, such as China and Indonesia, have a lower cost of production and therefore, their products may be more price competitive both in international markets as well as Indian. Further, any failure to continuously adhere to global standards in quality as well as cost and delivery parameters could result in adverse customer perception thereby resulting in a reduction, or cancellation of orders.
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5. Our revenues are highly dependent on a limited number of customers. The loss of any of our major
customers or a decrease in the volume of the fabric they source from us may adversely affect our
revenues and profitability.
We derive a significant portion of our revenues from a limited number of customers. In FY 2007-08, our largest customer accounted for 6.68% of our revenues and our five largest customers accounted for 22.85% of our revenues. As a result of our reliance on a limited number of clients, we may face inconsistency in revenues and pricing pressure. The number / amount of fabrics to be procured by them may vary from year to year since we are not their exclusive supplier. In addition, there are a number of factors, other than our performance, that could cause loss of a customer, which cannot be predicted. Our customers may also decide to reduce the quantity of the fabric sourced from us because of challenging market conditions and other factors, internal and external, relating to their business. The loss of any of the major customers, a decrease in the volume of the fabric they source from us or decrease in the price of the fabric we supply may adversely affect our revenue and profitability.
6. We do not currently have any significant expansion plans.
We do not currently have any plans to significantly expand our production facilities. As a result of the same, we may not be able to meet increases in demand for our products in the future. Such failure to meet demand increases may adversely impact our financial performance.
7. Our inability to identify evolving fashion trends and create new designs may adversely affect our
business.
We operate in the business of design and manufacture of various high end fabrics, which by its nature is a highly creative industry. Our business requires us to understand and keep ourselves updated with changing fashion trends. Any inability on our part to understand or update ourselves on the prevailing worldwide trend or to forecast changes well in time may affect our business. The fashion oriented nature of the textile industry subjects us to certain uncertainties associated with the industry. Further, the range of the products in our garment business undergoes constant change according to the season and the fashion trend and our inability to identify fashion trends could adversely affect our business and financial operations.
8. We are dependent on external suppliers for raw materials, which constitute the largest component of our
material costs.
Cotton and cotton yarn comprises a substantial component of our total raw materials. For requirement of raw materials we are dependent on external suppliers. Cotton is an agricultural product and its supply and quality are subject to forces of nature. This dependency on imports makes us vulnerable to foreign currency risk and domestic and international factors affecting the countries from which we import the cotton including:
• Political instability
• Crop failure
• Bilateral relations with India
• Economic conditions Any material shortage or interruption in the supply or decrease in the quality of cotton due to the above factors, natural causes or other factors in the countries from whom we import cotton, could result in increased production costs that we may not be able to successfully pass on to other customers, which in turn would have a material adverse effect on our financial condition. For more details, please refer to the chapter “Management Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 157 of this Draft Letter of Offer.
9. We do not have long-term contracts with our buyers and our buyers prescribe various standards which
we are required to comply with.
While we have been dealing with several of our buyers for many years, we do not have any long term contracts with them. Any change in the buying pattern of our buyers can thus adversely impact our business at short notice in the absence of any binding long term contracts with them. Further, in the absence of such
xii
long term contracts there can be no assurance that a particular buyer would continue to purchase apparels/textile/yarn from us in the future. In addition we have to comply with stringent norms and guidelines prescribed by our buyers in relation to various parameters including quality, confidentiality, insurance and intellectual property, non compliance with which may have a material adverse effect on our relationship with such buyer and receipt of further orders from such buyers.
10. Our Company has a high debt to equity ratio.
As on December 31, 2008, our debt to equity ratio is 4.35:1 and 4.04:1 on a consolidated and standalone basis respectively. This may have a negative impact on our profitability and earning in future. For details of our properties hypothecated with the lenders, please refer to the chapter titled “Financial Statements” beginning on page 155 of this Draft Letter of Offer. Further, the high debt-equity ratio may adversely affect our future borrowing capabilities and therefore the Company may not be able to avail funds that it may require. Though we intend to use the proceeds of the Issue to repay a portion of the outstanding debt against the Company, the same may not reduce the debt to equity ratio to a significant level. For further details on the use of proceeds, please refer to the chapter titled “Objects of the Issue” beginning on page 31.
11. Slowdown in the retail garment business may adversely affect our growth.
We are primarily engaged in the business of manufacturing fabrics which are sold to international fashion houses and premium fashion brands. Demand for our products is highly dependent on the demand for the products of these international fashion houses and premium fashion brands. Any slowdown in the retail garment segment, especially in the premier segment for any reason whatsoever may have an adverse impact on our financial condition and our future prospects.
12. The failure of our technology systems could adversely impact our business.
As our production operations are technology driven, the importance of technology to our business is paramount. Any failure in such technology could result in the disruption of our operations at our facility at Nagpur, which could consequently result in business interruption, the loss of buyers, damaged reputation and weakening of our competitive position. This may have a material adverse effect on our financial condition and results of operations.
13. Restrictive Covenants in loan documents.
The Company has entered into several loan agreements with various lenders, such as EXIM Bank, Allahabad Bank and Axis Bank Limited which requires the Company to obtain the prior approval of the aforementioned banks to take certain actions, including entering into any fresh lending arrangements with other lenders. In addition, we are subject to a number of risks associated with debt financing, including the risk that cash flow from operations will be insufficient to meet required payments of principal and interest. In particular, we have a number of working capital financings and other short-term debt facilities which have been extended to us by various banks on a yearly basis. While we have in the past been successful in negotiating with banks to roll-over or refinance our short-term debt instruments and obtain sufficient credit, we cannot assure you that we will be able to continue to do so in the future, which may result in liquidity problems for us and we will need to find alternate sources of funding. Although we anticipate that we will be able to repay or refinance existing debt (including certain loans with proceeds from this offering), and any other indebtedness when it matures, there can be no assurance that we will be able to do so. In addition, we have granted security in favour of our lenders over, among others, immovable assets by way of mortgage and hypothecation of our assets both present and future pursuant to our loan and security agreements. For further details of our secured indebtedness, please refer to the chapter titled “Financial Indebtedness” beginning on page 58. If we are unable to fulfill our payment obligations under the loan agreements, our property and assets could be forfeited or transferred, which may adversely impact our business operations. These security arrangements also restrict our ability to grant further security over our
xiii
properties and assets. The existing security in favour of our lenders may affect our ability to raise additional money and grant additional security.
14. Our Company is subject to high working capital requirements and our inability to fund these
requirements in a timely manner may adversely impact our financial performance.
Our Company’s working capital requirement is high due to higher holding level of inventory and debts. Inability of our Company to raise corresponding working capital in line with the Company’s operations may result in adversely affecting our operations and financial performance.
15. Our Company has had negative cash flows in the recent past.
Our Company has had negative cash flows in the recent past, as indicated in the table below. (Rs in lakhs)
9 month period
ending
December 31,
2008
FY 2007-
08
FY 2006-
07
FY 2005-
06
Net cash flow from operating activities (162.22) 527.02 (482.52) 234.28
Net cash flow from investing activities (527.40) (4,022.71) (5,625.78) (3,614.67)
Net cash flow from financing activities 20.41 3,142.69 7,312.15 3,382.19 Net increase / (decrease) in cash and
cash equivalents
(669.21) (353.00) 1,203.85 1.80
16. Our operations are subject to varied business risks and there may be inadequate insurance coverage to
cover our economic losses as well as certain other risks including those pertaining to claims by third
parties and litigation. Our operations are subject to various risks and hazards which may adversely affect our profitability, including natural calamities, breakdown of operations, failure or substandard performance of network equipment, third party liability claims, labour disturbances, employee frauds, infrastructure failure and terrorist activities. We cannot assure you that the operation of our business will not be affected by any of the incidents and hazards listed above.
Although, we have taken certain insurance coverage, we cannot assure you that our arrangements for insurance or indemnification will be adequate to cover claims, including those exceeding policy aggregate limitations or exceeding the resources of the indemnifying party. In the event, our insurance coverage is inadequate or insufficient to cover the loss suffered by us, our financial condition and results of operations will be adversely affected.
17. Our Promoter will continue to control a significant percentage of our Equity Share capital and may
exercise substantial influence over us. Their interests may conflict with your interests as a shareholder
Our Promoter and our Promoter Group holds 52.05% of the Equity Share capital as on the date of this Draft Letter of Offer. Accordingly our Promoter along with our Promoter Group will have the ability to exercise significant influence over matters requiring shareholders’ approval. The interest of the Promoter along with the Promoter Group may not be aligned with the interest of the other shareholders of the Company.
18. Our fabric facilities are geographically located in one area.
The fabric production facilities of our Company are located at one place, that is, Nagpur, Maharashtra. As a result, if there is any localised social unrest, natural disaster or breakdown of services and utilities in Nagpur, it may affect our business adversely. For instance, in April 2007, a major breakdown in a pipeline operated by the MIDC led to a water shortage for a period of four months at our facilities at Nagpur, which had an adverse impact on our production output and quality control. As a result, we were unable to meet orders placed by certain customers and there was a consequent reduction in repeat orders placed with us, which in turn resulted in a reduction in our revenues. Our ability to successfully meet orders placed with us in a timely manner may be affected by factors such as breakdown of infrastructure, political unrest or other
xiv
resource constraints, and may be affected by other unforeseen reasons, events or circumstances, which may be beyond our control.
19. We have limited offshore presence.
Approximately 64.39% and 60.84% of our revenue as of FY 2008 and the nine months period ended December 31, 2008 respectively are derived from export of our production. However, other than our offices at Legnano and Santa O’ Mero in Italy, we do not have any offshore office as a result of which we may not be able to capitalise on opportunities offered by the international apparel market and our foreign customers in a timely manner. Therefore, our growth in offshore markets may be hampered, which may affect our future profitability and growth.
20. Inability to attract and retain talented professionals may impact our business.
Attracting and retaining talented professionals is important to our business growth, especially in light of the paucity of talented professionals in the market, and we believe it to be a significant source of competitive advantage. The inability to attract and retain talented professionals or the resignation or loss of key management personnel may have an adverse impact on our business and financial performance.
21. We have a number of contingent liabilities and our profitability could be affected by materialization of
any of the contingent liabilities.
As of December 31, 2008 and March 31, 2008, our contingent liabilities as disclosed in our consolidated statement of assets and liabilities, under Indian GAAP, were as follows:
(Rs. in lakhs)
Particulars As on December 31,
2008
As on March 31, 2008
Estimated amount of contracts remaining to be executed on capital account
78.52 56.86
Disputed Liability with central excise authorities 1,533.52 1,497.61
Disputed Liability with central excise authorities and the income tax department
1,455.49 1,455.49
Bank Guarantees issued 373.71 223.07
Corporate Guarantees 5,450.00 3,750.00
Bills discounted 173.76 354.55
Dividend to preference shareholders 102.37 58.50
Open Letter of Credit 585.19 1,405.57
Crystallization of any of the above liabilities may require us to honour the demands raised, if any, which may adversely impact our profitability and may have a material adverse impact on our financial resources and net worth.
22. There are a number of outstanding litigations against our Company, the Promoter, Promoter Group
Entities, Subsidiaries and Directors.
Our Company, our Promoter, certain members of our Promoter Group, Subsidiaries and Directors of our Company are involved in a number of legal proceedings incidentals to their business and operations. There can be no assurance that these matters will be settled in favour of these entities, and that no further liability will arise out of these claims. Material Litigations against the Company, the Promoter, the Directors and Promoter Group companies are as follows: Our Company
Category No. of
cases
Aggregate Amount involved
Statutory 81 Approximately Rs.20,81,23,368
xv
Labour 7 -
Promoter
Category No. of
cases
Aggregate Amount involved
Criminal 4 -
Promoter Group Companies / Individuals
Category No. of
cases
Aggregate Amount involved
Civil 6 Rs.15,48,656
Criminal 6 -
Statutory 13 Rs.46,82,20,471
Labour 3 Rs.4,99,152
Writ Petitions
2 -
Subsidiaries
Category No. of
cases
Aggregate Amount involved
Civil 2 Rs.24,96,295
Directors
Category No. of
cases
Aggregate Amount involved
Criminal 2 -
Joint Venture
Category No. of
cases
Aggregate Amount involved
Statutory 2 Rs.14,61,530
For more information regarding litigations please refer to the chapter titled “Outstanding Litigations and Material Developments” beginning on page 157 of this Draft Letter of Offer.
23. We may be unable to adequately protect our intellectual property since certain of our trademarks, logos
and other intellectual property are currently not registered and therefore do not enjoy any statutory
protection. Furthermore, we may be subject to claims alleging breach of third party intellectual property
rights.
We have secured registration for the trademark, “Morarjee” in two classes in India. We currently have four trademark applications pending under the provisions of the Trademarks Act of 1999 in relation to the trademarks “Gorena” and “Vaughan & Pickett”. We also have several trademark applications in foreign jurisdictions as well. For further details of our pending approvals, please refer to the chapter titled “Government Approvals” beginning on page 199. We cannot assure you that we will be able to register these trademarks or that third parties will not infringe our intellectual property, causing damage to our business prospects, reputation and goodwill. Our efforts to protect our intellectual property may not be adequate and any third party claim on any of our unprotected brands may lead to erosion of our business value and our operations could be adversely affected. We may need to litigate in order to determine the validity of such claims and the scope of the proprietary rights of others. Any such litigation could be time consuming and costly and the outcome cannot be guaranteed. We may not be able to detect any unauthorised use or take appropriate and timely steps to enforce or protect our intellectual property. We also can provide no assurance that the unauthorised use by any third parties of the
xvi
trademark "Morarjee" and other related trademarks will not similarly cause damage to our business prospects, reputation and goodwill.
24. Compliance with and changes in, safety, health and environmental laws and regulations may adversely
affect our Company’s results of operations and its financial condition.
We are subject to a broad range of safety, health and environmental laws and regulations. For further details on laws and regulations applicable to the Company, please refer to the chapter titled “Regulations and Policies” beginning on page 62 of this Draft Letter of Offer. Our manufacturing facilities are subject to Indian laws and government regulations on safety, health and environmental protection. These laws and regulations impose controls on air and water discharge, noise levels, storage handling, discharge and disposal of chemicals, employee exposure to hazardous substances and other aspects of our Company’s operations and products. Environmental laws and regulations may become more stringent, and the scope and extent of any new regulations, including their effect on our Company’s operations cannot be predicted with any certainty. Any changes in environmental regulations may impose additional taxes and other levies and/or require establishment of additional infrastructure for handling discharge of effluents and other emissions. Further, a failure to comply with any existing or future environmental regulations may result in levy of fines, commencement of judicial proceedings and/or third party claims. Any levies or fines imposed on our Company under environmental regulations or additional expenditure for establishment of additional infrastructure for handling discharge of effluents and other emissions, may adversely affect its results of operations and financial condition. Our Company has incurred, and is expected to continue to incur, operating costs to comply with safety, health and environmental laws and regulations. The discharge of certain chemicals, other hazardous substances or other pollutants into the environment, even if made inadvertently, may lead to violation of various statutes that may make us liable to the Government of India or the State Governments or to third parties. In recent years, safety, health and environmental laws and regulations in India have become increasingly stringent and it is possible that they will become significantly more stringent in the future. Further, there can be no assurance that our Company will not be involved in future litigation or other proceedings or be held responsible in any litigation or proceedings relating to safety, health and environmental matters, the costs of which could be material. Our Company could be subject to substantial civil and criminal liability and other regulatory consequences in the event the operation of its business results in material contamination of the environment. Our Company may be the subject of allegations of environmental pollution in suits filed by state pollution control authorities which may attract criminal and civil liabilities. If such cases are determined against our Company, there could be an adverse effect on our business and operations. Clean-up and remediation costs and related litigation could also adversely affect its business and profitability. Any accidents involving hazardous substances can cause personal injury and loss of life, substantial damage to or destruction of property and equipment and could result in a suspension of operations. The loss or shutdown of operations over an extended period at any of our Company’s plant would have a material adverse effect on our Company’s business and operations.
25. Our operations involve hiring of contract labour, which involves compliance with various applicable
regulations, the non-compliances of which may have financial implications.
In order to retain flexibility and keep our fixed overhead costs to the minimum, in line with industry practice, we appoint contractors who in turn engage on-site contract labour for performance of our low skill operations. From a regulatory perspective, we face the risk that on an application made by the contract labourers, the appropriate court/tribunal may direct us that the contract labourers are required to be regularized or absorbed, and/or that we pay certain contributions in this regard that can adversely impact our financial performance.
Fabric manufacturing is a labour intensive industry. We are constrained by the laws and regulations governing the downsizing or restructuring the existing workforce of the Company. Retrenchment, lay offs and termination of the services of the workmen are governed by the Industrial Disputes Act, 1947. The costs, liabilities and requirements associated with complying with these laws and regulations may be substantial and time-consuming and may delay the restructuring of the workforce. Accordingly, we may be unable to fully implement productivity measures that may require reducing or relocating existing work
xvii
force. For more information regarding labour legislations, please refer to the chapter titled ‘Regulations and Policies’ beginning on page 62 of this Draft Letter of Offer.
26. Currency rate fluctuations could have an adverse effect on our financial results.
We import various equipment for our facilities for which we make payment in foreign currency. Accordingly, depreciation of the INR against the USD and other currencies may adversely affect our financial position and results of operations by increasing the Rupee spending. Our Company is exposed to foreign exchange risks by virtue of being an exporter of products and an appreciation of the INR against the USD could adversely impact receivables in relation to the products exported by us. While our Company may enter into forward contracts or other derivative instruments in order to appropriately mitigate risks on account of currency fluctuation, there can be no assurance that the risks arising out of fluctuations by the INR against the USD can be fully mitigated.
27. Some of our Promoter Group Entities, subsidiaries and joint ventures are loss making and negative net worth as per their latest audited financial statements
Details of some of our Promoter Group entities, Subsidiaries and joint ventures which have incurred loss during the last three years are as follows:
(Rs. in lakhs)
Profit /
(Loss)
incurred
for the
year ended March 31,
2008
Profit / (Loss)
incurred for the
year ended March
31, 2007
Profit / (Loss)
incurred for
the year ended
March 31,
2006
Negative
net
worth
Ashok Piramal Enterprises Private Limited 0.04 (0.10) 0.00 -
Ashok Piramal Management Corporation Limited (57.65) 0.41 0.43
(55.19)
Goldlife Mercantile Company Private Limited 2.59 10.29 (9.49)
-
Highpoint Agro Star Private Limited (0.06) - - -
Jammin Recreation Private Limited (367.40) (0.32) - (366.72)
Lifezone Mercantile Private Limited (0.07) - - -
Miranda Tools Private Limited (1.89) - - (0.89)
Morarjee Goculdas Spinning & Weaving Private Limited (0.09) (67.26) 33.35
(652.06)
Omega Multitrade Private Limited (0.11) - - -
Onestar Mercantile Company Private Limited (5654.94) (99.82) (31.52)
(544.30)
Onestar Trading Company Private Limited (0.12) (0.08) (0.06) -
Oneup Mercantile Company Private Limited (0.12) (0.08) (0.06) -
xviii
Profit /
(Loss)
incurred
for the
year ended
March 31, 2008
Profit / (Loss)
incurred for the
year ended March
31, 2007
Profit / (Loss)
incurred for
the year ended
March 31,
2006
Negative
net
worth
Peninsula Investment Management Company Limited (130.90) (60.69) -
-
Peninsula Mega-City Development Private Limited (0.18) (0.28) -
-
Peninsula SA Realty Private Limited (3.39) (13.53) - (16.17)
Peninsula Townships Development Private Limited (1.00) (5.88) -
(6.14)
Pune Football Club Private Limited (155.41) - - (5.65)
Pune Sports Club Private Limited (0.07) - - -
Topstar Mercantile Private Limited (0.11) - - -
Toptech Mercantile Company Private Limited (11.81) (0.42) (0.06)
(11.44)
Aditi Management Consultancy Private Limited 1617.07 42.46 (4.17)
-
Aarti Management Consultancy Private Limited 614.50 49.52 (2.91)
-
Anjoss Trading Private Limited 629.75 27.25 (5.36) -
AAA Township Private Limited (0.12) - - -
Alibagh Farming and Agriculturist Company Private Limited (0.14) (0.18) (0.37)
-
Bayside Property Developers Private Limited (0.15) (0.09) -
-
Bayside Realty Private Limited (1.26) (0.09) - (0.52)
Delta Realties Limited (0.12) - - -
Freedom Aviation Private Limited (1.74) - - -
J M Livestock Private Limited (65.60) (46.00) (10.66) (121.32)
J M Property Management Private Limited (3.74) (0.10) - -
Newplaza Multitrade Private Limited (0.12) (0.10) (0.05) -
J M Mega Properties Private Limited (0.13) - - -
xix
Profit /
(Loss)
incurred
for the
year ended
March 31, 2008
Profit / (Loss)
incurred for the
year ended March
31, 2007
Profit / (Loss)
incurred for
the year ended
March 31,
2006
Negative
net
worth
West Star Agro-Realties Private Limited (1.67) (0.16) (0.10) (6.47)
Providence Educational Academy Private Limited (0.12) - -
-
Gees Accessories & Co-ordinators Private Limited (0.36) (0.63) (0.11)
-
Crossroads Shoppertainment Private Limited (1.92) (16.33) (15.39) (129.50)
Cromwell Tools (India) Private Limited (0.08) (0.13) (2.21) (93.47)
Miranda Few Tools Private Limited (85.26) (77.79) (25.04) -
Thundercloud Technologies (India) Private Limited (2.87) (0.98) (25.21)
-
Delta Magnets Limited (formerly G. P. Electronics Limited) 16.42 (233.19) (396.06)
-
Aryanish Finance and Investments Private Limited (0.13) (0.12) (0.13)
-
Blackpool Realty Private Limited 0.06 - (0.30) -
Intertrade Mercantile Company Private Limited (3.14) (2.97) (0.38)
-
Lakeview Mercantile Company Private Limited (0.49) (0.21) (0.09)
(1.29)
Outreach Mercantile Company Private Limited (0.27) (0.11) (0.06)
-
Riteline Exports Private Limited (0.13) (0.09) - -
Seastar Trading Company Private Limited 7.32 (1.29) (28.39) (21.50)
Integra Apparels & Textiles Limited 158.74 209.92 (51.42) -
Men’s Club s.p.a. (32.24) NA NA -
Morarjee International s.r.l. (28.87) (3.96) (2.47) (84.98)
Pranit Consultants Private Limited (5.28) 0.32 (0.61)
Fabritex Exports Private Limited (694.74) (1011.49) 39.12
Morarjee Castiglioni (India) Private Limited 0.96 (0.06) (0.20) -
xx
Profit /
(Loss)
incurred
for the
year ended
March 31, 2008
Profit / (Loss)
incurred for the
year ended March
31, 2007
Profit / (Loss)
incurred for
the year ended
March 31,
2006
Negative
net
worth
Just Textiles Limited 74.53 330.37 (87.28) -
28. Any future issuance of Equity Shares by us may dilute your shareholding and adversely affect the
trading price of the Equity Shares.
Any future issue of Equity Shares by our Company may lead to dilution of Investors’ shareholding or affect the market price of our Equity Shares. Similarly, the disposal of Equity Shares by any of our Company’s major shareholders, or the perception that such issues or sales may occur, may significantly affect the trading price of the Equity Shares.
29. Our factory requires various regulatory approvals and any failure to obtain the same in time may
materially impact our operations.
Our factory requires various Governmental and regulatory approvals on a periodic basis. Non-receipt of any of the required approvals may hamper our business. For details of any regulatory approvals/ renewals required for the operation of our factory, which have not been obtained, please refer to the chapter titled “Government Approvals” beginning on page 199 of this Draft Letter of Offer.
30. The Company has issued certain warrants convertible into Equity Shares, pursuant to the rights issue
undertaken by it in 2006. Any exercise of warrants will dilute your shareholding in the Company.
The Company had, in 2006, issued 51,91,275 detachable warrants (along with Equity Shares), representing an entitlement to 51,91,275 Equity Shares, pursuant to a rights issue. The warrants are convertible into an equal number of Equity Shares at a conversion price of Rs. 100 per warrant. Out of the 51,91,275 warrants issued, 26,08,711 warrants were issued to the Promoter and the Promoter Group and 25,82,564 warrants were issued to non Promoter Group entities. These warrants are currently outstanding and can be exercised up to November 2, 2009. The Promoter and Promoter Group entities holding warrants have provided an undertaking to the Company that they will not exercise their right of conversion, thereby applying for conversion of the warrants currently held by them, till the time the validity of such warrants expire, nor will they, in any way, do any such act which will result in the transfer of these warrants or acquisition of any additional warrants. In the event that the non promoter group entities choose to exercise their entitlement in full before the Record Date, the Equity Shares issued pursuant to such exercise shall constitute 12.44 % of the post-issue paid up capital of the Company. Any exercise of such warrants will dilute your shareholding in the Company, and may adversely affect the trading price of our Equity Shares. Conversely, if the non Promoter and non Promoter Group individuals do not exercise any warrants held by them and given that the Promoter and the Promoter Group have provided an undertaking that they will not convert the warrants held by them, all such unexercised warrants will lapse on November 2, 2009. As a result, the Company will not receive any additional payment and may require to raise alternative sources of capital to meet the organic and inorganic growth for which the warrants were issued. For further details, please refer to the chapter titled “Capital Structure” beginning on page 18 of this Draft Letter of Offer.
31. There has been a shortfall in the performance vis a vis promise in the last issue made by a company
forming part of the Promoter Group.
PLL made a public issue to their shareholders in 1994. The issue comprised of 15,25,000 equity shares of Rs. 10 each for cash at a premium of Rs. 250 each aggregating to Rs. 39.6 lakhs and firm allotment of 24,75,000 equity shares of Rs. 10 each at a premium of Rs. 250 each to select FIs/FIIs/NRIs/IMFs aggregating to Rs. 6430 lakhs .
Objects of the issue
xxi
The objects of the issue were: a. To finance the modernization-cum-expansion of manufacturing facilities of the company’s textile
division; and b. To finance the margin money requirement for working capital requirements of the modernization-cum-
expansion project. The promise made in the above rights issue and actual performance achieved is as follows:
(Rs. in lakhs)
Particulars 1996-97 1995-96 1994-95
Promise Performance Promise Performance Promise Performance
Gross Sales 70,000.00 3,2961.00 51,000.00 37,660.00 43,000.00 4,1691.00
PAT 5270.00 (2090.00) 3160.00 978.0 2720.00 2660.00
EPS 268.60 (10.70) 183.90 49.8 138.6 135.60
Dividend 30% 8% 30% 15% 30% 30%
32. The Company neither owns nor has any formal lease agreement in relation to its registered office.
Our registered office is located at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013, which is not owned by the Company. Our Company may be required to vacate the premises on which its registered office is situated and may therefore be required to make alternative arrangements for office space and related infrastructure.
EXTERNAL RISK FACTORS
33. If regional hostilities, terrorist attacks or social unrest in India increase, the Company’s business could
be adversely affected. The Asian region has from time to time experienced instances of civil unrest, terrorist attacks and hostilities among neighbouring countries, including between India and Pakistan. Since May 1999, military confrontations between India and Pakistan have occurred in Kashmir. Also, since early 2003, there have been a number of terrorist attacks in India in the last several years, including recent terrorist attacks in Mumbai in November 2008. Military activity or terrorist attacks in India in the future could influence the Indian economy by creating a greater perception that investments in Indian companies involve higher degrees of risk. These hostilities and tensions could lead to political or economic instability in India and a possible adverse effect on the Indian economy, our Company’s business, its future financial performance and the trading price of the Equity Shares. Furthermore, India has also experienced social unrest in some parts of the country. If such tensions occur in other parts of the country, leading to overall political and economic instability, it could have an adverse effect on the Group’s business, future financial performance and the trading price of the Equity Shares.
34. Our growth is dependant on the Indian economy.
Our performance and the growth of our business are dependant on the performance of the Indian economy. India’s economy has been adversely affected by the current global economic uncertainties and liquidity crisis, higher inflation, volatility in interest rates, currency exchange rates, commodity and electricity prices, adverse conditions affecting agriculture, and various other factors. Risk management techniques by banks and lenders in such circumstances could affect the availability of funds in the future or the withdrawal of existing credit facilities of our Company. The current slowdown in the Indian economy could adversely affect our business, including our ability to implement our strategy and consider future expansion plans. The Indian economy is currently in a state of transition and it is difficult to predict the impact of certain fundamental economic changes upon our business. Conditions outside India, such as a slowdown or recession in the economic growth of other major countries, especially the United States, or increases in the price of oil, have an impact on the growth of the Indian economy, and Government policy may change in response to such conditions. While recent Governments have been keen on encouraging private participation in the industrial sector, any adverse change in policy could result in a further slowdown of the
xxii
Indian economy. Additionally, these policies will need continued support from stable regulatory regimes that stimulate and encourage the investment of private capital into industrial development. Any downturn in the macroeconomic environment in India could materially and adversely affect the price of the Shares, our business and results of operations.
35. Reduction or termination of policies instituted to promote growth of the textile sector.
The Government of India has instituted several policies to promote the growth of the Indian textile sector. These include interest rate subsidies, duty / tax reimbursement schemes like duty drawback / DEPB. Termination of or variation in the terms of such policies can adversely impact the profitability of textile companies in the country.
36. Probable opposition to sourcing fabric from India.
Potential threats to the domestic textile industry in developed countries and geographies that are not as competitive as India and China has led to a growing political opposition to sourcing of fabric from countries such as India. Any increase in such opposition may lead to restrictions being imposed on export of fabric from countries such as India and China and impact the growth of textile industry players in such countries.
37. Significant new capacities being set up in the country.
Significant capacities have been set up in the country for the manufacture of yarn dyed cotton fabric. Should our existing customer’s source part of their requirements from these new units, there can be no assurance that our capacities will be fully utilized. These could increase the cost of fabric manufactured by us.
38. Emergence of competition from other manufacturing countries having Free Trade Agreements (FTAs)
and Preferential Trade Agreements (PTAs) with the major importing countries
While quantitative restrictions stand eliminated with the removal of quotas, certain countries which enjoy FTAs/PTAs with major importing countries may have an advantage (by way of lower or zero import tariffs) over exporters from countries that do not have such agreements. India currently is not party to such agreements.
39. Increasing wage cost and non availability of skilled personnel.
Wage costs in India have historically been significantly lower than the wage costs in the developed countries for comparably skilled professionals in the textile industry, which has been one of our competitive strengths. However, wage increases in India may prevent us from sustaining this competitive advantage and may negatively affect our profit margins. The buoyancy in the Indian textile industry with the opening up of global trade may lead to an increase in wage costs which could result in increased cost for textile professionals. This can impact the performance and margins of players in the industry in India and may result in a material adverse effect on our business.
40. Global economic, political and social conditions may harm our ability to do business, increase our costs
and negatively affect our stock price.
Macroeconomic factors that affect the Indian economy and the global economic scenario have an impact on our business. Further, external factors such as potential terrorist attacks, acts of war or geopolitical and social turmoil in many parts of the world could prevent or hinder our ability to do business, increase our costs and negatively affect our stock price. For example, increased instability may adversely impact the desire of employees and customers to travel, the reliability and cost of transportation, our ability to obtain adequate insurance at reasonable rates or require us to incur increased costs for security measures for our domestic and international operations. These uncertainties make it difficult for us and our customers to accurately plan future business activities. More generally, these geopolitical social and economic conditions could result in increased volatility in India and worldwide financial markets and economy.
41. After this offer, the price of our Equity Shares may be volatile, or an active trading market for our Equity
Shares may not develop.
xxiii
The prices of our Equity Shares on the Stock Exchanges may fluctuate after this Issue as a result of several factors including:
• volatility in the Indian and global securities markets;
• our results of operations and performance;
• performance of our competitors, the Indian apparel manufacturing industry and the perception in the market about investments in the apparel manufacturing sector:
• adverse media reports on the Company or the Indian apparel manufacturing industry;
• changes in the estimates of our performance or recommendations by financial analysts;
• significant developments in India’s economic liberalisation and deregulation policies; and
• significant developments in India’s fiscal and environmental regulations.
NOTES TO RISK FACTORS:
1. This is an Issue of [●] fully paid equity shares of Rs. 10 each at a premium of Rs. [●] per fully paid equity share for an amount aggregating Rs. [●] lakhs to the existing Equity shareholders on rights basis in the ratio of one fully paid equity share for every one existing equity share held by the existing shareholders on the Record Date.
2. Net worth of the Company as on December 31, 2008 is Rs. 4,403.44 lakhs as per the restated consolidated
financial statements of our Company under Indian GAAP. The size of the Issue is an amount not exceeding
Rs. [•] lakhs. The net asset value per share (book value) as on December 31, 2008 for Equity Shares of Rs. 10 face value is Rs. 13.25.
3. We had entered into certain related party transactions for FY 2008, 2007, 2006, 2007 and 2008 and 9 month
period ended December 31, 2008 as disclosed in the chapter titled “Related Party Transaction” beginning on page 154 of this Draft Letter of Offer.
(Rs. in lakhs)
Nature of the
transaction
For the
nine
month period
ending
December
31, 2008 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004
Purchases of Goods/Services
110.16 142.24 107.38 56.36 76.25 1,129.22
Sales of Goods - - - - 54.66 424.88
Loan Deposit/Received
- - - - 2,000.00 1,704.53
Loan given / Repaid - - - 2,000.00 4.83 2,646.99
Loan repaid by related party
- - - - 560.00 -
Investment in Equity Shares
and Application Money
- - - - 5.49 64.11
Buy Back of Equity Shares
- - - - 32.49 -
xxiv
Nature of the
transaction
For the
nine
month
period
ending
December 31, 2008 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004
Purchase of Textile
Undertaking
- - - - - 432.00
Interest paid - - - - - 23.11
Interest Received - - - - - 9.41
Remuneration 95.81 119.94 115.09 103.60 85.39 68.83
Rent paid 92.76 123.67 7.20 13.40 13.80 -
Outstanding Payable 339.11 197.60 61.60 12.36 2,008.56 545.92
Outstanding Receivable
0.73 0.73 0.73 0.73 34.45 564.07
4. Before making an investment decision in respect of this Offer, you are advised to refer to the chapter titled
“Basis for Issue Price” beginning on page 34 of this Draft Letter of Offer. 5. Please refer to the sub section titled ‘Basis of Allotment’ under “Terms and Procedure of the Issue”
beginning on page 214 of this Draft Letter of Offer for details on basis of allotment. 6. For transactions in Equity Shares of the Company by the Promoter Group and Directors of the Company in
the last six months, please refer to chapter titled ‘Capital Structure’ beginning on page 18 of this Draft Letter of Offer.
7. The average cost per Equity Share for our Promoter is Rs. 0.48. 8. For interests of our directors and key managerial personnel, please refer to “Management” beginning on
page 81 of this Draft Letter of Offer. For interests of our Promoter and Promoter Group please refer to “Promoter and Promoter Group” beginning on page 98 of this Draft Letter of Offer.
9. Other than as disclosed in the chapter titled “Capital Structure” beginning on page 18 of this Draft Letter of
Offer, our Company has not issued any Equity Shares for consideration other than cash. 10. For details on the change of name of the Company as well as the MoA, please refer to the chapter titled
“History of our Company and other Corporate Matters” beginning on page 66. 11. Any clarification on the Issue shall be made available by the Lead Manager and the Company to the
investor at large and no additional information would be available to a section of investors in any manner whatsoever.
12. Investors may contact the Compliance Officer or the Lead Manager for any complaints pertaining to the
Issue. 13. The Lead Manager and our Company shall keep the shareholder / public informed of any material changes
till the listing and trading of the Rights Equity Shares commences as per the terms of the listing agreement and the SEBI DIP Guidelines.
1
SUMMARY
SUMMARY OF INDUSTRY
Unless otherwise indicated, all industrial and statistical data relating to the textile industry in India in the
following discussion have been extracted from the Ministry of Textile’s Annual Report (2007-2008) and WTO
International Trade Statistics Book – 2008. Information used in the document has been obtained from publicly
available documents from various sources. The data may have been re-classified by us for the purpose of
presentation. While the data is believed to be true, it has not been independently verified by our Company or the
Lead Manager.
THE TEXTILE INDUSTRY
The two main aspects of the Textile industry are manufacture of textiles (yarn and fabric) and clothing. The manufacturing of textile is usually more capital intensive than clothing. This includes spinning of yarn from fibre (natural as well as man made, and blends thereof), weaving/knitting of fabric from yarn and finishing of the fabric. These functions are often undertaken in stand-alone unit and sometimes in integrated plants. These plants are often automated and require high capital investment. Clothing on the other hand is less capital intensive, with a greater degree of labour involved in it. Hence, clothing industry has also moved to the countries which have cheap and abundant labour. The textiles manufacturing typically employ large work force and combined with the clothing industry, in most countries, it is a major employer. In 2007-08, the global textile trade contributed to 1.7% of the total world trade and clothing contributed 2.5%. The contribution of textile trade is showing a decline in comparison to previous years. There are many apparel retail companies that have faced tremendous financial pressure. The global textile industry is facing a direct impact of the same. (Source: WTO International Trade Statistics Book – 2008)
OVERVIEW OF INDIAN TEXTILE INDUSTRY
The Indian Textiles Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the textiles industry also plays an important role through its contribution to industrial output, employment generation, and the export earnings of the country. Currently, it contributes about 14 percent to industrial production, 4 percent to the GDP, and 17 percent to the country’s export earnings. It provides direct employment to over 35 million people. The Textiles sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of this industry has a direct bearing on the improvement of the economy of the nation The Cotton / Man-made fibre textiles industry is the largest organized industry in the country in terms of employment (nearly 1 million workers) and the number of units. Besides, there are a large number of subsidiary industries dependent on this sector, such as those manufacturing machinery, accessories, stores, ancillaries, dyes & chemicals. As on December 31, 2007, there were 1,744 cotton/man-made fibre textiles mills (non-SSI) in the country with a capacity of 34.87 million spindles, 4, 57,000 rotors, and 56,000 looms. (Source: Ministry of Textile Annual Report 2007-2008)
The Indian Textile Industry is a vertically integrated industry which covers a large gamut of activities ranging from production of its own raw material namely, cotton, jute, silk and wool, to providing to the consumers high value added products such as fabrics and garments. India also produces large varieties of synthetic and man made fibres such as filament and spun yarns from polyester, viscose, nylon and acrylic which are used to manufacture fabric and garments.
SWOT OF INDIAN TEXTILE SECTOR
Strengths Weaknesses
● High availability of all raw materials
● Export incentives and Technology upgradations
● Rigid Government policies, specially labour policy
2
encouraged by government measures
● Low labour cost and availability of skilled and technical labour force
● Self reliant industry producing the entire chain from fibre/cotton to garments/home textiles
● Ability to handle value additions, embellishments
● Large and growing domestic demand
● Excellence in fabric and garment designing
● Low cotton yield per hectare
● Small size and technologically outdated plants result in lack of economies of scale, low productivity, and weak quality control
● Fabric/ processing still to meet international standards
● With the exception for spinning, other sectors are fragmented and unit production capacities very low by international standards
● Infrastructure bottlenecks for handling huge volumes
Opportunities Threats
● Replacement of the MFA and full integration of textile industry resulted in huge opportunities for export
● Increase in consumption pattern across the country along with the rise in demand for high quality premium fabrics.
● Enhanced competition from other countries similarly constrained previously
● Pricing pressure following the opening up of quotas
SUMMARY OF OUR BUSINESS
We are a part of the erstwhile Morarjee group, one of India’s oldest and most experienced textiles manufacturing houses, now renamed as Ashok Piramal group. Morarjee Goculdas Spinning and Weaving Company Limited (subsequently known as Morarjee Realties Limited and now known as ‘Peninsula Land Limited’), incorporated on August 10, 1871, was one of the flagship Company of the erstwhile Morarjee Group. The Ashok Piramal Group is a diversified and growing conglomerate with business interest in textiles, real estate, engineering, entertainment and sports.
We are an integrated textile company primarily engaged in the manufacturing high quality cotton shirting fabrics, premium voiles and high fashion printed fabrics with world class technology and distinct Italian designing as our key differentiators. We own and operate a 70 lakh meters per annum weaving capacity for manufacturing of our high value cotton shirting and 48 lakhs meters per annum weaving capacity for manufacturing of premium voiles and high fashion printed fabric at Nagpur. Our core customers in the international market include reputed garment manufactures and some of the leading fashion houses and premier international brands in USA, Europe, Japan and Middle East. In the domestic market, our customers consist primarily of leading premium brands. Our Company has 4 direct subsidiaries. Our Company holds 89.12% in Integra Apparels and Textiles Limited and 100% in Morarjee International s.r.l. and 67% (directly and through Morarjee International s.r.l.) in Mens Club spa. Integra Apparels and Textiles Limited has a wholly owned subsidiary, namely Pranit Consultants Private Limited which in turn holds 100% in Fabritex Exports Private Limited. Our Italian subsidiaries Morarjee International s.r.l., and Mens Club s.p.a., enhances our access to European markets as well as to provide quicker service to customers. In addition to the above, we have recently set up a subsidiary, namely Morarjee Holdings Private Limited. Our promoter is Ms. Urvi A. Piramal. For the year ended March 31, 2008 and the nine month period ended December 31, 2008 our consolidated revenue was Rs. 28,154.25 lakhs and Rs. 24,795.58 lakhs respectively and our consolidated loss after tax after minority interest for the year ended March 31, 2008 and the nine month period ended December 31, 2008 was Rs. 2,378.17 lakhs and Rs. 2,987.14 lakhs respectively.
3
Strengths
Our principal competitive strengths are as follows: Fully integrated textile manufacturing company
Our Company is one of the few fully-integrated textile units in the country, from spinning to garment manufacture. At the same time, each of the key process, i.e. spinning, weaving, finishing and processing, and garmenting, operate as separate profit centers and are commercially viable as independent functions. Our Company would like to be present through the entire value chain of textile industry, and will continue to invest in upgrading its technology, people and other key resources. Cutting-edge design
To maintain its competitive advantage in this key area of product differentiation, our Company continuously invests in upgrading its design capabilities. Our Company has one of the most advanced design studios in the country, and has invested in a state-of-the-art Design Studio in Italy, which has enabled us to develop “European” styled seasonal collections, designs, etc. essential for us to remain a key player in the highly competitive European and US markets Product Quality
One of the key requirements in premium fabric segment is consistency in product quality and finishing. Our Company has managed to maintain quality standards at the highest levels. We are regularly investing in upgrading our fabric processing and finishing facilities to enable us to improve our finished products as well as develop new finishes for the market. Customer Service
Cutting-edge design and high quality fabric have to be supported by the highest levels of customer service which includes aspects like working with each customer’s design team to develop unique collections, producing yardages or desk-loom samples of a customer’s design for approval, doing short runs of multiple variants, consistent and timely fulfillment of orders and continuous and real-time customer interaction. To this end, and in order to be closer to Company’s key European customers, our Company has set up an office in Legnano, Italy, which caters to the growing needs from this region.
Diversified customer base
Our Company has a well-diversified customer base, both in India and overseas. In the Indian market, our Company supplies its products to well-known retailers and garment and home textile manufacturers and exporters. In the overseas markets, our company is the nominated / preferred vendor for several brands / retailers. Besides USA, our Company has a diversified market spread over countries in EU, South-East Asia, Africa and South America. Strategy
Expanding our market base
We believe we have an opportunity to further penetrate into our existing market. While export to Europe constituted almost 22.79% of our total sales, we believe that there is further scope for expansion into the yarn dyed and printed segment in Europe. Our Company will continue exploring opportunities in various countries where it can supply value added textile products to enhance its geographic reach. Simultaneously, our Company will also seek to expand its reach in the domestic markets by exploring the untapped markets and segments as part of its strategy.
Diversified product mix
4
It is our Company’s endeavour to constantly develop new products and finishes to capture our customers’ requirements both within its traditional product framework as well as for new specialty fabrics. We endeavour to strengthen our portfolio of our high quality cotton shirting fabrics, premium voiles, high fashion printed fabrics business for both men and women to meet customer needs and demands both in the existing as well as new markets. To be preferred partner / associate suppliers to Global Customers
As part of its growth strategy, our Company is making conscious efforts to move up the value chain with its customers and become the preferred partner / associate supplier to some of the global brands. This would also have the advantage of being able to procure bulk orders from such global customers.
5
THE ISSUE
Equity Shares proposed to be issued by the Company
[●] Equity Shares
Rights Entitlement 1 Equity Share for every 1 Equity Share held on the Record Date
Record Date [●], 2009
Issue Price per Rights Equity Share Rs. [●]
Equity Shares outstanding prior to the Issue 1,81,69,463 Equity Shares
Equity Shares outstanding after the Issue of Rights Equity Shares
[●] Equity Shares
Use of Issue Proceeds The Issue proceeds will be utilized for the repayment of debt of the Company and meeting Issue expenses. For more information, see “Objects of the Issue” beginning on page 31 of this Draft Letter of Offer.
Terms of the Issue For more information, see “Terms and Procedure of the Issue” beginning on page 214 of this Draft Letter of Offer.
6
SELECTED FINANCIAL INFORMATION
The following tables set forth the summary financial information derived from the restated unconsolidated and
consolidated summary financial statements of the Company as on and for Fiscal 2004, 2005, 2006, 2007 and
2008 and the nine months ended December 31, 2008, prepared in accordance with Indian GAAP and the Act
and restated in accordance with the SEBI DIP Guidelines, such restated unconsolidated and consolidated
summary financial statements being included in the chapter titled “Financial Statements” beginning on page
155 of this Draft Letter of Offer.
The summary financial information of the Company presented below should be read in conjunction with the
restated financial statements and the notes (including the significant accounting principles) thereto, included in
the chapter titled “Financial Statements” beginning on page 155 of this Draft Letter of Offer and Management
Discussion and Analysis of Financial Condition and Result of Operations” beginning on page 157 of this Draft
Letter of Offer.
Standalone Summary Financial Statements
STATEMENT OF ASSETS AND LIABILITIES AS RESTATED
(Rs. in Lacs)
PARTICULARS
As at
31.12.2008
As at
31.03.2008
As at
31.03.2007
As at
31.03.2006
As at
31.03.2005
As at
31.03.2004
A Fixed Assets
Gross Block 21,975.26 21,867.45 20,517.98 17,995.84 15,323.27 14,053.19
Less: Depreciation 7,058.27 6,244.09 5,310.53 4,415.59 3,654.41 2,989.70
Net Block 14,916.99 15,623.36 15,207.45 13,580.25 11,668.86 11,063.49
B Investments 3,140.81 3,123.17 3,112.21 240.36 240.36 472.14
C
Current Assets, Loans
& Adv
Inventories 4,383.50 5,232.31 4,421.24 3,797.06 3,095.57 2,984.54
Sundry Debtors 4,517.03 3,139.94 3,988.67 3,388.04 2,208.56 1,784.13
Cash and Bank Balances 133.36 767.38 1,214.92 15.69 32.33 26.15
Loans and Advances 2,869.68 2,908.07 2,838.12 2,110.05 921.36 2,311.28
Total 11,903.57 12,047.70 12,462.95 9,310.84 6,257.82 7,106.10
D
Liabilities and
Provisions
Secured Loans 13,202.33 13,841.45 13,714.84 10,749.09 5,097.17 7,069.17
Unsecured Loans 6,809.03 5,972.71 3,439.34 3,668.31 3,863.93 4,883.74
Current Liabilities and Provisions
5,334.49 4,204.39 4,578.63 4,216.35 5,400.31 3,294.59
Deferred Tax Liabilities
Total 25,345.85 24,018.55 21,732.81 18,633.75 14,361.41 15,247.50
E Preference shares 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
F
Net Worth (A+B+C-D-
E)*
3,615.52 5,775.68 8,049.80 3,497.70 2,805.63 2,394.23
G Represented by
Paid up Share Capital
- Equity Shares 1,816.95 1,816.95 1,816.95 1,038.26 1,038.26 3,287.60
- Advance against Equity
2,875.00
Reserves and Surplus 1,798.57 3,958.73 6,232.85 2,459.44 1,767.37 (3,768.37)
Total 3,615.52 5,775.68 8,049.80 3,497.70 2,805.63 2,394.23
H
Misc. Expns upto the
extent not w.off
I Net Worth (G-H)* 3,615.52 5,775.68 8,049.80 3,497.70 2,805.63 2,394.23
7
The accompanying significant accounting policies and notes are integral part of this statement.
8
STATEMENT OF PROFIT AND LOSS ACCOUNT AS RESTATED
(Rs in lacs)
For the Nine
month
period
ended on FOR THE YEAR ENDED ON
PARTICULARS 31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
INCOME
Sales
Export Sales 9,866.29 10,483.03 13,870.33 9,781.65 8,523.49 4,730.38
Domestic Sales 5,536.96 6,936.23 7,774.16 7,936.97 6,726.03 5,733.75
DEPB Income 453.02 533.66 290.46 258.93 330.99 319.41
15,856.27 17,952.92 21,934.95 17,977.55 15,580.51 10,783.54
Less: Excise Duty & Sales Return
433.03 861.44 726.36 1,035.06 829.17 582.30
15,423.24 17,091.48 21,208.59 16,942.49 14,751.34 10,201.24
Increase/(Decrease) in Stock (895.47) 635.62 741.00 378.42 27.48 686.56
Other Income 3.74 1.00 12.13 7.83 36.01 0.30
14,531.51 17,728.10 21,961.72 17,328.74 14,814.83 10,888.10
EXPENDITURE
Material Consumed 4,259.79 6,689.33 8,619.62 6,153.56 5,469.95 4,676.25
Manufacturing Expenses 5,464.90 6,416.68 6,368.58 5,028.56 4,487.11 3,016.63
Employees' Emoluments 1,411.81 1,746.23 1,508.92 1,328.71 1,268.06 918.27
Admn, Selling & Other Expns
3,264.29 2,629.04 2,702.59 2,310.51 1,645.49 1,085.07
Depreciation 814.18 1,009.69 926.74 807.33 716.30 561.04
Financial Charges 1,458.66 1,490.34 968.19 619.29 563.69 744.83
Miscellaneous Expns w.off - - - - - 110.56
16,673.63 19,981.31 21,094.64 16,247.96 14,150.60 11,112.65
Profit before tax (2,142.12) (2,253.21) 867.08 1,080.78 664.23 (224.55)
Provision for Tax Current Tax ( MAT )
- - 97.29 90.95 - -
Deferred Tax - - - - - -
Fringe Benefit Tax 18.04 20.91 25.07 35.74
MAT Credit Entitlement (97.29) (90.95)
Net Profit / (Loss) after tax
as per Audited Statement
of A/c
(2,160.16) (2,274.12) 842.01 1,045.04 664.23 (224.55)
Impact on account of adjustments required by paragraph 6.10.2.7(b) of Chapter VI of the SEBI Guidelines [See note 13 of Annexure IV]
- - - - - -
Adjusted Profit / (Loss) (2,160.16) (2,274.12) 842.01 1,045.04 664.23 (224.55)
Brought forward Profit/(Loss) from previous year
(901.49) 1,372.63 950.98 363.91 (3,813.53) (3,588.98)
Profit/(Loss) available for
appropriation
(3,061.65) (901.49) 1,792.99 1,408.95 (3,149.30) (3,813.53)
Add:
Transfer from Debenture Redemption Reserve
- - - - - -
Transfer from Share Premium
- - - - - -
Surplus on Capital Restructuring
- - - - 3,766.85
Less:
9
Adjusted Against Reserve - 43.00 105.00 33.30
Proposed Dividend on
- Equity - 272.54 259.56 155.74
- Distribution Tax - 46.32 36.40 21.84
- Preference - 50.00 50.00 37.50
- Distribution Tax - 8.50 7.01 5.26
Balance Carried forward to Balance Sheet
(3,061.65) (901.49) 1,372.63 950.98 363.91 (3,813.53)
The accompanying significant accounting policies and notes are integral part of this statement.
10
Consolidated Summary Financial Statements
STATEMENT OF CONSOLIDATED ASSETS AND LIABILITIES AS RESTATED (Rs in lacs)
PARTICULARS
As at
31.12.2008
As at
31.03.2008
As at
31.03.2007
As at
31.03.2006
As at
31.03.2005
As at
31.03.2004
A Fixed Assets
Gross Block 29,437.60 28,914.38 24,638.68 18,998.08 15,417.41 16,249.07
Less: Depreciation 8,925.11 7,788.12 5,869.46 4,447.73 3,657.64 3,420.04
Net Block 20,512.49 21,126.26 18,769.22 14,550.35 11,759.77 12,829.03
Goodwill on consolidation
1,996.10 1,961.18 1,578.40 81.61 90.68 -
B Investments 1.72 1.72 773.58 0.65 0.65 0.71
C Current Assets,
Loans & Adv
Inventories 7,118.57 7,677.24 5,531.36 4,266.94 3,201.33 3,354.47
Sundry Debtors 7,085.06 5,321.29 4,909.22 3,718.41 2,212.14 2,239.96
Cash and Bank Balances
232.31 901.52 1,254.52 50.67 48.87 85.44
Loans and Advances 4,346.61 4,235.83 4,277.11 1,615.46 946.21 1,953.78
Total 18,782.55 18,135.88 15,972.21 9,651.48 6,408.55 7,633.65
D Liabilities and
Provisions
Secured Loans 18,188.62 18,629.81 16,451.73 11,549.09 5,097.17 7,369.17
Unsecured Loans 8,378.84 6,700.04 3,534.78 3,668.31 3,883.73 5,319.18
Current Liabilities and Provisions
8,795.88 6,724.34 6,046.18 4,672.73 5,504.56 3,657.90
Minority Interest 393.13 569.88 209.97 6.30 14.00 -
Deferred tax liability 132.95 252.33 242.59 - - 90.45
Total 35,889.42 32,876.40 26,485.25 19,896.43 14,499.46 16,436.70
E Preference Shares 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
F Net Worth
(A+B+C-D)*
4,403.44 7,348.64 9,608.16 3,387.66 2,760.19 3,026.69
G Represented by
Paid up Share Capital
- Equity Shares 1,816.95 1,816.95 1,816.95 1,038.26 1,038.26 3,287.60
- Advance against Equity
- - - - - 2,875.00
- Reserves and Surplus
2,447.19 5,392.39 7,776.38 2,334.57 1,707.10 (3,742.11)
- Capital Reserve on Consolidation
139.30 139.30 14.83 14.83 14.83 810.76
Total 4,403.44 7,348.64 9,608.16 3,387.66 2,760.19 3,231.25
H Misc. Expns upto
the extent not w.off
204.56
I Net Worth (G-H)* 4,403.44 7,348.64 9,608.16 3,387.66 2,760.19 3,026.69
The accompanying significant accounting policies and notes are integral part of this statement.
11
STATEMENT OF CONSOLIDATED PROFIT AND LOSS ACCOUNT AS RESTATED
(Rs in lacs)
For the Nine
month period ended on
FOR THE YEAR ENDED ON
PARTICULARS
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
Income
Export Sales 15,230.92 16,430.91 16,696.54 10,691.79 9,044.67 5,198.33
Domestic Sales 9,279.80 11,491.57 10,277.30 8,312.70 8,967.67 7,775.76
DEPB 817.64 1,103.53 457.67 300.49 361.79 375.94
25,328.36 29,026.01 27,431.51 19,304.98 18,374.13 13,350.03
Less: Excise Duty & Sales Return
543.36 893.90 755.66 1,042.93 1,160.00 882.76
24,785.00 28,132.11 26,675.85 18,262.05 17,214.13 12,467.27
Increase/(Decrease) in Stock
(308.39) 1,201.64 1,007.99 574.69 (63.21) 719.18
Other Income 10.58 22.14 475.93 9.83 95.26 48.23
24,487.19 29,355.89 28,159.77 18,846.57 17,246.18 13,234.68
EXPENDITURE
Material Consumed 8,813.12 12,073.56 11,137.96 6,834.41 6,802.87 5,819.62
Manufacturing Expenses
6,891.17 8,365.78 7,553.43 5,245.51 4,687.08 3,148.58
Employees' Emoluments
3,930.33 4,307.17 2,697.25 1,909.69 1,576.02 1,318.53
Admn, Selling & Other Expns
5,035.12 3,823.54 3,030.20 2,326.12 1,997.30 1,356.56
Depreciation 1,127.18 1,362.49 1,095.38 836.28 822.65 651.85
Financial Charges 1,904.64 1,748.94 1,227.94 653.19 591.64 807.37
Miscellaneous Expns w.off
- - - - - 110.56
27,701.56 31,681.48 26,742.16 17,805.20 16,477.56 13,213.07
Profit before tax (3,214.37) (2,325.59) 1,417.61 1,041.37 768.62 21.61
Other Adjustments VRS w/off
- - - - 204.56 204.56
(3,214.37) (2,325.59) 1,417.61 1,041.37 564.06 (182.95)
Provision for Tax
Provision for Tax (Including MAT )
13.70 46.48 170.44 106.90 - 3.20
Deferred Tax Adjustment
(119.38) 9.73 138.28 - (18.52) 12.15
Fringe Benefit Tax 30.73 35.71 35.05 41.22 - -
Fringe Benefit Tax- Earlier years
2.82 - - - - -
MAT Credit Entitlement
- (25.45) (152.71) (90.95) - -
Provision for Tax for Earlier Years
0.25 9.79 - - - -
Profit / (Loss) After (3,142.49) (2,401.85) 1,226.55 984.20 582.58 (198.30)
12
Tax
Share of Minority Interest
(155.35) (23.68) 25.17 (7.70) - -
Net Profit / (Loss)
after Tax as per Audited Statement of
A/c
(2,987.14) (2,378.17) 1,201.38 991.90 582.58 (198.30)
Impact on account of adjustments required by paragraph 6.10.2.7(b) of Chapter VI Of the SEBI Guidelines [See note 17 of Annexure IV]
- - 0.50 13.67 5.52 -
Adjusted Profit /
(Loss)
(2,987.14) (2,378.17) 1,200.88 978.23 577.06 (198.30)
Brought forwards Profit/(Loss) from previous year
(774.39) 1,603.78 823.26 303.00 (3,787.27) (3,735.73)
Profit/(Loss)
available for
appropriation
(3,761.53) (774.39) 2,024.14 1,281.23 (3,210.21) (3,934.03)
Add:
Surplus on Capital Restructuring
- - - - 3,766.85 -
Less:
Capital Loss adj against purchase consideration
- - - - - (146.76)
Proposed Dividend on
- Equity - - 272.54 259.56 155.74 -
- Distribution Tax - - 46.32 36.40 21.84 -
- Preference - - 50.00 50.00 37.50 -
- Distribution Tax - - 8.50 7.01 5.26 -
Transfer to General Reserve
- - 43.00 105.00 33.30 -
Balance Carried forward to Balance Sheet
(3,761.53) (774.39) 1,603.78 823.26 303.00 (3,787.27)
The accompanying significant accounting policies and notes are integral part of this statement. For details, please refer to the chapter titled “Financial Statement” on page 155.
13
GENERAL INFORMATION
This Issue is being made pursuant to a resolution passed under Section 81(1) of the Act by the Board of Directors of the Company at its meeting held on February 23, 2009. At the aforementioned meeting, the Board has declared the rights entitlement as 1 Rights Equity Share for every 1 fully paid up Equity Share held on the Record Date. The Board has also constituted a Committee of Directors and delegated powers to the Committee to finalise the other terms of the issue. The Rights Issue Committee has, in its meeting held on [●], determined the Issue price as Rs. [●] per Equity Share. Registered and Corporate Office of the Company:
Peninsula Spenta Mathuradas Mills Compound Senapati Bapat Marg Lower Parel Mumbai 400 013 Maharashtra.
Registration Number: 11-90643. Corporate Identification Number: U 52322 MH 1995 PLC 090643. Registrar of Companies: Everest House 100 Marine Drive Mumbai 400 002 Maharashtra. The Equity Shares of the Company were listed on the BSE and NSE with effect from March 24, 2005 and December 3, 2007 respectively. Board of Directors
Name and Designation Age
Director
Identificati
on Number
Address
Ms. Urvi A. Piramal Non executive Chairperson (Non independent Director)
56 00044954 61A Piramal House, Pochakhanawala Road, Worli, Mumbai 400 025.
Mr. Harshvardhan A. Piramal Executive Vice Chairman (Non independent Director)
35 00044972 61A Piramal House, Pochakhanawala Road, Worli, Mumbai 400 025.
Mr. P. K. Gothi Managing Director (Non independent Director)
59 00046304 102, Ashok House, Plot 102, Beach House CHS, Gandhi Gram Road, Juhu, Vile Parle (W), Mumbai 400 049.
Mr. Aditya Mangaldas (Independent Director)
45 00032233 12 Ocean View, 100 Bhulabhai Desai Road, Mumbai 400 026.
Mr. Mahesh Gupta Non Executive Director (Non independent Director)
52 00046810 402 Ashok House, Beach House CHS, Gandhigram Road Juhu, Mumbai 400 049.
Mr. Pradipta Mohapatra (Independent Director)
59 00066239 Old No.11, ABM Avenue, Chennai 600 028.
Mr. Ranjan Sanghi 64 00275842 21, Mistri Court, 4th Floor,
14
Name and Designation Age
Director
Identificati
on Number
Address
(Independent Director) Dinshaw Vaccha Road, Mumbai 400 020.
Mr. Shailesh Haribhakti as alternate director to Mr. Takao Yajima (Independent Director)
53 00007347 Flat No. 228, ‘B’Wing, Kalpataru Habitat, 22nd Floor, Dr. S.S. Rao Road, Parel, Mumbai 400 012.
Mr. Shobhan Thakore (Independent director)
61 00031788 509, Cumbala Crest, 42-A, G. Deshmukh Marg, Mumbai 400 026
Mr. Takao Yajima (Independent Director)
49 01870785 6-5-19 Ooizumimachi, Nerima-ku, Tokyo, Japan
For more details regarding our Directors, please refer to the chapter titled “Management” beginning on page 81 of this Draft Letter of Offer. Company Secretary and Compliance Officer
Mr. S.C. Kashimpuria Morarjee Textiles Limited Peninsula Spenta Mathuradas Mills Compound Senapati Bapat Marg Lower Parel Mumbai 400 013 Maharashtra. Tel: + 91 22 6615 4651 / 53 Fax: + 91 22 6615 4593 Email: [email protected] Website: www.morarjeetextiles.com Investors may contact the Compliance Officer in case of any pre issue / post issue related problems such as non receipt of Abridged Letter of Offer / Letter of Allotment / share certificate(s) / refund orders.
Bankers to the Company
Allahabad Bank Industrial Finance Branch 2nd Floor, Allahabad Bank Building 37, Mumbai Samachar Marg Fort , Mumbai 400 023. Tel: + 91 22 2270 2745 / 46 / 47 Fax: + 91 22 2270 2733 / 35 Email:[email protected] Contact Person: Mr. C. Pushpa Raju
Axis Bank Limited Universal Insurance Bldg., Sir P M Road, Fort, Mumbai 400 001 Tel: + 91 22 6610 7265 Fax: + 91 22 6610 7293 Email:[email protected] / [email protected] Contact Person: Mr. Rajesh Khandelwal / Mr. Viraj Vaidya
Export-Import Bank of India
Centre One Building, Floor 21 World Trade Centre Complex Cuffe Parade, Mumbai 400 005 Tel: + 91 22 2218 5272 Fax: + 91 22 2218 8076 / 2217 3238 Email: [email protected] Contact Person: Mr. Mukul Sarkar Lead Manager to the Issue
15
Enam Securities Private Limited 801, Dalamal Towers Nariman Point Mumbai 400 021
Tel: +91 22 6638 1800 Fax +91 22 2284 6824 Contact person: Mr. Anurag Byas Email: [email protected] Website: www.enam.com Investor grievances email: [email protected] SEBI Registration Number: INM000006856 Enam Securities Private Limited shall be responsible for and shall coordinate the following activities in relation to this Issue:
No Activities
1. Capital structuring with the relative components and formalities such as composition of debt and equity, type of instruments.
2. Drafting and Design of the offer document and of advertisement / publicity material including newspaper advertisements and brochure/memorandum containing salient features of the offer document. To ensure compliance with the SEBI DIP Guidelines and other stipulated requirements and completion of prescribed formalities with Stock Exchange and SEBI.
3. Retail/Non-institutional marketing strategy which will cover, inter alia, preparation of publicity budget, arrangements for selection of (i) ad-media, (ii) bankers to the issue, (iii) collection centres (iv) distribution of publicity and issue material including composite application form and the abridged letter of offer and the draft letter of offer to the extent applicable.
4. Institutional marketing strategy to the extent applicable.
5. Selection of various agencies connected with the issue, namely Registrars to the Issue, Printers, and Advertisement agencies.
6. Follow-up with bankers to the issue to get quick estimates of collection and advising the issuer about closure of the issue, based on the correct figures.
7. The post-issue activities will involve essential follow-up steps, which must include finalisation of basis of allotment / weeding out of multiple applications, listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as registrars to the issue, bankers to the issue, and bank handling refund business. Even if many of these post-issue activities would be handled by other intermediaries, the Lead Manager shall be responsible for ensuring that these agencies fulfill their functions and enable him to discharge this responsibility through suitable agreements with the Issuer Company.
Legal Advisor to the Issue AZB & Partners
23rd Floor Express Towers Nariman Point Mumbai – 400 021 Tel: +91 22 6639 6880 Fax: +91 22 6639 6888 Statutory Auditors of the Company Shah & Co.
Chartered Accountants Maker Bhavan No. 2
16
18, New Marine Lines, Mumbai 400 020 Tel:+ 91 22 6633 3558 Fax: + 91 22 5633 3561 / 2203 7935 Email: [email protected] Bankers to the Issue [●] Registrar & Transfer Agents
Registrar to the Issue
Registrar and Transfer Agent to the Company
Link Intime India Private Limited
C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup ( West) Mumbai 400 078 Tel.: +91 22 2596 0320 Fax: +91 22 2596 0328/29 Contact Person: Mr. Pravin Kasare Email: [email protected] Website: www.linkintime.co.in SEBI Registration Number: INR 000003761
Freedom Registry Limited*
008, Ground Floor Peninsula Centre Dr. S.S. Rao Road Parel, Mumbai 400 012 Tel: + 91 22 2410 5685 Fax: + 91 22 6661 8788 Contact Person: Mr. Sanjay Kalgutkar Email: [email protected] SEBI Registration Number: INR 000003563
*The name of Freedom Registry Limited was changed from Amtrac Management Services Limited with effect from April 16, 2009.
Note: Investors are advised to contact the Registrar to the Issue in case of any pre issue / post issue related problems such as non receipt of Abridged Letter of Offer / Letter of Allotment / share certificate(s) / refund orders.
Monitoring Agency
A monitoring agency is not required to be appointed in terms of Clause 8.17 of the SEBI DIP Guidelines. The Board of Directors of our Company will monitor the use of the proceeds of this Issue.
Credit rating
This being an issue of equity shares, no credit rating is required.
Impersonation
As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of sub-
section (1) of section 68A of the Act which is reproduced below:
“Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any
shares therein, or otherwise induces a Company to allot, or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five
years” Underwriting
Our Company does not intend to enter into any underwriting arrangement in relation to the Issue.
Minimum Subscription
If the Company does not receive the minimum subscription of 90% of the Issue amount, the Company shall forthwith refund the entire subscription amount received within 15 days from the date of closure of the Issue. If
17
there is a delay beyond eight days after the date from which the Company becomes liable to pay the amount, the Company shall pay interest for the delayed period as prescribed under Section 73 of the Act. The Promoter and members of the Promoter Group holding Equity Shares have undertaken to fully subscribe for their rights entitlement under the Issue. They reserve the right to subscribe for their rights entitlement either by themselves and/ or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any member of the Promoter Group to another member of the Promoter Group. The Issue will become undersubscribed if after considering the number of Equity Shares applied as per the Rights Entitlement plus additional Equity Shares, minimum subscription is not achieved. In the event of undersubscription, our Promoter and members of our Promoter Group (together hereinafter referred to as “Promoters” in this clause) intend to apply for additional Equity Shares of the Company in addition to their rights entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining any approvals required under applicable law, to ensure that at least 90% of the Issue is subscribed. Such subscription for Equity Shares over the Promoter’s rights entitlement, if allotted, may result in an increase in its percentage shareholding above its current percentage shareholding. Further, such acquisition of additional Equity Shares of the Company shall (i) not result in a change of control of the management of the Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the chapter on “Objects of the Issue” beginning on page 31 of this Draft Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of Allotments to such Promoters, in this Issue, the shareholding of such Promoters in the Company exceeds their current shareholding. Such Promoters intend/s to subscribe to such unsubscribed portion as per the relevant provisions of the law. Allotment to such Promoters of any unsubscribed portion, over and above their entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements. The above is subject to the terms mentioned in the section titled “Basis of Allotment” in the chapter titled “Terms and Procedure of the Issue” beginning on page 214 of this Draft Letter of Offer.
Issue Schedule
Issue Opening Date: [●]
Last date for receiving requests for split forms: [●]
Issue Closing Date: [●]
Debenture Trustee
No debenture trustee has been appointed for this Issue as it is not applicable for the Issue.
18
CAPITAL STRUCTURE
The authorized Share capital of the Company is Rs. 53,00,00,000 divided into 4,30,00,000 Equity Shares of Rs. 10/- each and 10,00,000 5% redeemable cumulative non convertible preference shares of Rs. 100 each.
Aggregate
nominal value
(In Rs. lakhs)
Aggregate
Value at
Issue Price
(In Rs.
Lakhs)
Authorized share capital*
4,30,00,000 Equity Shares of Rs. 10 each 4,300.00
10,00,000 5% redeemable cumulative non convertible preference shares of Rs. 100/- each.
1,000.00
Total 5,300.00
Issued, subscribed and paid-up capital
1,81,69,463 Equity Shares of Rs. 10 each fully paid-up 1,816.95
10,00,000 5% redeemable cumulative non convertible Preference Shares of Rs. 100/- each
1,000.00
Total 2,816.95
Present Issue being offered to the Equity Shareholders through the Letter of Offer
[●] Equity Shares of Rs. 10 each at a premium of Rs. [●] i.e. at a price of Rs.[●]
[●] [●]
Paid up capital after the Issue
[●] Equity Shares of Rs. 10 each fully paid up [●]
10,00,000 5% redeemable cumulative non convertible preference shares of Rs. 100/- each.
1000.00
Share premium account
Existing share premium account 3353.80
Share premium account after the Rights Issue assuming allotment of all Equity Shares offered
[●]
*The authorized share capital of the Company was increased from Rs. 50,00,00,000 to Rs. 53,00,00,000 by a Special Resolution passed at the Extra Ordinary General Meeting of the shareholders held on June 17, 2004.
The Company had, in 2006, issued 51,91,275 detachable warrants (along with Equity Shares), representing an entitlement to 51,91,275 Equity Shares, pursuant to its rights issue. The warrants are convertible into an equal number of Equity Shares at a conversion price of Rs. 100 per warrant. Out of the 51,91,275 warrants issued, 26,08,711 warrants were issued to the Promoter and the Promoter Group and 25,82,564 warrants were issued to non Promoter Group entities. These warrants are currently outstanding and can be exercised up to November 2, 2009. The Promoter and Promoter Group entities holding warrants have provided an undertaking to the Company that they will not exercise their right of conversion, thereby applying for conversion of the warrants currently held by them, till the time the validity of such warrants expire, nor will they, in any way, do any such act which will result in the transfer of these warrants or acquisition of any additional warrants. Details of the increase in authorized Share Capital since incorporation
Equity Shares (Rs.)
Preference shares (Rs.)
Total (Rs.)
EGM/AGM Date of AGM/EGM
20,00,00,000 - 20,00,00,000 On incorporation July 14, 1995
30,00,00,000 - 30,00,00,000 EGM October 12, 1996
32,00,00,000 - 32,00,00,000 EGM November 10, 1997
40,00,00,000 - 40,00,00,000 EGM December 11, 1998
40,00,00,000 10,00,00,000 50,00,00,000 EGM October 14, 1999
43,00,00,000 10,00,00,000 53,00,00,000 EGM June 17, 2004
Notes to Capital Structure:
1. Build up of Equity Share Capital
19
Date of
allotment /
buy back
No. of Equity
Shares
Allotted /
(Bought back)
Face
Value
(Rs.)
Issue
Price
(Rs.)
Cumulative
paid-up
capital (Rs.)
Cumulative
share
premium
(Rs.)
Consideration Remarks
July 14, 1995
20 10 10 200 - Cash Initial subscription to Memorandum of Association
July 25, 1995
30 10 10 500 - Cash Further issue of shares
February 9, 1998
1,99,99,950 10 10 20,00,00,000 - Cash Further issue of shares
March 12, 1998
54,70,000 10 10 25,47,00,000 - Cash Further issue of shares
May 13, 1999
45,30,000 10 10 30,00,00,000 - Cash Further issue of shares
March 5, 2001
28,76,000 10 10 32,87,60,000 - Cash Further issue of shares
June 29, 2004
1,00,00,000 10 15.5 42,87,60,000 5,50,00,000 Cash Further issue of shares
September 20, 2004
(3,24,93,450)
10 NA 10,38,25,500 Nil* Cash Buy back and Reduction of Equity Shares pursuant to restructuring scheme during September 2004.* Please refer note 3 below
November 3, 2006
77,86,913 10 55 18,16,94,630 35,04,11,085 Cash Issue of shares pursuant to the rights issue undertaken by the Company pursuant to the letter of offer, dated August 24, 2006
* Pursuant to the restructuring, the carried forward losses of Rs.3,813.53 lakhs as of March 31, 2004 was set off against (a) the reduction of share capital of Rs.3,216.85 lakhs (net of consideration) and (b) the share premium of Rs.550 lakhs leaving balance loss of Rs. 46.68 lakhs. For further details, please refer to note 3 below.
Except for issuance of equity shares under the scheme of arrangement/buy back as listed in the table above, our Company has not issued Equity Shares for consideration other than cash. We have not issued any shares out of revaluation reserve.
2. Details of Share Premium Account prior to the Issue
FY Particulars Number of
Equity Shares
Premium
per Equity
Share (Rs.)
Amount (Rs.) Cumulative
Amount (Rs.)
2004-05 Further issue of Equity Shares
1,00,00,000 5.5 5,50,00,000 5,50,00,000
2004-05 Pursuant to the restructuring, the carried forward losses of Rs. 3813.5 lakhs as of March 31, 2004 was set off against (a) the reduction of share capital of Rs. 3,216.8 lakhs (net of consideration) and
(3,24,93,450) NA (5,50,00,000) Nil
20
FY Particulars Number of
Equity Shares
Premium
per Equity
Share (Rs.)
Amount (Rs.) Cumulative
Amount (Rs.)
(b) the share premium of Rs. 550 lakhs leaving balance loss of Rs.46.7 lakhs. For further details, please refer to note 3 below.
2006-07 Issue of shares pursuant to the rights issue undertaken by the Company pursuant to the letter of offer, dated August 24, 2006
77,86,913 45 35,04,11,085 35,04,11,085
2006-07 Payment of expenses towards rights issue
NA NA (1,50,30,980) 33,53,80,105
3. Details of Equity Shares Bought Back
Buy-back of Equity Shares of the Company of face value Rs. 10 each.
Time Period No. of Shares Average Price (In Rs.) Total Amount
(In Rs. lakhs)
September 2004 3,24,93,450 0.10 32.5
With a view to rationalize the financial structure of the Company, during the year ended March 31, 2005, 1,00,00,000 equity shares of Rs.10/- each have been issued and allotted at a premium of Rs.5.50 per share, whereby the paid up Equity Share capital of the Company has increased by Rs.1,000.00 lakhs and share premium account credited by Rs.550.00 lakhs. For this purpose the authorized Share capital has been increased from Rs. 5,000.00 lakhs to Rs. 5,300.00 lakhs. The terms of the 10,00,000 redeemable cumulative non convertible preference shares of Rs.100 each have also been modified by revising the rate of dividend from 11.25% to 5% and extending the redemption period by making the preference shares redeemable any time after November 15, 2014 but before November 15, 2019. In view of the modification of rights attached to preference shares, the said shares shall be non cumulative up to June 30, 2004 and shall carry cumulative dividend of 5% per annum with effect from July 01, 2004. The advance against equity of Rs. 2,875.00 lakhs has been settled by making payment of Rs. 1,550.00 lakhs and the balance Rs. 1,325.00 lakhs has been cancelled and transferred to general reserve. In continuation of the exercise to rationalize the company’s financial structure, the Board of Directors had formulated a scheme under section 391 and section 100 read with section 78 of the Act for purchase by the Company of its own Equity Shares from the Company’s shareholders at minimal token consideration of 10 paisa per share and then cancellation of such purchased shares resulting in reduction of Equity Share capital and the amount in share premium account of the Company correspondingly setting off the Company’s accumulated losses. The equity shareholders of the Company had offered for purchase by the Company 3,24,93,450 equity shares. The scheme has been sanctioned by the Bombay High Court and upon giving effect to the scheme, (a) the Equity Share Capital of the Company Rs. 4,287.60 lakhs stands reduced by Rs. 3,249.34 lakhs to Rs.1,038.26 lakhs. The carried forward losses of Rs. 3,813.53 lakhs as at March 31, 2004 stands set off against (a) the reduction of share capital of Rs.3,216.85 lakhs (net of consideration) and (b) the share premium of Rs.550.00 lakhs leaving balance loss of Rs.46.68 lakhs. For more details refer to “History of our Company and other Corporate Matters” beginning on page 66 of this Draft Letter of Offer.
4. Current shareholding pattern of the Company as on April 17, 2009
21
Shareholders No. of
Equity
Shares held
pre-Issue
% of pre-
Issue
capital
No. of Equity
Shares post
Rights Issue
% of post Issue
capital
assuming
allotment of all
Equity Shares
offered*
No. of
Equity
Shares
post Issue
and post
exercise of
Warrants
% of post
Issue
capital,
post
exercising
warrants*
I. PROMOTER
AND
PROMOTER
GROUP **
94,57,813 52.05 1,89,15,626 52.05 1,89,15,62
6 [●]
1.Indian
Promoters
a) Individuals:
Ms. Urvi A. Piramal
24,783 0.14 49,566 0.14 49,566 [●]
b) Promoter
Group (Individuals)
Mr. Harshvardhan A. Piramal
8,261 0.05 16,522 0.05 16,522 [●]
Mr. Rajeev A. Piramal
8,261 0.05 16,522 0.05 16,522 [●]
Mr. Nandan A. Piramal
8,261 0.05 16,522 0.05 16,522 [●]
Mr. Jaydev Mody
428 0.00 856 0.00 856 [●]
Ms. Kalpana Singhania
5,419 0.03 10,838 0.03 10,838 [●]
c) Indian
Promoters –
Corporate
Bodies
Topstar Mercantile Private Limited
23,61,716 13.00 47,23,432 13.00 47,23,432 [●]
d) Trusts
Ashok Piramal Group Textiles Trust (through its trustee Ms. Urvi A. Piramal)
62,84,687 34.59 1,25,69,374 34.59 1,25,69,374
[●]
Morarjee Goculdas Spinning and Weaving Company Limited Senior Employee Option Scheme (through its trustees Ms.
7,55,997 4.16 15,11,994 4.16 15,11,994 [●]
22
Shareholders No. of
Equity
Shares held
pre-Issue
% of pre-
Issue
capital
No. of Equity
Shares post
Rights Issue
% of post Issue
capital
assuming
allotment of all
Equity Shares
offered*
No. of
Equity
Shares
post Issue
and post
exercise of
Warrants
% of post
Issue
capital,
post
exercising
warrants*
Urvi A. Piramal, Mr. Shobhan Thakore and Mr. Mahesh Gupta)
2. Foreign
Promoters.
- - - - - -
3. Persons
acting in
concert
- - - - - -
II. NON PROMOTER
HOLDING
87,11,650 47.95 1,74,23,300 47.95 [●] [●]
1. Institutional
Investors
a) Mutual Funds and UTI
2,711 0.01 5,422 0.01 [●] [●]
b) Banks, Financial Institutions/ Insurance Companies
20,23,032 11.13 40,46,064 11.13 [●] [●]
c) FIIs 1,135 0.01 2,270 0.01 [●] [●]
2. Others
a) Corporate Bodies
13,57,525 7.47 2,71,50,50 7.47 [●] [●]
b) Indian Public 51,95,977 28.59 1,03,91,954 28.59 [●] [●]
c) NRIs/ OCBs/ NDCs
1,31,270 0.72 2,62,540 0.72 [●] [●]
TOTAL 1,81,69,463 100 3,63,38,926 100 [●] [●]
*Assuming all shareholders apply for and are allotted Equity Shares. ** The Company had, in 2006, issued 51,91,275 detachable warrants (along with Equity Shares), representing an entitlement to 51,91,275 Equity Shares, pursuant to its rights issue. The warrants are convertible into an equal number of Equity Shares at a conversion price of Rs. 100 per warrant. Out of the 51,91,275 warrants issued, 26,08,711 warrants were issued to the Promoter and the Promoter Group and 25,82,564 warrants were issued to non Promoter Group entities. These warrants are
currently outstanding and can be exercised up to November 2, 2009. The Promoter and Promoter Group entities holding warrants have provided an undertaking to the Company that they will not exercise their right of conversion, thereby applying for conversion of the warrants currently held by them, till the time the validity of such warrants expire, nor will they, in any way, do any such act which will result in the transfer of these warrants or acquisition of any additional warrants. Pursuant to this undertaking, the number of Equity Shares held by the Promoter and the Promoter Group will not change due to any conversion of warrants.
The Promoter and members of the Promoter Group holding Equity Shares have undertaken to fully subscribe for their rights entitlement under the Issue. They reserve the right to subscribe for their rights entitlement either by themselves and/ or through one or more entities controlled by them, including by subscribing for Equity
23
Shares pursuant to any renunciation made by any member of the Promoter Group to another member of the Promoter Group. The Issue will become undersubscribed if after considering the number of Equity Shares applied as per the Rights Entitlement plus additional Equity Shares, minimum subscription is not achieved. In the event of undersubscription, our Promoter and members of our Promoter Group (together hereinafter referred to as “Promoters” in this clause) intend to apply for additional Equity Shares of the Company in addition to their rights entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining any approvals required under applicable law, to ensure that at least 90% of the Issue is subscribed. Such subscription for Equity Shares over the Promoter’s rights entitlement, if allotted, may result in an increase in its percentage shareholding above its current percentage shareholding. Further, such acquisition of additional Equity Shares of the Company shall (i) not result in a change of control of the management of the Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section on “Objects of the Issue” of this Draft Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of allotments to the Promoters in this Issue, the Promoters’ shareholding in the Company exceeds their shareholding. The Promoters shall subscribe to such unsubscribed portion in the Issue as per the relevant provisions of law. Allotment to the Promoters of any unsubscribed portion in the Issue, over and above their entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements. The above is subject to the terms mentioned in the section titled “Basis of Allotment” in the chapter titled “Terms and Procedure of the Issue” beginning on page 214 of this Draft Letter of Offer. 5. Details of the shareholding of the Promoter, Promoter Group,
and our Directors in the Company as on the date of this Draft Letter of Offer.
Name of entities No. of Shares Percentage of
shareholding
(a) Promoter*
Ms. Urvi A. Piramal 24,783 0.14
Sub total (a) 24,783 0.14
(b) Promoter Group (Individuals)*
Mr. Harshvardhan A. Piramal 8,261 0.05
Mr. Rajeev A. Piramal 8,261 0.05
Mr. Nandan A. Piramal 8,261 0.05
Mr. Jaydev Mody 428 0.00
Ms. Kalpana Singhania 5,419 0.03
Sub total (b) 30,630 0.18
(c) Promoter Group (Body Corporates)*
Topstar Mercantile Private Limited 2,361,716 13.00
Sub total (c) 2,361,716 13.00
(d) Promoter Group( Others)*
Morarjee Goculdas Spinning & Weaving Company Limited Senior Employees Stock Option Scheme (through its trustees Ms. Urvi A. Piramal, Mr. Shobhan Thakore and Mr. Mahesh Gupta)
7,55,997 4.16
Ashok Piramal Group Textiles Trust (through its trustee, Ms Urvi A. Piramal)
62,84,687 34.59
Sub total (d) 70,40,684 38.75
24
Name of entities No. of Shares Percentage of
shareholding
Total Promoter and Promoter Group
shareholding (a+ b+ c+d )*
94,57,813 52.05
(e) Directors
Ms. Urvi Piramal
24,783
0.14
Mr. Harshvardhan A. Piramal 8,261 0.05
Mr. P.K. Gothi jointly with Ms. Bhakti Gothi 4214 0.02
Ms. Bhakti Gothi jointly with Mr. P.K. Gothi 4570 0.03
Ms. Sunita Gupta jointly with Mr. Mahesh Gupta
58,000
0.32
Mr. Ranjan Sanghi jointly with Ms. Jayashree Sanghi
1,692 0.01
Mr. Vishnubhai Bhagwandas Haribhakti jointly with Mr. Shailesh Haribhakti
2 0.00
Sub total (e) 1,01,522 0.57
* The Company had, in 2006, issued 51,91,275 detachable warrants (along with Equity Shares), representing an entitlement to 51,91,275 Equity Shares, pursuant to its rights issue. The warrants are convertible into an equal number of Equity Shares at a conversion price of Rs. 100 per warrant. Out of the 51,91,275 warrants issued, 26,08,711 warrants were issued to the Promoter and the Promoter Group and 25,82,564 warrants were issued to non Promoter Group entities. These warrants are currently outstanding and can be exercised up to November 2, 2009. The Promoter and Promoter Group entities holding warrants have provided an undertaking to the Company that they will not exercise their right of conversion, thereby applying for conversion of the warrants currently held by them, till the time the validity of such warrants expire, nor will they, in any way, do any such act which will result in the transfer of these warrants or acquisition of any additional warrants. Pursuant to this undertaking, the number of Equity Shares held by the Promoter and the Promoter Group will not change due to any conversion of warrants.
6. Details of acquisition by our Promoter
Details of the acquisition of Equity Shares by Ms. Urvi A. Piramal are set out below:
Date of
Acquisition
No. of
shares
Face
Value (Rs.)
Issue
Price (Rs.)
Cumulative
Share Capital
Consideration
(Rs.)
Remarks
April 9, 2005
289 10 N.A. 289 Nil Pursuant to a scheme of arrangement, the shareholders of PLL were allotted shares of Morarjee Textiles Limited. By virtue of the aforesaid scheme the shareholders of PLL were allotted Equity Shares in the ratio of 10:21, accordingly the Promoter was allotted 289 Equity Shares
03.11.2006 216 10 55 505 11,880 Rights Issue
16.08.2007 190 10 N.A. 695 Nil Acquired by way of Gift from Mr. Ajay G. Piramal jointly with Ms. Swati A. Piramal
24088 10 N.A. 24783 Nil Acquired by way of Gift from Ms. Nandini A. Piramal
25
Total 24783 11880
7. Details of the transactions in Equity Shares by the Promoter and the Promoter Group during the last
six months
7 (a) Details of the transactions in Equity Shares by the Promoter and the Promoter Group during the last six months Pursuant to an order of the High Court of Bombay dated February 6, 2009 sanctioning a scheme of merger, Newone Trading Company Private Limited (“Newone”), Topflag Trading Company Private Limited (“Topflag”) and Goldflag Mercantile Company Private Limited (“Goldflag”) (collectively the “Transferor Companies”) were merged into Omega Multitrade Private Limited. At the time of the High Court order, Newone held 20,94,895 Equity Shares, Topflag held 20,94,896 Equity Shares and Goldflag held 20,94,896 Equity Shares, aggregating to 62,84,687 Equity Shares, Prior to the coming into effect of the merger, that is, March 6, 2009, the Transferor Companies transferred the 62,84,687 Equity Shares held by them (through an off market transfer) to Ashok Piramal Group Textiles Trust on March 2, 2009 for a total consideration of Rs. 86,540,140. Thereafter, the said proceeds were transferred to Omega Multitrade Private Limited, pursuant to the scheme of merger coming into effect. Through a merger order passed by the High Court of Bombay dated December 12, 2008, Bigdeal Mercantile Private Limited (“Bigdeal”) one of our erstwhile promoter group companies, (which held 23,61,716 Equity Shares) along with Newzone Mercantile Company Private Limited, Alltime Mercantile Company Private Limited and Superplaza Mercantile Company Private Limited merged into Topstar Mercantile Private Limited. Pursuant to the scheme of merger, which came into effect from January 27, 2009, the 23,61,716 Equity Shares held by Bigdeal stand transferred in the name of Topstar Mercantile Private Limited on February 19, 2009. 7 (b) There are no transaction in shares by the Directors of the Company in the last six months.
8. Top ten shareholders
The top ten shareholders of the Company as on the date of this Draft Letter of Offer:
Name of the shareholders Total Shares Percentage of pre issue
capital
Ashok Piramal Group Textiles Trust through its trustee Ms Urvi A. Piramal
62,84,687 34.59
Topstar Mercantile Private Limited 23,61,716 13.00
Life Insurance Corporation of India 16,44,769 9.05
Mr. Bharat Jayantilal Patel 7,74,080 4.26
Morarjee Goculdas Spinning & Weaving Company Limited Senior Employees Stock Option Scheme (through its trustees Ms. Urvi A. Piramal, Mr. Shobhan Thakore and Mr. Mahesh Gupta) 7,55,997 4.16
Blossom Mercantile Private Limited 6,17,651 3.40
The Oriental Insurance Company Limited 2,93,314 1.61
Mr. Hardik Bharat Patel 2,70,000 1.49
Mr. Hitesh Ramji Javeri 2,00,101 1.10
26
Name of the shareholders Total Shares Percentage of pre issue
capital
Religare Finvest Limited 1,77,100 0.97
Total 1,33,79,415 73.63
The top ten shareholders of the Company as on April 10, 2009 is as follows:
Name of the shareholders Total Shares Percentage of pre issue
capital
Ashok Piramal Group Textiles Trust through its trustee Ms Urvi A. Piramal
62,84,687 34.59
Topstar Mercantile Private Limited 23,61,716 13.00
Life Insurance Corporation of India 16,44,972 9.05
Mr. Bharat Jayantilal Patel 7,74,080 4.26
Morarjee Goculdas Spinning & Weaving Company Limited Senior Employees Stock Option Scheme (through its trustees Ms. Urvi A. Piramal, Mr. Shobhan Thakore and Mr. Mahesh Gupta) 7,55,997 4.16
Blossom Mercantile Private Limited 6,17,651 3.40
The Oriental Insurance Company Limited 2,93,314 1.61
Mr. Hardik Bharat Patel 2,70,000 1.49
Mr. Hitesh Ramji Javeri 2,00,101 1.10
Religare Finvest Limited 1,77,550 0.98
Total 1,33,80,068 73.64
The top ten shareholders of the Company on April 20, 2007 are as follows:
Name of the shareholders Total Shares Percentage of pre issue
capital
PEL Holdings Private Limited 23,61,716 13.00
Newone Trading Company Private Limited 20,02,548 11.02
Goldflag Mercantile Company Private Limited 20,02,547 11.02
Topflag Trading Company Private Limited 20,02,547 11.02
Life Insurance Corporation Of India 16,44,972 9.05
Morarjee Goculdas Spinning & Weaving Company Limited Senior Employees Stock Option
7,55,997 4.16
27
Name of the shareholders Total Shares Percentage of pre issue
capital
Scheme (through its trustees Ms. Urvi A. Piramal, Mr. Shobhan Thakore and Mr. Mahesh Gupta)
Alankrita Finance & Investments Private Limited 6,17,651 3.40
Mr. Bharat Jayantilal Patel 6,13,939 3.38
Mr. Ruchit Bharat Patel 5,33,834 2.94
The Oriental Insurance Company Limited 2,93,314 1.61
Total 1,28,29,065 70.60
9. The total number of members of the Company as on April 20, 2009 was 19,182. 10. The present Issue being a rights Issue, as per extant SEBI DIP Guidelines, the requirement of
promoters’ contribution and lock-in are not applicable. 11. The Company has not availed of “bridge loans” to be repaid from the proceeds of the Issue for
incurring expenditure on the Objects of the Issue. 12. The Company, the Directors, the Promoter, the members of the Promoter Group, their respective
directors and the Lead Manager of the Issue have not entered into any buy-back, standby or similar arrangements for the purchase of Equity Shares.
13. The Company undertook a rights issue in 2006, pursuant to which 77,86,913 Equity Shares at Rs. 55
per Equity Share and 51,91,275 detachable warrants were issued on a rights basis. The detachable warrants were convertible into one Equity Share per warrant at a conversion price of Rs.100 per warrant. The issue closed on October 10, 2006 and the Equity Shares and the warrants were issued and allotted on November 3, 2006. The Equity Shares and the detachable warrants were listed on the BSE on November 10, 2006. On December 3, 2007 and on February 7, 2008, all the Equity Shares and the warrants respectively of the Company were listed on the NSE.
14. At any given time, there shall be only one denomination of the Equity Shares of the Company and the
Company shall comply with such disclosure and accounting norms specified by SEBI from time to time. Apart from 51,91,275 detachable warrants outstanding, the Equity Shareholders of the Company do not hold any option or convertible loan or debenture, which would entitle them to acquire further shares in the Company, As on the date of filing this Draft Letter of Offer, the Equity Shares are fully paid up and there are no partly paid up Equity Shares.
15. The Company has not issued any Equity Shares out of revaluation reserves. 16. As on the date of this Draft Letter of Offer, no shares of the Company have been pledged by the
Promoter or the Promoter Group. 17. Neither the Company nor the Promoter shall make any payments, direct or indirect, such as discounts,
commissions, allowances or otherwise under the Issue. 18. There are certain restrictive covenants in the loan agreements entered into by the Company with certain
lenders for short term and long term borrowing. For further details, please refer to the chapter titled “Financial Indebtedness” beginning on page 58 of this Draft Letter of Offer.
19. There has been no allotment of Equity Shares for consideration other than cash. 20. There are currently 51,91,275 outstanding warrants issued by the Company. The Promoter and
Promoter Group entities holding warrants have provided an undertaking to the Company that they will
28
not exercise their right of conversion, thereby applying for conversion of the warrants currently held by them, till the time the validity of such warrants expire, nor will they, in any way, do any such act which will result in the transfer of these warrants or acquisition of any additional warrants. Therefore, except for the possible conversion of 25,82,564 warrants held by non Promoter and non Promoter Group individuals, no further issue of capital by way of issue of bonus shares, preferential allotment, rights issue or public issue or in any other manner which will affect the equity capital of the Company, shall be made during the period commencing from the filing of this Draft Letter of Offer with the SEBI and the date on which the Rights Equity Shares issued under the Letter of Offer are listed or application moneys are refunded on account of the failure of the Issue. Further, presently the Company does not have any intention to alter the equity capital structure by way of split/ consolidation of the denomination of the shares on a preferential basis or issue of bonus or rights or public issue of shares or any other securities within a period of six months from the date of opening of the Issue. Except for allotment of Equity Shares under the ESOS that may vest and be exercised in the next six months or if our Company enters into any acquisition and joint ventures or, if the business needs otherwise arise, subject to necessary approvals, consider raising additional capital to fund such activity or use the Equity Shares as currency for acquisition for participation in such joint ventures.
21. The Issue will remain open for 15 days. However, the Board will have the right to extend the Issue
period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date. 22. The terms of issue to Non-Resident Equity Shareholders/Applicants have been presented under the
section “Terms and Procedure of the Issue” beginning on page 214 of this Draft Letter of Offer. 23. Employee Stock Option Scheme
The disclosures relating to the ESOS are as under:
Description ESOS
Options Granted 1,85,000
Date of Grant October 1, 2006.
Pricing Formula The ESOS provides that the options would normally be granted to the eligible employees at a discount of 20% to the two weeks average market price on the stock exchange on which the shares of the Company are listed a day prior to the date of the meeting of the board in which the options are granted. However, the Board of Directors shall have absolute powers and authority to decide the same from time to time.
The Board of Directors, in its meeting dated
October 16, 2006 has decided to fix the exercise price at Rs. 75. Therefore, with effect from October 1, 2006, the exercise price is Rs. 75 per option.
Options Vested 54,600
Options exercised and total number of Equity Shares arising as a result of exercise of Options
Nil
Options lapsed/cancelled 94,000
Total number of Equity Shares arising as a result of the exercise of the options (assuming vesting of the valid options and exercise of all the valid
91,000
29
Description ESOS
options vested) options
Variations in terms of Options Nil
Money realized by exercise of Options Nil
Total number of Options in force 91,000
Vesting Schedule 25% on more than 1 years but less than 2 years;
35% on more than 2 years but less than 3 years;
40% on completion of 3 years from the offer date to be exercised within 30 days from the expiry of 3 years from the offer date
Option granted to Directors / key managerial personnel
50,000#
Options granted to any employee equal to or exceeding 1% of the issued capital of our Company at the time of grant
Nil
Options granted to any employee equal to or exceeding 5% of the total options granted under the ESOS
Nil
Diluted earning per share (“EPS”) as reported on an unconsolidated basis, pursuant to the issue of Equity Shares on exercise of options
Rs. (12.13) as on December 31, 2008*
Where the Company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options, shall be disclosed. The impact of this difference on profits and on EPS of the Company shall also be disclosed.
Had the Company followed fair value method for accounting the stock option, employee compensation expense would have been higher by R. 0.63 lakhs. Consequently, profit after tax would have been lower by Rs. 0.63 lakhs and the basic and diluted EPS would have been Rs. (12.13) per share. The assumptions used to estimate fair value options include the following: Risk free interest rate - 7.1%, Expected Life - 3 years, Volatility - 7%, Dividend yield - 2.7%, Market price of share at the time of grant of options – Rs. 68.55.
Weighted average exercise prices and weighted average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock.
Weighted average exercise price of options is Rs. 75. Weighted average fair value of options is Rs. 4.20.
Lock in NA
Impact on profits and EPS of the last three years Nil
* As per the auditors report dated March 21, 2009, till date, no options under the ESOS has been exercised by any of the eligible employees. Considering the present market price of the Equity Share of the Company, it is unlikely that the options will be exercised in the future also and accordingly the options granted under the ESOS are not treated as potential Equity
30
Shares as defined in AS-20 “Earnings per share” and thus no impact of dilution on EPS is considered. For further details, please refer to the chapter titled “Financial Statements” beginning on page 155 of this Draft Letter of Offer.
# Granted to Mr. P.K. Gothi
31
OBJECTS OF THE ISSUE
The Company intends to utilize the Issue proceeds, after deducting the Issue management fees and other expenses associated with the Issue (‘Net Proceeds’) for the part repayment of existing loan / debt. The main objects clause of the Memorandum of Association enables the Company to undertake the activities for the end utilization of the existing loan / debt, the part repayment of which, the funds are being raised pursuant to the Issue. The existing activities of the Company are within the ambit of the objects clause of the Memorandum of Association. In case of a shortfall in the Net Proceeds to meet the aforesaid objects of the Issue, we propose to prepay the loan / debt only to the extent of the Net Proceeds raised. Requirement of Funds and Means of Finance The details of the proceeds of the Issue are summarized in the following table:
(Rs. In lakhs)
Description
Amount
Gross proceeds of the Issue [•]
Issue expenses [•]
Net Proceeds [•]
Details of Object of the Issue
1. Repayment of loan
In the usual course of our business we avail debt from various banks, mutual funds, financial institutions and corporates in the form of bank over draft facilities, issuance of debentures, issuance of commercial papers and inter corporate deposits. We intend to utilize the Net Proceeds to repay debt up to [●]. The details of such debt availed by our company and to be repaid out of the Net Proceeds, are provided below
(Rs. in lakhs)
Lender
Facility
Loan documentation
Total
Amount
sanctioned
Total
Amount
disbursed
Total Amount
outstanding as
on April 15,
2009*
Amount to
be repaid
and prepaid
from the
Net
Proceeds
ACT Fininvest Limited#
Inter Corporate Deposit
Demand Promissory Note
Rs. 8,550.00
Rs 6,858.30
Rs. 7,789.00**
[●]
Total
_____________ * By a certificate dated April 16, 2009, TMG Associates, Chartered Accountants has certified the amounts outstanding as
on April 15, 2009. ** The amount outstanding as on April 15, 2009 includes principal outstanding i.e. Rs. 6,858.30 lakhs and overdue interest
i.e. Rs. 930.70 lakhs. # We do not have any relationship with ACT Fininvest Limited, except in the ordinary course of business.
For details of our indebtedness, please refer to the chapter titled “Financial Indebtedness” beginning on page 58. The terms of the aforementioned loan are set out below:
32
Interest Rate 9.5% to 16.5% per annum or such other rate as may be intimated, payable annually
Repayment On demand
Collateral Security Demand Promissory Note
Prepayment By the Borrower by giving 3 days notice No Prepayment Penalty
As on April 15, 2009, the Company had utilized the sum of Rs. 7,789 lakhs, which was raised as debt by the Company from ACT Fininvest Limited. By a certificate dated April 16, 2009, TMG Associates, Chartered Accountants, have certified the amounts outstanding as on April 15, 2009 and have confirmed that the debt raised by the Company has been sanctioned and utilized for operations / working capital purpose. The repayment of debt from the net proceeds will assist the company in reducing its interest burden. 2. Issue Related Expenses The Issue related expenses include, inter alia, issue management fees, printing and distribution expenses, legal fees, advertisement expenses and registrar and depository fees. Expenses related to the Issue will be borne by the Company. The Company intends to utilize approximately Rs. [●] lakhs from the gross proceeds of the Issue towards the Issue expenses.
A detailed breakdown of the Issue expenses is set forth in the table below:
Activity Expense
Estimated
Amount (Rs. in
lakhs)
Percentage of
total Issue
expenses (%)*
Percentage of
total Issue size
(%)*.
Fees of the Lead Manager, Registrar, Bankers to the Issue, Legal Advisors and other professional services
[●] [●] [●]
Advertising, traveling and marketing expenses
[●] [●] [●]
Printing and stationery expenses [●] [●] [●]
Total [●] [●] [●]
*To be finalized at the time of filing the Letter of Offer.
Means of Finance
The Net Proceeds are proposed to be utilized for the part prepayment of the loan set out above.
Interim Use of Net Proceeds
There will not be any interim use of funds as the Company proposes to the part prepay the loan immediately after receiving the Gross Proceeds and deducting Issue expenses from the same.
Monitoring of utilisation of funds As our Issue size is less than Rs. 500 crores, we are not required to appoint a monitoring agency pursuant to Clause 8.17 of the SEBI DIP Guidelines. Our Board will monitor the utilization of the Issue proceeds. As per Clause 49 of the listing agreements with the Stock Exchanges, we shall disclose to the Audit Committee, the uses / applications of funds on a quarterly basis as a part of our quarterly declaration of financial results.
33
Further, we shall, on a quarterly basis, prepare a statement indicating material deviations, if any, in the use of Issue proceeds. Such statement shall be furnished to the Stock Exchanges along with the interim and / or annual financial statements and shall be published in the newspapers simultaneously with the interim or annual financial results, after placing it before our Audit Committee. Other confirmations
No part of the proceeds from the Issue will be paid by us as consideration to our Promoters, our Directors, Promoter Group, relatives or key managerial employees, except in the normal course of our business.
Bridge Loan
We have not raised any bridge loan from any bank or financial institution for any amount as at the date of this Draft Letter of Offer.
34
BASIS FOR ISSUE PRICE
The Issue price of Rs. [●] has been determined by our Company in consultation with the Lead Manager, on the basis of market conditions. Investors should also refer to the chapter titled “Risk Factors” beginning on page ix
and “Financial Statements” beginning on page 155 to get a more informed view before making an investment
decision.
Qualitative Factors
1. Fully integrated textile manufacturing company 2. Cutting-edge design 3. Product Quality 4. Customer Service: 5. Diversified customer base
For details on our qualitative factors, please refer to the section titled “Our Strengths” in the chapter titled “Our Business” beginning on page 46 of this Draft Letter of Offer. Quantitative Factors Information presented in this section is derived from our audited restated standalone and consolidated restated financial statements prepared in accordance with Indian GAAP. Some of the quantitative factors, which form the basis for deciding the price, are as follows: 1. Earnings Per Share (EPS) – Basic and Diluted:
EPS (in Rs.) Year ended
Standalone Consolidated
Weight
March 31, 2006 9.52 8.87 1 March 31, 2007 5.78 8.42 2
March 31, 2008 (12.84) (13.41) 3
Weighted Average (2.91) (2.42) Nine month ended December 31, 2008 (Not Annualised)
(12.13) (16.68)
Note:
• EPS calculations are in accordance with AS 20 “Earnings per Share”.
• The face value of each Equity Share is Rs. 10.
2. Price/Earning (P/E) ratio in relation to Issue Price of Rs. [●] per Equity Share
S. No. Particulars Standalone Consolidated
a. P/E ratio based on diluted EPS for the year ended March 31, 2008:
[•] [•]
b. P/E ratio based on weighted average EPS: [•] [•]
c. Industry P/E* Highest 51.3
Lowest - Industry Composite 8.67
* P/E based on trailing twelve months earnings for the entire Textile Industry Source: Capital Market, Volume XXIV/03 April 6-Apr 19, 2009 (Industry- Textile Products, Textile – Cotton / Blended,
Textile Processing)
3. Return on Net worth (RoNW)
RoNW (%) Year ended
Standalone Consolidated
Weight
March 31, 2006 28.25 28.88 1 March 31, 2007 9.73 12.50 2
March 31, 2008 (40.39) (32.36) 3
Weighted Average (12.24) (7.20)
35
Nine month ended December 31, 2008 (Not Annualised)
(61.36) (67.84)
Note: Net worth as appearing in the restated audited standalone and consolidated summary statement of assets and liabilities for the respective period has been considered for RoNW.
4. Minimum Return on Increased Net Worth Required to Maintain pre-Issue EPS as on December
31, 2008:
Based on EPS of Rs. (12.13) as per standalone financial statements Based on EPS of Rs. (16.68) as per consolidated financial statements Note: Assuming that the Rights Equity Shares offered on a rights basis are fully subscribed.
5. Net Asset Value
NAV (Rs.)
Standalone Consolidated
NAV as at March 31, 2006 33.69 31.84
NAV as at March 31, 2007 44.30 59.21
NAV as at March 31, 2008 31.79 29.65 NAV as at December 31, 2008 19.90 13.25 NAV after the Issue* [●] [●]
Issue Price* [●] [●] * Will be incorporated in the Letter of Offer
NAV per Share = Net worth, as restated, at the end of the period/year (excluding preference share capital)/ Number of equity share outstanding at the end of the period/year The Issue price of Rs. [●] per Equity Share has been determined on the basis of assessment of market conditions and is justified based on the above accounting ratios.
6. Comparison with other listed companies
EPS for fiscal
2008 (Rs.)
P/E RoNW for Fiscal
2008 (%)
NAV for Fiscal 2008
(Rs.)
Arvind Limited 1.4 - 2.3 63.5 Alok Industries Limited 3.2 3.4 16.9 30.90
Gokaldas Exports Limited 15.7 7.9 12.7 131.3 Nahar Spinning Limited 2.9 - 2.3 145.7 Vardhman Textiles Limited 20.5 3.9 10.8 202.9
Morarjee Textiles Limited (13.41)* - (32.36)* (29.65)* * From the consolidated restated financials for FY 2008. Source: Capital Market, Volume XXIV/03 April 6-Apr 19, 2009 (Industry- Textile Products, Textile – Cotton / Blended,
Textile Processing)
The peer group listed companies, as stated above, are engaged in the business of textile processing and products. On the basis of the above qualitative and quantitative parameters, we and the Lead Manager are of the
opinion that the Issue Price of Rs. [•] per Equity Share is justified. For further details, please refer to the chapter titled “Risk Factors” beginning on page ix and the financials of the Company including important profitability and return ratios, as set out in the section “Financial Statements” beginning on page 155.
36
STATEMENT OF TAX BENEFITS
SPECIAL TAX BENEFITS
There are no special tax benefits available to the Company and its shareholders. GENERAL TAX BENEFITS
As per the present provisions of Income-tax Act, 1961 (hereinafter referred to as “the Act”) and other laws as applicable for the time being in force in India, the following tax benefits are available to the company and to the shareholders of the company, subject to fulfillment of prescribed conditions: A. TO THE COMPANY
1. Under Section 32 of the Act, the company is entitled to claim depreciation allowance at the prescribed
rates on all its tangible and intangible assets acquired and put to use for its business. 2. Under Section 10(34) of the Act, dividend income (whether interim or final) received by the company
from any other domestic Company (in which the company has invested) is exempt from tax in the hand of the Company.
3. The income received by the company from distribution made by any mutual fund specified
Under Section 10(23D) of the Act in respect of which tax is paid by such mutual fund u/s. 115R of the Act or from the Administrator of the specified undertaking or from the specified companies referred to in section 10(35) of the Act is exempt from tax in the hands of the Company.
4. Under Section 10(38) of the Act, the Long-term Capital Gains arising on transfer of Long Term
securities, being shares or unit of an equity oriented fund which are chargeable to Securities Transaction Tax, are exempt from tax in the hands of the company. Provided that income by way of long term capital gain of a company shall be taken into account in computing the book profit and income tax payable u/s 115JB
5. As per the provisions of Section 32(2) of the Act, where effect cannot be given either in full to any
depreciation allowance under sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years without any time limit.
6. As per the provisions of Section 72 of the Act, unabsorbed business loss under the head “Profits and
Gains of Business or Profession” can be carried forward and set off against the profits of any business or profession in a subsequent year. The loss cannot be carried forward for more than eight assessment years.
7. As per the provisions of Section 112(1)(b) of the Act, other Long-term Capital Gains arising to the
company are subject to tax at the rate of 20% (plus applicable surcharge and education cess) after considering indexation benefit. However, as per the Proviso to that section, the long-term capital gains resulting from transfer of listed securities or units [not covered by section 10(36) and 10(38) of the Act], are subject to tax at the rate of 20% on long-term capital gains worked out after considering indexation benefit (plus applicable surcharge and education cess), which would be restricted to 10% of long-term capital gains worked out without considering indexation benefit (plus applicable surcharge and education cess).
8. As per the provisions of section 111A of the Act, Short-term Capital Gains arising to the company from
transfer of Equity Shares in any other company through a recognized stock exchange or from sale of units of any equity-oriented mutual fund are subject to tax @ 15% (plus applicable surcharge and education cess), if such a transaction is subjected to Securities Transaction Tax.
37
9. Under Section 115JAA of the Act, the Company shall be eligible for credit in respect of tax paid under section 115JB of the Act. Such a tax credit shall be carried forward and set off in accordance with provisions of Section 115JAA of the Act.
10. In accordance with and subject to the conditions specified in Section 54EC of the Act, the Company
would be entitled to exemption from tax on Long-term Capital Gains [not covered by section 10(36) and section 10(38) of the Act] if such capital gain is invested in any of the long-term specified assets (hereinafter referred to as the “new asset”) to the extent and in the manner prescribed in the said sections. If the new asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains for which exemption is availed earlier would become chargeable to tax as long term capital gains in the year in which such new asset is transferred or converted into money. However, investment made in long term specified asset by assessee during any financial year cannot exceed 50 lacs.
B. TO THE SHAREHOLDERS OF THE COMPANY:
I. RESIDENT SHAREHOLDERS
1. Under Section 10(34) of the Act, dividend (whether interim or final) received from a domestic
company is exempt from tax in the hands of the resident shareholders of the Company. 2. Under Section 10(38) of the Act, the Long-term Capital Gain arising on transfer of securities,
which are chargeable to Securities Transaction Tax, are exempt from tax in the hands of the resident shareholders.
3. As per the provisions of Section 112(1)(a) of the Act, other Long-term Capital Gains arising to the
resident shareholders are subject to tax at the rate of 20% (plus applicable surcharge and education cess). However, as per Proviso to that section, the long-term capital gains resulting from transfer of listed securities or units [not covered by section 10(36) and 10(38) of the Act], are subject to tax at the rate of 20% on long term capital gains after considering the indexation benefit (plus applicable surcharge and education cess, (which would be restricted to 10% of long term capital gains without considering the indexation benefit (plus applicable surcharge and education cess).
4. As per the provisions of section 111A of the Act, Short-term Capital Gains arising to the resident
shareholders from the transfer of Equity Shares in a company through a recognized stock exchange are subject to tax @ 15% (plus applicable surcharge and education cess) if such a transaction is subjected to Securities Transaction Tax.
5. U/s 36(1)(xv) of the Income tax Act STT paid by an assessee in respect of share trading transaction will
be allowed as deduction in computing his business income. 6. In accordance with and subject to the conditions specified in Section 54EC of the Act, the resident
shareholders would be entitled to exemption from tax on Long-term Capital Gains [not covered by section 10(36) and section 10(38) of the Act], if such capital gains are invested in any of the long-term specified assets being bonds (hereinafter referred to as the “new asset”) to the extent and in the manner prescribed in the said sections. However, investments in Long Term specific assets by assessee during any financial year cannot exceed Rs.50 lacs. If the new asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains for which exemption is availed earlier would become chargeable to tax as long term capital gains in the year in which such new asset is transferred or converted into money.
7. In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and subject
to the conditions and to the extent provided in Section 54F of the Act, the shareholder is entitled to exemption from Long-term Capital Gains arising from the sale of shares in the Company [not covered by sections 10(36) and 10(38) of the Act], if the net sales consideration is invested for purchase or construction of a residential house. If part of the net consideration is invested within the prescribed period in a residential house, such gains would not be chargeable to tax on a proportionate basis. If, however, such new residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains for
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which the exemption was availed earlier would taxed as long-term capital gains of the year in which such residential house is transferred.
II. MUTUAL FUNDS
In case of a shareholder being a Mutual fund, as per the provisions of Section 10(23) of the Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992or Regulations made there under, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds authorised by the Reserve Bank of India are exempt from income-tax, subject to the notified conditions.
III. VENTURE CAPITAL COMPANIES / FUNDS
In case of a shareholder being a Venture Capital Company / Fund, any income of Venture Capital Companies / Funds registered with the Securities and Exchange Board of India, are exempt from income-tax, subject to the conditions specified in Section 10(23FB) of the Act.
C. BENEFITS AVAILABLE UNDER THE WEALTH TAX ACT, 1957
‘Asset’ as defined under section 2(ea) of the Wealth Tax Act, 1957, does not include share in companies. Hence, the shares are not liable to Wealth Tax.
D. BENEFITS AVAILABLE UNDER THE GIFT TAX ACT, 1958
Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares will not attract gift tax.
Notes:
1. All the above benefits are as per the current tax law and will be available only to the sale by first named
holder in case the shares are held by joint holders. 2. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further
subject to any benefits available under the Double Taxation Avoidance Agreements (DTAA), if any, between India and the country in which the non-resident has fiscal domicile.
3. In view of the nature of tax consequences, being based on all the facts, in totality, of the investors, each
investor is advised to consult his / her own tax advisor with respect to specific tax consequences of his / her participation in the scheme.
4. The above statements of possible Direct Tax benefit sets out the provision of Law in a summary manner
only and is not a complete analysis or listing of all potential tax consequences of purchase, ownership and disposal of Equity Shares.
5. In view of the individual nature of tax consequences, each investor is advised to consider his / her / its
own case. The tax implications of an investment in the Equity Shares, particularly in view of the fact that certain recently enacted legislations may not have direct legal impact.
For SHAH & CO. CHARTERED ACCOUNTANTS H.N. SHAH PARTNER Membership No.8152 Mumbai: March 21, 2009
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INDUSTRY OVERVIEW
Unless otherwise indicated, all industrial and statistical data relating to the textile industry in India in the
following discussion have been extracted from the Ministry of Textile’s Annual Report (2007-2008) and WTO
International Trade Statistics Book – 2008. Information used in the document has been obtained from publicly
available documents from various sources. The data may have been re-classified by us for the purpose of
presentation. While the data is believed to be true, it has not been independently verified by our Company or the
Lead Manager.
THE TEXTILE INDUSTRY
The two main aspects of the Textile industry are manufacture of textiles (yarn and fabric) and clothing. The manufacturing of textile is usually more capital intensive than clothing. This includes spinning of yarn from fibre (natural as well as man made, and blends thereof), weaving/knitting of fabric from yarn and finishing of the fabric. These functions are often undertaken in stand-alone unit and sometimes in integrated plants. These plants are often automated and require high capital investment. Clothing on the other hand is less capital intensive, with a greater degree of labour involved in it. Hence, clothing industry has also moved to the countries which have cheap and abundant labour. The textiles manufacturing typically employ large work force and combined with the clothing industry, in most countries, it is a major employer. In 2007-08, the global textile trade contributed to 1.7% of the total world trade and clothing contributed 2.5%. The contribution of textile trade is showing a decline in comparison to previous years. There are many apparel retail companies that have faced tremendous financial pressure. The global textile industry is facing a direct impact of the same. (Source: WTO International Trade Statistics Book – 2008) OVERVIEW OF INDIAN TEXTILE INDUSTRY
The Indian Textiles Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the textiles industry also plays an important role through its contribution to industrial output, employment generation, and the export earnings of the country. Currently, it contributes about 14 percent to industrial production, 4 percent to the GDP, and 17 percent to the country’s export earnings. It provides direct employment to over 35 million people. The Textiles sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of this industry has a direct bearing on the improvement of the economy of the nation The Cotton / Man-made fibre textiles industry is the largest organized industry in the country in terms of employment (nearly 1 million workers) and the number of units. Besides, there are a large number of subsidiary industries dependent on this sector, such as those manufacturing machinery, accessories, stores, ancillaries, dyes & chemicals. As on December 31, 2007, there were 1,744 cotton/man-made fibre textiles mills (non-SSI) in the country with a capacity of 34.87 million spindles, 4, 57,000 rotors, and 56,000 looms. (Source: Ministry of Textile Annual Report 2007-2008)
The Indian Textile Industry is a vertically integrated industry which covers a large gamut of activities ranging from production of its own raw material namely, cotton, jute, silk and wool, to providing to the consumers high value added products such as fabrics and garments. India also produces large varieties of synthetic and man made fibres such as filament and spun yarns from polyester, viscose, nylon and acrylic which are used to manufacture fabric and garments.
STRENGTHS OF THE INDIAN TEXTILE INDUSTRY
Abundance of Cotton
Cotton is one of the major crops cultivated in India. India has the largest cotton acreage in the world and cotton is the dominant fibre in Indian Textile Industry. India was the 2nd largest producer (4.76 Million Metric Tons)
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of cotton in the world during 2006-07, accounting for 18.45% of global production. During 2006-07, India led the world in cultivated area (9.16 Million hectares). With the further possibility of increase in use of Bt seeds/ Hybrid seeds, and a decline in the cost of such seeds, it is estimated that by the terminal year of XI Five Year Plan (2007-2012), the yield per hectare will increase to 700 Kgs., and cotton production will reach 390 Lakh bales. (Source: Ministry of Textile Annual Report 2007-2008)
Thus, India has a natural competitive advantage in terms of a strong and large cotton base, abundant cheap skilled labour and presence across the entire value chain of the industry ranging from spinning, weaving, and madeups to manufacturers of garments along with the advantage of high operational efficiencies in spinning and weaving.
India’s Textile Export
During 2006-07, the textiles and clothing exports were US$ 18.73 billion recording a growth of about 7% over the previous year, and contributed about 15% of country’s total exports earnings in 2006-07. In the current financial year the growth of textiles and clothing exports has been slower, which is being attributed by the industry to the appreciation of the rupee. As per the Directorate General of Commercial Intelligence and Statistics data, textiles & clothing exports during the 1st half of current financial year amounted to US$ 9.14 billion, as against US$ 9.23 billion in the corresponding period of the previous year, recording a negative growth of about 1%. All major commodities of textiles have recorded negative growth except man-made textiles, which has recorded a growth of about 26%. Handicrafts items, cotton textiles and readymade garments, major textiles commodities, have recorded negative growth of 18%, 3.25% and 6.6%, respectively. (Source: Ministry of Textile Annual report 2007-08)
To support and strengthen the textiles industry to meet these challenges, the Government is implementing several measures. As a part of these measures, the Government has already announced certain concessions to the textiles industry. These include an increase in Duty Entitlement Pass Book and Duty Drawback rates, exemption from service tax on select services, reduction in interest rates of pre-shipment and post-shipment credit, and faster clearance of arrears of terminal excise duties and Central Sales Tax, etc. In addition, the Ministry of Textiles has decided to continue TUFS and SITP to equip the textiles industry with latest technology and world class infrastructure. India’s export target of US $ 55 billion by 2012 has been fixed keeping in view the following factors:
• End of quota regime, wherein the lower cost of manufacturing is likely to a lead to rising preference for ready to use products.
• Growing world economies with rising per-capita income, spurring consumption.
• Increased trade in apparel driving the demand for fibre, yarn and fabrics.
• A surge in demand for technical textiles.
• A shift from manufacturing/stitching to design-cum-manufacturing.
• Increasing penetration of high format retail stores. (Source: Ministry of Textile Annual Report 2007-08)
Steps Taken by the Government to Boost the Textile Industry Several steps have already been taken to improve India's textile industry:
● Up-gradation of the Technology Up-gradation Fund Scheme (TUFS);
● The Scheme for Integrated Textiles Parks (SITP)
● National Calamity Contingent Duty (NCCD) of 1 percent removed on polyester filament yarn.
● Naphtha for use in the manufacture of polymers will be subjected to normal rate of 5 percent.
● General CENVAT rate on all goods reduced from 16 percent to 14 percent.
● Central Sales Tax rate being reduced from 3 percent to 2 percent from April 1, 2008.
Self reliance in production of the entire chain of textile: from fibre/cotton to garments/home textiles
The textile processing chain is described in the illustration below:
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Note: VSF: Viscose Staple Fiber, PSF: Polyester Staple Fiber, PFY: Polyester Filament Yarn, VFY:
Viscose Filament Yarn
The textile value chain extends from raw material, i.e., fibres to finished products, i.e., clothing and made-ups, with spinning, weaving, knitting and processing coming in between as intermediate processes. The structural pyramid of Indian textile industry is inverse in terms of ‘strength’. Fibre manufacturing and spinning processes is strong while weaving and processing are relatively weak segments. However, in the recent past, there has been intensive activity in terms of technological up-gradation of entire value chain of the textile activity. With the constant up-gradation of technology and support from schemes like TUFS Indian textile industry has become self reliant by way of backward and forward integrations.
Excellence in fabric designing
The textile industry has come of age in terms of designing the fabric as per the requirement of the domestic and international customers. Manufacturers have developed latest textures for clothes to match the taste of the fashion world. This ability to meet the international demands of designs and textures in fabric has given India a distinctive position on the international fabric circuit.
SWOT OF INDIAN TEXTILE SECTOR
Strengths Weaknesses
● High availability of all raw materials
● Export incentives and Technology upgradations encouraged by government measures
● Low labour cost and availability of skilled and
● Rigid Government policies, specially labour policy
● Low cotton yield per hectare
● Small size and technologically outdated plants
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technical labour force
● Self reliant industry producing the entire chain from fibre/cotton to garments/home textiles
● Ability to handle value additions, embellishments
● Large and growing domestic demand
● Excellence in fabric and garment designing
result in lack of economies of scale, low productivity, and weak quality control
● Fabric/ processing still to meet international standards
● With the exception for spinning, other sectors are fragmented and unit production capacities very low by international standards
● Infrastructure bottlenecks for handling huge volumes
Opportunities Threats
● Replacement of the MFA and full integration of textile industry resulted in huge opportunities for export
● Increase in consumption pattern across the country along with the rise in demand for high quality premium fabrics.
● Enhanced competition from other countries similarly constrained previously
● Pricing pressure following the opening up of quotas
RECENT POLICY AND ADMINISTRATIVE INITIATIVES
Responding to the growing importance of textile industry and its contribution in overall GDP, the Government of India has been providing for schemes and policies for boosting further reforms. Such reforms have been initiated looking at the changing dynamics of the Indian textile industry post the quota regime. A series of policy measures were initiated by the Government in the past. Some such initiatives that have been continued from the past and those which have been implemented now are summarized below: 1) Scheme for Integrated Textiles Parks (SITP):
Though the Indian textiles industry has its inherent advantages, infrastructure bottlenecks are a prime area of concern. With a view to take advantage of the post Multi Fibre Arrangement (MFA) scenario, the Apparel Parks for Exports Scheme (APES) and the Textiles Centre Infrastructure Development Scheme (TCIDS) were launched in 2002 to provide world class export infrastructure at important textiles launched in 2002 to provide world class export infrastructure at important textiles centres. The objective of APES was to create exclusive export zones of apparel manufacturing. TCIDS was to modernize and fill in the gaps in the infrastructure at existing major textiles centres, to remove the impediments to production. The performance of both Apparel Parks and TCIDS was restrained by the nature of assistance permitted. It was felt that there was a need to review both the schemes to examine the possibility for making provision for expeditious implementation of these schemes. Therefore, both the Schemes were merged into a new scheme called the 'Scheme for Integrated Textile Park (SITP)' in 2005 to neutralize the weakness of fragmentation of various sub-sectors of the textiles and non-availability of quality infrastructure. These parks would incorporate facilities for spinning, sizing, texturing, weaving, processing, apparels and embellishments. This scheme is based on the Public Private Partnership (PPP) model. As per the target for the Xth Five Year Plan, 30 projects were approved by the Government of India. State-wise details of sanctioned project are - Andhra Pradesh (4), Gujarat (7), Karnataka (1), Maharashtra (6), Punjab (1) Rajasthan (4), Tamil Nadu (6), and West Bengal (1). These Parks would have facilities for spinning, sizing, texturising, weaving, processing, apparels, etc. The estimated project cost (for common infrastructure and common facilities) is Rs. 2,893.42 Crores, of which Government of India assistance under the scheme would be Rs. 1,054.76 Crores. Upto December 2007, Rs. 238.77 crores had been disbursed for implementation of these projects. Total disbursement, upto March 2008, is estimated at Rs. 325.00 crores. 2,186 entrepreneurs put up their units in these parks covering an area of 3,206 Acre. The projected investment in these parks is Rs. 15,258 crores and estimated annual production is Rs 24,024 crores. When fully operational, these parks would generate employment for 5.45 lakh persons (2.02 lakh direct & 3.43 indirect). These parks are expected to be developed by March 2009.
(Source: Ministry of Textile Annual Report 2007-08) 2) Technology Up-gradation Funds Scheme (TUFS):
The Indian Textiles Industry has, over the years, suffered from server technology obsolescence and lack of economies of scale, which in turn diluted its productivity, quality and cost effectiveness, despite distinctive advantages in raw material, knowledge base, and skilled human resources.
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Given the significance of textiles industry to the overall state of the Indian economy, its employment potential and the huge backlog of technology up-gradation, it was felt that to sustain and improve its competitiveness and overall long term viability, it is essential that the textiles industry has access to timely and adequate capital, internationally comparable rates of interest.
The Scheme successfully helped overcome the technological disadvantage of the Indian textiles sector to a great extent including the transition from a quantitatively restricted textiles trade to market-driven global merchandise. It infused an investment climate in the textiles sector and, in its operational life span of eight years has propelled investment of more than Rs. 90, 000 crores. The garmenting, technical textiles and processing segments of the textiles industry have great potential to add value and generate employment. The Working Group on Textiles and Jute Industry for the XIth Five Year Plan, constituted by the Planning Commission, has set a growth rate of 16% for the sector, projecting an investment of Rs. 1,50,600 crores in the Plan period. (Source: www.india.gov.in)
Initially, the term of the Technology Up-gradation Fund Scheme was upto March 31, 2004, and it was extended till March 31, 2007. Due to overwhelming response from the industry, the Government decided to extend the Scheme upto the XIth Five Year Plan, and reframed some of the financial and operational parameters in respect of new loans. In the Xth Five Year Plan (2002-07), Rs. 1,270 crores was earmarked for the scheme. However, the net utilisation of funds was Rs. 2,044.17 crores. In the latest budget announcements (2008-09) provision for TUFS is proposed to be increased to Rs. 1,090 crores from Rs. 911 crores in 2007-08. As on December 31, 2008 an estimated Rs. 54,743 Cr had been disbursed to the textile manufacturing companies under this scheme. In the latest stimulus package announced by the Government Rs. 140 bn additional allocation has been made to clear backlogs in TUFS. There are several other schemes that have been initiated by the Government for boosting the industry. These include:
• 20% Capital Subsidy Scheme (CLCS-TUFS @20%) for Powerloom Units
• Textile Workers’ Rehabilitation Fund Scheme
• Technology Mission on Cotton comprising of four mini-missions for improving the raw material for the textile industry
• Integrated Scheme for Powerloom Sector Development with an objective of Modernisation of Powerloom Sector to achieve 12% growth per annum.
• Group Insurance Scheme for Powerloom Workers (Source: Office of the Textile commissioner http://www.txcindia.com/)
As per mandate of National Textiles Policy, 2000, the important steps taken by Government to boost the high-tech investment in processing sector include-
• A Credit linked capital subsidy @10% under Technology Up-gradation Fund Scheme (TUFS), in addition to the existing 5% interest reimbursement.
• The rate of depreciation for investment in high-tech processing machines increased from 25% to 50%.
• The import duty on specified hi-tech processing machines has been brought down to 5%. The import of such machines permitted under OGL.
• Hi-tech processing machines are permitted under zero duty EPCG Scheme.
• In order to take care of quality requirements and facilitate eco-friendly production of processed fabric, eco-testing and quality testing facilities have been created throughout the country with an investment of over Rs.60 crores so far.
(Source: Ministry of Textile Annual Report 2007-08)
3) Announcement of National Textile Policy:
Taking note of the new challenges and opportunities presented by the changing global environment, particularly the initiation of the process of gradual phasing out of quantitative restrictions on imports and the lowering of tariff levels for an integration of the world textile and clothing markets by end 2004, and the need for a focused approach to maximizing opportunities and strengths inherent in the situation, Government of India had in November 2000 announced the new textile policy with the objective of facilitating the textile Industry to attain and sustain a pre-eminent global standing in the manufacture and export of clothing. The policy endeavours to achieve the target of textile and apparel export from the present level to US $ 50 billion by 2010 of which the share of garments will be US$ 25 billion.
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4) Export Promotion Capital Goods (EPCG) Scheme:
• The customs duty payable under EPCG Scheme has been reduced from 5% to 3%.
• To improve export competitiveness of Indian exports, all exports made towards fulfillment of export obligation under EPCG scheme will now be eligible for incentives/rewards under promotional schemes.
• Average export obligation under EPCG for Premier Trading Houses shall, as an option, be calculated, based on the average of last 5 year’s export, instead of the present 3 years.
(Source: Annual Supplement 2008 to Foreign Trade Policy 2004-09)
5) Advance Licensing Scheme: With a view to facilitating exports and to access duty free inputs under the scheme, standard input-output norms for about 300 textiles and clothing export products have been prescribed and this scheme has remained under operation.
6) Duty Exemption Pass Book (DEPB) Scheme:
DEPB credit rates have been prescribed for 83 textiles and clothing products. The nomenclature and rates for DEPB entries pertaining to certain textile products have been rationalized. The DEPB credit rates were reduced by 45% across the board in all textile items on September 23, 2004. While addressing the concerns of certain segments of the trade, the DEPB credit rates were revised again on December 30,.2004 by announcing changes to the extent of 60% reduction in respect of cotton textile items, 30% reduction in blended textile and wollen items and 22.5% reduction in man-made textile and silk items in place of 45% reduction effected earlier. To impart continuity and stability to India’s foreign trade regime, DEPB scheme is being extended till May 2009. (Source: Ministry of Textile Annual Report 2007-08)
7) Duty Drawback Scheme:
The exporters are allowed refund of the excise and import duty suffered on inputs of the export products under the Scheme. Department of Revenue announced revision in All Industry Rates of Duty Drawback (AIR of DBK) on January 18, 2005. There has been substantial reduction in AIR of DBK in almost all textile export products except certain items of silk and wool sectors. In the revised Drawback Schedule, 165 new entries of textile products have been created in addition to earlier 101 entries. The revised rates have been prescribed on the basis of weight of the export product instead of earlier system based on FOB value of the product. Besides, in respect of apparel items, the drawback rates have also been given on the basis of composition of textiles.
8) Human Resource Development Initiatives:
Attention has also been paid to Human Resource Development in the textile sector. The GoI supports programs of organisations and institutions engaged in human resource development that addresses the professional manpower needs of the industry. To cater the demand for fashion designers and fashion technologists in the garment sector the National Institute of Fashion Technology (NIFT) was set up. GoI has also decided to develop Nodal Centre for Upgradation of Textile Education as an autonomous national level Textile Education Resource Centre. The Sardar Vallabhbhai Institute of Textile Management was set-up on as a national level Institute for Textiles Management at Coimbatore, Tamil Nadu, to prepare the Indian Textiles Industry to face the challenges of the post-MFA era, and establish itself as a leader in the global textiles trade. (Source Ministry of textile Annual Report 2007-08)
9) Construction of Apparel International Mart:
The GoI is also assisting the Apparel Export Promotion Council in constructing an Apparel International Mart at Gurgaon for providing a world-class facility to the apparel exporters to showcase their products and serve as one stop shop for reputed international buyers.
10) Textile Centres Infrastructure Development Scheme (TCIDS):
For upgrading infrastructure facilities to enhance operational efficiency of textile units located at important textile centres, in March 2002 GoI has launched the TCIDS scheme. TCIDS Scheme is a part of the drive to improve infrastructure facilities at potential textile growth centres and therefore, aims at removing bottlenecks in exports so as to achieve the target of US$ 50 billion by 2010 as envisaged in the National Textile Policy, 2000. This scheme shall cover investments, which are in the nature of exigencies, or emergencies and which could not be foreseen as part of the annual plan scheme proposals.
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(Source: Ministry of Textiles website www.texmin.nic.in)
11) Organisation of Buyer-Seller Meets/Fairs in the Country as well as Abroad:
The Textile Export Promotion Councils have been regularly conducting seminars, organizing buyer seller meets, participating in exhibitions abroad to promote textile exports. Besides, events like TEXSTYLES India, Indian Handicrafts and Gift Fair, India International Garment Fair are also organized in the country to provide an exposition of India’s capabilities in textile and clothing sectors to the visiting foreign buyers.
KEY PLAYERS
In the domestic market, other players in the industry who offers similar kind of product category are Arvind Mills, Ashima Mills, Bharat Vijay Mills, Monti, Vardhman Group, Raymond, , Sintex, BSL and Premier Mills. Alongwith these number of small and regional players also exist in this industry. In the international market, we compete with companies from European countries and Turkey. FUTURE OUTLOOK FOR THE TEXTILE INDUSTRY
There is a sense of optimism and confidence prevailing in the industry and the industry is projected to grow at the rate of 16 per cent in value terms in the next five years. The policy measures initiated by the Government are showing striking results. Investment has increased significantly in the textiles sector, and is expected to touch Rs.1,50,600 crore by 2012. This enhanced investment will generate 17.37 million jobs (comprising 12.02 million direct and 5.35 million indirect jobs) by 2012. Today, the industry is increasingly embracing modern technology and work processes, becoming more globally competitive, building strong brand equity for its products, and consistently achieving higher growth rates than ever in its long history. The challenges are many. The Government is committed to transform what is today an emerging or sunrise sector, into a developed industry. The industry is in an expansion mode and is likely to benefit from growing demand both in the domestic as well as international markets. The anti-surge mechanism which the WTO has imposed on Chinese exports is expected to benefit India. Further, earlier regulations favoured small scale players, which is now undergoing change. Further, with the opening up of the quota regime and other regulatory measures like liberalizing foreign direct investment norms, large investments are being planned to meet the growing domestic and international demand. (Source: http://india.gov.in/sectors/commerce/textiles.php)
KEY FACTORS THAT WOULD IMPACT INDIAN TEXTILE SECTOR IN THE COMING TIMES:
• Dollar Strength: The textile industry’s value is closely connected to the US Dollar because of the contribution of exports to the textile industry. The dollar has shown strong trends in recent past and that has caused the earnings of the textile companies to decline. Dollar will continue to be a major factor in textile export growth.
• Cotton Price Movement:
India has abundant sources production of cotton for consumption within the country and for exports. With the further possibility of increase in use of Bt seeds/ Hybrid seeds, and a decline in the cost of such seeds, it is estimated that by the terminal year of XI Five Year Plan (2007-2012), the yield per hectare will increase to 700 kgs., and cotton production will reach 390 lakh bales. Thus the cost of domestically grown cotton would play a major role in determining the future growth trends of the Indian Textile Industry.
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OUR BUSINESS
In this section “our Company” refers to the Company, while “we”, “us” and “our” refers to our Company and
its Subsidiaries.
We are a part of the erstwhile Morarjee group, one of India’s oldest and most experienced textiles manufacturing houses, now renamed as Ashok Piramal group. Morarjee Goculdas Spinning and Weaving Company Limited (subsequently known as Morarjee Realties Limited and now known as ‘Peninsula Land Limited’), incorporated on August 10, 1871, was one of the flagship Company of the erstwhile Morarjee Group. The Ashok Piramal Group is a diversified and growing conglomerate with business interest in textiles, real estate, engineering, entertainment and sports. We are an integrated textile company primarily engaged in the manufacturing high quality cotton shirting fabrics, premium voiles and high fashion printed fabrics with world class technology and distinct Italian designing as our key differentiators. We own and operate a 70 lakh meters per annum weaving capacity for manufacturing of our high value cotton shirting and 48 lakhs meters per annum weaving capacity for manufacturing of premium voiles and high fashion printed fabric at Nagpur. Our core customers in the international market include reputed garment manufactures and some of the leading fashion houses and premier international brands in USA, Europe, Japan and Middle East. In the domestic market, our customers consist primarily of leading premium brands. Our Company has 4 direct subsidiaries. Our Company holds 89.12% in Integra Apparels and Textiles Limited and 100% in Morarjee International s.r.l. and 67% (directly and through Morarjee International s.r.l.) in Mens Club spa. Integra Apparels and Textiles Limited has a wholly owned subsidiary, namely Pranit Consultants Private Limited which in turn holds 100% in Fabritex Exports Private Limited. Our Italian subsidiaries Morarjee International s.r.l., and Mens Club s.p.a., enhances our access to European markets as well as to provide quicker service to customers. In addition to the above, we have recently set up a subsidiary, namely Morarjee Holdings Private Limited. Our promoter is Ms. Urvi A. Piramal. For the year ended March 31, 2008 and the nine month period ended December 31, 2008 our consolidated revenue was Rs. 28,154.25 lakhs and Rs. 24,795.58 lakhs respectively and our consolidated loss after tax after minority interest for the year ended March 31, 2008 and the nine month period ended December 31, 2008 was Rs. 2,378.17 lakhs and Rs. 2,987.14 lakhs respectively. Strengths
Our principal competitive strengths are as follows: Fully integrated textile manufacturing company
Our Company is one of the few fully-integrated textile units in the country, from spinning to garment manufacture. At the same time, each of the key process, i.e. spinning, weaving, finishing and processing, and garmenting, operate as separate profit centers and are commercially viable as independent functions. Our Company would like to be present through the entire value chain of textile industry, and will continue to invest in upgrading its technology, people and other key resources. Cutting-edge design
To maintain its competitive advantage in this key area of product differentiation, our Company continuously invests in upgrading its design capabilities. Our Company has one of the most advanced design studios in the country, and has invested in a state-of-the-art Design Studio in Italy, which has enabled us to develop “European” styled seasonal collections, designs, etc. essential for us to remain a key player in the highly competitive European and US markets Product Quality
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One of the key requirements in premium fabric segment is consistency in product quality and finishing. Our Company has managed to maintain quality standards at the highest levels. We are regularly investing in upgrading our fabric processing and finishing facilities to enable us to improve our finished products as well as develop new finishes for the market.
Customer Service
Cutting-edge design and high quality fabric have to be supported by the highest levels of customer service which includes aspects like working with each customer’s design team to develop unique collections, producing yardages or desk-loom samples of a customer’s design for approval, doing short runs of multiple variants, consistent and timely fulfillment of orders and continuous and real-time customer interaction. To this end, and in order to be closer to Company’s key European customers, our Company has set up an office in Legnano, Italy, which caters to the growing needs from this region.
Diversified customer base
Our Company has a well-diversified customer base, both in India and overseas. In the Indian market, our Company supplies its products to well-known retailers and garment and home textile manufacturers and exporters. In the overseas markets, our company is the nominated / preferred vendor for several brands / retailers. Besides USA, our Company has a diversified market spread over countries in EU, South-East Asia, Africa and South America. Strategy
Expanding our market base
We believe we have an opportunity to further penetrate into our existing market. While export to Europe constituted almost 22.79% of our total sales, we believe that there is further scope for expansion into the yarn dyed and printed segment in Europe. Our Company will continue exploring opportunities in various countries where it can supply value added textile products to enhance its geographic reach. Simultaneously, our Company will also seek to expand its reach in the domestic markets by exploring the untapped markets and segments as part of its strategy.
Diversified product mix
It is our Company’s endeavour to constantly develop new products and finishes to capture our customers’ requirements both within its traditional product framework as well as for new specialty fabrics. We endeavour to strengthen our portfolio of our high quality cotton shirting fabrics, premium voiles, high fashion printed fabrics business for both men and women to meet customer needs and demands both in the existing as well as new markets. To be preferred partner / associate suppliers to Global Customers
As part of its growth strategy, our Company is making conscious efforts to move up the value chain with its customers and become the preferred partner / associate supplier to some of the global brands. This would also have the advantage of being able to procure bulk orders from such global customers.
Our Products Our products include high value cotton shirting fabrics, premium voiles and high fashion printed fabrics. Details of our products are given below:
Yarn dyed Cotton Shirting Fabric MTL specializes in high yarn-counts with a focus on 80s and above counts in a wide range of fabrications. The yarn dyed shirting division specializes in premium color woven, premium shirting fabric with a distinctive finish in the weaves like Poplin, Twill, Dobby, Royal Oxford, Pique etc. These kinds of collections are exclusively created to suit the seasonal demands of customers all around the world.
48
Our yarn dyeing facility is in accordance with the Oeko-Tex standard and also can reach the national and international standards of environmental protection and assurance of full quality control at all times. To ensure the quality of fabrics, our finishing department is equipped with advanced equipments such as singeing, mercerization, jet bleaching, monfort stentering machine and sanforizing machine. They together form a finishing product line to meet the high quality requirement of our customers across the world. Our fabrics are procured by leading garment manufacturers in developed countries such as USA, Europe, Japan, etc catering to premium brands in these geographies. The premium cotton fabric is procured by leading international and domestic brands. Special attention is devoted to maintain quality in the production chain and is capable of conducting tests in accordance with the international testing standards.
Premium Voiles and High Fashion Printed Fabrics
Our Company also makes premium voiles and high fashion printed fabrics for the European, Middle East, Far East and North African markets. Products range from western women’s wear to Arab dressing (headgear, men and women’s apparels). Our voiles and printed fabrics are exported to leading international brands. The export to these international brands is routed through the convertors who work as buying agent of these brands. In the domestic market, High Fashion Printed Fabrics are procured mainly by leading garment manufacturing brands. Details of export of our voiles for the FY 2008 and FY 2007
Export Zones Year ended March 31, 2008 (Amount
in Rs. lakhs)
% Year ended March 31, 2007 (Amount
in Rs. lakhs)
%
Far East 555.27 9.84 586.62 7.46
Middle East 3,502.83 62.04 3,738.84 47.54
North African Markets
1,433.19 25.39 3,281.94 41.73
Others 154.36 2.73 257.64 3.28
Total 5,645.65 100 7,865.04 100
Readymade Apparel
We started garments business in July 2004 by outsourcing the manufacturing activity (capacity of 2.5 lakhs pieces per annum). The Company formally entered the garments business by acquiring 85% stake (currently 89.12%) in a garment manufacturing company, Integra Apparels and Textiles Limited (“Integra”) in FY 2005. This forward integration move focuses on garments for men, women, and kids wear in the international market. Within a short span of time, Integra started its first manufacturing unit for casual top-wear with a capacity of 6 lakh pieces per annum. After commissioning of the aforementioned unit, Integra has further expanded by setting up a dedicated unit for high end formal shirts with a capacity of 6 lakhs pieces per annum. All the above units are located in Bengaluru which is a major garment manufacturing centre in India.
Italian Initiative
In 2005, we formed Morarjee International s.r.l., based out of Legnano, Italy to gain access to one of the global fashion centres. It has an experienced team of Italian designers and marketing personnel, with expertise in global fashion trends. We also have a state-of-the-art design studio for designing new collections based on current fashion trends. Our Revenue
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We sell our products in domestic as well as in the export market. Our selling arrangement includes direct sales to customers as well as well as through distributors. The details of the domestic and export sales are as follows:
(Rs. in lakhs)
Revenue Earned
% of total revenue
earned Year
Domestic Market
Overseas Market*
Total
Domestic Overseas
2005-06 7,729.60 10,532.45 18,262.05 42.33 57.67
2006-07 9,772.04 16,903.81 26,675.85 36.63 63.37
2007-08 11,016.78 17,115.33 28,132.11 39.16 60.84
* The above figures include export incentives. Geographically our segments can be categorized into domestic and international. Details of revenues from different products / geographic area are given below:
(Rs. in lakhs)
Shirting % Voile % Garment % Total %
2005-06
Export 3,769.06 39.41 5,812.23 78.76 951.16 53.85 10,532.45 56.30
Domestic 5,794.08 60.59 1,567.12 21.24 815.01 46.15 8,176.21 43.70
Total 9,563.14 100.00 7,379.35 100.00 1,766.17 100.00 18,708.66 100.00
2006-07
Export 5,879.93 51.47 8,030.46 82.08 2,651.60 60.77 16,561.99 64.77
Domestic 5,545.11 48.53 1,753.09 17.92 1,711.56 39.22 9,009.76 35.23
Total 11,425.04 100.00 9,783.55 100.00 4,363.16 100.00 22,571.75 100.00
2007-08
Export 4,671.45 49.77 5,946.39 77.18 6,164.86 66.08 16,782.70 63.52
Domestic 4,715.09 50.23 1,758.55 22.82 3,164.82 33.92 9,638.46 36.48
Total 9,386.54 100.00 7,704.94 100.00 9,329.68 100.00 26,421.16 100.00
The above segment categories do not include job work being done through our joint venture Just Textiles Limited. Note: The above figures exclude export benefits Our Customers
A brief description of our customer base for yarn dyed cotton shirting fabrics, premium voiles and high fashion printed fabrics are set out below:
Yarn Dyed Cotton Shirting Fabrics
In the international market our fabrics are procured by leading garment manufacturers in developed countries such as USA, Europe, Japan, etc catering to premium brands in these geographies. In addition, our fabric is also procured by leading garment manufacturers for export on behalf of leading international brands. In the domestic market, our customers consist of leading premium brands. Premium Voiles and High Fashion Printed Fabrics
We directly export premium voiles to Middle East, Far East and North African markets for Arab Dressing. Our voiles and printed fabrics are also exported to developed markets in the women’s wear segment, to leading international brands. The export to these international brands is routed through the convertors who work as buying agent of these brands. In the domestic market, high fashion printed fabrics are procured mainly by leading international garment manufacturers operating in India.
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Our top five buyers as on FY 2006-07 and FY 2007-08 are as follows:
FY 2007-08 FY 2006-07
Buyers (in
terms of rank)
Sales (Rs. in
lakhs)
Percentage of
total sales
Buyers (in
terms of rank) Sales (Rs. in
lakhs) Percentage of
total sales
1 1141.00 6.68% 1 1260.42 5.94%
2 999.57 5.85% 2 1055.51 4.98%
3 747.70 4.37% 3 892.15 0.42%
4 598.11 3.50% 4 573.24 2.70%
5 418.65 2.45% 5 1079.50 5.09%
Total 3905.03 22.85% Total 4860.82 22.92%
Capacity and Capacity Utilisation
Our installed capacity and our actual production and sales during last three year period ended March 31, 2008 and the 9 month period ended December 31, 2008 is as under:
Particulars For the 9 month
period ended
December 31,
2008
For the year
ended March
31, 2008
For the year
ended March
31, 2007
For the year
ended March
31, 2006
Installed Capacity (Looms) (pieces)
248
26,00,000
248 26,00,000
290
13,00,000
294
6,24,000
Installed Capacity (Spindles)*
31568 31568 31464 25976
PRODUCTION
Finished Fabrics (Lakh mtrs.) (Pieces)
126.75 13,83,372
148.09 18,80,649
170.94 10,18,612
147.15 4,34,517
Yarn (Tons) 697.37 928.72 854.65 798.30
SALES
Finished Fabrics (Lakh mtrs.) (Pieces)
125.95 13,89,637
147.46 18,49,835
171.04 9,28,863
145.31 4,00,638
Yarn (Tons) 48.26 109.60 101.26 171.93
Net Sales (Rs. (lakhs))** 24,785.00 28,132.11 26,675.85 18,262.05
** Sales include sales of DEPB License, waste, etc. Based on the available loom and spindle capacity, the production of fabrics and yarn respectively, over the years / periods mentioned above, have utilized substantially the full available capacity. Our Business Process
Fabrics The manufacturing process has certain distinctive features, which are not normally prevalent in other cotton textile units in India. The process flow chart of our Company is as shown below:
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Details of Process Flow
Spinning
It is a process of simultaneously twisting and drawing the attenuated strand of fibres in to a yarn. The different process flow of spinning is as follows: Blow Room
At the Blow Room level Fibre is opened to remove impurities. Opening of bales sometimes occurs in conjunction with the blending of fibres. Suppliers deliver natural fibres to the spinning mill in compressed bales. The fibres must be sorted based on grade, cleaned to remove particles of dirt, twigs, and leaves, and blended with fibres from different bales to improve the consistency of the fibre mix. Sorting and cleaning is performed in machine known as openers, which consist of a rotating cylinder equipped with spiked teeth or a set of toothed bars. These teeth pull the unbaled fibres apart, fluffing them while loosening impurities. As the feed of the opener comes from multiple bales, the opener blends the fibres as it cleans and opens them. Carding Tufts of fiber are conveyed by air streams to a carding machine, which transports the fibres over a belt equipped with the wire needles. A series of rotating brushes rests on top of the belt. The different rotation speeds of the belt and the brushes cause the fibres to tease out and align into thin, parallel sheets. Many shorter fibres, which would weaken the yarn, are separated out and removed. A further objective of carding is to better align the fibres to prepare them for spinning. The sheet of carded fibres is removed through a funnel into a loose ropelike strand called a sliver. Opening, blending, and carding are sometimes performed in integrated carders that accept raw fiber and output carded sliver. Sliver lab Several slivers are combined into a continuous, rope like strand and fed to a machine known as a drawing frame. Combing
In coil combing process the short fibres present in the carded sliver is removed, which is referred to as “Voile”. The delivered combed sliver consists only of fibres with desired length. In this process along with the short fibre removal some amount of Neps is also removed. Voile extracted differs from fibre to fibre. Draw Frame
This is also called Finisher Draw Frame and once again several slivers are combined into a continuous, ropelike strand and fed to this machine. The drawing frame contains several sets of rollers
YARN DYEING
SPINNING WINDING WARPING SIZING DRAWING
IN
WEAVING
GREY FABRIC INSPECTION
PROCESSING & PRINTING
FINAL INSPECTION
PACKING
OUR BUSINESS PROCESS
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that rotate at successively faster speeds. As the slivers pass through, they are further drawn out and lengthened, to the point where they may be five to six times as long as they were originally. During drawing, slivers from different types of fibers (e.g., cotton and polyester) may be combined to form blends. Once a sliver has been drawn, it is termed a roving. Simplex or Speed Frame Simplex is a process that uses a frame to stretch the yarn further. The delivered strand of fibres is called Roving. This process imparts a slight twist as it removes the yarn and winds it onto a rotating spindle. The yarn, now termed as roving in ring spinning operations, is made up of a loose assemblage of fibres drawn into a single strand and is about eight times the length and one-eighth the diameter of the sliver, or approximately as wide as a pencil. Ring Frame
The yarn is first fed through another set of drawing or delivery rollers, which lengthen and stretch it still further. It is then fed onto a high-speed spindle. The difference in speed of travel between the guide and spindle determines the amount of twist imparted to the yarn. The yarn is collected on a bobbin. Finishing At the finishing process, the yarn produced at the Ring Frame is further winded/ processed on a Paper Cone or other Cones/Tubes so that it can be delivered to customer or sent for further processing. Activities covered under the finishing department are: Autoconer In this process, large packages of single yarn are made in form of cones without any hand made knots. In addition to this, this machine also has sensors and removes many yarn faults like neps, uneveness faults, thicks and thins from Ring Frame Yarn etc. Ply Winding
The purpose of this process is to make a supply package for doublers. Here two strands of yarn are piled and wound on the cheese. Doubling
Doubling machine is feed cheese, which has two single yarns, wound together. Through Ring Frame Bobbin and the final output contains lot of hand made knots. For Doubling, yarn is also procured from outside. Steaming
In this process the yarn is steamed in big chambers in order to provide it strength. Winding and steaming: Here the doubling bobbins are made into cone. Here some amount of yarn faults is removed through electric clearers as like in autoconers. Singeing and steaming
In this process the protruding fibres from the yarn are burnt while it is passed through the burners. The hairiness level in the tarn is reduced through this process. Yarn Dyeing and Rewinding
This process is optional for shirting fabric. The grey yarn is taken out for the yarn dyeing process. Yarn dyeing is on cones and in this method yarn is wound on perforated plastic cones and immersed in dye bath. The dye liquor is put into the vessel back and forced through the cones. This type of dyeing is carried out on elevated temperature pressure, which is used in wet colours in yarn. Dyed yarn after drying is rewound on autoconer machine on paper cones for feeding on looms for weaving.
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Warping
Warping is the process of preparation of warper beams for use in sizing process or directly for use on looms. Warper beam of dyed yarn is prepared on sectional warping machine and warper is used for grey yarn and full colour is prepared on direct warping machine. Sizing
It is the process warp yarn is sized with starch (and other sizing materials) to give necessary tensile strength and smoothness required for weaving. Starch carboxymethyl cellulose (CMC) and polyvinyl alcohol (PVA) are the sizing agent extensively employed in sizing. Drawing - IN
In this process each end of the yarn is yarn dyed is drawn in through the high reed and then gaited on machine for preparing weaver beams for the loom. If new article is same then old article is knotted with new one by knotting machine. Weaving
Fabric is woven on the looms by shedding, picking and beating up process. All these are done on weaving machine. Grey Fabrics Inspection
The fabric so obtained is inspected on grey inspection machine for checking any defects such as floats, missing ends, cracks etc and subsequently to eliminate the same.
Processing and Printing Processing
Singeing and Desizing
The fabric is now treated with high temperature on singeing machine, which is electrically controlled to remove the hairs on the yarn, after which Desizing is done which is a process employed to remove the sizing materials present in the grey cloth to make it suitable for further processing. If starch is used as the sizing agent, the following two methods are employed for its removal: - - Desizing with acid – The grey cloth is treated with dilute sulphuric acid (0.5%) and washed well. - Desizing with enzymes – The cloth is dipped in baths and kept for 4 to 8 hours at 55 to 80 degree Celsius. The enzyme hydrolyses starch and converts to readily soluble substances. Then the clothes are subject to mild acid treatment and rinsed well with water. If polyvinyl alcohol (PVA) or carboxymethyl cellulose (CMC) are used for sizing, they are removed with a detergent / water solution as they are readily soluble in water. Washing and Mercerising
After desizing process the fabric is washed with soap solution at 90-degree cel. and mercerized to give lusture, strength, dye affinity and width stability to fabrics. The fabric is then cooled at 14 to 15 degree cel. With caustic soda, which swells the cellulose and fabric shrinks. Bleaching
Bleaching of the fabric is done in Jiggers. This treatment is different for whites, full colours and normal colours. This is done to remove impurities and make the fabric white. This is an essential process, used to remove natural colouring materials and to render the clothes white. Alkaline hypochlorite or chlorine is used for
54
bleaching cotton textiles. Bleaching is usually followed by washing with fresh water and then by scouring anti chlorine (treatment with sodium bisulphite) to remove traces of alkali and chlorine. Drying
The fabric is dried in a stenter. Finish is also applied here. Different fabrics need different finishes and thus the recipe changes accordingly. The stenter also provides uniformity in the weft. Printing
(i) Design Studio: - In this, various types of designs are prepared either manually or on computer. Then tracings are prepared for engraving. (ii) Engraving: - In this process printing screens are prepared from the tracings. (iii) Sampling: - In this process printing is done on small scale. These samples are created for customer approval as well as guideline for bulk printing. (iv) Printing: - In this process fabric is printed on the rotary or flatbed printing machines. (v) Ageing: - This process is done for fixation of colours on the printed fabric. Passing the fabric through the loop ager machine does this. (vi) Washing: - This is done for removing the gum and residual colours from the printed fabric. Final Inspection
The final inspection is carried out by point system to grade the cloth and to see if there are any defects gone un- noticed earlier or emerged in the processing stage. Packing
The fabric is then rolled on the rolling machine and packed in the roll forms. Thus after final process the fabric goes out of the factory.
Garments
Our Subsidiaries procure fabric which is then checked and issued to the production department. Designing is an important factor in the ready-made garments industry. The garments are designed either as per the latest trends in the fashion world or the design is received from the buyer, according to which samples are prepared. The sample is then sent to the buyer for approval. After receipt of approval from the buyer, the design is given for bulk production. The summarized process is as follows: Fabric Checking ���� Design Creation / Pattern Making ���� Sampling ���� Cutting and Sorting ���� Stitching����
Inspection���� Folding ���� Packing
Our Marketing and Sales
The market for our products can be categorized into international and domestic market. Over a period of time, our Company has carved for itself a niche in the premium product category and strengthened its image in the market place for its product. Our Company has a full-fledged marketing team led by a team of professionals. We have also enhanced our international presence through our exclusive marketing wholly owned subsidiary in Italy which has a state of the art studio for making seasonal collections, new designs and products. We sell our products directly to the customer as well as through agents. In the domestic market, our Company supplies shirting fabrics to almost all leading national premium brands for their premium collections and in the international market, in case of shirting fabrics, to various
55
international brands. The export to the international brands is routed through the convertors who work as buying agent of these brands. For the premium voile and printed fabrics products, the main markets are Middle-East, African countries, Indonesia, Korea and Switzerland. Our Company is initiating efforts to explore newer markets and / business opportunities, especially in Europe. Details of Competition
In the domestic market, the other players who offer similar kind of products are Arvind Mills, Monti and Premier Mills. In the international market, as our Company is operating in the niche premium product category, it competes with companies from European countries and Turkey. Due to the availability of skilled and relatively low cost labour in the country, our Company has a competitive advantage vis-à-vis such international competitors.
Export Possibilities and Export Obligations
More than 50% of our turnover comprises of exports. As mentioned above, in the international market, in case of shirting fabrics, we cater to U.S.A, Europe and Japan markets. For the premium voile and printed fabrics products, the main markets are Middle-east, African countries, Indonesia, Korea and Switzerland. Our Company has no export obligations. Our Focus on Quality
We have internalized quality control management systems and quality improvement systems in our plant. We have Quality Audit team reviewing all aspects of quality assurance at our plant, at each production stage. Apart from that, a dedicated in-house management team overlooks the implementation and adherence to quality control policies. The Corporate management takes active interest and reviews the use of IT enabled platforms, which help in monitoring the activities at the plant.
Certification : Our Company’s quality standards have always been in line with world quality standards. Our Company has received the following accreditations:
1) ISO 9001 and 14002 accreditation 2) Our Company’s products have certification for
EGYPTIAN GIZA COTTON from the Egyptian Ministry of Economic and Trade Fair ORGANIC COTTON from GOTS OEKO-TEX approved.
Our Suppliers and Raw Material Consumption
Our main raw materials consist of cotton, yarn, dyes and chemicals. Cotton
Our requirement for cotton, which is mainly the extra long staple variety, is imported (approx.80%) primarily from Egypt, USA and CIS countries, and the balance requirement of cotton is sourced locally. We normally procure our yearly requirements at the beginning of the season to ensure uninterrupted supplies of the required quality of cotton. Cotton imported during the period from April 1, 2005 to March 31, 2008 Cotton imported from 2007-08 (in Kg.) 2006-07 (in Kg.) 2005-06 (in Kg.)
USA 3,26,697 1,21,860 76,306
Egypt 5,79,194 5,82,088 3,79,472
CIS 2,07,064 3,93,333 4,84,038
China 46,980 77 0
Sudan 63,660 19,286 17,890
Total Imported Cotton 12,23,595 11,16,644 9,57,706
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Yarn
Approximately 40% of our yarn requirement, mainly of finer count variety is met from our captive spinning capacity. Balance requirement is sourced from various local suppliers. There is abundant domestic supply of the quality of yarn that we require for manufacturing of fabric. Colours and Chemicals
In case of Yarn Dyed Cotton Shirting, the requirements of dyes and chemicals are procured mainly through imports (from European suppliers) and in case of other fabrics, they are procured from reputed local manufacturers. Our Facilities and Manpower
Facilities
Our manufacturing plants are situated at: (a) Maharashtra Industrial Development Corporation , Plot G-2, Butibori Industrial Area, Nagpur District (b) Survey No. 36/F, Haralkunte Village, 27th Main, HSR Layout, Somasundarapalaya, Bengaluru 560 -102 (c) Krishna Reddy Industrial Area, 7th Mile Kudlu Gate, Hosur Road, Bengaluru 560 - 068 All our facilities are equipped with all necessary infrastructure facilities. All our facilities are leased from third parties and the Company does not own any property. Human Resources
As on March 31, 2009, we have 3,700 permanent employees. Of these, 2,838 are technical workmen and the remaining are managerial and executive staff. In addition, the Company also engages workmen on contract basis. We place utmost importance on our “human capital”. Our philosophy is to effectively utilize the potential of our employees and groom them to compete with the challenges ahead. We facilitate consistent improvement in performance, productivity and effectiveness by setting targets through an interactive process. Human resources are being increasingly recognized as critical to the success of an organization and therefore, we have established a need based Management Development Programs and Competency Mapping programme to create value for our employees and to improve their contribution to our Company’s progress. Our Company has harmonious employee and industrial relations and there is close interaction between the management and workmen to facilitate smooth functioning of our units. Manufacturing Location At present our manufacturing facilities are located at Butibori, which is at a distance of 30 kms from Nagpur in Maharashtra State, at Haralukunte Village, Somasundarapalaya, Bengaluru and at Krishna Reddy Industrial Area, Hosur Road, Bengaluru. Plant and Machinery and Manufacturing Process
Our Company has a fully integrated composite textile mill consisting of two plants separately for high quality shirting fabrics and premium voiles and high fashion printed fabrics at Butibori, Nagpur, with 31568 spindles and 248 looms, and the requisite machinery for processing and printing. Infrastructure Facilities
Our manufacturing plant is situated in Maharashtra Industrial Development Corporation (MIDC), Butibori, Nagpur, at Haralukunte Village, Somasundarapalaya, Bengaluru and at Krishna Reddy Industrial Area, Hosur Road, Bengaluru, all of which are adequately equipped with all necessary infrastructure facilities including power, water, roads, transportation facilities, etc. Power
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Our per day requirement of power of 7034 KVA (maximum demand) is met by MSEB and KSEB. We also have stand-by generators of 4220 KVA capacity which takes care of certain critical operations in case of power break down. Water
Our requirement of water is 2930 KL per day which is met by supplies from MIDC and KIDC. We have an Effluent Treatment Plant meeting all the standards stipulated by Maharashtra Pollution Control Board. Insurance
Our operations are subject to hazards inherent in large scale textile manufacturing, such as risk of equipment failure and work accidents. We also are subject to the effects of natural disasters and acts of terrorism. The hazards we face include those that may cause injury and loss of life, damage to and destruction of property and equipment and environmental damage. We have obtained what we consider to be adequate insurance for our facilities, automobiles, for workmen compensation, hospitalization, group personnel accident policies (for our permanent employees), etc, as may be required under the various jurisdictions where our facilities are located.
Health and Safety
We follow a strict code of Health and Safety practices at conditions in the workplace and beyond. The code is monitored continually by internal management reviews, which involve representatives from all areas of the business. The group also reviews and updates the code regularly ensuring that all legislation and recommended practice is complied with. We constantly strive to remain eco-friendly by adhering to the highest international standards of manufacturing and affluent treatment to ensure the welfare of our consumers and the sanctity of our natural environment.
The Environment
Good environmental practice has always been a prime consideration in our development, leading us to seek practical solutions to avoid the production of waste. Our business activity inevitably has an impact on the environment. We seek to minimize this impact as far as possible by operating a policy of sustainable development and constantly researching new ways to reduce pollution, wastage and the amount of resources used, while recycling as much as we can.
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FINANCIAL INDEBTEDNESS
Details of Secured Borrowings
Our Company’s secured borrowings on a standalone basis are as follows: Term Loans
Sr.
No Lender(s)
Date of
Availment
/Execution of
Agreement
Charge/security
given Total
sanctioned
amount
(Rs. in lakhs)
Amount
Outstanding
as on April
15, 2009
(Rs. in
lakhs)
Rate
of
Interest
Re-
payment
Terms
1 Axis Bank Limited (Under the TUFS)
July 30, 2007 Exclusive First Charge on all the movable assets acquired out of the facility and pari passu second charge on all the other installations cranes, furniture, computers and other tangible accessories, vehicles together with spares tools and accessories and all other articles lying on the premise at Nagpur or in the godowns of Our Company. Pari passu Second Charge by way of mortgage on our Company’s immovable property.
2,400.00 2,300.00# PLR-3.25% with monthly rests
Quarterly repayment of Rs. 100 lakhs beginning from Q4 of FY 2008-09
2. Axis Bank Limited
September 2, 2008
Pari passu first charge on the whole of our Company’s movable goods and current assets present and future etc. and all present and future book debts. Pari passu second charge
2,000.00* 1,283.00# PLR-3.25% with monthly rests.
On Demand
59
Sr.
No Lender(s)
Date of
Availment
/Execution of
Agreement
Charge/security
given Total
sanctioned
amount
(Rs. in
lakhs)
Amount
Outstanding
as on April
15, 2009
(Rs. in
lakhs)
Rate
of
Interest
Re-
payment
Terms
on all existing and future movable fixed assets of our Company together with spare tools and accessories and all other articles lying on the premises at Mumbai, Nagpur or any other places.
3 Allahabad Bank (Under the TUFS)
August 18, 2004 and
August 26, 2005
Hypothecation by way of first charge of all the present and future assets created from and out of the term loan. First pari passu charge by way of mortgage on our company’s immovable properties.
6,000.00 4,344.00 PLR-2.50% with monthly rest.
24 quarterly installments of Rs. 62.5 lakhs each and quarterly installments of Rs. 187.50 lakhs each
4 Allahabad Bank
October 15, 2008
Hypothecation of stock, book debts and other current assets of our Company both present and future, ranking pari passu with other banks.
Pari passu second charge by way of mortgage on our Company’s immovable properties.
4,500.00 4,309.00 Fund Based : PLR Non Fund Based: varying from 0.25% to 0.50% depending on the tenor of the LC
On Demand
5 EXIM Bank (Under TUFS)
March 24, 1999
The whole of our Company’s movable fixed assets, both present and
1,500.00 125.00 16.50% Semi-annual installments of Rs. 43.0 lakhs
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Sr.
No Lender(s)
Date of
Availment
/Execution of
Agreement
Charge/security
given Total
sanctioned
amount
(Rs. in
lakhs)
Amount
Outstanding
as on April
15, 2009
(Rs. in
lakhs)
Rate
of
Interest
Re-
payment
Terms
future including its movable plant and machinery, equipment, appliances, furniture, vehicles, machinery spares and stores, tools and accessories whether or not installed. Legal mortgage in respect of our Company’s immovable properties situated at Butibori Industrial Area, Poli and Kirmiti, Taluka Hingana, District Nagpur, Maharashtra.
6 EXIM Bank
December 29, 2003
Pari Passu first charge by way of hypothecation of entire current assets of our Company, both present and future. Pari Passu second charge on the immovable properties of our Company.
USD 50 lakhs or its
INR equivalent
2,481.00 PLR – 2.50%
On Demand
# Total Amount outstanding as on April 17, 2009. * Out of the total amount of Rs. 2,000 lakhs, Rs 200 lakhs is towards loan equivalent risk (LER) for covering the foreign exchange exposure of the Company.
Details of Unsecured Borrowings
61
Sr.
No Lender(s)
Date of
Availment
/Execution of
Agreement
Charge/security
given Total
sanctioned
amount
(Rs. in
lakhs)
Amount
Outstanding
as on April
15,
2008 (Rs. in
lakhs)
Rate
of
Interest
Re-
payment
Terms
1. ACT Fininvest Limited
March 21, 2007, March 30, 2007, April 1, 2007, March 24, 2008, April 1, 2008, March 20, 2009
Demand Promissory Note.
8,400.00 7,789.00 9.50% to 16.50% per annum, payable annually.
On demand.
Details of Unsecured Borrowings
Some of the corporate actions for which we require the prior written consent of our lenders include the following: 1. conclude any fresh borrowing either secured or unsecured with any financial institution and not create
further charge over fixed assets without written consent; 2. to enter into any agreement or arrangement to guarantee or become obligated for all or any part of any
financial or other obligation of; 3. to create or permit to exist any lien on any property, revenues or other assets, present or future; 4. to enter any transaction except in the ordinary course of business on the basis of arm’s-length arrangement
(including, without limitation , transactions whereby our Company might pay more than the ordinary commercial price for any purchase or might receive less than the full ex- works commercial price (subject to normal trade discounts) for its products;
5. to enter into any management contract or similar arrangement whereby its business or operations are managed by any other person;
6. to form or have any subsidiary; 7. to take/ obtain and other short term and/or long term bank loans or advances; 8. to change our charter in any manner which would be inconsistent with the provisions of any loan
documents; 9. to change the nature or scope of project or change the nature of its present or contemplated business or
operations; 10. to undertake or permit any merger, spin-off, consolidation or reorganization; 11. to mortgage, sell, lease, exchange or create any charge, lien or encumbrance of any kind on specified
undertakings, assets, security secured with the lender and change use of the assets; 12. to prepay or repurchase any long-term debt; 13. to pay the Directors commission in any year when amount due to lenders is still outstanding; 14. to affect any change in control of our Company; 15. to affect the constitution of our Company. We have obtained the approvals for the Rights Issue from our all our lenders from whom we require approvals under the respective loan documents.
62
REGULATIONS AND POLICIES
The following description is a summary of the relevant regulations and policies as prescribed by the
Government of India and the Ministry of Textiles. The information detailed in this chapter has been obtained
from the websites of the relevant regulators and publications available in the public domain. The regulations set
out below are not exhaustive, and are only intended to provide general information to the investors and is
neither designed nor intended to be a substitute for professional legal advice. Taxation statutes such as the
Income Tax Act, 1961, Central Sales Tax Act, 1956 and applicable local sales tax statutes, labour regulations
such as the Employees State Insurance Act, 1948 and the Employees Provident Fund and Miscellaneous
Act, 1952, and other miscellaneous regulations such as the Trade Marks Act, 1999 and applicable shops and
establishments statutes apply to us as they do to any other Indian company. For details of government approvals
obtained by our Company in compliance with these regulations, see the chapter titled “Government Approvals”
beginning on page 199 of this Draft Letter of Offer. The statements below are based on the current provisions
of Indian law, and the judicial and administrative interpretations thereof, which are subject to change or
modification by subsequent legislative, regulatory, administrative or judicial decisions.
The Multi Fiber Arrangement (MFA) and the WTO Agreement on Textiles & Clothing (ATC)
The Multi Fiber Arrangement governed world trade in textiles and garments from 1974 through 1994, imposing quota restrictions on the textile exports from developing countries to developed countries. The MFA was signed in 1974. As the restraints on textile trade were globalized, multilateral negotiations ensued, leading to a series of agreements. Initially, the agreements covered only cotton, but they eventually expanded into “multi fiber” arrangements covering textiles and clothing made from all fibers. The MFA was hence introduced in 1974 as a short-term measure intended to allow developed countries to adjust to imports from the developing world. On January 1, 1995, the MFA was replaced by the WTO Agreement on Textiles and Clothing, which set out a transitional process for the ultimate removal of the aforesaid quotas. The ATC was signed by the signatories to the General Agreement on Tariff and Trade (GATT) on the basis of securing the eventual integration of the textiles and clothing sector into the GATT on the basis of strengthened GATT rules and disciplines whereby quotas were phased out on the basis of an agreed timetable i.e. 16% of imports were made quota-free by January 11, 1995, a further 17% by January 1, 1998, a further 18% by January 1, 2002 and the remaining 49% by January 1, 2005. The ATC was a transitional instrument, built to ensure the progressive integration of textile and clothing products into the GATT 1994 rules and thereby ensure a liberalization process to progressively enlarge existing quotas (until they were removed) by increasing annual growth rates at each stage. National Textile Policy – 2000 (NTxP – 2000)
The Government of India in November 2000 announced the National Textile Policy – 2000, thereby replacing the previous Textile Policy of 1985. The main objective of the NTxP – 2000 was to enable the industry to attain and sustain a preeminent global standing in the manufacture and export of clothing. It aimed at achieving textiles and apparel exports of upto USD 5,000 crore by 2010 from the present USD 1,100 crore. It also dereserved the garments sector from the SSI reservation list and lifted the foreign direct investment cap of 24%. The NTxP – 2000 took note of the new challenges and opportunities presented by the changing global environment, particularly the initiation of the process of gradual phasing out of quantitative restrictions on imports and the lowering of tariff levels for an integration of the world textile and clothing markets by the end of 2004. This policy promotes joint ventures and strategic alliances with leading world manufacturers. The objectives of the NTxP – 2000 were to:
• Facilitate the textile industry to attain and sustain a pre-eminent global standing in the manufacture and export of clothing;
• Equip the textile industry to withstand pressures of import penetration and maintain a dominant presence in the domestic market;
• Liberalize controls and regulations so that the different segments of the textile industry are enabled to perform in a greater competitive environment;
• Enable the textile industry to build world class state-of-the-art manufacturing capabilities in conformity with environmental standards, and for this purpose to encourage Foreign Direct Investment as well as research and development in the sector;
• Develop a strong multi-fibre base with thrust on product up gradation and diversification;
63
• Sustain and strengthen the traditional knowledge, skills and capabilities of our weavers and craftspeople;
• Enrich human resource skills and capabilities, with special emphasis on those working in the decentralized sectors of the textile industry; and for this purpose to revitalize the institutional structure;
• Expand productive employment by enabling the growth of the textile industry, with particular effort directed to enhancing the benefits to the north east region;
• Make Information Technology (IT), an integral part of the entire value chain of textile production and thereby facilitate the textile industry to achieve international standards in terms of quality, design and marketing and;
• Involve and ensure the active co-operation and partnership of the State Governments, Financial Institutions, Entrepreneurs, Farmers and Non-Governmental Organisations in the fulfillment of these objectives
Further, the Government has conveyed it’s commitment towards providing a conducive environment to enable the Indian textile industry to realise its full potential, achieve global excellence, and fulfill its obligation to different sections of society. Technology Upgradation Fund Scheme (TUFS)
Given the significance of the textile industry to the overall health of the Indian economy, its employment potential and the huge historical backlog of technology up gradation, particularly in the context of the liberalization of the national industrial and trade policy and globalization of textile trade, it has been emphasized that in order to sustain and improve its competitiveness and overall long term viability, it is essential for the textile industry to have access to timely and adequate capital at internationally comparable rates of interest in order to upgrade its technology level. In light of the foregoing, it has been felt necessary to make operational a focused and time-bound Technology Upgradation Fund Scheme (“TUFS”) which would provide a focal point for modernization efforts through technology up gradation in the textile industry. The main feature of the TUFS would be a 5 % reimbursement on the interest actually charged by the identified financial institutions on the sanctioned projects. The TUFS was launched from April 1, 1999 to March 31, 2007 in order to provide an impetus for the modernization of the textile and jute industry and to further enhance its viability and competitiveness in the domestic and the international markets. Technology up gradation under TUFS would ordinarily mean induction of state-of-the-art or near-state-of-the-art technology. Accordingly, technology levels are bench-marked in terms of specified machinery for each sector of the textile industry. Machinery with technology levels lower than that specified will not be permitted for funding under the TUFS. Textiles Committee Act, 1963
The Textiles Committee Act, 1963 came into force on August 22, 1964. The said Act calls for constitution of a Textiles Committee by the Central Government. The said Textiles Committee shall ensure a standard quality of textiles both for internal marketing and export purposes and the manufacture and use of standard types of textile machinery, assisting and encouraging scientific, technological and economic research in the textile industry and textile machinery. The Textiles Committee shall also promote export of textiles and textile machinery and carry on propaganda for that purpose. The said Act also imposes a duty of excise on textiles and textile machinery manufactured in India at such rate, not exceeding 1% ad valorem as the Central Government may, by notification in the Official Gazette, fix provided that, no such cess shall be levied on textiles manufactured out of the handloom or powerloom industry. However, the Central Government may exempt any variety of textiles or textiles machinery if it is required to do so in the public interest. The Textiles Committee recognizes standard specifications for textiles and packing materials used in the packing of textiles or textile machinery, for the purposes of export and for internal consumption and affix suitable marks on such standardized varieties of textiles and packing materials.
By a notification dated January 17, 2007, the Central Government has exempted ready made garments, being a variety of textiles from the levy of whole of the cess, so as to rationalize the tax and cess burden on the readymade garments in the changed scenario of global competitiveness and thus improve the competitiveness of the Indian readymade garment sector in global markets.
64
Further, by a press release dated May 24, 2007, the Union Cabinet gave its approval for exemption of all textiles and all textile machinery manufactured in India from Textiles Committee cess under the Textiles Committee Act, 1963. Textile (Development and Regulation) Order, 2001
The Textile (Development and Regulation) Order, 2001 was brought into force by the Central Government under Section 3 of the Essential Commodities Act, 1955 and repealed the Textile (Development and Regulation) Order, 1993. Under the said Order every manufacturer of textiles, textile machinery and every person dealing with textiles shall keep books of accounts, data and other records relating to his business in the matter of production, processing, import, export, supply, distribution, sale, consumption, etc. and shall furnish such returns or information in respect of their business as and when directed by the Textile Commissioner. The said Order further prescribes filing of an Information Memorandum as per the requisite form with the Textile Commissioner, Mumbai in the event of:
• installation of textile machinery for the manufacture of textiles within thirty days of the installation of such machinery;
• relocation, selling, transferring or otherwise disposing of any textile machinery referred to above, within thirty days from the date of such re-location, sale, transfer or disposal; and
• modernization of a textile unit. The Order further provides that no person shall make any markings on any textiles resembling the brand name or trade name of any other person who has applied for or obtained a registration to that effect under the Trade and Merchandise Marks Act, 1958 (43 of 1958), except under and limited to the extent of specific authorization by the holder of or applicant for such brand or trade name.
The Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 The Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 provides for the levy and collection of an additional 10% of the total amount of excise duty chargeable on certain textiles and textile articles as specified in the schedule to the said Act.
Export Promotional Measures under the Foreign Trade Policy 2008 – 2009
The following export promotional measures of the Government of India are applicable to our Company:
1. Export Houses Export Houses are eligible to avail of several facilities including inter alia:
• Authorization and customs clearances for both imports and exports on self-declaration basis;
• Fixation of Input-Output norms on priority within 60 days;
• Exemption from compulsory negotiation of documents through banks. Remittance / Receipts, however, would be received through banking channels;
• 100% retention of foreign exchange in Exchange Earner’s Foreign Currency account;
• Enhancement in normal repatriation period from 180 days to 360 days;
• Exemption from furnishing of bank guarantee in Schemes under Foreign Trade Policy; and
• Star Export Houses shall be permitted to establish Export Warehouses, as per Department of Revenue Guidelines.
2. Export Promotion Capital Goods Scheme (EPCG Scheme) Under the scheme, the imports are allowed at a concessional rate of duty which is to be off-set through export of finished product to the extent of five times of the value of the duty saved within a period of eight years from the date of imports. Failure to achieve this export obligation entails payment of the duty saved amount alongwith interest at the specified rates.The EPCG Scheme covers manufacturer exporters with or without supporting manufacturer(s)/ vendor(s), merchant exporters tied to supporting manufacturer(s) and service providers. 3. Advance Authorization Scheme
65
Advance Authorization Scheme is a duty exemption scheme issued to allow duty free import of inputs, which are physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, energy, catalysts which are consumed / utilized to obtain export product, may also be allowed. The Director General of Foreign Trade, by means of Public Notice, may exclude any product(s) from the purview of Advance Authorization. Advance Authorizations are exempted from payment of basic customs duty, additional customs duty, education cess, antidumping duty and safeguard duty, if any. The facility of Advance Authorization shall also be available where some or all inputs are supplied free of cost to exporter by foreign buyer. 4. Duty Entitlement Passbook Scheme (DEPB) DEPB is a duty remission scheme enabling post export replenishment / remission of duty on inputs used in export products. The Objective of DEPB is to neutralize the incidence of customs duty on import content of export product. Component of Special Additional Duty and customs duty on fuel shall also be allowed under DEPB (as a brand rate) in case of non- availment of CENVAT credit. The neutralization shall be provided by way of grant of duty credit against the export product. An exporter may apply for credit, at a specified percentage of FOB value of exports, made in freely convertible currency or payment made from foreign currency account of SEZ unit / SEZ Developer in case of supply by DTA. Credit shall be available against such export products and at such rates as may be specified by Director General of Foreign Trade by way of public notice. Credit may be utilized for payment of customs duty on freely importable items. The DEPB holder shall have the option to pay additional customs duty in cash as well. DEPB is being continued till May 2009. 5. Duty Free Import Authorization Scheme (DFIA) DFIA is a duty exemption scheme issued to allow duty free import of inputs, fuel, oil, energy sources, catalyst which are required for production of export product. Director General of Foreign Trade, by means of Public Notice, may exclude any product(s) from purview of DFIA. This scheme is in force from May 1, 2006. 6. Duty Drawback Scheme (DBK) DBK is a duty remission scheme enabling post export replenishment / remission of duty on inputs used in export products, whereby exporters are allowed refund of the excise and import duty suffered on raw materials under DBK so as to make the products more competitive in the international market. 7. Target Plus Scheme Target Plus Scheme is a duty remission scheme issued to allow duty free import of capital goods including spares, office equipments, professional equipments and office furniture provided the same are freely importable under ITC (HS) and are non transferable. The objective of the scheme is to accelerate growth in exports by rewarding star export houses who have achieved a quantum growth in exports. The duty free entitlement certificate shall be valid for a period of twelve (12) months.
66
HISTORY OF OUR COMPANY AND OTHER CORPORATE MATTERS
Background
We are a part of the erstwhile Morarjee group, one of India’s oldest and most experienced textiles manufacturing houses, now renamed as Ashok Piramal Group. Morarjee Goculdas Spinning and Weaving Company Limited (subsequently known as Morarjee Realties Limited and now known as Peninsula Land Limited), incorporated on August 10, 1871, was one of the flagship Company of the erstwhile Morarjee Group. The Ashok Piramal Group is a diversified and growing conglomerate with business interest in textiles, real estate, engineering, entertainment and sports. Morarjee Goculdas Spinning and Weaving Company Limited was incorporated as a public limited company and thereafter set up its first mill in Mumbai. In 1980, the company acquired a second composite textile unit at Lower Parel, Mumbai. Due to the hardships and difficulties of the textile industry, Morarjee Goculdas Spinning and Weaving Company Limited gradually shifted its focus towards real estate. In 1995 Morarjee Goculdas Spinning and Weaving Company Limited set up Morarjee Brembana Private Limited as a 50:50 joint venture with Manifattura Di Valle Brembana Spa Italy, a leading Italian company to manufacture high quality cotton shirting fabrics, with its manufacturing facility at Butibori near Nagpur. Morarjee Brembana Private Limited was converted into a public company with effect from December 24, 1996. Since its inception Morarjee Brembana Limited (formerly known as Morarjee Brembana Private Limited) issued further shares on different dates as is given in the table below: -
Date Shares Cumulative
July 14, 1995 20 20
July 14, 95 30 50
February 9, 1998 1,99,99,950 2,00,00,000
March 12, 1998 54,70,000 2,54,70,000
May 13, 1999 45,30,000 3,00,00,000
March 05, 2001 28,76,000 3,28,76,000
In September 2003, the 50% shareholding held by Manifattura Di Valle Brembana Spa Italy was bought back by Morarjee Goculdas Spinning & Weaving Company Limited and the Morarjee Goculdas Spinning & Weaving Company Limited Senior Employees Stock Option Scheme. In October 2003, Morarjee Goculdas Spinning & Weaving Company Limited underwent a business re-organization whereby it transferred its entire textile business to Morarjee Brembana Limited and thus the textile operations shifted from Mumbai to Nagpur. Under the continued business reorganisation, in October 2003, Morarjee Goculdas Spinning & Weaving Company Limited transferred 1,93,96,240 shares held in Morarjee Brembana Limited, to the MGM Shareholders Benefit Trust, which was set up for the benefit of the employees of Morarjee Goculdas Spinning & Weaving Company Limited Senior Employee Stock Option Scheme, with the ultimate intention that these shares would ultimately be held by the employees of Morarjee Goculdas Spinning & Weaving Company Limited. Further, in June 2004, Company issued further 1,00,00,000 Equity Shares which were subscribed by Morarjee Goculdas Spinning & Weaving Company Limited and subsequently the shareholding of Morarjee Brembana Limited became: -
Existing Holding
Inter se Transfer Balance
Further Issue
(June 29,
2004) Total
% of
shareholdin
g
Morarjee Goculdas Spinning &
3,25,47,240 (1,93,96,240) 1,31,51,000 1,00,00,000 2,31,51,000 54%
67
Existing
Holding
Inter se
Transfer Balance
Further Issue
(June 29,
2004) Total
% of
shareholdin
g
Weaving Company Limited
MGM ESOP 3,28,760 0 3,28,760 0 3,28,760 0.77%
MGM Shareholders Benefit Trust
0 1,93,96,240 1,93,96,240 0 1,93,96,240 45.23%
Total 3,28,76,000 3,28,76,000 1,00,00,000 4,28,76,000 100%
On September 8, 2004 the name of Morarjee Goculdas Spinning & Weaving Company Limited was changed to Morarjee Realties Limited. Morarjee Brembana Limited came out with a restructuring scheme in September, 2004 to mitigate the past losses and the residual losses aggregating to Rs. 3,813.53 lakhs, which resulted in:
● Writing off of old unadjusted losses
● Capital Restructuring
● Buy back of Equity Shares
● Reduction of Share capital Under this scheme, both MGM Shareholders Benefit Trust and Morarjee Realties Limited offered some part of their holding for buy back scheme offered by Morarjee Brembana Limited at Rs. 0.10 per Equity Share and subsequently these shares were cancelled by Morarjee Brembana Limited consequent to which, Morarjee Brembana Limited’s equity share capital stood reduced to Rs. 10,38,25,500 divided into 1,03,82,550 equity shares of Rs. 10 each. The said buy back was not done through the stock exchanges as Morarjee Brembana Limited was not a listed company at the time of the buy back and was pursuant to the scheme of amalgamation approved by the Bombay High Court and in compliance with the relevant provisions of the Act. Subsequently, these losses were set off by capital reduction and share premium to the extent of Rs. 3216.85 lakhs and Rs. 550 lakhs respectively. The emerging capital was as under: -
Total Offered in buy back
Equity
Shares after
set off
Morarjee Realties Limited 2,31,51,000 1,38,76,286 92,74,714
MGM ESOP 3,28,760 0 3,28,760
MGM Shareholders Benefit Trust 1,93,96,240 1,86,17,164 7,79,076
Total 4,28,76,000 3,24,93,450 1,03,82,550 Morarjee Realties Limited also came out with a restructuring scheme in November 2004 and the brief features of which are as under: -
● Morarjee Realties Limited distributed 92,74,714 equity shares held by it in Morarjee Brembana Limited to its equity shareholders in the ratio of 10 equity shares in Morarjee Brembana Limited for every 21 equity shares in Morarjee Realties Limited .
● Morarjee Realties Limited distributed 7,79,076 Equity Shares in the name of MGM Shareholders Benefit Trust held by it in Morarjee Brembana Limited to its equity shareholders in the ratio of 1:25
The emerging share capital of Morarjee Brembana Limited was as under:
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Shareholder No. of Shares % of shareholding
Promoter 55,68,038 53.63 %
Directors and Relatives 28,326 0.26 %
FIs / FIIs / MFs 12,69,501 12.23 %
Private Corporate Bodies and NRIs / 6,70,236 6.46 %
Indian Public 28,46,449 27.42 %
TOTAL 1,03,82,550 100.00 %
Finally, in January 2005, Morarjee Brembana Limited changed its name to Morarjee Textiles Limited. Pursuant to the above restructuring scheme and vide information memorandum dated February 21, 2005, the Equity Shares of our Company got listed on BSE on March 24, 2005 (vide listing approval dated March 22, 2005) Further, pursuant to the Scheme of Arrangement of Morarjee Realties Limited approved by the High Court of Judicature at Bombay, vide its order dated November 4, 2004, between Morarjee Realties Limited and its members whereby investments held by Morarjee Realties Limited in the Equity Share Capital of the Company – comprising of 92,74,714 Equity Shares of Rs. 10 each fully paid up of the Company – were distributed to the equity shareholders of Morarjee Realties Limited without any payment, in the ratio of 10:21 as on January 5, 2005, which was the record date fixed by Morarjee Realties Limited for this purpose. The name of Morarjee Realties Limited was changed to Peninsula Land Limited on April 10, 2006. Rights Issue – 2006 and Listing at NSE In 2006, the Company also completed a rights issue of 7,786,913 fully paid equity shares of Rs. 10 each at a premium of Rs. 45 per fully paid equity share for an amount aggregating Rs. 4,282.80 lakhs to the existing equity shareholders on rights basis in the ratio of three fully paid equity share for every four existing equity shares held by the existing shareholders and for every three equity shares being allotted on rights basis, the allottees received two detachable warrants. On December 3, 2007, the Equity Shares were listed and admitted for trading on National Stock Exchange of India Limited. Disassociation by Ajay Piramal group
At the time of the rights issue in 2006, Mr. Ajay G. Piramal and Ms. Urvi A. Piramal were the promoters of the Company. Mr. Ajay G. Piramal along with his relatives and entities controlled by him (“Ajay Piramal Group”) were part of the promoter group of the Company. On August 16, 2007, the Equity Shares held by certain members of the Ajay Piramal group, were transferred to Ms. Urvi A. Piramal, Mr. Harshvardhan A. Piramal, Mr. Rajeev A. Piramal, Mr. Nandan A. Piramal in the manner set out below:
69
Sl. No. Name of
transferor No. of
shares
transferred
Name of
transferee No. of
shares
transferred
Percentage
shareholding
(%)
Consideration
(Rs.)
Ms. Urvi A. Piramal
190 0.00 1. Mr. Ajay G. Piramal jointly with Ms. Swati A. Piramal
192
Mr. Nandan A. Piramal
2 0.00
2. Mr. Ajay G. Piramal
649 Mr. Nandan A. Piramal
649 0.00
Mr. Harshvardhan A. Piramal
8,261 0.04
Mr. Rajeev A. Piramal
8,239 0.04
3. Mr. Anand A. Piramal
24,088
Mr. Nandan A. Piramal
7,588 0.04
4. Ms. Lalita G. Piramal
22 Mr. Nandan A. Piramal
22 0.00
5. Ms. Nandini A. Piramal
24,088 Ms. Urvi A. Piramal
24,088 0.13
By way of Gift
Total 49,039 49,039 0.26
On August 20, 2007, Ajay G. Piramal, as a trustee of the Gopikisan Piramal Memorial Hospital, a shareholder in the Company and a member of the Ajay Piramal group, transferred the Equity Shares in the manner specified below:
Sl.
No.
Name of transferor Name of transferee No. of shares
transferred
Percentage
shareholding
(%)
Consideration
(Rs.)
1. Goldflag Mercantile Company Private Limited
80,698 0.44 36,77,961.96
Topflag Trading Company Private Limited
80,698 0.44 36,37,562.95
Gopikisan Piramal Memorial Hospital
Newone Trading Company Private Limited
80,697 0.44 38,79,910.94
Total 2,42,093 1.33 111,95,435.85
Post the transfer of shares in the manner set out above, PEL Holdings Private Limited (“PEL”), one of the Ajay Piramal group of companies, merged with Bigdeal Mercantile Private Limited (“Bigdeal”) by way of a merger scheme sanctioned by an order of the High Court of Bombay, dated November 23, 2007, pursuant to which, 23,61,716 Equity Shares held by PEL were transferred to Bigdeal on January 4, 2008.
Pursuant to transfer of shares on August 16, 2007 and August 20, 2007 and the merger of PEL with Bigdeal, the Ajay Piramal group ceased to hold Equity Shares in the Company and relinquished any control it may have had over the Company, from January 4, 2008. Pursuant to this disassociation of the Ajay Piramal group from the Company as described above, the Ajay Piramal group ceased to constitute a part of the “Promoter and Promoter Group” of the Company. Recent development
Through a High Court of Bombay order dated December 12, 2008, Bigdeal, along with Newzone Mercantile Company Private Limited, Alltime Mercantile Company Private Limited and Superplaza Mercantile Company
70
Private Limited merged into Topstar Mercantile Private Limited. Therefore, currently, the 23,61,716 Equity Shares originally held by PEL are held by Topstar Mercantile Private Limited. In 2009, pursuant to an order of the High Court of Bombay dated February 6, 2009 sanctioning a scheme of merger, Newone Trading Company Private Limited (“Newone”), Topflag Trading Company Private Limited (“Topflag”) and Goldflag Mercantile Company Private Limited (“Goldflag”) (collectively the “Transferor
Companies”) were merged into Omega Multitrade Private Limited. At the time of the High Court order, Newone held 20,94,895 Equity Shares, Topflag held 20,94,896 Equity Shares and Goldflag held 20,94,896 Equity Shares, aggregating to 62,84,687 Equity Shares, Prior to the coming into effect of the merger, that is, March 6, 2007, the Transferor Companies transferred the 62,84,687 Equity Shares held by them (through an off market transfer) to Ashok Piramal Group Textiles Trust on March 2, 2009 for a total consideration of Rs. 86,540,140. Thereafter, the said proceeds were transferred to Omega Multitrade Private Limited, pursuant to the scheme of merger coming into effect. Main Objects of our Company
Our objects as contained in our Memorandum of Association include:
1. to carry on the business of manufacturing and selling of fabrics. 2. to carry on the business of manufacturing and marketing of high value quality shirting products. 3. to carry on business of manufactures, imports and exports, wholesale and retails dealers of and in
men’s, women’s and children’s clothing. Changes in the Memorandum of Association
The Company was incorporated on July 14, 1995 as Morarjee Brembana Private Limited. It was subsequently converted into a public company on December 24, 1996. Changes in Authorized Share Capital
Equity Shares
(Rs.)
5% redeemable
cumulative non
convertible
Preference shares
(Rs.)
Total
(Rs.)
EGM/AGM Date of
AGM/EGM
20,00,00,000 - 20,00,00,000 On incorporation July 14, 1995
30,00,00,000 - 30,00,00,000 EGM October 12, 1996
32,00,00,000 - 32,00,00,000 EGM November 10, 1997
40,00,00,000 - 40,00,00,000 EGM December 11, 1998
40,00,00,000 10,00,00,000 50,00,00,000 EGM October 14, 1999
43,00,00,000 10,00,00,000 53,00,00,000 EGM June 17, 2004
Other Changes
S. No. Particulars Date of EGM/AGM
1 Change in name of the Company from Morarjee Brembana Private Limited to Morarjee Brembana Limited
November 18, 1996
2 Change in name of the Company from Morarjee Brembana Limited to Morarjee Textiles Limited
November 5, 2004
3. Change in registered office January 24, 2007
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Important milestones achieved by the Company are as follows:
YEAR EVENT
April, 1995
Agreement to form a 50-50 joint venture between The Morarjee Goculdas Spinning &Weaving Company Limited (MGL) and Manifattura Di Valle Brembana (MVB), Italy.
July, 1995 Incorporation of the Company as Morarjee Brembana Private Limited
November, 1996
Change of status of Morarjee Brembana Private Limited from private limited to public limited.
January, 1998 Commercial production at Nagpur
September, 2003
Buy-out of MVB’s equity by MGL
October, 2003 Transfer of MGL’s textile undertaking to Morarjee Brembana Limited
September, 2004
Restructuring of Company’s Equity Share Capital
January, 2005 Formation of subsidiary in Italy – Morarjee International s.r.l.
January, 2005 Change of name from Morarjee Brembana Limited to Morarjee Textiles Limited
March, 2005 Listing of equity shares on Bombay Stock Exchange Limited
March, 2005 Investment in subsidiary – Integra Apparels & Textiles Limited – Forward integration into garment manufacturing
December, 2005 Joint venture with Just Textiles Limited.
January, 2007 Acquisition of Mens Club s.p.a.
December, 2007 Listing with the NSE
January, 2008 100% acquisition of Pranit Consultants Private Limited and its wholly owned subsidiary, Fabritex Exports Private Limited through the Company’s subsidiary, Integra Apparels & Textiles Limited.
Subsidiaries
1. Integra Apparels & Textiles Limited
Integra Apparels & Textiles Limited (“Integra”) has been set up as subsidiary of the Company, and was incorporated on July 2, 2004 with the Registrar of Companies, Bangalore, Karnataka. The status of Integra was changed from private to public on March 30, 2009. The registered office of Integra is situated at Krishna Reddy Industrial Area, Kudlu Gate, 7th Mile, Hosur Road, Bangalore 560 068. Integra was set up to vertically integrate and provide a comprehensive service to its customers and itself, by initiating its own garments business. The main objects of Integra is inter alia to manufacture, import and export, wholesale and retail dealership, of textiles, fabrics, apparels and garments and dresses of every kind, nature and description for men, women and children. Integra is currently engaged in the business of spinning, texturizing, weaving etc. The Company holds 89.12% of the equity share capital of Rs. 875 lakhs. The company had initially outsourced the manufacturing activity. However, within a short span of time, we started our first manufacturing unit for casual top-wear with a capacity of 6 lakhs pieces per annum. After commissioning of the unit, Integra has further expanded by setting up a dedicated unit for high end formal shirts with a capacity of 6 lakhs pieces per annum. All the above units are located in Bangalore which is a major garment manufacturing centre in India.
Board of Directors
S. No Name
1. Mr. R Krishnakumar
2. Mr. P K Gothi
3. Mr. Harshvardhan A. Piramal
4. Ms. Alpana Chinai
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5. Mr. Chandrakant Khetan
6. Mr. Vivek Tibrewala
7. Mr. Ranjan Sanghi
Shareholding Pattern as on the date of this Draft Letter of Offer
S. No Name of Share Holder No. of shares Percentage of
holding
1. Mr.R Krishnakumar 70,000 0.80
2. Mr. R Ramraj 70,000 0.80
3. Mr. R. Krishnakumar jointly with Ms. Jayashree Krishnakumar
504,000 5.76
4 Mr. Ashishkumar Shrivastava jointly with Ms. Nishila Shrivastava
154,000 1.76
5. Mr. R Ramraj jointly with Ms. Sunita Ramraj 56,000 0.64
6. Mr. K Sainath jointly with Ms. S Deveshri 98,000 1.12
7. Morarjee Textiles Limited 7,798,000 89.12
TOTAL 8750,000 100
Financial performance
(in Rs. Lakhs except per share data)
Integra is not a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1995 nor is it under winding up.
2. Morarjee International s.r.l.
Morarjee International s.r.l., (“Morarjee International”) has been registered in Italy on October 27, 2005 as a 100% subsidiary, with a capital of Euro 10,000.00 with its registered office at Corso Italia, 62, 20025 Legnano (MI), Italy. The administrator of Morarjee International is Mr. N.K. Sharma. The main objects of the Morarjee International is production, marketing, importation, exportation for itself and for third parties of fabrics and textile products and similar items of garment products and accessories in general and also of merchandise and products of all kinds and types. Morarjee is currently engaged in the business of providing marketing services. The Company currently holds all the equity share capital in Morarjee International.
Board of Directors
S. No Name
1. Mr. N K Sharma
Shareholding as on the date of this Draft Letter of Offer
S. No Name of Share Holder No. of shares Percentage of
Particulars December 31, 2008
(Nine Month
Period)
FY 2008 FY 2007 FY 2006
Total Income 7,025.05 7,617.21 4,396.88 1,768.39
Profit/(loss) after tax (272.08) 158.74 209.92 (51.42)
Equity capital (par value Rs. 10 per share)
875 875 62.50 50.00
Reserves & Surplus 763.81 1,035.81 1,689.49 (8.01)
Earnings per share (Face Value Rs. 10 per share)
(3.11) 2.68 41.73 (10.28)
Book value per Share (of Rs. 10 each)
18.73 21.84 280.32 8.39
73
holding
1. Morarjee Textiles Limited 10,000 100.00
Financial performance
In Rs. lakhs except for share data
Particulars December 31, 2008
(Nine Month Period)
FY 2008 FY 2007 FY 2006
Total Income 288.28 442.82 438.45 396.55
Profit/(Loss) after tax (23.46) (28.87) (3.96) (2.47)
Equity capital (par value €1 per share) (Equivalent to INR)
5.61 5.61 5.61 5.61
Reserves & Surplus (114.05) (90.59) (58.34) (54.91)
Basic Earnings per share (234.60) (288.70) (39.60) (24.70)
Book value (par value €1 per share) (Equivalent to INR)
(1,084.43) (849.80) (527.30) (493.00)
Note: For conversion rates please refer to “Currency of Presentation”
3. Pranit Consultants Private Limited
Pranit Consultants Private Limited (“Pranit”) is a subsidiary of Integra Apparels and Textiles Limited (“Integra”) incorporated on January 7, 1986 with the Registrar of Companies, Delhi and Haryana. The registered office of Pranit is at B-57, Maya Puri Industrial Area, Phase – I, New Delhi 110 004. Integra acquired the entire shareholding of Pranit along with all its assets and liabilities as a going concern subjects to agreed terms and conditions. Pranit along with Mr. R. Krishna Kumar own the entire equity shareholding of M/s Fabritex Exports Private Limited (“Fabritex”) and thus by virtue of the acquisition described above, Integra acquired control of the shareholding of Fabritex as per the terms, conditions, covenants and warranties as set out in the aforementioned agreement. The main objects of Pranit is inter alia to acquire technical and managerial information, know-how and data for the erection and operation of plants, to carry out the business of consultants in all branches and organize advise and render management in various branches. It is currently engaged in the business of management and consultancy services.
Board of directors
S. No Name
1. Mr. Harshvardhan A. Piramal
2. Mr. P K Gothi
3. Mr. R. Krishna Kumar
Shareholding as on the date of this Draft Letter of Offer
S. No Name of Share Holder No. of shares Percentage
of holding
1. Integra Apparels & Textiles Limited 48,09,710 100.00
2. Mr. R Krishna Kumar jointly with Integra Apparels & Textiles Limited
10 0.00
Total 48,09,720
100.00
Financial performance
(in Rs. Lakhs except per share data)
Particulars December 31,
2008 (Nine
Month Period)
FY 2008 FY 2007 FY 2006
Total Income - - 0.41 -
Profit/(Loss) after tax - (5.28) 0.32 (0.61)
74
Equity capital (par value Rs. 10 per share)
480.97 480.97 1.07 1.07
Reserves and Surplus 47.90 47.90 53.19 52.87
Earnings per share (Face Value Rs. 10 per Share)
- 0.11 2.99 (5.71)
Book value per Share (of Rs. 10 each)
11 11 506.15 503.16
Pranit is not a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1995 nor is it under winding up.
4. Fabritex Exports Private Limited
Fabritex Exports Private Limited (“Fabritex”) is a subsidiary of Pranit Consultants Private Limited, which was incorporated on July 19, 1993 with the Registrar of Companies, Karnataka (Bangalore). Its registered office at Survey No. 113, Hongasandra Village, Begur Hobli (7th Mile), Hosur Road, Bangalore 560068 Karnataka. The main objects of the Fabritex is inter alia to manufacture, import and export, wholesale and retail dealership, of textiles, clothing, garments, dresses, apparel and hosiery goods of every kind, nature and description for men, women and children. Fabritex is currently engaged in the business of manufacturing garments and trading.
Board of directors
S. No
Name
1. Mr. Harshvardhan A. Piramal
2. Mr. P K Gothi
3. Mr. Krishna Kumar
Shareholding as on the date of this Draft Letter of Offer
S. No Name of Share Holder No. of shares Percentage of
holding
1. Pranit Consultants Private Limited 26,58,990 100.00
2. Mr. R Krishna Kumar jointly with Pranit Consultants Private Limited
10
Total 26,59,000 100.00
Financial performance
(in Rs. Lakhs except per share data)
Fabritex is not a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1995 nor is it under winding up.
Particulars December 31,
2008 (Nine Month
Period)
FY 2008 FY 2007 FY 2006
Total Income 107.22 1,058.31 3,125.26 5,610.23
Profit/(Loss) after tax (485.87) (694.74) (1,011.49) 39.12
Equity capital (Face value Rs. 10 per share)
265.90 265.90 265.90 265.90
Reserves & Surplus (1,418.61) (932.74) (16.95) 803.24
Basic Earnings per share
(18.27) (26.13) (38.04) 1.47
Book value per Share (of Rs. 10 each)
(43.35) (25.08) 9.36 40.21
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5. Men’s Club Spa
Mens Club s.p.a. (“Mens Club”) has been registered in Santa O’ Mero, Italy and was incorporated on December 22, 2006. Its registered office is at Via Metella, Nuova 68, 64027 Santa O’ Mero, TE, Italy. The main object of Mens Club is inter alia, the production of articles of clothing, industrial laundry and industrial embroidering and quilting . Mens Club is currently engaged in the production of garments. Board of directors
S. No Name
1. Ms. Urvi A. Piramal
2. Mr. Harshvardhan A. Piramal
3. Mr. Mahesh Gupta
4. Mr. P K Gothi
5. Dr. Callegari Giuseppe Luigi Luciano
6. Mr. Verni Danilo
7. Mr. Trenta Giuseppe
Shareholding as on the date of this Draft Letter of Offer
S. No Name of Share Holder No. of shares
(of 1 euro each)
Percentage of
holding
1. Morarjee Textiles Limited 10,20,000 51.00
2. Morarjee International s.r.l. 3,20,000 16.00
3. Mr. Bacà Bernardino 1,40,000 7.00
4 Mr.Trenta Giuseppe 1,20,000 6.00
5. Mr.Verni Danilo 1,00,000 5.00
6. Mr. Di Martino Cristiano 80,000 4.00
7. Mr. De Ascentiis Giuseppe 40,000 2.00
8. Mr. Migliorati Giuliano 20,000 1.00
9. Mr. Callegari Luca Antonio Luigi 1,60,000 8.00
TOTAL 20,00,000 100
Financial performance
(in Rs. Lakhs except per share data)
Particulars Year ended
September 30,
2008
Year ended
December 31,
2007
Year ended
March 31, 2006
Total Income 1,050.13 1,403.08 -
Profit after tax (220.90) (32.24) -
Equity capital (par value €1 per share) (Equivalent to INR)
1,162.40 1,162.40 -
Reserves & Surplus (221.14) (42.17) -
Basic Earnings per share (11.04) (1.61) -
Book value (par value €1 per share) (Equivalent to INR)
47.06 56.01 -
This company has been incorporated post March 31, 2006 and as such audited financials for FY 2006 are not
available
6. Morarjee Holdings Private Limited
Morarjee Holdings Private Limited (“MHPL”) has been set up as a subsidiary of the Company. It was incorporated on March 4, 2009 with the Registrar of Companies, Maharashtra. The registered office of MHPL is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main objects of MHPL is inter alia to carry on the business of finance, industrial finance and investment activities and giving consultation of finance and investment company and financing industrial enterprise and to invest and manage the capital and other moneys received by the company in the
76
purchase or upon the security of shares, stock, debenture stock, bonds, mortgages, obligations and securities of any kind issued or guaranteed by any company, corporation or undertaking of whatever nature and whatsoever so constituted or carrying of business and shares, stocks, debenture, debenture stock, bonds, units, mortgages obligations and securities issued or guaranteed by Government, Sovereign Ruler, Commissioners, Trusts, Municipal, Local or other Authority or body of whatever nature at home or abroad and to invest in immovable property and to also receive monies on deposits, current account etc., and to transact business as capitalist, promoters etc., and to carry on business of financing. MHPL has just been incorporated and presently not carrying out any business.
Board of Directors
S. No Name
1. Mr. Harshvardhan A. Piramal
2. Mr.P.K.Gothi
Shareholding Pattern as on the date of this Draft Letter of Offer
S. No Name of Share Holder No. of shares Percentage of
holding
1. Morarjee Textiles Limited 9,999 99.99
2. Mr. Harshvardhan A. Piramal 1 0.01
TOTAL 10,000 100
Financial performance
This company has been recently incorporated and as such audited financials for FY 2008, 2007 and 2006 are
not available
MHPL is not a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1995 nor is it under winding up.
Joint Ventures
1. Morarjee Castiglioni (I) Private Limited
Morarjee Castiglioni (I) Private Limited (“MCPL”) was incorporated on August 26, 1997, as a 50:50 Joint Venture between Morarjee Goculdas Spinning and Weaving Company Limited (now known as Peninsula Land Limited) and Manifattura Castiglioni SPA of Italy (MCS). The registered office of MCPL is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. In 2003, to facilitate business re-organization and concentration of the entire textile business in one company, the entire textile business of Peninsula Land Limited including this Joint Venture was transferred to Morarjee Textiles Limited (then known as Morarjee Brembana Limited).The main objects of MCPL is to inter alia manufacture and market home furnishing fabric cloth and other such material of all types and description. It is currently engaged in the business of production of home furnishing fabrics.
Board of directors
S. No Name
1. Mr. P K Gothi
2. Mr. Pierluigi Colombo
3. Mr. Giorgio Colombo
4. Mr. Dario Colombo (Alternative of Mr. Giorhio Colombo)
5. Mr. Bharat Sanghavi
Shareholding as on the date of this Draft Letter of Offer
Shareholders No. of shares %
77
Morarjee Textiles Limited 999,600 50.00
Morarjee Textiles Limited jointly with Mr. P K Gothi
200 0.00
Morarjee Textiles Limited jointly with Ms. Urvi A. Piramal
200 0.00
Manifattura Castiglioni SPA 10,00,000 50.00
Total 20,00,000 100.00
Financial performance
(in Rs. lakhs except per share data)
For the period ended Particulars
December 31,
2008 (Nine Month Period)
March 31, 2008 March 31, 2007 March 31, 2006
Total Income 0.88 1.51 0.62 0.40
Profit after tax/(Loss) (0.09) 0.96 (0.06) (0.20)
Equity capital (Face value Rs. 10 per share)
200 200 200 200
Reserves & Surplus (41.00) (40.99) (42.26) (42.50)
Earnings per share (Face Value Rs. 10 per Share)
- 0.05 - -`
Book value per Share (Face Value Rs. 10 per Share)
7.95 7. 95
7.89 7.87
2. Just Textiles Limited
Just Textiles Limited (“JTL) was incorporated as Just Weaves Private Limited on August 5, 1987 with its registered office at K-5, Additional M. I. D. C., Anand Nagar, Ambernath, Thane – 421 506. The status of the JTL was changed from private to public on August 4, 1988. Subsequently, on September 6, 1988, the name of JTL was changed to Just Textiles Limited. The main objects of JTL is inter alia to produce, manufacture, import and export, and deal in all kinds of textile facbrics, yarn, threads, plant, machinery, equipment, component spares and other articles related in the textile industry. It is currently engaged in the business of processing, trading of fabrics and garment manufacturing. Board of directors
S. No Name
1. Ms Urvi A. Piramal
2. Mr. Harshvardhan A. Piramal
3. Mr. P K Gothi
4. Mr. Bharat Sanghavi
5. Mr. Pradeep Modi
6. Ms. Rita Batra
7. Mr. Harish Mehta
8. Mr. Jehan Sethna
Shareholding as on the date of this Draft Letter of Offer
Shareholders No. of shares %
Mr.Pradeep Modi 3,18,438 19.61
Ms. Usha Modi 11,032 0.68
Mr. Vishwanath Modi 25,400 1.56
Just Exports Private Limited 3,36,086 20.70
Ms. Manju Scruwala 30 0.00
Ms. Rita Batra 43,000 2.65
Mr. Yugam Shah 40 0.00
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Shareholders No. of shares %
Mr. Amit Liladhar Shah 79,006 4.87
Ms. Priyanka Dilip Dudhani 5,000 0.31
Ms. Divya Dilip Dudhani 5,000 0.31
Orient Securities Private Limited 5,000 0.31
Morarjee Textiles Limited 7,95,560 49.00
Total 16,23,592 100
Financial performance
(in Rs. lakhs except per share data)
For the period ended Particulars
December 31,
2008 (Nine
Month Period)
March 31, 2008 March 31, 2007 March 31, 2006
Total Income 2,856.04 4,126.53 4,114.34 2,547.28
Profit/(Loss) after tax 39.88 74.53 330.37 (87.28)
Equity capital (Face value Rs. 100 per share)
1,623.59 1,623.59 1,623.59 1,128.03
Reserves & Surplus 425.66 385.78 311.25 204.71
Basic Earnings per share 2.51 4.59 21.52 (5.83)
Book value per Share (Face value Rs. 100 per share)
126.22 123.76 119.17 109.01
Summary of key agreements
Share purchase agreement dated January 16, 2008 (“SPA”) between our Subsidiary, Integra Apparels &
Textiles Private Limited (now Integra Apparels & Textiles Limited) (“the Purchaser), Mr. Sudhir Sekhri, Mr.
Pradeep Sekhri and Mr. Vishwanath Sekhri (“the Sellers”), and Pranit Consultants Private Limited
(“Pranit”). Our Subsidiary, Integra Apparels and Textiles Limited has entered into the SPA with the Sellers and Pranit for the transfer 48,09,720 equity shares (“Pranit Shares”) of Pranit each held by the Seller to the Purchaser. As M/s Fabritex Exports Private Limited (“Fabritex”) is a wholly owned subsidiary of Pranit, the acquisition of Pranit by the Purchaser would enable it to own and control Fabritex. The Pranit Shares were transferred for a total consideration of Rs. 3,30,00,000. The SPA is not assignable by the Seller although the Purchaser has a right to assign. Apart from the current liabilities as per the closing accounts, all other liabilities would be discharged solely by the Sellers and they would indemnify the Purchaser for discharging the same, and any losses which may be incurred by the Purchaser which may arise from a breach of any of the Seller’s warranties, any demand for payment of taxes which the sellers had failed to pay, any demand in respect of title of Fabritex’s assets or any cost arising out of any litigation. Further, the Seller, the Purchaser and Pranit entered into an additional agreement on January 17, 2008 for the passing on or sharing of such benefits that are likely to accrue to the seller in future whose amounts were not ascertainable at the stage at which the agreement was entered into. These benefits include sharing of tax benefits on account of carry forward losses of Fabritex, reduction in the customs duty payable for advance licenses pending closure as on the date of the this SPA, refund from the income tax department on account on succeeding in the appeal with the Income Tax Appellate Tribunal and recoveries of bad debts.
Agreement dated December 23, 2005 (“JVA”) between the Company, Mr. Pradeep Modi, Just Textiles
Limited ("JTL") and Just Exports Private Limited ("the Associated Company")
The JVA has been entered into by the Company for the purposes of obtaining a stake in JTL. Pursuant to the JVA, the Company has purchased 3,00,000 equity shares at Rs. 100 per equity share from Mr. Modi and subscribed to 4,95,560 equity shares of JTL at Rs. 100 per equity share at a total consideration of Rs. 7,95,56,000, such that the post transaction shareholding ratio is 51:49 of Mr. Pradeep Modi and Associates and MTL respectively.
79
In case of a public issue of JTL, excluding the shareholding held by the public, the inter se shareholding between Mr. Pradeep Modi and associates and the Company will continue to be 51:49. The business affairs of JTL are operated, managed and controlled jointly by the Company and Mr. Pradeep Modi and associates. Through this agreement, products manufactured, procured, processed or developed by the Company will not be marketed or sold by either the Associate Company or JTL without its prior consent. Mr. Pradeep Modi has also agreed not to compete with the Company’s or JTL's business. JTL shall give preferential rates and scheduling of capacity for processing the Company’s products. MTL has the right to place 4 Directors on the board of JTL and no decisions on strategic matter can be taken without the consent of one of the Company appointed directors. If the Company decides to transfer its shares, it must first offer them to Mr. Pradeep Modi. Similarly, if Mr. Pradeep Modi decides to transfer his shares, he must first offer them to the Company. The Company also has the right to terminate the JVA if Mr. Pradeep Modi becomes insolvent or if the Associate Company is wound up or a substantial portion of its assets are possessed, giving it the right to buy over the shares held by Mr. Pradeep Modi or the Associate Company in JTL. Mr. Pradeep Modi has the right to terminate the Agreement if the Company is wound up or if a substantial portion of its assets are taken possession of, giving him the right to buy over the Company shares.
Capitalisation of Reserves or Profits
Our Company has not capitalized any of its reserves or profits for the last five years.
Change in business line in last five years
The Company has not changed its business line in the last five years.
Default in payment of Loans
Apart from a default in the payment of a loan to Axis Bank, the Company has not defaulted in any payments to any other lender. For further details, please refer to the chapter titled “Risk Factors” beginning on page ix.
Issue of shares to Promoter other than by cash
The Company has not issued any Equity Shares for consideration other than cash.
Injunction / Restraining Order
The Company is not operating under any injunction or restraint order.
For details of our subsidiary and other group companies, please refer to the chapters titled “ Management” and “Our Promoter and Promoter Group” beginning on page 81 and 98.
For detailed description of our financial results, growth, customers / suppliers, please refer to the chapter titled “Management Discussion and Analysis of Financial Conditions and Results of our Operation” and “Our Business” beginning on page 157 and page 46 respectively. For detailed description of our management, please refer to the chapter titled “Management” beginning on page 81.
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DIVIDENDS
Equity Shares
We have paid dividends for the year ending March 31, 2005, 2006 and 2007. Please note that the declaration and payment of dividend will be recommended by our Board of Directors and approved by our shareholders at their discretion and will depend upon a number of factors, including, but not limited to profits, capital requirements and overall financial conditions. . The following are the dividend payouts in last five years by our Company:
F. Y. Dividend per equity share of
Rs. 10 each (Amount in Rs.) Amount (In Rs. lakhs)
(1)
2003-2004 Nil Nil
2004-2005 1.50 155.74
2005-2006 2.50 259.56
2006-2007 1.50 272.54
2007-2008 Nil Nil
(1) Excluding dividend tax where applicable
Preference Shares
We have paid dividends on our 5% redeemable cumulative non convertible preference shares for the year ending March 31, 2005, 2006 and 2007. The following are the dividend payouts in last four years by our Company:
F. Y.
Dividend per preference
share of Rs. 100 each (Amount in Rs.)
Amount (In Rs. lakhs)(1)
2004-2005 3.75 37.50
2005-2006 5.00 50.0
2006-2007 5.00 50.0
2007-2008 Nil Nil
(1) Excluding dividend tax where applicable
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MANAGEMENT
The following table sets forth details regarding our Board of Directors as on the date of this Draft Letter Offer
Sr.
No.
Name, Father’s /
Husband’s name Designation, Address,
Occupation, Date of
Appointment, Director
Identification Number
(DIN) and Term
Nationality Age
(years)
Directorships
1 Ms. Urvi A. Piramal W/o (Late) Mr. Ashok G. Piramal, 61A Piramal House, Pochakhanawala Road, Worli, Mumbai 400 025 Designation: Non executive Chairperson Occupation: Industrialist First appointed on February 1, 2005 DIN: 00044954
Term: Liable to retire by rotation
Indian 56 1. Ashok Piramal Enterprises Private Limited
2. Ashok Piramal Management Corporation Limited
3. Crossroads Shoppertainment Private Limited
4. Delta Magnets Limited 5. Goldlife Mercantile Company
Private Limited 6. Highpoint Agro Star Private Limited 7. Jammin Recreation Private Limited 8. Just Textiles Limited 9. L & T Crossroads Private Limited 10. Lifezone Mercantile Private Limited 11. Men’s Club s.p.a 12. Miranda Few Tools Private Limited 13. Miranda Tools Private Limited 14. Omega Multitrade Private Limited 15. Onestar Mercantile Company
Private Limited 16. Onestar Trading Company Private
Limited 17. Oneup Mercantile Company Private
Limited 18. Peninsula Land Limited 19. Peninsula Trustee Limited 20. Piramyd Retail and Merchandising
Private Limited 21. PMP Components Private Limited 22. Pune Football Club Private Limited 23. Seastar Trading Company Private
Limited 24. Supertime Trading Private Limited 25. Topstar Mercantile Private Limited 26. Toptech Mercantile Company
Private Limited 27. Topzone Mercantile Company
Private Limited
2 Mr. Harshvardhan A. Piramal S/o (Late) Mr. Ashok G. Piramal
61A Piramal House, Pochakhanawala Road, Worli, Mumbai 400 025 Designation: Executive
Indian 35
1. Arrow Textiles Limited 2. Ashok Piramal Enterprises Private
Limited 3. Ashok Piramal Management
Corporation Limited 4. Camphor and Allied Products
Limited 5. Crossroads Shoppertainment Private
Limited 6. Fabritex Exports Private Limited
82
Sr.
No.
Name, Father’s /
Husband’s name
Designation, Address,
Occupation, Date of
Appointment, Director
Identification Number (DIN) and Term
Nationality Age
(years)
Directorships
Vice Chairman (Non Independent Director) Occupation: Industrialist First appointed on June 1, 2004 DIN: 00044972
Term: Expires on May 31, 2010
7. Goldlife Mercantile Company Private Limited
8. Highpoint Agro Star Private Limited 9. Integra Apparels & Textiles Limited 10. Just Textiles Limited 11. Lifezone Mercantile Private Limited 12. Men’s Club s.p.a. 13. Millennium Broadcast Company
Private Limited 14. Miranda Few Tools Private Limited 15. Miranda Tools Private Limited 16. Morarjee Holdings Private Limited 17. Omega Multitrade Private Limited 18. Onestar Mercantile Company Private
Limited 19. Onestar Trading Company Private
Limited 20. Oneup Mercantile Company Private
Limited 21. Peninsula Facility Management
Services Private Limited 22. Peninsula Mega Properties Private
Limited 23. Peninsula Mega-City Development
Private Limited 24. Peninsula SA Realty Private Limited 25. Peninsula Townships Development
Private Limited 26. PMP Components Private Limited 27. Pranit Consultants Private Limited 28. Pune Football Club Private Limited 29. Pune Sports Club Private Limited 30. Supertime Trading Private Limited 31. Topstar Mercantile Private Limited 32. Toptech Mercantile Company Private
Limited 33. Topzone Mercantile Company
Private Limited
3 Mr. P. K. Gothi S/o Mr. N.D.Gothi 102, Ashok House Plot 102, Beach House CHS Gandhi Gram Road, Juhu, Vile Parle (W), Mumbai 400049 Designation: Managing Director (Non independent Director) Occupation: Service
Indian 59 1. Cotton Association of India 2. Fabritex Exports Private Limited 3. Integra Apparels & Textiles Limited 4. Just Textiles Limited 5. Kamal Realty Limited 6. Men’s Club s.p.a. 7. Morarjee Castiglioni (India) Private
Limited 8. Morarjee Goculdas Spinning &
Weaving Private Limited 9. Morarjee Holdings Private Limited 10. Pacific Piramal Trading Private
Limited 11. Piramal KDs Superstores Private
83
Sr.
No.
Name, Father’s /
Husband’s name
Designation, Address,
Occupation, Date of
Appointment, Director
Identification Number (DIN) and Term
Nationality Age
(years)
Directorships
First appointed on July 25, 1995 DIN: 00046304 Term: Expires on December 27, 2009
Limited 12. Pranit Consultants Private Limited
4 Mr. Aditya Mangaldas S/o Harshavadan Mangaldas 12 Ocean View, 100 Bhulabhai Desai Road, Mumbai 400026 Designation: Independent Director Occupation: Businessman First appointed on February 18, 2005 DIN: 00032233 Term: Liable to retire by rotation
Indian 45 1. Arrow Textiles Limited 2. Bromelia Trading Private Limited 3. The Victoria Mills Limited
5 Mr. Mahesh Gupta S/o Mr. Shrikrishna Gupta 402 Ashok House Beach House CHS Gandhigram Road Juhu, Mumbai 400 049 Occupation : Service Designation: Non executive Director (Non- Independent) First appointed on January 19, 2006 DIN: 00046810 Term: Liable to retire by rotation
Indian 52 1. Ashok Piramal Management Corporation Limited
2. Boom Realty Private Limited 3. Ceat Limited 4. Champs Elysee Enterprises Private
Limited 5. City Parks Private Limited 6. Delta Corp Limited 7. Delta Magnets Limited 8. Men’s Club spa 9. Peninsula Investment Management
Company Limited 10. Peninsula Land Limited 11. Peninsula Pharma Research Centre
Private Limited 12. Renato Finance & Investments
Private Limited 13. RPG Life Sciences Limited 14. Topvalue Brokers Private Limited 15. Whitecity Mercantile Company
Private Limited
6 Mr. Pradipta Mohapatra Indian 59 1. Brabourn Enterprises Limited
84
Sr.
No.
Name, Father’s /
Husband’s name
Designation, Address,
Occupation, Date of
Appointment, Director
Identification Number (DIN) and Term
Nationality Age
(years)
Directorships
S/o Late Mr. Lakshmidar Mohapatra Old No. 11, ABM Avenue, Chennai – 600 028 Occupation: Service Designation : Independent Director First appointed on June 8, 2006 DIN: 00066239 Term: Liable to retire by rotation
2. Saregama India Limited 3. Chennai Business School Limited 4. Executive & Business Coaching
Foundation India Limited 5. Hemas Holdings p.l.c., Sri Lanka 6. Saregama India Limited 7. Saregama p.l.c. 8. Spencer International Hotels Limited 9. Totus Consulting Services Private
Limited 10. Zensar OBT Technologies Limited 11. Zensar Technologies Incorporated
(USA) 12. Zensar Technologies Limited 13. Zensar Technologies (UK) Limited 14. Zenzar Advanced Technologies
Limited
7 Mr. Ranjan Sanghi S/o Mr. Suraj Prakash Sanghi 21, Mistri Court, 4th Floor, Dinshaw Vaccha Road, Mumbai 400020 Designation: Independent Director Occupation: Industrialist First appointed on February 1, 2005 DIN: 00275842 Term: Liable to retire by rotation
Indian 64 1. Amzel Automotive Limited 2. Bagalkot Cement & Industries
Limited 3. Bajaj Auto Finance Limited 4. Bombay Auto Ancillary & Invstment
Private Limited 5. Borax Morarjee Limited 6. HDFC Trustee Company Limited 7. Integra Apparels & Textiles Limited 8. Kemp & Co. Limited 9. Mohan Three Wheelers Private
Limited 10. Navtech E-Solutions Private Limited 11. Rajesh Sanghi Auto Traders Private
Limited 12. Sah & Sanghi Auto Agencies Private
Limited 13. Spirax Marshall Private Limited 14. Suraj Sanghi Finance Limited 15. Tyresoles Concessionaries Private
Limited
8 Mr. Shailesh Haribhakti S/o Mr. Vishnubhai Haribhakti Flat No. 228, ‘B’Wing, Kalpataru Habitat, 22nd Floor, Dr. S.S. Rao Road, Parel, Mumbai 4000012 Designation: Alternate Director to Mr. Takao
Indian 53 1. ACC Limited 2. Advantage Moti India Private
Limited 3. Akruti City Limited 4. Ambuja Cements Limited 5. BDO Haribhakti Consulting Private
Limited 6. Blue Star Limited 7. Everest Kanto Cylinders Limited 8. First Policy Insurance Advisors
Private Limited
85
Sr.
No.
Name, Father’s /
Husband’s name
Designation, Address,
Occupation, Date of
Appointment, Director
Identification Number (DIN) and Term
Nationality Age
(years)
Directorships
Yajima (Independent Director) Occupation: Chartered Accountant First appointed on April 30, 2008 DIN: 00007347 Term: Liable to retire by rotation
9. Future Capital Holdings Limited 10. Great Offshore Limited 11. Hercules Hoists Limited 12. Hexaware Technologies Limited 13. J K Paper Limited 14. J M Financial Asset Reconstruction
Company Private Limited. 15. Kotak Mahindra Trusteeship
Services Limited. 16. LIC Pension Fund Limited 17. Mahindra Lifespace Developers
Limited. 18. Overseas Infrastructure Alliance
India Limited 19. Pantaloon Retail (India) Limited 20. Quadrum Solutions Private Limited 21. The Dhanalakshmi Bank Limited
9 Mr. Shobhan Thakore s/o Mr. Madhukant Thakore 509, Cumbala Crest, 42-A, G. Deshmukh Marg, Mumbai 400 026 Occupation: Solicitor Designation: Independent Director First appointed on January 19, 2006 DIN: 00031788 Term: Liable to retire by rotation
Indian 61 1. Alkyl Amines Chemicals Limited 2. Bharat Forge Limited 3. Carborundum Universal Limited 4. Carraro India Limited (Alternate
Director) 5. Carraro PNH Components (India)
Private Limited 6. Uni Deritend Limited 7. Uni Klinger Limited 8. DSP Merrill Lynch Fund Managers
10 Mr. Takao Yajima S/o Mr. Hisakazu Yajima 6-5-19 Ooizumimachi, Nerima-ku, Tokyo, Japan Designation: Independent Director Occupation: Industrialist First appointed on January 18, 2005 DIN: 01870785
Japanese 49 Flex Company Limited
86
Sr.
No.
Name, Father’s /
Husband’s name
Designation, Address,
Occupation, Date of
Appointment, Director
Identification Number (DIN) and Term
Nationality Age
(years)
Directorships
Term: Liable to retire by rotation
Our Directors (mentioned above) have confirmed that they have not been detained as wilful defaulters by the RBI or any other Governmental authority. Additionally, there are no violations of securities laws committed by them in the past or are pending against them and none of our Directors have been restricted from accessing the capital markets for any reasons, by SEBI or any other authorities.
Brief Biography of Our Directors
1. Ms. Urvi A. Piramal
As Chairperson of Ashok Piramal Group, Ms. Urvi A. Piramal oversees a professionally managed business group in India. She is the guiding force behind the Group’s sustained and profitable growth and in bringing the group companies closer to realizing her vision of touching the lives of one in five people around the globe. She has a Bachelor of Science degree and has attended the Advance Management Program at Harvard Business School. She joined the group’s textile division in 1984 and modernized the operations while focusing on higher levels of quality and productivity. Ms. Piramal plays a leading role in envisioning and formulating the Group’s strategies in real estate, textiles, engineering and entertainment businesses. The Group’s real estate foray has been driven by her foresight and her sharp business acumen has played an immeasurable role in placing Peninsula Land Limited as one of the top real estate companies in India. She has been a member of Technology and Quality Improvement Committee of IMC since its inception in 1994, and also the Chairperson of Supply Chain & Retail business (Internal Trade) Committee (04-05). Ms. Piramal has received a number of awards for her contribution to business. She was awarded the Qimpro Gold Standard Award for excellence in managing Quality Improvement programmes across the Group. She has won the Outstanding Woman Industrialist Award presented by the Marinelines Junior Chamber and the Yami Woman Award for her outstanding contribution to business by The ITC Grand Central. She also has to her credit the Cheminor Award from the India Institute of Materials Management. She is a Trustee of the Piramal Education Trust and Ashok G. Piramal Trust, which has been set up for the underprivileged. The trust runs a childrens’ School at Bagar in Rajasthan.
2. Mr. Harshvardhan A. Piramal
Mr. Harshvardhan A. Piramal, Executive Vice Chairman of the Company is 35 years of age. Mr. Piramal has completed his Bachelor of Science with specialisation in Physics from the Kings College London, U.K. followed by MBA with specialization in Finance and Strategy from the London Business School, U.K. He began his professional career as an Analyst at Indocean Venture Advisors (now JP Morgan Chase). He has been actively involved in the Ashok Piramal Group ventures since 1996. He went on to serve as the Chief Operating Officer (Allied Pharmaceutical Businesses) at Piramal Healthcare Limited (formerly known as Nicholas Piramal India Limited), where he oversaw a successful growth in the Company’s Vitamins, Diagnostics and Pathology Lab businesses. Mr. Harshvardhan A. Piramal has a keen interest in sports activities and has won several accolades in sports such as polo, soccer and equestrian sports. He is a co-founder of the Wildlife Conservation Trust.
3. Mr. P.K. Gothi
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Mr. P. K. Gothi, Managing Director of the Company is 59 years of age. Mr. Gothi is a graduate in engineering with a Gold Medal from the IIT Roorkee. He possesses more than 38 years of experience in diversified industries and has worked for reputed companies. He joined the Piramal Group in 1985 where he first headed G. P. Electronics Limited as executive director and pioneered the successful Greenfield Project. Subsequently, he moved to Miranda Tools as executive director and helped turn around the company. Later, he moved to Corporate office as President of the Piramal Group wherein he undertook the assignment of long term strategic planning for the Textile Division alongwith McKinsey & Co. He played a very important role in the partner search and the signing of joint ventures with Italian textile companies. Mr. Gothi is the Chairman of the Governing Council of the Bombay Textile Research Association (BTRA) and the Chairman of Mill Owner’s Association (MOA) besides being a member of various other professional organisations.
4. Mr. Aditya Mangaldas
Mr. Aditya Mangaldas, Independent Director of the Company is 45 years of age. Mr Mangaldas is a Mechanical Engineer from L.D.College of Engineering, Ahmedabad. He also completed his MBA from Babson College, USA. He has been the Chairman and Managing Director of The Victoria Mills Limited since October, 1999. He has a wide experience and has spent approximately 20 years in the textile industry. Mr. Mangaldas is also actively involved in organizations involved in housing and caring for children with serious chronic diseases.
5. Mr. Mahesh Gupta
Mr. Mahesh Gupta, Non Executive Non Independent Director of the Company is 52 years of age. Mr. Gupta has an Honours Degree in B.Com; L.L.B (Gen.), Fellow Member of The Institute of Chartered Accountants of India and The Institute of Company Secretaries of India. He has an outstanding academic record and is a rank holder and a silver medialist in Company Secretaries Final Examination. As Group Managing Director of the Ashok Piramal Group, he oversees all the businesses of the Ashok Piramal Group which comprises mainly of Real Estate (Peninsula Land Limited), Textiles (Morarjee Textiles Limited, Integra Apparels), Engineering (Miranda Tools, PMP Components Private Limited and Bakony Wiper Systems Limited). Mr. Gupta has over 3 decades of professional experience in business management and in all aspects of Corporate Finance such as treasury management, mergers and acquisitions, strategic planning, direct taxation, company law matters, etc. Mr. Gupta was awarded the CFO of the Year Award (2001), Special Commendation for Financial Excellence (Mergers & Acquisitions Category) by IMA (formerly known as EIU), New Delhi. Mr. Gupta is on the Board of several listed companies.
6. Mr. Pradipta Mohapatra Mr. Pradipta Mohapatra, Independent Director of the Company is 59 years of age. Mr. Pradipta Mohapatra is an Engineer from NIT, Rourkela and studied Management from Jamnalal Bajaj and Harvard Business School. He is also a graduate of Behavioral Coaching Institute, U. K. and was invited to be Fellow of Chartered Management Institute, U. K. Mr. Mohapatra supervises management of Companies in the Technology Sector of RPG Group. During his career, he has significant experience in incubation of new businesses as well as nursing sick businesses back to health. He has had 35 years in experience in general management. Mr. Mohapatra’s work has been documented in several case studies by IMD, Laussanne, INSEAD, Paris and IIM, Ahmedabad. He is the Past Chairman of Confederation of Indian Industries – Southern Region, Past President, Madras Management Association and Member, Executive Council of AIMA. As a co-founder of Executive Business Coaching Foundation, India, Mr. Mohapatra is very involved with the promotion of Executive Coaching as a new profession in India.
7. Mr. Ranjan Sanghi
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Mr. Ranjan Sanghi, Independent Director of the Company is 64 years of age. Mr. Sanghi has a Honours Degree in B. Com and is also a Law Graduate and has been associated with the automobile industry since over 25 years. Mr. Sanghi has been trained in the Automobile field at the Vauxhall Motors, Luton, England, U. K., which is a subsidiary of General Motors Limited, U. S. A. in 1970. He was the President of the Western India Automobile Association, Mumbai in 1990-91. He is the Director of Sah & Sanghi Group of Companies and manages the trading, manufacturing and investment operations of the entire Sah & Sanghi Group. He was the president of Bombay Gymkhana Limited between 1995 – 1997.
8. Mr. Shailesh Haribhakti
Mr. Shailesh Haribhakti, Independent (Alternate) Director of the Company is 53 years of age. Mr. Haribhakti is a Fellow, Chartered Accountant. His professional interest spread across several industries, governance issues, risk management and standard setting, Mr. Haribhakti is a Director on the board of twenty-two highly acclaimed public and private companies holding the position of Chairman or Member of Audit Committee in ten of them. In addition, he is committee member of Futures & Options Segment of National Stock Exchange of India and a member of SEBI Committee on Disclosures and Accounting Standards. He serves as member of managing committee of ASSOCHAM and IMC, Corporate Governance Committees of ASSOCHAM and CII and is Chairman of the Global Warming Committee of IMC. He was a member of the ICAI’s Group on Implementation of Convergence with IFRS. He was Member of the Standards Advisory Council of the International Accounting Standards Board. Mr. Haribhakti has in the past served as Chairman of the India affiliate of the Certified Financial Planner TM Board of Standards (CFPTM Board) – FPSB (India). He has been awarded “The Best Non Executive Independent Director Award – 2007” by the Asian Centre for Corporate Governance & IMC. His present associations also include Membership of Rotary Club of Mumbai.
9. Mr. Shobhan Thakore
Mr Shobhan Thakore, Independent Director of the Company is 61 years of age. Mr Thakore has completed his B.A. (Politics) and Bachelor of Law from the Bombay University. He is a Solicitor of High Court, Bombay and Supreme Court of England and Wales. He is presently the Senior Partner of M/s. Talwar Thakore & Associates, a leading solicitor firm. Mr. Shobhan Thakore is an advisor to several leading Indian Companies on corporate law matters and securities related legislations. He has also acted on behalf of leading investment banks and issuers for Indian IPO offerings and several international equity and equity linked debt issuances by Indian corporates. He has advised in the establishment and operations of various India dedicated equity funds and domestic mutual funds. Being a solicitor for over 30 years, he has instructed leading Indian Counsel before various courts and forums including High Courts around India as well as Supreme Court of India in various matters involving indirect tax, commercial and corporate law.
10. Mr. Takao Yajima
Mr Takao Yajima, Independent Director of the Company is 49 years of age. Mr Yajima is an engineering graduate (Aerospace division) from University of Tokyo. Mr Yajima is an Industrialist and owns garment manufacturing units in Japan, China and Indonesia. He is the President of Flex Company Limited, Japan. He has wide experience in the international textile market. He has had 20 years in experience in the apparels business.
Borrowing Powers of the Board
The Board of Directors have been authorized to borrow any sum, or sums of monies and/or to receive / avail of financial assistance or to undertake financial obligation in any form, from time to time from any one or more of the Financial Institutions, Bankers, Funds and/or from any one or more other persons, firms, bodies corporate, mutual funds or entities, whether by way of loans, cash credit, advances, or deposits, or bills discounting, issue of debentures, bonds, financial arrangement or obligations or otherwise and whether unsecured or secured by mortgage, charge, hypothecation or lien or pledge of the Company’s assets and properties, whether immovable or movable or stock-in-trade (including raw materials, stores, spares parts and components in stock or in transit) and work in progress, investments, notwithstanding that the monies to be borrowed together with the monies already borrowed by the Company will or may exceed the aggregate of the paid up capital of the Company and its free reserves, that is to say reserves not set apart for any specific purpose, so that the total amount upto which the monies may be borrowed by the Board and outstanding at any time apart from temporary loans obtained from the Company’s Bankers in the ordinary course of business shall not exceed by more than Rs. 30,000 lakhs
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over and above the aggregate of the paid up capital and free reserves of the Company for the time being, exclusive of interest and other charges and for securing such borrowings / facilities the Board be and is hereby further authorized to execute such debenture trust deeds or mortgage, charge, hypothecation, lien, promissory notes, deposits and other deeds and instruments or writings containing such conditions and covenants as the Board may think fit with powers to vary and /or alter the terms and conditions of security created / to be created.
For further details of the provisions of our Articles of Association regarding borrowing powers, please refer to the chapter titled “Main Provisions of the Memorandum and Articles of Association of the Company” beginning on page 237. Compensation of our Directors
The compensation paid by us to our directors for the fiscal year ended 2007-2008 are provided below: A. Non-Executive Directors and Independent Directors Apart from sitting fees of Rs. 10,000 no remuneration or other form of compensation was paid to our Non Executive Directors during the fiscal 2007-2008. B. Executive Directors
All elements of
remuneration
package
Performance bonus Total
Name of Director
In Rs. (Lakhs) In Rs. (Lakhs) In Rs.
(Lakhs)
Mr. Harshvardhan A. Piramal 40.90 - 40.90
Mr. P.K. Gothi 41.75 - 41.75
The appointment of Mr. Harshvardhan A. Piramal is valid for a period of 5 years with effect from June 1, 2007. The appointment of Mr. P.K.Gothi is valid upto December 27, 2009. The appointment is subject to termination by three months notice in writing on either side. No severance is payable to the Managing Director. Terms and Conditions of Appointment of Executive Directors
Abstract of the terms and conditions of and memorandum of interest regarding appointment of: 1. Mr. Harshvardhan A. Piramal as Executive Vice Chairman of the Company
At the Annual General Meeting held on August 11, 2008, the shareholders by special resolution revised the terms of remuneration of Mr. Harshvardhan A. Piramal, Executive Vice Chairman of the Company with effect from June 1, 2007 till May 31, 2010 in modification to the ordinary resolution passed by the Shareholders at the Annual General Meeting held on July 26, 2007. The particulars of revised terms of remuneration payable to Mr. Harshvardhan A. Piramal are as under: REMUNERATION: Salary:
Basic Salary of Rs 3,20,000 (Rupees Three Lakhs Twenty Thousand Only) per month subject to such annual increments as the Board may determine and approve; Perquisites: Reimbursement of Medical Expenses upto a maximum of Rs. 1,00,000/- per annum. Reimbursement of Leave Travel Expenses upto a maximum of Rs 1,50,000 per annum. Retirement Benefits: Contribution to Provident Fund, Superannuation Fund, Gratuity Fund as per the rules of the company.
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Minimum Remuneration:
The Directors concerned or interested in the above are Mr Harshvardhan A. Piramal, himself and Ms Urvi A. Piramal (relatives of Mr. Harshvardhan A. Piramal). Copy of the Resolution passed by the shareholders may be inspected at the Registered Office of the Company between 11.00 a.m. and 1.00 p.m. on all working days except Saturday, Sunday and holidays. 2. Mr. P K Gothi as Managing Director of the Company
At the Annual General Meeting held on 11th August 2008, the Shareholders by special resolution revised the terms of remuneration of Mr. P K Gothi, Managing Director of the Company with effect from 1st April 2007 for the remainder of the tenure upto 27th December 2009 in modification to the ordinary resolution passed by the Shareholders at the Annual General Meeting held on July 26, 2007. The particulars of revised terms of remuneration payable to Mr. P K Gothi are as under : Remuneration:
Salary: Basic Salary of Rs 2,10,000 (Rupees Two Lakhs Ten Thousand Only) per month subject to such annual increments as the Board may determine and approve; Perquisites:
Rent-free company accommodation or house rent allowance in lieu thereof, subject to a maximum of Rs. 150,000 per month. Reimbursement of Medical Expenses upto a maximum of Rs. 1,00,000 per annum for himself and his family. Reimbursement of Leave Travel Expenses upto a maximum of Rs 1,25,000 per annum. Retirement Benefits:
Contribution to Provident Fund, Superannuation Fund, Gratuity Fund as per the rules of the company. Minimum Remuneration:
All other terms and conditions as approved by the shareholder of the Company shall continue to remain valid. No director other than Mr. P K Gothi may be considered to be concerned or interested in the above. Copy of the Resolution passed by the shareholders may be inspected at the Registered Office of the Company between 11.00 a.m. and 1.00 p.m. on all working days except Saturday, Sunday and holidays. Shareholding of our Directors in our Company
The following table details the shareholding of our Directors in their personal capacity, as at the date of this Draft Letter of Offer. Please note that as per the Articles, the Directors are not required to hold any qualification shares.
Name of Directors
Number of
Equity Shares
(As on the date of this Draft Letter of
Offer)
Ms. Urvi A. Piramal 24,783
Mr. Harshvardhan A. Piramal 8,261
Mr. P.K. Gothi jointly with Ms. Bhakti Gothi 4214
Ms. Bhakti Gothi jointly with Mr. P.K. Gothi 4570
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Ms. Sunita Gupta jointly with Mr. Mahesh Gupta 58,000
Mr. Ranjan Sanghi jointly with Ms. Jayashree Sanghi 1,692
Mr. Vishnubhai Bhagwandas Haribhakti jointly with Mr. Shailesh Haribhakti
2
None of our Directors have transacted in the shares of the Company in the last six months. None of our Directors are relatives within the meaning of Section 6 of the Act, except for Mr. Harshvardhan A. Piramal who is the son of Ms. Urvi A. Piramal. Interest of Directors
None of our Directors, except Promoter Directors nominated by the Promoter, have been appointed pursuant to any understanding or arrangement with major shareholders, customers, suppliers and others. All Directors of the Company may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or a Committee. The executive vice chairman and the managing director will be interested to the extent of remuneration paid to him for services rendered by him as officer of the Company. All our directors may also be deemed to be interested to the extent of Equity Shares, if any, already held by them or their relatives in the Company, or that may be subscribed for and allotted to them, out of the present Issue in terms of this Draft Letter of Offer and also to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. The Directors may also be regarded as interested in the Equity Shares, if any, held by or that may be subscribed by and allotted to the companies, firms and trust, in which they are interested as directors, members, partners and/or trustees. The key managerial personnel of our Company do not have any interest in our Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business and to the extent of the Equity Shares held by them in our Company, if any. Changes in Our Board of Directors during the last three years
Name Date of Appointment Date of Cessation Reason
Mr.Ajay G. Piramal July 25, 1995 June 8, 2006 Resigned
Dr. G. Callegari January 1, 2005 April 1, 2008 Resigned
Mr.Shailesh Haribhakti February 18, 2005 Alternate Director
April 30, 2008
March 24, 2008 Resigned Re-appointment
Mr.Pradpita Mohapatra June 8, 2006 - Appointment
Corporate Governance Our Company has complied and has taken all steps to comply with the provisions of the Listing Agreement in respect of corporate governance, especially with respect to broad basing of our Board of Directors and constituting committees. Currently, our Board consists of 9 Directors, out of which 2 are executive Directors, 2 are non executives and 5 are non executive independent Directors. The details of our Board level committees, including the committees formed under Clause 49 are given below: (i) Audit Committee
Members
Name of the Directors Designation
Mr. Ranjan Sanghi Chairman*
Mr. Shobhan Thakore Member
Mr. Aditya Mangaldas Member
* being a member appointed as a Chairman with effect from 30th April, 2008.
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The Audit Committee is comprised of 3 independent directors. The Audit Committee met 6 times during FY 2009, i.e. on April 30, 2008, June 05, 2008, July 30, 2008, October 20, 2008, January 29, 2009 and February 23, 2009.
Scope and terms of reference
The scope of the Audit Committee as defined under Clause 49 of the Listing Agreement dealing with Corporate Governance and the provisions of the Act. The Audit Committee acts as a link between the management, the statutory, cost and internal auditors and the Board of Directors and oversees the financial reporting process. Functions of the Audit Committee
1. Overseeing our Company’s financial reporting process and the disclosure of its financial
information to ensure that the financial statement is correct, sufficient and credible; 2. Recommending to our Board, the appointment, re-appointment and, if required, the replacement or
removal of our Statutory Auditors and the fixation of audit fees;
3. Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to:
a) Matters required to be included in the Director’s Responsibility Statement to be
included in the Board’s report in terms of clause (2AA) of section 217 of the Act; b) Changes, if any, in accounting policies and practices and reasons for the same. c) Major accounting entries involving estimates based on the exercise of judgment by
management. d) Significant adjustments made in the financial statements arising out of audit findings. e) Compliance with listing and other legal requirements relating to financial statements. f) Disclosure of any related party transactions. g) Qualifications in the draft audit report.
4. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
5. Reviewing the adequacy of internal audit function, if any, including the structure of the internal
audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;
6. Discussion with our internal auditors about any significant findings and follow up thereon;
7. Reviewing the findings of any internal investigations by the internal auditors into matters where
there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;
8. Discussion with our Statutory Auditors before the audit commences, about the nature and scope of
audit as well as post-audit discussion to ascertain any area of concern;
9. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors;
10. To review with the management, the statement of uses / application of funds raised through an
issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue and making appropriate recommendations to the Board to take up steps in this matter;
11. To review the functioning of the Whistle Blower mechanism, in case the same is existing;
12. To consider other topics, as defined by the Board;
93
13. To review the following information:
a. Management discussion and analysis of financial condition and results of operations; b. Statement of significant related party transactions (as defined by the Audit
Committee), submitted by the management; c. Management letters/letters of internal control weakness issued by the statutory
auditors; d. Internal audit reports relating to internal control weakness; and e. The appointment, removal and terms of remuneration of the Internal Auditor.
(ii) Investors Grievances Committee
Members
Name of the Directors Designation
Ms. Urvi A. Piramal Chairperson
Mr. P.K.Gothi Member
The Investors Grievances Committee is comprised of one executive and one non-executive director. In the FY 2009, Investor Grievance Committee met 4 times during FY 2009, i.e. on June 05, 2008, July 30, 2008, October 20, 2008 and January 29, 2009.
Scope and Terms of Reference
The committee was constituted in terms of the mandatory requirement of Clause 49 of the Listing Agreement to look into the redressal of grievances of investors like non receipt of share certificates, non-receipt of balance sheet, non-receipt of dividend warrants etc. Company has appointed Freedom Registry Limited as its Registrar and Share Transfer Agents in compliance with SEBI directive and the power relating to share transfers has been delegated by the Board to Freedom Registry Limited.
(iii) Remuneration Committee
Members
Name of the Directors Designation
Mr. Ranjan Sanghi Chairman
Ms. Urvi A. Piramal Member
Mr. Shobhan Thakore Member
Mr.Aditya Mangaldas Member
The Remuneration Committee is comprised of three independent directors and one non-executive directors. The Remuneration Committee met once during the course of FY 2009 on June 5, 2008. Scope and Terms of Reference
The committee was constituted in terms of the non mandatory requirement of Clause 49 of the Listing Agreement to determine on behalf of shareholders with agreed terms of reference, the company’s policy on specific remuneration packages for executive directors including pension rights and any compensation payment.
(iv) Issue of Rights / Warrants Committee
Members
Name of the Directors Designation
Ms. Urvi A. Piramal Chairperson
Mr. Harshvaradhan A. Piramal Executive Vice Chairman
Mr. P. K. Gothi Managing Director
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Mr. Mahesh Gupta Director
The Issue of Rights / Warrants Committee is comprised of Ms. Urvi A. Piramal, Mr. Harshvaradhan A. Piramal, Mr. P. K. Gothi and Mr. Mahesh Gupta. This Committee has not meet met any time during the course of FY 2009. Scope and Terms of Reference
The Board has appointed this Committee to oversee and administer the activities to be undertaken for this Issue. Its scope includes: - 1. to finalise, settle and execute and deliver or arrange the delivery of the draft offering document
(the draft letter of offer), final letter of offer, and all other documents, deeds, agreements and instruments as may be required or desirable in connection with the rights shares/ warrants/ options or other convertible instruments by the Company;
2. to sign the letter of offer on behalf of the Board of Directors finalized in consultation with the Lead
Manager / Legal Counsel;
3. finalise and approve the terms and conditions of the appointment of intermediaries which shall inter-alia include fees for Lead Manager, Legal Advisors, Registrars to the Issue, Auditors etc.
4. to fix the record date, opening and closing date for the issue and any other dates proposed in the time table including to extend the issue period;
5. apply to the Stock Exchanges seeking their approval for change, if any, in the record date and take necessary steps in this regard;
6. apply to regulatory authorities seeking their approval for allotment of any unsubscribed portion of the issue (in favour of the parties willing to subscribe to the same);
7. to make applications for listing of the rights shares / warrants / options /or other convertible instruments in one or more stock exchange(s) and decide the designated stock exchange for the purpose of Rights issue and allotment;
8. to make applications to the Reserve Bank of India and such other authorities, as may be required,
for the purpose of issue of shares by the Company to non-resident investors such as NRIs and FIIs
9. to decide the mode and manner of allotment of shares if any not subscribed and left/remaining after allotment of rights and additional shares applied by the shareholders and renounces;
10. open a separate Current Account in the name and style of “Morarjee Textiles Limited (Rights) Issue Account”, with a scheduled bank to receive applications along with application monies in respect of the issue of the shares of the Company;
11. open a Bank Account of the Company in the name and style of “Morarjee Textiles Limited (Rights) Issue Refund Account”;
12. open such number of Bank Accounts as may be required in connection with the Rights Issue;
13. file necessary returns, make declarations / announcements, furnish information, etc., to the concerned authorities in connection with the Rights Issue / warrants / options / or other convertible instruments;
14. sign and execute any other document in connection with the Rights Issue / warrants / options / or other convertible instruments;
15. do all such acts, deeds, matters and things as it may, in its absolute discretion, deem necessary or desirable for such purpose, including without limitation, allocation and allotment of the shares as permissible in law, issue of share certificates in accordance with the relevant rules;
95
16. deal with all matters preceding and succeeding the issue; and
17. settle all questions, difficulties or doubts that may arise in regard to such issues or allotment as it
may, in its absolute discretion deem fit. Organisational Structure
Key Managerial Personnel
The details of our key managerial personnel are as follows:
Name Age Designation Qualifications Previous
Employment
Total years of
Experience
Date of
Joining Gross
Salary
(in Rs.
lakhs)
Mr. R. K. Bhatnagar 57 President - shirting Fabric
division
B Tech Hons Maral Overseas Limited,
37 May 10, 2008
47.4
Mr. Vijay K. Maheshwari
45 President- Voile &
Print Division
B Tech Hons. Klopman International,
23 May 17, 2008
34.6
Mr. S.C. Kashimpuria
53 Head -Finance & Accounts / Company Secretary
B.Com, A.C.S.
Modern Syntex (India)
Limited
32 July 15, 1980
26.3
All the abovementioned key managerial personnel are permanent employees of our Company. The remuneration of each of our key personnel is as per the statement pursuant to Section 217(2A) of the Act and the Companies (Particulars of Employees) Rules, 1975.
Chairperson Ms. Urvi A. Piramal
Executive Vice Chairman
Mr. Harshvardhan A. Piramal
Managing Director
Mr. P.K. Gothi
President – Shirtings Fabric Division Mr. R.K. Bhatnagar
President – Viole & Print Division Mr. Vijay Maheshwari
Head Finance & Accounts and Company Secretary
Mr. S.C. Kashimpuria
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The Lead Manager has ensured that all the abovementioned key managerial personnel are permanent employees on the rolls of our Company. Brief profile of the Key Managerial Personnel
Mr. R. K. Bhatnagar, 57 years, is gold medalist B.Tech Honours graduate from Punjab University. He has 37 years of experience in various capacities. He has been associated in varying roles with LNJ Bhilwara Group, Ginni International Limited, Welspun Terry Towels Limited and STI India Limited. Mr. Vijay K. Maheshwari, 45 years, has 23 years of experience in the field of textiles. He graduated with B. Tech (Honours) and P.G. Diploma in Computer Programming & Management Applications. He has been associated with leading textile groups in India such as Raymond and Bombay Dyeing as well as international groups like the Workwear brand of Italy M/s Klopman International Mr. S C Kashimpuria, 53 years, the Head of Finance and Accounts and Company Secretary has been associated with various companies of our Group since 1980 and he has a total experience of over 32 years in various capacities. He is a Commerce Graduate and is also a member of the Institute of Company Secretaries of India. Shareholding of key managerial personnel in our Company as on the date of this Draft Letter of Offer:
Name of Key Managerial Personnel No. of Equity Shares held
(Pre-Issue)
Mr. R. K. Bhatnagar -
Mr. Vijay K. Maheshwari 20
Mr. S.C. Kashimpuria 350
Interest of key managerial personnel
None of our key managerial personnel have been appointed pursuant to any understanding or arrangement with major shareholders, customers, suppliers and others. The key managerial personnel of our Company do not have any interest in our Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business and to the extent of the Equity Shares held by them in our Company, if any. Bonus or Profit Sharing Plan
The Company has currently in place a performance linked bonus plans for its key managerial personnel. Details of loans taken by key managerial personnel in our Company
As on March 31, 2009 we had no loans outstanding to our Directors or any of the Key Managerial Personnel except the following.
(Amount in Rs.)
Name of the Key
Managerial Personnel
Loan
Amount
Rate of
Interest
EMI Amount Outstanding
Amount
Nature of
Loan
Mr. S.C. Kashimpuria 8,00,000 4.5% 25,000 1,25,000 Housing
Except as stated otherwise in this Draft Letter of Offer, we have not entered into any contract, agreement or arrangement during the preceding two years from the date of this Draft Letter of Offer in which our Directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements or arrangements or are proposed to be made to them. Apart from Mr. Kashimpuria, our Directors and our key managerial personnel have not taken any loan from our Company.
Changes in our key managerial employees during the last three years
Name Designation Date of
Joining
Date of
Leaving
Reasons
Mr. Girish Rao President – Sales Marketing July 4, 2005 March 31, 2008
Resignation
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Mr. B.B. Sharma Executive President – Textile Division
May 1, 2003 April 26, 2006
Resignation
Mr. Vijay Maheshwari President – Voiles and Print Division
May 17, 2008 - -
Mr. R.K. Bhatnagar President – Shirtings Fabrics Division
May 10, 2008 - -
Mr. Lorence Vyas Senior Vice President (Operations)
May 5, 2006 January 31, 2007
Mr. Bharat S. Sanghavi Chief Financial Officer – Textiles Business
October 1, 2003
December 31, 2007
Transferred to Peninsula Land
Limited
For details of our ESOS, please refer to the chapter titled Capital Structure beginning on page 18.
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PROMOTER AND PROMOTER GROUP
We are a part of the Ashok Piramal group, which is a diversified and growing conglomerate with business interest in textiles, real estate, engineering and entertainment and sports. Our Promoter is Ms. Urvi A. Piramal. Her details are set out below:
Ms. Urvi A. Piramal
Ms. Urvi A. Piramal, aged 56 is the Chairperson (Non Executive) of the Company. For more details, please refer to the chapter titled “Management” beginning on page 81of this Draft Letter of Offer. Passport No.: Z-1581931 PAN No.: AAJPP8861F
Ms. Urvi A. Piramal, 56 years of age has a Bachelor of Science degree from the Bombay University (1972) and attended the Advanced Management Program at the Harvard Business School (1993). As Chairperson of Ashok Piramal Group, Ms. Urvi A. Piramal oversees a professionally managed business group in India. She is the guiding force behind the Group’s sustained and profitable growth and in bringing the group companies closer to realizing her vision of touching the lives of one in five people around the globe. She has a Bachelor of Science degree and has attended the Advance Management Program at Harvard Business School. She joined the group’s textile division in 1984 and modernized the operations while focusing on higher levels of quality and productivity. Ms. Piramal plays a leading role in envisioning and formulating the Group’s strategies in real estate, textiles, engineering and entertainment businesses. The Group’s real estate foray has been driven by her foresight and her sharp business acumen has played an immeasurable role in placing Peninsula Land Limited as one of the top real estate companies in India. She has been a member of Technology and Quality Improvement Committee of IMC since its inception in 1994, and also the Chairperson of Supply Chain & Retail business (Internal Trade) Committee (04-05). Ms. Piramal has received a number of awards for her contribution to business. She was awarded the Qimpro Gold Standard Award for excellence in managing Quality Improvement programmes across the Group. She has won the Outstanding Woman Industrialist Award presented by the Marinelines Junior Chamber and the Yami Woman Award for her outstanding contribution to business by The ITC Grand Central. She also has to her credit the Cheminor Award from the India Institute of Materials Management.
She is a Trustee of the Piramal Education Trust and Ashok G. Piramal Trust, which has been set up for the underprivileged. The trust runs a childrens’ School at Bagar in Rajasthan. The Permanent Account Number (“PAN”), Bank Account No. and Passport No. will be submitted to the Stock Exchanges at the time of filing this Draft Letter of Offer with the Stock Exchanges. For details of acquisition of Equity Shares by the Promoter, please refer to the chapter titled “History of our Company and other Corporate Matters” beginning on page 66.
Interest of our Promoter and Promoter Group
Our Promoter and Promoter Group is interested in the Company to the extent of the Equity Shares held by them as well as the Rights Equity Shares offered under this Issue and Equity Shares due to them on conversion of outstanding convertible instruments and also to the extent of any dividend payable to them and other distributions in respect of the aforesaid Equity Shares and Rights Equity Shares. The Promoter and Promoter Group entities holding warrants have provided an undertaking to the Company that they will not exercise their right of conversion, thereby applying for conversion of the warrants currently held by them, till the time the validity of such warrants expire, nor will they, in any way, do any such act which will result in the transfer of
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these warrants or acquisition of any additional warrants. Further, the Promoter and the Promoter Group may also be interested to the extent of Equity Shares held by or that may be subscribed by and allotted to the companies, firms and trust, in which they interested as a director, member, partner or trustee. In addition, our Promoter, being a non- executive Chairperson of the Company, may be deemed to be interested to the extent of fees, if any, payable for attending meetings of the Board or a committee thereof as well as to the extent of remuneration and reimbursement of expenses, if any, payable under our Articles of Association and to the extent of remuneration, if any, paid for services rendered as an officer or employee of our Company. However, post October 20, 2008, our Promoter has declined to accept any sitting fees. This has been taken on record by the Board of Directors.
Payment of benefits to our Promoters during the last two years
Except as stated in the chapter titled “Financial Statements” beginning on page 155, there has been no payment of benefits to our Promoter during the last two years from the date of filing of this Draft Letter of Offer. Related Party Transactions
For details on the related party transactions, please refer to the chapter titled “Related Party Transaction” beginning on page 154. Litigation details pertaining to our Promoters
For details on litigations and disputes pending against the Promoter and defaults made by the Promoter please refer to the chapter titled “Outstanding Litigations and Material Developments” beginning on page 181 of this Draft Letter of Offer. Common Pursuit
Our Promoter do not have any interest in any venture that is involved in activities similar to those conducted by our Company, or Subsidiaries, or any member of the Promoter Group. Promoter Group
The following entities / natural persons form part of our Promoter Group:
S. No. Name
Promoter Group Individuals
1. Mr. Harshvardhan A. Piramal
2. Mr. Rajeev A. Piramal
3. Mr. Nandan A. Piramal
4. Mr. Jaydev Mody
5. Ms. Kalpana Singhania
Promoter Group Companies / Entities
1. AAA Township Private Limited
2. Aarti Management Consultancy Private Limited
3. Aditi Management Consultancy Private Limited
4. Alibagh Farming and Agriculturist Company Private Limited
5. Anjoss Trading Private Limited
6. Aryanish Finance and Investments Private Limited
7. Ashok Piramal Enterprises Private Limited
8. Ashok Piramal Group Textiles Trust
9. Ashok Piramal Management Corporation Limited
10. Ashok Piramal Mega Properties Private Limited
11. Ashok Piramal Mega-City Development Private Limited
12. Ashok Piramal Township Development Private Limited
13. Bayside Properties Private Limited
14. Bayside Property Developers Private Limited
15. Bayside Realty Private Limited
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S. No. Name
16. Blackpool Realty Private Limited
17. Cromwell Tools (India) Private Limited
18. Crossroads Shoppertainment Private Limited
19. Delta Magnets Limited
20. Delta Real Estate Consultancy Private Limited
21. Delta Realties Limited
22. Freedom Aviation Private Limited
23. Freedom Registry Limited
24. Gees Accessories & Co-Ordinates Private Limited
25. G.K. International Private Limited
26. Goldlife Mercantile Company Private Limited
27. Highpoint Agro Star Private Limited
28. Intertrade Mercantile Company Private Limited
29. J M Livestock Private Limited
30. J M Mega Properties Private Limited
31. J M Property Management Private Limited
32. Jammin Recreation Private Limited
33. Jayem Real Estate Private Limited
34. Jayem Realty Management Private Limited
35. Lakeview Mercantile Company Private Limited
36. Lifezone Mercantile Private Limited
37. Miranda Few Tools Private Limited
38. Miranda Tools Private Limited
39. Morarjee Goculdas Spinning & Weaving Private limited
40. Newplaza Multitrade Private Limited
41. Omega Multitrade Private Limited
42. Onestar Mercantile Company Private Limited
43. Onestar Trading Company Private Limited
44. Oneup Mercantile Company Private Limited
45. Outreach Mercantile Company Private Limited
46. Peninsula Developers and Builders Private Limited
47. Peninsula Investment Management Company Limited
48. Peninsula Land Development Private Limited
49. Peninsula Land Limited
50. Peninsula Mega-City Development Private Limited
51. Peninsula Real Estate Management Private Limited
52. Peninsula Real Estate Services Private Limited
53. Peninsula SA Realty Private Limited
54. Peninsula Townships Development Private Limited
55. PLL Delta Hotels Private Limited
56. PMP Components Private Limited
57. Powerjet Carriers and Transporters Private Limited
58. Providence Educational Academy Private Limited
59. Pune Football Club Private Limited
60. Pune Sports Club Private Limited
61. Riteline Export Private Limited
62. RR Mega City Builders Private Limited
63. Seastar Trading Company Private Limited
64. Supertime Trading Private Limited
65. Thundercloud Technologies (India) Private Limited
66. Topstar Mercantile Private Limited
67. Topstar Realty Private Limited
68. Toptech Mercantile Company Private Limited
69. West Star Agro – Realties Private Limited
70. Morarjee Goculdas Spinning and Weaving Company Limited Senior Employee Stock Option Scheme
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Promoter Group Entities
1. AAA Township Private Limited
AAA Township Private Limited (“ATPL”) was incorporated on April 9, 2007 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400001, Maharashtra. The main object of ATPL is inter alia to build, construct, alter, improve, maintain, enlarge, pull down, remove or replace and to develop, work, manage, carry out and control any buildings, office, chawls and other works and conveniences and to contribute to, subscribe or otherwise assist or take part in the construction, improvement, maintenance, development, working, management, carrying out or control thereof and to form partnerships with any other person or company in doing any of these things. ATPL is currently involved in the business of real estate development and consultancy. Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Darius Khambatta Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of
shareholding
1 Mr. Jaydev Mody 9,999 99.99
2 Mr. Darius Khambatta 1 0.01
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL
INFORMATION
FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus (0.12) - -
Total Income - - -
Profit/(Loss) after Tax (0.12) - -
Earnings per share (Rs.) (Face Value Rs.10)
(1.22) - -
Book Value per equity share (Rs.)
8.11 - -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available 2. Aarti Management Consultancy Private Limited
Aarti Management Consultancy Private Limited (“AMCPL”) was incorporated on March 8, 2001 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of AMCPL is inter alia of consultants, advisors and counselors and to provide consulting, advisory and counseling services in all areas of industry, commerce and business. AMCPL is currently involved in the business of investment and consultancy.
Board of Directors
Name Designation
Mr. Jaydev Mody Director Ms. Ambika Kothari Director Mr. Hardik Dhebar Director
Shareholding Pattern as on the date of this Draft Letter of Offer
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Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Zia Mody 10,000 50.00
2 Mr. Jaydev Mody 10,000 50.00
Total 20,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus 1,062.67 448.18 395.63
Total Income 729.97 69.84 -
Profit/(Loss) after Tax 614.50 49.52 (2.91)
Earnings per share (Rs.) (Face Value Rs.10) 6,145 495.18 (29.05)
Book Value per equity share (Rs.) 10,628.35 4,482.16 3,955.53
3. Aditi Management Consultancy Private Limited
Aditi Management Consultancy Private Limited (“AMCP”) was incorporated as Robert Management Consultancy Private Limited on July 6 1999 as a private limited company under the Act. Subsequently, on November 2, 2000, the name of the AMCP was changed to Aditi Management Consultancy Private Limited with Registrar of Companies, Maharashtra, Mumbai. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of AMCP is inter alia to carry on the business of consultants, advisors and counselors and to provide consulting, advisory and counseling services in all areas of industry, commerce and business. AMCP is currently involved in the business of investment and consultancy.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Ms. Ambika Kothari Director
Mr. Hardik Dhebar Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Zia Mody 10,000 50.00
2 Mr. Jaydev Mody 10,000 50.00
Total 20,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus 2,032.11 415.04 372.58
Total Income 1,872.14 56.26 -
Profit/(Loss) after Tax 1,617.07 42.46 (4.17)
Earnings per share (Rs.) (Face Value Rs.10)
16,170.67 424.62 (41.71)
Book Value per equity share (Rs.) 20,323.06 4,151.23 3,725.43
4. Alibagh Farming and Agriculturist Company Private Limited
Alibagh Farming and Agriculturist Company Private Limited (“AFACPL”) was incorporated on June 23, 2003 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of AFACPL is inter alia to carry on the business as agriculturists, floriculturist, horticulturist, tissue culture and allied activities, cultivation, farming, sowing and trading in agricultural produce, seeds, agricultural and farm equipment, animal husbandry, fish
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farming, cultivation and production of all and any kind of agricultural, horticultural or floricultural products, fishery, tannery, cultivation and trading of fish, frogs and other sea products, ,, mushrooms, and allied products and other allied activities thereto. AFACPL is currently involved in the business of agriculturist activities. Board of Directors
Name Designation
Mr. Jaydev Mody Director
Ms. Zia Mody Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 11,275 22.35
2 Ms. Zia Mody 25,225 50.00
3 Mr. Jitu Virwani 4,650 9.22
4 Ms. Shalini Pradhan 4,650 9.22
5 Aarti Management Consultancy Private Limited
1,550 3.07
6 Aditi Management Consultancy Private Limited
1,550 3.07
7 Anjoss Trading Private Limited 1,550 3.07
Total 50,450 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 5.05 5.05 1.00
Reserves and Surplus (0.99) (0.84) (0.66)
Total Income - - -
Profit/(Loss) after Tax (0.14) (0.18) (0.37)
Earnings per share (Rs.) (Face Value Rs.10) (0.30) (0.36) (3.65)
Book Value per equity share (Rs.) 7.77 8.03 2.66
5. Anjoss Trading Private Limited
Anjoss Trading Private Limited (“ATPL”) was incorporated as Jyeshtha Trading Private Limited on May 26, 1999 as a private limited company under the Act. Subsequently, on November 20, 2000, the name of the Company was changed to Anjoss Trading Private Limited with Registrar of Companies, Maharashtra. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of ATPL is inter alia to carry on the business as general merchants, traders and dealers in goods, commodities and merchandise on ready and forward basis, importers and exporters, brokers and agents, commission agents, distributors, stockists and indenting agents. ATPL is currently engaged in the business of investment and consultancy.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Ms. Ambika Kothari Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Zia Mody 10,000 50.00
2 Mr. Jaydev Mody 10,000 50.00
Total 20,000 100.00
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Financial Performance (Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus 1,022.80 393.05 362.96
Total Income 747.70 51.54 -
Profit/(Loss) after Tax 629.75 27.25 (5.36)
Earnings per share (Rs.) (Face Value Rs.10) 6,297.54 272.49 (53.58)
Book Value per equity share (Rs.) 10,230.11 3,931.40 3,639.34
6. Aryanish Finance and Investments Private Limited
Aryanish Finance and Investments Private Limited (“AFIPL”) was incorporated on 3rd January, 1995 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, 2nd floor, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of AFIPL is inter alia is to finance the industrial or other enterprises by way of lending and advancing money, machinery, land, building, shed or such other things as may be required by such industrial or other enterprises either with or without security and upon such terms and conditions as the Company may think fit, any financial institutions, banks or other parties for obtaining finance whether for its long term capital, working capital or for any deferred payment finance and to deal in all kinds of financial documents like commercial papers bills of exchange, hundies, certificate of deposits, promissory notes and other negotiable instruments and securities etc. AFIPL is currently involved in the financial business.
Board of Directors
Name Designation
Mr. Deepak Lulla Director
Mr. Ashish Kapadia Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Aarti Management Consultancy Private Limited
3,334 33.34
2 Aditi Management Consultancy Private Limited
3,333 33.33
3 Anjoss Trading Private Limited 3,333 33.33
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (0.92) (0.79) (0.67)
Total Income 0 0 0
Profit/(Loss) after Tax (0.13) (0.12) (0.13)
Earnings per share (Rs.) (Face Value Rs.10) (1.28) (1.24) (1.26)
Book Value per equity share (Rs.) 0.71 1.96 3.17
7. Ashok Piramal Enterprises Private Limited
Ashok Piramal Enterprises Private Limited (“APEPL”) was incorporated on December 21, 2005 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of the APEPL is inter alia to carry on the business of providing support services in the field of accounting, legal matters, consultancy services, information technology, business process outsourcing, and providing assistance on back office operation. APEPL is currently engaged in the business of providing professional services.
Board of Directors
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Name Designation
Ms Urvi A. Piramal Director
Mr Harshvardhan A. Piramal Director
Mr Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1. Ms Urvi A. Piramal 9,900 20
2. Mr Harshvardhan A. Piramal 10,000 20
3. Mr Rajeev A. Piramal 10,000 20
4. Mr Nandan A. Piramal 10,000 20
5. Mr Jaydev Mody 9,900 20
6. Mr Mahesh Gupta 100 0
7. Mr V Hariharan 100 0
Total 50,000 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 5.00 5.00 5.00
Reserves and Surplus (0.06) (0.11) 0.00
Total Income 0.19 0 0.1
Profit/(Loss) after Tax 0.04 (0.10) 0.00
Earnings per share (Rs.) (Face Value Rs.10) 0.09 (0.20) 0.00
Book Value per equity share (Rs.) 9.18 9 9
8. Ashok Piramal Group Textiles Trust
Ashok Piramal Group Textiles Trust (“APGTT”) was formed through a trust deed dated April 1, 2008. The main object of APGTT is to hold investments in the operating companies managed by the Piramal family members engaged in the textile business or related activities. Trustees as on the date of this Draft Letter of Offer
Trustees
1. Ms. Urvi A. Piramal
2. Mr. Harshvardhan A. Piramal
3. Mr. Rajeev A. Piramal
4. Mr. Nandan A. Piramal
Financial performance
This company has been recently incorporated and as such audited financials are not available 9. Ashok Piramal Management Corporation Limited
Ashok Piramal Management Corporation Limited (“APMCL”) was incorporated on December 16, 2005 as a public company under the Act. The certificate for the commencement of business was dated January 25, 2006 Its registered office is located at Peninsula Spenta Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of APMCL is inter alia, to carry on the business of providing support services in the field of accounting, legal matters, consultancy services, information technology, business process outsourcing, and providing assistance on back office operation. APMCL is currently engaged in the business of providing professional services.
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Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Mr. Jaydev Mody Director
Mr. Mahesh Gupta Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Urvi A. Piramal 9,900 20
2 Mr. Harshvardhan A. Piramal 10,000 20
3 Mr. Rajeev A. Piramal 10,000 20
4 Mr. Nandan A. Piramal 10,000 20
5 Mr. Jaydev Mody 9,900 20
6 Mr. Mahesh Gupta 100 0
7 Mr. V. Hariharan 100 0
Total 50,000 100
Financial Performance (Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 5.00 5.00 5.00
Reserves and Surplus (56.81) 0.84 0.43
Total Income 203.49 192.85 7.70
Profit/(Loss) after Tax (57.65) 0.41 0.43
Earnings per share (Rs.) (Face Value Rs.10) (115.31) 0.83 0.86
Book Value per equity share (Rs.) (110.38)
3.96 2.16
10. Ashok Piramal Mega Properties Private Limited
Ashok Piramal Mega Properties Private Limited (“APMPPL”) was incorporated on March 8, 2007 as a private limited company under the Act. Its registered office is situated at 106, Peninsula Centre, Dr. S. S. Road, Parel, Mumbai 400 012. The main object of APMPPL is, inter alia, to purchase, take on lease or in exchange, or otherwise deal with moveable and immovable property and rights and privileges of all kinds. APMPPL is currently engaged in the business of real estate. Board of Directors
Name Designation
Mr. Rajeev A. Piramal Director
Mr. Rajesh Jaggi Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Rajeev A. Piramal 5,000 50
2 Mr. Rajesh Jaggi 5,000 50
Total 10,000 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
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Reserves and Surplus 0 - -
Total Income - - -
Profit/(Loss) after Tax - - -
Earnings per share (Rs.) (Face Value Rs.10) - - -
Book Value per equity share (Rs.) 9.11 - -
This company has been incorporated on March 8, 2007 and as such audited financials for FY 2006 and FY 2007 are not available 11. Ashok Piramal Mega-City Development Private Limited
Ashok Piramal Mega-City Development Private Limited (“APMDPL”) was incorporated on March 8, 2007 as a private limited company under the Act. Its registered office is situated at 106, Peninsula Centre, Dr. S S Road, Parel, Mumbai 400 012. The main object of APMDPL is, inter alia, to purchase take on lease or in exchange, or otherwise deal with moveable and immovable property and rights and privileges of all kinds. APMDPL is currently engaged in the business of real estate development.
Board of Directors
Name Designation
Mr. Rajeev A. Piramal Director
Mr. Rajesh Jaggi Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Rajeev A. Piramal 5,000 50
2 Mr. Rajesh Jaggi 5,000 50
Total 10,000 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus 0 - -
Total Income - - -
Profit/(Loss) after Tax - - -
Earnings per share (Rs.) (Face Value Rs.10) - - -
Book Value per equity share (Rs.) 9.11 - -
This company has been incorporated on March 8, 2007 and as such audited financials for FY 2006 and FY 2007 are not available.
12. Ashok Piramal Township Development Private Limited
Ashok Piramal Township Development Private Limited (“APTDPL”) was incorporated on March 8, 2007 as a private limited company under the Act. Its registered office is situated at 106, Peninsula Centre, Dr. S. S. Rao Road, Parel, Mumbai 400 012. The main object of APTDPL is, inter alia, to purchase, take on lease or in exchange, or otherwise deal with moveable and immovable property and rights and privileges of all kinds. APTDPL is currently engaged in the business of building of township. Board of Directors
Name Designation
Mr. Rajeev A. Piramal Director
Mr. Rajesh Jaggi Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
108
1 Mr. Rajeev A. Piramal 5,000 50
2 Mr. Rajesh Jaggi 5,000 50
Total 10,000 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus 0.00 - -
Total Income - - -
Profit/(Loss) after Tax - - -
Earnings per share (Rs.) (Face Value Rs.10) - - -
Book Value per equity share (Rs.) 9.11 - -
This company has been incorporated on March 8, 2007 and as such audited financials for FY 2006 and FY 2007 are not available
13. Bayside Properties Private Limited
Bayside Properties Private Limited (“BPPL”) was incorporated as Oneline Multitrade Private Limited on February 16, 2006 as a private limited company under the Act. Subsequently on July 19, 2006, the name of the Company was changed to Bayside Properties Private Limited with the Registrar of Companies, Maharashtra, Mumbai. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of BPPL is interalia to purchase take on lease or in exchange, or otherwise acquire, develop, improve, manage, cultivate, work, sell, exchange, surrender, lease, mortgage, charge, convert, turn to account, dispose of and deal with moveable and immovable property and rights and privileges of all kinds etc. BPPL is currently involved in the business of real estate leasing and development.
Board of Directors
Name Designation
Mr. Prakash Chhabria Director
Mr. Javed Tapia Director
Mr. Jaydev Mody Director
Mr. Rajiv Punater Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Prakash P. Chabria jointly with Ms. Ritu P. Chabria
250 2.50
2 Ms. Ritu P. Chabria 250 2.50
3 Mr. Prakash P. Chabria 350 3.50
4 Ms. Ritu P. Chabria jointly with Prakash P Chabria
250 2.50
5 Mr. Azim F. Tapia and Mr. Javed F Tapia 750 7.5
6 Mr. Javed F. Tapia and Mr. Azim F Tapia 850 8.5
7 Mr. Rajiv Punater and Ms. Anjali Punater 600 6.00
8 Ms. Anjali Punater and Mr. Rajiv Punater 500 5.00
9 Mr. Dattaraj Salgaocar 2,000 20.00
10 Mr. Ravinder Jain 1,000 10.00
11 Mr. Raj Shroff 100 1.00
12 Aarti Management Consultancy Private Limited
1,033 10.33
13 Aditi Management Consultancy Private Limited
1,033 10.33
14 Anjoss Trading Private Limited 1,034 10.34
Total 10,000 100.00
109
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus 1,195.40 1,176.48 -
Total Income 245.99 4,335.74 -
Profit/(Loss) after Tax 18.92 1,176.48 -
Earnings per share (Rs.) (Face Value Rs.10) 189.17 11,764.81 -
Book Value per equity share (Rs.) 11,949.51 11,758.52 9.1
14. Bayside Property Developers Private Limited
Bayside Property Developers Private Limited (“BPDPL”) was incorporated on February 5, 2007 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of BPDPL is inter alia to purchase, buy, take on lease, or otherwise acquire or sell or dispose off or give on lease any land (whether freehold or leasehold), houses, buildings, or other property with or without machinery, and to erect, construct, build any warehouses, engine houses, factories, mill, residential colonies, shopping malls, Commercial Buildings, Resorts, Hotels or other buildings, which may be considered expedient or desirable for the objects or purposes of the Company or any of them, and to pay for the same lands, buildings and other property, whether purchased or acquired or built or constructed by the Company, either in cash or to make advances on them or any of them. BPDPL is currently engaged in the business of real estate development. Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Rajiv Punater Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 9,000 90.00
2 Mr. Rajiv Punater 1,000 10.00
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 -
Reserves and Surplus (0.25) (0.09) -
Total Income - - -
Profit/(Loss) after Tax (0.15) (0.09) -
Earnings per share (Rs.) (Face Value Rs.10) (1.52) (0.93) -
Book Value per equity share (Rs.) 5.94 7.27 -
This company has been incorporated post March 31, 2006 and as such audited financials for FY 2006 are not available 15. Bayside Realty Private Limited
Bayside Realty Private Limited (“BRPL”) was incorporated on February 5, 2007 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of BRPL is inter alia to purchase, buy, take on lease, or otherwise acquire or sell or dispose off or give on lease any land (whether freehold or leasehold), houses, buildings, or other property with or without machinery and to erect, construct, build any warehouses, engine houses,
110
factories, mill, residential colonies, shopping malls, commercial buildings, resorts, hotels or other buildings, which may be considered expedient or desirable for the objects or purposes of the company or any of them and to pay for the same lands, buildings and other property, whether purchased or acquired or built or constructed by the Company, either in cash or to make advances on them or any of them. BRPL is currently involved in the business of real estate development.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Rajiv Punater Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 2,500 25.00
2 Mr. Javed Tapia jointly with Ms. Neelam Tapia
2,500 25.00
3 Mr. Rajiv Punater jointly with Ms. Anjali Punater
2,500 25.00
4 Mr. Prakash Chhabria jointly with Ms. Ritu Chhabria
2,500 25.00
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 -
Reserves and Surplus (1.36) (0.09) -
Total Income - - -
Profit/(Loss) after Tax (1.26) (0.09) -
Earnings per share (Rs.) (Face Value Rs.10) (12.65) (0.93) -
Book Value per equity share (Rs.) (5.18) 7.27 -
This company has been incorporated post March 31, 2006 and as such audited financials for FY 2006 are not available 16. Blackpool Realty Private Limited
Blackpool Realty Private Limited (“BRPL”) was incorporated as Blackpool Trading Company Private Limited on July 11, 2005 as a private limited company under the Act. Subsequently, on May 14, 2007, the name of the Company was changed to Blackpool Realty Private Limited with Registrar of Companies, Maharashtra, and Mumbai. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of BRPL is inter alia to purchase, buy, take on lease, or otherwise acquire or sell or dispose off or give on lease any land (whether freehold or leasehold), houses, buildings, or other property with or without machinery, and to erect, construct, build any warehouses, engine houses, factories, mill, residential Colonies, Shopping Malls, Commercial Buildings, Resorts, Hotels or other buildings, which may be considered expedient or desirable for the objects or purposes of the Company or any of them, and to pay for the same lands, buildings, and other property, whether purchased or acquired or built or constructed by the Company, either in cash, or to make advances on them or any of them. BRPL is currently involved in the real estate business.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Javed Tapia Director
Shareholding Pattern as on the date of this Draft Letter of Offer
111
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Aarti Management Consultancy Private Limited 1,663 16.63
2 Aditi Management Consultancy Private Limited 1,663 16.63
3 Anjoss Trading Private Limited 1,664 16.64
4 Mr. Javed Tapia jointly with Ms. Neelam Tapia 4,990 49.90
5 Ms. Shruti Patni jointly with Mr. Arihant Patni 7 0.07
6 Mr. Arihant Patni jointly with Ms. Shruti Patni 3 0.03
7 Ms. Zia Mody jointly with Mr. Jaydev Mody 10 0.10
Total 10,000 100.00
Financial Performance (Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (0.24) (0.30) (0.30)
Total Income 0.98 - -
Profit/(Loss) after Tax 0.06 0 (0.30)
Earnings per share (Rs.) (Face Value Rs.10) 0.57 0 (2.99)
Book Value per equity share (Rs.) 6.53 5.81 5.66
17. Cromwell Tools (India) Private Limited Cromwell Tools (India) Private Limited (“CTPL”) was incorporated on April 18, 1996 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of CTPL is inter alia to manufacture, fabricate, process, produce, finish, assemble buy, sell, import, export and deal in, including distribution of all types of engineering tools used by engineering and other manufacturing industries for all purposes including industry, agriculture, domestic purposes and elsewhere. CTPL is currently involved in the business of manufacturing and trading of tools.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. S. C. Kashimpuria Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Onestar Mercantile Company Private Limited 19,99,975 100
2 Ms. Urvi A. Piramal jointly with Onestar Mercantile Company Private Limited
25 0
Total 20,00,000 100
Financial Performance
(Rs. In lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 200.00 200.00 200.00
Reserves and Surplus (293.46) (293.38) (293.25)
Total Income - - 3.99
Profit/(Loss) after Tax (0.08) (0.13) (2.21)
Earnings per share (Rs.) (Face Value Rs.10) 0 0 (0.11)
Book Value per equity share (Rs.10/-) (5.00) (4.67) (4.66)
18. Crossroads Shoppertainment Private Limited
112
Crossroads Shoppertainment Private Limited (“CSPL”) was incorporated on February 22, 1999 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of CSPL is inter alia to acquire, establish, maintain, run and manage shop malls, entertainment arcades, video halls, cinema halls, departmental stores and for that purpose and deal in trade, import and export, market and distribute all consumer durables and other consumer necessities. CSPL is currently involved in the business of management and trading.
Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Jaydev Mody Director
Mr. Harshvardhan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Onestar Mercantile Company Private Limited 2,49,999 100
2 Ms. Urvi A. Piramal jointly with Onestar Mercantile Company Private Limited 1 0
Total 250000 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 25.00 25.00 25.00
Reserves and Surplus (152.66) (150.74) (134.40)
Total Income 0 0 0
Profit/(Loss) after Tax (1.92) (16.33) (15.39)
Earnings per share (Rs.) (Face Value Rs.10) (0.77) (6.53) (6.16)
Book Value per equity share (Rs.10) (51.80)
(51.77)
(46.19)
19. Delta Magnets Limited
Delta Magnets Limited (“DML”) was incorporated as G. P. Electronics Private Limited on September 23, 1982 as a private limited company under the Act. The status of the Company was changed from Private to Public on July 16, 1984. Subsequently, on October 31, 2008, the name of the Company was changed to Delta Magnets Limited with Registrar of Companies, Maharashtra, Mumbai. Its registered office is situated at 16/A Ali Chambers, 2nd Floor, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of DML is inter alia to carry on business as manufacturers of and dealers in Electronic instruments, Miscellaneous Electric Equipment, Magnetic Tapes, Ferrite rods. Capacitors, Connectors, Micro Switches, Electronic Switching Equipment, Power Diodes, Rectifiers, Integrated Circuits, Resistors, Reed relays switches, Printed Boards, and Computers Mini Computers, Micro-processor Based system and allied items. DML is currently involved in the business of manufacturing arc magnets for automobile sector and isotropic rings, disc for various applications. Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Mahesh Gupta Director
Mr. Javed Tapia Director
Mr. Jaydev Mody Director
Captain R.B. Barick Director
Mr. Ashish Kapadia Director
Shareholding Pattern as on December 31, 2008
113
Total no. of Shareholding as
a % of total no. of shares
Shareholders No. of
Equity
Shares held
pre-Issue
Total no. of
Shares
Total no. of shares
held in
Dematerialized Form
As a %
of(A+B)
As a %
of(A+B+C)
(A)Shareholdin
g of Promoter
and Promoter
Group
(1) Indian
Individuals / Hindu Undivided Family
1 1,125 1,125 0.02 0.02
Bodies Corporate 6 30,17,937 30,12,519 62.09 62.09
Sub Total 7 30,19,062 30,13,644 62.11 62.11
(2) Foreign
Total
shareholding of
Promoter and
Promoter
Group (A)
7 30,19,062 30,13,644 62.11 62.11
(B) Public
Shareholding
(1) Institutions
Mutual Funds / UTI
5 7,375 225 0.15 0.15
Foreign Institutional Investors
3 2,275 525 0.05 0.05
Sub Total 8 9,650 750 0.20 0.20
(2) Non-Institutions
Bodies Corporate 92 2,56,928 2,56,252 5.29 5.29
Individuals
114
Total no. of Shareholding as
a % of total no. of shares
Shareholders No. of
Equity
Shares held
pre-Issue
Total no. of
Shares
Total no. of shares
held in
Dematerialized Form
As a %
of(A+B)
As a %
of(A+B+C)
(A)
Shareholding of
Promoter and
Promoter
Group
Individual shareholders holding nominal share capital up to Rs. 1 lakh
4,372 13,21,157 9,78,959 27.18 27.18
Individual shareholders holding nominal share capital in excess of Rs. 1 lakh
12 2,49,407 2,23,407 5.13 5.13
Any Others
(Specify) 11 4,659 4,424 0.10 0.10
Clearing Members
1 10 - - -
Non Resident Indians
10 4,649 4,424 0.10 0.10
Sub Total 4,487 18,32,151 14,63,042 37.69 37.69
Total Public
shareholding
(B) 4,495 18,41,801 14,63,792 37.89 37.89
Total (A)+(B) 4,502 48,60,863 44,77,436 100.00 100.00
(C) Shares held
by Custodians
and against
which
Depository
Receipts have
been issued
- - - - -
Total (A)+(B)+(C)
4,502 48,60,863 44,77,436 - 100.00
115
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 486.09 486.09 486.09
Reserves and Surplus 413.81 410.54 676.10
Total Income 827.70 765.68 724.58
Profit/(Loss) after Tax 16.42 (233.19) (396.06)
Earnings per share (Rs.) (Face Value Rs.10) 0.34 (5.46) (9.49)
Book Value per equity share (Rs.) 18.51 18.44 23.90
BSE
Month High (Rs.)
Date of High
Volume on date
of high
(No. of
shares)
Low (Rs.)
Date of Low
Volume on date of low
(No. of
shares)
Average price
for the
month
(Rs.)
September, 2008
21.80 September 5, 2008
615 14.75 September 30, 2008
1323 18.26
October, 2008
15.39 October 14, 2008 440 12.64 October 24, 2008 50 13.66
November, 2008
12.01 November 4, 2008
100 9.95 November 28, 2008
400 11.12
December, 2008
10.40 December 23, 2008
210 8.95 December 8, 2008
50 9.86
January, 2009 14 January 15, 2009 10 10.70 January 1, 2009 1 12.58
February, 2009
- - - - - - -
March, 2009 13.97 March 16, 2009 1479 12.60 March 20, 2009 200 12.92
NSE
Month High (Rs.) Date of High
Volume on date of
high (No.
of shares)
Low (Rs.)
Date of Low
Volume on date of
low (No.
of shares)
Average price
for the
month
(Rs.)
October, 2008
- - - - - - -
November, 2008
- - - - - - -
December, 2008
10 December 24, 2008
10 9.70 December 23, 2008 50 9.83
January, 2009
12.80 January 12, 2009
200 10.50 January 2, 2009 1 11.89
February, 2009
- - - - - - -
March, 2009
12 March 27, 2009
50 11.90 March 19, 2009 383 12
Current market price as on April 13, 2009 on the BSE is Rs. 16.03 and current market capitalization is Rs. 779.19 lakhs and on the NSE is Rs. 14.25 and Rs. 692.67 lakhs respectively.
Changes in capital structure in the last 6 months
116
There have not been any changes in the capital structure in the last six months. As on April 17, 2009, there are no outstanding investor complaints. 20. Delta Real Estate Consultancy Private Limited
Delta Real Estate Consultancy Private Limited (“DRECPL”) was incorporated as Delta Township & Real Estate Private Limited on April 3, 2008 as a private limited company under the Act. Subsequently, on October 17, 2008, the name of the Company was changed to Delta Real Estate Consultancy Private Limited with Registrar of Companies, Maharashtra, Mumbai. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of DRECPL is inter alia to build, construct, alter, improve, maintain, enlarge, pull down, remove or replace and to develop, work, manage, carry out and control any buildings, office, chawls and other works and conveniences and to contribute to, subscribe or otherwise assist or take part in the construction, improvement, maintenance, development, working, management, carrying out or control thereof. DRECPL is currently involved in the business of real estate.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Ashish Kapadia Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 9,999 99.99
2 Mr. Ashish Kapadia 1 0.01
Total 10,000 100.00
Financial Performance
This company has been recently incorporated and as such audited financials are not available
21. Delta Realties Limited
Delta Realties Limited (“DRL”) was incorporated on February 1, 2008 as a public limited company under the Act. The date of certificate for commencement of business was July 4, 2008. Its registered office is situated at 16/A Ali Chambers, 2nd floor, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of DRL is inter alia to build, construct, alter, improve, maintain, enlarge, pull down, remove or replace and to develop, work, manage, carry out and control any buildings, office, chawls and other works and conveniences and to contribute to, subscribe or otherwise assist or take part in the construction, improvement, maintenance, development, working, management, carrying out or control thereof and to form partnerships with any other person or company in doing any of these things. DRL is currently involved in the business of real estate. Board of Directors
Name Designation
Mr. Chand Arora Director
Mr. Sunil Nair Director
Mr. Darius Khambatta Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 49,994 99.99
2 Aarti Management Consultancy Private Limited
1 0.00
3 Aditi Management Consultancy Private Limited
1 0.00
117
4 Anjoss Trading Private Limited 1 0.00
5 Delta Corp Limited 1 0.00
6 Ms. Ambika Kothari 1 0.00
7 Mr. Ashish Kapadia 1 0.00
Total 50,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 5.00 - -
Reserves and Surplus (0.12) - -
Total Income - - -
Profit/(Loss) after Tax (0.12) - -
Earnings per share (Rs.) (Face Value Rs.10) (0.25) - -
Book Value per equity share (Rs.) 8.95 - -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available 22. Freedom Aviation Private Limited
Freedom Aviation Private Limited (“FAPL”) was incorporated on February 15, 2008 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of FAPL is inter alia to establish, maintain and operate air transport operations including air services, airlines and lines of aerial conveyances including scheduled passenger air transport services and lines and chartered domestic and international services and lines for merchandise of all and every description either through owned aircraft or leased, whether as principals, agents or otherwise and to set up flying services both as private and public carriers on National and International route. FAPL is currently involved in the business of aviation.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Darius Khambatta Director
Captain Vijay Kumar Madan Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 1,19,99,880 100.00
2 Delta Corp. Limited 120 0.00
Total 1,20,00,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1,200.00 - -
Reserves and Surplus (1.74) - -
Total Income - - -
Profit/(Loss) after Tax (1.74) - -
Earnings per share (Rs.) (Face Value Rs.10) (0.01) - -
Book Value per equity share (Rs.) 9.90 - -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available 23. Freedom Registry Limited
118
Freedom Registry Limited (“FRL”) was incorporated as Amtrac Management Services Private Limited on January 4, 1994 and changed its status to a public limited company on December 13, 1995. Subsequently, the name of the Company was changed to Freedom Registry Limited with effect from April 16, 2009. Its registered office is situated at Plot No. 101/102 MIDC 19th Street, CEAT Tyres, Nashik 422 007, Maharashtra. FRL is registered with SEBI as a registrar and transfer agent. The main object of FRL is inter alia to carry on the business of and to act as various kinds of intermediaries in the Securities market including to act as registrars to the issue, share and debenture transfer agents, transfer agents for various other kinds of securities, brokers, sub-brokers, depositories and/or participants in depositories, lead managers/merchant bankers to an issue, underwriters to an issue,and such other kinds of intermediaries as may be recognised by law from time to time. FRL is currently involved in the business of registrar and transfer agent.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Deepak Lulla Director
Mr. Hardik Vinay Dhebar Director
Mr. Ashish Kapadia Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 63,750 27.72
2 Aarti Management Consultancy Private Limited
17,083 7.43
3 Aditi Management Consultancy Private Limited.
17,083 7.43
4 Anjoss Trading Private Limited 17,083 7.43
5 Mr. Hardik Dhebar jointly with Anjoss Trading Private Limited
1 0.00
6 Topstar Mercantile Private Limited 57,501 25.00
7 Omega Multitrade Private Limited 57,499 24.99
Total 2,30,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 23.00 23.00 23.00
Reserves and Surplus 20.40 13.48 8.17
Total Income 32.11 27.60 31.60
Profit/(Loss) after Tax 6.93 6.47 08.30
Earnings per share (Rs.) (Face Value Rs.10) 3.01 2.82 3.60
Book Value per equity share (Rs.) 18.87 15.86 13.55
24. Gees Accessories & Co-Ordinates Private Limited (“Gees”)
Gees Accessories & Co-Ordinates Private Limited, was incorporated under the Act, on August 19, 1994 and has its registered office at 107 Harsha House, Karam Pura Comm. Complex, New Delhi 110 015.The main object of Gees Accessories & Co-ordinates Private Limited is inter alia produce, refine, process, buy, sell, export or import or otherwise deal in all classes and kinds of jewellery, costume jewellery, beeds, hand bags, purses, apparels, garments, scarfs, handicrafts, their accessories and co-ordinates. It is currently engaged in trading business of Gees include export and import of artificial jewellery. Board of Directors
Name Designation
Ms. Kalpana Singhania Director
119
Ms. Gopika Singhania Director
Ms. Ambika Singhania Director
Shareholding pattern as on the date of this Draft Letter of Offer
Sl.
No. Name of the Shareholder No. of Shares
% of
shareholding
1 Ms. Kalpana Singhania 510 50
2 Ms. Gopika Singhania 510 50
Total 1020 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.02 1.02 1.02
Reserves and Surplus 0 0.35 0.98
Total Income 0.03 0 0.67
Profit/(Loss) after Tax (0.36) (0.63) (0.11)
Earnings per share (Rs.) (Face Value Rs.100) (35.53) (61.41) (11.60)
Book Value per equity share (Rs.) 99.37 135.09 196.51
25. G. K. International Private Limited
G K International Private Limited, was incorporated under the Act, on February 15, 1991 and has its registered office at 107 Harsha House, Karam Pura Commercial Complex, New Delhi 110 015.The main object of G K International Private Limited is inter alia to import and export all or any of the goods or commodities permitted to be imported or exported lawfully from time to time. It is currently inter alia engaged in the business of export and import of JK Tyres and JK papers. Board of Directors
S. No Name
1. Ms. Kalpana Singhania
2. Ms. Gopika Singhania
3. Ms. Ambika Kothari
Shareholding pattern as on the date of this Draft Letter of Offer
No. Name of the Shareholder No. of Shares % shareholding
1 Ms. Kalpana Singhania 1,015 50.12
2 Ms. Gopika Singhania 1,010 49.88
Total 2,025 100.00
Financial Performance
(Rs. lakhs except per share data)
FY 2008 FY 2007 FY 2006
Net Sales and other Income 34.85 52.05 34.30
Profit/ (loss) after tax (before adjustments)
3.13 26.48 13.45
Equity capital (Face value Rs. 100 per share)
2.02 2.02 2.02
Reserves & Surplus (Excl. Revaluation)
117.85 114.72 88.23
Earnings per share 154.80 1,307.82 664.45
120
Book value per Share (Face value Rs. 100 per share)
5,919.87 5,765.08 4,457.26
26. Goldlife Mercantile Company Private Limited
Goldlife Mercantile Company Private Limited (“GMCPL”) was incorporated on February 4, 2005 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of GMCPL is to inter alia carry on the business in India and abroad as Traders, Distributors, Dealers, Exporter, Importer, Brokers, Stockiest and commission agent. GMCPL is primarily engaged in the business of trading. Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Urvi A. Piramal jointly with with Mr. Harshvardhan A. Piramal, Mr. Rajeev A. Piramal and Mr. Nandan A. Piramal 9,990 100
2 Ms. Urvi A. Piramal 10 0
Total 10,000 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus 2.96 0.36 9.93
Total Income 40.18 107.66 114.94
Profit/(Loss) after Tax 2.59 10.29 (9.49)
Earnings per share (Rs.) (Face Value Rs.10) 26 103 (95)
Book Value per equity share (Rs.) 38.77 13
(90.30)
27. Highpoint Agro Star Private Limited
Highpoint Agro Star Private Limited (“HASPL”) was incorporated on August 7, 2007 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of HASPL is inter alia to acquire any estates or lands by purchase, lease, concession, grant, licence or otherwise and utilize, grow, plant, cultivate, produce, refine and exploit for agriculture / forest produce, floricultural, horticultural, plantation, sericulture, poultry farming, dairy, nursery, planting, pisciculture, other plants, trees, crops, natural products of any kind. HASPL is currently engaged in the business of agriculture. Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Mr. Jaydev Mody Director
Ms. Alpana Chinai Director
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Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Urvi A. Piramal 5,000 50
2 Mr. Harshvardhan A. Piramal 1,667 17
3 Mr. Rajeev A. Piramal 1,667 17
4 Mr. Nandan A. Piramal 1,666 17
Total 10,000 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus (0.06) - -
Total Income 0 - -
Profit/(Loss) after Tax (0.06) - -
Earnings per share (Rs.) (Face Value Rs.10) (0.59) - -
Book Value per equity share (Rs.) 7.79
- -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available 28. Intertrade Mercantile Company Private Limited
Intertrade Mercantile Company Private Limited (“IMCPL”) was incorporated on November 10, 2003 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of IMCPL is inter alia to carry on the business in India and abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest, commission agent, agency business, selling, marketing business, assembling, fabricating and processors. IMCPL is currently involved in the trading business. Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Javed Tapia Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 20,000 8.00
2 Ms. Anjali Mody 10 0.00
3 Ms. Zia Mody 19,990 7.80
4 Anjoss Trading Private Limited 70,000 28.00
5 Aditi Management Consultancy Private Limited 70,000 28.00
6 Aarti Management Consultancy Private Limited 70,000 28.00
Total 10,000 100.00
Financial Performance (Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 25.00 25.00 25.00
Reserves and Surplus (6.69) (3.55) (0.58)
Total Income - - -
Profit/(Loss) after Tax (3.14) (2.97) (0.38)
Earnings per share (Rs.) (Face Value Rs.10) (1.26) (1.19) (0.15)
Book Value per equity share (Rs.) 7.17 8.41 9.57
29. J M Livestock Private Limited
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J M Livestock Private Limited (“JMLPL”) was incorporated on December 1, 2005 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of JMLPL is inter alia to carry on in India or elsewhere the business of cattle keepers, live stock breeders of every variety of animal whether bred as pedigree stock or for the purpose of its sale, as meat poultry, hiders or the business of poultry, farmers. JMLPL is currently involved in the business of breeding, developing and nursing for commercial use all types of animals and livestock such as cow, ox, bull, buffaloes, dogs etc.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Darius Khambatta Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 9,990 99.90
2 Mr. Darius Khambatta 10 0.10
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (122.26) (56.66) (10.66)
Total Income 93.49 15.71 -
Profit/(Loss) after Tax (65.60) (46.00) (10.66)
Earnings per share (Rs.) (Face Value Rs.10) (655.59) (460.04) (106.61)
Book Value per equity share (Rs.) (1213.19) (557.28) (97.32)
30. J M Mega Properties Private Limited
J M Mega Properties Private Limited (“JMMPPL”) was incorporated on October 9, 2007 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of JMMPPL is inter alia to purchase, buy, take on lease, or otherwise acquire or sell or dispose off or give on lease any land (whether freehold or leasehold), houses, buildings, or other property with or without machinery, and to erect, construct, build any warehouses, engine houses, factories, mill, residential colonies, shopping malls, Commercial Buildings, Resorts, Hotels or other buildings, which may be considered expedient or desirable for the objects or purposes of the Company or any of them, and to pay for the same lands, buildings and other property, whether purchased or acquired or built or constructed by the Company, either in cash or to make advances on them or any of them. JMMPPL is currently involved in the business of real estate.
Board of Directors
Name Designation
Mr. Sunil Nair Director
Mr. Darius Khambatta Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 9,999 99.99
2 Mr. Darius Khambatta 1 0.01
Total 10,000 100.00
Financial Performance
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(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus (0.13) - -
Total Income - - -
Profit/(Loss) after Tax (0.13) - -
Earnings per share (Rs.) (Face Value Rs.10) (2.65) - -
Book Value per equity share (Rs.) 7.60 - -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available 31. J M Property Management Private Limited
J M Property Management Private Limited (“JMPMPL”) was incorporated on December 22, 2006 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of JMPMPL is inter alia to purchase, buy, take on lease, or otherwise acquire or sell or dispose off or give on lease any land (whether freehold or leasehold), houses, buildings, or other property with or without machinery, and to erect, construct, build any warehouses, engine houses, factories, mill, residential colonies, shopping malls, Commercial Buildings, Resorts, Hotels or other buildings, which may be considered expedient or desirable for the objects or purposes of the Company or any of them, and to pay for the same lands, buildings and other property, whether purchased or acquired or built or constructed by the Company, either in cash or to make advances on them or any of them. JMPMPL is currently involved in the business of property management.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Darius Khambatta Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 24,00,000 80.00
2 Mr. Javed Tapia 3,00,000 10.00
3 Mr. Azim Tapia 3,00,000 10.00
Total 30,00,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 300.00 1.00 -
Reserves and Surplus (3.84) (0.10) -
Total Income - - -
Profit/(Loss) after Tax (3.74) (0.10) -
Earnings per share (Rs.) (Face Value Rs.10) (0.12) (0.99) -
Book Value per equity share (Rs.) 9.86 6.61 -
This company has been incorporated post March 31, 2006 and as such audited financials for FY 2006 are not available 32. Jammin Recreation Private Limited
Jammin Recreation Private Limited (“JRPL”) was incorporated on July 29, 2006 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of JRPL is to inter alia carry on the business in India and abroad of establishing chain of entertainment, recreation and amusement centers. JRPL is currently engaged in the business of entertainment / recreation.
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Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Urvi A. Piramal 5,000 50.00
2 Mr. Harshvardhan A. Piramal 1,666 16.70
3 Mr. Rajeev A. Piramal 1,667 16.70
4 Mr. Nandan A. Piramal 1,667 16.70
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 -
Reserves and Surplus (367.72) (0.32) -
Total Income 113.69 0.01 -
Profit/(Loss) after Tax (367.40) (0.32) -
Earnings per share (Rs.) (Face Value Rs.10) (3674.01) (3.17) -
Book Value per equity share (Rs.) (3667.19) 6.82 -
This company has been incorporated post March 31, 2006 and as such audited financials for FY 2006 are not available 33. Jayem Real Estate Private Limited
Jayem Real Estate Private Limited (“JREPL”) was incorporated on April 7, 2008 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of JREPL is inter alia to build, construct, alter, improve, maintain, enlarge, pull down, remove or replace and to develop, work, manage, carry out and control any buildings, office, chawls and other works and conveniences and to contribute to, subscribe or otherwise assist or take part in the construction, improvement, maintenance, development, working, management, carrying out or control thereof. JREPL is currently involved in the business of real estate. Board of Directors
Name Designation
Mr. Darius Khambatta Director
Mr. Sunil Nair Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 9,999 99.99
2 Mr. Ashish Kapadia 1 0.01
Total 10,000 100.00
Financial Performance
This company has been recently incorporated and as such audited financials are not available 34. Jayem Realty Management Private Limited
Jayem Realty Management Private Limited (“JRMPL”) was incorporated on April 7, 2008 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of JRMPL is inter alia to build, construct, alter, improve, maintain, enlarge, pull down, remove or replace and to develop, work, manage, carry out and control any
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buildings, office, chawls and other works and conveniences and to contribute to, subscribe or otherwise assist or take part in the construction, improvement, maintenance, development, working, management, carrying out or control thereof. JRMPL is currently involved in the business of real estate.
Board of Directors
Name Designation
Mr. Darius Khambatta Director
Mr. Sunil Nair Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 9,999 99.99
2 Mr. Ashish Kapadia 1 0.01
Total 10,000 100.00
Financial Performance
This company has been recently incorporated and as such audited financials are not available 35. Lakeview Mercantile Company Private Limited
Lakeview Mercantile Company Private Limited (“LMCPL”) was incorporated on February 16, 2006 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of LMCPL is inter alia to purchase, buy, take on lease, or otherwise acquire or sell or dispose off or give on lease any land (whether freehold or leasehold), houses, buildings, or other property with or without machinery, and to erect, construct, build any warehouses, engine houses, factories, mill, residential Colonies, Shopping Malls, Commercial Buildings, Resorts, Hotels or other buildings, which may be considered expedient or desirable for the objects or purposes of the Company or any of them, and to pay for the same lands, buildings, and other property, whether purchased or acquired or built or constructed by the Company, either in cash, or to make advances on them or any of them. LMCPL is currently involved in the real estate business.
Board of Directors
Name Designation
Ms. Ambika Kothari Director
Mr. Prakash Chhabria Director
Mr. Darius Khambatta
Shareholding Pattern as on the date of this Draft Letter of Offer Equity
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Aarti Management Consultancy Private Limited
1,833 18.33
2 Aditi Management Consultancy Private Limited
1,833 18.33
3 Anjoss Trading Private Limited 1,834 18.34
4 Mr. Prakash Chhabria jointly with Ms. Ritu Chhabria
3,000 30.00
5 Delta Corp Limited 1,500 15.00
Total 10,000 100.00
Preference
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Aarti Management Consultancy Private Limited
1,83,300 18.33
2 Aditi Management Consultancy Private Limited
1,83,300 18.33
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3 Anjoss Trading Private Limited 1,83,400 18.34
4 Prakash Chhabria jointly with Ritu Chhabria 3,00,000 30.00
5 Delta Corp Limited 1,50,000 15.00
Total 10,00,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (0.80) (0.31) (0.09)
Total Income 0.00 0.00 0.00
Profit/(Loss) after Tax (0.49) (0.21) (0.09)
Earnings per share (Rs.) (Face Value Rs.10) (4.93) (2.12) (0.94)
Book Value per equity share (Rs.) (12.92) (9.88) 7.71
36. Lifezone Mercantile Private Limited
Lifezone Mercantile Private Limited (“LMPL”) was incorporated on July 25, 2007 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of LMPL is to, inter alia, carry on the business in India and abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest and commission agents. LMPL is currently engaged in the business of trading. Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms Urvi A. Piramal 5,000 50.00
2 Mr Harshvardhan A. Piramal 1,667 16.67
3 Mr Rajeev A. Piramal 1,667 16.67
4 Mr Nandan A. Piramal 1,666 16.66
Total 10,000 100.00
Financial Performance (Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus (0.07) - -
Total Income 0 - -
Profit/(Loss) after Tax (0.07) - -
Earnings per share (Rs.) (Face Value Rs.10) (0.69) - -
Book Value per equity share (Rs.) 8.69
- -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available 37. Miranda Few Tools Private Limited
Miranda Few Tools Private Limited (“MFTPL”) was incorporated as Supersoft Trading Company Private Limited on February 2, 2005 as a private limited company under the Act. Subsequently, on June 27, 2005, the name of the Company was changed to Miranda Few Tools Private Limited with Registrar of Companies,
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Maharashtra, Mumbai. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of MFTPL is to inter alia carry on the business as manufacturers, designers, assemblers, contractors, dealers, exporters and importers of all kinds of automotive parts and accessories. MFTPL is currently involved in the business of manufacture of taps.
Board of Directors
Name Designation
Ms Urvi A. Piramal Director
Mr Harshvardhan A. Piramal Director
Mr Jack Olivier Moser Director
Mr David Douglas Aldridge Director
Mr Phillipe Alain Moser (Alternate Director To Mr Jack Olivier Moser)
Director
Mr Henery Holton Gorrell (Alternate Director to Mr David Douglas Aldridge)
Director
Mr Rajeev A. Piramal (Alternate Director to Ms Urvi A. Piramal)
Director
Mr Nandan A. Piramal (Alternate Director to Mr Harshvardhan A. Piramal)
Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Onestar Mercantile Company Private Limited 12,14,000 50
2 What Cheer Investments (Pty) Limited 12,14,000 50
Total 24,28,000 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 242.80 227.80 227.80
Reserves and Surplus (53.15) (102.89) (25.10)
Total Income 437.34 307.75 124.64
Profit/(Loss) after Tax (85.26) (77.79) (25.04)
Earnings per share (Rs.) (Face Value Rs.10) (3.51) (3.41) (1.10)
Book Value per equity share (Rs.10) 7.67 5.32 8.72
38. Miranda Tools Private Limited
Miranda Tools Private Limited (“MTPL”) was incorporated on December 27, 2006 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013.The main object of MTPL is to inter alia, carry on the business of manufacturers, producers, processors, makers, inventors, designers, convertors, repairers, assemblers, cleaners, importers, exporters, traders, buyers, sellers, retailers, wholesalers, suppliers and indenters of various types of tools. MTPL is currently engaged in the business of manufacture of engineering tools.
Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Amarnath Agrawal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
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1 Ms Urvi A. Piramal 7,37,999 100.00
2 Mr Harshvardhan A. Piramal jointly with Ms. Urvi A. Piramal 1 0.00
Total 7,38,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus (1.89) - -
Total Income 0 - -
Profit/(Loss) after Tax (1.89) - -
Earnings per share (Rs.) (Face Value Rs.10) (18.91) -
-
Book Value per equity share (Rs.) (8.91) - -
This company has been incorporated on December 27, 2006 and as such audited financials for FY 2006 and FY 2007 are not available 39. Morarjee Goculdas Spinning & Weaving Private limited
Morarjee Goculdas Spinning & Weaving Private Limited (“MGSWPL”) was incorporated as Morarjee Legler Private Limited on August 16, 1995 as a private limited company under the Act. Subsequently, on February 23, 2005, its name was changed to Morarjee Goculdas Spinning & Weaving Private Limited. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of the MGSWPL is to carry on the business of manufacturing and marketing of high quality fabrics (including denim, corduroy flat/cottons bull denim, and other fabrics used for casual wear garment (including finished jeans, shirts, trousers and other casual wear garments). MGSWPL is currently engaged in the business of manufacture of fabrics. Board of Directors
Name Designation
Mr. P K Gothi Director
Mr. Bharat Sanghavi Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms Urvi A. Piramal 4,000 40
2 Mr. Pramodkumar Gothi 4,000 40
3 Morarjee Textiles Limited 2,000 20
Total 10,000 100
Financial Performance:
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 100 1.00 1.00
Reserves and Surplus (972.07) (971.98) (904.71)
Total Income 0 0 33.48
Profit/(Loss) after Tax (0.09) (67.26) 33.35
Earnings per share (Rs.) (Face Value Rs.10) (0.86) (672.60) 333.52
Book Value per equity share (Rs.)* (9710.67) (9709.80) (9037.17)
*Share Application money received has not been considered for calculation of Book Value
40. Newplaza Multitrade Private Limited
Newplaza Multitrade Private Limited (“NMPL”) was incorporated on March 3, 2006 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of NMPL is inter alia to carry on the business in India and
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abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest and commission agent, agency business, selling and marketing business, assembling, fabricating and processors of agricultural, commercial, industrial products, household, domestic, automobiles, farms and forest product, food product, leather and leather products, rubber and rubber products, etc. NMPL is currently engaged in the business of trading activities.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Darius Khambatta Director
Mr. Ashish Kapadia Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 9,990 99.90
2 Mr. Ashish Kapadia 10 0.10
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (0.29) (0.16) (0.05)
Total Income - - -
Profit/(Loss) after Tax (0.12) (0.10) (0.05)
Earnings per share (Rs.) (Face Value Rs.10) (1.29) (1.05) (0.55)
Book Value per equity share (Rs.) 6.41 7.61 8.55
41. Omega Multitrade Private Limited
Omega Multitrade Private Limited (“OMPL”) was incorporated on July 25, 2007 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of OMPL is to inter alia carry on the business in India and abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest and commission agents. OMPL is currently engaged in the business of trading. Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Equity Shares
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Urvi A. Piramal 5,000 50.00
2 Mr. Harshvardhan A. Piramal 1,667 16.67
3 Mr. Rajeev A. Piramal 1,667 16.67
4 Mr. Nandan A. Piramal 1,666 16.66
Total 10,000 100.00
5% Non Cumulative Preference Shares of Rs. 10 each
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Urvi A. Piramal jointly withMr. Rajeev A. Piramal 5,000 16.67
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2 Mr. Rajeev A. Piramal jointly with Ms. Urvi A. Piramal 5,000 16.67
3 Ms. Urvi A. Piramal jointly with Mr. Nandan A. Piramal 5,000 16.67
4 Mr. Nandan A. Piramal jointly with Ms. Urvi A. Piramal 5,000 16.67
5 Ms. Urvi A. Piramal jointly withMr. Harshvardhan A. Piramal 5,000 16.67
6 Mr. Harshvardhan A. Piramal jointly with Ms. Urvi A. Piramal 5,000 16.67
Total 30,000 100.00
5% Cumulative Preference Shares of Rs. 10 each
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Urvi A. Piramal 3,345 49.99
2 Mr. Harshvardhan A. Piramal 1,146 16.67
3 Mr. Rajeev A. Piramal 1,146 16.67
4 Mr. Nandan A. Piramal 1,146 16.67
Total 6,873 100.00
Financial Performance (Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus (0.11) - -
Total Income 0 - -
Profit/(Loss) after Tax (0.11) - -
Earnings per share (Rs.) (Face Value Rs.10) (1.08) - -
Book Value per equity share (Rs.) 8.30
- -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available Pursuant to an order of the High Court of Bombay dated February 6, 2009 sanctioning a scheme of merger, Newone Trading Company Private Limited (“Newone”), Topflag Trading Company Private Limited (“Topflag”) and Goldflag Mercantile Company Private Limited (“Goldflag”) (collectively the “Transferor
Companies”) were merged into Omega Multitrade Private Limited. At the time of the High Court order, Newone held 20,94,895 Equity Shares, Topflag held 20,94,896 Equity Shares and Goldflag held 20,94,896 Equity Shares, aggregating to 62,84,687 Equity Shares, Prior to the coming into effect of the merger, the Transferor Companies transferred the 62,84,687 Equity Shares held by them (through an off market transfer) to Ashok Piramal Group Textiles Trust on March 2, 2009 for a total consideration of Rs. 86,540,140. Thereafter, the said proceeds were transferred to Omega Multitrade Private Limited, pursuant to the scheme of merger coming into effect. Therefore, the Transferor Companies are no longer part of the Promoter Group. 42. Onestar Mercantile Company Private Limited
Onestar Mercantile Company Private Limited (“OMCPL”) was incorporated on January 31, 2005 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of OMCPL is inter alia to carry on the business in India and abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest and commission agent. OMCPL is currently involved in the business of trading.
Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
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Shareholding Pattern as on the date of this Draft Letter of Offer
Eauity Shares
Sl.No. Names of Shareholder No. of Shares held % of
shareholding
1 Ms. Urvi A. Piramal 2,500 25.00
2 Ms. Urvi A. Piramal jointly with Mr. Harshvardhan A. Piramal 2,500 25.00
3 Ms. Urvi A. Piramal jointly with Mr. Rajeev A. Piramal 2,500 25.00
4 Ms. Urvi A. Piramal jointly with Mr. Nandan A. Piramal 2,490 24.90
5 Mr. Nandan A. Piramal jointly with Ms. Urvi A. Piramal
10 0.10
Total 10,000 100.00
1% non cumulative preference shares of Rs. 10 each
Sl.No. Names of Shareholder No. of Shares held % of
shareholding
1 Ms. Urvi A. Piramal jointly with Mr. Rajeev A. Piramal 7,500 18.75
2 Mr. Rajeev A. Piramal jointly with Ms. Urvi A. Piramal 5000 12.50
3 Ms. Urvi A. Piramal 2500 6.25
4 Ms. Urvi A. Piramal jointly with Mr. Harshvardhan A. Piramal 7500 18.75
5 Ms. Urvi A. Piramal jointly with Mr. Nandan A. Piramal 7490 18.73
6 Mr. Nandan A. Piramal jointly with Ms. Urvi A. Piramal 5010 12.53
7 Mr. Harshvardhan A. Piramal jointly with Ms. Urvi A. Piramal 5000 12.50
Total 40000 100
10% Non Cumulative Preference Shares of Rs. 10 each
Sl. No. Names of Shareholder No. of Shares held % of
shareholding
1. Ms. Urvi A. Piramal jointly with Mr. Rajeev A. Piramal
5000 12.50
2. Mr. Rajeev A. Piramal jointly with Ms. Urvi A. Piramal
5000 12.50
3. Ms. Urvi A. Piramal jointly with Mr. Harshvardhan A. Piramal
5000 12.50
4. Mr. Harshvardhan A. Piramal jointly with Ms. Urvi A. Piramal
5000 12.50
5. Ms. Urvi A. Piramal jointly with Mr. Nandan A. Piramal
5000 12.50
6. Mr. Nandan A. Piramal jointly with Ms. Urvi A. Piramal
5000 12.50
7. Topstar Mercantile Private Limited 9499 23.75
8. Mr. Rajeev A. Piramal 1 0.00
9. Aarti Management Consultancy Private Limited 166 0.42
10. Aditi Management Consultancy Private Limited 167 0.42
11. Anjoss Trading Private Limited 167 0.42
Total 40,000 100.00
1% Non Cumulative Preference Share of Rs. 10,000/- each
Sl. No. Names of Shareholder No. of Shares held % of
shareholding
1 Supertime Trading Private Limited 517 100
132
Total 517 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (589.52) (131.41) (31.58)
Total Income 17.69 0 0
Profit/(Loss) after Tax (5,654.94) (99.82) (31.52)
Earnings per share (Rs.) (Face Value Rs.10) (5,6549.36) (998.25) (315.22)
Book Value per equity share (Rs.) (5,890.64) (1305) (307)
43. Onestar Trading Company Private Limited
Onestar Trading Company Private Limited (“OTCPL”) was incorporated on February 2, 2005 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of the OTCPL is inter alia to carry on the business in India and abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest and commission agent . OTCPL is currently involved in the business of trading.
Board of Directors
Name Designation
Ms Urvi A. Piramal Director
Mr Harshvardhan A. Piramal Director
Mr Rajeev A. Piramal Director
Mr Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Urvi A. Piramal jointly with Mr. Harshvardhan A. Piramal, Mr. Rajeev A. Piramal, Mr. Nandan A. Piramal 9,990 99.90
2 Ms. Urvi A. Piramal 10 0.10
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (0.33) (0.21) (0.12)
Total Income 0 0 0
Profit/(Loss) after Tax (0.12) (0.08) (0.06)
Earnings per share (Rs.) (Face Value Rs.10) (1.19) (0.86) (0.64)
Book Value per equity share (Rs.) 6 7 8
44. Oneup Mercantile Company Private Limited
Oneup Mercantile Company Private Limited (“OMCP”) was incorporated on January 28, 2005 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of OMCP is to inter alia carry on the business in India and abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest and commission agent. OMCP is currently involved in the business of trading.
Board of Directors
Name Designation
133
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Urvi A. Piramal 2,500 25.00
2 Ms. Urvi A. Piramal jointly with Mr. Harshvardhan A. Piramal 2,500 25.00
3 Ms. Urvi A. Piramal jointly with Mr. Rajeev A. Piramal 2,500 25.00
4 Ms. Urvi A. Piramal jointly with Mr. Nandan A. Piramal 2,490 24.90
5 Mr. Nandan A. Piramal jointly with Ms. Urvi A. Piramal 10 0.10
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (0.32) (0.21) (0.12)
Total Income 0 0 0
Profit/(Loss) after Tax (0.12) (0.08) (0.06)
Earnings per share (Rs.) (Face Value Rs.10) (1.19) (0.81) (0.64)
Book Value per equity share (Rs.) 5.97 7.04 7.72
45. Outreach Mercantile Company Private Limited
Outreach Mercantile Company Private Limited (“OMCPL”) was incorporated on December 20, 2005 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of OMCPL is inter alia to carry on the business in India and abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest & commission agent, agency business, selling and marketing business, assembling, fabricating and processing. OMPCL is primarily involved in trading activities. Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Darius Khambatta Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Aarti Management Consultancy Private Limited
3,334 33.00
2 Aditi Management Consultancy Private Limited
3,333 33.00
3 Anjoss Trading Private Limited 3,333 34.00
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (0.44) (0.17) (0.05)
134
Total Income - - -
Profit/(Loss) after Tax (0.27) (0.11) (0.06)
Earnings per share (Rs.) (Face Value Rs.10) (2.70) (1.16) (0.50)
Book Value per equity share (Rs.) 4.89 7.49 8.55
46. Peninsula Developers and Builders Private Limited
Peninsula Developers and Builders Private Limited (“PDBPL”) was incorporated on January 17, 2007 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PDBPL is to inter alia to purchase, take on lease or in exchange, or otherwise deal with moveable and immovable property and rights and privileges of all kinds. PDBPL is currently engaged in the business of real estate. Board of Director
Name Designation
Mr. Rajeev A. Piramal Director
Mr. Rajesh Jaggi Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Rajeev A. Piramal 5,000 50
2 Mr. Rajesh Jaggi 5,000 50
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus 0 - -
Total Income 0 - -
Profit/(Loss) after Tax 0 - -
Earnings per share (Rs.) (Face Value Rs.10) 0 - -
Book Value per equity share (Rs.) 9.02 - -
This company has been incorporated on January 17, 2007 and as such audited financials for FY 2006 and FY 2007 are not available 47. Peninsula Investment Management Company Limited
Peninsula Investment Management Company Limited (“PIMCL”) was incorporated on December 15, 2005 as a public limited company under the Act. PIMCL received its certificate of commencement of business on February 2, 2006. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PIMCL is inter alia to undertake and carry on the office or offices and duties of manager, advisers, administrators, attorneys, agents, consultants, representatives or nominees of or for any venture capital funds, mutual funds, unit trusts, investment trust or any other portfolio of securities, properties or assets of any kind. PIMCL is currently involved in the business of investment manager.
Board of Directors
Name Designation
Mr Rajeev A. Piramal Director
Mr. Jaydev Mody Director
Mr. Rajesh Jaggi Director
Mr. Mahesh Gupta Director
Ms. Bhavna Doshi Director
Mr. Vikas Gore Director
135
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Peninsula Land Limited 75,00,000 75.00
2 Mr Harshvardhan A. Piramal 1,50,000 1.50
3 Mr Rajeev A. Piramal 1,50,000 1.50
4 Mr Nandan A. Piramal 1,50,000 1.50
5 Mr Jaydev Mody 14,00,000 14.00
6 Mr Mahesh Gupta 5,00,000 5.00
7 Ms Urvi A. Piramal 1,50,000 1.50
Total 1,00,00,000 100.00
Financial Performance (Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1000.00 942.25 -
Reserves and Surplus (191.59) (60.69) -
Total Income 128.71 8.63 -
Profit/(Loss) after Tax (130.90) (60.69) -
Earnings per share (Rs.) (Face Value Rs.10) (1.31) (0.64) -
Book Value per equity share (Rs.) 8.08 9.37 -
This company has been incorporated on December 15, 2005 and as such audited financials for FY 2006 are not available. 48. Peninsula Land Development Private Limited
Peninsula Land Development Private Limited (“PLDPL”) was incorporated on January 17, 2007 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PLDPL is inter alia to purchase, take on lease or in exchange, or otherwise deal with moveable and immovable property and rights and privileges of all kinds. PLDPL is currently involved in the business of real estate.
Board of Directors
Name Designation
Mr Rajeev A. Piramal Director
Mr Rajesh Jaggi Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Rajeev A. Piramal 5,000 50
2 Mr Rajesh Jaggi 5,000 50
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus - - -
Total Income - - -
Profit/(Loss) after Tax - - -
Earnings per share (Rs.) (Face Value Rs.10) - - -
Book Value per equity share (Rs.) 8.87 - -
This company has been incorporated post January 17, 2007 and as such audited financials for FY 2006 and FY 2007 are not available. 49. Peninsula Land Limited
136
Peninsula Land Limited (“PLL”) was incorporated on August 10, 1871 as Morarjee Goculdas Spinning & Weaving Company Limited with the then Registrar of Joint Stock Companies, Bombay now Registrar of Companies, Maharashtra Mumbai. The name was changed from Morarjee Goculdas Spinning & Weaving Company Limited to Morarjee Realties Limited w.e.f. September 8, 2004 and subsequently, the name was again changed from Morarjee Realties Limited to Peninsula Land Limited w.e.f. April 10, 2006. The registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013, Maharashtra. The main object of PLL is inter alia to sell, exchange or lease the whole or any part of the land or other immovable property for the time being belonging to the Company, and to take back the same on lease or repurchase for such price or prices. PLL is primarily involved in the business of real estate. Board of Directors
Name Designation
Ms. Urvi A. Piramal Executive Chairperson
Mr. Rajeev A. Piramal Executive Vice Chairman
Mr. Mahesh Gupta Group Managing Director
Mr. Rajesh Jaggi Managing Director
Mr. Jaydev Mody Director
Mr. Amitabha Ghosh Director
Ms. Bhavna Doshi Director
Mr. C. M. Hattangdi Director
Mr. D. M. Popat Director
Mr. Sudhindar Khanna Director
Lt. Gen. Deepak Summanwar Director
Shareholding Pattern as on December 31, 2008
Total no. of Shareholding as a % of total no. of shares
Shareholders No. of Equity
Shares held
pre-Issue
Total no. of Shares
Total no. of shares held in
Dematerialized Form
As a %
of(A+B)
As a %
of(A+B+C)
(A)PROMOTER AND
PROMOTER
GROUP
1.Indian
Individuals / Hindu Undivided Family
7 3,19,11,035 3,19,11,035 11.43 11.43
Bodies Corporate 3 11,68,82,052 11,68,82,052 41.86 41.86
Employees Stock Option Scheme
1 10,00,000 10,00,000 0.36 0.36
Sub Total 11 14,97,93,087 14,97,93,087 53.65 53.65
(2) Foreign
Total
shareholding of Promoter and
Promoter
Group (A)
11 14,97,93,087 14,97,93,087 53.65 53.65
137
Total no. of Shareholding as
a % of total no. of shares
Shareholders No. of
Equity
Shares held
pre-Issue
Total no. of
Shares
Total no. of shares
held in
Dematerialized Form
As a %
of(A+B)
As a %
of(A+B+C)
(B) Public
Shareholding
(1) Institutions
Mutual Funds / UTI
8 9,02,295 8,76,000 0.32 0.32
Financial Institutions / Banks
37 4,94,906 4,43,946 0.18 0.18
Insurance Companies
7 1,41,12,760 1,41,08,290 5.05 5.05
Foreign Institutional Investors
22 5,26,88,382 5,26,79,132 18.87 18.87
Sub Total 74 6,81,98,343 6,81,07,368 24.43 24.43
(2) Non-
Institutions
Bodies Corporate 1,108 2,70,63,142 2,66,60,787 9.69 9.69
Individuals
Individual shareholders holding nominal share capital up to Rs. 1 lakh
59,317 2,73,59,077 2,17,78,097 9.80 9.80
Individual shareholders holding nominal share capital in excess of Rs. 1 lakh
18 59,70,393 54,94,728 2.14 2.14
Any Others
(Specify) - - - - -
Clearing Members
59 1,45,609 1,45,609 0.05 0.05
138
Total no. of Shareholding as
a % of total no. of shares
Shareholders No. of
Equity
Shares held
pre-Issue
Total no. of
Shares
Total no. of shares
held in
Dematerialized Form
As a %
of(A+B)
As a %
of(A+B+C)
Non Resident Indians
430 6,71,569 5,72,919 0.24 0.24
Sub Total 60,932 6,12,09,790 5,46,52,140 21.92 21.92
Total Public
shareholding
(B) 61,006 12,94,08,133 12,27,59,508 46.35 46.35
Total (A)+(B) 61,017 27,92,01,220 27,25,52,595 100.00 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 Year Ended 2007
(9 months)
Year ended June 30,
2006
(15 months)
Equity Capital 5,589.56 4,214.56 3,954.56
Reserves and Surplus 88,143.74 38,813.79 12,356.38
Total Income 35,559.6 32,091.44 29,332.8
Profit/(Loss) after Tax 12,978.9 13,203.8 14,418.8
Basic Earnings per share before Extra ordinary & Prior Period Item (Rs.) (Face Value Rs. 2) *
6.05 7.78 7.02
Basic Earnings per share after Extra ordinary & Prior Period Item (Rs.) (Face Value Rs. 2) *
5.35 6.53 7.30
Book Value per equity share (Rs.) *
31.36 17.30 21.50
* During the year 2007-2008, the face value of the shares of Rs. 10/- each was sub-divided into five equity shares of Rs. 2/- each, hence the EPS and Book Value of the years prior to 2007-2008 have been adjusted accordingly.
BSE
Month High
(Rs.) Date of High
Volume
on date of
high (No. of shares)
Low
(Rs.) Date of Low
Volume on
date of low
(No. of shares)
Average
price
for the month
(Rs.)
September, 2008
72.90 September 2, 2008
2,61,857 41.00 September 30, 2008
1,62,073 56.66
October, 2008
48 October 1, 2008 40,720 16.25 October 27, 2008 1,89,428 13.66
November, 2008
29.60 November 5, 2008
4,94,054 15.20 November 26, 2008
1,20,198 23.31
December, 2008
26.80 December 22, 2008
2,92,375 16.00 December 2, 2008 54,678 21.61
January, 2009
27.90 January 5, 2009 1,48,165 20.00 January 13, 2009 67,010 22.33
139
Month High
(Rs.) Date of High
Volume
on date of
high (No.
of shares)
Low
(Rs.) Date of Low
Volume on
date of low
(No. of
shares)
Average
price
for the
month
(Rs.)
February, 2009
26.90 February 6, 2009 19,57,863 18.10 February 24,2009 43,252 20.61
March, 2009 22.10 March 24, 2009 1,29,717 17.50 March 6, 2009 88,097delta 19.91
NSE
Month High (Rs.)
Date of High
Volume on date
of high
(No. of
shares)
Low (Rs.)
Date of Low
Volume on date of low
(No. of
shares)
Average price
for the
month
(Rs.)
September, 2008
72.80 September 2, 2008
3,34,034 42.00 September 30, 2008
2,59,508 57.28
October, 2008
48.40 October 1, 2008 93,257 16.20 October 27, 2008 2,67,380 28.34
November, 2008
29.85 November 5, 2008
6,68,367 15.25 November 26, 2008
1,75,728 21.33
December, 2008
26.80 December 22, 2008
3,47,068 15.85 December 2, 2008
50613 21.61
January, 2009 27.50 January 2, 2009 3,18,170 19.80 January 29, 2009 1,92,871 22.38
February, 2009
26.50 February 6, 2009 28,89,972 18.00 February 24, 2009
1,31,970 20.65
March, 2009 22.15 March 31, 2009 1,19,973 17.30 March 6, 2009 93,118 19.74
Current market price on the BSE as on April 20, 2009 is Rs. 34.20 and current market capitalization is Rs. 95,486.82 lakhs and on the NSE is Rs. 34.25 and Rs. 95,626.42 lakhs respectively. Changes in capital structure in the last 6 months
There have not been any changes in the capital structure in the last six months. As on April 17, 2009, there are no outstanding investor complaints. 50. Peninsula Mega-City Development Private Limited
Peninsula Mega-City Development Private Limited (“PMCDPL”) was incorporated on February 13, 2006 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PMCDPL is inter alia to purchase, take on lease or in exchange, or otherwise deal with moveable and immovable property and rights and privileges of all kinds. PMCDPL is currently engaged in the business of real estate. Board of Directors
Name Designation
Mr. Harshvardhan A. Piramal Director
Mr Rajeev A. Piramal Director
Mr. Jaydev Mody Director
Shareholding Pattern as on the date of this Draft Letter of Offer
140
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr Harshvardhan A. Piramal 1 0.01
2 Mr Rajeev A. Piramal 5,000 50
3 Mr Jaydev Mody 4,999 49.99
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (0.45) (0.28) 0
Total Income - - -
Profit/(Loss) after Tax (0.18) (0.28) -
Earnings per share (Rs.) (Face Value Rs.10) (1.79) (2.77) -
Book Value per equity share (Rs.) 2.90 3.87 6.62
51. Peninsula Real Estate Management Private Limited
Peninsula Real Estate Management Private Limited (“PERMPL”) was incorporated on January 17, 2007 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PERMPL is inter alia to purchase, take on lease or in exchange, or otherwise deal with moveable and immovable property and rights and privileges of all kinds. PERMPL is currently engaged in the business of real estate.
Board of Directors
Name Designation
Mr Rajeev A. Piramal Director
Mr Rajesh Jaggi Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Rajeev A. Piramal 5,000 50
2 Mr Rajesh Jaggi 5,000 50
Total 10,000 100.00
Financial Performance (Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - - Reserves and Surplus - - -
Total Income - - -
Profit/(Loss) after Tax - - -
Earnings per share (Rs.) (Face Value Rs.10) - - -
Book Value per equity share (Rs.) 9.02 - -
This company has been incorporated post January 17, 2007 and as such audited financials for FY 2006 and FY 2007 are not available 52. Peninsula Real Estate Services Private Limited
Peninsula Real Estate Services Private Limited (“PRESPL”) was incorporated on January 17, 2007 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PRESPL is inter alia to purchase, take on lease or in exchange, or otherwise deal with moveable and immovable property and rights and privileges of all kinds. PRESPL is currently involved in the business of providing of real estate services. Board of Directors
141
Name Designation
Mr. Rajeev A. Piramal Director
Mr. Rajesh Jaggi Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Rajeev A. Piramal 5,000 50
2 Mr. Rajesh Jaggi 5,000 50
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital- 1.00 - -
Reserves and Surplus - - -
Total Income - - -
Profit/(Loss) after Tax - - -
Earnings per share (Rs.) (Face Value Rs.10) - - -
Book Value per equity share (Rs.) 9.02 - -
This company has been incorporated post January 17, 2007 and as such audited financials for FY 2006 and FY 2007 are not available 53. Peninsula SA Realty Private Limited
Peninsula SA Realty Private Limited (“PSARPL”) was incorporated as Peninsula Realty Private Limited on February 6, 2006 as a private limited company under the Act. Subsequently, on December 12, 2006, the name of the Company was changed to Peninsula SA Realty Private Limited with Registrar of Companies, Maharashtra, Mumbai. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PSARPL is inter alia to purchase, take on lease or in exchange or otherwise deal with moveable and immovable property and rights and privileges of all kinds. PSARPL is currently involved in the business of real estate. Board of Directors
Name Designation
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Jaydev Mody Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Harshvardhan A. Piramal 1 0.01
2 Mr. Rajeev A. Piramal 5,000 50
3 Mr. Jaydev Mody 4,999 49.99
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (16.92) (13.53) 0
Total Income - - -
Profit/(Loss) after Tax (3.39) (13.53) -
Earnings per share (Rs.) (Face Value Rs.10) (33.86)
(135.32) 0
Book Value per equity share (Rs.) (161.70)
(128.60)
6.62
142
54. Peninsula Townships Development Private Limited
Peninsula Townships Development Private Limited (“PTDPL”) was incorporated on February 13, 2006 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PTDPL is inter alia to purchase, take on lease or in exchange, or otherwise deal with moveable and immovable property and rights and privileges of all kinds. PTDPL is currently involved in the business of real estate. Board of Directors
Name Designation
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Jaydev Mody Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Harshvardhan A. Piramal 1 0.01
2 Mr. Rajeev A. Piramal 5,000 50
3 Mr. Jaydev Mody 4,999 49.99
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00
1.00
Reserves and Surplus (6.88) (5.88)
-
Total Income - - -
Profit/(Loss) after Tax (1.00) (5.88)
-
Earnings per share (Rs.) (Face Value Rs.10) (9.98) (58.83) -
Book Value per equity share (Rs.) (61.38) (52.19)
6.62
55. PLL Delta Hotels Private Limited
PLL Delta Hotels Private Limited (“PDHPL”) was incorporated on July 9, 2008 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PDHPL is inter alia to own, furnish, run, take over, manage, carry on the business of hotels, motels, resorts, restaurants, service apartments, café, tavern, refreshment room, boarding and lodging, house keepers, clubs, casinos, merchants of wine, beer and aerated mineral and artificial water and other drinks, purveyors, caterers, dressers, clubs, baths, dressing room, laundries grounds and places of amusement, recreation and entertainment in India or any other part of the world and / or to render technical advice thereon. PDHPL is currently involved in the business of hotels. Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1. Mr. Jaydev Mody 5,000 50
2. Mr. Nandan A. Piramal 5,000 50
Total 10,000 100
143
Financial Performance
This company has been recently incorporated and as such audited financials are not available.
56. PMP Components Private Limited
PMP Components Private Limited (“PMP”) was incorporated on May 1, 1996 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. PMP was a wholly owned subsidiary company of Morarjee Brembana Limited as on November 27, 2003, and then ceased to be Deemed Public Company by operation of law consequent to insertion of Section 43A(2A) by the Companies (Amendments) Act, 2000 with effect from September 14, 2001.The main object of PMP is inter alia to carry on the business as manufacturers, designers, assemblers, contractors, dealers, exporters and importers of all kinds of automotive parts and accessories, equipments and fittings. PMP is currently involved in the business of manufacture of auto components.
Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. S N Somani Whole time Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Onestar Mercantile Company Private Limited 30,66,135 68.27
2 Ms. Urvi A. Piramal 4,59,595 10.23
3 Mr. Harshvardhan A. Piramal 9,65,405 21.50
Total 44,91,135 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 306.61 306.61 306.61
Reserves and Surplus 1870.41 1811.07 1593.80
Total Income 4196.97 3512.90 2903.20
Profit/(Loss) after Tax 64.40 217.27 186.29
Earnings per share (Rs.) (Face Value Rs.10) 2.10 7.09 6.07
Book Value per equity share (Rs.10) 71.00 69.07 61.98
57. Powerjet Carriers and Transporters Private Limited
Powerjet Carriers and Transporters Private Limited (“PCTPL”) was incorporated on August 28, 2008 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PCTPL is inter alia to carry on the business of transport, owners and charterers of road vehicles, aircrafts, ships and boats, of every description, lighter men, carriers of goods and passengers by road, rail, water or air, car men. PCTPL is currently involved in the business of transport.
Board of Directors
Name Designation
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1. Mr. Rajeev A. Piramal 5,000 50
144
2. Mr. Nandan A. Piramal 5,000 50
Total 10,000 100
Financial Performance
This company has been recently incorporated and as such audited financials are not available
58. Providence Educational Academy Private Limited
Providence Educational Academy Private Limited (“PEAPL”) was incorporated on October 31, 2007 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, 2nd floor, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of PEAPL is inter alia to establish, open, run, maintain, buy, acquire and otherwise control, manage etc schools, colleges, educational centres, coaching centres, training centres, academic centres of various educational, vocational and professional disciplines in India or abroad to be affiliated by the Governing Authorities in India or abroad, as the case may be to promote and disseminate cost effective, high quality and equitable uses of education communications and related open learning techniques. Further, it is also to provide necessary accommodation, boarding and lodging facilities and other amenities to the students admitted to the said schools, colleges, institutes etc. PEAPL is currently involved in the business to provide education by establishing schools, colleges, and educational centres.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Darius Khambatta Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 9,999 99.90
2 Mr. Darius Khambatta 1 0.10
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus (0.12) - -
Total Income 0.00 - -
Profit/(Loss) after Tax (0.12) - -
Earnings per share (Rs.) (Face Value Rs.10) (1.18) - -
Book Value per equity share (Rs.) 7.61 - -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available. 59. Pune Football Club Private Limited
Pune Football Club Private Limited (“PFCPL”) was incorporated on August 20, 2007 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PFCPL is inter alia to form a professional football team and to encourage and develop football for participating either commercially or on charity basis in regional, national and international events, games, tournaments, matches and to earn out of such participation. PFCPL is currently involved in the business of promoting football.
Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
145
Mr. Nandan A. Piramal Director
Mr. Harsh Mehta Director
Mr. Rohan Gavaskar Director
Mr. Pankaj Kanodia Director
Mr. Kunal Chandra Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Harshvardhan A. Piramal 6,666 26.66
2 Mr. Rajeev A. Piramal 6,667 26.67
3 Mr. Nandan A. Piramal 6,667 26.67
4 Mr. Kunal Chandra 1,250 5
5 Mr. Harsh Mehta 1,250 5
6 Mr. Rohan Gavaskar 2,500 10
Total 25,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008
FY 2007 FY 2006
Equity Capital 2.50 - -
Reserves and Surplus (7.84) - -
Total Income 0 - -
Profit/(Loss) after Tax (155.41) - -
Earnings per share (Rs.) (Face Value Rs.10) (621.65) - -
Book Value per equity share (Rs.) (22.58) - -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available
60. Pune Sports Club Private Limited
Pune Sports Club Private Limited (“PSCPL”) was incorporated on August 22, 2007 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of PSCPL is to inter alia set up a sports club for the promotion of indoor and outdoor sports. PSCPL is currently involved in the business of sports club.
Board of Directors
Name Designation
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Harshvardhan A. Piramal 3,333 33.33
2 Mr. Rajeev A. Piramal 3,334 33.34
3 Mr. Nandan A. Piramal 3,333 33.33 Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
146
Reserves and Surplus (0.08) - -
Total Income 0 - -
Profit/(Loss) after Tax (0.07) - -
Earnings per share (Rs.) (Face Value Rs.10) (0.75) - -
Book Value per equity share (Rs.) 7.52 - -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available. 61. Riteline Exports Private Limited
Riteline Exports Private Limited (“REPL”) was incorporated on April 26, 2006 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of REPL is interalia to carry on the business in India and abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest, commission agent, agency business, selling and marketing business. REPL is primarily involved in trading and business.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Darius Khambatta Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of
shareholding
1 Aarti Management Consultancy Private Limited 1,700 17.00
2 Aditi Management Consultancy Private Limited 1,700 17.00
3 Anjoss Trading Private Limited 1,700 17.00
4 Mr. Prakash Chhabria 2,900 29.00
5 Mr. Javed Tapia 2,000 20.00
Total 10,000 100.00
Financial Performance (Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 -
Reserves and Surplus (0.23) (0.09) -
Total Income - - -
Profit/(Loss) after Tax (0.13) (0.09) -
Earnings per share (Rs.) (Face Value Rs.10) (1.37) (0.9) -
Book Value per equity share (Rs.) 6.41 7.62 -
This company has been incorporated post March 31, 2006 and as such audited financials for FY 2006 are not available. 62. RR Mega City Builders Private Limited
RR Mega City Builders Private Limited (“RRMCBPL”) was incorporated on June 2, 2007 as a private limited company under the Act. Its registered office is situated at 106, Peninsula Centre, Dr. S. S. Rao Road, Parel, Mumbai 400 012. The main object of RRMCBPL is inter alia to purchase, take on lease or in exchange, or otherwise deal with moveable and immovable property and rights and privileges of all kinds. RRMCBPL is currently involved in the business of development of real estate. Board of Directors
Name Designation
Mr. Rajeev A. Piramal Director
Mr. Rajesh Jaggi Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Rajeev A. Piramal 5,000 50
147
2 Mr. Rajesh Jaggi 5,000 50
Total 10,000 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus - - -
Total Income - - -
Profit/(Loss) after Tax - - -
Earnings per share (Rs.) (Face Value Rs.10) - - -
Book Value per equity share (Rs.) 9.08 - -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available. 63. Seastar Trading Company Private Limited
Seastar Trading Company Private Limited (“STCPL”) was incorporated on February 9, 2005 as a private limited company under the Act. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400 001, Maharashtra. The main object of STCPL is interalia to carry on the business in India and abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest, commission agent, agency business, selling and marketing business, assembling,. STCPL is primarily involved in trading business.
Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Rajeev A. Piramal Director
Ms. Urvi A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Rajeev A. Piramal jointly with ms. Roopali R. Piramal
50 0.50
2 Mr. Jaydev Mody jointly with Ms. Zia Mody
50 0.50
3 Aditi Management Consultancy Private Limited
3,300 33.00
4 Aarti Management Consultancy Private Limited
3,300 33.00
5 Anjoss Trading Private Limited 3,300 33.00
Total 10,000 100.00
Financial Performance (Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (22.42) (29.74) (28.45)
Total Income 7.47 - -
Profit/(Loss) after Tax 7.32 (1.29) (28.39)
Earnings per share (Rs.) (Face Value Rs.10) 73.24 (129.13) (283.90)
Book Value per equity share (Rs.) (214.95) (288.32) (275.54)
64. Supertime Trading Private Limited
Supertime Trading Private Limited (“STPL”) was incorporated on August 1, 2008 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of STPL is to inter alia carry on the business in India
148
and abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest and commission agents. STPL is currently involved in the business of trading. Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Urvi A. Piramal 5,000 50.00
2 Mr. Harshvardhan A. Piramal 1,667 16.67
3 Mr. Rajeev A. Piramal 1,667 16.67
4 Mr. Nandan A. Piramal 1,666 16.66
Total 10,000 100.00
Financial Statements
This company has been recently incorporated and as such audited financials are not available 65. Thundercloud Technologies (India) Private Limited
Thundercloud Technologies (India) Private Limited (“TTPL”) was incorporated on March 24, 2000 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of TTPL is inter alia to establish, set up, organize, maintain, support, assist and / or carry on the business of e-commerce, designing, building, developing, operating internet / web sites, providing goods and services through the internet, off-shore and on-site and other electronic media. TTPL is currently involved in the business of computer services.
Board of Directors
Name Designation
Mr. S.C. Kashimpuria Director
Mr. Kailas Kaimal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Equity shares
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Ms. Urvi A. Piramal 20 0
2 Mr. Harshvardhan A. Piramal 10 0
3 Onestar Mercantile Company Private Limited 10,00,000 100.00
Total 10,00,030 100
Preference shares
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Onestar Mercantile Company Private Limited 10,00,000 100.00
Total 10,00,000 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 100 100 100
Reserves and Surplus (20.65) (17.54) (16.56)
Total Income 1.76 2.15 162.58
Profit/(Loss) after Tax (2.87) (0.98) (25.21)
Earnings per share (Rs.) (Face Value Rs.10) (0.29) (0.09) (2.52)
Book Value per equity share (Rs.) 7.93 8.25 8.34
149
66. Topstar Mercantile Private Limited
Topstar Mercantile Private Limited (“TMPL”) was incorporated on March 16, 2007 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of the TMPL is inter alia to carry on the business in India and abroad as traders, distributors, dealers, exporter, importer, brokers, stockist and commission agent. .TMPL is currently involved in the business of trading. Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Equity
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1. Ms. Urvi A. Piramal 5,000 50
2. Mr. Harshvardhan A. Piramal 1,667 16.67
3. Mr. Rajeev A. Piramal 1,667 16.67
4. Mr. Nandan A. Piramal 1,666 16.66
Total 10,000 100
10% Preference Shares of Rs. 10 each
No. Name of the Shareholder No. of Shares % shareholding
1 Ms. Urvi A. Piramal jointly with Mr. Nandan A. Piramal
5,000 12.50
2 Mr. Nandan A Piramal jointly with Ms. Urvi A. Piramal 5,000 12.50
3 Ms. Urvi A. Piramal 5,000 12.50
4 Mr. Harshvardhan A. Piramal 1,667 4.17
5 Mr. Rajeev A. Piramal 1,667 4.17
6 Mr. Nandan A. Piramal 1,666 4.17
7 Ms. Urvi A. Piramal jointly with Mr. Rajeev A. Piramal 5,000 12.50
8 Mr. Rajeev A. Piramal jointly with Ms. Urvi A. Piramal 5,000 12.50
9 Ms. Urvi A. Piramal jointly with Mr. Harshvardhan A. Piramal
5,000 12.50
10 Mr. Harshvardhan A. Piramal jointly with Ms. Urvi A. Piramal
5,000 12.50
Total 40,000 100.00
5% Preference Shares of Rs. 10 each
No. Name of the Shareholder No. of Shares % shareholding
1 Ms. Urvi A. Piramal 3,435 49.99
2 Mr. Harshvardhan A Piramal 1,146 16.67
3 Mr. Rajeev A. Piramal 1,146 16.67
4 Mr. Nandan A. Piramal 1,146 16.67
Total 6,873 100.00
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus (0.11) - -
Total Income 0 - -
Profit/(Loss) after Tax (0.11) - -
150
Earnings per share (Rs.) (Face Value Rs.10) (1.11) - -
Book Value per equity share (Rs.10/-) 8.46 - -
This company has been incorporated post March 16, 2007 and as such audited financials for FY 2006 and FY 2007 are not available. PEL Holdings Private Limited (“PEL”), one of the Ajay Piramal group of companies, merged with Bigdeal Mercantile Private Limited (“Bigdeal”) by way of a merger scheme sanctioned by an order of the High Court of Bombay, dated November 23, 2007, pursuant to which, 23,61,716 Equity Shares held by PEL were transferred to Bigdeal on January 4, 2008. Through a High Court of Bombay order dated December 12, 2008, Bigdeal, along with Newzone Mercantile Company Private Limited, Alltime Mercantile Company Private Limited and Superplaza Mercantile Private Limited merged into Topstar Mercantile Private Limited. Therefore, currently, the 23,61,716 Equity Shares originally held by PEL are held by Topstar Mercantile Private Limited. Therefore, PEL and Bigdeal are no longer members of the Promoter Group.
67. Topstar Realty Private Limited
Topstar Realty Private Limited (“TRPL”) was incorporated as Ashok Piramal Realty Private Limited on March 8, 2007 as a private limited company under the Act. Subsequently, on May 7, 2008, the name of the Company was changed to Topstar Realty Private Limited with Registrar of Companies, Maharashtra, Mumbai. Its registered office is situated at 106, Peninsula Centre, Dr. S. S. Rao Road, Parel, Mumbai 400012. The main object of TRPL is, inter alia, to purchase, take on lease or in exchange, or otherwise deal with moveable and immovable property and rights and privileges of all kinds. TRPL is currently engaged in the business of real estate.
Board of Directors
Name Designation
Mr. Rajeev A. Piramal Director
Mr. Rajesh Jaggi Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Rajeev A. Piramal 5,000 50
2 Mr. Rajesh Jaggi 5,000 50
Total 10,000 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 - -
Reserves and Surplus 0.00 - -
Total Income 0 - -
Profit/(Loss) after Tax 0 - -
Earnings per share (Rs.) (Face Value Rs.10) - - -
Book Value per equity share (Rs.) 9.11 - -
This company has been incorporated post March 31, 2007 and as such audited financials for FY 2006 and FY 2007 are not available. 68. Toptech Mercantile Company Private Limited
Toptech Mercantile Company Private Limited (“TMCPL”) was incorporated on January 31, 2005 as a private limited company under the Act. Its registered office is situated at Peninsula Spenta Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013. The main object of TMCPL is to inter alia carry on the business in India and abroad as traders, distributors, dealers, exporter, importer, brokers, stockiest and commission agent. TMCPL is currently involved in the business of trading.
Board of Directors
Name Designation
Ms. Urvi A. Piramal Director
151
Mr. Harshvardhan A. Piramal Director
Mr. Rajeev A. Piramal Director
Mr. Nandan A. Piramal Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares
held
% of
shareholding
1 Ms. Urvi A. Piramal 2500 25
2 Ms. Urvi A. Piramal jointly with Mr Harshvardhan A. Piramal 2500 25
3 Ms. Urvi A. Piramal jointly with Mr Rajeev A. Piramal 2500 25
4 Ms. Urvi A. Piramal jointly with Mr. Nandan A. Piramal 2490 24.9
5 Mr. Nandan A. Piramal jointly with Ms. Urvi A. Piramal 10 0.1
Total 10000 100
Financial Performance
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (12.36) (0.54) (0.12)
Total Income 0 0 0
Profit/(Loss) after Tax (11.81) (0.42) (0.06)
Earnings per share (Rs.) (Face Value Rs.10) (118.13) (4.20) (0.64)
Book Value per equity share (Rs.10) (114.35) 3.65 7.72
69. West Star Agro – Realties Private Limited
West Star Agro – Realties Private Limited (“WSR”) was incorporated as West Star Elastomers Private Limited on October 24, 1985 as a private limited company under the Act. Subsequently, on October 8, 2007 the name of the Company was changed to West Star Agro – Realties Private Limited with Registrar of Companies, Maharashtra, Mumbai. Its registered office is situated at 16/A Ali Chambers, Nagindas Master Road, Fort, Mumbai 400001, Maharashtra. The main object of WSR is inter alia to purchase, buy, take on lease, or otherwise acquire or sell or dispose of or give on lease any agricultural land and to carry on the business as agriculturists, floriculturist, horticulturist, tissue culture and allied activities, cultivation, farming, sowing and trading in agricultural produce, seeds, agricultural and farm equipment, animal husbandry, fish farming, cultivation and production of all and any kind of agricultural, horticultural or floricultural products, fishery, tannery, cultivation and trading of fish, frogs and other sea products, fishery, tannery, cultivation and trading of fish, frogs and other sea products, mushrooms, and allied products and other allied activities thereto. WSR is currently involved in the business of Agriculture. Board of Directors
Name Designation
Mr. Jaydev Mody Director
Mr. Chand Arora Director
Mr. Bezan Chenoy Director
Shareholding Pattern as on the date of this Draft Letter of Offer
Sl.No. Names of Shareholder No. of Shares held % of shareholding
1 Mr. Jaydev Mody 699 69.90
2 Ms. Zia Mody 1 0.10
3 Mr. Darius Chenoy 100 10.00
4 Mr. Nazak Chenoy 100 10.00
5 Mr. Mahesh Gupta jointly with Ms. Sunita Gupta
100 10.00
Total 1,000 100.00
Financial Performance
152
(Rs. in lakhs except per share data)
FINANCIAL INFORMATION FY 2008 FY 2007 FY 2006
Equity Capital 1.00 1.00 1.00
Reserves and Surplus (7.47) (5.80) (5.63)
Total Income - - -
Profit/(Loss) after Tax (1.67) (0.16) (0.10)
Earnings per share (Rs.) (Face Value Rs.100) (167.07) (16.47) (10.38)
Book Value per equity share (Rs.) (646.77) (479.70) (463.23)
70. Morarjee Goculdas Spinning and Weaving Company Limited Senior Employee Stock Option Scheme is
a Trust)
Morarjee Goculdas Spinning and Weaving Company Limited Senior Employee Stock Option Scheme is a Trust) formed in September 1995. The main object of this Trust is to hold investments in the group companies for the benefit of employees. Trustees as on the date of this Draft Letter of Offer
Trustees
5. Ms. Urvi A. Piramal
6. Mr. Mahesh S Gupta
7. Mr. Shobhan Thakore
Financial performance
(Rs. In lakhs)
FINANCIAL
INFORMATION
FY 2008 FY 2007 FY 2006
Corpus 0.1 0.1 0.1
Income and Expenditure A/c balance
15.56 16.94 20.53
Income / Loss (1.39) (3.58) (2.88)
Companies with which the promoter has disassociated during the preceding three years:
Disassociation by sale of shareholding
Sl. No. Name of Promoter Name of Company No. of shares
sold
Date of sale
of shares
Details of
disassociation
Piramal Polymers Limited
24,53,333 July 5, 2007
Supersoft Trading Company Private Limited
1,00,000 July 25, 2006
Kojam Fininvest Limited
18,975 September 27, 2005
1. Ms. Urvi A. Piramal
DSP Merrill Lynch Limited
12,000 March 17, 2006
Redemption of preference shares
Disassociation by resignation from management and directorship
Sr.
No
Name of the Company Date of Appointment Date of Cessation
1. Alltime Mercantile Company Private Limited January 18, 2005 January 27, 2009
2. Anand Piramal Investments Private Limited December 18, 1992 September 18, 2003
3. Arrow Webtex Limited January 11, 1992 December 12, 2002
4. Blackpool Trading Company Private Limited January 16, 2001 December 1, 2006
153
Sr.
No
Name of the Company Date of Appointment Date of Cessation
5. Charlie Capital Services Limited December 23, 1994 Ceased
6. Cineline Trading Company Private Limited January 18, 2005 May 8, 2008
7. Cityline Constructions Private Limited February 10, 2005 June 22, 2007
8. Ffusion Designerwear Private Limited (Formerly known as Piramyd Shoparc Private Limited)
February 22, 1999 March 11, 2005
9. Goldflag Mercantile Company Private Limited
January 14, 2005 March 6, 2009
10. Gujarat Glass Private Limited March 12, 1998 January 9, 2006
11. Highzone Mercantile Company Private Limited
January 24, 2005 February 9, 2009
12. Maxplaza Trading Company Private Limited January 31, 2005 May 8, 2008
13. Nandini Piramal Investments Private Limited December 18, 1992 March 22, 2005
14. Newone Trading Company Private Limited January 14, 2005 March 6, 2009
15. Newzone Mercantile Company Private Limited
January 17, 2005 January 27, 2009
16. Piramal Healthcare Limited (formerly known as Nicholas Piramal India Limited)
June 26, 1988 June 28, 2006
17. Oneline Mercantile Company Private Limited January 17, 2005 May 8, 2008
18. PEL Finance & Investments Private Limited December 28, 1995 April 26, 2004
19. Peninsula I.T. Parks Private Limited April 25, 2005 February 9, 2009
20. Piramal Enterprises Limited September 19, 1991 March 4, 2005
21. Piramal Holdings Limited November 3, 1993 December 13, 2005
22. Piramal Polymers Limited August 18, 1994 December 26, 2007
23. Piramyd Retail Limited March 18, 2005 January 2, 2008
24. PMP Iskra Auto Electricals Private Limited March 19, 1998 October 14, 2003
25. Pureview Trading Company Private Limited September 16, 2006 November 27, 2006
26. Savoy Finance & Investments Private Limited December 1, 1992 March 22, 2005
27. Superplaza Mercantile Company Private Limited
January 14, 2005 January 27, 2009
28. Supersoft Mercantile Company Private Limited
January 19, 2005 February 9, 2009
29. Surewin Trading Company Private Limited January 24, 2005 February 9, 2009
30. Swati Piramal Investment Private Limited December 18, 1992 March 22, 2005
31. The Dawn Mills Company Limited* March 13, 2006 -
32. The Swastik Safe Deposits & Investments Limited
December 1, 1992 March 22, 2005
33. Thundercloud Technologies (India) Private Limited
March 24, 2000 February 7, 2006
34. Topflag Trading Company Private Limited January 14, 2005 March 6, 2009
35. Topwave Mercantile Company Private Limited
January 14, 2005 May 8, 2008
36. Urvi Chemicals & Allied Industries Limited December 1, 1992 January 5, 2006
37. Weltall Investment Private Limited July 25, 1994 August 30, 2005
38. Werko Miranda Drills Private Limited May 23, 1997 October 14, 2003
39. Bigdeal Mercantile Private Limited August 2, 2007 January 27, 2009
* The Dawn Mills Company Limited have merged with PLL vide Bombay High Court’s order dated September 16, 2005 and therefore has ceased to exist.
154
RELATED PARTY TRANSACTIONS
For details on our related party transactions, please refer to the chapter titled “Financial Statements” on page 155.
155
FINANCIAL STATEMENTS
Sr. No. Contents Page
1. Auditor’s report dated February 26, 2009 on the restated standalone financials of the Company.
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2. Auditor’s report dated March 21, 2009 on the restated consolidated financials of the Company.
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FINANCIAL INFORMATION
AUDITORS’ REPORT
To The Board of Directors Morarjee Textiles Limited 2, Peninsula Spenta Mathuradas Mills Compound Senapati Bapat Marg, Lower Parel Mumbai 400 013 Dear Sirs, Re: Proposed Rights Issue of equity shares of Morarjee Textiles Limited (“MTL” or “the Company”) 1. We have examined the attached financial information of MTL in terms of our engagement letter dated
23rd February 2009. The said financial information has been prepared by the Company in accordance with the requirements of paragraph B of Part II of Schedule II to the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 as updated till 8th December 2008, (“SEBI Guidelines”) issued by the Securities and Exchange Board of India and is approved by the Company’s Board of Directors.
2. The financial information referred to above is extracted as applicable from the audited financial
statements of the Company, approved by the Companies’ board of directors and adopted (where applicable) by the Companies’ shareholders, and is contained in the following Annexures to this report:
- Annexure I contain the “Statement of Profit and Loss Account”, as restated, of MTL as at 31st
December 2008 and 31 March 2008, 2007, 2006, 2005 and 2004. - Annexure II contains the “Statement of Assets and Liabilities”, as restated, of MTL for the
period/years ended 31st December 2008 and 31st March 2008, 2007, 2006, 2005 and 2004. - Annexure III contain the ‘Significant Accounting Policies’ adopted by the Company in the
preparation of financial statements, as relevant to the Summary Statements in Annexure I and II, and Notes to the Summary Statements.
- Annexure IV contains the “Notes to the Statement of Profit and Losses and Adjusted Assets and
Liabilities”, as relevant to the Summary Statements in Annexure I and II. - Annexure XIII contain Statement of Cash Flow Statement, as restated for the period/years ended
31st December 2008 and 31st March 2008, 2007, 2006, 2005 and 2004.
3. Based on our examination of the Summary Statements referred to in paragraph 2 above in our opinion:
(i) The restated financial information reflects the significant accounting policies adopted by the Company as at 31st December 2008.
(ii) Adjustments for material amounts have been made in the respective period/ years to which
they relate. (iii) There are no extra-ordinary items that need to be disclosed separately.
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(iv) Adjustments to the restated financial information have been made for quantifiable qualifications, (where made) in the auditors’ reports on the financial statements of the Company.
4. We have also examined the following financial information set out in Annexures V to XII & XIV to
XV prepared by the Company in accordance with the SEBI Guidelines, in terms of our engagement letter dated 23rd February 2009 as at and for the period ended 31st December 2008 and for years ended 31st March 2008, 2007, 2006, 2005 and 2004, approved by the Board of Directors and annexed to this report: i. Annexure V - Accounting Ratios relating to Earnings Per Share, Return on Net Worth and
Net Asset Value per share of MTL ii. Annexure VI - Details of Dividends Paid of MTL iii. Annexure VII - Statement of Tax Shelter of MTL iv. Annexure VIII - Statement of Sundry Debtors with ageing schedule v. Annexure IX - Statement of Loans and Advances vi. Annexure X - Capitalisation Statement of MTL vii. Annexure XI - Summary Statement of Principal terms of loans and assets charged as security
of Secured and Unsecured Loans of MTL viii. Annexure XII - Statement of Unsecured Loans ix. Annexure XIV - Statement of Other Income x. Annexure XV - Statement of Investments of MTL
5. This report should not in any way be construed as a reissuance or redating of any of the previous audit
report by other firms of Chartered Accountants nor should this be construed as a new opinion on any of the financial statements referred to herein.
6. Throughout our report amounts in Rupees lacs have been rounded to the nearest thousand, except
where it has also been necessary to disclose decimals. This report is intended solely for your information and for inclusion in Draft Letter of Offer in connection with the Offering and is not to be used, referred to or distributed for any other purpose without our prior written consent.
For SHAH & CO., Chartered Accountants H.N.SHAH Partner Membership No: 8152 Mumbai: 26th February 2009
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Annexure - I STATEMENT OF PROFIT AND LOSS ACCOUNT AS RESTATED
(Rs in lacs)
For the Nine
month
period
ended on FOR THE YEAR ENDED ON
PARTICULARS 31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
INCOME
Sales
Export Sales 9,866.29 10,483.03 13,870.33 9,781.65 8,523.49 4,730.38
Domestic Sales 5,536.96 6,936.23 7,774.16 7,936.97 6,726.03 5,733.75
DEPB Income 453.02 533.66 290.46 258.93 330.99 319.41
15,856.27 17,952.92 21,934.95 17,977.55 15,580.51 10,783.54
Less: Excise Duty & Sales Return
433.03 861.44 726.36 1,035.06 829.17 582.30
15,423.24 17,091.48 21,208.59 16,942.49 14,751.34 10,201.24
Increase/(Decrease) in Stock (895.47) 635.62 741.00 378.42 27.48 686.56
Other Income 3.74 1.00 12.13 7.83 36.01 0.30
14,531.51 17,728.10 21,961.72 17,328.74 14,814.83 10,888.10
EXPENDITURE
Material Consumed 4,259.79 6,689.33 8,619.62 6,153.56 5,469.95 4,676.25
Manufacturing Expenses 5,464.90 6,416.68 6,368.58 5,028.56 4,487.11 3,016.63
Employees' Emoluments 1,411.81 1,746.23 1,508.92 1,328.71 1,268.06 918.27
Admn, Selling & Other Expns
3,264.29 2,629.04 2,702.59 2,310.51 1,645.49 1,085.07
Depreciation 814.18 1,009.69 926.74 807.33 716.30 561.04
Financial Charges 1,458.66 1,490.34 968.19 619.29 563.69 744.83
Miscellaneous Expns w.off - - - - - 110.56
16,673.63 19,981.31 21,094.64 16,247.96 14,150.60 11,112.65
Profit before tax (2,142.12) (2,253.21) 867.08 1,080.78 664.23 (224.55)
Provision for Tax Current Tax ( MAT )
- - 97.29 90.95 - -
Deferred Tax - - - - - -
Fringe Benefit Tax 18.04 20.91 25.07 35.74
MAT Credit Entitlement (97.29) (90.95)
Net Profit / (Loss) after tax
as per Audited Statement
of A/c
(2,160.16) (2,274.12) 842.01 1,045.04 664.23 (224.55)
Impact on account of adjustments required by paragraph 6.10.2.7(b) of Chapter VI of the SEBI Guidelines [See note 13 of Annexure IV]
- - - - - -
Adjusted Profit / (Loss) (2,160.16) (2,274.12) 842.01 1,045.04 664.23 (224.55)
Brought forward Profit/(Loss) from previous year
(901.49) 1,372.63 950.98 363.91 (3,813.53) (3,588.98)
Profit/(Loss) available for
appropriation
(3,061.65) (901.49) 1,792.99 1,408.95 (3,149.30) (3,813.53)
Add:
Transfer from Debenture Redemption Reserve
- - - - - -
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Transfer from Share Premium
- - - - - -
Surplus on Capital Restructuring*
- - - - 3,766.85
Less:
Adjusted Against Reserve - 43.00 105.00 33.30
Proposed Dividend on
- Equity - 272.54 259.56 155.74
- Distribution Tax - 46.32 36.40 21.84
- Preference - 50.00 50.00 37.50
- Distribution Tax - 8.50 7.01 5.26
Balance Carried forward to Balance Sheet
(3,061.65) (901.49) 1,372.63 950.98 363.91 (3,813.53)
The accompanying significant accounting policies and notes are integral part of this statement. * For detail refer Note A
Note A: Reserve & Surplus (Rs in Lacs)
Reserve and Surplus
As at
31.12.2008
As at
31.03.2008
As at
31.03.2007
As at
31.03.2006
As at
31.03.2005
As at
31.03.2004
1. General Reserve
- Opening balance 1,506.42 1,506.42 1,508.46 1,403.46 45.16 -
- Write Back of share application money
- - - - - 45.16
Add : Transfer from Advance application Money
- - - - 1,325.00 -
Less : Accrued liability on Account of employees leave benefits as on 01.04.2006
- - 45.04 - - -
Add : Transfer from Profit & Loss Account
- - 43.00 105.00 33.30 -
Less : Debit balance of Profit & Loss Account
1,506.42 1,506.42 1,506.42 1,508.46 1,403.46 45.16
2. Capital Restructuring
Account
32,493,450 Equity Shares cancelled under Capital Restructuring Scheme
- - - - 3,249.34 -
Add: Transfer from Share Premium Account
- - - - 550.0 -
Less: Consideration paid Against cancellation of Equity Shares
- - - - 32.49 -
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0.00 0.00 0.00 0.00 3,766.85 0.00
Less : Amount Transferred to Profit & Loss Account
- - - - 3,766.85
0.00 0.00 0.00 0.00 0.00 0
3. Share Premium
- Opening Balance 3,353.80 3,353.80 - - - -
Received during the year - - 3,504.11 - 550 -
Less: Transferred to Capital Restructuring Account
- - - 550 -
Less : Right Issue Expenses Adjusted
- - 150.31 - - -
3,353.80 3,353.80 3,353.80 0.00 0.00 0.00
4. Profit & Loss
Account
(3,061.65)
(901.49)
1,372.63
950.98
363.91
(3,813.53)
TOTAL 1,798.57 3,958.73 6,232.85 2,459.44 1,767.37 (3,768.37)
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Annexure - II STATEMENT OF ASSETS AND LIABILITIES AS RESTATED
(Rs. in Lacs)
PARTICULARS
As at
31.12.2008
As at
31.03.2008
As at
31.03.2007
As at
31.03.2006
As at
31.03.2005
As at
31.03.2004
A. Fixed Assets
Gross Block 21,975.26 21,867.45 20,517.98 17,995.84 15,323.27 14,053.19
Less: Depreciation 7,058.27 6,244.09 5,310.53 4,415.59 3,654.41 2,989.70
Net Block 14,916.99 15,623.36 15,207.45 13,580.25 11,668.86 11,063.49
B. Investments 3,140.81 3,123.17 3,112.21 240.36 240.36 472.14
C.
Current Assets, Loans
& Adv
Inventories 4,383.50 5,232.31 4,421.24 3,797.06 3,095.57 2,984.54
Sundry Debtors 4,517.03 3,139.94 3,988.67 3,388.04 2,208.56 1,784.13
Cash and Bank Balances 133.36 767.38 1,214.92 15.69 32.33 26.15
Loans and Advances 2,869.68 2,908.07 2,838.12 2,110.05 921.36 2,311.28
Total 11,903.57 12,047.70 12,462.95 9,310.84 6,257.82 7,106.10
D
Liabilities and Provisions
Secured Loans 13,202.33 13,841.45 13,714.84 10,749.09 5,097.17 7,069.17
Unsecured Loans 6,809.03 5,972.71 3,439.34 3,668.31 3,863.93 4,883.74
Current Liabilities and Provisions
5,334.49 4,204.39 4,578.63 4,216.35 5,400.31 3,294.59
Deferred Tax Liabilities
Total 25,345.85 24,018.55 21,732.81 18,633.75 14,361.41 15,247.50
E. Preference shares 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
F.
Net Worth (A+B+C-D-
E)*
3,615.52 5,775.68 8,049.80 3,497.70 2,805.63 2,394.23
G. Represented by
Paid up Share Capital
- Equity Shares 1,816.95 1,816.95 1,816.95 1,038.26 1,038.26 3,287.60
- Advance against Equity
2,875.00
Reserves and Surplus 1,798.57 3,958.73 6,232.85 2,459.44 1,767.37 (3,768.37)
Total 3,615.52 5,775.68 8,049.80 3,497.70 2,805.63 2,394.23
H.
Misc. Expns upto the
extent not w.off
I. Net Worth (G-H)* 3,615.52 5,775.68 8,049.80 3,497.70 2,805.63 2,394.23
The accompanying significant accounting policies and notes are integral part of this statement.
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Morarjee Textiles Limited Annexure III - Accounting Policies 1. Basis of preparation of financial statement
(a) Basis of Accounting: The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting to comply with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956.
(b) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in India requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements.
2. Fixed Assets
All the fixed assets are stated at historical cost. In respect of Assets acquired under new project/ expansion/ restructuring, interest cost on borrowings and other related expenses during trial runs and upto satisfactory commencement of commercial production have been capitalised to Plant & Machinery and any subsidy given for a specific assets is reduced from cost. The Accounting Standard -10 of the Institute of Chartered Accountants of India has been compiled with in this respect.
3. Depreciation
Depreciation has been provided on straight line method on all fixed assets except Leasehold land at the rates specified in Schedule XIV to the Companies Act, 1956. Premium on lease hold land is amortised over the period of lease. Intangible assets are amortised over their estimated useful life.
4. Lease Accounting
Lease rentals on assets taken on lease are recognized as expense in the statement of Profit and loss account on an accrual basis over the lease term.
5. Inventory
Raw materials, work in progress, finished goods, packing materials, stores, spares, traded goods and consumables are carried at the lower of cost and net realisable value. The comparison of cost and net realisable value is made on an item-by-item basis. Damaged, unserviceable and inert stocks are suitably depreciated. In determining cost of raw materials, packing materials, traded goods, stores, spares and consumables, weighted average cost method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition. Cost of finished goods and work-in-process includes the cost of raw materials, packing materials, an appropriate share of fixed and variable production overheads, excise duty as applicable and other costs incurred in bringing the inventories to their present location and condition. Fixed production overheads are allocated on the basis of normal capacity of production facilities.
6. Investments
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Long term investments are carried at cost. Provision for diminution in the value of long term investments is made only if such a decline is not temporary in the opinion of the management. Short term investments are carried at lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.
Profit and loss on sale of investments is determined on a first in first out (FIFO) basis.
7. Revenue Recognition
Revenue is recognized only when there is no significant uncertainty as to the measurability / collectability of amount.
8. Transactions in Foreign Exchange
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Profit and loss account of the year. Monetary assets and liabilities denominated in foreign currencies, which are outstanding as at the year end are translated at the closing exchange rate and the resultant exchange differences are recognized in the Profit and loss account. The premium or discount on forward exchange contracts is recognized over the period of the contracts in the profit and loss account.
9. Employee Benefits (i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
(ii) Post-employment benefits:
(a) Defined contribution plans Defined contribution plans are, Government administered Provident Fund Scheme and Government administered Pension Fund Scheme for all employees and Superannuation scheme for eligible employees. The Company’s contribution to defined contribution plans are recognized in the profit and loss account in the financial year to which they relate.
The interest to the beneficiaries every year is being notified by the Government.
(b) Defined benefit plans (i) Defined benefit gratuity plan The Company operates a defined benefit gratuity plan for employees.
The cost of providing defined benefits is determined using the Projected Unit Credit Method with actuarial valuations being carried out at each balance sheet date. Past service cost is recognized
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immediately to the extent that the benefits are already vested, else is amortised on a straight-line basis over the average period until the amended benefits become vested.
The defined benefit obligations recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized actuarial gains and losses and unrecognized past service costs, and as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative defined benefit obligations resulting from this calculation) is recognized representing the unrecognized past service cost plus the present value of available refunds and reductions in future contributions to the plan.
(iii) Other long term employee benefits
Entitlements to annual leave and sick leave are recognized when they accrue to employees. Sick leave can only be availed while annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulation of leaves. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit Method with actuarial valuations being carried out at each balance sheet date.
The Accounting Standard (AS) 15, “Employee Benefits (revised 2005)”, issued by the Council of Institute of Chartered Accountants of India, originally comes into effect in respect of the accounting periods commencing on or after April 01, 2006 and was mandatory in nature from that date. Consequently, the above standard becomes applicable to the company for any period on or after the effective date. However, subsequently the Council of the Institute has deferred the mandatory applicability of the standard for all periods on and after 7 December 2007. The Company adopted the Accounting Standard (AS) 15, “Employee Benefits (revised 2005)” for the first time in preparing the financial statements for the year ended 31st March ,2007. For the purpose of the restated statements, AS-15 (revised) has not been applied for the years ended March 31, 2006, 2005 and 2004 as the same was not applicable in those years. The restated financial statements for those years have been prepared in compliance with the erstwhile Accounting Standard (AS) 15. Consequently significant impact, if any, of applicability of the new standard has not been recognized in the restated statements for the years ended March 31, 2006, 2005 and 2004.
10. Miscellaneous Expenditure (upto March 2005)
Preliminary expenses, Term Loan Processing Charges, marketing and selling Arrangement Service and Strike Period Expenditure are written off over a period of 5 years.
Technical/ Other consultancy fees and Exim Bank Loan Prepayment Premium are written off over period of 3 years from the date of completion of the Consultancy services research activities.
11. Provision for Taxation
Income tax expense comprises of current tax (i.e. amount of tax for the period determined in accordance with the Income Tax Act, 1961), deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period) and fringe benefit tax (computed in accordance with the relevant provisions of the Income tax Act, 1961). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date to reassess realisation.
12. Provisions and Contingencies
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The company creates a provision when there exists a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.
13. Earnings per share
The basic and diluted earnings per share (“EPS”) is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.
14. Proposed Dividend Dividend recommended by the Board of Directors is provided for in the accounts, pending approval at
the Annual General Meeting
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Annexure – IV NOTES TO SUMMARY STATEMENT
(Rs. in lacs)
1
Contingent liability in
respect of
As at
31.12.2008
As at
31.03.08
As at
31.03.07
As at
31.03.06
As at
31.03.05
As at
31.03.04
a)
Estimated amount of contracts remaining to be executed on Capital Account
59.45 25.49 542.88 562.66 301.14 37.98
b) Disputed liability with Central Excise Authorities
1,533.52 1,497.61 1,508.17 1,472.99 1,614.89 2,149.85
c) Disputed liability with Income Tax Authorities
1,455.49 1,455.49 - - - -
d) Counter Guarantees issued to Banks
367.40 216.76 39.06 43.54 83.00 78.90
e) Corporate Guarantee 5,450.00 3,750.00 1,850.00 900.00
- -
f) Bill Discounted 173.76 354.55 244.99 151.97 102.49 179.16
g) Dividend to Preference Share Holders
102.37 58.50 - - - 562.50
2 Open letter of credit 271.42 824.01 1,193.35 637.79 527.69 238.49
3 CAPITAL STRUCTURE
a. FINANCIAL STRUCTURE - RATIONALIZED in the year 2004-2005
With a view to rationalize the financial structure of the Company, during the year 2004-05, 1,00,00,000 equity shares of Rs.10/- each have been issued and alloted at a premium of Rs. 5.50 per share, hereby the paid up equity share capital of the company has increased by Rs. 1,000.00 lacs and share premium account credited by Rs.550 lacs. For this purpose the authorized share capital has been increased from Rs.40 crores to Rs 43 crores. The terms of the 10,00,000 redeemable cumulative preference shares of Rs. 100/- each have also been modified by revising the rate of dividend from 11.25% to 5% and extending the redemption period by making the preference shares redeemable any time after 15th November, 2014 but before 15th November 2019. In view of the modification of Rights attached to Preference Shares, the said shares shall be non cumulative upto 30.06.04 and shall carry cumulative dividend of 5% per annum with effect from 01.07.2004. The advance against equity of Rs.2,875.00 lacs has been settled by making payment of Rs.1,550.00 lacs and the balance Rs.1,325.00 lacs has been cancelled and transferred to General Reserve.
b. REDUCTION OF SHARE CAPITAL - SETTING OFF CARRIED FORWARD LOSSES in the year 2004-05 During the year 2004-05 In continuation of the exercise to rationalize the company's financial structure, the Board of Directors had formulated a scheme u/s 391 and section 100 read with section 78 of the Companies Act, 1956 for purchase by the company of its own equity shares from the company's shareholders at minimal token consideration of 10p (Ten Paise) per share and then cancellation of such purchased shares resulting in reduction of equity share capital and the amount in share premium account of the company correspondingly setting off the company’s accumulated losses. The equity shareholders of the company had offered for purchase by the company 3,24,93,450 equity shares. The scheme has been sanctioned by the Hon'ble Bombay High Court and upon giving effect to the scheme, (a) the equity share capital of the company Rs.4,287.60 lacs stands reduced by Rs.3,249.35 lacs to Rs. 1,038.26 lacs. The carried forward Losses of Rs. 3,813.53 lacs as at 31.03.04 stands set off against (a) the reduction of share capital of Rs.3,216.86 lacs (net of consideration), and (b) the share premium of Rs. 550.00 lacs leaving balance loss of Rs.46.68 Lacs.
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(Rs. in lacs)
4 Employee Benefits: Unfunded
Gratuity Leave Encashment
Amount Recognised in Balance sheet 31.03.2008 31.03.2008
Present Value of Unfunded Obligation 117.72 49.90
Present Value of Unfunded Obligations
Unrecognised Past Service Cost 0 0
Amount not recognised as Asset, because of the limit in Para 59(b)
0
0
Amount in Balance Sheet
Liability 117.72 49.90
Assets 0 0
Net Liability 117.72 49.90
Expense Recognised in the Statement of Profit & Loss
Opening Defined Benefit Obligation less benefits Paid 0 0
Current Service Cost 16.44 20.96
Interest Cost on Defined Benefit Obligation 6.68 3.84
Expected Return on Plan Assets 0 0
Net Actuarial Losses / (Gains) Recognised in Year 25.84 4.39
Past Service Cost 0 0
Effect of the limit in Para 59(a) 0 0
Losses / (Gains) on "Curtailments and Settlements" 0 0
Total Included in "Employee Benefit Expense" 48.96 29.19
Change in Define Benefit Obligation
Opening Defined Benefit Obligation as at 01.04.2007 83.48 47.99
Current Service Cost 16.44 20.96
Interest Cost 6.68 3.84
Actuarial Losses / (Gain) 25.84 4.39
Liabilities Extinguished on Curtailment 0 0
Liabilities Extinguished on Settlements 0 0
Liabilities Assumed on Acquisition 0 0
Exchange Difference on Foreign Plans 0 0
Benefits Paid (14.72) (27.28)
Closing Defined Benefit Obligation as at 31.03.2008 117.72 49.90
Discount Rate 8% 8%
Summary of the Actuarial Assumptions: Note: I. The estimates of future salary increases, considered in actuarial valuation, takes into account the
inflation, seniority, promotion and other relevant factors. II For the period ended 31.12.2008 liability for gratuity and leave encashment is arrived at based on
internal calculation of the same and actual liability for the year ended 31.03.2009 will be worked out based on actuarial valuation.
III The Accounting Standard (AS) 15, “Employee Benefits (revised 2005)”, issued by the Council of
Institute of Chartered Accountants of India, originally comes into effect in respect of the accounting periods commencing on or after April 01, 2006 and was mandatory in nature from that date. Consequently, the above standard becomes applicable to the Group for any period on or after the effective date. However, subsequently the Council of the Institute has deferred the mandatory applicability of the standard for all periods on and after 7 December 2007. The Group adopted the
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Accounting Standard (AS) 15, “Employee Benefits (revised 2005)” for the first time in preparing the financial statements for the year ended 31st March 2007. For the purpose of the restated statements, AS-15 (revised) has not been applied for the years ended March 31, 2006, 2005 and 2004 as the same was not applicable in those years. The restated financial statements for those years have been prepared in compliance with the erstwhile Accounting Standard (AS) 15. Consequently significant impact, if any, of applicability of the new standard has not been recognized in the restated statements for the years ended March 31, 2006, 2005 and 2004.
5. Company has not given any loans to any of its directors. 6. The Company is engaged in manufacture of textile products which as per Accounting Standard - As -
17 is considered only reportable business segment. 7. As required by Accounting Standard – AS-18 "Related Parties Disclosure" issued by The Institute of
Chartered Accountants of India, related parties and transaction with related parties are as follows: A. Summary of the transactions with the related parties as follows.
(Rs. in lacs)
For the nine
month
period
ended on For the year ended on
Nature of Transaction 31.12.2008
31.03.
2008
31.03.
2007
31.03.
2006
31.03.
2005
31.03.
2004
Purchases of
Goods/Services
Controlling Companies - - - - - 1,066.90
Subsidiaries 265.93 376.86 435.84
394.89 - -
Joint Ventures 24.98 283.81 380.05 - - -
Associate Companies 110.16 142.24 107.38
56.36 76.25 32.97
Total
401.07 802.91
923.27 451.25
76.25 1,099.87
Sales of Goods
Controlling Companies - - - - - 409.95
Subsidiaries 150.63
362.15 486.73
459.19 124.39 -
Joint Ventures 0.02
148.94 185.20 - - -
Associate Companies - - - - 54.66 11.91
Total
150.65
511.09
671.93
459.19
179.05 421.86
Loan/Deposit Received
from
Controlling Companies - - - - - 1,677.53
Associate Companies - - - - 2,000.00 -
Total - - - - 2,000.00 1,677.53
Loan given / Repaid to
related parties
- - - - - -
Controlling Companies - - - - - 1,764.00
F-14
Subsidiaries - - 356.21
1,373.52 108.28 530.00
Associate Companies - - -
2,000.00 4.83 882.99
Total
- - 356.21
3,373.52
113.11 3,176.99
Loan repaid by related
party
Controlling Companies - - - - - -
Subsidiaries - - 808.44
790.00 530.00 -
Associate Companies - - - - 560.00 -
Total
- - 808.44
790.00
1,090.00 -
Investment in Equity
Shares and Application
Money
Controlling Companies - - - - - -
Subsidiaries 17.64 10.96 1,500.00 - 175.61 407.39
Associates Companies - - - - - 64.11
Total 17.64 10.96 1,500.00 - 175.61 471.50
Buy Back of Equity Shares
Controlling Companies - - - - 13.88 -
Associate Companies - - - - 18.61 -
Total - - - - 32.49 -
Purchase of Textile
Undertaking
Controlling Companies - - - - - 432.00
Associate Companies - - - - - -
Total - - 432.00
Interest paid
Controlling Companies - - - - - -
Associate Companies - - - - - -
Total - - - - - -
Interest Received
Controlling Companies - -
Subsidiaries - 4.78 50.36 41.63 0.34
Associate Companies - - - - - 9.41
Total - 4.78 50.36 41.63 0.34 9.41
Remuneration to
Key Management Personnel 76.83 101.85 101.60 94.30 86.15 46.93
Total 76.83 101.85 101.60 94.30 86.15 46.93
Rent paid
Associate Companies 83.76 111.67 - - - -
Relatives of key management personnel
- - - 9.20 13.80 -
Total 83.76 111.67 - 9.20 13.80 -
Outstanding Balance
Outstanding Payable - - - -
Joint Venture Companies 139.87 160.66 146.37 146.93 146.94 146.94
Associates Companies 275.54 143.41 17.12 12.36 2,008.56 10.38
Total 415.41 304.07 163.49 159.29 2,155.50 157.32
Outstanding Receivable
F-15
Joint Venture Companies - - 31.77 - - -
Subsidiaries 476.65 436.92 313.27 861.69 186.93 530.00
Associates Companies 0.73 0.73 0.73 0.73 34.45 711.01
Total 477.38 437.65 345.77 862.42 221.38 1,241.01
F-16
B. List of Related Parties with whom transactions have taken place during the year. Refer: Annexure – B1 8. As required by Accounting Standard - 20 issued by the Institute of Chartered Accountants of India, the
reporting in respect of Earning Per Share (EPS) Basic & Diluted is as follows (Rs. in lacs)
For the year ended on
For the
nine month
ended on
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
Profit/(Loss) after tax
(2,160.16) (2,274.12) 842.01 1,045.04 664.23 (224.56)
Less: Dividend on Preference Shares & Taxes
43.87 58.50 58.50 57.01 42.76 -
Profit/(Loss)
available to
equity
shareholders
(2,204.03) (2,332.62) 783.51 988.03 621.47 (224.56)
Weighted average no. of equity shares for basic EPS
18,169,463 18,169,463 13,561,317 10,382,550 26,837,062 32,876,000 No of Shares
Nominal Value of Equity Shares
10 10 10 10 10 10 Rs.
Basic Earning Per Equity Shares (basic & diluted)
(12.13) (12.84) 5.78 9.52 2.32 (0.68) Rs.
9. As per the requirement of Accounting Standard 22 issued by Institute of Chartered Accountants of India applicable
from period 1.4.2001. The accumulated deferred tax assets of the company not taken in accounts amounting to Rs.1,614.48 lacs (Previous Year Rs. 1,023.97 lacs) as per conservative policy of the company. (Rs. in lacs)
For the
nine
month
period
ended on For the year ended on
Change
during
FY 2008-09
(Upto
31.12.2008) 31.12.
2008
31.03.
2008
31.03.
2007
31.03.
2006
31.03.
2005
31.03.
2004
Deferred Tax Liability
Accelerated Depreciation 97.19 2,298.87 2,201.68 2,288.23 2,115.67 1,904.35 1,801.87
Total 97.19 2,298.87 2,201.68 2,288.23 2,115.67 1,904.35 1,801.87
Deferred Tax Assets
Accelerated Amortisations - - - - 0.41 0.83 (1.32)
Gratuity (5.17) 9.96 15.13
PL (6.18) 2.84 9.02 - - - -
Unabsorbed Depreciation 342.69 3,085.21 2,742.52 2,546.53 2,521.82 2,521.81 2,686.60
Capital Loss 0 3.57 3.57 - - - -
B/f Business Losses 356.36 811.77 455.41 182.93 331.21 485.65 546.35
Total 687.70 3,913.35 3,225.65 2,729.46 2,853.44 3008.29 3,231.63
Net Deferred Tax Assets 590.51 1,614.48 1,023.97 441.23 737.77 1,103.94 1,429.76
F-17
Note: Deferred Tax Liability during the period ended 31st Dec., 2008 is amounting to Rs.2,298.87 lacs and net deferred tax assets Rs. 3,913.53 lacs.
10. During the Financial Year 2003-04 balance in deferred revenue expenditure has been fully charged to
profit and loss account which has resulted in increase of loss by Rs. 30.64 lacs. 11. Employees Stock Option Plan
Till date no options under the Employees Stock Option Plan has been exercised by any of the eligible employees. Considering the present market price of the Equity Share of the company, it is unlikely that the options will be exercised in future also and accordingly the options granted under the Plan are not treated as potential equity shares as defined in Accounting Standard -20 “Earning Per Share” and thus no impact of dilution on EPS is considered.
12. The company has taken vehicles on an operating basis for a period of 48/ 60 months. The lease rentals are payable on monthly basis by the Company.
Future minimum lease rentals payable as per agreement:
(Rs in Lacs)
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
a) Not later than one year 30.78 33.19 24.03 20.38 13.46 -
b) Later than one year but not later than five years
36.21 49.15 49.43 55.05 49.31 -
c) Later than five years - - - - - -
66.99 82.34 73.46 75.43 62.77 -
Lease payment recognised in profit & Loss account
27.94 26.95 21.31 17.35 8.41 -
13. Impact on account of adjustments required by paragraph 6.10.2.7(b) of the SEBI Guidelines.
(Rs. in lacs)
For the nine
month period
ended on For the year ended on
Nature of Transaction 31.12.2008
31.03.2008
31.03.2007 31.03.2006 31.03.2005 31.03.2004
Net Profit & Loss Account as per audited accounts
(2,160.16) (2,274.12) 842.01 1,045.04 664.23 (225.47)
Add : Prior Period Expenses
0.00 0.00 0.00 0.00 0.00 0.92
Profit & (Loss) account before prior period adjustments
(2,160.16) (2,274.12) 842.01 1,045.04 664.23 (224.55)
Material Amounts impacting other financials years
0 0 0 0 0 0
(See note below)
Adjusted Profit / (Loss) (2,160.16) (2,274.12) 842.01 1,045.04 664.23 (224.55)
Note: Material previous year adjustments comprise of expenses pertaining to previous years which have been adjusted in the years to which they relate.
F-18
14. Figures of period ended 31.12.2008 is not comparable with previous all financial year. 15. Previous year's figures have been regrouped wherever necessary.
F-19
Annexure – B1 List of Related parties with whom transactions have taken place during the year.
For the year ended on
For the nine
month
period ended on
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
a) Controlling Companies
-
-
-
-
Manifatura Di Valle Brembana SPA
Morarjee Gokuldas Spg & Wvg Co. Ltd.
-
-
-
-
-
Manifatura Di Valle Brembana SPA
b) Subsidiary Companies
Morarjee Intl s.r.l.
Morarjee Intl s.r.l.
Morarjee Intl s.r.l.
Morarjee Intl s.r.l.
PMP Components Pvt. Ltd.
PMP Components Pvt. Ltd.
Integra Apparels & Textiles Pvt. Ltd.
Integra Apparels & Textiles Pvt. Ltd.
Integra Apparels & Textiles Pvt. Ltd.
Integra Apparels & Textiles Pvt. Ltd.
Morarjee Intl s.r.l.
-
Men’s Club S.P.A.
Men’s Club S.P.A.
Men’s Club S.P.A.
-
Integra Apparels & Textiles Pvt. Ltd.
-
c) Associates
Companies
Morarjee Gokuldas Spg & Wvg Co.Pvt. Ltd. (Formerly - Morarjee Legler Pvt Ltd.)
Morarjee Gokuldas Spg & Wvg Co.Pvt. Ltd. (Formerly - Morarjee Legler Pvt Ltd.)
Gujarat Glass Ltd
Gujarat Glass Ltd
Gujarat Glass Ltd
Gujarat Glass Ltd
Peninsula Land Ltd
Ashok Piramal Management Corporation Ltd
Morarjee Gokuldas Spg & Wvg Co.Pvt. Ltd. (Formerly - Morarjee Ledger Pvt Ltd.)
Morarjee Gokuldas Spg & Wvg Co.Pvt. Ltd. (Formerly - Morarjee Ledger Pvt Ltd.)
Morarjee Legler Pvt. Ltd.
Morarjee Legler Pvt. Ltd.
Peninsula Facility Management Services Pvt Ltd.
Piramal Health Care Ltd.
Ashok Piramal Management Corporation Ltd
Ashok Piramal Management Corporation Ltd
- -
Peninsula Land Ltd
Thundercloud Technologies (India) Pvt.
Thundercloud Technologies (India) Pvt. Ltd.
Thundercloud Technologies (India) Pvt.
Thundercloud Technologies (India) Pvt.
F-20
Ltd. Ltd. Ltd.
-
-
Nicholas Piramal India Ltd.
Nicholas Piramal India Ltd.
Nicholas Piramal India Ltd.
-
-
Piramyd Retail & Merchandise Pvt. Ltd.
Piramal Enterprises Ltd.
Piramal Enterprises Ltd.
Peninsula Land Ltd
Piramal Health Care Pvt. Ltd.
Piramal Health Care Pvt. Ltd.
-
-
PMP Components Pvt. Ltd.
Piramyd Retail & Merchandise Pvt. Ltd.
Piramyd Retail & Merchandise Pvt. Ltd.
-
-
-
Peninsula Land Ltd (Formerly - Morarjee Gokuldas Spg & Wvg Co. Ltd.)
Morarjee Realties Ltd (Formerly - Morarjee Gokuldas Spg & Wvg Co. Ltd.) part of the year controlling company -
-
-
-
PMP Components Pvt. Ltd.
-
-
d) Joint
Venture
Companies
Morarjee Castiglioni (I) Pvt. Ltd.
Morarjee Castiglioni (I) Pvt. Ltd.
Morarjee Castiglioni (I) Pvt. Ltd.
Morarjee Castiglioni (I) Pvt. Ltd.
Morarjee Castiglioni (I)Pvt. Ltd.
Morarjee Castiglioni (I) Ltd.
Just Textiles Ltd
Just Textiles Ltd
Just Textiles Ltd
e) Key
Management
Personnel
Mr. Harshvardhan Piramal
Mr. Harshvardhan Piramal
Mr. Harshvardhan Piramal
Mr. Harshvardhan Piramal
Mr. Harshvardhan Piramal
Mr. Ajay Piramal
Mr. P.K. Gothi
Mr. P.K. Gothi
Mr. P.K. Gothi Mr. P.K. Gothi Mr. P.K. Gothi
Mr. Harshvardhan Piramal
-
-
-
-
Mr. Robert Lobo (Part of the Year)
Mr. P.K. Gothi( part of the year )
Mr. Robert Lobo
f) Relatives of
Key
Management
Personnel
-
-
Mrs. Bhakti P. Gothi
Mrs. Bhakti P. Gothi
Mrs. Bhakti P. Gothi
-
F-21
Note : The above information has been determined to the extent such parties have been identified on the basis of information provided by the company and approved by the Board of Directors of the Company , which has been relied upon by the Auditors.
F-22
Annexure - V Statement of Accounting Ratios
For the
nine month
period
ended on For the Year ended on
S.
No. Particulars 31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
1
Earning Per Share (Basic & Diluted) (Before Extra Ordinary Items)
(12.13) (12.84) 5.78 9.52 2.32 (0.68)
2
Earning Per Share (Basic & Diluted) (After Extra Ordinary Items)
(12.13) (12.84) 5.78 9.52 2.32 (0.68)
3
Return on Net Worth (%) (Before Extra Ordinary Items)
-61.36% -40.39% 9.73% 28.25% 22.15% -9.38%
4
Return on Net Worth (%) (After Extra Ordinary Items)
-61.36% -40.39% 9.73% 28.25% 22.15% -9.38%
5 Net Assets Value per Share
19.90 31.79 44.30 33.69 27.02 7.28
Notes: 1. Earning Per Share :Adjusted Profit after tax before extra ordinary items/No of Shares (Before Extra Ordinary Items) 2. Earning Per Share (After Extra Ordinary Items) :Adjusted Profit after tax after extra ordinary items/No of Shares 3. Return on Net Worth (%) :Adjusted Profit after tax before extra ordinary items/Net Worth (Before Extra Ordinary Items) 4. Return on Net Worth (%) : Adjusted Profit after tax after extra ordinary items/Net Worth (After Extra Ordinary Items) 5. Net Assets Value per Share :Net Worth excluding Preference Shares Capital/No. of Equity Shares
F-23
ANNEXURE – VI
STATEMENT OF DIVIDEND DECLARED
Preference Shares The Board of Directors has recommended dividend for Preference Shares of Rs.100/- each as given in the table below.
Equity Shares The Board of Directors has recommended dividend for Equity Shares of Rs. 10/ each as given in the table below.
(Rs. in lacs)
Equity Shares Preference Shares
Period No of Shares
Dividend
% Amount
Div.
Tax
No of
Shares
Dividend
% Amount
Div.
Tax
31st March 2007
18169463 15% 272.54 46.32 1000000 5% 50.00 8.5
31st March 2006
10382550 25% 259.56 36.40 1000000 5% 50.00
7.01
31st March 2005 *
10382550 15% 155.74 21.84 1000000 5% 37.50
5.26
* Period from 01.07.2004 to 31.03.2005 for Preference Shares
Note: No Dividend has been declared for 2003-04, 2007-08 and for the period ended 31st Dec, 2008. Dividend payable to Preference Shareholders for Year ended 2007-08 and period ended 31st December, 2008 has been shown under contingent liability
F-24
ANNEXURE VII - TAX SHELTER STATEMENT
(Rs. In Lacs)
For the nine
month period
ended on For the year ended on
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
Book Profit / (Loss) (2,160.16) (2,253.21) 867.08 1,080.78 664.23 (224.55)
Tax at Notional Rate (on Book Profit)
Nil Nil 291.86 363.79 243.06 Nil
Adjustments (102.15) (234.94) (313.70) (651.55) (580.53) (381.50)
- Diff between Tax dep & Book Dep
(294.86) (407.36) (408.83) (651.55) (597.90) (504.11)
- Other adjustments 192.71 172.42 95.14 - 17.37 122.62
- Set off of B/fd business loss
- - 553.39 457.73 83.70 -
Net adjustment (2,160.16) (2,253.21) 867.08 1,080.78 664.23 (224.55)
Tax Saving on Net adjustment
N.A N.A 291.86 363.79 243.06 N.A
Total Taxation N.A N.A N.A N.A
Note : Refer Note
2 Ref Note No
2 Ref Note No
4 Ref Note No
3 Ref Note No
1 Ref Note No
2
Note: 1. For the year ended 31.03.2005, as per section 115 JB of the Income Tax Act, 1961, ("the Act"), the
Company has set off its book profit of Rs. 6,64,22,954/- against brought forward unabsorbed depreciation amounting to Rs. 10,46,88,765/- and therefore Minimum Alternate Tax Liability does not arise.
2. In the financial year ending on 31.03.2004, 31.3.2008 and for nine month ended 31.12.2008 the
company has incurred losses. Hence there was no saving on account of Income Tax in these years. 3. For the year ended 31.03.2006, as per section 115 JB of the Income -tax Act, 1961('the Act"), tax paid
as per provision of MAT is Rs.79.01 lacs . As per section 115 JAA of the Act, Company is entitled to take MAT credit in next 7 assessment years, and accordingly the Company has accounted for MAT credit entitlement as receivable and consequently there is no impact of MAT provision on the profit of the captioned financial year.
4. For the year ended 31.03.2007, as per section 115 JB of the Income -tax Act, 1961('the Act"), tax
paid as per provision of MAT is Rs.97.29 lacs . As per section 115 JAA of the Act, Company is entitled to take MAT credit in next 7 assessment years, and accordingly the Company has accounted for MAT credit entitlement as receivable and consequently there is no impact of MAT provision on the profit of the captioned financial year.
5. Total future tax benefits i.e. deferred tax assets amounting to Rs 1614.48 Lacs as on 31.12.2008 has
not recognized in the books of accounts, based on consideration of prudence.
F-25
ANNEXURE - VIII AGEWISE ANALYSIS OF SUNDRY DEBTORS
(Rs. in lacs)
Sundry Debtors outstanding for
As on More than 180 days Less than 180 days Total Sundry Debtors
31st December, 2008 444.99 4,072.04 4,517.03
31st March, 2008 351.21 2,788.73 3,139.94
31st March, 2007 275.62 3,713.05 3,988.67
31st March, 2006 320.18 3,067.86 3,388.04
31st March, 2005
200.39
2,008.17 2,208.56
31st March, 2004
152.94
1,631.19 1,784.13
ANNEXURE - IX ANALYSIS OF LOANS AND ADVANCES
(Rs. in lacs)
As at
31.12.2008 As at
31.03.2008 As at
31.03.2007 As at
31.03.2006 As at
31.03.2005 As at
31.03.2004
Advances Recoverable in cash or kind or for value to be recd
1,333.99 1,181.36 856.11 469.12 232.85 302.48
Deposit with Excise/Sales Tax Authorities
795.26 995.76 1,165.06 640.1 404.25 665.52
Deposits and other advances 207.41 192.3 288.28 152.74 114.49 209.52
Advances to Staff 29.79 27.44 27.7 31.98 60.46 43.08
MAT Credit Entitlement 188.24 188.24 188.24 90.95 0 0
Loans with Subsidiary 314.26 322.24 312 724.43 108.58 530
Loans to Co. in which Directors are interested
0.73 0.73 0.73 0.73 0.73 560.68
Total 2,869.68 2,908.07 2,838.12 2,110.05 921.36 2,311.28
F-26
Annexure - X CAPITALISATION STATEMENT
(Rs in lacs)
PARTICULARS
As on
31.12.2008
As on
31.12.2008
BORROWING:
Short Term Debt 6,401.83
Long Term Debt 13,609.53
Preference Shares 1,000.00
Total Debts 21,011.36
SHAREHOLDERS FUND
Share Capital (Paid up Capital) 1,816.95
Reserves & Surplus
General Reserve 1,506.42
Share Premium 3,353.80
Debit Balance of Profit & Loss Account (3,061.65) 1,798.57
Total Shareholders Fund
3,615.52
TOTAL CAPITALISATION 24,626.88
DEBT EQUITY RATIO 4.04 4.04 : 1
(Debt Equity Ratio = Long Term Debt / Shareholders Fund)
F-27
ANNEXURE - XI - Terms of Loans PRINCIPAL TERMS OF LOANS AND ASSETS CHARGED AS SECURITY
(Rs. in lacs)
Particulars
As at
31.12.2008
As at
31.03.2008
As at
31.03.2007
As at
31.03.2006
As at
31.03.2005
As at
31.03.2004
A) Secured Loans
FOREIGN CURRENCY
TERM LOAN
TERM LOAN FROM
FINANCIAL
INSTITUTIONS: - Repayable in half yearly equal instalments of Rs.31.25 lacs ending on 01.11.2010 (Secured by way of Equitable Mortgage on Company's Immovable Properties at Butibori, Nagpur and by a charge created on Co's moveable assets including its moveable plant and Machinery spares ,tools and accessories and other movables, both present and future, subject to prior charge of Company's Bankers
125.00 187.50 250.00 312.50 375.00 2808.40
TERM LOAN FROM
BANKS: Repayable in quarterly equal instalments of Rs.85.24 lacs and Rs.238.43 lacs will start after Sept 2009 and end on Sept 2012 and Sept 2013 respectively and repayment of Rs.100 lacs will start from Feb 2009 and end on Nov 2015.(Secured by a pari passu charge on the movable assets including its moveable plant and machinery, spare, tools and accessories secured by a pari passu equitable mortgage on company's immovable properties at Butibori, Nagpur)
6,675.50 6,925.50 7,925.50 6,000.00 1,500.00 0
F-28
CASH CREDIT/PACKING
CREDIT FROM BANKS (Secured by way of hypothecation of Current Assets of the Co. viz.,Raw Materials, Stock- In - Process, Finished Goods, consumables stock and spares , book debts and other moveable both present and future and secured by pari passu second charge created on Co's moveable assets including its moveable plant and machinery, spares, tools and accessories and other moveable, both present and future.
6,401.83 6,728.45 5,539.34 4,436.59 3,222.17 4260.77
TOTAL 13,202.33 13,841.45 13,714.84 10,749.09 5,097.17 7,069.17
NOTE: Repayment Schedule given above is applicable only for 31.12.2008
F-29
ANNEXURE - XII ANALYSIS OF OUTSTANDING UNSECURED LOANS TAKEN BY THE CO
(Rs. in lacs)
Period Amount
Rate of
Int
Repayment
Schedule
1 Period Ended 31.12.2008
FROM : CORPORATE BODIES
6,809.03 13% &
14.5% On Demand
ACT Fininvest Ltd. (Formerly known as Ashok cutting tools Ltd) TOTAL 6,809.03
2 Year ended 2007-2008
FROM : CORPORATE BODIES
4,269.18 11.50% On Demand ACT Fininvest Ltd. (Formerly known as Ashok cutting tools Ltd) TOTAL - A 4,269.18
FROM : OTHERS
Deutsche Bank 703.53
8.375% On Receipt of export proceeds
Yes Bank Ltd 1,000.00 13.75% 16.07.2008
TOTAL - B 1,703.53
TOTAL (A+B)
5,972.71
Year ended 2006-2007
FROM : CORPORATE BODIES
1,439.34 9.50% On Demand ACT Fininvest Ltd. (Formerly known as Ashok cutting tools Ltd) TOTAL - A 1,439.34
FROM : OTHERS
Yes Bank Ltd 1,000.00
10.25% 17.10.2007
3
UTI Bank Ltd 1,000.00 11.00% 08.01.2008
TOTAL - B 2,000.00
TOTAL (A+B)
3,439.34
4 Year ended 2005-2006
FROM : CORPORATE BODIES
2,668.31 9.00% On Demand ACT Fininvest Ltd. (Formerly known as Ashok cutting tools Ltd) TOTAL - A 2,668.31
FROM : OTHERS
UTI Bank 1,000.00
8.25% 22.07.2006 paid
TOTAL - B 1,000.00
TOTAL (A+B)
3,668.31
Year ended 2004-2005
FROM : CORPORATE BODIES
TOTAL - A 463.93 8.50% On Demand ACT Fininvest Ltd. (Formerly known as Ashok Cutting tools Ltd)
463.93
FROM : OTHERS
5
Allahabad Bank 1,000.00
7.00% 23.07.2005 paid
Ing Vyasa Bank 2,400.00
6.20% 27.09.2005 paid
TOTAL - B 3,400.00
F-30
TOTAL (A+B)
3,863.93
6 Year ended 2003-04
FROM : CORPORATE BODIES
GUJARAT GLASS LTD. 4.83 On Demand
NOZAKI FINANCE & INVESTMENTS PVT LTD
4,003.00 - do -
TOTAL - A 4,007.83
FROM : OTHERS
Citi Bank 875.91 Libor +
.75% 03.04.2004 paid
TOTAL - B 875.91
TOTAL (A+B)
4,883.74
F-31
MORARJEE TEXTILES LIMITED
ANNEXURE – XIII CASH FLOW STATEMENT AS RESTATED
(Rs. in lacs)
For the nine month
period ended on For the year ended on 31st December, 2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
A. CASH FLOW FROM
OPERATING ACTIVITIES
Net Profit/(Loss) for the period / year
(2160.16) (2274.12) 842.01 1045.04 664.23 (224.55)
Add: Miscellaneous Expenses w/off
0.00 0.00 0.00 0.00 0.00 110.56
(2160.16) (2274.12) 842.01 1045.04 664.23 (113.99)
Add: Provision for Tax - MAT/ FBT
18.04 20.91 25.07 35.74
Depreciation 814.18 1009.69 926.74 807.33 716.30 561.04
Interest Expenses 1484.33 1568.77 1069.41 664.31 569.29 744.83
Loss on Sale of Investment 0.00 0.00 0.00 0.00 2.38
Less:Interest Income 25.67 78.43 101.22 45.02 5.59
Profit on Sale of Assets 0.00 1.00 11.55 1.07 8.53 0.24
2290.88 2519.94 1908.45 1461.29 1273.85 1305.63
Operating Profit Before
Working Capital Changes
130.72 245.82 2750.46 2506.33 1938.08 1191.64
Adjustments for Changes in Working Capital
(Increase)/ Decrease in Trade and Other Receivables
(1346.68) 789.02 (1643.84) (1661.37) 1074.07 (2735.26)
(Increase) /Decrease in Inventories
848.81 (811.07) (624.18) (701.49) (111.03) (1570.87)
Increase/(Decrease) in Trade Payables
503.82 (2.79) 258.66 642.49 (81.70) 2472.77
5.95 (24.84) (2009.36) (1720.37) 881.34 (1833.36
)
Cash from Operating Activities 136.67 220.98 741.10 785.96 2819.42 (641.72)
Less: Extra Ordinary item
Less: Income Tax Paid 18.61 19.24 131.71 116.11
F-32
(MAT/FBT)
Net Cash From Operating
Activities
118.06 201.74 609.39 669.85 2819.42 (641.72)
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (107.81) (1480.66) (2602.16) (2786.41) (1384.05) (3321.38)
Sale of Fixed Assets 0.00 56.06 59.77 68.76 70.92 0.44
Loans to Subsidiaries 7.98 (10.24) 412.43 (615.85) (108.58) 0.00
Interest Income 25.67 78.43 101.22 45.02 5.59
Purchase of Investments (17.64) (10.96) (2871.85) 0.00 (175.61) (472.13)
Sale of Investments 0.00 0.00 0.00 405.00 0.00
Net Cash Used in Investing
Activities
(91.80) (1367.37) (4900.59) (3288.48) (1186.73) (3793.07)
C. CASH FLOW FROM
FINANCING ACTIVITIES
Proceeds from Long Term Borrowings
0.00 0.00 2400.00 4500.00 3900.00 4039.00
Repayment of Long Term Borrowings
(312.50) (1062.50) (537.00) (62.50) (2433.40) (2144.20)
Issue of Equity Share with premium
0.00 0.00 0.00 0.00 1550.00 0.00
Proceeds from Right Issue 0.00 4282.80 0.00 0.00
Right Issue Expenses 0.00 (150.31) 0.00
Dividend and Distribution Tax thereon
0.00 (374.05) (348.99) (218.18)
Refund of Advance against Equity
0.00 0.00 0.00 (1550.00) 0.00
Consideration against cancellation of Shares
0.00 0.00 0.00 0.00 (32.49) 0.00
Increase/ (Decrease) in Short term Borrowings
509.70 3722.48 873.78 (981.20) (2458.40) 3349.08
Interest Paid (857.48) (1567.84) (1029.85) (636.13) (602.22) (786.83)
Net Cash Used in Financing (660.28) 718.09 5490.43 2601.99 (1626.51) 4457.05
F-33
Activities
Net Increase in Cash and Cash Equivalents (A)+(B)+(C)
(634.02) (447.54) 1199.23 (16.64) 6.18 22.26
Cash and Cash Equivalents at the beginning of the year
767.38 1214.92 15.69 32.33 26.15 3.89
Cash and Cash Equivalents at the end of the period / year
133.36 767.38 1214.92 15.69 32.33 26.15
F-34
Annexure - XIV Statement of Other Income -
(Non-Recurring)
(Rs. in lacs)
For the year ended on
For the nine
month period ended on
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
Insurance Claim 2.47 - 0.26 6.76 22.86 -
Miscellaneous Receipts
1.27 - 0.32 - 4.61 0.06
Profit on Sale of Assets
1.00 11.55 1.07 8.53 0.24
Total 3.74 1.00 12.13 7.83 36.00 0.30
Investment - Annexure – XV
The aggregate amount of Investments with subsidiary and joint venture companies are as follows:
(Rs in Lacs)
As at
31.12.2008
As at
31.03.2008
As at
31.03.2007
As at
31.03.2006
As at
31.03.2005
As at
31.03.2004
Investment in –Govt.
Securities (Unquoted)
0.64 0.64 0.64 0.64 0.64 0.64
Investment in Equity
Shares (Unquoted )
(Related Parties)
PMP Components Pvt. Ltd. **
- - - - - 407.39
Morarjee International Srl **
5.61 5.61 5.61 5.61 5.61 -
Integra Apparels and Textiles Pvt. Ltd. **
1,687.64 1,670.00
1,670.00
170.00
170.00
-
Morarjee Castiglioni (I) Pvt. Ltd.
64.10 64.10
64.10
64.10
64.10
64.10
Mens Club s.p.a.** 587.25
587.25
576.29 - -
Just Textiles Ltd. 795.56
795.56
795.56 - - -
Morarjee Goculdas Spg & Wvg Pvt. Ltd. ( Formerly- Morarjee Legler Pvt. Ltd )
0.01 0.01 0.01 0.01 0.01 0.01
Total
3,140.81
3,123.17
3,112.21
240.36
240.36
472.14
F-35
FINANCIAL INFORMATION
AUDITORS’ REPORT
To The Board of Directors Morarjee Textiles Limited 2 Peninsula Spenta Mathuradas Mills Compound Senapati Bapat Marg, Lower Parel Mumbai 400 013 Dear Sirs, Re: Proposed Rights Issue of equity shares of Morarjee Textiles Limited (“MTL” or “the Company”) 1. We have examined the attached financial information of MTL and of its subsidiaries in terms of our
engagement letter dated 23rd February 2009. The said financial information has been prepared by the Company in accordance with the requirements of paragraph B of Part II of Schedule II to the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 as updated till 8th December 2008, (“SEBI Guidelines”) issued by the Securities and Exchange Board of India and is approved by the Company’s Board of Directors.
2. The financial information referred to above is extracted as applicable from the audited standalone
financial statements of the Company and its subsidiary/ies, approved by the Companies’ Board of directors and adopted (where applicable) by the Companies’ shareholders, and is contained in the following Annexures to this report:
- Annexure I contain the “Statement of Consolidated Profit and Loss Account”, as restated, of MTL
and its subsidiaries as at 31st December 2008, 31st March 2008, 2007, 2006, 2005 and 2004. - Annexure II contain the “Statement of Consolidated Assets and Liabilities”, as restated, of MTL
and its subsidiaries for the period/years ended 31st December 2008 and 31st March 2008, 2007, 2006, 2005 and 2004.
- Annexure III contain the ‘Significant Accounting Policies’ adopted by the Company in the
preparation of the consolidated financial statements of MTL and its subsidiaries, as relevant to the Summary Statements in Annexure I and II, and Notes to the Summary Statements.
- Annexure IV contain the “consolidated Notes to the statement of restated Profit and Losses and
restated consolidated Assets and Liabilities”, as relevant to the Summary Statements in Annexure I and II
- Annexure XIII contain Consolidated Cash Flow Statement, as restated for the period/years ended
31st December 2008 and 31st March 2008, 2007, 2006 and 2005 3. Based on our examination of the Summary Statements referred to in paragraph 2 above in our opinion:
(i) The restated financial information reflects the significant accounting policies adopted by the
Company and its subsidiaries as at 31st December 2008. (ii) Adjustments for material amounts have been made in the respective period/ years to which
they relate. (iii) There are no extra-ordinary items that need to be disclosed separately.
F-36
(iv) Adjustments to the restated financial information have been made for quantifiable qualifications, (where made) in the auditors’ reports on the financial statements of the Company and its subsidiaries.
4. We have also examined the following financial information set out in Annexure V to XII & XIV to XV
prepared by the Company and its subsidiaries in accordance with the SEBI Guidelines in terms of our engagement letter dated 23rd February 2009 as at and for the period ended 31st December 2008 and for years ended 31 March 2008, 2007, 2006, 2005 and 2004, approved by the Board of Directors and annexed to this report: i. Annexure V- Accounting Ratios relating to Earnings Per Share,
Return on Net Worth and Net Asset Value per share ii. Annexure VI- Details of Dividends Paid iii. Annexure VII- Statement of Tax Shelter iv. Annexure VIII- Statement of Sundry Debtors with ageing schedule v. Annexure IX- Statement of Loans and Advances vi. Annexure X- Capitalisation Statement vii. Annexure XI- Summary Statement of Principal terms of loans and assets charged as security
of Secured and Unsecured Loans viii. Annexure XII- Statement of Unsecured Loans ix. Annexure XIV- Statement of Other Income x. Annexure XV- Statement of Investments of MTL
5. The Consolidated Summary Statements referred to above have been extracted from the consolidated
financials statements prepared by the Company for the purposes of this report and examined by us. 6. This report should not in any way be construed as a reissuance or redating of any of the previous audit
report by other firms of Chartered Accountants nor should this be construed as a new opinion on any of the financial statements referred to herein.
7. Throughout our report amounts in Rupees lacs have been rounded to the nearest thousand, except
where it has also been necessary to disclose decimals. This report is intended solely for your information and for inclusion in Draft Letter of Offer in connection with the Offering and is not to be used, referred to or distributed for any other purpose without our prior written consent.
For SHAH & CO.,
Chartered Accountants H.N.SHAH Partner Membership No: 8152 Mumbai: 21st March 2009
F-37
Annexure - I STATEMENT OF CONSOLIDATED PROFIT AND LOSS ACCOUNT AS RESTATED
(Rs in lacs)
For the Nine
month period ended on
FOR THE YEAR ENDED ON
PARTICULARS
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
Income
Export Sales 15,230.92 16,430.91 16,696.54 10,691.79 9,044.67 5,198.33
Domestic Sales 9,279.80 11,491.57 10,277.30 8,312.70 8,967.67 7,775.76
DEPB 817.64 1,103.53 457.67 300.49 361.79 375.94
25,328.36 29,026.01 27,431.51 19,304.98 18,374.13 13,350.03
Less: Excise Duty & Sales Return
543.36 893.90 755.66 1,042.93 1,160.00 882.76
24,785.00 28,132.11 26,675.85 18,262.05 17,214.13 12,467.27
Increase/(Decrease) in Stock
(308.39) 1,201.64 1,007.99 574.69 (63.21) 719.18
Other Income 10.58 22.14 475.93 9.83 95.26 48.23
24,487.19 29,355.89 28,159.77 18,846.57 17,246.18 13,234.68
EXPENDITURE
Material Consumed 8,813.12 12,073.56 11,137.96 6,834.41 6,802.87 5,819.62
Manufacturing Expenses
6,891.17 8,365.78 7,553.43 5,245.51 4,687.08 3,148.58
Employees' Emoluments
3,930.33 4,307.17 2,697.25 1,909.69 1,576.02 1,318.53
Admn, Selling & Other Expns
5,035.12 3,823.54 3,030.20 2,326.12 1,997.30 1,356.56
Depreciation 1,127.18 1,362.49 1,095.38 836.28 822.65 651.85
Financial Charges 1,904.64 1,748.94 1,227.94 653.19 591.64 807.37
Miscellaneous Expns w.off
- - - - - 110.56
27,701.56 31,681.48 26,742.16 17,805.20 16,477.56 13,213.07
Profit before tax (3,214.37) (2,325.59) 1,417.61 1,041.37 768.62 21.61
Other Adjustments VRS w/off
- - - - 204.56 204.56
(3,214.37) (2,325.59) 1,417.61 1,041.37 564.06 (182.95)
Provision for Tax
Provision for Tax (Including MAT )
13.70 46.48 170.44 106.90 - 3.20
Deferred Tax Adjustment
(119.38) 9.73 138.28 - (18.52) 12.15
Fringe Benefit Tax 30.73 35.71 35.05 41.22 - -
Fringe Benefit Tax- Earlier years
2.82 - - - - -
MAT Credit Entitlement
- (25.45) (152.71) (90.95) - -
Provision for Tax for Earlier Years
0.25 9.79 - - - -
Profit / (Loss) After (3,142.49) (2,401.85) 1,226.55 984.20 582.58 (198.30)
F-38
Tax
Share of Minority Interest
(155.35) (23.68) 25.17 (7.70) - -
Net Profit / (Loss)
after Tax as per Audited Statement of
A/c
(2,987.14) (2,378.17) 1,201.38 991.90 582.58 (198.30)
Impact on account of adjustments required by paragraph 6.10.2.7(b) of Chapter VI Of the SEBI Guidelines [See note 17 of Annexure IV]
- - 0.50 13.67 5.52 -
Adjusted Profit /
(Loss)
(2,987.14) (2,378.17) 1,200.88 978.23 577.06 (198.30)
Brought forwards Profit/(Loss) from previous year
(774.39) 1,603.78 823.26 303.00 (3,787.27) (3,735.73)
Profit/(Loss)
available for
appropriation
(3,761.53) (774.39) 2,024.14 1,281.23 (3,210.21) (3,934.03)
Add:
Surplus on Capital Restructuring*
- - - - 3,766.85 -
Less:
Capital Loss adj against purchase consideration
- - - - - (146.76)
Proposed Dividend on
- Equity - - 272.54 259.56 155.74 -
- Distribution Tax - - 46.32 36.40 21.84 -
- Preference - - 50.00 50.00 37.50 -
- Distribution Tax - - 8.50 7.01 5.26 -
Transfer to General Reserve
- - 43.00 105.00 33.30 -
Balance Carried forward to Balance Sheet
(3,761.53) (774.39) 1,603.78 823.26 303.00 (3,787.27)
The accompanying significant accounting policies and notes are integral part of this statement. * For detail refer Note A Note A - Reserve and Surplus
(Rs. In Lacs)
Reserve and Surplus As at
31.12.2008
As at
31.03.2008
As at
31.03.2007
As at
31.03.2006
As at
31.03.2005
As at
31.03.2004
1. General Reserve
- Opening balance 1,506.42 1,506.42 1,508.46 1,403.46 45.16 -
- Write back of Share application Money MVB
- - - - - 45.16
Add: Transfer from Advance share application money
- - - - 1,325.00 -
Add: Transferred from - - 43.00 105.00 33.30 -
F-39
Profit and Loss Account
Less : Accrued Liability of account of employees leave benefits as of 01.04.2006
- - 45.04 - - -
1,506.42 1,506.42 1,506.42 1,508.46 1,403.46 45.16
2.Capital
Restructuring
Account
3,24,93,450 Equity Shares cancelled under Capital Restructuring Scheme
- - - - 3249.34 -
Add: Transfer from Share Premium Account
- - - - 550.00 -
Less: Consideration paid against cancellation of Equity Shares
- - - - 32.49 -
- - - - 3,766.85 -
Less: Amount Transferred to Profit and Loss Account
- - 3,766.85 -
3. Share Premium
Opening balance 4,662.80 4,662.80 - - - -
Received during the year
- - 4,991.61 550.00 -
Less: Rights issue Expenses
150.31
Less: Transferred to Capital Restructuring Account
550.00 -
Less: Minority Interest - - 178.50 - - -
4,662.80 4,662.80 4,662.80 - - -
4. Foreign Exchange
Reserve
Opening Balance (2.44) 3.38 2.85 0.64 - -
Adjustment for the period
41.94 (5.82) 0.53 2.21 0.64 -
39.50 (2.44) 3.38 2.85 0.64 -
5. Profit and Loss
Account
(3,761.53) (774.39) 1,603.78 823.26 303.00 (3,787.27)
2,447.19 5,392.39 7,776.38 2,334.57 1,707.10 (3,742.11)
F-40
Annexure - II STATEMENT OF CONSOLIDATED ASSETS AND LIABILITIES AS RESTATED (Rs in lacs)
PARTICULARS
As at
31.12.2008
As at
31.03.2008
As at
31.03.2007
As at
31.03.2006
As at
31.03.2005
As at
31.03.2004
A. Fixed Assets
Gross Block 29,437.60 28,914.38 24,638.68 18,998.08 15,417.41 16,249.07
Less: Depreciation
8,925.11 7,788.12 5,869.46 4,447.73 3,657.64 3,420.04
Net Block 20,512.49 21,126.26 18,769.22 14,550.35 11,759.77 12,829.03
Goodwill on consolidation
1,996.10 1,961.18 1,578.40 81.61 90.68 -
B. Investments 1.72 1.72 773.58 0.65 0.65 0.71
C. Current Assets,
Loans & Adv
Inventories 7,118.57 7,677.24 5,531.36 4,266.94 3,201.33 3,354.47
Sundry Debtors 7,085.06 5,321.29 4,909.22 3,718.41 2,212.14 2,239.96
Cash and Bank Balances
232.31 901.52 1,254.52 50.67 48.87 85.44
Loans and Advances
4,346.61 4,235.83 4,277.11 1,615.46 946.21 1,953.78
Total 18,782.55 18,135.88 15,972.21 9,651.48 6,408.55 7,633.65
D Liabilities and
Provisions
Secured Loans 18,188.62 18,629.81 16,451.73 11,549.09 5,097.17 7,369.17
Unsecured Loans 8,378.84 6,700.04 3,534.78 3,668.31 3,883.73 5,319.18
Current Liabilities and Provisions
8,795.88 6,724.34 6,046.18 4,672.73 5,504.56 3,657.90
Minority Interest 393.13 569.88 209.97 6.30 14.00 -
Deferred tax liability
132.95 252.33 242.59 - - 90.45
Total 35,889.42 32,876.40 26,485.25 19,896.43 14,499.46 16,436.70
E. Preference
Shares
1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
F. Net Worth
(A+B+C-D)*
4,403.44 7,348.64 9,608.16 3,387.66 2,760.19 3,026.69
G. Represented by
Paid up Share Capital
- Equity Shares 1,816.95 1,816.95 1,816.95 1,038.26 1,038.26 3,287.60
- Advance against Equity
- - - - - 2,875.00
Reserves and Surplus
2,447.19 5,392.39 7,776.38 2,334.57 1,707.10 (3,742.11)
Capital Reserve on Consolidation
139.30 139.30 14.83 14.83 14.83 810.76
Total 4,403.44 7,348.64 9,608.16 3,387.66 2,760.19 3,231.25
H. Misc. Expns
upto the extent
not w.off
204.56
I. Net Worth (G-
H)*
4,403.44 7,348.64 9,608.16 3,387.66 2,760.19 3,026.69
The accompanying significant accounting policies and notes are integral part of this statement.
F-41
Morarjee Textiles Limited Annexure III - Accounting Policies
1. Basis of preparation of financial statement
(a) Basis of Accounting:
The financial statements have been prepared and presented under the historical cost
convention on accrual basis of accounting to comply with the accounting standards prescribed
in the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the
Companies Act, 1956.
(b) Use of estimates
The preparation of financial statements in conformity with generally accepted accounting
principles (GAAP) in India requires Management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities
on the date of financial statements.
2. Fixed Assets
All the fixed assets are stated at historical cost. In respect of Assets acquired under new project/ expansion/ restructuring, interest cost on borrowings and other related expenses during trial runs and up to satisfactory commencement of commercial production have been capitalised to Plant & Machinery and any subsidy given for a specific assets is reduced from cost. The Accounting Standard -10 of the Institute of Chartered Accountants of India has been compiled with in this respect.
3. Depreciation
Depreciation has been provided on straight line method on all fixed assets except Leasehold land at the rates specified in Schedule XIV to the Companies Act, 1956. Premium on lease hold land is amortised over the period of lease. Intangible assets are amortised over their estimated useful life.
4. Lease Accounting
Lease rentals on assets taken on lease are recognized as expense in the statement of Profit and loss account on an accrual basis over the lease term.
5. Inventory
a) Raw materials, work in progress, finished goods, packing materials, stores, spares, traded goods and consumables are carried at the lower of cost and net realisable value. The comparison of cost and net realisable value is made on an item-by-item basis. Damaged, unserviceable and inert stocks are suitably depreciated.
b) In determining cost of raw materials, packing materials, traded goods, stores, spares and consumables, weighted average cost method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all
other costs incurred in bringing the inventory to their present location and condition.
c) Cost of finished goods and work-in-process includes the cost of raw materials, packing materials, an appropriate share of fixed and variable production overheads, excise duty as applicable and other costs incurred in bringing the inventories to their present location and condition. Fixed production overheads are allocated on the basis of normal capacity of production facilities.
6. Investments
Long term investments are carried at cost. Provision for diminution in the value of long term investments is made only if such a decline is not temporary in the opinion of the management. Short
F-42
term investments are carried at lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments. Profit and loss on sale of investments is determined on a first in first out (FIFO) basis.
7. Revenue Recognition
Revenue is recognized only when there is no significant uncertainty as to the measurability / collectability of amount.
8. Transactions in Foreign Exchange
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the
transaction. Exchange differences arising on foreign exchange transactions settled during the year are
recognized in the Profit and loss account of the year.
Monetary assets and liabilities denominated in foreign currencies, which are outstanding as at the year
end are translated at the closing exchange rate and the resultant exchange differences are recognized in
the Profit and loss account.
The premium or discount on forward exchange contracts is recognized over the period of the contracts
in the profit and loss account.
9. Translation of foreign Currency Statements
In translation the financial statements of foreign entities for incorporation in the consolidated financial
statements, the assets and liabilities are translated at the exchange rate prevailing at the balance sheet
date of respective subsidiaries and income and expense items are translated at the average rates of
exchange for the year. The resulting exchange differences are classified as foreign currency translation
reserve.
10. Research and Development
The Revenue Expenditure on Research and Development is charged to Profit & Loss account.
11. Voluntary Retirement Scheme
In case of subsidiary compensation paid on voluntary retirement scheme has been deferred and one half
has been charged to Profit and Loss account.
12. Employee Benefits
(i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
(ii) Post-employment benefits:
(a) Defined contribution plans
Defined contribution plans are, Government administered Provident Fund Scheme and
Government administered Pension Fund Scheme for all employees and Superannuation scheme for eligible employees. The Company’s contribution to defined contribution plans are recognized in the profit and loss account in the financial year to which they relate.
F-43
The interest to the beneficiaries every year is being notified by the Government.
(b) Defined benefit plans
(i) Defined benefit gratuity plan
The Company operates a defined benefit gratuity plan for employees.
The cost of providing defined benefits is determined using the Projected Unit Credit Method with actuarial valuations being carried out at each balance sheet date. Past service cost is recognized immediately to the extent that the benefits are already vested, else is amortised on a straight-line basis over the average period until the amended benefits become vested.
The defined benefit obligations recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized actuarial gains and losses and unrecognized past service costs, and as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative defined benefit obligations resulting from this calculation) is recognized representing the unrecognized past service cost plus the present value of available refunds and reductions in future contributions to the plan.
(iii) Other long term employee benefits
Entitlements to annual leave and sick leave are recognized when they accrue to employees. Sick leave can only be availed while annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulation of leaves. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit Method with actuarial valuations being carried out at each balance sheet date. The Accounting Standard (AS) 15, “Employee Benefits (revised 2005)”, issued by the Council of Institute of Chartered Accountants of India, originally comes into effect in respect of the accounting periods commencing on or after April 01, 2006 and was mandatory in nature from that date. Consequently, the above standard becomes applicable to the Group for any period on or after the effective date. However, subsequently the Council of the Institute has deferred the mandatory applicability of the standard for all periods on and after 7 December 2007. The Group adopted the Accounting Standard (AS) 15, “Employee Benefits (revised 2005)” for the first time in preparing the financial statements for the year ended 31st March ,2007. For the purpose of the restated statements, AS-15 (revised) has not been applied for the years ended March 31, 2006, 2005 and 2004 as the same was not applicable in those years. The restated financial statements for those years have been prepared in compliance with the erstwhile Accounting Standard (AS) 15. Consequently significant impact, if any, of applicability of the new standard has not been recognized in the restated statements for the years ended March 31, 2006, 2005 and 2004.
13. Goodwill Goodwill is written off over a period of ten years. 14. Provision for Taxation
Income tax expense comprises of current tax (i.e. amount of tax for the period determined in
accordance with the Income Tax Act, 1961), deferred tax charge or credit (reflecting the tax effects of
timing differences between accounting income and taxable income for the period) and fringe benefit
tax (computed in accordance with the relevant provisions of the Income tax Act, 1961).
The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized
using the tax rates that have been enacted or substantively enacted by the balance sheet date.
F-44
Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be
realised in future; however, where there is unabsorbed depreciation or carry forward loss under taxation
laws, deferred tax assets are recognized only if there is a virtual certainty of realisation of such assets.
Deferred tax assets are reviewed as at each balance sheet date to reassess realisation.
15. Provisions and Contingencies
The company creates a provision when there exists a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.
16. Earnings per share
The basic and diluted earnings per share (“EPS”) is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.
17. Proposed Dividend Dividend recommended by the Board of Directors is provided for in the accounts, pending approval at the Annual General Meeting
F-45
Annexure - IV NOTES TO THE CONSOLIDATED SUMMARY STATEMENT (Rs in lacs)
1
Contingent liability in
respect of
As at
31.12.08
As at
31.03.08
As at
31.03.07
As at
31.03.06
As at
31.03.05
As at
31.03.04
a)
Estimated amount of contracts Remaining to be executed on Capital Account
78.52 56.86 661.61 572.56 719.44 59.06
b) -Disputed liability with Central Excise Authorities
1,533.52 1,497.61 1,508.17 1,472.99 1,614.89 2,149.85
-Disputed liability with Income Tax Deptt.
1,455.49 1,455.49 - - - -
c) Bank Guarantees 373.71 223.07 45.37 58.77 83.00 78.90
d) Corporate Guarantee 5,450.00 3,750.00 1,850.00 - - -
e) Bill Discounted 173.76 354.55 244.99 151.97 102.49 179.16
f) Dividend to Preference Share Holders
102.37 58.50 - - - 562.50
g)
Disputed demands pending with various appellate authorities on account of sales tax
- - - - - 6.09
2 Open Letter of Credit 585.19 1,405.57 1,561.65 637.79 582.69 248.18
3 CAPITAL STRUCTURE
c. IN CASE OF PARENT COMPANY -FINANCIAL STRUCTURE - RATIONALIZED IN PREVIOUS YEAR 2004-05
With a view to rationalize the financial structure of the Company, during the year 2004-05, 1,00,00,000 equity shares of Rs.10/- each have been issued and allotted at a premium of Rs. 5.50 per share, whereby the paid up equity share capital of the company has increased by Rs.1000.00 lacs and share premium account credited by Rs.550 lacs. For this purpose the authorized share capital has been increased from Rs.40 crores to Rs 43 crores. The terms of the 10,00,000 redeemable cumulative preference shares of Rs. 100/- each have also been modified by revising the rate of dividend from 11.25% to 5% and extending the redemption period by making the preference shares redeemable any time after 15th November, 2014 but before 15th November ,2019. In view of the modification of Rights attached to Preference Shares, the said shares shall be non cumulative upto 30.06.04 and shall carry cumulative dividend of 5% per annum with effect from 01.07.2004. The advance against equity of Rs.2875.00 lacs has been settled by making payment of Rs.1550.00 lacs and the balance Rs.1325.00 lacs has been cancelled and transferred to General Reserve.
d. R EDUCTION OF SHARE CAPITAL - SETTING OFF CARRIED FORWARD LOSSES in previous year 2004-05. During the year 2004-05 in continuation of the exercise to rationalize the company's financial structure, the Board of Directors had formulated a scheme u/s 391 and section100 read with section78 of the Companies Act,1956 for purchase by the company of its own equity shares from the company's shareholders at minimal token consideration of 10p (Ten Paise) per share and then cancellation of such purchased shares resulting in reduction of equity share capital and the amount in share premium account of the Company correspondingly setting off the company's accumulated losses. The equity shareholders of the company had offered for purchase by the company 3,24,93,450 equity shares. The scheme has been sanctioned by the Hon’ble Bombay High Court and upon giving effect to the scheme,(a)the equity share capital of the company Rs.4287.60 lacs stands reduced by Rs.3249.35 lacs to Rs. 1038.26 lacs. The carried forward Losses of Rs. 3813.53 lacs as at 31.03.04 stands set off against (a) the reduction of share capital of Rs.3216.86 lacs (net of consideration) , and (b) the share premium of Rs. 550.00 lacs leaving balance loss of Rs.46.68 lacs.
F-46
(Rs. In Lacs) 4 Employee Benefits : Unfunded
Gratuity Leave Encashment
Amount Recognised in Balance sheet 31.03.2008 31.03.2008
Present Value of Unfunded Obligation 160.10 97.40
Present Value of Unfunded Obligations Unrecognised Past Service Cost
0.00 0.00
Amount not recognised as Asset, because of the limit in Para 59(b)
0.00 0.00
Amount in Balance Sheet
Liability 160.10 97.40
Assets 0.00 0.00
Net Liability 160.10 97.40
Expense Recognised in the Statement of Profit & Loss
Opening Defined Benefit Obligation less benefits Paid
0.00 0.00
Current Service Cost 38.69 53.70
Interest Cost on Defined Benefit Obligation 10.09 7.39
Expected Return on Plan Assets 0.00 0.00
Net Actuarial Losses / (Gains) Recognised in Year
23.02 5.77
Past Service Cost 0.00 0.00
Effect of the limit in Para 59(a) 0.00 0.00
Losses / (Gains) on "Curtailments and Settlements"
(11.27) 0.00
Total Included in "Employee Benefit Expense" 60.53 66.86
Change in Define Benefit Obligation
Opening Defined Benefit Obligation 119.95 76.79
Current Service Cost 38.69 53.70
Interest Cost 10.09 7.39
Actuarial Losses / (Gain) 23.02 5.77
Liabilities Extinguised on Curtailment (11.27) 0.00
Liabilities Extinguised on Settlements 0.00 0.00
Liabilities Assumed on Acquisition 0.00 0.00
Exchange Difference on Foreign Plans 0.00 0.00
Benefits Paid (20.38) (46.26)
Closing Defined Benefit Obligation 160.10 97.39
Note: I. The estimates of future salary increases, considered in actuarial valuation, takes into account the
inflation, seniority, promotion and other relevant factors. II. For the period ended 31.12.2008 liability for gratuity and leave encashment is arrived at based on
internal calculation of the same and actual liability for the year ended 31.03.2009 will be worked out based on actuarial valuation.
III. The Accounting Standard (AS) 15, “Employee Benefits (revised 2005)”, issued by the Council of
Institute of Chartered Accountants of India, originally comes into effect in respect of the accounting periods commencing on or after April 01, 2006 and was mandatory in nature from that date. Consequently, the above standard becomes applicable to the Company for any period on or after the effective date. However, subsequently the Council of the Institute has deferred the mandatory applicability of the standard for all periods on and after 7 December 2007. The Company adopted the Accounting Standard (AS) 15, “Employee Benefits (revised 2005)” for the first time in preparing the
F-47
financial statements for the year ended 31st March,2007. For the purpose of the restated statements, AS-15 (revised) has not been applied for the years ended March 31, 2006, 2005 and 2004 as the same was not applicable in those years. The restated financial statements for those years have been prepared in compliance with the erstwhile Accounting Standard (AS) 15. Consequently significant impact, if any, of applicability of the news standard has not been recognized in the restated statements for the years ended March 31, 2006, 2005 and 2004.
5. As required by Accounting Standard - 18 "Related Parties Disclosure" issued by The Institute of Chartered Accountants of India, related parties and transaction with related parties are as follows:
A. Summary of the transactions with the related parties as follows.
(Rs in Lacs)
Nature of Transaction
For the
nine
month
ended on for the year ended on
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
Purchases of Goods/Services
Controlling Companies - - - - - 1,066.90
Associates Companies 110.16 142.24 107.38 56.36 76.25 62.32
Total 110.16 142.24 107.38 56.36 76.25 1,129.22
Sales of Goods
Controlling Companies - - - - - 409.95
Associates Companies - - - - 54.66 14.93
Total - - - - 54.66 424.88
Loan Deposit/Received from
Controlling Companies - - - - - 1,677.53
Associates Companies - - - - 2,000.00 27.00
Total - - - - 2,000.00 1,704.53
Loan given / Repaid to related
parties
Controlling Companies - - - - - 1,764.00
Associates Companies - - - 2,000.00 4.83 882.99
Total - - - 2,000.00 4.83 2,646.99
Loan repaid by related party
Associates Companies - - - - 560.00 -
Total - - - - 560.00 -
Investment in Equity Shares and
Application Money
Associates Companies - - - - - 64.11
Key Management Personnel - - - - 5.49 -
Total - - - - 5.49 64.11
Buy Back of Equity Shares
Controlling Companies - - - - 13.88 -
Associates Companies - - - - 18.61 -
Total - - - - 32.49 -
Purchase of Textile Undertaking
Controlling Companies - - - - - 432.00
Associates Companies - - - - - -
Total - - - - 432.00
Interest paid
Controlling Companies - - - - - -
Associates Companies - - - - - 23.11
Total - - - - - 23.11
F-48
Interest Received
Controlling Companies - - - - - -
Associates Companies - - - - - 9.41
Total - - - - - 9.41
Remuneration to
Key Management Personnel 95.81 119.94 115.09 103.60 85.39 68.83
Total 95.81 119.94 115.09 103.60 85.39 68.83
Rent paid
Associates Companies 83.76 111.67
Relatives of key management personnel
9.00 12.00 7.20 13.40 13.80 -
Total 92.76 123.67 7.20 13.40 13.80 -
Outstanding Balance
Outstanding Payable
Joint Ventures
Associates Companies 339.11 197.60 61.60 12.36 2,008.56 545.92
Total 339.11 197.60 61.60 12.36 2,008.56 545.92
Outstanding Receivable
Joint Ventures
Associates Companies 0.73 0.73 0.73 0.73 34.45 564.07
Total 0.73 0.73 0.73 0.73 34.45 564.07
F-49
B. List of Related Parties with whom transaction have taken place during the period / year.
Refer Annexure B1
For the nine
month ended on For the year ended on
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
a) Controlling
Companies
- - - - - Morarjee Goculdas Spg & Wvg Co. Ltd.
b) Associates
Companies
Ashok Piramal Management Corporation Ltd.
Ashok Piramal Management Corporation Ltd.
Ashok Piramal Management Corporation Ltd.
Ashok Piramal Management Corporation Ltd.
- -
Peninsula Land Limited
Peninsula Land Limited
Peninsula Land Limited
Peninsula Land Limited(Formerly Morarjee Goculdas spg. & Wvg. Co. Ltd.)
Morarjee Realities Ltd part of the year cotrolling company(Formerly-Morarjee Goculdas Spg & Wvg Co Ltd)
- Piramal Healthcare Ltd.
- - - -
Peninsula Facility Management Services Pvt Ltd.
- - - - -
- - - Gujarat Glass Ltd
Gujarat Glass Ltd Gujarat Glass Ltd
Morarjee Goculdas Spg & Wvg pvt. Ltd. (Formerly-Morarjee Legler Pvt Ltd.)
Morarjee Goculdas Spg & Wvg pvt. Ltd. (Formerly-Morarjee Legler Pvt Ltd.)
Morarjee Goculdas Spg & Wvg pvt. Ltd. (Formerly-Morarjee Legler Pvt Ltd.)
Morarjee Goculdas Spg & Wvg pvt. Ltd. (Formerly-Morarjee Legler Pvt Ltd.)
Morarjee Legler Pvt. Ltd.
Morarjee Legler Pvt. Ltd.
- - - Thundercloud Technologies (India) Pvt. Ltd.
Thundercloud Technologies (India) Pvt. Ltd.
Thundercloud Technologies (India) Pvt. Ltd.
Just Exports Pvt Ltd.
Just Exports Pvt Ltd.
Just Exports Pvt Ltd.
- - -
- - - Nicholas Piramal India Ltd.
Nicholas Piramal India Ltd.
Morarjee Castiglioni (I) Pvt.Ltd
F-50
- - - Piramal Enterprises Ltd.
Piramal Enterprises Ltd.
Morarjee Goculdas Spg & Wvg Co. Ltd.
- - - Miranda Tools Miranda Tools
- - - Piramal Health Care Pvt. Ltd.
Piramal Health Care Pvt. Ltd.
G.P. Electronics Ltd.
- - - Piramyd Retail & Merchandising Pvt. Ltd.
Piramyd Retail & Merchandising Pvt. Ltd.
Swastik Safe Deposits & Investment Pvt. Ltd.
- - - - GP Electronics Ltd
BMK Laboratories Pvt. Ltd.
- - - - Surewin Trading Co. Pvt. Ltd.
Nozaki Finance & Investments Pvt. Ltd.
- - - - Highzone Mercantile Co. Pvt. Ltd.
-
c ) Key
Management
Personnel
Mr. Harshvardhan Piramal
Mr.Harshvardhan Piramal
Mr.Harshvardhan Piramal
Mr.Harshvardhan Piramal
Mr. Rajeev A. Piramal
Mr. Ajay Piramal
Mr. P.K. Gothi Mr. P.K. Gothi
Mr. P.K. Gothi
Mr. P.K. Gothi Mr. Harshvardhan Piramal
Mrs Urvi A. Piramal
Mr R. Krishnakumar
Mr R. Krishnakumar
Mr R. Krishnakumar
Mr R. Krishnakumar
Mr. P.K. Gothi Mr Rajeev A. Piramal
Mr. Pradeep Modi
Dr.Giuseppe Callegari
Dr.Giuseppe Callegari
Dr.Giuseppe Callegari
Mr. Robert Lobo (Part of the Year)
Mr. P.K. Gothi
Mr. Pradeep Modi
Mr. Pradeep Modi
Mr. S.M. Kulkarni
Mr. Harshvardhan Piramal
Mr. S.N. Somani Mr. N. Santhanam
Dr. Giuseppe Callegari
Mr. Robert Lobo
Mr. R.Krishnakumar
Mr. S.M. Kulkarni
Mr. S.N. Somani
F-51
d) Relatives of
Key
Management
Personnel
Mrs. Jayashree Krishnakumar
Mrs. Jayashree Krishnakumar
Mrs. Bhakti P. Gothi
Mrs. Bhakti P. Gothi
6. Segment wise Revenue, Results and Capital Employed
(Rs in Lacs)
For the
nine
month
ended on for the year ended on
Nature of Transaction 31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
1 Segment Revenue
Textiles - - - 18,324.45 14,814.28 10,287.98
Auto Ancillary - - - - 2,462.33 2,235.09
- - - 18,324.45 17,276.61 12,523.07
2 Segment Result
Textiles - - - 1,684.73 1,138.92 519.97
Auto Ancillary - - - 126.08 245.43
- - - 1,684.73 1,265.00 765.40
Less: (1) Financial Expenses
- - - 653.19 591.64 807.37
(2) Other unallocable expenditure net off unallocable income
- - - (9.83) (95.26) (48.23)
(3)Prior Period / Exceptional items
- - - 2.26 204.56 205.48
(4) Income taxes - - - 57.17 (18.52)
- - - 981.94 582.58 (199.22)
3 Other Information
Segment Assets
Textiles - - - 24,284.09 18,259.65 17,704.33
Auto Ancillary - - - - - 2,739.26
Unallocated Corporate Assets
- - - - - -
- - - 24,284.09 18,259.65 20,443.59
Segment Liabilities
Textiles - - - 19,879.50 14,493.94 15,247.49
Auto Ancillary - - - - - 1,093.79
Unallocated Corporate Liabilities
- - - - - -
- - - 19,879.50 14,493.94 16,341.28
Capital Expenditure
Textiles - - - 3,695.58 1,475.91 3,321.37
Auto Ancillary - - - - 42.69 73.62
Unallocated Corporate Liabilities
- - - - - -
- - - 3,695.58 1,518.60 3,394.99
Depreciation
Textiles - - - 836.28 716.96 561.04
Auto Ancillary - - - - 105.69 90.81
- - - 836.28 822.65 651.85
F-52
7. As required by Accounting Standard - 20 issued by the Institute of Chartered Accountants of India, the reporting in respect of Earning Per Share (EPS) Basic & diluted is as follows (Rs. In lacs)
8. As per the disclosure requirements of Accounting Standard 22 - "accounting for Taxes on Income", the following information is provided.
Non-cash expenses other than depreciation
- - - 9.07 - 110.56
- - - 9.07 - 110.56
For the
nine
month
period
ended on For the year ended on
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
Profit/(Loss) after tax (3,142.49) (2,401.85) 1,226.55 984.20 582.58 (198.30)
Add: Share of Minority Interest Adjusted
155.33 23.68 (25.17) 7.70 - -
Less: Prior Period Expenses 0.50 13.67 5.52 -
Less: Dividend on Preference Shares & Taxes
43.87 58.50 58.50 57.01 42.76 -
Profit/(Loss) available to equity shareholders
(3,031.03) (2,436.67) 1,142.38 921.22 534.30 (198.30)
Weighted average no. of equity shares for basic & Diluted EPS
18,169,463 18,169,463 13,561,317 10,382,550 26,837,062 32,876,000
Nominal Value of Equity Shares
10.00 10.00 10.00 10.00 10.00 10.00
Basic Earning Per Equity Shares ( In Rs) (Basic & Diluted)
(16.68)
(13.41)
8.42
8.87
1.99
(0.60)
For the
nine
month
Period
ended on For the year ended on
Particulars
Changes
during FY
2008-09
upto
31.12.2008 31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
Deferred Tax Liability
Accelerated Depreciation
77.73 2852.61 2774.88 2667.16 2134.48 1906.28 1801.83
Total 77.73 2852.61 2774.88 2667.16 2134.48 1906.28 1801.83
Deferred Tax Assets
Gratuity / PL -24.83 15.42 40.25 0.92 - - -
Accelerated Amortisations
- - - - 0.41 0.83 -1.32
Capital Loss 0.00 3.57 3.57
Unabsorbed Depreciation
16.24 3085.21 3068.97 2546.53 2580.05 2552.42 2686.78
B/f Business Losses
1192.67 1990.53 797.86 326.52 348.23 495.74 563.12
Total 1184.08 5094.73 3910.65 2873.97 2928.69 3048.99 3248.58
F-53
(Rs. In lacs) Note: Deferred Tax Liability during the period ended 31st December, 2008 is amounting to Rs.2852.61 lacs and net deferred tax assets Rs.5094.73 lacs. I In case of the parent company the accumulated deferred tax assets of the company not taken in accounts
amounting to Rs.1614.48 lacs (Previous Year Rs.1023.97 lacs) as per conservative policy of the company
II Working for Subsidiary
The accumulated deferred tax assets of the company have not been taken in accounts amounting to Rs.752.46 lacs for the period ended 31.12.2008
III Working for Joint Venture
The accumulated deferred tax assets of the company not taken in accounts amounting to Rs.8.13 Lacs for the period ended 31.12.2008.
9 In case of parent company during the Financial Year 2003-04 balance in deferred revenue expenditure has been fully charged to Profit & Loss account which has resulted in increase of loss by Rs 30.64 Lacs.
10 The parent company and one of the subsidiary company has taken vehicles on an operating basis for a
period of 60 months. The lease rentals are payable as per the lease agreements.
Future minimum lease rentals payable as per agreement: (Rs in Lacs)
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
a) Not later than one year
54.71 57.12 31.46 27.54 16.78 -
b) Later than one year but not later than five years
60.35 97.22 58.65 71.43 60.38 -
c) Later than five years - - -
115.06 154.34 90.11 98.97 77.16 -
Lease payment recognised in profit & Loss account
53.72 37.10 28.47 24.51 10.90 -
11 Employees Stock Option Plan
Till date no options under the Employees Stock Option Plan has been exercised by any of the employees. Considering the present market price of the Equity Share of the company, it is unlikely that the options will be exercised in future also and accordingly the options granted under the Plan are not treated as potential equity shares as defined in Accounting Standard -20 “Earning Per Share” and no impact of dilution on EPS is considered
12. Details of subsidiary and joint venture consolidated
Particular Status
Country of
incorporation
% of voting
power
1
The PMP Components Pvt. Ltd ( upto previous year 2004-2005 )
Wholly owned India 100
2 Integra Apparels & Textiles Pvt. Ltd. Subsidiary India 89
3 Pranit Consultants Pvt Ltd. Sub -Subsidiary India 100
4 Fabritex Exports Pvt Ltd. Sub -Subsidiary India 100
Net Deferred Tax Assets
1,106.35 2242.12 1135.77 206.81 794.21 1142.71 1446.75
F-54
5 Morarjee International SRL Wholly owned Italy 100
6 Men’s Club s.p.a. Subsidiary Italy 67
7 Just Textiles Ltd. Joint venture India 49
8 Morarjee Castiglioni (i) Pvt. Ltd Joint venture India 50
13 One of the subsidiary company has capitalized following expenses as preoperative expenses due to major expansion.
(Rs in lacs)
For the nine
month
period
ended on For the year ended on
Particulars 31.12.2008 31.03.2008 31.03.2007 31.03.2006
Wages & Salary 79.68 223.94 83.29 25.76
Legal & Professional 0.00 43.72 20.57 7.21
Other exp. 41.79 25.28 23.07 1.07
Rent - 90.81 18.41 5.16
Interest - 38.94 10.05 4.70
Consumables - 12.22 8.01 3.53
Entry Tax - 10.72 4.71 6.09
Power & Fuel 12.39 - - -
Trial Production - 21.09 19.61 38.79
Sample sale - - - (1.35)
Electricity - 11.46 12.64 1.13
133.86 478.18 200.36 92.09
14. One of the Foreign subsidiary of the company has goodwill appearing in the books of accounts which is being depreciated at the rate of 5.5% p.a. No Adjustments in this regard is made in the consolidated statement of the company, as it is according to the generally accepted accounting practices in that country. The impact of year wise depreciation provided in the books on the consolidated profit & loss of the company are as follows:
For the year ended 31.03.2008 Rs. 11.38 Lacs
For the Period ended 31.12.2008 Rs. 10.58 Lacs
15. INVESTMENTS: During the previous year from 2004-05 , 2005-06 , 2006-07, 2007-08 and 2008-09 (upto Dec.08) company has entered into following transactions. i) Investment in subsidiary company i.e. PMP Components Pvt. Ltd. was sold for Rs.405 lacs in financial
year 2004-2005. ii) Purchased following Equity shares from Integra Apparels and Textiles Pvt Ltd. as detailed below:
Nos
Face Value
(In Rs.)
Premium
(In Rs.)
Total Per
Share
(In Rs.)
Total Amt
(In Rs. Lacs)
Year of
purchase
4,25,000 10.00 30.00 40.00 170.00 2004-2005
1,25,000 10.00 1,190.00 1,200.00 1,500.00 2006-2007
71,50,000 (Bonus Shares) 10.00 - - - 2007-2008
98,000 10.00 8.00 18.00 17.64 2008-2009
7798000 Equity shares of Rs.10 each fully paid is a 89% of holding in Integra Apparels & Textiles Pvt Ltd as of 31.12.2008
F-55
iii) Established in 2004-05 a wholly owned subsidiary Morarjee International srl in Italy with paid up capital of 10000 share of Euro 1 per share each amounting to Euro 10000.
iv) In 2006-07 purchased 10,00,000 (50% Holding) Equity Shares of EURO 1 each fully paid up of Mens
Club s.p.a. a Italiy company having paid up capital of EURO 2 Million.
-In 2006-07 one of the Foreign Subsidiary company also Morarjee International s.r.l. Italy purchased 1,70,000 (17% holding) Equity share of EURO 1 each fully paid up of Men’s Club s.p.a., Italy.
-In 2007-08 the parent company purchased 20000 Equity Shares of EURO 1 each fully paid up Equity shares of Men’s Club. S.p.a. from Morarjee International s.r.l. Italy.
v) In 2007-08 one of the subsidiary company Integra Apparels & Textiles Pvt Ltd. acquired total holding
of 48,09,720 Equity Shares of Rs.10/- each of Pranit Consultants Pvt. Ltd. 16. Principles of Consolidation: a) The Consolidated Financial statements are based on the audited financial statements of the subsidiary
for the period ended 31st December, 2008 except for Men’s Club s.p.a. which is for the period January 2008 to September 2008. No significant transactions have occurred after the Balance Sheet date of subsidiary.
b) The Financial statements of the company and its subsidiary have been combined to the extent possible on a line by line basis by adding together like items of assets, liabilities, income and expenses. All significant intra group balances and transactions have been eliminated on consolidation.
c) The consolidated financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the company's financial statements.
d) The goodwill / capital reserve on consolidation has been recognised in the consolidated financial statement.
e) Minority interest in the net income and net assets of the consolidated financial statements are computed and shown separately.
17 Impact on account of adjustments required by paragraph 6.10.2.7(b) of the SEBI Guidelines
(Rs in lacs)
For the nine
month
period
ended on For the year ended on
Nature of Transaction 31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
Net Profit & (Loss) Account as per audited accounts
(2,987.58) (2,378.67) 1,184.89 989.64 582.58 (199.22)
Add : Prior Period Expenses
0.44 0.50 16.49 2.26 0.00 0.92
Profit & (Loss) Before Prior Period adjustments
(2,987.14) (2,378.17) 1,201.38 991.90 582.58 (198.30)
Material Amounts impacting other financials years
- - 0.50 13.67 5.52 -
(See note below)
Adjusted Profit / (Loss) (2,987.14) (2,378.17) 1,200.88 978.23 577.06 (198.30)
Note: Material previous year adjustments comprise of expenses pertaining to previous years which have been adjusted in the years to which they relate. 18 Figures of period ended 31.12.2008 is not comparable with previous all financial years as the period under review is for nine months. 19 Previous year's figures have been regrouped wherever necessary.
F-56
Annexure - V STATEMENT OF ACCOUNTING RATIOS (In Rs.)
For the year ended on
Sl
No Particulars
For the nine
month
period
ended on 31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
1 Earning Per Share (Basic & Diluted) (Before Extra Ordinary Items)
(16.68) (13.41) 8.42 8.87 1.99 (0.60)
2 Earning Per Share (Basic & Diluted) (After Extra Ordinary Items)
(16.68) (13.41) 8.42 8.87 1.99 (0.60)
3 Return on Net Worth (%) (Before Extra Ordinary Items)
-67.84% -32.36% 12.50% 28.88% 28.30% 0.21%
4 Return on Net Worth (%) (After Extra Ordinary Items)
-67.84% -32.36% 12.50% 28.88% 20.91% -6.55%
5 Net Assets Value per Share 13.25 29.65 59.21 31.84 25.71 9.21
Notes: 1. Earning Per Share :Adjusted Profit after tax before extra ordinary items/No of Shares (Before Extra Ordinary Items) 2. Earning Per Share (After Extra Ordinary Items) :Adjusted Profit after tax after extra ordinary items/No of Shares 3. Return on Net Worth (%) :Adjusted Profit after tax before extra ordinary items/Net Worth (Before Extra Ordinary Items) 4. Return on Net Worth (%) : Adjusted Profit after tax after extra ordinary items/Net Worth (After Extra Ordinary Items) 5. Net Assets Value per Share :Net Worth excluding Preference Shares Capital/No. of Equity Shares
F-57
ANNEXURE – VI STATEMENT OF DIVIDEND DECLARED
Preference Shares The Board of Directors has recommended dividend for Preference Shares of Rs.100/- each as per table below.
Equity Shares The Board of Directors has recommended dividend for Equity Shares of Rs. 10/ each as per table below.
Equity Shares Preference Shares
Period No of
Shares
Dividend
%
Amount
(In Rs.
Lacs) Div.Tax
No of
Shares
Dividend
%
Amount
(In Rs.
Lacs) Div.Tax
31st March 2007 1,81,69,463 15% 272.54 46.32 10,00,000 5% 50.00 8.5
31st March 2006 1,03,82,550 25% 259.56 36.40 10,00,000 5% 50.00 7.01
31st March 2005*
1,03,82,550 15% 155.74 21.84 10,00,000 5% 37.50 5.26
* Period from 01.07.2004 to 31.03.2005 for Preference Shares Note: No Dividend has been declared for 2003-04 and 2007-08 and therefore dividend payable to Preference Shareholders has been shown under contingent liability.
F-58
ANNEXURE VII - TAX SHELTER STATEMENT
I. Working for parent company
(Rs in lacs)
For the nine
month period ended on For the year ended on
30.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
Book Profit / (Loss) (2,160.16) (2,253.21) 867.08 1,080.78 664.23 (224.55)
Tax at Notional Rate (on Book Profit)
Nil Nil 291.86 363.79 243.06 Nil
Adjustments (102.15) (234.94) (313.70) (651.55) (580.53) (381.50)
- Diff between Tax Dep & Book Dep
(294.86) (407.36) (408.83) (651.55) (597.90) (504.11)
- Other adjustments 192.71 172.42 95.14 - 17.37 122.62
- Set off of B/fd business loss
- - 553.39 457.73 83.70 -
Net adjustment (2,160.16) (2,253.21) 867.08 1,080.78 664.23 (224.55)
Tax Saving on Net adjustment
N.A N.A 291.86 363.79 243.06 N.A
Total Taxation N.A N.A - - N.A N.A
Refer Note 2
Ref Note No 2
Ref Note No 4
Ref Note No 3
Ref Note No 1
Ref Note No 2
Note: 1. For the year ended 31.03.2005, as per section 115 JB of the Income Tax Act, 1961, ("the Act"), the
Company has set off its book profit of Rs. 6,64,22,954/- against brought forward unabsorbed depreciation amounting to Rs. 10,46,88,765/- and therefore Minimum Alternate Tax Liability does not arise.
2. In the financial year ending on 31.03.2004, 31.3.2008 and for nine month ended 31.12.2008 the company has incurred losses. Hence there was no saving on account of Income Tax in these years.
3. For the year ended 31.03.2006, as per section 115 JB of the Income -tax Act, 1961('the Act"), tax paid
as per provision of MAT is Rs.79.01 lacs. As per section 115 JAA of the Act, Company is entitled to take MAT credit in next 7 assessment years, and accordingly the Company has accounted for MAT credit entitlement as receivable and consequently there is no impact of MAT provision on the profit of the captioned financial year.
4. For the year ended 31.03.2007, as per section 115 JB of the Income -tax Act, 1961('the Act"), tax paid
as per provision of MAT is Rs.97.29 lacs. As per section 115 JAA of the Act, Company is entitled to take MAT credit in next 7 assessment years, and accordingly the Company has accounted for MAT credit entitlement as receivable and consequently there is no there is no impact of MAT provision on the profit of the captioned financial year.
5. Total future tax benefit i.e. deferred tax assets amounting to Rs 1614.48 Lacs as on 31.12.2008 has
not recognised in the books of accounts, based on consideration of prudence.
II. Working for Joint Venture The accumulated deferred tax assets of joint venture company Morarjee Castiglioni India Pvt Ltd. not taken in accounts amounting to Rs.8.13 lacs for the period ended 31.12.2008. III. Working for Subsidiary
The accumulated deferred tax assets of subsidiary companies Integra Apparels & Textiles Pvt Ltd together and its subsidiary not taken to accounts amounting to Rs.752.46 lacs for the period ended 31.12.2008.
F-59
ANNEXURE - VIII AGEWISE ANALYSIS OF SUNDRY DEBTORS
(Rs. In Lacs)
Sundry Debtors outstanding for
As on More than 180 days Less than 180 days Total Sundry Debtors
31st December, 2008 477.14 6,607.92 7,085.06
31st March, 2008 360.49 4,960.8 5,321.29
31st March, 2007 309.48 4,599.74 4,909.22
31st March, 2006 320.18 3,398.23 3,718.41
31st March, 2005 200.38 2,011.76 2,212.14
31st March, 2004 189.47 2,050.49 2,239.96
ANNEXURE - IX ANALYSIS OF LOANS AND ADVANCES
(Rs in lacs)
As at 31.12.2008
As at 31.03.2008
As at 31.03.2007
As at 31.03.2006
As at 31.03.2005
As at 31.03.2004
Advances Recoverable in Cash or Kind
2464.73 2,067.03 1,540.22 565.07 315.68 453.38
Deposit and Other Advances
767.10 744.73 552.66 273.33 158.30 231.12
Advances to staff 49.68 39.29 37.74 37.72 67.25 43.08
Deposit with excise, sales tax authorities
795.26 1,114.94 1,165.07 647.66 404.25 661.87
Deposit with Public Bodies
0 - - - - 3.65
MAT Credit Entitlement 269.11 269.11 243.66 90.95 - -
Corporate Deposit - - 737.03 - - -
Loans to Company in which Directors are interested
0.73 0.73 0.73 0.73 0.73 560.68
(Morarjee Goculdas Spg & Wvg Pvt. Ltd. Formerly-Morarjee Legler Pvt. Ltd.)
- - - - - -
4,346.61 4,235.83 4,277.11 1,615.46 946.21 1,953.78
F-60
Annexure - X
CAPITALISATION STATEMENT
(Rs in lacs)
As at
31.12.2008 31.12.2008
PARTICULARS AMOUNT
BORROWING:
Short Term Debt 9,004.82
Long Term Debt 17,562.64
Preference shares 1,000.00
Total Debts 27,567.46
SHAREHOLDERS FUND
Share Capital (Paid up Capital) 1,816.95
General Reserve 1,506.42
Share Premium 4,662.80
Foreign exchange Reserve 39.50
Profit & Loss Account (3,761.53) 2,447.19
Total Shareholders Fund 4,264.14
TOTAL CAPITALISATION 31,831.60
DEBT EQUITY RATIO 4.35 4.35 : 1
F-61
Annexure XI - TERMS OF LOANS
TERMS OF LOANS AND ASSETS CHARGED AS SECURITY
(Rs. In Lacs)
Particulars
As at 31.12.2008
As at 31.03.2008
As at 31.03.2007
As at 31.03.2006
As at 31.03.2005
As at 31.03.2004
A) Secured Loans
TERM LOAN FROM
FINANCIAL INSTITUTION : - Repayable in half yearly equal installments of Rs.31.25 lacs ending on November 2010 (Secured by way of Equitable Mortgage on Company's Immovable Properties at Butibori, Nagpur and by a charge created on Co's moveable assets including its moveable plant and Machinery, pares, tools and accessories and other moveable both present and future, subject to prior charge of Company's Bankers)
125.00 187.50 250.00 312.50 375.00 2,808.40
TERM LOAN FROM BANK : - Repayable in quarterly equal instalments of Rs.323.66 lacs from Sept 09 and Rs. 100 lacs from Feb 09 ending on Sept 2012 , Sept 2013 and on Nov 2015 respectively. (Secured by a paripassu charge on the movable assets including its moveable plant and machinery, spare, tools and accessories secured by a parripassu equitable mortgage on company's immovable properties at Butibori, Nagpur)
6,675.50 6,925.50 7,925.50 6,000.00 1,500.00 -
-Repayable in quarterly equal instalments of Rs.47.06 lacs and Rs.35.94 lacs from April 2009 and Rs.37.50 lacs from Feb 2010 ending on Jan 2011, Dec 2016 and on Oct 2017 respectively. (Secured by first and exclusive charge on the present and future movable and immovable fixed assets of the company.) 2,206.68 2,135.47 931.94 800.00 - -
F-62
- Repayable in quarterly equal instalments of Rs.49 lacs from Sept.09 and Rs.35 lacs from Dec 09 ending on Dec. 2011. (Secured against hypothecation of assets, stocks, book debts, vehicles and personal guarantee by directors) 409.06 513.61 736.20 - - -
CASH CREDIT/PACKING CREDIT (Secured by way of hypothecation of Current Assets of the Co. viz.,Raw Materials, Stock- In - Process, Finished Goods, consuambles stock and spares , book debts and other moveable both present and future and secured by pari passu second charge created on Co's moveable assets including its moveable plant and machinery, spares, tools and accessories and other moveable, both present and future.)
8,772.38 8,867.73 6,608.09 4,436.59 3,222.17 4,560.77
TOTAL 18,188.62 18,629.81 16,451.73 11,549.09 5,097.17 7,369.17
NOTE: Repayment Schedule given above is applicable only for 31.12.2008
F-63
ANNEXURE - XII ANALYSIS OF OUTSTANDING UNSECURED LOANS TAKEN BY THE
COMPANY
(Rs in lacs)
Period 31.12.2008 Rate of Int Repayment Schedule
1 FROM : CORPORATE BODIES
ACT Fininvest Ltd. (Formerly - Ashok Cutting Tools Ltd.)
8,146.40 13% & 14.5% On Demand
Total - A 8,146.40
FROM : OTHERS
Directors 31.89 16.00% On Demand
Directors 4.35 Interest free On Demand
Others 196.20 12.00% On Demand
Total - B 232.44
Total (A+B) 8,378.84
2 Year ended 2007-08
FROM : CORPORATE BODIES
ACT Fininvest Ltd. (Formerly - Ashok Cutting Tools Ltd.)
4,922.42 11.5% & 13% On Demand
Total - A 4,922.42
FROM : OTHERS
Deutsche Bank 703.53 8.375% to be Adjusted on
export relisation
Yes Bank Ltd 1,000.00 13.75% 16.07.2008
State Bank of India 18.61
Directors 22.83 16% On Demand
Others 28.30 12% On Demand
Others 4.35 Interest free On Demand
Total - B 1,777.62
Total (A+B) 6,700.04
3 Year ended 2006-07
FROM : CORPORATE BODIES
ACT Fininvest Ltd. (Formerly - Ashok Cutting Tools Ltd.)
1,439.34 9.50% On Demand
Total - A 1,439.34
FROM : OTHERS
Yes Bank Ltd 1,000.00 13.75% 18.01.2008
UTI Bank Ltd 1,000.00 10.25% 17.10.2007
Directors 15.98 Interest Free On Demand
Others 79.46 12% On Demand
Total - B 2,095.44
Total - (A+B) 3,534.78
4 Year ended 2005-06
FROM : CORPORATE BODIES
ACT Fininvest Ltd. (Formerly - Ashok Cutting Tools Ltd.)
2,668.31 9.00% On Demand
F-64
Total - A 2,668.31
FROM : OTHERS
UTI Bank 1,000.00 8.25% 22.07.2006 paid
Total - B 1,000.00
Total - (A+B) 3,668.31
5 Year ended 2004-05
FROM : CORPORATE BODIES
ACT Fininvest Ltd. (Formerly - Ashok Cutting Tools Ltd.)
463.93 8.50% On Demand
Total - A 463.93
FROM : OTHERS
Allahabad Bank 1,000.00 7.00% 23.07.2005 paid
Ing Vyasa Bank 2,400.00 6.20% 27.09.2005 paid
Directors 5.66 31.05.2005 paid
Banca Popolara Di Milano 14.14 15.06.2005 paid
Total - B 3,419.80
Total - (A+B) 3,883.73
6 Year ended 2003-04
FROM : CORPORATE BODIES
GUJARAT GLASS LTD. 4.83 On Demand
NOZAKI FINANCE & INVESTMENTS PVT LTD
4,388.00 Interest free On Demand
Total - A 4,392.83
FROM : OTHERS
Citi Bank 875.91 Libor + .75% 03.04.2004 paid
Sales tax deferral scheme 40.44 Interest free
Credit lyonnais 10.00 7.50%
Total - B 926.35
Total - (A+B) 5,319.18
F-65
MORARJEE TEXTILES LIMITED
ANNEXURE - XIII CASHFLOW AS RESTATED (Rs. In Lacs)
For the nine month
period ended on For the year ended on
31st December, 2008 31st March,2008 31st March, 2007 31st March,2006 31st March,2005
A. CASH FLOW FROM OPERATING
ACTIVITIES
Net Profit/(Loss) for the year (3,142.49) (2,401.85) 1,226.55 984.20 564.06
Add: Miscellaneous Expenses w/off 0.00 0.00 0.00 0.00 204.56
Add: Fixed Assets W/off 0.00 0.00 0.00 0.00 32.39
Less: Prior Period Adjustments 0.00 0.00 0.50 13.67 5.52
(3,142.49) (2,401.85) 1,226.05 970.53 795.49
Add: Provision for Tax – MAT/FBT (71.88) 76.26 191.06 57.17
Depreciation 1,127.18 1,362.49 1,095.38 836.28 822.65
Interest Expenses 1,931.36 1,827.54 1,280.02 664.31 598.20
Minority Interest adjusted 0.00 0.00 0.00 0.00 0.00
Capital Reserve on consolidation 0.00 124.47 0.00 0.00
Adjustment on consolidation (21.40) 1,155.45 0.00 0.00
Goodwill Written off - - - 9.07 0.00
Less:Interest Income 26.72 78.60 52.08 11.12 6.56
Profit on Sale of Assets (5.79) 1.00 418.61 1.07 6.47
Foreign Exchange Reserve on Consolidation (41.94) 2,986.27 5.82 4,460.79 0.53 2,096.30 2.21 1,556.85 (0.64) 1,408.46
Operating Profit Before Working Capital
Changes
(156.22) 2,058.94 3,322.35 2,527.38 2,203.95
Adjustments for Changes in Working Capital
(Increase)/ Decrease in Trade and Other Receivables
(1,874.55) (345.34) (3,717.26) (2,084.57) 1035.39
(Increase) /Decrease in Inventories 558.67 (2,145.88) (1,264.42) (1,065.61) 153.14
Increase/(Decrease) in Trade Payables 1,341.54 1,064.03 1,320.76 991.49 (326.75)
25.66 (1,427.19) (3,660.92) (2,158.69) 861.78
Cash from Operating Activities (130.56) 631.75 (3,38.57) 368.69 3,065.73
Less: Extra Ordinary item
Less: Income Tax Paid (MAT/FBT) 31.66 104.73 143.95 134.41 0.00
F-66
Net Cash From Operating Activities (A) (162.22) (A) 527.02 (A) (482.52) (A) 234.28 (A) 3,065.73
B. CASH FLOW FROM INVESTING
ACTIVITIES
Purchase of Fixed Assets (619.91) (4,176.74) (5,491.60) (3,694.92) (1,518.60)
Sale of Fixed Assets 65.79 75.43 586.67 69.13 84.13
Interest on Income 26.72 78.60 52.08 11.12 6.56
Purchase of Investments 0.00 0.00 (772.93) 0.00 0.00
Adjustment on Consolidation 0.00 0.00 0.00 0.00 787.36
Goodwill on Consolidation 0.00 0.00 0.00 0.00 (90.68)
Sale of Investments 0.00 0.00 0.00 0.00 0.00
Net Cash Used in Investing Activities (B) (527.40) (B) (4,022.71) (B) (5,625.78) (B) (3,614.67) (B) (731.23)
C. CASH FLOW FROM FINANCING
ACTIVITIES
Proceeds from Long Term Borrowings 169.89 1,391.76 3,268.14 5,300.00 3,900.00
Repayment of Long Term Borrowings (515.73) (1,473.32) (537.00) (62.50) (2,433.40)
Issue of Equity Share with premium 0.00 0.00 0.00 0.00 1,550.00
Refund of Advance against Equity 0.00 0.00 0.00 0.00 (1,550.00)
Proceeds from Right Issue 0.00 0.00 4,282.80 0.00 0.00
Right Issue Expenses 0.00 0.00 (150.31) 0.00 0.00
Dividend Payment and Taxes 0.00 (374.05) (348.99) (218.18) 0.00
Consideration against cancellation of Shares 0.00 0.00 0.00 0.00 (32.49)
Increase/ (Decrease) in Short term Borrowings 1,583.45 5,424.90 2,037.97 (1,001.00) (3,174.05)
Interest Paid (1,217.20) (1,826.60) (1,240.46) (636.13) (631.13)
Net Cash Used in Financing Activities (C) 20.41 (C) 3,142.69 (C) 7,312.15 (C) 3,382.19 (C) (2,371.07)
Net Increase in Cash and Cash Equivalents (A)+(B)+(C)
(669.21) (353.00) 1,203.85 1.80 (36.57)
Cash and Cash Equivalents at the beginning 901.52 1,254.52 50.67 48.87 85.44
Cash and Cash Equivalents at the end 232.31 901.52 1,254.52 50.67 48.87
F-67
Annexure - XIV - STATEMENT OF OTHER INCOME
(Rs in Lacs)
For the
nine month
ended on For the year ended on
31.12.2008
31.03.2008
31.03.2007
31.03.2006
31.03.2005
31.03.2004
Insurance Claim 2.48 15.11 0.43 6.76 22.86 -
Miscellaneous Receipts 8.1 6.03 56.89 2.00 49.13 47.01
Profit on Sale of Assets - 1.00 418.61 1.07 6.47 1.22
Profit on Sale of Subsidiary - - - - 16.80 -
Total
10.58 22.14 475.93 9.83 95.26 48.23
Annexure - XV: INVESTMENTS
The aggregate amount of Investments : - (Rs in Lacs)
As at As at As at As at As at As at
31.12.2008 31.03.2008 31.03.2007 31.03.2006 31.03.2005 31.03.2004
Investment in Govt.
Securities( Unquoted )
0.64
0.64 0.64 0.64 0.64 0.70
Investment in Equity
Shares (Unquoted )
- - - - - -
Morarjee Goculdas Spg & Wvg Pvt. Ltd ( Formerly- Morarjee Legler Pvt. Ltd )
0.01
0.01 0.01 0.01 0.01 0.01
Just Exports Private Limited
0.98 0.98 0.98 - - -
Development Credit Bank Ltd. (Market value as of 31.12.2008 is Rs. 0.39 lacs)
0.09
0.09 0.09 - - -
Mens Club s.p.a. 771.86
Total
1.72
1.72 773.58 0.65 0.65 0.71
156
STOCK MARKET DATA FOR EQUITY SHARES OF OUR COMPANY
Our Company’s Equity Shares are listed on the BSE and NSE. As our Company’s Equity Shares are actively traded on the BSE and NSE, stock market data has been given separately for each of these Stock Exchanges. The following tables sets forth, the high and low of daily closing prices of our Equity Shares on BSE and NSE along with the number of Shares traded and the value traded in lakhs of Rupees on these days, for last three financial years and from April 1 to April 17, 2009 of our Company as required:
BSE
High Low FY /
Period Date Price (in
Rs.)
No. of
Shares
Traded
Value for
the day
(Rs lakhs)
Date Price
(in
Rs.)
No. of
Shares
Traded
Value for
the day (Rs
lakhs)
Average
Price
(in Rs.)
2006
23/1/2006
139 52,687 70.57 21/07/2006
55.10 19,471 12.12 81.12
2007
10/01/2007
79.25 43,038 32.54 13/11/2007
36.05 8,185 3.44 52.08
2008
3/1/ 2008
76.70 135,504 101.56 11/12/2008
9.28 2,050 0.19 27.89
Jan 2009 7/1/
2009 13.94 1,393 0.18 20/1/2
009 10.60 50 0.00 12.07
Feb 2009 27/2/2
009 13.77 1,000 0.14 10/2/2
009 10.50 14,082 1.49 11.86
March 2009
3/3/ 2009
13.10 307 0.04 19/3/2009
10.30 3,320 0.35 11.46
Apri1 1-17, 2009
17/4/2009
14.17 1,218 0.16 1/4/ 2009
10.50 4,940 0.57 12.54
NSE
High Low FY /
Period Date Price (in
Rs.)
No. of
Shares
Traded
Value for
the day
(Rs lakhs)
Date Price
(in
Rs.)
No. of
Shares
Traded
Value for
the day (Rs
lakhs)
Average
Price
(in Rs.)
2006
- - - - - - - - -
2007
31/12/2007
68.40 20,601 13.24 5/12/2007
42.15 30,934 14.49 54.41
2008
3/1/ 2008
77.00 41,740 30.97 5/12/2008
9.30 1,788 0.17 28.55
Jan 2009 6/1/
2009 14.10 152 0.02 30/1/2
009 11.20 10 0 12.82
Feb 2009 27/2/2
009 11.70 1 0.00 4/2/
2009 10.00 6 0 10.79
March 2009
3/3/ 2009
12.90 750 0.09 17/3/2009
9.35 8 0 10.24
Apri1 1-17, 2009
16/4/2009
13.50 425 0.65 1/4/ 2009
10.05 25 0 11.67
Current market price on the BSE as on April 20, 2009 is Rs. 13.02 and current market capitalization is Rs. 2,365.66 lakhs and on the NSE is Rs. 12.50 and Rs. 2,271.18 lakhs respectively.
157
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF
OPERATIONS
The following discussion of our financial condition and results of operations is based on our restated
consolidated financial statements as of and for the nine months period ended December 31, 2008 and for the
financial years ended March 31, 2008, 2007 and 2006 including the schedules and notes thereto and the report
thereon, which appear in the chapter titled “Financial Statements” in this Draft Letter of Offer. The financial
statements presented and discussed in this Draft Letter of Offer are based on Indian GAAP, the Act and the
SEBI DIP Guidelines and restated as required under SEBI DIP Guidelines. Our fiscal year ends on March 31 of
each year. Accordingly, all references to a particular fiscal year are to the twelve-month period ended on
March 31 of that year.
Indian Textile Industry.
Indian Textile Industry is vertically integrated and covers a large gamut of activities ranging from production of its own raw material namely cotton, jute, silk and wool to manufacturing high value added fabric and garments.
The Indian Textile Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the textile industry also plays an important role through its contribution to industrial output, employment generation, and the export earnings of the country. Currently, it contributes about 14 percent to industrial production, 4 percent to the GDP, and 17 percent to the country’s export earnings. It provides direct employment to over 35 million people. The Textiles sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of this industry has a direct bearing on the improvement of the economy of the nation The Cotton / Man-made fibre textile industry is the largest organized industry in the country in terms of employment (nearly 1 million workers) and the number of units. Besides, there are a large number of subsidiary industries dependent on this sector, such as those manufacturing machinery, accessories, stores, ancillaries, dyes & chemicals. As on December 31, 2007, there were 1,744 cotton/man-made fibre textiles mills (non-SSI) in the country with a capacity of 34.87 million spindles, 4, 57,000 rotors, and 56,000 looms. (Source: Ministry of
Textile Annual Report 2007-2008)
Our Corporate Overview
We are an established manufacturer of high quality cotton shirting fabrics, premium voiles and high fashion printed fabrics with sophisticated technology and distinct designing as our key differentiators. We cater to customers both domestically and internationally. We have integrated forward into the garments segment by setting up our subsidiary, Integra Apparels and Textiles Limited focusing on garments for women, men and kids wear in the international market. We have also set up a 100% subsidiary, Morarjee International s.r.l. in Europe based in Legnano, Italy, which has a state-of-the-art design studio for the fabric and garment collections and is supported by team of European designers and marketing personnel. During the fiscal 2007 , we have also acquired 67% stake in Men’s Club s.p.a., an Italian shirt brand based in Santa O’ Mero in south central Italy and 49% in our Joint Venture ‘Just Textiles Limited’. Whereas, our acquisition of Men’s Club s.p.a., was our step towards our foray into the international branding business, acquisition of stake in Just Textiles increased our product portfolio and opened up new era of growth for the expansion and modernization of Company’s weaving and spinning capacity. Recently, we have also completed the strategic acquisition of Fabritex Exports Private Limited which will add additional 400 machine production capacity, increasing total capacity by 12 lakh pieces per annum.
Factors affecting our results of Operations
The following discussion of factors affecting our results of operations relates to the principal factors that we
believe will affect the results of our operations. For details in relation to factors affecting our results of
operations and not mentioned herein, see the sections “Forward-Looking Statements” and “Risk Factors”
beginning on pages vii and ix, respectively.
158
Dollar Strength The textile industry’s value is closely connected to the USD on account of the contribution of exports to the textile industry. The dollar has shown strong trends in recent past and that has impacted the earnings of the textile companies. Dollar will continue to be a major factor in textile export growth. For the nine months period ended December 31, 2008, our exports and foreign exchange losses were Rs. 15,959.73 lakhs and Rs. 1,864.86 lakhs. As a percentage of our total sales revenue, our export sales revenue for the nine months period was 64.39%. A significant portion of our revenues in the future may be denominated in foreign currencies as a result of contribution of export in our total revenue. The exchange rate between the Rupee and the other foreign currencies such as the U.S. Dollar and Euro / Pound Sterling has changed substantially in recent years and may continue to fluctuate significantly in the future. Accordingly, our operating results may be impacted by fluctuations in the exchange rate between the Indian Rupee and other foreign currencies. Cotton Price Movement
India has abundant production of cotton for consumption within the country and for exports. With the further possibility of increase in use of Bt seeds/ Hybrid seeds, and a decline in the cost of such seeds, it is estimated that by the terminal year of XI Five Year Plan (2007-2012), the yield per hectare will increase to 700 kgs., and cotton production will reach 390 lakh bales. Thus the cost of domestically grown cotton would play a major role in determining the future growth trends of the Indian Textile Industry. Infrastructural Constraints
All our production facilities are located at just one location i.e. at Nagpur. Any infrastructural constraints as what happened during the April / July 2007, could impact our production and could hamper the overall revenues and profitability.
Ability to borrow at competitive rates
As on date, our debt-equity ratio is very high. If we are unable to bring down our debt-equity ratio, we may not be able to borrow money at the competitive rates or at terms the acceptable to us. Additionally, adverse changes in prevailing interest rates can affect the ability of borrowers like us. Our results of operations and earnings could be affected by movements in interest rates. Impact of Recession
Global growth prospects have deteriorated significantly, aggravated by the financial crisis and the severe strains on banking systems and credit conditions worldwide. The impact of global slowdown is visible not only in the financial markets but also in the basic industries including textiles. This may have impact on the overall demand of the textile products, reduction in number of orders, overall pricing of the products and unable to utilize the plant to full capacity. Significant Accounting Policies to the Consolidated Financial Statements
Our Company’s financial statements included in this Draft Letter of Offer have been prepared in accordance with Indian GAAP and restated as required under SEBI DIP Guidelines. All income and expenditure having a material bearing on the financial statements are recognized on accrual basis. Preparation of financial statements in accordance with Indian GAAP, the applicable accounting standards issued by the Institute of Chartered Accountants of India (“ICAI”) and the relevant provisions of the Act require our Company’s management to make judgments, estimates and assumptions that it believes are most appropriate in the circumstances for the purpose of giving a true and fair view of our Company’s results of operations and an understanding of its financial condition and results of operations. Our Company’s significant accounting policies are set forth in Annexure III to its restated financial statements included in the section “Financial Statements” beginning on page 155.
159
Components of Income and Expenditure
The following descriptions set forth information with respect to key components of our consolidated financial statements: INCOME
Our total revenue comprise of revenue from sale of our products i.e. fabric and garments and other income. The following table shows the break up of our total revenue for the nine months period ended December 31, 2008 and fiscal ended March 31, 2008, 2007 and 2006:
(Rs. in lakhs)
Sources of Revenue For the nine months
period ended December
31, 2008
Year ended
March 31,
2008
Year ended
March 31,
2007
Year ended
March 31, 2006
Sale of Products 24,785.00 28,132.11 26,675.85 18,262.05
Other Income 10.58 22.14 475.93 9.83
Total Revenue 24,795.58 28,154.25 27,151.78 18,271.88
Sale of Products
This primarily comprise sale of high quality cotton shirting fabrics, premium voiles, high fashion printed fabrics, and garments. We sell our products in domestic as well as in the export market. Our selling arrangement includes direct sales to our customers, through our distributors and using the marketing and distribution network of some of our subsidiaries operating in other geographies. The details of the domestic and export sales are as follows:
(Rs. in lakhs)
Revenue Earned
% of total revenue
earned
For the period / year ended
Domestic
Market #
Overseas
Market#
Total
Domestic Overseas
December 31, 2008* 8,825.27 15,959.73 24,785.00 35.61% 64.39%
March 31, 2008 11,016.78 17,115.33 28,132.11 39.16% 60.84%
March 31, 2007 9,772.04 16,903.81 26,675.85 36.63% 63.37%
March 31, 2006 7,729.60 10,532.45 18,262.05 42.33% 57.67%
* For the nine months period ended
# Domestic Revenue is net of Excise Duty and Sales Return and export revenue is inclusive of export incentives
Other Income Our other income does not consist of any income of recurring nature. Normally, our other income consists of profit / loss on sale of assets and insurance claims received. EXPENDITURE
Our expenditure consists broadly of operating expenses (material consumed & manufacturing expenses), personnel expenses, administrative expenses and interest and finance charges.
Materials Consumed
Our raw material includes raw cotton, cotton yarn and includes imported and indigenous procurements. Our imports mainly consist of extra long staple variety of cotton from Egypt, USA and CIS countries due to the non-availability of the required quantity and quality from domestic markets. The break up of our imported and indigenous raw material is as under:
(Rs. in lakhs)
For the financial year ended
Particulars
For the nine months
period ended March 31, March 31, 2007 March 31, 2006
160
December 31, 2008 2008
Amount % Amount % Amount % Amount %
Raw Material
Imported 1,158.64 13.15%
1,841.74 15.25%
1,570.08 14.10% 963.70 14.10%
Indigenous 7,654.48 86.85%
10,231.82 84.75%
9,567.88 85.90% 5,870.71 85.90%
Total 8,813.12 100% 12,073.56 100%
11,137.96 100% 6,834.41 100%
Though only 13-14% of our raw material is imported directly by us, most of our domestic suppliers source extra long staple variety of cotton from abroad. So, in real terms, our consumption of imported raw material would be greater than the said 13-14%. Manufacturing Expenses
Our manufacturing expenses mainly comprise of processing charges, dyes & chemicals, packing materials, stores & spares, power & fuel among others. These constitute around 90% of our total manufacturing expenses. Certain conversion charges (which includes amount paid to contract labour) and costs of other consumables, repairs to building, plant and machinery, rates, taxes and water charges are also included in manufacturing expenses.
Employee Emoluments
Personnel expenses consist primarily of expenses incurred towards payment of salaries, wages, allowances and bonuses, contributions to ‘Employers’ Provident Fund’ and other miscellaneous staff welfare expenses. In addition, we employ workmen on contractual basis. We had 3,576 employees on our payroll as on December 31, 2008. Administration, Selling and Distribution Expenses
Administrative and other expenses primarily include freight out expenses, legal and professional expenses, rental expenses, expenses for advertising and business promotions, travelling and conveyance expenses, electricity charges, office, printing and stationary expenses. Recently, we have started charging our foreign exchange profits / losses also under the administrative, selling and distribution expenses. Depreciation
Depreciation is provided on the basis of ‘Straight Line Method’, at the rates specified in Schedule XIV of the Act. The depreciation is provided on pro rata basis on the assets acquired, sold or disposed of during the relevant year. Premium on leasehold land is amortized over the period of lease. Intangible assets are amortized over their estimated useful life. Interest
Our interest and finance expenses consist of borrowing costs, including interest and charges payable on borrowings. Interest primarily includes interest paid to banks & financial institutions and for availing the cash credit / packing credit form the banks. Interest and finance charges also include bank guarantee commissions paid to banks towards bank guarantees. . Provision of Taxation
We are subject to income tax liability in India pursuant to the IT Act. Also, pursuant to the IT Act, corporations are in some circumstances subject to a minimum tax liability based on book profit. We make provision for current tax as well as for deferred tax liability based on our anticipated utilization of tax charges carried forward. We have made necessary provisions for fringe benefit tax as well.
Current Tax: Current tax is the provision made for income tax liability on the profits for the applicable financial period in accordance with applicable tax laws.
161
Deferred Tax: Deferred tax arises from timing differences between book profits (accounting) and taxable profits that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using tax rates and laws that have been enacted or substantially enacted as of the date of our Company’s balance sheet. Fringe Benefit Tax: Our Company, as per applicable law, has to pay fringe benefit tax. MAT: As per the prevailing Income Tax laws in the country, we are allowed to take credit of MAT paid for the seven subsequent financial years. Analysis of our results of operations
The following table sets forth certain profits and loss data in absolute amount (in rupees lakhs) and as a percentage of ‘total income’ for the nine months period ended December 31, 2008 and fiscal years ended March 31, 2008, 2007 and 2006 of our Company on consolidated basis.
(Rs. In lakhs)
For the year ended on March 31 Particulars For the nine months period
ended December
31, 2008
2008 2007 2006
Net Sales (including export incentives)
24,785.00 28,132.11 26,675.85 18,262.05
Other Income 10.58 22.14 475.93 9.83
Increase / (decrease) in stock (308.39) 1,201.64 1,007.99 574.69
Total Income 24,487.19 29,355.89 28,159.77 18,846.57
Material Consumed 8,813.12 12,073.56 11,137.96 6,834.41
Cost of Materials Consumed to Total Income
35.99% 41.13% 39.55% 36.26%
Manufacturing Expenses 6,891.17 8,365.78 7,553.43 5,245.51
Manufacturing Expenses to Total Income
28.14% 28.50% 26.82% 27.83%
Employee Emoluments 3,930.33 4,307.17 2,697.25 1,909.69
Employee Emoluments to Total Income
16.05% 14.67% 9.58% 10.13%
Administration, Selling and Other Expenses
5,035.12 3,823.54 3,030.20 2,326.12
Administration, Selling and Other Expenses to Total Income
20.56% 13.02% 10.76% 12.34%
Profit/(Loss) before Interest, Depreciation, Tax and Prior Period Item
(182.55) 785.84 3,740.93 2,530.84
Profit/(Loss) before Interest, Depreciation, Tax and Prior Period Item to Total Income
-0.75% 2.68% 13.28% 13.42%
162
For the year ended on March 31 Particulars For the nine
months period
ended December
31, 2008
2008 2007 2006
Interest Expense (net) 1,904.64 1,748.94 1,227.94 653.19
Interest Expense (net) to Total Income
7.78% 5.96% 4.36% 3.47%
Depreciation 1,127.18 1,362.49 1,095.38 836.28
Depreciation to Total Income 4.60% 4.64% 3.89% 4.44%
Profit/(Loss) before Tax and Prior Period Item
(3,214.37) (2,325.59) 1,417.61 1,041.37
Profit/(Loss) before Tax and Prior Period Item to Total Income
-13.13% -7.92% 5.03% 5.53%
Provision for Taxes (including deferred tax, FBT and MAT credit entitlement)
(71.88) 76.26 191.06 57.17
Profit/(Loss) after Tax before prior period adjustments and Minority Interest
(3,142.49) (2,401.85) 1,226.55 984.20
Prior period items and other adjustments
- - 0.50 13.67
Share of Minority Interest (155.35) (23.68) 25.17 (7.70)
Profit/(Loss) after Minority Interest
(2987.14) (2378.17) 1200.88 978.23
Profit/(Loss) after Minority Interest to Total Income
-12.20% -8.10% 4.26% 5.19%
Discussion of financial results for the nine months period ended December 31, 2008 During the nine months ended December 31, 2008, though we restored our operations completely and our production for the nine months period was in line with our yearly production, but our major setback was depreciating Indian currency due to which we suffered a foreign exchange loss of Rs. 1,864.86 lakhs. This was primarily on account of currency hedging done by the Company to overcome the impact of strengthening Indian currency during the end of FY 2008. Further, our sales were also impacted by the overall downturn in the global economy, which had an impact on the overall textile demand. For the nine months period ended December 31, 2008, our exports sales were Rs. 15,959.73 lakhs i.e. 64.39% of our total sales revenue. Total Income
Our total income for the nine months period ended December 31, 2008 was Rs. 24,487.19, which comprise of our sales revenue and other income. Sales revenue
Our total sales revenue for the nine months period ended December 31, 2008 was Rs. 24,785 lakhs. Break up of our domestic and export sales for the nine months period ended December 31, 2008 was as under:
163
(Rs. in lakhs)
Total Sales Income % of Total Sales Income For the period ended
Domestic
Market
Overseas
Market
Total
Domestic
Market
Overseas
Market
December 31, 2008 8,825.27 15,959.73 24,785 35.61% 64.39%
Other Income
During the nine months period ended December 31, 2008 our other Income was Rs. 10.58 lakhs which primarily comprise of miscellaneous receipts and insurance claim. . Detailed break up of our other income is given below:
(Rs. in lakhs) For the nine months period ended
December 31, 2008
Particulars
Amount As a % of
Total Income
Insurance Claim 2.48 0.01%
Miscellaneous Receipts 8.1 0.03%
Total 10.58 0.04%
Expenditure
Our total expenditure was Rs. 27,701.56 lakhs for the nine months period ended December 31, 2008. Detailed break up of our total expenditure is as given under –
(Rs. in lakhs)
For the nine months period ended
December 31, 2008
Particulars
Amount As a % of Total
Income
Material Consumed 8,813.12 35.99%
Manufacturing Expenses 6,891.17 28.14%
Employee Emoluments 3,930.33 16.05%
Administration, Selling and Distribution Expenses 5,035.12 20.56%
Depreciation 1,127.18 4.60%
Financial Charges 1,904.64 7.78%
Total 27,701.56 113.13%
Raw Material Consumed
Our raw material consumption for the nine months period ended December 31, 2008 was Rs. 8,813.12 lakhs which was 35.99% of our total income. As a percentage of total income, we were able to reduce the total expenses on raw material. Out of the total raw material consumed during the year, though our direct imported raw material was 13.15% only, but most of our domestic suppliers source extra long staple variety of cotton from abroad. So, in real terms, our consumption of imported raw material would be greater than the said 13.15%. Manufacturing Expenses
Manufacturing expenses for the nine months period ended December 31, 2008 were Rs. 6,891.17 lakhs or 28.14% of the total income for the said period. Detailed break up of our manufacturing expenses is as given under –
(Rs. in lakhs)
164
For the nine months period ended
December 31, 2008
Particulars
Amount As a % of
Total Income
Processing Charges 1,968.93 8.04%
Dyes and Chemicals 1,718.48 7.02%
Packing Material 171.83 0.70%
Stores and Spares 322.29 1.32%
Other Consumables 156.72 0.64%
Repairs and Maintenance - Building 19.40 0.08%
Repairs and Maintenance - Plant & Machinery 148.60 0.61%
Repairs and Maintenance - Others 50.58 0.21%
Power & Fuel 2,106.63 8.60%
Rates, Taxes & Water Charges 161.68 0.66%
Other Expenses 66.03 0.27%
Total 6,891.17 28.14%
Employee Emoluments As on December 31, 2008 we had 3,576 employees on our rolls and as such employee emoluments for the nine months period ended December 31, 2008 were Rs. 3,930.33 lakhs or 16.05% of the total income for the said period. Detailed break up of our employee emoluments is as given under –
(Rs. in lakhs)
For the nine months period ended December
31, 2008
Particulars
Amount As a % of
Total Income
Salaries and Wages 3,464.59 14.15%
Provident Fund - Employee Contribution 362.23 1.48%
Staff Welfare Expenses 103.51 0.42%
Total 3,930.33 16.05%
Administrative, Selling and Distribution Expenses
For the nine months period ended December 31, 2008 our administrative, selling and distribution expenses were Rs. 5,035.12 lakhs or 20.56% of the total income. Primary reason of sudden hike in our administration expenses was the inclusion of foreign exchange losses during the said period. During this period we suffered a net foreign exchange loss of Rs. 1,119.29 lakhs at the entity level and Rs. 1,864.86 lakhs on the consolidated basis which was primarily on account of our hedging transaction to cover up our earnings on exports at the time when rupee was appreciation against the foreign currency, specifically being USD. Detailed break up of our administrative, selling and distribution expenses is as given under –
(Rs. in lakhs)
For the nine months period ended December
31, 2008
Particulars
Amount As a % of
Total Income
Freight Out 620.04 2.53%
Insurance Charges 38.59 0.16%
Legal and Professional Expenses 335.43 1.37%
Rent 483.43 1.97%
165
Telephone Expenses 68.48 0.28%
Travelling 246.54 1.01%
Marketing Service Fee and Commission 362.78 1.48%
Directors Remuneration 68.58 0.28%
Auditors Remuneration 17.62 0.07%
Loss on Sale of Assets 5.79 0.02%
Foreign Exchange (Gain) / Loss 1,864.86 7.62%
Miscellaneous Expenses 922.98 3.77%
Total 5,035.12 20.56%
Operating Profit / (Loss)
During the nine months period ended December 31, 2008, for the first time we made an operating loss of Rs. 182.55 lakhs which was primarily attributed to the foreign exchange losses incurred by us on account of currency hedging done by the Company to overcome the impact of strengthening Indian currency Interest Expenses
During the nine months period ended December 31, 2008 our interest cost was Rs. 1,904.64 lakhs which was 7.78% of our total income. This increase was primarily on account of servicing of the secured debts for the entire period, increased interest rates and increase in our unsecured short term borrowings. Mentioned below are details of our interest and finance charges incurred during the nine months period ended December 31, 2008.
(Rs. in lakhs)
For the nine months period ended December
31, 2008
Particulars
Amount As a % of
Total Income
Interest on Term Loan 1,201.33 4.91%
Others 730.03 2.98%
Less: Interest Income 26.72 0.11%
Total 1,904.64 7.78%
Depreciation
Depreciation charges accounted for is 4.60% of our total income. Depreciation charges for the nine months period ended December 31, 2008 were Rs. 1,127.18 lakhs. Profit / (Loss) before Tax
As a reason of the abovementioned foreign exchange loss, in our standalone accounts as well as our consolidated accounts, our loss before tax for the said nine months period ended December 31, 2008 was Rs. 3,214.37 lakhs. Provision for Taxation
We had to revise the ‘provision for taxation’ amounting to Rs. 71.88 lakhs for the nine months period ended December 31, 2008, which was primarily on account of the deferred tax adjustment. Provision for taxation for the nine months period ended December 31, 2008 comprise of:
(Rs. in lakhs)
For the nine months period ended
December 31, 2008
Particulars
Amount As a % of
Total Income
166
Current Tax (including MAT) 13.70 0.06%
Deferred Tax (119.38) -0.49%
Fringe Benefit Tax 30.73 0.13%
Fringe Benefit Tax - Earlier Years 2.82 0.01%
MAT Credit Entitlement - 0.00%
Provision for Tax for earlier years 0.25 0.00%
Total (71.88) -0.29%
Profit / (Loss) after Tax before Minority Interest
For the nine month period ended December 31, 2008, the ‘Loss after tax before minority interest’ was Rs. 3,142.49 lakhs. Profit / (Loss) after Minority Interest
For the nine month period ended December 31, 2008, the ‘Loss after tax and minority interest’ was Rs. 2,987.14 lakhs. As there were no adjustments during the said period our profit after minority and after adjustments for the nine months period ended December 31, 2008 was also Rs. 2,987.14 lakhs. Comparison of historical results of operations
Fiscal 2008 compared to fiscal 2007
The year 2007-08 was a year of strong challenges for the Company on account of:
• A major breakdown in MIDC pipeline resulted in an acute problem in water supply for 4 months, from April to July 2007. This impacted the business adversely in terms of production, customer service and quality.
• As a consequence of the above, one season of business in our shirting division was lost as some customers did not place repeat orders due to delay / non-supply of previous orders on time
• Appreciation of Rupee against the USD . During the year, Company also completed the strategic acquisition of Fabritex Exports Private Limited which will add additional 400 machine production capacity, increasing total annual capacity by 12 lakh pieces per annum. Though on a consolidated basis, the total sales revenue increased marginally by 5.46% from Rs. 26,675.85 lakhs to Rs. 28,132.11 lakhs but our sales revenue on standalone basis got a strong hit on account of the breakdown in the infrastructural facilities and was down by 19.41% as compared to FY 2007. Further on account of this, on a consolidated basis, the PAT declined from Rs. 1,226.55 lakhs in FY 2007 to a net loss of Rs. 2,401.85 lakhs in FY 2008. Revenues
Our total income increased marginally by 4.25% from Rs. 28,159.77 lakhs for FY 2007 to Rs. 29,355.89 lakhs for FY 2008. Our total revenues comprised of revenue from our sales and other income.
Sales
Our total sales revenue increased marginally by 5.46% from Rs.26,675.85 lakhs to Rs. 28,132.11 lakhs. This was despite the fact that our overall realisation from our export revenue was down as a result of appreciation in Indian currency during the year and the setback that Company faced major infrastructural facility constraint as a result of which our production was hampered for 4 months from April to July 2007. This increase was primarily on account of 81.70% increase in the total income of our subsidiary Integra Apparels, 24.93% increase in the total income of our joint venture ‘Just Textile’ and on account of revenue contribution from our subsidiary Men’s Club s.p.a.
167
The detailed break up of our total sales revenue for the year 2007-08 and 2006-07 is as given under: -
(Rs. in lakhs)
Total Sales Income % of Total Sales Income For the year ended
Domestic
Market
Overseas
Market
Total
Domestic
Market
Overseas
Market
March 31, 2008 11,016.78 17,115.33 28,132.11 39.16% 60.84%
March 31, 2007 9,772.04 16,903.81 26,675.85 36.63% 63.37%
Whereas, our production facilities at Nagpur impacted, we continued to invest more in one of our subsidiary ‘Integra Apparels’, which continued to grew rapidly and registered sales growth of 81.70% from Rs. 4,363.16 lakhs in FY 2007 to Rs. 7,927.87 lakhs in FY 2008 despite difficult conditions in the global market. Our joint venture, ‘Just Textiles’ also registered a sales growth of 24.93% from Rs. 3,278.25 lakhs in FY 2007 to Rs. 4,095.69 lakhs in FY 2008 thereby adding to the total sales of the Company. Other Income
Our other income decreased from Rs. 475.93 lakhs in FY 2007 to Rs. 22.14 lakhs during FY 2008. Other income during the year was nominal and cannot be compared with the other income of FY 2007 which was primarily on account of profit on sale of building in our joint venture ‘Just Textiles’. Detailed break up of our other income is given below:
(Rs. in lakhs)
For the year ended
March 31, 2008
For the year ended
March 31, 2007
Particulars
Amount As a % of
Total Income
Amount As a % of
Total Income
Insurance Claim 15.11 0.05% 0.43 0.00%
Interest (Other) 0 0.00% 0 0.00%
Miscellaneous Receipts 6.03 0.02% 56.89 0.20%
Profit on same of Assets 1 0.00% 418.61 1.49%
Profit on sale of subsidiary 0 0.00% 0 0.00%
Total 22.14 0.08% 475.93 1.69%
Expenditure
Our total expenditure was Rs. 31,681.48 lakhs for the fiscal 2008, as compared to an expenditure of Rs. 26,742.16 lakhs for the fiscal 2007, representing an increase of 18.47%. Detailed break up of our total expenditure is as given under –
(Rs. in lakhs)
For the year ended
March 31, 2008
For the year ended
March 31, 2007
Particulars
Amount As a % of
Total Income
Amount As a % of Total
Income
Material Consumed 12,073.56 41.13% 11,137.96 39.55%
Manufacturing Expenses 8,365.78 28.50% 7,553.43 26.82%
Employee Emolument's 4,307.17 14.67% 2,697.25 9.58%
Administration, Selling and Distribution Expenses
3,823.54 13.02% 3,030.20 10.76%
Depreciation 1,362.49 4.64% 1,095.38 3.89%
168
Financial Charges 1,748.94 5.96% 1,227.94 4.36%
Total 31,681.48 107.92% 26,742.16 94.97%
Raw Material Consumed
Our raw material consumption for the fiscal year 2008 increased by 8.40% on absolute terms as compared to 5.46 % increase in our total sales revenue. As a percentage of total income, our raw material consumption was 41.13% of total income for fiscal 2008 as compared to 39.55% for the fiscal 2007. It increased primarily on account of sharp increase in the prices of both Indian and international cotton prices. Break up of our imported and indigenous raw material consumed is as under:
(Rs. In lakhs)
For the financial year ended
Particulars March 31,
2008
March 31, 2007
Amount % Amount %
Raw Material
Imported 1,841.74 15.25% 1,570.08 14.10%
Indigenous 10,231.82 84.75% 9,567.88 85.90%
Total 12,073.56 100% 11,137.96 100%
Manufacturing Expenses Our total manufacturing expenses increased by 10.75% for FY 2008 to Rs. 8,365.78 lakhs as compared to Rs. 7,553.43 lakhs during FY 2007. Our manufacturing expenses accounted for 28.50% of our total income for FY 2008 in line with the previous year FY 2007 where manufacturing expenses comprised 26.82% of our total income.
(Rs. in lakhs)
For the year ended March 31,
2008
For the year ended March 31, 2007 Particulars
Amount As a % of Total
Income
Amount As a % of
Total Income
Processing Charges 2,379.46 8.11% 1,703.54 6.05%
Dyes and Chemicals 2,155.97 7.34% 2,259.15 8.02%
Packing Material 169.84 0.58% 184.46 0.66%
Stores and Spares 388.84 1.32% 368.07 1.31%
Other Consumables 240.43 0.82% 197.47 0.70%
Repairs and Maintenance - Building
21.64 0.07% 24.16 0.09%
Repairs and Maintenance - Plant and Machinery
221.89 0.76% 211.60 0.75%
Repairs and Maintenance – Others
55.35 0.19% 21.79 0.08%
Power and Fuel 2,455.67 8.37% 2,352.40 8.35%
Rates, Taxes and Water Charges 213.19 0.73% 213.28 0.76%
Other Expenses 63.50 0.22% 17.51 0.06%
Total 8,365.78 28.50% 7,553.43 26.82%
There was no major change in any of the constituents of manufacturing expenses during the year except processing charges which increased primarily on account of increase in outsourcing of processing work.
169
Employee Emoluments
Our personnel expenses increased from Rs. 2,697.25 lakhs constituting 9.58% of our total income for fiscal 2007 to Rs. 4,307.17 lakhs constituting 14.67% of our total income for fiscal 2008. The primary reason for this increase was acquisition of Fabritex Exports Private Limited and growth in the number of employees from 3,236 in Fiscal 2007 to 4,052 in Fiscal 2008. Mentioned below are details of comparison of the key ingredients of our personnel expenses of Fiscal 2007 with Fiscal 2008.
(Rs. in lakhs)
For the year ended March 31,
2008
For the year ended March 31, 2007 Particulars
Amount As a % of Total
Income
Amount As a % of
Total Income
Salaries and Wages 3,823.70 13.03% 2,381.91 8.46%
Provident Fund – Employer’s Contribution
366.06 1.25% 234.78 0.83%
Staff Welfare Expenses 117.41 0.40% 80.56 0.29%
Total 4,307.17 14.67% 2,697.25 9.58%
Administration, Selling and Other Expenses
Our administrative and other expenses increased from Rs. 3,030.20 lakhs for fiscal 2007 to Rs. 3,823.54 lakhs for fiscal 2008, representing an increase of 26.18%. Our administrative, selling and other expenses accounted for 13.02 % of our total income for FY 2008. Our total expenses for the year increased on account of inclusion of expenses incurred by our subsidiary Men’s Club s.p.a., Fabritex Exports Private Limited and increase in our legal and professional expenses and rental expenses incurred by the Company and one of its subsidiary Integra Apparels and Textiles Limited. Mentioned below are details of comparison of the key ingredients of our administrative and other expenses during Fiscal 2007 with Fiscal 2008.
(Rs. in lakhs) For the year ended
March 31, 2008
For the year ended
March 31, 2007
Particulars
Amount As a % of
Total Income
Amount As a % of
Total Income
Freight Out 718.39 2.45% 758.16 2.69%
Insurance Charges 77.17 0.26% 78.83 0.28%
Legal and Professional Expenses
646.82 2.20% 430.64 1.53%
Rent 475.41 1.62% 111.39 0.40%
Telephone Expenses 86.68 0.30% 95.55 0.34%
Travelling 287.79 0.98% 271.34 0.96%
Marketing Service Fee and Commission
331.45 1.13% 293.94 1.04%
Directors Remuneration 89.87 0.31% 89.15 0.32%
Auditors Remuneration 22.60 0.08% 20.45 0.07%
Foreign Exchange Gain / Loss (163.69) -0.56% (40.73) -
-0.14%
170
Miscellaneous Expenses 1,251.05 4.26% 921.48 3.27%
Total 3,823.54 13.02% 3,030.20 10.76%
Depreciation
Depreciation has been provided on straight-line basis on the plant and machinery owned by the Company. Depreciation for the fiscal 2008 was Rs. 1,362.49 lakhs as compared to Rs. 1,095.38 lakhs for the fiscal 2007. As a percentage of total income, depreciation for fiscal 2008 was 4.64% as compared to 3.89% during fiscal 2007.
Interest and Finance Charges
Interest and finance charges for fiscal 2008 were Rs. 1,748.94 lakhs or 5.96% of total income as compared to Rs. 1,227.94 lakhs or 4.36% of total income for fiscal 2007. Our interest expenses during the year increased on account of increase in interest rates, increase in short term unsecured loans and servicing of the secured and unsecured loans for the full year. Mentioned below are details of comparison of the key ingredients of our interest and finance charges during Fiscal 2007 with Fiscal 2008.
(Rs. in lakhs)
For the year ended
March 31, 2008
For the year ended
March 31, 2007
Particulars
Amount As a % of
Total Income
Amount As a % of
Total Income
Interest on Term Loan 973.97 3.32% 804.10 2.86%
Others 853.57 2.91% 475.92 1.69%
Less: Interest Income 78.60 0.27% 52.08 0.18%
Total 1,748.94 5.96% 1,227.94 4.36%
Profit / Loss before Tax
Loss before Tax for the year ended March 31, 2008 was Rs. 2,325.59 lakhs as compared to profit before Tax of Rs. 1,417.61 lakhs for fiscal 2007. This was primarily on account of low realisation from our export revenue with appreciation in Indian currency during the year and as impact on production schedule due to breakdown in MIDC pipeline which impacted our overall sales during that period and as a result of overall reduction in margins. Provision for taxation (net of deferred taxes) ‘Provision for taxation’ was Rs. 76.26 lakhs for fiscal 2008 as compared to Rs. 191.06 lakhs for fiscal 2007, representing a substantial decrease on account of decline in our profitability. Our comparative tax constituents under Provision for Taxation for fiscal 2008 and 2007 are as under:
(Rs. in lakhs)
For the year ended March 31, 2008
For the year ended March 31, 2007
Particulars
Amount As a % of Total
Income
Amount As a % of
Total Income
Current Tax (MAT) 46.48 0.16% 170.44 0.61%
Deferred Tax 9.73 0.03% 138.28 0.49%
Fringe Benefit Tax 35.71 0.12% 35.05 0.12%
Fringe Benefit Tax - Earlier Years
- 0.00% - 0.00%
MAT Credit Entitlement (25.45) -0.09% (152.71) -0.54%
171
Provision for Tax for earlier years
9.79 0.03% - 0.00%
Total 76.26 0.26% 191.06 0.68%
Profit / Loss after Tax before Minority Interest and Prior Period Adjustment Loss after Tax before minority interest and prior period adjustment was Rs. 2,401.85 lakhs for fiscal 2008 as against the profit of Rs. 1,226.55 for fiscal 2007. Profit / Loss after Minority Interest and Adjustments Loss after minority interest and adjustment was Rs. 2,378.17 lakhs for fiscal 2008 as against a profit of Rs. 1,200.88 lakhs for fiscal 2007.
Fiscal 2007 compared to fiscal 2006
This was a significant year in many respects for the Company. During 2006-07: -
• Company completed its rights issue comprising issuance of its Equity Shares and Warrants to its existing Equity Shares
• Company expanded and modernized its printing facilities by installing state of art machinery.
• Company made its foray in international branding with the acquisition of 67% stake (together with another Subsidiary Morarjee International s.r.l.) in Men’s Club spa, a medium sized shirt brand company in Italy.
• Increased the stake in Integra Apparels and Textiles Private Limited to 88%.
• Introduced ‘Morarjee Fashion’ branding in voiles in the Sudanese market Company also faced significant pressure on its margins on account of the following:
• Increase in yarn and cotton cost by 30% and 5% respectively
• Increase in power cost
• Appreciation of rupee against USD
• Increase in interest rates Overall, year 2006-07 being a year of growth for the Company when on a consolidated basis, the total sales revenue increased by 46.07% from Rs. 18,262.05 lakhs during FY 2006 to Rs. 26,675.85 lakhs for FY 2007. On account of this increase, our consolidated PAT also increased by 24.62% from Rs. 984.20 lakhs to Rs. 1,226.55 lakhs. Total Income
Our total income increased by 49.42% from Rs. 18,846.57 lakhs for FY 2006 to Rs. 28,159.77 lakhs for FY 2007. Our total revenues comprised of revenue from our sales and other income.
Sales
Our total sales revenue increased by 46.07% from Rs. 18,262.05 lakhs for FY 2006 to Rs. 26,675.85 lakhs for FY 2007. This was mainly on account of increase in our exports which accounted for 63.37 % of our total income for FY 2007 as compared to 57.67 % of our total income for FY 2006 and as a result of acquisition of Just Textiles. The detailed break up of our total sales revenue for the year 2006-07 and 2005-06 is as given under: -
(Rs. in lakhs)
Total Sales Income % of Total Sales Income For the year ended
Domestic
Market
Overseas
Market
Total
Domestic
Market
Overseas
Market
172
Total Sales Income % of Total Sales Income For the year ended
Domestic
Market
Overseas
Market
Total
Domestic
Market
Overseas
Market
March 31, 2007 9,772.04 16,903.81 26,675.85 36.63 63.37
March 31, 2006 7,729.60 10,532.45 18,262.05 42.33 57.67
Other Income
Our other income increased substantially from Rs. 9.83 lakhs in FY 2006 to Rs. 475.93 lakhs during FY 2007. Other income during FY 2007 was primarily on account of profit on sale of building in our joint venture ‘Just Textiles’. Such profit on sale of assets was a non-recurring in nature, otherwise the other income for FY 2007 was normal was nominal. Detailed break up of our other income is given below:
(Rs. in lakhs)
For the year ended March 31,
2007
For the year ended
March 31, 2006
Particulars
Amount As a % of
Total Income
Amount As a % of
Total Income
Insurance Claim 0.43 0.00% 6.76 0.04%
Interest (Other) 0 0.00% 0 0.00%
Miscellaneous Receipts 56.89 0.20% 2 0.01%
Profit on same of Assets 418.61 1.49% 1.07 0.01%
Profit on sale of subsidiary 0 0.00% 0 0.00%
Total 475.93 1.69% 9.83 0.05%
Expenditure
Our total expenditure was Rs. 26,742.16 lakhs for the fiscal 2007, as compared to an expenditure of Rs. 17,805.20 lakhs for the fiscal 2006, representing an increase of 50.19%, which was as a result of increase in our total income. Detailed break up of our total expenditure is as given under –
(Rs. in lakhs)
For the year ended March 31,
2007
For the year ended March 31, 2006 Particulars
Amount As a % of Total
Income
Amount As a % of Total
Income
Material Consumed 11,137.96 39.55% 6,834.41 36.26%
Manufacturing Expenses 7,553.43 26.82% 5,245.51 27.83%
Employee Emolument's 2,697.25 9.58% 1,909.69 10.13%
Administration, Selling and Distribution Expenses
3,030.20 10.76% 2,326.12 12.34%
Depreciation 1,095.38 3.89% 836.28 4.44%
Financial Charges 1,227.94 4.36% 653.19 3.47%
Total 26,742.16 94.96% 17,805.20 94.47%
Raw Material Consumed
Our raw material consumption for the fiscal year 2007 increased by 62.97% on absolute terms as compared to 46.07 % increase in our total sales revenue. This was on account of acquisition of Just Textiles and increase in raw material consumption in one of our subsidiary Integra Textiles and Apparels Limited. As a percentage of
173
total income, our raw material consumption was 39.55% of total income for fiscal 2007 as compared to 36.26 % for the fiscal 2006. It increased primarily on account of increase in the usage of imported raw material and sharp increase in the prices of all the three major inputs i.e. cotton, yarn and cloth both in Indian and international markets. Break up of our imported and indigenous raw material consumed is as under:
(Rs. in lakhs)
For the financial year ended Particulars March 31, 2007 March 31, 2006
Amount % Amount %
Raw Material
Imported 1,570.08 14.10% 963.70 14.10%
Indigenous 9,567.88 85.90% 5,870.71 85.90%
Total 11,137.96 100% 6,834.41 100%
Manufacturing Expenses
Our total manufacturing expenses increased by 44% for FY 2007 to Rs. 7,553.43 lakhs as compared to Rs. 5,245.51 lakhs during FY 2006. Our manufacturing expenses accounted for 26.82% of our total income for FY 2008 in line with the previous year FY 2007 where manufacturing expenses comprised 27.83% of our total income.
(Rs. in lakhs)
For the year ended March 31,
2007
For the year ended March 31, 2006 Particulars
Amount As a % of Total
Income
Amount As a % of Total
Income
Processing Charges 1,703.54 6.05% 957.86 5.08%
Dyes and Chemicals 2,259.15 8.02% 1,673.88 8.88%
Packing Material 184.46 0.66% 148.11 0.79%
Stores and Spares 368.07 1.31% 334.62 1.78%
Other Consumables 197.47 0.70% 124.72 0.66%
Repairs and Maintenance - Building
24.16 0.09% 18.08 0.10%
Repairs and Maintenance - Plant & Machinery
211.60 0.75% 137.93 0.73%
Repairs and Maintenance - Others
21.79 0.08% 27.95 0.15%
Power & Fuel 2,352.40 8.35% 1,680.64 8.92%
Rates, Taxes & Water Charges 213.28 0.76% 126.93 0.67%
Other Expenses 17.51 0.06% 14.79 0.08%
Total 7,553.43 26.82% 5,245.51 27.83%
There was no major change in any of the constituents of manufacturing expenses during the year except processing charges which increased primarily on account of increase in outsourcing of processing work.
Employee Emoluments Our personnel expenses increased from Rs. 1,909.69 lakhs constituting 10.13% of our total income for fiscal 2006 to Rs. 2,697.25 lakhs constituting 9.58% of our total income for fiscal 2007. Though our cost towards employee emoluments reduced as a percentage of total income, but on a year on year it increased by 41.24 %. This was on account of acquisition of Just Textiles Limited, on account of growth in the number of employees
174
from 1,875 in Fiscal 2006 to 3,236 in Fiscal 2007 and regular increments. Mentioned below are details of comparison of the key ingredients of our personnel expenses of Fiscal 2006 with Fiscal 2007.
(Rs. in lakhs)
For the year ended March 31,
2007
For the year ended March 31, 2006 Particulars
Amount As a % of Total
Income
Amount As a % of
Total Income
Salaries and Wages 2,381.91 8.46% 1,669.72 8.86%
Provident Fund – Employer’s Contribution
234.78 0.83% 185.67 0.99%
Staff Welfare Expenses 80.56 0.29% 54.30 0.29%
Total 2,697.25 9.58% 1,909.69 10.13%
Administration, Selling and Other Expenses
Our administrative and other expenses increased from Rs. 2,326.12 lakhs for FY 2006 to Rs. 3,030.20 lakhs for FY 2007, representing an increase of 30.27 %. Administrative, selling and other expenses which accounted for 10.76 % of our total income for FY 2007 were 12.34 % of our total income during FY 2006. During the year we were able to save on some of our expenses heads like freight out cost and reduction in travelling and marketing cost. Mentioned below are details of comparison of the key ingredients of our administrative and other expenses during Fiscal 2006 with Fiscal 2007.
(Rs. in lakhs)
For the year ended March 31,
2007
For the year ended March 31,
2006
Particulars
Amount As a % of Total
Income
Amount As a % of
Total Income
Freight Out 758.16 2.69% 604.07 3.21%
Insurance Charges 78.83 0.28% 55.52 0.29%
Legal and Professional Expenses 430.64 1.53% 305.31 1.62%
Rent 111.39 0.40% 69.69 0.37%
Telephone Expenses 95.55 0.34% 78.02 0.41%
Travelling 271.34 0.96% 238.41 1.27%
Marketing Service Fee and Commission
293.94 1.04% 228.27 1.21%
Directors Remuneration 89.15 0.32% 74.20 0.39%
Auditors Remuneration 20.45 0.07% 8.66 0.05%
Foreign Exchange Gain / Loss (40.73) -0.14% (71.70) -0.38%
Goodwill written off - 0.00% 9.07 0.05%
Miscellaneous Expenses 921.48 3.27% 726.60 3.86%
Total 3030.20 10.76% 2,326.12 12.34%
Depreciation
175
Depreciation has been provided on straight-line basis on the plant and machinery owned by the Company. Depreciation for the fiscal 2007 was Rs. 1,095.38 lakhs as compared to Rs. 836.28 lakhs for the fiscal 2006. As a percentage of total income, depreciation for fiscal 2007 was 3.89% as compared to 4.44% during fiscal 2006.
Interest and Finance Charges
Interest and finance charges for fiscal 2007 were Rs. 1,227.94 lakhs or 4.36 % of total income as compared to Rs. 653.19 lakhs or 3.47 % of total income for fiscal 2006. Our interest expenses during the year increased on account of increase in interest rates, increase in term loans from Banks and increase in the line of credit (cash credit) and packing credit from the banks. Mentioned below are details of comparison of the key ingredients of our interest and finance charges during fiscal 2006 with fiscal 2007.
(Rs. in lakhs)
For the year ended March 31,
2007
For the year ended
March 31, 2006
Particulars
Amount As a % of Total
Income
Amount As a % of Total
Income
Interest on Term Loan 804.10 2.86% 402.35 2.13%
Others 475.92 1.69% 261.96 1.39%
Less: Interest Income 52.08 0.18% 11.12 0.06%
Total 1,227.94 4.36% 653.19 3.47%
Profit / Loss before Tax
Profit before Tax for the year ended March 31, 2007 was Rs. 1,417.61 lakhs as compared to profit before Tax of Rs. 1,041.37 lakhs for fiscal 2006. On a year on year basis, we registered a growth of 36.13%. Our profit before tax was 5.03% of our total income for fiscal 2007 as compared to 5.53% of our total income for fiscal 2006. Provision for taxation (net of deferred taxes) ‘Provision for taxation’ was Rs. 191.06 lakhs for fiscal 2007 as compared to Rs. 57.17 lakhs for fiscal 2007, representing a substantial increase on account of increase in profitability for the year, providing for the deferred tax and after adjusting the MAT credit entitlement available to the Company. Our comparative tax constituents under Provision for Taxation for fiscal 2007 and 2006 are as under:
(Rs. in lakhs)
For the year ended March 31, 2007
For the year ended March 31, 2006
Particulars
Amount As a % of Total
Income
Amount As a % of Total
Income
Current Tax (MAT) 170.44 0.61% 106.90 0.57%
Deferred Tax 138.28 0.49% - 0.00%
Fringe Benefit Tax 35.05 0.12% 41.22 0.22%
Fringe Benefit Tax - Earlier Years
- 0.00% - 0.00%
MAT Credit Entitlement (152.71) -0.54% (90.95) -0.48%
Provision for Tax for earlier years
- 0.00% - 0.00%
Total 191.06 0.68% 57.17 0.30%
Profit after Tax before Minority Interest and Prior Period Adjustment
176
Profit after Tax before minority interest and prior period adjustment was Rs. 1,226.55 lakhs for fiscal 2007 as compared to profit after tax of Rs. 984.20 lakhs for fiscal 2006. Profit after Minority Interest and Adjustments Profit after Tax , and after minority interest and prior period adjustment was Rs. 1,200.88 lakhs for fiscal 2007 as compared to profit after tax of Rs. 978.23 lakhs for fiscal 2006. Liquidity and Capital Resources
Principal Sources of Liquidity
As on December 31, 2008 our cash and bank balances amounted to Rs. 232.31 lakhs. We believe that our anticipated internal accruals and proceeds of the Issue will be sufficient to meet our present cash requirements. Our anticipated cash flows from operations however depends on a number of factors beyond our control, such as prevailing general economic condition, cost of our inputs, competition that we may face etc. We may therefore need to increase our indebtedness. Net Cash Flows
The table below summarizes our cash flow for the nine months period ended December 31, 2008 and for the financial years ended on March 31, 2008, 2007 and 2006:
(Rs. in lakhs)
During the year ended
March 31
Particulars
During the nine
months period
ended
December 31,
2008
2008 2007 2006
Net Cash flow from Operating Activities
(162.22) 527.02 (482.52) 234.28
Net Cash flow from Investing Activities
(527.40) (4,022.71) (5,625.78) (3,614.67)
Net Cash flow from Financing Activities
20.41 3,142.69 7,312.15 3,382.19
Net Increase / (Decrease) in Cash
and Cash Equivalents (669.21) (353.00) 1,203.85 1.80
Operating Activities
Cash flow from operating activities primarily depends upon our operating profits and changes in net working capital. The table below summarizes our cash flow for the nine months period ended December 31, 2008 and for the financial years ended on March 31, 2008, 2007 and 2006:
(in Rs. lakhs)
During the year ended
March 31
Particulars
During the nine
months period ended
December 31,
2008
2008 2007 2006
Operating Profits before working capital changes (net of tax)
(156.22) 2,058.94 3,322.35 2,527.38
Adjustment for changes in working capital
25.66 (1,427.19) (3,660.92) (2,158.69)
Less: Income Tax Paid (MAT/ FBT) 31.66 104.73 143.95 134.41
Net Cash from Operating Activities (162.22) 527.02 (482.52) 234.28
Investing Activities
177
Net cash used in investing activities represents capital expenditure, investments and income from dividends and interest. The table below summarizes our net cash used in investing activities for the nine months period ended December 31, 2008 and for the financial years ended on March 31, 2008, 2007 and 2006:
(in Rs. lakhs)
During the year ended March 31,
Particulars
During the nine
months period ended
December 31,
2008
2008 2007 2006
Purchase of Fixed Assets (619.91) (4,176.74) (5,491.60) (3,694.92)
Sale of Fixed Assets 65.79 75.43 586.67 69.13
Interest Income 26.72 78.60 52.08 11.12
Purchase of Investments - - (772.93) -
Net Cash used in Investing Activities (527.40) (4,022.71) (5,625.78) (3,614.67)
Financing Activities
Net cash from financing activities is determined by the level of principal and interest payout on debts, new indebtedness, and issue of new capital stock and dividend and interest payouts. The table below summarizes our net cash from investing activities for the nine months period ended December 31, 2008 and for the financial years ended on March 31, 2008, 2007 and 2006:
(in Rs. lakhs)
During the year ended March 31
Particulars
During the nine
months period ended
December 31,
2008
2008 2007 2006
Proceeds from Long Term Borrowings 169.89 1,391.76 3,268.14 5,300
Repayment of Long Term Borrowings (515.73) (1,473.32) (537.00) (62.50)
Proceeds from Rights Issue - - 4,282.80 -
Right Issue Expenses - - (150.31) -
Dividend Payment and Taxes - (374.05) (348.99) (218.18)
Increase / (Decrease) in short term Borrowings
1,583.45 5,424.90 2,037.97 (1,001.00)
Interest Paid (1,217.20) (1,826.60) (1,240.46) (636.13)
Net cash used in financing activities 20.41 3,142.69 7,312.15 3,382.19
Indebtedness
The following table presents our secured and unsecured debt for the nine months period ended December 31, 2008 and for the financial years ended on March 31, 2008, 2007 and 2006:
(Rs. in lakhs)
Year Ended March 31,
Nine months period
ended December 31,
2008
2008 2007 2006
Particulars Amount % Amount % Amount % Amount %
Secured Loan 18,188.62 68.46% 18,629.81 73.55%
16,451.73 82.31%
11,549.09 75.89%
Unsecured Loan
8,378.84 31.54% 6,700.04 26.45%
3,534.78 17.69%
3,668.31 24.11%
Total Debt 26,567.46 100% 25,329.85 100% 19,986.51 100% 15,217.40 100%
As of December 31, 2008, we had a total debt of Rs. 26,567.46 lakhs in our books and a debt equity ratio of 4.35:1. With the completion of the proposed rights issue, we plan to bring down our debt equity ratio.
Historical and Planned Capital Expenditure
178
Our capital expenditures for the nine months period ended December 31, 2008 and for the fiscal year ended 2008 were Rs. 558.14 lakhs and Rs. 3,091.59 lakhs, respectively. This was primarily on account of putting of additional lines by one of our Subsidiary, Integra Apparels and Textiles Limited. Capital expenditure includes installation of new looms towards modernization and expansion of the weaving capacity for manufacturing of yarn dyed cotton shirting fabric. As on date, we haven’t planned any capital expenditure for FY 2009. Our Restructuring Scheme
With a view to rationalize the financial structure of the Company, during the year ended March 31, 2005, 10,000,000 equity shares of Rs.10/- each have been issued and allotted at a premium of Rs.5.50 per share, whereby the paid up Equity Share Capital of the company has increased by Rs.1,000.00 lakhs and share premium account credited by Rs. 550 lakhs. For this purpose the authorized share capital has been increased from Rs.5,000 lakhs to Rs. 5,300 lakhs. The terms of the 1,000,000 redeemable cumulative preference shares of Rs.100/- each have also been modified by revising the rate of dividend from 11.25% to 5% and extending the redemption period by making the preference shares redeemable any time after November 15, 2014 but before November 15, 2019. In view of the modification of rights attached to Preference Shares, the said shares shall be non cumulative up to June 30, 2004 and shall carry cumulative dividend of 5% per annum with effect from July 01, 2004. The advance against Equity of Rs. 2,875 lakhs has been settled by making payment of Rs. 1,550 lakhs and the balance Rs. 1,325 lakhs has been cancelled and transferred to General Reserve. In continuation of the exercise to rationalize the company’s financial structure, the Board of Directors had formulated a scheme under section 391 and section 100 read with section 78 of the Act for purchase by the Company of its own equity shares from the Company’s shareholders at minimal token consideration of 10p (Ten Paise) per share and then cancellation of such purchased shares resulting in reduction of Equity Share Capital and the amount in share premium account of the Company correspondingly setting off the Company’s accumulated losses. The equity shareholders of the Company had offered for purchase by the Company 32,493,450 equity shares. The scheme has been sanctioned by the Bombay High Court and upon giving effect to the scheme, (a) the equity share capital of the Company Rs. 4,287.60 lakhs stands reduced by Rs. 3,249.34 lakhs to Rs. 1,038.26 lakhs. The carried forward Losses of Rs. 3,813.53 lakhs as at March 31, 2004 stands set off against (a) the reduction of share capital of Rs. 3,216.85 lakhs (net of consideration) and (b) the share premium of Rs.550 lakhs leaving balance loss of Rs.46.68 lakhs. Related Party Transactions
For details of related party transactions, please refer to the chapter titled “Related Party Transactions” beginning on page 154 of this Draft Letter of Offer.
Financial Market Risks
Quantitative and Qualitative Disclosures about Market Risk
Currency Exchange Rates
Exchange rate fluctuations, if any arising out of foreign currency transactions are dealt with appropriately, and the receivables and payables are reinstated at the rates prevailing at the year end. In the recent past, we have incurred heavy losses on account of depreciation of Indian currency.
Interest Rates
Interest rate risk results from changes in interest rates, which may affect our financial expenses. We bear interest rate risk with respect to indebtedness as on December 31, 2008 and March 31, 2008 as the interest rate could vary in the near future. Most of our borrowings are on the floating rate basis. All our loans based on floating rate interest are subject to any rise in interest rates by our lenders, which may impact our financial conditions. Loans outstanding to Directors and Key Managerial Personnel
179
As on March 31, 2009 we had no loans outstanding to our Directors or any of the Key Managerial Personnel except the following:
Name of the Key
Managerial
Personnel
Loan
Amount
Rate of
Interest
EMI Amount Outstanding
Amount
Nature of
Loan
Mr. S. C. Kashimpuria
Rs. 8,00,000 4.5% Rs. 25,000 Rs. 1,25,000 Housing
Information required as per Clause 6.8 of SEBI DIP Guidelines
Unusual or infrequent events or transaction
To the best of our knowledge, save as described elsewhere in this Draft Letter of Offer, particularly in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, there are no events that may be described as unusual or infrequent events and transactions. Significant economic/regulatory changes
Indian legal system and policy of Government for textile industry has undergone major changes in last few years. For recent economic and regulatory changes, please refer to the chapter titled “Industry Overview”, “Regulations and Policies” and “Risk Factors” beginning on pages 39, 62 and ix respectively. The management does not foresee any significant economic changes concerning the Print Industry in the immediate future, which might have an impact on the profitability or operations of our Company, other than the changes in government policies, changes in demand / supply of print products and such other changes which are in usual course of business. Known trends and uncertainties
Other than as described elsewhere in this Draft Letter of Offer, particularly in the chapter titled “Risk Factors” starting on page ix and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, to our knowledge there are no trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations. Future relationship between costs and income
Our effort is to create efficient processes resulting in cost reduction and have a better control over our supply chain. We expect to continue this effort of improving our technology initiatives and help us realize better margins in the future. Other than as described elsewhere in this Draft Letter of Offer, to the best of our knowledge, there are no known factors, which will affect the future relationship between the costs and income, or which will have a material impact on the operations and finances of the Company. Turnover for the industry segment in which we operate
Please refer to the discussions in the chapter titled “Industry Overview” on page 39 of this Draft Letter of Offer.
New product and business segment We are in the business of manufacturing of high quality cotton shirting fabrics, premium voiles and high fashion printed fabrics. In the financial year 2006 and financial year 2008, we also entered in the business of garments and international branding through our subsidiaries Integra Apparels and Textiles Private Limited and Men’s Club s.p.a. In order to meet the changing requirements of our customers we may have to launch new products categories or new formats of delivery or new brands. Further, we may also consider exploring new business opportunities made available to the textile industry. Seasonality of business
180
Textile industry not being a seasonal industry, no such impact can be there on Company’s revenue. Dependence on single or few suppliers/ Customers
We source our products from a diverse group of suppliers and thus our operations are risk averse from supplier side. Similarly, we sell our products to a wide customer base and do not foresee business risk arising from our customers. Competitive Conditions
With the removal of quota system with effect from January 2005, the quantitative and fiscal restrictions imposed on importing countries have been removed, resulting in increased participation by the players across the world for acquiring a larger share of the global trade. As such, our Company faces stiff competition from domestic as well as international players in the industry. Our Company is among the few companies in India, which exist at the entire value chain of the textile industry. Our sales have grown over the years due to concerted and conscious effort that we have pursued in the exports market. We believe that we are well positioned to enhance our position as a supplier of high quality shirting, premium voiles and high fashion for our customers. On account of our competitive strengths, we feel that we are well positioned to serve our customers, which includes:
● Experienced professional management team
● Cutting-edge Design
● Product Quality
● Customer Service
● Integrated Facilities
● High quality manufacturing
● Consistent performance
● Customer reach Significant Developments after December 31, 2008 that may affect our future results of operations.
There have been no material changes post December 31, 2008 that may affect our future results of operation.
181
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS
Except as described below, there are no outstanding litigations, suits or criminal or civil prosecutions,
proceedings or tax liabilities against the Company, our Directors, our Promoter or group companies and there
are no defaults, non payment of statutory dues, over dues to banks/ financial institutions, defaults against banks/
financial institutions, defaults in dues payable to holders of any debentures, bonds or fixed deposits, issued by
the Company (including past cases where penalties may or may not have been awarded and irrespective of
whether they are specified under paragraph (i) of part 1 of Schedule XIII of the Companies Act, 1956). The
following are the outstanding or pending litigations or suits or proceedings against the Company and criminal
complaints or cases, defaults, non-payment or overdues of statutory dues, proceedings initiated for any
economic or civil offences and disciplinary action taken by SEBI or stock exchanges against the Company, its
subsidiaries and other group companies and the outstanding or pending litigations or suits or proceedings
against the subsidiaries and other group companies.
I. Litigation Involving the Company
A. Outstanding litigation and material developments / proceedings initiated against our Company
Statutory
a. Excise
Sr.
No.
Particulars of show cause
notice Particulars of the case Amount involved
Authority
before which
currently
pending
1. Show cause notice bearing number 643
Short payment for the period from May 1, 1981 to November 30, 1983
Duty amounting to Rs. 61,629.
Commissioner
of Central
Excise,
Mumbai
2. Show cause notice bearing number 1239
Availment certain benefits which according to the department the Company was not entitled to
Duty amounting to Rs. 8,500.
Commissioner
of Central Excise,
Mumbai
3. Show cause notice bearing number 43
Duty on hard waste for the period from January 1, 1986 to September 30, 1986
Duty amounting to Rs. 6,21,938.
Commissioner
of Central
Excise,
Mumbai
4. Show cause notice dated September 9, 2002 bearing number 1704
Reversal of credit amount availed on input for the period from August 17, 2001 to February 20, 2002
Duty amounting to Rs. 3,49,641.
Commissioner
of Central
Excise,
Mumbai
5. Show cause notice dated November 26, 2002 bearing number 1239
Difference in valuation by the Company and the Excise Department for the period from June 11, 1998 to June 30, 1999
Duty amounting to Rs. 3,45,274.
CESTAT
6. Show cause notice dated January 8, 2003 bearing number 3741
Difference in valuation by the Company and the Excise Department for the period from July 1, 1999 to June 30, 2000
Duty amounting to Rs. 9,05,082.
CESTAT
7. Show cause notice dated July 27, 1994 bearing number 596
Difference in valuation by the Company and the Excise Department for the period from March 1, 1994 to April 24, 1994
Duty amounting to Rs. 2,11,738.
Commissioner
of Central
Excise,
Mumbai
8. Show cause notice dated October 5, 1994 bearing number 94
Difference in valuation by the Company and the Excise Department for the period
Duty amounting to Rs. 11,72,016.
Commissioner
of Central
Excise,
182
Sr.
No.
Particulars of show cause
notice Particulars of the case Amount involved
Authority
before which
currently
pending
from April 1, 1994 to September 30, 1994
Mumbai
9. Show cause notice dated May 5, 1995 bearing number 277
Difference in valuation by the Company and the Excise Department for the period from October 1, 1994 to October 31, 1994
Duty amounting to Rs. 10,81,562.
Commissioner
of Central
Excise, Mumbai
10. Show cause notice dated June 5, 1995 bearing number 200
Difference in valuation by the Company and the Excise Department for the period from November 1, 1994 to December 31, 1994
Duty amounting to Rs. 26,66,147.
Commissioner
of Central
Excise,
Mumbai
11. Show cause notice dated August 4, 1995 bearing number 95
Difference in valuation by the Company and the Excise Department for the period from January 1, 1995 to January 31, 1995
Duty amounting to Rs. 9,88,370.
Commissioner
of Central
Excise,
Mumbai
12. Show cause notice dated September 4, 1995 bearing number 464
Difference in valuation by the Company and the Excise Department for the period from February 1, 1995 to March 31, 1995
Duty amounting to Rs. 17,51,463.
Commissioner
of Central
Excise,
Mumbai
13. Show cause notice dated November 3, 1995 bearing number 95
Difference in valuation by the Company and the Excise Department for the period from April 1, 1995 to April 30, 1995
Duty amounting to Rs. 8,50,505.
Commissioner
of Central
Excise,
Mumbai
14. Show cause notice dated December 4, 1995 bearing number 655
Difference in valuation by the Company and the Excise Department for the period from May 1, 1995 to June 30, 1995
Duty amounting to Rs. 17,97,854.
Commissioner
of Central
Excise,
Mumbai
15. Show cause notice dated April 4, 1995 bearing number 495
Difference in valuation by the Company and the Excise Department for the period from September 1, 1994 to October 31, 1995
Duty amounting to Rs. 2,59,581.
Commissioner
of Central
Excise,
Mumbai
16. Show cause notice dated June 5, 1995 bearing number 202
Difference in valuation by the Company and the Excise Department for the period from November 1, 1994 to December 31, 1994
Duty amounting to Rs. 13,24,006.
Commissioner of Central
Excise,
Mumbai
17. Show cause notice dated August 4, 1995 bearing number C Ex/show cause notice/MGM2/Sale Value/vii/G-ii/95
Difference in valuation by the Company and the Excise Department for the period from January 1, 1995 to January 31, 1995
Duty amounting to Rs. 6,47,657.
Commissioner
of Central
Excise,
Mumbai
18. Show cause notice dated September 9, 1995 bearing number 468
Difference in valuation by the Company and the Excise Department for the period from February 1, 1995 to March 31, 1995
Duty amounting to Rs. 3,65,596.
Commissioner
of Central
Excise,
Mumbai
19. Show cause notice dated November 3, 1995 bearing number 95
Difference in valuation by the Company and the Excise Department for the period
Duty amounting to Rs. 2,90,564.
Commissioner
of Central
Excise,
183
Sr.
No.
Particulars of show cause
notice Particulars of the case Amount involved
Authority
before which
currently
pending
from April 1, 1995 to April 30, 1995
Mumbai
20. Show cause notice dated December 4, 1995 bearing number 658
Difference in valuation by the Company and the Excise Department for the period from May 1, 1995 to June 30, 1995
Duty amounting to Rs. 10,39,231.
Commissioner
of Central
Excise, Mumbai
21. Two show cause notices bearing number CEX/G2/VII/(MGM)(2)/INPUT CONT dated January 25, 2000 and CEX/G2/VII/(MGM)(2)/INPUT CONT/98/170 dated June 28, 2000
Demand of central excise duty for the period from July 1, 1999 to March 31, 2000
Duty amounting to Rs. 34,194.
Commissioner
of Central
Excise,
Mumbai
22. Show cause notice dated July 24, 2001 bearing number 576
Difference in valuation by the Company and the Excise Department for the period from July 1, 2000 to January 31, 2001
Duty amounting to Rs. 9,619.
Commissioner
of Central
Excise,
Mumbai
23. Show cause notice dated August 6, 2001 bearing number 593
Difference in valuation by the Company and the Excise Department for the period from July 1, 2000 to November 30, 2000
Duty amounting to Rs. 8,902
Commissioner of Central
Excise,
Mumbai
24. Show cause notice dated August 7, 2000 bearing number V(52)3-30/2000/D/3154
Pending duty for the period from July 1, 1999 to July 31, 1999
Duty amounting to Rs. 12,10,232.
Commissioner
of Central
Excise,
Mumbai
25. Show cause notice dated August 23, 2000 bearing number V(52)3-30/2000/D/PartI/3536
Pending duty for the period from August 1, 1999 to February 29, 2000
Duty amounting to Rs. 24,31,068.
Commissioner
of Central
Excise,
Mumbai
26. Show cause notice dated April 4, 2001 bearing number V(52)3-30/2000/D/ PartI/2414
Pending duty for the period from March 1, 2000 to August 1, 2000
Duty amounting to Rs. 52,05,986.
Commissioner
of Central
Excise,
Mumbai
27. Show cause notice dated August 30, 2001 bearing number V(52)3-30/2000/D/ PartI/5804
Pending duty for the period from August 1, 2000 to November 30, 2000
Duty amounting to Rs. 38,52,516.
Commissioner of Central
Excise,
Mumbai
28. Show cause notice dated January 2, 2002 bearing number V(52)3-30/2000/D/ PartI/57
Pending duty for the period from December 1, 2000 to March 31, 2001
Duty amounting to Rs. 26,44,255.
Commissioner
of Central
Excise,
Mumbai
29. Show cause notice dated June 16, 2002 bearing number II(39)29/CIU/2001/4127
Pending duty for the period from April, 2001 to November, 2001
Duty amounting to Rs. 2,14,58,644.
Commissioner
of Central
Excise,
Mumbai
30. Show cause notice dated July 25, 2003 bearing number V(52)19-127/2003/MC/ST
Difference in valuation on the payment of service tax on foreign consultancy
Duty amounting to Rs. 1,09,933.
Commissioner
of Central
Excise,
Mumbai
31. Show cause notice dated August 2, 2004 bearing number
Difference in valuation on the payment of service tax
Duty amounting to Rs. 1,18,620.
Commissioner
of Central
184
Sr.
No.
Particulars of show cause
notice Particulars of the case Amount involved
Authority
before which
currently
pending
IV(16)19-63/Divn/II/ST/04/6430
on foreign consultancy Excise,
Mumbai
32. Show cause notice Duty on hard waste for the period from March 26, 1995 to September 3, 1997
Duty amounting to Rs.1,00,000.
-
33. Show cause notice bearing number 344
Duty on transnational credit Duty amounting to Rs 2,02,465
Commissioner
of Central Excise,
Mumbai
34. Show cause notice dated May 5, 2006 bearing number V(52) 3-152/2005/D/3316
Duty on waste yarn for the period from April, 2005 to December, 2005
Duty amounting to Rs. 4,45,928
Commissioner
of Central
Excise,
Mumbai
35. Show cause notice dated December 28, 2006 bearing number V(72) 3-72/2006/D/10972
Duty on waste yarn for the period from January, 2006 to September, 2006
Duty amounting to Rs. 4,46,211
Commissioner
of Central
Excise,
Mumbai
36. Show cause notice dated October 16, 2007 bearing number V(52) 3-96/2007/D/
Duty on waste yarn for the period from October, 2006 to February, 2007
Duty amounting to Rs. 4,82,118
Commissioner
of Central
Excise,
Mumbai
37. Show cause notice dated April 1, 20 bearing number V(52) -35/2008/D/1334
Duty on waste yarn for the period from March, 2007 to August, 2007
Duty amounting to Rs. 3,02,752
Commissioner
of Central
Excise, Mumbai
38. Show cause notice bearing number V(52) 3-91/2008/D
Duty on waste yarn for the period from September, 2007 to July, 2008
Duty amounting to Rs. 3,48,426
Commissioner
of Central
Excise,
Mumbai
39. Show cause notice dated September 18, 2008 bearing number V/ST/SIC/62/Dn.-II/Morarjee/07/786
Non payment of service tax on business auxiliary for the period from assessment year 2006-07
Duty amounting to Rs. 38,73,642
Commissioner
of Central
Excise,
Mumbai
40. Show cause notice dated March 9, 2007 bearing number V(52) 3-99/2005/D/1334
Duty on the cloth damaged in fire for the period from December, 2003 to May, 2004
Duty amounting to Rs. 1,20,808
Commissioner
of Central
Excise,
Mumbai
41. Appeal number 8182- 8185 of 2003 filed in the Supreme Court against the following show cause notices:
a. Show cause notice dated December 3, 1998 bearing number V(52)3-59/97/D/3547 for the period from May 1, 1998 to May 31, 1998;
b. Show cause notice dated December, 30 1998 bearing number V(52)3-59/97/D/3939 for the period from June 1, 1998 to June 30, 1998;
c. Show cause notice dated January 28, 1999 bearing
To avail certain benefits which according to the department the Company was not entitled to for the period from May 1, 1998 to May 31, 1998
Duty amounting to Rs. 2,98,89,024
SC
185
Sr.
No.
Particulars of show cause
notice Particulars of the case Amount involved
Authority
before which
currently
pending
number V(52)3-59/97/D/ 514 dated for the period from July 1, 1998 to July 31, 1998;
d. Show cause notice dated March 1, 1999 bearing number V(52)3-59/97/D/911 dated for the period from August 1, 1998 to August 31, 1998;
e. Show cause notice dated March 5, 1999 bearing number (52)15-43/99/Adj for the period from September 1, 1998 to November 30, 1998;
f. Show cause notice dated June 25, 1999 bearing number V(52)3-30/99/D/2745 for the period from December 1, 1998 to December 31, 1998;
g. Show cause notice dated July 30, 1999 bearing number V(52)3-30/99/D/3234 to for the period from January 1, 1999 to January 31, 1999;
h. Show cause notice dated September 1, 1999 bearing number V(52)3-30/99/D/3591 for the period from February 1, 1999 to February 28, 1999;
i. Show cause notice dated September 29, 1999 bearing number V(52)3-30/99/D/3215 for the period from March 1, 1999 to July 31, 1999;
j. Show cause notice bearing number V(52)3-30/99/D/375 for the period from August 1, 1999 to December 31, 1999;
k. Show cause notice bearing number V(52)3-30/99/D/3871 for the period from January 1, 2000 to February 29, 2000;
42. Show cause notice dated February 15, 2001 bearing
Availment certain benefits which according to the
Duty amounting to Rs. 43,51,714
Commissioner
of Central
186
Sr.
No.
Particulars of show cause
notice Particulars of the case Amount involved
Authority
before which
currently
pending
number V(52)3-30/99/D/332 department the Company was not entitled to for the period from March 1, 2000 to March 31, 2000
Excise, Nagpur
43. Show cause notice dated February 26, 2001 bearing number V(52)3-30/99/D/1456
Availment certain benefits which according to the department the Company was not entitled to for the period from April 1, 2000 to June 30, 2000
Duty amounting to Rs. 97,65,287
Commissioner of Central
Excise, Nagpur
44. Show cause notice dated July 19, 2001 bearing number V(52)3-30/99/D/4084
Availment certain benefits which according to the department the Company was not entitled to for the period from July 1, 2000 to August 31, 2000
Duty amounting to Rs. 59,93,553
Commissioner
of Central
Excise, Nagpur
45. Show cause notice dated September 19, 2001 bearing number V(52)3-30/99/D/6487
Availment certain benefits which according to the department the Company was not entitled to for the period from September 1, 2000 to September 30, 2000
Duty amounting to Rs. 68,26,823
Commissioner
of Central
Excise, Nagpur
46. Show cause notice dated September 24, 2000 bearing number V(52)3-30/99/D/7422
Availment certain benefits which according to the department the Company was not entitled to for the period from October 1, 2000 to November 31, 2000
Duty amounting to Rs. 64,94,761
Commissioner
of Central
Excise, Nagpur
47. Show cause notice dated December 19, 2001 bearing number V(52)3-33/2000/D/8893
Availment certain benefits which according to the department the Company was not entitled to for the period from December 1, 2000 to March 31, 2001
Duty amounting to Rs. 67,08,878
Commissioner
of Central
Excise, Nagpur
48. Show cause notice dated September 15, 1977 bearing number SCN/R-III/6/2038
Demand of payment of additional duty on yarn for the period from September 1, 1976 to May 24, 1977
Duty amounting to Rs. 1,92,259
CESTAT
49. Show cause notice dated February 28, 2005 bearing number V(52)15-131/2004/Adj/3471
Reversal of credit on waste yarn for the period from March, 2004 to August, 2004
Duty amounting to Rs. 6,24,253
CESTAT
50. Show cause notice dated April 3, 2003bearing number V(MGM)34/36/A/02/53
Duty to be paid on clearance of fabrics for the period from March 1, 2002 to September 30, 2002
Duty amounting to Rs. 1,24,42,690
Supreme Court
of India
51. 4 Show cause notices bearing number SCN/MGM/nickel cyl/RVII/GII/90 dated October 26, 1990, SCN/MGM/nickel cyl/RVII/GII/91 dated February 19, 1991, SCN/MGM/nickel cyl/RVII/GII/91 dated July 30, 1991 and SCN/MGM/nickel cyl/RVII/GII/90 dated
Duty to be paid on the manufacture of nickel cylinders for the period from April 1, 1990 to July 30, 1991
Duty amounting to Rs. 2,09,933
CESTAT
187
Sr.
No.
Particulars of show cause
notice Particulars of the case Amount involved
Authority
before which
currently
pending
December 30, 1991. 52. Show cause notice dated
January 16, 2001 bearing number V(22) 15 10/2001/Adj/1262
Duty on waste yarn for the period from December, 2002 to March, 2003
Duty amounting to Rs. 5,49,617
CESTAT
53. Show cause notice dated June 21, 2004 bearing number V(52) 15-82/2004/Adj/11193
Duty on waste yarn for the period from April, 2003 to February, 2004
Duty amounting to Rs. 13,47,727
CESTAT
54. 6 Show cause notices bearing number V(52)3-30/2000/D/2123dated August 4, 2000, V(52)3-30/2000/D/55 dated January 3, 2001, V(52)3-30/2000/D/424 dated January 17, 2001, V(52)3-30/2000/D/1492 dated February 26, 2001, V(52)3-30/2000/D/2818 dated May 2, 2001, V(52)15-13/2001/Adj/1019 dated May 31, 2001.
Procurement against advance release order for the period from July 1, 1999 to October 31, 2000
Duty amounting to Rs. 4,16,21,908
Supreme Court
of India
55. Show cause notice bearing number
Duty to be paid on yarn for the period from September, 1976 to May, 1977
Duty amounting to Rs. 19,200
CESTAT
56. Show cause notice dated November 9, 2005 bearing number V(52)15-131/2004/Adj
Reversal of the credit on waste yarn for the period from September, 2004 to March, 2005
Duty amounting to Rs. 3,11,989
CESTAT
57. Show cause notice dated January 28, 2003 bearing number V(52)3-71/2002/D/994
Reversal of the credit on waste yarn for the period from December 1, 2001 to October, 2002
Duty amounting to Rs. 9,84,989
CESTAT
58. Show cause notice dated November 5, 1990 bearing number SCN/MGM/59/09/RVII/GII/90
Duty to be paid on manufacturing of printing frames for the period from May 1, 1990 to September 30, 1990
Duty amounting to Rs. 25,109
CESTAT
59. Show cause notice dated February 5, 2003 bearing number V(MGM) 4-04/F1/03/4216.
Duty to be paid on polyster soft vests for the period from January 1, 1998 to September 30, 2002
Duty amounting to Rs. 3,19,412
Bombay High Court
60. Show cause notice dated February 17, 2003 bearing number V/PI/12-62/2000/371
Difference in valuation by the Company and the Excise Department on the value of cloth sold from July 1, 1998 to June 30, 2002
Duty amounting to Rs. 44,35,569
CESTAT
b. Income Tax
1. The Income Tax Department filed an appeal ITA no. 548/M/08 dated January 23, 2008 against the Company challenging the CIT(A) order dated October 19, 2007 on the grounds for disallowance of deduction of service charge expenses amounting to 24.26 lakhs. This is for the assessment year 2003-04. The matter is pending before the ITAT.
188
2. The Income Tax Department has filed ITA No 4915/M/08 dated August 3, 2008 against the order by CIT(A) dated May 19, 2008 on the ground of incorrect treatment of capital expenditure. The amount involved is Rs.145 lakhs. This is for the assessment year 2004-05. The matter is pending before the ITAT.
Labour
1. A complaint (546/ 2000) dated December 21, 2000 was filed by Mr. Ramakant Kundlikrao Shinde against the Company under Section 28 read with Section 30 of and PULP Act before the Labour Court against his dismissal by the Company and has prayed reinstatement. The matter is pending before the Labour Court.
2. Mr. Nikesh Barahate filed a complaint (105/2001) dated January 31, 2001 before the Industrial Court
of Maharashtra (Nagpur Bench) under Section 28 and Section 30 of the MRTU and the PULP Act, read with Schedule IV of the PULP Act for discontinuation of contract of service and has prayed for the reinstatement of the same.
3. Mr. Mahendra Choudhary and three others filed a complaint (45/2001 to 48/2001) dated January 11,
2001 before the First Labour Court Tribunal under Section 28 of the MRTU and the PULP Act, read with Schedule IV of the PULP Act for discontinuation of contract of service and prayed for reinstatement. The matter is still pending in the First Labour Court.
4. Mr. Kamlakar filed a complaint (417/2001) before the Second Labour Court Tribunal under Section 28
of the MRTU and the PULP Act, alleging the wrongful termination during the training period. The matter is pending before the Second Labour Court Tribunal.
5. Mr. Sanjay Sheshrao Band filed a complaint (514/2001) dated August 17, 2001 before the Second
Labour Court Tribunal, Nagpur under Section 28 of the MRTU and the PULP Act, against his dismissal from services by the Company and claiming reinstatement. Interim relief has been provided to the Company. The main matter is pending before the Second Labour Court.
6. Mr. Sunil Thambre Band filed a complaint (632/2001) dated November 5, 2001 before the Third
Labour Court Tribunal, Nagpur under Section 7 read with Section 28 of the MRTU and the PULP Act read with Schedule IV, Item 1 of Maharashtra Act No. 1 of 1972, 632/2001, against dismissal from service by the Company and has prayed for reinstatement. The reply for the same has been filed. The matter is pending before the Third Labour Court.
7. Mr. Vishwakarma and four others filed a complaint (7/2000) dated November 14, 2000 before the
Third Labour Court under Section 25(2) of the MRTU and PULP Act alleging illegal lock out and that the Company is engaged in unfair trade practices. The reply for the same has been filed and the matter is pending before the Third Labour Court.
B. Outstanding litigation and material developments/proceedings initiated by our Company
Statutory
1. The Company has filed an appeal dated January 22, 2009 against the Income Tax Department challenging the order of AO for disallowing depreciation of Rs. 496.62 lakhs. This is for the assessment year 1998-99. The matter is pending before the CIT(A).
2. The Company has filed an income tax appeal dated March 25, 2009 against the Order of the CIT(A) for
denial of long term capital loss of Rs 17.34 lakhs on sale of shares of PMP Components Private Limited on the ground that such sales were made with related parties and hence the capital gain was recomputed by the AO. Further interest claimed under section 14A of the IT Act was disallowed. This is for the assessment year 2005-06. The matter is pending before the ITAT.
3. The Company has filed an ITA No 4708/M/08 dated August 3, 2008 against The Income Tax
Department on account of unavailed MODVAT credit on closing stock of Rs 262.93 lakhs and interest under section 14A of the IT of Rs 66.63 lakhs. This is for the assessment year 2004-05. The matter is pending before the ITAT.
189
4. The Company has filed an ITA no. 408/M/08 dated January 3, 2008 against the Income Tax
Department challenging the CIT(A) order dated October 19, 2007 for disallowance of expenses such as guest house expenses, vehicle hire charges and foreign travel expenses amounting to Rs. 21.63 lakhs to the Company. This is for the assessment year 2003-04.The matter is pending before the ITAT.
Labour
1. A complaint (BIR 16/2000) dated November 27, 2000 was filed before the Labour Court, Nagpur under Section 78 and 79 of the Bombay Industrial Relations Act, 1946 by the Company against Mr. Mohabe and others to declare the strike illegal and withdraw the same. Reply for the same has been filed. The matter is pending in the Labour Court.
2. A complaint (90/2000) dated November 28, 2000 was filed before the Labour Court under Section.
48(1) of the MRTU and PULP Act by the company against Mr. Kharbadkar and others for violating the orders of the Industrial Court and the same is pending before the Labour Court, Nagpur.
II. Litigation involving the Directors of the Company
Mr. Harshvardhan A. Piramal
Criminal
A former distributor of Nicholas Piramal India Limited (“NPIL”) (now known as Piramal Healthcare Limited), Medilink Agencies has filed a criminal complaint no. 713 of 2003 dated June 7, 2003 against Mr. Harshvardhan A.Piramal before the Judicial Magistrate, First Class, Patna under sections 420, 120, 387 and 506 of the Indian Penal Code, 1860. It is alleged that to ensure proper performance of its obligation, Medilink Agencies had deposited two post dated cheques with NPIL. Subsequently, when Medilink Agencies terminated its distributorship arrangement with NPIL, Medilink Agencies requested NPIL to return the two post dated cheques that had been retained by NPIL. NPIL delayed in acting upon the said request and returning the cheques to Medilink Agencies and consequently Medilink Agencies has filed a criminal complaint against Mr. Harshvardhan A.Piramal before the Judicial Magistrate, First Class, Patna. Mr. Harshvardhan A. Piramal has been exempted from appearance in the matter. The matter pending before the Judicial Magistrate First Class, Patna.
Mr. Mahesh Gupta
Criminal
Mr. R.B.Jhunjunwala and others have filed a complaint no. 246/M/05 of 2005 in August 19, 2005 against Ms. Urvi A.Piramal (in her capacity as Director of Piramal Healthcare Limited (formerly known as Nicholas Piramal India Limited)), Mr. Mahesh Gupta (in his capacity as chief financial officer and company secretary of Piramal Healthcare Limited (formerly known as Nicholas Piramal India Limited))and others in the Court of Additional Metropolitan Magistrate 40th Court, Girgoan on a charge under Sections 403, 406, 409, 417, 420, 120B read with Section 34 of the Indian Penal Code, 1860. Ms. Urvi A.Piramal, Mr. Mahesh Gupta and others have filed a criminal application number 428/ 2009 dated January 29, 2009 against the order of the issue of process. The matter is pending.
III. Litigation involving our Subsidiaries
Integra Apparels & Textiles Limited (“Integra”)
Civil
A. Outstanding litigation and material developments / proceedings initiated against Integra
M/s. Gopala Krishna Fabrics has filed a suit for recovery of Rs. 24,96,295 against Integra Apparels & Textiles Limited. Summon dated March 23, 2009 has been issued.
190
B. Outstanding litigation and material developments/proceedings initiated by Integra
Integra has filed a suit no. OS 6487/ 2007 against M/s Nexus International dated August 14, 2007 asking the Court for directions to release the goods which was held by job workers. The case is currently pending in the Principle City Civil and the Sessions Judge, Bangalore.
IV. Litigation involving our Promoters
Criminal
A. Outstanding litigation and material developments / proceedings initiated against Our Promoter
1. The Pune Municipal Corporation issued a show cause notice numbers HLO/PFA/1471 and HLO/PFA/1470 both dated July 9, 2008 to Ms. Urvi A. Piramal and Mr. Nandan Piramal respectively regarding compliance of Section 14 A of the Prevention of Food Adulteration Act, 1954, which makes it obligatory for the vendor to disclose certain details such as the name and address of the person from whom article of food was purchased and to give information of sale and purchase bills and samples of food. The matter is currently pending.
2. The Government of Madhya Pradesh acting through Mr. Sachin Lougariya, Food Inspector, Indore, has filed a criminal complaint numbers 33965/ 2008 dated December 26, 2008 in the Court of Judicial Magistrate, First Class (Special Court Municipal), Indore against Ms. Urvi A.Piramal , Mr. Nandan Piramal and Mr. Jaydev Mody (“Accused”) being the erstwhile directors of the Piramyd Retail Limited (now known as Indiabulls Retail Services Limited). The complaint has been filed for alleged offences under Sections 7 and 16 of the Prevention of Food Adulteration Act, 1954 which, inter alia, involve, sale of adulterated food samples. The Accused have filed a criminal complaint number 1542/2009 dated February 19, 2009 in the High Court of Madhya Pradesh under Section 482 of the Code of Criminal Procedure, 1973. The High Court has granted a stay order in favour of the Accused. The matter is currently pending.
3. Mr. R.B.Jhunjunwala and others have filed a complaint no. 246/M/05 of 2005 in August 19, 2005
against Ms. Urvi A.Piramal (in her capacity as Director of Piramal Healthcare Limited (formerly known as Nicholas Piramal India Limited)), Mr. Mahesh Gupta (in his capacity as chief financial officer and company secretary of Piramal Healthcare Limited (formerly known as Nicholas Piramal India Limited))and others in the Court of Additional Metropolitan Magistrate 40th Court, Girgoan on a charge under Sections 403, 406, 409, 417, 420, 120B read with Section 34 of the Indian Penal Code, 1860. Ms. Urvi A.Piramal, Mr. Mahesh Gupta and others have filed a criminal application number 428/ 2009 dated January 29, 2009 against the order of the issue of process. The matter is still pending.
4. A complaint number 43 of 2008 has been filed against Ms. Urvi A.Piramal and Mr. Nandan A
Piramal for alleged offences under Section 2 (ia) (a), Section 7 (i), Section 7 (v) of the Prevention of Food Adulteration Act, 1954 read with Rule 29 and Rule 32 (e), Rule 50 of the Prevention of Food Adulteration Rules, 1955. Ms. Urvi A.Piramal and Mr. Nandan A Piramal have filed a revision application No. 971 of 2008 in the Sessions Court, Pune, against the proceeding being carried out by the Judicial Magistrate, First Class, (PMC), Pune in relation to the regular complaint number 43 of 2008. . The matter is currently pending.
V. Litigation involving our Promoter Group
A. Outstanding litigation and material developments / proceedings initiated against Mr. Jaydev Mody
Mr. Jaydev Mody
Criminal
1. The Government of Madhya Pradesh acting through Mr. Sachin Lougariya, Food Inspector, Indore, has filed a criminal complaint numbers 33965/ 2008 dated December 26, 2008 in the
191
Court of Judicial Magistrate, First Class (Special Court Municipal), Indore against Ms. Urvi A. Piramal, Mr. Nandan A. Piramal and Mr. Jaydev Mody (“Accused”) being the erstwhile directors of the Piramyd Retail Limited (now known as Indiabulls Retail Services Limited). The complaint has been filed for alleged offences under Sections 7 and 16 of the Prevention of Food Adulteration Act, 1954 which, inter alia, involve, sale of adulterated food samples. The Accused have filed a criminal complaint number 1542/2009 dated February 19, 2009 in the High Court of Madhya Pradesh under Section 482 of the Code of Criminal Procedure, 1973. The High Court has granted a stay order in favour of the Accused. The matter is currently pending.
Others(Consumer)
Mr. Rajeev A. Piramal and Mr. Nandan A. Piramal
1. Mr. Rajeev A. Piramal and Mr. Nandan A. Piramal filed a consumer compliant number 154/ 2002 dated May 3, 2002 with against Continental Airways on grounds of deficiency in service and unfair trade practice. The matter is pending in the South Mumbai Consumer Dispute Redressal Forum, Mumbai City, Tardeo.
Delta Magnets Limited (previously known as G P Electronics Limited(“G.P.Electronics”)
A. Outstanding litigation and material developments / proceedings initiated against Delta
Magnets Limited:
Statutory
a) Income Tax 1. The Income Tax Department filed a case dated May 2005 against G.P Electronics regarding deduction
under Section 80HHC of the IT Act as to whether to include excise duty and sales tax as part of turnover at ITAT, Mumbai for the assessment year 1994-95. The total claim amount is Rs. 2,46,800. The matter is pending in the Mumbai High Court.
2. The Commissioner of Income Tax, City V, filed a case no.912/2004 dated July 30, 2004 against Delta
Magnets Limited regarding disallowance of claim for provision for doubtful debts amounting to Rs. 17,38,575 for the assessment year 1995-96. The matter is pending in the Mumbai High Court.
b) Excise
The excise department has filed a case no. 188/Cex/2002 and. O.I.O NO 24/2002 dated October 10, 2002 against G.P. Electronics for an amount of Rs. 15,56,101 plus interest before the Appellate Commissioner Excise on Modvat being disallowed for the financial years 1997-98 and 1998-99. The matter is pending before Appellate Commissioner, Excise.
c) Service Tax
The Service Tax Department filed claim no. F.NO.NSK-IV/S.TAX/GPL/CE/03 dated July 14, 2003 and claim no. F.NO.NSK-IV/S.TAX/GPL/CE/04 dated March 12, 2004 against G.P. Electronics. G.P. Electronics had entered into a technology licensing agreement with TDK Corporation of Japan. Under the agreement, G.P. Electronics had paid royalty and technical know-how fees to TDK. The department has claimed that service tax is leviable on payments made pursuant to this technology licensing agreement. The department has accordingly made 2 separate claim of Rs. 7,47,815 and penalty of Rs. 14,96,130 and Rs. 1,94,050 and penalty of Rs. 3,88,100 on account of unpaid service tax against G.P. Electronics Limited. G.P. Electronics has filed an appeal against the assessment of the department. The matter is pending against the Commissioner of Excise (Appeal), Nasik.
B. Outstanding litigation and material developments/proceedings initiated by Delta Magnets
Limited
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Criminal
G.P. Electronics had filed a criminal case no. 7109/ 2005 against Delhi Electronics in the Court of Judicial Magistrate, First Class, Nashik for dishonour of a cheque under section 138 of the Negotiable Instrument Act, 1881, amounting to Rs. 5.33 lakhs, An amount of Rs. 1.46 lakhs is still pending and the rest is recovered by G.P.Electronics. The matter is pending.
Statutory
a) Income Tax
Delta Magnets Limited filed an ITA No. 455/2007 against Income Tax Department on grounds of non deduction of depreciation under 80HHC while filing the income tax returns. This appeal has been filed for the claim of the same. The total claim amount is Rs. 3,44,484. The matter is pending with the Bombay High Court.
Peninsula Land Limited (“PLL”)
Piramal Holdings Limited and Dawn Mills Company Limited have merged with PLL vide Bombay High Court’s order dated September 16, 2005. This section includes the litigation of the erstwhile Piramal Holdings Limited.
A. Outstanding litigation and material developments / proceedings initiated against PLL:
Civil
1. GMM Pfaudler Limited has filed Suit No.3022 of 2008 against PLL and others. This suit is filed against Tata AIG Insurance and PLL to jointly and severally liable to pay to GMM Pfaudler Limited a sum of Rs.15,48,656 plus interest @18% per annum from April 2008 till filing of suit and further interest @18% per annum from suit till payment. The suit is pending in the Bombay High Court.
2. Mahalaxmi Industrial Estate has filed a suit no. 2555/2004 against Marathon NxtGen and
PLL. The dispute is regarding right of way of Marathon from the property of Mahalaxmi Industrial Estate. However, PLL is a formal party defendant and no relief is claimed against PLL. The matter pending in the City Civil Court, Mumbai.
3. Shantilal Mohanlal Shah has filed a summary suit No. 3103 of 2003 against Morarjee
Goculdas Spinning & Weaving Company Limited. This matter has been transferred to the Small Causes Court, Ahmedabad. The suit is filed for recovery of amounts in respect of goods sold and delivered. The suit has been dismissed for the want of prosecution and so far no restoration proceedings have been initiated.
4. Maliniben Shantilal Shah has filed a summary suit no. 3176 of 2003 against Morarjee
Goculdas Spinning & Weaving Company Limited. The suit is filed for recovery of amounts in respect of goods sold and delivered. The suit has been dismissed for want of prosecution and so far no restoration proceedings have been initiated. This matter has been transferred to the Small Causes Court, Ahmedabad and is still pending.
5. Mahalaxmi Industrial Estate Premises Co-operative Society Limited (“MIEP”) filed S.C. Suit
No.2555 of 2004 in the City Civil Court, against M/s.Marathon Nextgen Realty & Textiles Limited (“MNRTL”) and Peninsula. The suit filed by the plaintiff is in respect of the right of way claimed by the defendants on the plaintiff’s property. Plaintiffs claim that MNRTL and Peninsula are not entitled to the right of way and have sought a declaration and an injunction against MNRTL and Peninsula from using the passage through MIEP’s plot situated at Drainage Channel Road, Gandhi Nagar, Lower Parel, Mumbai - 400 013. A written statement and reply has been filed by MNRTL. The matter was posted hearing on November 8, 2006. The matter is currently pending in the City Civil Court.
Statuory
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a) Income Tax
1. The Income Tax Department has filed an income tax appeal no. 6912/M/02 before the High
Court, Bombay against the order of ITAT, on the grounds that ITAT held that leasing transaction does not fall within the ambit of “Undisclosed Income” and decided the issue in favour of PLL, for disallowance of claim for depreciation made in block assessment. The tax effect amounts to Rs. 42.45 crores. The appeal is currently pending in the High Court.
2. The Income Tax Department has filed an income tax appeal no. 7281/M/03 for the assessment
year 1997-98 and income tax appeal number 7282/M/03 for the assessment year 1998-99 before the ITAT against the order of CIT A, on grounds that provision for debenture redemption reserve u/s 115JA amounting to Rs. 345.10 lakhs are not deductible in computing book profit u/s 115JA of the Indian Income tax Act and various other aspects of calculation of the assessed income. The petition pertains to the assessment years 1997-98 and 1998-99. The appeals are currently pending in the ITAT.
3. The Income Tax Department has filed an income tax appeal no. 743/ 2006 dated April 25,
2006 before the Bombay High Court against the order of the tribunal for the assessment year 1994-95 on account of taxability of lease rentals. The amount involved in the appeal is Rs.16 lakhs. The matter is currently pending in the High Court.
Labour
Rangi Ramsubhag Rampyare Chawdhary (“RRRC”) has filed (WCA) No. 415/C-164 against Mahendra Metal and PLL for a claim for compensation of Rs. 4,99,152 and penalty @ 50% of the same in respect of injury caused to RRRC due to an accident which occurred on December 13, 2003. The matter is pending in the Labour Court.
Others (Writ Petitions)
1. Morarjee Goculdas Spinning & Weaving Company Limited (now known as Peninsula) has filed Writ Petition No. 840 of 1999 against the State of Maharashtra for issuance of writ of mandamus and for order and declaration that the standing committee resolution bearing SCR No. 1653 dated February 22, 1996 and the order dated October 31, 1998 in so far as such orders impose charges on industries located in non-confirming zones, at twice the rate applicable to industries in conformity zones, are ultra vires, unconstitutional, illegal, null and void ab-initio and non-est. The writ petition is pending before the High Court.
2. Global Earth Properties & Developers Private Limited and PLL have filed an Appeal No. 182
of 2008 in N/M 3062 of 2007 in Suit No.2316 of 2007 against Loreal India Private Limited and others challenging the order dated January 17, 2008 passed by Justice A.M. Khanwilkar in N/M No.3062 of 2007 in Suit No.2316 of 2007, wherein it was held that the Respondent no. 1 was entitled to enjoy the suit premises in the same way as in the leave and license agreement till the appellants followed due process of law to evict the same.
B. Outstanding litigation and material developments/proceedings initiated by PLL
Civil
1. PLL has filed suit no.516 of 2008 against Ms. Mrudula Sushil Adhyaru and other for damages and permanent injunction against them from entering, trespassing or encroaching or interfering with or obstructing, putting any obstacles in the plaintiff’s use, enjoyment, occupation of the suit property shown in plan. Pending suit, temporary order and injunction. The matter is pending in the High Court and the Plaintiff is directed to file affidavit of services.
2. PLL has filed an appeal no. 1993 of 1999 against Waman Sakharam Shinde Foreman against
the order passed by the Industrial Court for the Complaint Nos. 126 of 1997 and PGA/CA/55-
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21/2002 claiming extension of service in the Industrial Court. The Single Judge confirmed the order of the lower court against which PLL had filed an appeal. The Division Bench passed a conditional order granting stay of the single judge order with a condition that PLL needs to pay the monthly wages withholding the gratuity payment. PLL has complied with the order of the Division Bench. The appeal is pending for the final hearing.
3. PLL has filed an appeal no. 931/2006 against Chandrakant S. Dhopte against the orders of the
Labour Court for the Complaint (ULP) No. 188 of 1995 dated January 15, 1997 and January 28, 1997 and Industrial Courts being Revision Appl. (ULP) No. 26 of 1997 dated December 2, 2000 in the High Court whereby the order for reinstatement on the defendant’s original post with full back wages and continuity of services was passed. The Appeal has been filed before the Division Bench of the High Court.
4. PLL has filed suit no.56 of 1978 against The Kohinoor Mills Company Limited for a claim of
Rs. 72,551.22 for cotton ordered for purchased by defendants. A writ of summons and copy of the plaint was served on Defendant in March 1979. The written statement had been filed by the Defendants in January 1980. The suit is yet to be listed for hearing. This suit was originally filed by Dawn Mills.
5. PLL has filed a suit no.912/1999 against Arun Hasani for Rs. 97,181 for Melange Hosiery
Yarn on cones sold and delivered to defendants. The Summons have not been served. The suit is pending in the High Court. This suit was originally filed by Dawn Mills.
6. The Maharashtra State Power Looms Corporation and PLL have filed Suit No.162/1975
against M/s Laxmi Enterprises Plaintiff for a claim of Rs.1,60,764.75 from the defendants for not supplying yarn as agreed. The written statement was filed by the Defendants in September 1988. The suit is pending in the High Court and the same has to be listed for hearing. This suit was originally filed against Dawn Mills.
7. PLL has filed suit no.2189/1992 against Fairdeal Traders for a claim of Rs.1,51,387.59 for
Hosiery products sold and delivered to defendants. However, only defendant No.3 has entered appearance claiming that the persons who accepted service for Defendant Nos.1 and 2 have no authority to do so. Defendant No.3 has filed written statement. The suit is pending before the High Court.
8. PLL has filed suit no. 1737/1990 against Herbert Anthony Almeida for a claim of
Rs.1,04,074.31 for breach of agreement by the defendant. Summons was served by publication in newspaper. No written statement filed. The suit is pending in the High Court and is still to be listed. This suit was originally filed by Dawn Mills.
9. PLL has filed a summary suit No.1037/1997 against M/s Shakti Highway Carriers and others
for a claim of Rs. 4,60,090.91 for goods not delivered to the correct party by the defendants. Defendant No.1 has been served. Service to other defendants was not effected and the suit could not be proceeded with. This suit was originally filed by Dawn Mills.
10. PLL has filed a suit no.3425/1998 against Osva Textile Industries Private Limited for a claim
of Rs.1,80,116 for yarn sold and delivered to the defendants. Summons has still not been served for want of proper address of the Defendants. The matter is pending in the High Court. This suit was originally filed by Dawn Mills.
11. PLL has filed suit no.3681/2001 against Mr. R.D. Tewani and others for a claim of
Rs.6,00,156 for breach of agreement by PLL. PLL shall be applying for an ex-parte decree. The matter is pending in the High Court. This suit was originally filed by Dawn Mills.
12. PLL has filed summary suit no.2207 of 1993 against Ratna Sindhu Trade Link for a claim of
Rs.41,600.80 on grounds of non-payment for the hosiery grey fabric sold and delivered to Ratna Sindhu. A chamber order was taken out in October 1993 for condoning the delay in filing writ of summons. Summons was not served as they were attempting to settle the matter, This suit was originally filed by Dawn Mills.
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13. PLL has filed suit no.5807/1981 against Kamal Textiles and others for a claim of Rs.39,882.30 for hundi accepted by defendants. Summons was not served since defendants had left the premises and PLL is awaiting fresh addresses to be provided. The matter is pending in the City Civil Court. This suit was originally filed by Dawn Mills.
14. PLL has filed 9 cases against BMC for a claim amounting to Rs.8,81,33,870. All these matters
are pending in the Small Causes Court.
15. PLL has filed Mesne Profits Misc Application No. 27 of 2007 in T.E.R.Suit No.366 /387 of 2001 against Allahabad Bank for an enquiry into determination of mesne profits and that mesne profits be fixed at Rs.4,06,953.00 per month and Defendant be ordered to pay at this rate and also Municipal Taxes and other dues from June 1,2001 @ Rs.13,215 per month till actual delivery of possession to PLL of the suit premises. On October 20, 2008, cross examination of P.W.2-Architect was partly complete. The matter is pending in the Small Causes Court.
16. PLL has filed T.E.& R.Suit No.78/122 of 2007 against Hindustan Petroleum Corporation and
others (“HPC”) for an order and decree of eviction of HPC from the suit premises and for payment of mesne profits to PLL. The matter is pending before the Small Causes Court.
17. PLL has filed R.A.E Suit No.1139/1836/2007 against Jayaben Visanji Maru (“Maru”) for
eviction and possession of suit premises. Since Maru failed to file written statements, the matter has been posted for hearing as an undefended suit. The parties are to file consent terms in the matter before November 28, 2008. The matter is pending before the Small Causes Court.
18. Eurostar Properties has filed suit no. 1298 of 2006 against Swan Mills Limited (as the owner
of the property) and Peninsula (as the developer of the property)for declaration that there is a valid, subsisting and binding contract for Sale of building. Bombay High Court has rejected the application of Eurostar Properties for ad-interim reliefs.
19. Peninsula Land Limited has filed Municipal Appeal No. 291 of 2005 in the Small Causes
Court, Mumbai against Bombay Municipal Corporation (“BMC”) for setting aside the order dated February 24, 2005 fixing the ratable value at Rs. 90,10,205 in respect of Piramal Chambers. BMC had filed for computation on July 19, 2005. The matter was adjourned to July 27, 2006 for hearing. The matter is currently pending in the Small Causes Court, Mumbai.
Statutory
1. Piramal Holdings Limited (now known as Peninsula Land Limited) has filed an income tax appeal no. 3884/MUM2008 dated June 2, 2008 for assessment year 2004-05 against the order of the appellate commissioner confirming disallowance on account of depreciation on reclassification of block of assets, disallowance of foreign travel and disallowance of miscellaneous expense. This matter is pending before the ITAT
2. PLL has filed an appeal no. CIT(A)XXXVI/CIT/IT06(3)(2)/6/2005-06 dated April 4, 2005
before the appellate commissioner against the addition made by the assessing officer on ground of disallowance of interest under Section 14Afor Rs. 110.04 lakhs, disallowance of deduction under Section 43B amounting to Rs. 79.35 lakhs made within the grace period, additions made on account of MODVAT on closing stock amounting to Rs. 123.56 lakhs, revised long term capital gain on sale of lands under Section 45(2) on the basis of FMV as on April 1, 1981. The FMV as on April 01, 1981 is to be taken at Rs. 240 per sq ft as against Rs. 16 per sq ft considered by the AO. The appeal pertains to assessment year 2002-03. This appeal is currently pending before CIT (A).
3. PLL has filed an appeal dated March 26, 2009 on additions on account of unavailed
MODVAT credit on closing stock of Rs. 79.18 lakhs. The appeal pertains to assessment years 2003-04. The appeal number has not been issued yet. The appeal is currently pending before the ITAT.
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4. PLL has filed an appeal dated January 23, 2009 before the appellate commissioner against
additions made by the AO on the ground of rejecting system of accounting and computing notional gain of Rs. 3438.80 lakhs. The AO made further disallowance of expenditure of Rs. 1564.33 lakhs on ground that the same is not for the purpose of business, AO computed capital gains at Rs. 2066.70 lakhs as against Rs. 451.43 lakhs on account of conversion of land as stock in trade by taking FMV at the rate of Rs. 3000 per sq ft as against Rs. 1750 per sq ft. Further in computing capital gains the AO considered cost of land as on April 1, 1981 at the rate of Rs. 16.32 per sq ft as against Rs. 240 per sq ft. The AO further did not increase FMV in computing income tax. The AO further disallowed loss of Rs. 7136.76 lakhs on sale of shares. The AO has not allowed set off of unabsorbed depreciation of Rs. 1738.96 against other income. The appeal number has not been issued yet. This appeal pertains to assessment year 2006-07. The appeal is currently pending before the CIT(A).
Labour
1. PLL has filed 4 cases, being case number 14/02 dated April 3, 2002, case number 31/99 dated July 30. 1999, case number 45/ 96 dated September 25, 1996 and case number 13/02 dated April 2, 2002) against ESI on grounds of recovery of contribution in the respective cases for a claim amounting to Rs. 79,277.70.
2. PLL has filed 2 cases being, case number 860/ 02 dated October 3, 2002 and case number 195/06 dated May 4, 2006 against Rashtriya Mazdoor Sangh and sought injunction against workers from staging illegal demonstration within 100 mtrs of company gate. The matter is pending in the Labour Court.
3. PLL has filed an appeal no 3150/2006 in the Bombay High Court against the order dated December 5, 2006 of the Industrial Court and the order dated December 10, 2006 of the Labour Court in respect of 17 workers for declaring the closure as illegal and reinstatement with back wages and continuity of service and wages. Pursuant to directions of the High Court, Labour Court has upheld the case of 15 workers by order dated December 4, 2007. The Company appealed against this order in the Industrial Court. Out of the 15 cases, 13 cases were thereafter settled and 2 are pending in the Industrial Court. Further, of the 2 cases pending in the Labour Court, 1 case has been settled and 1 case is pending before the Labour Court. The amount involved is approximately Rs 15 lakhs.
4. PLL has filed Revision Application 13 of 2006 dated January 23, 2006 against Mohanlal Ramdas Yadav against the ad-interim order of the Labour Court whereby the Labour Court had stopped the enquiry proceedings against Mr. C.S. Dhopte. The matter is pending in the Labour Court.
Others (Writ Petitions)
The Indian National Trust and Cultural Heritage has filed Writ Petition No.1650 of 2005 against the State of Maharashtra and others seeking appropriate directions from the High Court for the protection and conservation of heritage structures in the mills of Mumbai, including properties belonging to Peninsula. Peninsula filed a chamber summons for including them as a party in the matter. On May 5, 2006 the matter came up for hearing before the Division Bench of the High Court. The Division Bench while disposing of all the Notices of Motion passed the following Order:
I (a) Interim injunction restraining the private mills from demolishing, destroying or in any manner
prejudicing the integrity of the 23 structures which have been listed except by following the due process of law;
(b) Directed the private mills to submit their objections to the designated officer of the Municipal
Corporation and await the Government decision and thereafter, if aggrieved, take appropriate legal steps; and
(c) Report to be made by the delegate of the Municipal Commissioner to the State Government,
preferably within 3 months from May 22, 2006. The State Government will take its decision and
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issue necessary notification within 2 months from the receipt of the report. As on date, the writ petition is pending final hearing.
Men’s Club s.p.a
Civil
M/s Levante (“Levante”) srl has filed a case against Men’s Club s.p.a (“MCP”) on grounds of default in payment of the rents due in the Court of Giulianova, Italy. The Court has passed a decree in favour of Levante to seize some of the assets of MCP and Levante has seized the same. Further, Morarjee International srl, (“ML”) and the Company also approached the Court to intervene/ participate in the assets seized to recover their dues from MCP. ML obtained a decree of a definitive injunction. Further, the Company alos obtained a decree of temporary injunction .
Miranda Tools Private Limited (“MTPL”)
Criminal
A criminal complaint no. R/39356/2008 has been filed against Miranda Tools Private Limited before the Court of Chief Metropolitan Magistrate, Tis Hazari District Court, Delhi under section 120B read with section 500 of the Indian Penal Code, 1860 along with section 357 of the Code of Criminal Procedure, 1973 on grounds of defamation and loss of personal and business reputation of M/s R.P. Gupta & Sons. The next date of hearing is July 29, 2009.
Statuory
MTPL has filed an appeal number E/4231 and 4132/05 against the excise authorities at Ankleshwar.
Cromwell Tools (India) Private Limited (“CTPL”) purchased products manufactured by MTPL(a division of erstwhile Morarjee Goculdas Spinning & Weaving Company Limited, which was later transferred to Nicholas Piramal India Limited and thereafter to MTPL), MTPL on a principle to principle basis and sold them to bulk users. The excise authorities at Ankleshwar held the arrangement was a device to reduce the incidence of excise payable by MTPL. The said authorities has held that MTPL ought to have paid excise not on the price at which it sold the products to CTPL but at the price at which CTPL sold the products to bulk users. The next date of hearing is June 2, 2009 and the matter in currently pending in CESTAT.
Labour
Two cases have been filed cases in the Labour Court, Bharuch against MTPL on the grounds of wrongful
termination of employment at the Ankeshwar plant of Nicholas Piramal. Reinstatement have been claimed.
Topstar Mercantile Private Limited Through a High Court of Bombay order dated December 12, 2008, Bigdeal, along with Newzone Mercantile Company Private Limited, Alltime Mercantile Company Private Limited (“Alltime”) and Superplaza Mercantile Company Private Limited merged into Topstar Mercantile Private Limited (“Topstar”). Therefore, the litigations initiated against Alltime Mercantiles Company Private Limited have been transferred to Topstar
A. Outstanding litigation and material developments / proceedings initiated against Alltime:
Statutory
1. An appeal number 2433 to 2435/M/05 dated March 30, 2005 was filed by the assistant
commissioner against the order of the CIT (A). The matter was in respect of the assessment years 1998-99, 2000-01 and 2001-02, where it was contested by Alltime that the manner of computation of interest disallowance should be consistently followed and allowed by the appellate commissioner. The matter is pending before the Income Tax Appellate Tribunal.
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2. Alltime has filed an appeal number ITA No.589 of 2007 dated May 3, 2007 before the Bombay high court against the order of the tribunal for the assessment year 1993-94 on the ground that renunciation of right is not taxable.
3. Appeals have been filed by the income tax department before the High Court of Mumbai in respect
of assessment years 1981-82 and 1982-83 aggregating to Rs. 16.31 lakhs on account of disallowance of short term capital loss and interest. These appeals are currently pending before the High Court of Mumbai.
B. Outstanding litigation and material developments/proceedings initiated by Alltime
An appeal has been filed by Alltime in ITA number 1889 – 1891/M/05 dated March 04, 2005 against disallowance of interest confirmed by the appellate commissioner. The tax effect arrived at is Rs. 104.16 lakhs. This appeal pertains to the assessment years 1998-99, 2000-01 and 2001-02. The matter is pending before the Income Tax Appellate Tribunal.
VI. Litigation involving our Joint Venture Company
Just Textiles Limited (“JTL”)
Statutory
1. A show cause cum demand notice number F. No.: V/Adj.(SCN) 15-215/JC/KDN/MIII/04/6423 dated June 10, 2008 has been issued Authority - Office of the Joint Commissioner of Central Excise, Mumbai III Commissionerate against JTL on the grounds of contravention of the provisions of Section 4 of Central Excise Act,1944 for under valuation of fabric value. The amount involved is Rs.14,56,530. The matter is currently pending before the Joint Commissioner, Mumai .
2. A show cause notice number F.No. - V-Adj/ (SCN) (Ch.54) / 4-19/ 08-09/ 1489 dated June 13, 08
has been issued againt JTL on the grounds of failure to file the monthly excise return 1 returns in the prescribed format for the month of Feb, 2004 within the prescribed time limit. The amount involved is Rs. 5000. The matter is currently pending.
Material developments since the last balance sheet date
There have been no material changes post December 31, 2008 that may affect our future results of operation.
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GOVERNMENT APPROVALS
In view of the approvals listed below, we can undertake this Issue and our current business activities and no further material approvals are required from any Government authority to continue such activities. We have received the following Government approvals that are material to our business: Approvals for the Issue:
1. In principle approval from the Bombay Stock Exchange Limited dated [●]. 2. In principle approval from the National Stock Exchange of India Limited dated [●]. A. Company Approvals
Corporate Approval
1. Corporate Identification Number: U 52322MH 1995 PLC 090643.
2. Certificate of Importer Exporter Code issued on September 22, 1995 by the Ministry of Commerce,
Government of India . The certificate grants our Company IEC no.-0395033853 Factory Approvals for the Nagpur Plant
1. Renewal License Number P/HQ/MH/15/2257(P19629) dated November 13, 2007 to import and store petroleum in installation granted by the Chief Controller of Explosives. This license is valid till December 31, 2010.
2. Registry Number - MR/12574 dated October 22, 2008 issued by Bombay Boiler Inspection Department under the Indian Boiler Act No. V of 1923 for the use of a flue tube package type boiler. This license is valid till October 15, 2009.
3. Registry Number MR/13484 dated November 3, 2008 issued by Bombay Boiler Inspection Department under the Indian Boiler Act No. V of 1923 for the use of a MWT type Boiler. This license is valid till October 23, 2009.
4. Consent number – BO/WPAE/NG-1340-08/R/CCHWA-147 for Consent to operate dated June 7, 2008 under the Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention & Control of Pollution) Act, 1981, Hazardous Wastes (Management & Handling) Rules, 1989 from Maharashtra Pollution Control Board issued by the Maharashtra Pollution Control Board. This License is valid upto December 31, 2009.
5. Verification certificate number 60392 dated March 22, 2009 for (i) One ATCO make electronic machine, (ii) Two elder make electronic machine, (iii) One Sansui make Electronic Machine, (iv) Two EL weigh make electronic machine, (v) One Avery make electronic machine under the Weights and Measures Enforcement Act, 1985 and Maharashtra Weights and Measures Standards(Enforcement) Rule, 1987 and amended rules 2000 issued by the Government of Maharashtra. This license is valid upto March 22, 2010.
6. Verification certificate number 60390 dated March 22, 2009 for (i) Two Aiwa- make electronic weighing machines, (ii) One Essae digi make electronic weighing machines, (iii) One MCO make machine, (iv) One afocosot-make machine under the Weights and Measures Enforcement Act, 1985 and Maharashtra Weights and Measures Standards(Enforcement) Rule, 1987 and amended rules 2000 issued by the Government of Maharashtra. This license is valid upto March 22, 2010.
7. Verification certificate number 60388 dated March 21, 2009 for cast iron weights Weights and Measures Enforcement Act, 1985 and Maharashtra Weights and Measures Standards(Enforcement) Rule, 1987 and amended rules 2000 issued by the Government of Maharashtra. This license is valid upto March 21, 2010.
8. Verification certificate number 60369 dated March 21, 2009 for one road weigh bridge under the Weights and Measures Enforcement Act, 1985 and Maharashtra Weights and Measures Standards (Enforcement) Rule, 1987 and amended rules 2000 issued by the Government of Maharashtra. This license is valid upto March 21, 2010.
9. License number 19/CON/2007 dated June 27, 2007 authorizing the Company to acquire, store and use solvent and slop issued by the Chief Inspector Industry. This license shall be valid upto June 26, 2010.
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10. License Number 094020 and registration number- 1314/ NGP/2(m)(i) dated January 6, 2009 for running of the factory under the Factories Act, 1948 for a period upto December 31, 2009.
11. Certificate number- RA/ST-065/2008 for Stability of factory dated June 5, 2008 obtained as per the Factories Act, 1948 for manufacturing cotton fabric .This certificate is valid for 5 years.
12. Approval Number- PLAN/SAK/51-2008/ 2064-67 dated May 23, 2008 issued by the Government of Maharashtra for approval of plans under the Factories Act, 1948.
13. Registration Number 760022583/ COMMERCIAL II dated September 20, 2007 issued by the Inspector under the Bombay Shops and Establishment Act, 1948 for Mumbai. This license is valid till December 31, 2009.
14. License number MH/PE/APP/41854/ Zone- V/ 05-A/ 327 dated July 14, 1995 issued by the Office of Regional Provident Fund Commissioner under the Maharashtra Tax on Professoins, Trades, Callings and Employments Act, 1975.
Tax related approvals for the Nagpur Plant
1. Permanent Account Number – AAACM2725R 2. Tax payer Identification Number under The Maharashtra Value Added Tax Act, 2002- 27530279938 V
dated April 1, 2006. 3. Tax payer Identification Number under The Central Sales Tax (Registration & Turnover) Rules, 1957 -
27530279938 C dated April 1, 2006 4. Central Excise Registration number – AAACM2725RXM001 dated April 8, 2005 issued by the Office
of the deputy Commissioner Customs and Central Excise Division –II Nagpur.
5. Issue of Tax Deduction Account Number NGPM00997D (Nagpur) MUMM 09765A (Mumbai) by the office of the Income Tax officer.
Licenses applied for by the Company
The Company has applied for the following licenses:
1. Renewal application dated December 31, 2008 to the Assistant Labour Commissioner & Registering Officer for amendment in Certificate of Registration under the Contract Labour Act, 1970 for the year 2009.
B. Subsidiary Approvals
Integra Apparels & Textiles Limited (“Integra”)
Corporate Approval
1. Certificate of Importer Exporter Code issued on September 1, 2004 by the Ministry of Commerce,
Government of India . The certificate grants our Company IEC no.- 0704010828. Factory Approvals for the Integra Plant
1. Acknowledgement number 1205/SIA/IMO/2005 dated November 28, 1997 for weaving and finishing of cotton textiles on powerlooms granted by the Ministry of Commerce and Industry.
2. Registration number (GTA)/ AABCI2524HST001 dated December 29, 2005 for transportation of goods by the road under the Finance Act, 1994 granted by the Ministry of Finance.
3. Registration number Kar.Inspn.53-22750-18 dated April 18, 2006 for insuring the employees and paying a contribution towards the same under the Employees’ state Insurance Act, 1948 granted by the Employees’ State Insurance Corporation.
4. Consent number 329/KSPCB/BNG-SR-I/EO/DEO/AEO-1/R.NO.13887/WPC&APC/2008-09 dated March 16, 2009 for the consent for discharge of effluents under the Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention & Control of Pollution) Act, 1981 granted by the Karnataka State Pollution Control Board. This license is valid from January 1, 2009 to December 31, 2009.
5. Registration number 11036217 dated August 3, 2004 issued by the Profession Tax officer, Karnataka Government under the Karnataka government Professional, Crafts and Industrial Tax, 1976.
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6. Factory and Boiler License number MYB 14291 dated July 23, 2005 renewed on January 1, 2008 for the use of 11880 kilowatt house horse power under the Factories Act, 1948 granted by the Chief Inspector of Factories. This license is valid upto December 31, 2010.
7. Office order number 378 and 376 dated February 21, 2008 for sewerage water connection issued by the Bangalore Water Supply & Sewerage Board.
8. License number KN/ BNG/ RO/CO-ORD/2006-07/116 dated July 31, 2006 issued by the Employees’ Provident Fund Organisation.
Tax related approvals for the Integra Plant
1. Permanent Account Number – AABCI2524H 2. Tax payer Identification Number under the Karnataka Value Added Tax Act- 29940204262 April 1,
2005. 3. Service Tax Code Number- AABCI2524HST001 issued by the Ministry of Finance.
4. Issue of Tax Deduction Account Number bearing number BLRI02104E by the office of the Income Tax officer.
Fabritex Exports Private Limited (“Fabritex”) Factory Approvals for the Fabritex Plant
1. Trade License number MOH.BH.PR/372/07-08 dated March 2, 2009 issued by the Bruhat Bangalore Mahanagara Palike, Health Department for carrying on garments trade. This license is valid upto March 31, 2010.
2. Consent number KSPCB/BNG-SR-I/EO/DEO/AEO-1/R.NO.11164/WPC&APC/2008-09 dated September 24, 2008 for the consent for discharge of effluents under the Water (Prevention and Control of Pollution) Act, 1974 & Air (Prevention & Control of Pollution) Act, 1981 granted by the Karnataka State Pollution Control Board. This license is valid from October 1, 2008 to September 30, 2009.
3. Factory and Boiler license number MYB 11743 dated February 2, 2001 renewed on December 31, 2009 for the use of 250700 kilowatt house horse power under the Factories Act, 1948 granted by the Chief Inspector of Factories. This license is valid upto December 31, 2009.
4. License and factory registration number 8823 dated August 31, 1994 renewed on January 1, 2009 for the use of 250700 kilowatt house horse power under the Factories Act, 1948 granted by the Chief Inspector of Factories. This license is valid upto December 31, 2009.
5. License number KW/23058 under the Employees’ Provident Fund Act granted by the Commissioner of Provident Fund.
Tax Related Approvals for the Fabritex Plant
1. Tax payer Identification Number under the Karnataka Value Added Tax Act- 29700052589 dated November 24, 2006.
Intellectual Property of the Company
Our Company has obtained the following registrations in India:
Sr. No. Application
No.
Class Name Date of filing of
application
Status
1. 1430653 25 Morarjee March 17, 2006 Registration valid till March 17, 2016
2. 1430654 24 Morarjee March 17, 2006 Registration valid till March 3, 2016
Our Company has applied for the following registrations in India:
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Sr.
No.
Application
No.
Class Name Date of filing of
application
Status
1. 1699222 24 Gorena June 16, 2008 Registration Pending
2. 1699225 25 Gorena June 16, 2008 Registration Pending
3. 1699223 24 Vaughan & Pickett June 16, 2008 Registration Pending
4. 1699224 25 Vaughan & Pickett June 16, 2008 Registration Pending
Our Company has applied for the following registrations in foreign countries:
Sr.
No.
Details Class Name Date of
application
Country Status
1. 123500 24 Gorena December 16, 2008
UAE Registration Pending
2. 100144 24 Gorena December 21, 2008
Kuwait Registration Pending
3. 74614 24 Gorena
January 5, 2009 Bahrain Registration Pending
4. 123501 25 Gorena December 16, 2008
UAE Registration Pending
5. 74615 25 Gorena January 5, 2009 Bahrain Registration Pending
6. 100145 25 Gorena
December 21, 2008
Kuwait Registration Pending
7. 123502 24 Vaughan & Pickett December 16, 2008
UAE Registration Pending
8. 100194 24 Vaughan & Pickett December 21, 2008
Kuwait Registration Pending
9. 74616 24 Vaughan & Pickett January 5, 2009 Bahrain Registration Pending
10. 123503 25 Vaughan & Pickett December 16, 2008
UAE Registration Pending
11. 74617 25 Vaughan & Pickett January 5, 2009 Bahrain Registration Pending
12. 100146 25 Vaughan & Pickett December 21, 2008
Kuwait Registration Pending
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STATUTORY AND OTHER INFORMATION
Authority for the Issue
This Issue is being made pursuant to a resolution passed under Section 81(1) of the Act by the Board of Directors of the Company at its meeting held on February 23, 2009. At the aforementioned meeting, the Board has declared the rights entitlement as 1 Rights Equity Share for every 1 fully paid up Equity Share held on the Record Date. The Board has also constituted a Committee of Directors and delegated powers to the Committee to finalise the other terms of the issue. The Rights Issue Committee has, in its meeting held on [●], determined the Issue price as Rs. [●] per Equity Share.
Prohibition by SEBI / RBI
Neither we, nor our Subsidiaries nor any joint venture companies in which we are a party, nor our Directors or the Promoter Group Companies, or companies with which our Directors are associated with as directors or promoters, have been prohibited from accessing or operating in the capital markets under any order or direction passed by SEBI. Further, none of the directors or person(s) in control of the Promoter (as applicable) have been prohibited from accessing the capital market under any order or direction passed by SEBI. Further neither we, nor our Subsidiaries nor any joint venture companies in which we are a party, nor our Directors or the Promoter Group Companies, or companies with which our Directors are associated with as directors or promoters have been declared as wilful defaulters by RBI and there have been no violation of securities laws committed by any one of them in the past and no such proceedings are pending against them. Eligibility for the Issue
We are an existing company registered under the Act, whose Equity Shares are listed on the BSE and the NSE. We are eligible to make the Issue in terms of Clause 2.4.1 (iv) of the SEBI DIP Guidelines. Disclaimer Clause
AS REQUIRED, A COPY OF THIS DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI.
IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT LETTER OF
OFFER TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME
HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY
EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH
THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS
MADE OR OPINIONS EXPRESSED IN THE DRAFT LETTER OF OFFER. THE LEAD MANAGERS,
ENAM SECURITIES PRIVATE LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN
THE DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000 IN FORCE
FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN
INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS PRIMARILY
RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT
INFORMATION IN THE DRAFT LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED TO
EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS
RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE
LEAD MANAGER, ENAM SECURITIES PRIVATE LIMITED HAS FURNISHED TO SEBI, A DUE
DILIGENCE CERTIFICATE DATED APRIL 20, 2009 IN ACCORDANCE WITH THE SEBI
(MERCHANT BANKERS) REGULATIONS, 1992 WHICH READS AS FOLLOWS:
“1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO
LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH
COLLABORATORS, ETC., AND OTHER MATERIALS IN CONNECTION WITH THE
FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;
2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE
COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES,
INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS
OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE
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CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER
PAPERS FURNISHED BY THE COMPANY,
WE CONFIRM THAT: (A) THE DRAFT LETTER OF OFFER FORWARDED TO SEBI IS IN CONFORMITY
WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE
ISSUE;
(B) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE, AS
ALSO THE GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY SEBI, THE
GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF
HAVE BEEN DULY COMPLIED WITH; AND
(C) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE,
FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL
INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND
SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF
THE COMPANIES ACT, 1956, the SEBI (DISCLOSURE AND INVESTOR
PROTECTION) GUIDELINES, 2000 AND OTHER APPLICABLE LEGAL
REQUIREMENTS.
3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT LETTER OF OFFER ARE REGISTERED WITH SEBI AND TILL DATE SUCH
REGISTRATION IS VALID.
4. WE SHALL SATISFY OURSELVES ABOUT THE WORTH OF THE UNDERWRITERS TO
FULFIL THEIR UNDERWRITING COMMITMENTS.- NOT APPLICABLE
5. WE CERTIFY THAT WRITTEN CONSENT FROM THE PROMOTERS HAS BEEN
OBTAINED FOR INCLUSION OF THEIR EQUITY SHARES AS PART OF THE
PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE EQUITY SHARES
PROPOSED TO FORM PART OF THE PROMOTERS’ CONTRIBUTION SUBJECT TO
LOCK-IN WILL NOT BE DISPOSED OR SOLD OR TRANSFERRED BY THE PROMOTERS
DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT LETTER
OF OFFER WITH SEBI UNTIL THE DATE OF COMMENCEMENT OF THE LOCK-IN PERIOD AS STATED IN THE DRAFT LETTER OF OFFER. - NOT APPLICABLE
6. WE CERTIFY THAT CLAUSE 4.6 OF THE SEBI (DISCLOSURE AND INVESTOR
PROTECTION) GUIDELINES, 2000, WHICH RELATES TO SECURITIES INELIGIBLE
FOR COMPUTATION OF PROMOTERS' CONTRIBUTION, HAS BEEN DULY COMPLIED
WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE CLAUSE
HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER. - NOT APPLICABLE
7. WE UNDERTAKE THAT CLAUSES 4.9.1, 4.9.2, 4.9.3 AND 4.9.4 OF THE SEBI
(DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000 SHALL BE
COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO
ENSURE THAT PROMOTERS’ CONTRIBUTION AND SUBSCRIPTION FROM ALL FIRM
ALLOTTEES WOULD BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF
THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT
ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’
CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED
COMMERCIAL BANK AND SHALL BE RELEASED TO THE COMPANY ALONG WITH
THE PROCEEDS OF THE PUBLIC ISSUE. - NOT APPLICABLE
8. WHERE THE REQUIREMENTS OF PROMOTERS’ CONTRIBUTION IS NOT
APPLICABLE TO THE ISSUER, WE CERTIFY THE REQUIREMENTS OF PROMOTERS’
CONTRIBUTION UNDER CLAUSE 4.10 {SUB-CLAUSE (A), (B) OR (C), AS MAY BE
APPLICABLE} ARE NOT APPLICABLE TO THE ISSUER.
9. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE ‘MAIN
OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF
ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES
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WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE
OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.
10. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE
THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE
BANK ACCOUNT AS PER THE PROVISIONS OF SECTION 73(3) OF THE COMPANIES
ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK
ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES
MENTIONED IN THE DRAFT LETTER OF OFFER. WE FURTHER CONFIRM THAT THE
AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE
ISSUER SPECIFICALLY CONTAINS THIS CONDITION.
11. WE CERTIFY THAT NO PAYMENT IN THE NATURE OF DISCOUNT, COMMISSION,
ALLOWANCE OR OTHERWISE SHALL BE MADE BY THE ISSUER OR THE
PROMOTERS, DIRECTLY OR INDIRECTLY, TO ANY PERSON WHO RECEIVES
SECURITIES BY WAY OF FIRM ALLOTMENT IN THE ISSUE. - NOT APPLICABLE.
12. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF
OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE EQUITY
SHARES IN DEMAT OR PHYSICAL MODE.
13. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER:
(A) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE
ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE COMPANY AND
(B) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH
DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO
TIME.”
THE FILING OF THE DRAFT LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE
COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE
COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY
AND OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI, FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH
THE LEAD MANAGER ANY IRREGULARITIES OR LAPSES IN THE DRAFT LETTER OF
OFFER.”
Disclaimer of the Company and the Lead Manager
Our Company and the Lead Manager accept no responsibility for statements made otherwise than in this Draft Letter of Offer or in any advertisement or other material issued by the Company or by any other persons at the instance of our Company and anyone placing reliance on any other source of information would be doing so at his own risk. The Lead Manager and our Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of this Draft Letter of Offer with SEBI. Disclaimer with respect to jurisdiction
This Draft Letter of Offer has been prepared under the provisions of Indian laws and the applicable rules and regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Mumbai, India only. This Draft Letter of Offer has been filed with SEBI, SEBI Bhavan, Plot No.C4-A,'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai 400051 for its observations. After SEBI gives its observations, the Letter of Offer will be filed with the Stock Exchanges as per the provisions of the Act. Selling Restrictions
The distribution of this Draft Letter of Offer and the issue of Rights Equity Shares to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into
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whose possession this Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. The Rights Equity Shares may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed; persons receiving a copy of this Draft Letter of Offer should not, in connection with the offer or sale of the Rights Equity Shares distribute or send this Draft Letter of Offer in or to the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe for the Rights Equity Shares referred to in this Draft Letter of Offer. Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances, create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as of any time subsequent to this date. United States Restrictions
NEITHER THE RIGHTS ENTITLEMENTS NOR THE RIGHTS EQUITY SHARES THAT MAY BE PURCHASED PURSUANT THERETO HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, RESOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OF AMERICA OR THE TERRITORIES OR POSSESSIONS THEREOF (THE “UNITED STATES” OR THE “U.S.”), OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, “U.S. PERSONS” (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”)), EXCEPT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE RIGHTS EQUITY SHARES REFERRED TO IN THIS DRAFT LETTER OF OFFER ARE BEING OFFERED IN INDIA, BUT NOT IN THE UNITED STATES. THE OFFERING TO WHICH THIS DRAFT LETTER OF OFFER RELATES IS NOT, AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS, AN OFFERING OF ANY SECURITIES OR RIGHTS FOR SALE IN THE UNITED STATES OR AS A SOLICITATION THEREIN OF AN OFFER TO BUY ANY OF THE SAID RIGHTS EQUITY SHARES OR RIGHTS ENTITLEMENTS. ACCORDINGLY, THIS DRAFT LETTER OF OFFER SHOULD NOT BE FORWARDED TO OR TRANSMITTED IN OR INTO THE UNITED STATES AT ANY TIME. NEITHER THE COMPANY NOR ANY PERSON ACTING ON BEHALF OF THE COMPANY WILL ACCEPT SUBSCRIPTIONS OR RENUNCIATIONS FROM ANY PERSON, OR THE AGENT OF ANY PERSON, WHO APPEARS TO BE, OR WHO THE COMPANY OR ANY PERSON ACTING ON BEHALF OF THE COMPANY HAS REASON TO BELIEVE IS, A RESIDENT OF THE UNITED STATES AND TO WHOM AN OFFER, IF MADE, WOULD RESULT IN REQUIRING REGISTRATION OF THIS DRAFT LETTER OF OFFER WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.
Designated Stock Exchange
The Designated Stock Exchange for the purpose of the Issue will be the [●]. Disclaimer Clause of the BSE
As required, a copy of this Draft Letter of Offer shall be submitted to the BSE. The disclaimer clause as indicated by the BSE shall be included in the Letter of Offer prior to filing the Letter of Offer with the BSE. Disclaimer Clause of the NSE As required, a copy of this Draft Letter of Offer shall be submitted to the NSE. The disclaimer clause as indicated by the NSE shall be included in the Letter of Offer prior to filing the Letter of Offer with the NSE. Impersonation
As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of sub-
section (1) of section 68A of the Act which is reproduced below:
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“Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any
shares therein, or otherwise induces a Company to allot, or register any transfer of shares therein to him, or any
other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five
years” Filing
This Draft Letter of Offer was filed with SEBI, SEBI Bhavan, Plot No.C4-A,'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai 400051 for its observations. This Draft Letter of Offer will be filed with the Stock Exchanges as per the requirements of the law. All the legal requirements applicable till the date of filing the Draft Letter of Offer with the Stock Exchanges have been complied with. Dematerialised Dealing
The Company has entered into agreements with the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) dated September 3, 2003 and March 2, 2005 respectively and its Equity Shares bear the ISIN No. INE161G01019. Listing
The existing Equity Shares are listed on the BSE and the NSE. The Company has made applications to the BSE and the NSE dated [●], 2009 and [●], 2009, respectively, seeking “in-principle” approval for the listing of the Rights Equity Shares, issued pursuant to the Issue. The Company has received such approval from the BSE pursuant to letter no. [●] dated [●], 2009 and from the NSE pursuant to letter no. [●] dated [●], 2009. The Company will apply to the Stock Exchanges for final approval for the listing and trading of the Rights Equity Shares. If the permission to deal in and for an official quotation in respect of the Rights Equity Shares to be issued pursuant to the Issue is not granted by either of the Stock Exchanges, the Company shall forthwith repay, without interest, all the subscription money received from the Equity Shareholders and/or other eligible applicants pursuant to this Draft Letter of Offer. If there is delay in the refund of such subscription money by more than eight days after the Company becomes liable to repay the subscription money (i.e., 15 days after the Issue Closing Date), the Company and every Director of the Company who is an officer in default shall be jointly and severally liable to repay the money with interest for the delayed period, at the rates stipulated under sub-sections (2) and (2A) of Section 73 of the Act. Consents
Consents in writing of the Auditors, Lead Manager, Legal Advisors, Registrar to the Issue, Compliance Officer, Bankers to the Issue to act in their respective capacities have been obtained and filed with SEBI, along with a copy of this Draft Letter of Offer and such consents have not been withdrawn up to the time of filing of this Draft Letter of Offer with the Stock Exchanges. The auditors, of the Company, namely Shah & Co., Chartered Accountants, and the Directors have given their written consent for the inclusion of their report and the statement of tax benefits (accruing to the Company and its members) in the form and content as appearing in this Draft Letter of Offer and such consents and reports have not been withdrawn up to the time of filing of this Draft Letter of Offer with the Stock Exchanges. To the best of our knowledge there are no other consents required for making this Issue. However, should the need arise, necessary consents shall be obtained by us. Expert Opinion, if any
Other than as disclosed in the chapter titled “Financial Statements” on page 155 of this Draft Letter of Offer, no expert opinion has been obtained by the Company in relation to the Issue.
Issue Expenses
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The Issue related expenses include, inter alia, Issue management fees, printing and distribution expenses, legal fees, advertisement expenses and registrar and depository fees. Expenses related to the Issue will be borne by the Company. The Company intends to utilize approximately Rs.[●] lakhs from the gross proceeds of the Issue towards the Issue expenses. A detailed breakdown of the Issue expenses is set forth in the table below:
Activity Expense
Estimated
Amount (Rs. in
lakhs)
Percentage of
total Issue
expenses (%)*
Percentage of
total Issue size
(%)*
Fees of the Lead Manager, Registrar, Bankers to the Issue, Legal Advisors and other professional services
[●] [●] [●]
Advertising, travelling and marketing expenses
[●] [●] [●]
Printing and stationery expenses [●] [●] [●]
Total [●] [●] [●]
*To be finalized at the time of filing the Letter of Offer.
Underwriting commission, brokerage and selling commission
No underwriting commission, brokerage and selling commission will be paid for this Issue. Date of listing of the Equity Shares on the Stock Exchanges The Equity Shares of our Company were listed on March 24, 2005 and December 3, 2007 on the BSE and the NSE respectively.
Issues for consideration other than cash
The Company has not issued Equity Shares for consideration other than cash or out of revaluation reserves, other than issuances mentioned in the section “Capital Structure” on page 18 of this Draft Letter of Offer.
Outstanding Debentures or Bonds and Preference Shares
The Company has no outstanding debentures or bonds. The Company currently has 10,00,000 5% redeemable cumulative non convertible preference shares of Rs. 100 each.
Option to Subscribe
Other than as set out in this Draft Letter of Offer, the Company has not given any person any option to subscribe to the Equity Shares of the Company.
Stock Market Data for Equity Shares
As our Equity Shares are actively traded on the BSE and NSE, our Company’s stock market data have been given separately for each of these Stock Exchanges. For further information on the high and low closing prices recorded on the BSE and NSE for the preceding month and the number of Equity Shares traded on the days the high and low prices, please refer to the chapter titled “Stock Market Data for Equity Shares of our Company”, on page 156.
Important
� This Issue is pursuant to the resolution passed by the Board of Directors at its meetings held on February 23, 2009.
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� This Issue is applicable to those Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in the electronic form and on the Register of Members of the Company at the close of business hours on the Record Date, after giving effect to the valid share transfers lodged with the Company upto the Record Date.
� Your attention is drawn to the section entitled ‘Risk Factors’ appearing on page ix of this Draft Letter of Offer and Abridged Letter of Offer, respectively.
� Please ensure that you have received the Composite Application Form (“CAF”) with this Draft Letter of Offer and Abridged Letter of Offer.
� Please read this Draft Letter of Offer /Abridged Letter of Offer and the instructions contained therein and in the CAF carefully before filling in the CAF. The instructions contained in the CAF are each an integral part of this Draft Letter of Offer and must be carefully followed. An application is liable to be rejected for any non-compliance of the provisions contained in the Draft Letter of Offer or the CAF.
� All enquiries in connection with this Draft Letter of Offer or CAF should be addressed to the Registrar to the Issue, quoting the Registered Folio number/ DP and Client ID number and the CAF numbers as mentioned in the CAF.
� All information shall be made available to the Investors by the Lead Manager and the Issuer, and no selective or additional information would be available by them for any section of the Investors in any manner whatsoever including at road shows, presentations, in research or sales reports, etc.
� The Lead Manager and the Company shall update this Draft Letter of Offer and the Letter of Offer and keep the public informed of any material changes till the listing and trading commences.
Issue Schedule
Issue Opening Date: [●]
Last date for receiving requests for split forms: [●]
Issue Closing Date: [●]
The Board may however decide to extend the Issue period as it may determine from time to time, but not exceeding 30 days from the Issue Opening Date.
Allotment Letters / Refund Orders
The Company will issue and dispatch letters of allotment/ share certificates/ demat credit and/or letters of regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any, within a period of 15 days from the date of closure of the Issue. If such money is not repaid within eight days from the day the Company becomes liable to pay it, the Company shall pay that money with interest as stipulated under Section 73 of the Act. The Board of Directors declares that funds against this Issue will be transferred to a separate bank account other than the bank account referred to in sub-section (3) of section 73 of the Act. Payment of refund shall be undertaken through ECS for applicants having an account at any of the following 68 centers notified by SEBI: Ahmedabad, Bengaluru, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram (managed by the RBI); Baroda, Dehradun, Nashik, Panaji, Surat, Trichy, Trichur, Jodhpur, Gwalior, Jabalpur, Raipur, Calicut, Siliguri (Non-MICR), Puducherry, Hubli, Shimla (Non-MICR), Tirupur, Burdwan (Non-MICR), Durgapur (Non-MICR), Sholapur, Ranchi, Tirupati (Non-MICR), Dhanbad (Non-MICR), Nellore (Non-MICR) and Kakinada (Non-MICR) (managed by State Bank of India); Agra, Allahabad, Jalandhar, Lucknow, Ludhiana, Varanasi, Kolhapur, Aurangabad, Mysore, Erode, Udaipur, Gorakpur and Jammu (managed by Punjab National Bank); Indore (managed by State Bank of Indore); Pune, Salem and Jamshedpur (managed by Union Bank of India); Visakhapatnam (managed by Andhra Bank); Mangalore (managed by Corporation Bank); Coimbatore and Rajkot (managed by Bank of Baroda); Kochi/Ernakulum (managed by State Bank of Travancore); Bhopal (managed by Central Bank of India); Madurai (managed by Canara Bank); Amritsar (managed by Oriental Bank of Commerce); Haldia (Non-MICR) (managed by United Bank of India); Vijaywada (managed by State Bank of Hyderabad); and Bhilwara (managed by State Bank of Bikaner and Jaipur). This mode of payment of refunds will be subject to availability of complete bank account details including the Magnetic Ink Character Recognition (“MICR”) code as appearing on a cheque leaf, from the Depositories. The payment of refunds through ECS is mandatory for applicants that have bank accounts at any of the 68 centers notified by SEBI, except where the applicant, being eligible, elects to receive refund through NEFT, direct credit or RTGS.
In case of those applicants who have opted to receive their Rights Entitlement in dematerialized form using electronic credit under the depository system, and advice regarding their credit of the Equity Shares shall be
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given separately. Applicants to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post intimating them about the mode of credit of refund within 15 working days of closure of the Issue. In case of those applicants who have opted to receive their Rights Entitlement in physical form and the Company issues Letter of Allotment, the corresponding share certificates will be kept ready within three months from the date of allotment thereof or such extended time as may be approved by the Companies Law Board under Section 113 of the Act or other applicable provisions, if any. Allottees are requested to preserve such letters of allotment, which would be exchanged later for the share certificates. The letter of allotment / refund order exceeding Rs. 1,500 would be sent by registered post/speed post to the sole/first Applicant's registered address. Refund orders up to the value of Rs. 1,500 would be sent under certificate of posting. Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole/first Applicant. Adequate funds would be made available to the Registrar to the Issue for this purpose.
Previous Issues by our Company and our Promoter Group during last three years
Our Company The Company, Morarjee Textiles Limited, undertook a rights issue in 2006, pursuant to which 77,86,913 Equity Shares at Rs. 55 per Equity Share and 51,91,275 detachable warrants were issued on a rights basis. The detachable warrants were convertible into one Equity Share per warrant at a conversion price of Rs.100 per warrant. The issue closed on October 10, 2006 and the Equity Shares and the warrants were issued and allotted on November 3, 2006. The Equity Shares and the detachable warrants were listed on the BSE on November 10, 2006. On December 3, 2007 and on February 7, 2008, all the Equity Shares and the warrants respectively of the Company were listed on the NSE. The certificates in relation to the Equity Shares issued pursuant to the aforementioned rights issue was dispatched on November 6, 2006. Dividend at the rate of 15% on the Equity Shares were paid in FY 2007. For further details, please refer to the chapter titled “Dividends” on page 80 of this Draft Letter of Offer. Promise v Performance:
The Company:
Objects of the Issue The proceeds for the issue of Equity Shares, pursuant to the rights issue carried out by the Company in 2006 were to be used towards: a. repayments of existing high cost debts upto Rs. 1590 lakhs; b. utilization of working capital requirements upto Rs. 2400 lakhs; c. general corporate purposes; d. issue expenses Set out below is the utilization for the amounts raised pursuant to the 2006 rights issue:
Object Amounts (Rs. In
lakhs)
Repayment of existing high cost debt 1590
Utilization for working capital 2400
General Corporate purpose 142.50
Issue expenses 150.30
The proceeds from the exercise of warrants were to be utilised for pursuing organic and inorganic growth opportunities. As none of the warrants have been exercised as on date, the Company would not be in a position to provide the promise versus performance to that extent.
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Peninsula Land Limited (formerly known as Morarjee Realties Limited):
Objects of the issue The objects of the issue were: To finance the modernization-cum-expansion of manufacturing facilities of the company’s textile division; and To finance the margin money requirement for working capital requirements of the modernization-cum-expansion project. Promise v. Performance The promise made in the above rights issue and actual performance achieved as well as the shortfall thereof is as follows:
In Rs. Lakhs
Particulars 1996-97 1995-96 1994-95
Promise Performance Promise Performance Promise Performance
Gross Sales 70,000.00 3,2961.00 51,000.00 37,660.00 43,000.00 4,1691.00
PAT 5270.00 (2090.00) 3160.00 978.0 2720.00 2660.00
EPS 268.60 (10.70) 183.90 49.8 138.6 135.60
Dividend 30% 8% 30% 15% 30% 30%
Investor Grievances and Redressal System
The Company has adequate arrangements for redressal of Investor complaints. Well-arranged correspondence system developed for letters of routine nature. The share transfer and dematerialization for the Company is being handled by inhouse registrar and share transfer agent. Letters are filed category wise after having attended to. Redressal norm for response time for all correspondence including shareholders complaints is seven days. Status of Complaints
Total number of complaints received during FY 2008: 7 Number of shareholders complaints received during on FY 2009: 2 Status of complaints: Out of the 7 and 2 complaints received during FY 2008 and FY 2009 respectively, we have resolved all the complaints to the satisfaction of the shareholders. Time normally taken by Company for disposal of various types of investor grievance: 2-3 days Investor Grievances arising out of this Issue
The Company’s investor grievances arising out of the Issue will be handled by Mr. S.C. Kashimpuria, Compliance Officer and Company Secretary, and Link Intime India Private Limited, who is the Registrar to the Issue. The Registrar will have a separate team of personnel handling only our post-Issue correspondence. The agreement between us and the Registrar will provide for retention of records with the Registrar for a period of at least one year from the last date of dispatch of Letter of Allotment/ share certificate / warrant/ refund order to enable the Registrar to redress grievances of Investors. All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as folio no., name and address, contact telephone / cell numbers, email id of the first applicant, number and type of shares applied for, Application Form serial number, amount paid on application and the name of the bank and the branch where the application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the Renouncee should be furnished. The average time taken by the Registrar for attending to routine grievances will be 2-3 days from the date of receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the
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endeavour of the Registrar to attend to them as expeditiously as possible. We undertake to resolve the Investor grievances in a time bound manner.
Investors may contact the Compliance Officer / Company Secretary in case of any pre-Issue/ post -Issue
related problems such as non-receipt of letters of allotment/share certificates/demat credit/refund orders
etc. His address is as follows:
Mr. S.C. Kashimpuria Morarjee Textiles Limited Peninsula Spenta Mathurdas Mills Compound Senapati Bapat Marg Lower Parel Mumbai 400 013, India. Tel: + 91 22 6615 4651 / 53 Fax: + 91 22 6615 4593 Email: [email protected] Website: www.morarjeetextiles.com Changes in Auditors during the last three years
There has been no change in the auditors in the last three years. Capitalisation of Reserves or Profits
The Company has not capitalized any of its reserves or profits for the last five years.
Revaluation of Fixed Assets
There has been no revaluation of the Company’s fixed assets for the last five years.
Minimum Subscription
If the Company does not receive the minimum subscription of 90% of the issued amount, the Company shall forthwith refund the entire subscription amount received within 15 days from the date of closure of the Issue. If there is a delay beyond eight days after the date from which the Company becomes liable to pay the amount, the Company shall pay interest for the delayed period as prescribed under Section 73 of the Act. The Promoter and members of the Promoter Group holding Equity Shares have undertaken to fully subscribe for their rights entitlement under the Issue. They reserve the right to subscribe for their rights entitlement either by themselves and/ or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any member of the Promoter Group to another member of the Promoter Group. The Issue will become undersubscribed if after considering the number of Equity Shares applied as per the Rights Entitlement plus additional Equity Shares, minimum subscription is not achieved. In the event of undersubscription, our Promoter and members of our Promoter Group (together hereinafter referred to as “Promoters” in this clause) intend to apply for additional Equity Shares of the Company in addition to their rights entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining any approvals required under applicable law, to ensure that at least 90% of the Issue is subscribed. Such subscription for Equity Shares over the Promoter’s rights entitlement, if allotted, may result in an increase in its percentage shareholding above its current percentage shareholding. Further, such acquisition of additional Equity Shares of the Company shall (i) not result in a change of control of the management of the Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the chapter on “Objects of the Issue” on page 31 of this Draft Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of Allotments to such Promoters, in this Issue, the shareholding of such Promoters in the Company exceeds their current shareholding. Such Promoters intend/s to subscribe to such unsubscribed portion as per the relevant provisions of the law. Allotment to such Promoters of any unsubscribed portion, over and above their entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements. The
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above is subject to the terms mentioned in the section titled “Basis of Allotment” in the chapter titled “Terms and Procedure of the Issue” beginning on page 214 of this Draft Letter of Offer.
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TERMS AND PROCEDURE OF THE ISSUE
The Rights Equity Shares are subject to the terms and conditions contained in this Draft Letter of Offer, the enclosed Composite Application Form (“CAF”), FEMA, the Memorandum and Articles of Association of the Company, approvals from the Government of India and the RBI, (if applicable) the provisions of the Act, SEBI DIP Guidelines and other guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies from time to time. The terms and conditions as stipulated in the allotment advice or letter of allotment or consolidated certificates and any other law, rules or regulations as may be applicable and introduced from time to time.
Authority for the Issue
This Issue is being made pursuant to a resolution passed under Section 81(1) of the Act by the Board of Directors of the Company at its meeting held on February 23, 2009. At the aforementioned meeting, the Board has declared the rights entitlement as 1 Rights Equity Share for every 1 fully paid up Equity Share held on the Record Date. The Board has also constituted a Committee of Directors and delegated powers to the Committee to finalise the other terms of the issue. The Rights Issue Committee has, in its meeting held on [●], determined the Issue price as Rs. [●] per Equity Share. Basis for the Issue
The Rights Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in the electronic form and on the register of members of the Company in respect of Equity Shares held in the physical form at the close of business hours on the Record Date, fixed in consultation with the Designated Stock Exchange. The Equity Shares are being offered for subscription in the ratio of 1 Rights Equity Shares for every 1 Equity Shares held by the Equity Shareholders. Rights Entitlement
As your name appears as a beneficial owner in respect of the Equity Shares held in the electronic form or appears in the register of members as an Equity Shareholder as on the Record Date, you are entitled to the number of Rights Equity Shares specified in Block I of Part A of the enclosed CAF. The eligible Equity Shareholders are entitled to 1 Rights Equity Share for every 1 fully paid-up Equity Share(s) held on the Record Date. I General Terms of the Issue
1. Market Lot
The market lot for the Rights Equity Shares in dematerialized mode is one. In case of holding of Equity Shares in physical form, the Company will issue to the allottees one certificate for the Rights Equity Shares allotted to each folio with a split performance (a “Share Certificate”). In respect of the consolidated certificates, the Company will, upon receipt of a request from an Equity Shareholder, split such consolidated certificate into smaller denominations within 10 working days from the receipt of the request from such Equity Shareholder. The Company shall not charge a fee for splitting any of the consolidated certificates. Investors may please note that the Rights Equity Shares can be traded on the Stock Exchanges in
dematerialized form only.
2. Nomination Facility In terms of Section 109A of the Act, a nomination facility is available in case of equity shares. The applicant can nominate any person by completing the relevant details in the CAF in the space provided for this purpose. A sole Equity Shareholder or the first Equity Shareholder, along with other joint Equity Shareholders, being individuals, may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Rights Equity Shares. A person, being a nominee, who becomes
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entitled to the Rights Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the Equity Shares. A nomination shall stand rescinded upon the sale of the Rights Equity Shares by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. When the Rights Equity Shares are held jointly by two or more persons, the nominee shall become entitled to receive the amount only on the demise of all the joint-holders. Fresh nominations can be made only in the prescribed form available on request at the Registered Office or with such other person at such addresses as may be notified by the Company. Only one nomination will be applicable for one folio. Hence, if an Equity Shareholder has already registered a nomination with the Company, no further nomination needs to be made for the Rights Equity Shares to be allotted in the Issue under the same folio. However, new nominations, if any, by an Equity Shareholder shall operate in supersession of any previous nomination. In case the allotment of Rights Equity Shares is in dematerialized form, there is no need to make a separate nomination for such Rights Equity Shares to be allotted in the Issue. Nominations registered with the respective Depository Participant of the applicant will prevail. If the applicants wish to change the nomination, they are requested to inform their respective Depositary Participants.
3. Joint-Holders Where two or more persons are registered as the holders of any Rights Equity Shares, they shall be deemed to hold such Rights Equity Shares as joint-holders with benefits of survivorship, subject to the provisions contained in the Articles of Association. 4. Minimum Subscription If the Company does not receive the minimum subscription of 90% of the issued amount, the Company shall forthwith refund the entire subscription amount received within 15 days from the date of closure of the Issue. If there is a delay beyond eight days after the date from which the Company becomes liable to pay the amount, the Company shall pay interest for the delayed period as prescribed under Section 73 of the Act. The Promoter and members of the Promoter Group holding Equity Shares have undertaken to fully subscribe for their rights entitlement under the Issue. They reserve the right to subscribe for their rights entitlement either by themselves and/ or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any member of the Promoter Group to another member of the Promoter Group. The Issue will become undersubscribed if after considering the number of Equity Shares applied as per the Rights Entitlement plus additional Equity Shares, minimum subscription is not achieved. In the event of undersubscription, our Promoter and members of our Promoter Group (together hereinafter referred to as “Promoters” in this clause) intend to apply for additional Equity Shares of the Company in addition to their rights entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining any approvals required under applicable law, to ensure that at least 90% of the Issue is subscribed. Such subscription for Equity Shares over the Promoter’s rights entitlement, if allotted, may result in an increase in its percentage shareholding above its current percentage shareholding. Further, such acquisition of additional Equity Shares of the Company shall (i) not result in a change of control of the management of the Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section on “Objects of the Issue” on page 31 of this Draft Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of Allotments to such Promoters, in this Issue, the shareholding of such Promoters in the Company exceeds their current shareholding. Such Promoters intend/s to subscribe to such unsubscribed portion as per the relevant provisions of the law. Allotment to such Promoters of any unsubscribed portion, over and above their entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements. The above is subject to the terms mentioned in the section titled “Basis of Allotment” in the chapter titled “Terms and Procedure of the Issue” beginning on page 214 of this Draft Letter of Offer.
5. Notices
All notices to the Rights Equity Shareholders required to be given by the Company shall be published in one English national daily newspaper with wide circulation, one Hindi national daily newspaper with wide circulation and one regional language newspaper with wide circulation at the place where the Registered Office
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is situated and/or will be sent by registered post or speed post to the registered holders of the Rights Equity Shares at their address in India registered with the Registrar to the Issue from time to time. 6. Listing and trading of the Equity Shares
The Company’s existing Equity Shares are currently traded on the BSE and the NSE under the ISIN INE161G01019. The fully paid-up Rights Equity Shares proposed to be issued pursuant to the Issue shall be listed and admitted for trading on the BSE and the NSE under the existing ISINs. All steps for the completion of the necessary formalities for listing and commencement of trading of the Rights Equity Shares allotted pursuant to the Issue shall be taken within seven working days of the finalization of the basis of allotment. The Company has made applications to the BSE and the NSE seeking “in-principle” approval for the listing of the Rights Equity Shares issued pursuant to the Issue in accordance with Clause 24(a) of the Listing Agreements pursuant to letters dated [●], 2009 and [●], 2009, respectively, and has received such approval from the BSE pursuant to letter no. [●] dated [●], 2009 and from the NSE pursuant to letter no. [●] dated [●], 2009. The Company will apply to the Stock Exchanges for final approval for the listing and trading of the Rights Equity Shares. No assurance can be given regarding the active or sustained trading in the Rights Equity Shares or the price at which the Rights Equity Shares offered under the Issue will trade either after the listing. 7. Offer to Non Resident Applicants General permission has been granted to any person resident outside India to purchase equity shares offered on a rights basis, including additional equity shares, by an Indian company in terms of FEMA and Regulation 6 of Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended. However, the general permission referred to above is subject to the restrictions described in “No Offer in the United States” and restrictions on investments by OCBs described below. Applications received from Non Resident Applicants for the allotment of Rights Equity Shares shall, inter alia, be also subject to the conditions imposed from time to time by the RBI under FEMA in relation to the receipt and refund of Application Money (defined below), allotment of Rights Equity Shares, issue of allotment advice/letters of allotment/Consolidated Certificates and payment of dividends. The Board of Directors may, in its absolute discretion, agree to such terms and conditions as may be stipulated by the RBI or any other regulatory authority while approving the allotment of Rights Equity Shares, payment of dividend, etc., to Non Resident applicants. The Rights Equity Shares purchased by Non Residents shall be subject to the same conditions, including restrictions in relation to repatriation, as are applicable to the original Equity Shares against which the Equity Shares are issued on a rights basis. No single FII can hold more that 10% of the Company’s post-Issue paid-up share capital. In respect of an FII investing in the Rights Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of the total paid-up share capital of the Company or 5% of the total paid-up share capital of the Company, in case such sub-account is a foreign corporate or an individual. Currently, the aggregate FII investment in the Company cannot exceed 24% of the Company’s total paid-up share capital. With the approval of the Board and the Equity Shareholders by way of a special resolution, the aggregate FII holding can go up to 100%. However, as on the date of this Draft Letter of Offer, the Company has not obtained any approval from the Board or the Equity Shareholders to increase the FII limit to more than 24%. Pursuant to Circular No. 14 dated September 16, 2003 issued by the RBI, OCBs have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies) Regulations, 2003, as amended. Accordingly, OCBs shall not be eligible to subscribe for the Rights Equity Shares. The RBI has however clarified in A.P. (DIR Series) Circular No. 44, dated December 8, 2003, that OCBs which are incorporated and are not under any adverse notice of the RBI will be considered for undertaking fresh investments as incorporated Non Resident entities. Thus, OCBs desiring to participate in the Issue must obtain prior approval from the RBI. On providing such approval to the Company at its Registered Office, the OCB shall receive the Letter of Offer and the CAF. In case of a change of the status of Equity Shareholders from resident to Non Resident, a new demat account shall be opened by such Equity Shareholders. DETAILS OF SEPARATE COLLECTION CENTERS FOR
THE APPLICATIONS OF NON RESIDENT APPLICANTS IN THE ISSUE SHALL BE PRINTED ON
THE CAF.
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The distribution of this Draft Letter of Offer and the issue of Rights Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. The Company is making the issue of Rights Equity Shares to the Equity Shareholders and this Draft Letter of Offer and the CAFs will be dispatched to the Equity Shareholders at their registered address in India only. 8. No Offer in the United States Neither the Rights Entitlements nor the Rights Equity Shares that may be subscribed to, pursuant thereto have been, and will be, registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or any U.S. state securities laws, and may not be offered, sold, resold or otherwise transferred within the United States of America or the territories or possessions thereof or to, or for the account or benefit of, “U.S. Persons” (as defined in Regulation S under the Securities Act), except in a transaction exempt from, or in a transaction not subject to, the registration requirements of the Securities Act. The Rights Equity Shares referred to in this Draft Letter of Offer are being offered in India but not in the United States of America. The offering to which this Draft Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any shares or warrants or rights for sale in the United States of America, the territories or possessions thereof, or as a solicitation therein of an offer to buy any of the said shares or warrants or rights. Accordingly, this Draft Letter of Offer and the CAF should not be forwarded to or transmitted in or to, and this Draft Letter of Offer and the CAF shall not be dispatched to, the United States of America at any time, except in a transaction exempt from, or in a transaction not subject to, the registration requirements of the Securities Act. None of the Company, the Registrar, the Lead Manager or any other person acting on behalf of the Company will accept subscriptions from any person, or the agent of any person, who appears to be, or who the Company, the Registrar, the Lead Manager or any other person acting on behalf of the Company has reason to believe is, a resident of the United States of America and to whom an offer, if made, would result in requiring registration of this Draft Letter of Offer with the United States Securities and Exchange Commission. Rights Entitlements may not be transferred or sold to any U.S. Persons.
9. Utilization of Issue Proceeds The Board of Directors declares that: (a) The funds received in the Issue will be transferred to a separate bank account other than the bank
account referred to in sub-section (3) of Section 73 of the Act. (b) Details of all moneys utilized out of the Issue shall be disclosed under an appropriate separate head in
the balance sheet of the Company indicating the purpose for which such moneys have been utilized. (c) Details of all unutilized moneys out of the Issue, if any, shall be disclosed under an appropriate
separate head in the balance sheet of the Company indicating the form in which such unutilized moneys have been invested.
The funds received in the Issue will be kept in a separate bank account and the Company will not have any access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90% of the Issue has been received by the Company.
10. Undertakings by the Company (a) The complaints received in respect of the Issue shall be attended to by the Company expeditiously and
satisfactorily.
(b) All steps for completion of the necessary formalities for listing and commencement of trading on all the Stock Exchanges where the Rights Equity Shares are to be listed will be taken within seven working days of finalization of the basis of allotment.
(c) The funds required for dispatch of refund orders/allotment advice/letters of allotment/consolidated certificates by registered post shall be made available to the Registrar to the Issue.
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(d) Where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicants within 15 days of the Issue Closing Date specifying details of the Refund Bank, along with the amount and the expected date of the electronic credit of refund.
(e) That the certificate of security / refund orders to Non Resident Indians shall be dispatched within the specified time.
(f) Except as specified in the chapter titled “Capital Structure” beginning on page 18 of this Draft Letter of Offer, no further issue of securities affecting the Equity Share capital of the Company shall be made until the Rights Equity Shares issued/offered through the Issue are listed or until the Application Money is refunded on account of non-listing, undersubscription, etc.
(g) The Company accepts full responsibility for the accuracy of information given in this Draft Letter of
Offer and confirms that to the best of its knowledge and belief, there are no other facts the omission of which makes any statement made in this Draft Letter of Offer misleading and further confirms that it has made all reasonable enquiries to ascertain such facts.
(h) All information shall be made available by the Lead Manager and the Company to the investors at large and no selective or additional information will be available for a section of the investors in any manner whatsoever including at road shows, presentations, in research or sales reports, etc.
(i) In accordance with Clause 43A of the Listing Agreements, a statement shall be furnished to the Stock
Exchanges on a quarterly basis indicating material deviations, if any, in the utilization of the proceeds of the Issue. This information shall also be published in the newspapers simultaneously with the interim or annual financial results, after such information has been placed before the Audit Committee in terms of Clause 49 of the Listing Agreements. In the event that the Audit Committee points out any deviation in the utilization of the proceeds of the Issue to the Board of Directors, or has given any other reservations about the end use of the proceeds of the Issue, the Company shall inform the Stock Exchanges without any delay. This information, after review by the Board of Directors, shall be furnished to the Stock Exchanges and shall simultaneously be published in the newspapers.
(j) In accordance with Clause 49 of the Listing Agreements, the Company shall disclose to the Audit
Committee, the uses/application of the proceeds of the Issue by major category, on a quarterly basis as a part of its quarterly declaration of financial results. Further, on an annual basis and until the full utilization of the proceeds of the Issue, the Company shall prepare a statement, which shall be certified by the statutory auditors of the Company, of the proceeds of the Issue utilized for purposes other than those specified in this Draft Letter of Offer and place such statement before the Audit Committee.
II Principal Terms and Conditions of the Issue of Equity Shares
1. Face Value Each Equity Share shall have the face value of Rs.10.
2. Entitlement An eligible Equity Shareholder is entitled to 1 Rights Equity Share(s) for every 1 fully paid-up Equity Share held on the Record Date.
3. Additional Equity Shares
The Equity Shareholders are eligible to apply for additional Rights Equity Shares over and above their Rights Entitlement provided such Equity Shareholders have applied for all the Rights Equity Shares that the Equity Shareholder are entitled to, without renouncing some or all of them. The application for the additional Rights Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board of Directors, in consultation, if necessary, with the Designated Stock Exchange. Where the number of additional Rights Equity Shares applied for exceeds the number of Rights Equity Shares available for allotment, the allotment of additional Rights Equity Shares shall be made on a fair and equitable
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basis, in consultation with the Designated Stock Exchange. See “Basis of Allotment” below under this chapter titled “Terms and Procedure of the Issue” beginning on page 214 of this Draft Letter of Offer. Renouncees who have subscribed for all the Rights Equity Shares renounced in their favor may also apply for additional Rights Equity Shares.
4. Issue Price Each Rights Equity Share is being offered at a price of Rs.[●] (including a premium of Rs.[●] per Rights Equity Share).
5. Terms of Payment On application, the aggregate amount in respect of the Rights Equity Shares applied for in the Issue at the rate of Rs.[●] per Rights Equity Share, which constitutes the full amount of the Issue Price, shall be payable (“Application Money”). The Application Money will be applied as under:
Towards the Equity Share Capital
Towards the Share Premium Account
On application Rs.10 per Equity Share Rs.[●] per Equity Share
A separate cheque/demand draft/pay order in respect of the Application Money must accompany each CAF. Payment should be made in cash (not more than Rs.20,000) or by cheque/demand draft/pay order drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub-member of the bankers clearing house located at the center where the CAF is accepted. Outstation cheques/demand drafts/pay orders will not be accepted and CAFs accompanied by such outstation cheques/demand drafts/pay orders are liable to be rejected. Payments in cash in excess of the amount specified above will not be accepted.
Pursuant to the RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the Stockinvest scheme has been withdrawn and accordingly, payment through Stockinvest will not be accepted in the Issue. Where an applicant has applied for additional Rights Equity Shares and is allotted a lesser number of Rights Equity Shares than applied for, the excess Application Money paid shall be refunded. The excess Application Money will be refunded within 15 days from the Issue Closing Date, and if there is a delay beyond eight days from the stipulated period, the Company and every Director of the Company who is an officer in default shall be jointly and severally liable to repay the money with interest for the delayed period, at the rates stipulated under sub-sections (2) and (2A) of Section 73 of the Act.
6. Ranking of the Equity Shares The Rights Equity Shares allotted pursuant to the Issue shall be subject to the Memorandum of Association and the Articles of Association and the Act and shall rank pari passu in all respects with the Equity Shares, including in relation to dividend payment. For further details, see the chapter titled “Main Provisions of the Memorandum and Articles of Association of the Company” beginning on page 237 of this Draft Letter of Offer. 7. Rights of the Equity Shareholders Subject to applicable laws, the Equity Shareholders shall have the following rights:
• Right to receive dividend, if declared;
• Right to attend general meetings and exercise voting powers;
• Right to vote on a poll, either in person or by proxy;
• Right to receive offers for shares on a rights basis and be allotted bonus shares, if announced;
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• Right to receive surplus on liquidation;
• Right of free transferability of shares; and
• Such other rights, as may be available to an equity shareholder of a listed public company under the Act and its memorandum and articles of association and the terms of the Listing Agreements with the Stock Exchanges.
For a detailed description of the main provisions of the Articles of Association dealing with voting rights, dividend, forfeiture and lien, transfer and transmission and/or consolidation/splitting, see the chapter titled “Main Provisions of the Memorandum and Articles of Association of the Company” on page 237 of this Draft Letter of Offer. 8. Issue of Duplicate Share Certificates If any Share Certificate is mutilated or defaced or the pages for recording transfers of the Rights Equity Shares are fully utilized, the Company, against the surrender of such Share Certificate may replace the Share Certificate, provided that it shall be replaced as aforesaid only if the Share Certificate number and the distinctive numbers are legible. If any Share Certificate is destroyed, stolen, lost or misplaced, then upon production of proof thereof, to the satisfaction of the Company and upon furnishing such indemnity/surety and/or such other documents as the Company may deem adequate, a duplicate Share Certificate shall be issued. 9. Caution
• Clubbing of folios/securities for the purpose of making a consolidated payment is not permitted.
• Cheques/demand drafts/pay orders should be payable at Mumbai for the full amount. Outstation payment instructions or payments for less than the full amount will be rejected.
• Investors are advised not to close or transfer their demat accounts between the period of application until the time of allotment or receipt of credit in their account so as to avoid rejection of credit from the Depositories and resultant delay in receiving the intimation of allotment.
IV. How to Apply?
1. Procedure for Application
The CAF will be printed in black ink for all Equity Shareholders, with separate advice for Non Resident Equity Shareholders.
The CAF consists of four parts:
Part A: Form for accepting the Rights Equity Shares offered and for applying for additional Rights Equity Shares; Part B: Form for renunciation of Rights Equity Shares; Part C: Form for application for Rights Equity Shares by renouncees; and Part D: Form for request for split application forms. 2. Options Available to the Equity Shareholders
The CAF clearly indicates the number of Rights Equity Shares that an Equity Shareholder is entitled to. An Equity Shareholder will have the following five options:
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A. Apply for his Rights Entitlement in full; B. Apply for his Rights Entitlement in part (without renouncing the other part); C. Apply for his Rights Entitlement in full and apply for additional Rights Equity Shares; D. Renounce his entire Rights Entitlement; or E. Apply for his Rights Entitlement in part and renounce the other part. Options A and B: Acceptance of the Rights Entitlement
The Equity Shareholders may accept their Rights Entitlement and apply for the Rights Equity Shares offered, either (i) in full or (ii) in part, without renouncing the other part, by completing Part A of the CAF. For details in relation to submission of the CAF and mode of payment, see “Submission of Application and Modes of Payment for the Issue” below. Option C: Acceptance of the Rights Entitlement and Application for Additional Rights Equity Shares
The Equity Shareholders are eligible to apply for additional Rights Equity Shares, over and above their Rights Entitlements, provided that such Equity Shareholders have applied for all the Rights Equity Shares offered to them without renouncing some or all of them in favor of any other person(s). The application for the additional Rights Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board of Directors, in consultation, if necessary, with the Designated Stock Exchange. Where the number of Rights Equity Shares applied for exceeds the number of Rights Equity Shares available for allotment, the allotment of additional Rights Equity Shares shall be made on a fair and equitable basis with reference to the number of Equity Shares held by the applicant on the Record Date. For details of the manner in which applications for additional Rights Equity Shares shall be considered and allotment completed, see “Basis of Allotment” below. If you desire to apply for additional Rights Equity Shares, please indicate your requirement in the place provided for additional Rights Equity Shares in Part A of the CAF.
Options D and E: Renunciation of the Rights Entitlement
As an Equity Shareholder, you have the right to renounce your entitlement to the Rights Equity Shares, in full or in part, in favour of one or more persons. Your attention is drawn to the fact that the Company shall not allot and/or register any Rights Equity Shares in favour of:
• More than three persons, including joint holders;
• Partnership firms or their nominees;
• Minors;
• Hindu Undivided Families (HUFs); or
• Trusts or societies (unless registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or any other law applicable to trusts and societies and is authorized under its constitution or bye-laws to hold equity shares of a company).
The person(s) in whose favour any Rights Equity Shares are renounced should complete and sign Part C of the CAF and submit the CAF to the Bankers to the Issue on or prior to the Issue Closing Date along with the Application Money. Renouncees need not be existing Equity Shareholders of the Company. Renouncees who have subscribed for all the Rights Equity Shares renounced in their favour may also apply for additional Rights Equity Shares. However, the right of renunciation is subject to the express condition that the Board of Directors shall be
entitled, in its absolute discretion, to reject the request from the Renouncees for the allotment of Rights
Equity Shares without assigning any reason therefor.
Renunciation by and/or in favour of Non Residents
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Any renunciation (i) from a resident Indian Equity Shareholder to a Non Resident, or (ii) from a Non Resident Equity Shareholder to a resident Indian, or (iii) from a Non Resident Equity Shareholder to a Non Resident; is subject to the renouncer/renouncee obtaining the necessary approvals, including from the RBI under FEMA, and such approvals should be attached to the CAF. Applications not accompanied by the aforesaid approvals are
liable to be rejected.
No single FII can hold more that 10% of the Company’s post-Issue paid-up share capital. In respect of an FII investing in the Rights Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of the total paid-up share capital of the Company or 5% of the total paid-up share capital of the Company, in case such sub-account is a foreign corporate or an individual. Currently, the aggregate FII investment in the Company cannot exceed 24% of the Company’s total paid-up capital. With the approval of the Board and the Equity Shareholders by way of a special resolution, the aggregate FII holding can go up to 100%. However, as on the date of this Draft Letter of Offer, the Company has not obtained any approval from the Board or the Equity Shareholders to increase the FII limit to more than 24%. Pursuant to circular No. 14 dated September 16, 2003 issued by the RBI, OCBs have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003. Accordingly, the existing Equity Shareholders of the Company who do not wish to subscribe for the Rights Equity Shares being offered but wish to renounce the same in favour of one or more persons shall not renounce the same (whether for consideration or otherwise) in favour of any OCB. Procedure for Renunciation (a) To renounce the entire Rights Entitlement in favour of one renouncee
If you wish to renounce the Rights Entitlement indicated in Part A, in whole, please complete Part B of the CAF and send it to the renouncee. In case of joint holding, all joint holders must sign Part B of the CAF. The renouncee should complete and sign Part C of the CAF. In case of joint renouncees, all joint renouncees must sign Part C of the CAF. Renouncees shall not be entitled to further renounce their entitlement in favour of any other person. (b) To renounce a part of the Rights Entitlement or the entire Rights Entitlement to more than one person
If you wish to either (i) accept the Rights Entitlement in part and renounce the balance or (ii) renounce the entire Rights Entitlement in favour of two or more renouncees, the CAF must be first split into the requisite number of forms. For this purpose, you shall have to apply to the Registrar to the Issue. Please indicate your requirement of split application forms in the space provided for this purpose in Part D of the CAF and return the CAF to the Registrar to the Issue so as to reach them at the latest by the close of business hours on the last date for receiving requests for split application forms. On receipt of the required number of split application forms from the Registrar to the Issue, the procedure as set out in paragraph (a) above will have to be followed. In case the signature of the Equity Shareholder, who has renounced the Rights Equity Shares, does not tally with the specimen registered with the Company, the application is liable to be rejected. A summary of the options available to the Equity Shareholders is set out below. You may exercise any of the following options with regard to the Rights Equity Shares offered using the CAF:
Option
Description
Action Required
A. Accept your Rights Entitlement in full
Complete and sign Part A. (All joint holders must sign)
B. Accept your Rights Entitlement in part without renouncing the balance
Complete and sign Part A. (All joint holders must sign)
C. Accept your Rights Entitlement in Complete and sign Part A including Block III relating to
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full and apply for additional Rights Equity Shares
the acceptance of the Rights Entitlement and Block IV relating to additional Rights Equity Shares. (All joint holders must sign)
D. Renounce your Rights Entitlement in full to:
1. One person (Joint renouncees are considered as one)
Complete and sign Part B (all joint holders must sign) indicating the number of Rights Equity Shares renounced and hand it over to the renouncee. The renouncee must complete and sign Part C. (All joint renounces must sign)
2. More than one person
Complete and sign Part D (all joint holders must sign) requesting for split application forms. Send the CAF to the Registrar to the Issue, so as to reach the Registrar on or prior to the last date for receiving requests for split application forms. Splitting will be permitted only once. Upon receipt of the split application form, take action as indicated below: 1. Complete and sign Part B indicating the number of
Rights Equity Shares renounced and hand it over to the renouncees.
2. Each of the renouncees should complete and sign
Part C for the Rights Equity Shares accepted by them.
E. Accept a part of your Rights Entitlement and renounce the balance to one or more person(s)
Complete and sign Part D (all joint holders must sign) requesting for split application forms. Send the CAF to the Registrar to the Issue, so as to reach the Registrar on or prior to the last date for receiving requests for split application forms. Splitting will be permitted only once. Upon receipt of the split application form, take action as indicated below: 1. For the Rights Equity Shares, you wish to accept,
complete and sign Part A. (All joint holders must sign)
2. For the Rights Equity Shares, you wish to renounce,
complete and sign Part B indicating the number of Rights Equity Shares renounced and hand it over to the renouncees.
3. Each of the renouncees should complete and sign
Part C for the Rights Equity Shares accepted by them.
3. Change and/or Introduction of Additional Holders If you wish to apply for the Rights Equity Shares jointly with any other person(s), not more than three, who is/are not already a joint holder(s) with you, it shall amount to a renunciation and the procedure for renunciation, as applicable, set out above will have to be followed. Even a change in the sequence of the names of joint holders shall amount to a renunciation and the procedure for renunciation, as applicable, set out above will have to be followed.
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4. Please note that:
• Part A of the CAF must not be used by any persons other than those in whose favour the Issue has been made. If used, this will render the application invalid.
• While applying for or renouncing their Rights Entitlement, joint holders must sign in the same order and as per the specimen signatures registered with the Company.
• A request by an Equity Shareholder for a split application form should be made for a minimum of 1 Rights Equity Shares or in multiples thereof and one split application form for the balance Rights Equity Shares, if any.
• A request by an Equity Shareholder for a split application form should reach the Company on or prior to [●], 2009.
• Only the person to whom the Letter of Offer and/or Abridged Letter of Offer has been addressed, and not the renouncee(s), shall be entitled to renounce and apply for split application forms. Forms once split cannot be split further.
• Split forms will be sent to the applicants by post at the applicant’s risk.
• In the case of a renunciation, the submission of the CAF to the Bankers to the Issue at the collecting branches specified on the reverse of the CAF together with Part B of the CAF duly completed shall be conclusive evidence of the right of the person applying for the Rights Equity Shares to receive allotment of such Rights Equity Shares.
For details on completing the CAF and other general instructions, please follow the instructions indicated on the reverse of the CAF. In addition, see “General Instructions for Applicants” below. 5. Availability of Duplicate CAFs
In case the original CAF is not received, or is misplaced by the Equity Shareholder/applicant, the Registrar to the Issue will issue a duplicate CAF on the request of the Equity Shareholder/applicant who should furnish the registered folio number/DP ID number and client ID number and his/her full name and address to the Registrar to the Issue. Please note that the request for a duplicate CAF should reach the Registrar to the Issue, within eight days from the Issue Opening Date. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose, including renunciation, even if it is received or found subsequently. If the Equity Shareholder/applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications. The Company or the Registrar to the Issue will not be responsible for postal delays or loss, if any, of a duplicate CAF in transit.
6. Application on Plain Paper An Equity Shareholder who has not received the original CAF nor is in a position to obtain a duplicate CAF may make an application to subscribe for the Issue on plain paper, along with a cheque drawn on a local bank or a demand draft/pay order payable at Mumbai in favour of the Bankers to the Issue, crossed account payee only and marked “[●]” (in the case of a resident Equity Shareholder or a Non Resident Equity Shareholder applying on a non-repatriation basis) or “[●]” (in the case of a Non Resident Equity Shareholder applying on a repatriation basis) and send the same by registered post directly to the Registrar to the Issue, to reach the Registrar on or prior to the Issue Closing Date. An application on plain paper, duly signed by the Equity Shareholders, including any joint holders, in the same order as per the specimen recorded with the Company, should contain the following particulars:
• Name of the issuer, being Morarjee Textiles Limited ;
• Name and address of the Equity Shareholder, including any joint holders;
• Registered folio number/DP ID number and client ID number;
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• Number of Equity Shares held as on the Record Date;
• Rights Entitlement;
• Number of Rights Equity Shares applied for;
• Number of additional Rights Equity Shares applied for, if any;
• Total number of Rights Equity Shares applied for;
• Total Application Money paid at the rate of Rs.[●] per Rights Equity Share;
• Particulars of the cheque/demand draft/pay order;
• Savings/Current Account Number and the name and address of the bank where the Equity Shareholder will be depositing the refund order. In case of Rights Equity Shares allotted in demat mode, the bank account details will be obtained from the information available with the Depositories;
• The permanent account number (PAN) of the Equity Shareholder and where relevant, for each joint holder, except in respect of Central and State Government officials and officials appointed by the court (e.g., official liquidators and court receivers) who, in terms of a SEBI circular dated June 30, 2008, may be exempt from specifying their PAN for transacting in the securities market, subject to submitting sufficient documentary evidence in support of their claim for exemption, provided that such transactions are undertaken on behalf of the Central and State Government and not in their personal capacity;
• A representation that the Equity Shareholder is not a “U.S. Person” (as defined in Regulation S under the Securities Act);
• Signature of the Equity Shareholders to appear in the same sequence and order as they appear in the records of the Company; and
• Additionally, Non Resident applicants shall include the following:
“I/We understand that neither the Rights Entitlement nor the Rights Equity Shares have been, and will
be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”) or
any United States state securities laws, and may not be offered, sold, resold or otherwise transferred
within the United States or to the territories or possessions thereof or to, or for the account or benefit
of, “U.S. Persons” (as defined in Regulation S under the US Securities Act), except in a transaction
exempt from, or in a transaction not subject to, the registration requirements of the US Securities Act.
The Rights Equity Shares referred to in this application are being offered in India but not in the United
States of America. The offering to which this application relates is not, and under no circumstances is
to be construed as, an offering of any shares or warrants or rights for sale in the United States, or the
territories or possessions thereof, or as a solicitation therein of an offer to buy any of the said shares
or warrants or rights. Accordingly, this application should not be forwarded to or transmitted in or to
the United States at any time, except in a transaction exempt from, or in a transaction not subject to,
the registration requirements of the US Securities Act. None of the Company, the Registrar, the Lead
Manager or any other person acting on behalf of the Company will accept subscriptions from any
person, or the agent of any person, who appears to be, or who the Company, the Registrar, the Lead
Manager or any other person acting on behalf of the Company has reason to believe is, a resident of
the United States and to whom an offer, if made, would result in requiring registration of this application with the United States Securities and Exchange Commission.
I/We am/are both an institutional investor and an “accredited investor” within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the US Securities Act and we have such knowledge and
experience in financial and business matters as to be capable of evaluating the merits and risks of our
investment in the Rights Equity Shares and we are, and any accounts for which we are acting are each,
able to bear the economic risk of our or its investment.
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I/We will not offer, sell or otherwise transfer any of the Rights Equity Shares which may be acquired by
us in any jurisdiction or under any circumstances in which such offer or sale is not authorized or to
any person to whom it is unlawful to make such offer, sale or invitation except under circumstances
that will result in compliance with any applicable laws or regulations. We satisfy, and each account for
which we are acting satisfies, all suitability standards for investors in investments of the type
subscribed for herein imposed by the jurisdiction of our residence.
I/We understand and agree that the Rights Equity Shares may not be reoffered, resold, pledged or
otherwise transferred except in an offshore transaction in compliance with Regulation S, or otherwise
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the
US Securities Act.”
Please note that Equity Shareholders who are making an application otherwise than on a CAF (i.e., on
plain paper as stated above) shall not be entitled to renounce their rights and should not utilize the CAF
for any purpose, including renunciation, even if it is received subsequently. If the Equity Shareholder
does not comply with any of these requirements, he/she shall face the risk of rejection of both the
applications and the Application Money received shall be refunded. However, the Company and/or any
Director of the Company will not be liable to pay any interest whatsoever on the Application Money so refunded.
The Equity Shareholders are requested to strictly adhere to these instructions. Failure to do so could result in the application being rejected, with the Company, the Lead Manager and the Registrar not having any liability to such Equity Shareholders. V. Submission of Application and Modes of Payment for the Issue
1. For Resident Equity Shareholders or Applicants
• Equity Shareholders or applicants who are applying through the CAF and residing at places where the bank collection centers have been opened by the Company for collecting applications, are requested to submit, on or prior to the Issue Closing Date, the completed CAFs at the corresponding collection center, together with a cheque/demand draft/pay order payable at Mumbai for the Application Money net of bank charges in favour of the Bankers to the Issue, crossed account payee only and marked “[●]”.
• Equity Shareholders or applicants residing at places other than places where the bank collection centers have been opened by the Company for collecting applications, and Equity Shareholders who are applying on plain paper, are requested to send the completed CAF or plain paper application, as case may be, together with a cheque/demand draft/pay order payable at Mumbai for the Application Money net of bank charges in favour of the Bankers to the Issue, crossed account payee only and marked “[●]”, directly to the Registrar to the Issue, by registered post so as to reach the Registrar on or prior to the Issue Closing Date. The Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.
2. For Non Resident Equity Shareholders or Applicants
Application with repatriation benefits
Non Resident Equity Shareholders or applicants applying on a repatriation basis are required to submit the completed CAF or the application on plain paper, as the case may be, along with payment in the following manner:
• By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad (submitted along with a Foreign Inward Remittance Certificate); or
• By cheques/demand drafts/pay orders remitted through normal banking channels or out of funds held in Non Resident External (NRE) Accounts or Foreign Currency Non Resident (FCNR) Accounts maintained in Mumbai with banks authorized to deal in foreign currency, along with documentary evidence in support of the remittance; or
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• By Indian Rupee drafts purchased by debit to an NRE/FCNR Account maintained elsewhere in India and payable in Mumbai.
• FIIs registered with SEBI must remit funds from special non resident rupee deposit accounts.
• For Equity Shareholders applying through a CAF, the CAF is to be sent to the bank collection center specified in the CAF, along with cheques/demand drafts/pay orders for the Application Money payable at Mumbai in favour of the Bankers to the Issue and marked “[●]” and must be crossed account payee only.
A separate cheque/demand draft/pay order must accompany each CAF. Non Resident Equity Shareholders or applicants may note that where payment is made by demand drafts purchased from NRE/FCNR Accounts as the case may be, an account debit certificate from the bank issuing the demand draft confirming that the demand draft has been issued by debiting the NRE/FCNR Account should be enclosed with the CAF. In the absence of the above, the CAF shall be considered incomplete and is liable to be rejected. In the case of NRIs who remit their Application Money from funds held in NRE/FCNR Accounts, refunds and other disbursements, if any, shall be credited to such accounts, details of which should be furnished in the appropriate columns in the CAF. In the case of NRIs who remit their Application Money through Indian Rupee demand drafts from abroad, refunds and other disbursements, if any, will be made in any convertible foreign currency at the rate of exchange prevailing at such time subject to the permission of the RBI and will be made net of bank charges or commission in USD, at the rate of exchange prevailing at such time. The Company will not be liable for any loss on account of exchange rate fluctuation for converting the Indian Rupee amount into any convertible foreign currency or for any collection charges charged by the applicant’s bankers. Payments through Non Resident Ordinary (NRO) Accounts will not be permitted. Neither the Company nor the Registrar to the Issue will be responsible for postal delays or loss, if any, of the application in transit. Application without repatriation benefits
In the case of Non Resident Equity Shareholders or applicants applying on a non-repatriation basis, in addition to the modes specified above, payment may also be made by way of cheques drawn on NRO Accounts maintained in Mumbai or Indian Rupee demand drafts purchased out of an NRO Account maintained elsewhere in India but payable at Mumbai. In such cases, the allotment of Rights Equity Shares will be on a non-repatriation basis. For Non Resident Equity Shareholders or applicants applying through a CAF, the CAF is to be sent to the bank collection center specified in the CAF along with cheques/demand drafts/pay orders for the Application Money drawn in favour of the Bankers to the Issue and marked “[●]” payable at Mumbai and must be crossed account payee only. Non Resident Equity Shareholders or applicants may note that where payment is made by demand drafts purchased from NRE/FCNR/NRO Accounts, as the case may be, an account debit certificate from the bank issuing the demand draft confirming that the demand draft has been issued by debiting such NRE/FCNR/NRO Account should be enclosed with the CAF. Otherwise the application shall be considered incomplete and is liable to be rejected. New demat accounts shall be opened for holders who have had a change in status from resident Indian to NRI.
Note:
• In case repatriation benefits are available, interest, dividend and sales proceeds derived from the investment in Rights Equity Shares can be remitted outside India, subject to tax, as applicable, according to the IT Act.
• In case Rights Equity Shares are allotted on a non-repatriation basis, the dividend and sale proceeds of the Rights Equity Shares cannot be remitted outside India.
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• The CAF duly completed together with the Application Money must be deposited with the Bankers to the Issue or any branches thereof indicated on the reverse of the CAF before the close of banking hours on or prior to the Issue Closing Date. A separate cheque/demand draft/pay order must accompany each CAF.
• In case of a CAF received from a Non Resident, allotment, refunds and other distributions, if any, will be made in accordance with the guidelines/rules prescribed by the RBI, as applicable at the time of making such allotment or remittance and subject to necessary approvals.
Last Date of Application
The last date for submission of the duly completed CAF is [●], 2009, i.e., the Issue Closing Date. The Board of Directors will have the right to extend the Issue Closing Date for such period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date. If the CAF together with the Application Money is not received by the Bankers to the Issue or the Registrar to the Issue, as the case may be, on or prior to the close of banking hours on the Issue Closing Date or such extended date as may be fixed by the Board, the offer contained in this Draft Letter of Offer shall be deemed to have been declined and the Board of Directors shall be at liberty to dispose of the Rights Equity Shares offered thereby, as provided under “Basis of Allotment” below. VI. Basis of Allotment
Subject to the provisions contained in this Draft Letter of Offer, the Articles of Association and the approval of the Designated Stock Exchange, the Board of Directors will proceed to allot the Rights Equity Shares in the following order of priority: (a) Full allotment to those Equity Shareholders who have applied for their Rights Entitlement either in full
or in part and also to the renouncees who have applied for the Rights Equity Shares renounced in their favour, in full or in part.
(b) In case of Equity Shareholders who have applied for all the Rights Equity Shares offered to them as
part of the Issue and have also applied for additional Rights Equity Shares, the allotment of such additional Rights Equity Shares will be made as far as possible on a proportionate basis having due regard to the number of Rights Equity Shares held by them on the Record Date, provided there is an unsubscribed portion after making full allotment under (a) above. The allotment of such Rights Equity Shares will be at the sole discretion of the Board of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not as a preferential allotment.
(c) In case of renouncees who have applied for the Rights Equity Shares renounced in their favour and
have also applied for additional Rights Equity Shares, provided there is an unsubscribed portion after making full allotment under (a) and (b) above, the allotment of such additional Rights Equity Shares will be made as far as possible on a proportionate basis at the sole discretion of the Board of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not as a preferential allotment.
(d) Allotment to any other person as the Board of Directors may, in its absolute discretion, deem fit
provided there is surplus available after making full allotment under (a), (b) and (c) above. After taking into account allotment to be made under (a) above, if there is any unsubscribed portion, the same shall be deemed to be “undersubscribed” for the purposes of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code which will be available for allocation under (b), (c) and (d) above. If the Company does not receive the minimum subscription of 90% of the issued amount, the Company shall forthwith refund the entire subscription amount received within 15 days from the date of closure of the Issue. If there is a delay beyond eight days after the date from which the Company becomes liable to pay the amount, the Company shall pay interest for the delayed period as prescribed under Section 73 of the Act. The Promoter and members of the Promoter Group holding Equity Shares have undertaken to fully subscribe for their rights entitlement under the Issue. They reserve the right to subscribe for their rights entitlement either
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by themselves and/ or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renounciation made by any member of the Promoter Group to another member of the Promoter Group. The Issue will become undersubscribed if after considering the number of Equity Shares applied as per the Rights Entitlement plus additional Equity Shares, minimum subscription is not achieved. In the event of undersubscription, our Promoter and members of our Promoter Group (together hereinafter referred to as “Promoters” in this clause) intend to apply for additional Equity Shares of the Company in addition to their rights entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining any approvals required under applicable law, to ensure that at least 90% of the Issue is subscribed. Such subscription for Equity Shares over the Promoter’s rights entitlement, if allotted, may result in an increase in its percentage shareholding above its current percentage shareholding. Further, such acquisition of additional Equity Shares of the Company shall (i) not result in a change of control of the management of the Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section on “Objects of the Issue” on page 31 of this Draft Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of Allotments to such Promoters, in this Issue, the shareholding of such Promoters in the Company exceeds their current shareholding. Such Promoters intend/s to subscribe to such unsubscribed portion as per the relevant provisions of the law. Allotment to such Promoters of any unsubscribed portion, over and above their entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements. The above is subject to the terms mentioned in the section titled “Basis of Allotment”. The Company expects to complete the allotment of the Rights Equity Shares within a period of 15 days from the Issue Closing Date in accordance with the Listing Agreements with the BSE and the NSE. In the event of oversubscription, allotment will be made within the overall size of the Issue. The Company shall not retain any oversubscribed Rights Equity Shares. Underwriting
The Company has not currently entered into any standby underwriting arrangement and does not intend to enter into any underwriting arrangement in relation to this Issue.
VII. Allotment and Refund
The Company will issue and dispatch allotment advice/letters of allotment/Share Certificates/demat credit and/or letters of regret along with refund orders or credit the allotted securities to the respective beneficiary accounts, if any, within a period of 15 days from the Issue Closing Date. If the amount to be refunded is not paid within eight days from the day the Company becomes liable to pay it, the Company and every Director of the Company who is an officer in default shall be jointly and severally liable to repay the money with interest for the delayed period, at the rates stipulated under sub-sections (2) and (2A) of Section 73 of the Act. In case of those Equity Shareholders or applicants who have opted to receive the Rights Equity Shares in dematerialized form using electronic credit under the depository system, advice regarding their credit of the Rights Equity Shares shall be given separately. In case of those Equity Shareholders or applicants who have opted to receive the Rights Equity Shares in physical form and in respect of which the Company issues letters of allotment, the corresponding Share Certificates will be delivered within three months from the date of allotment thereof or such extended time as may be approved by the Central Government under Section 113 of the Act or other applicable provisions, if any. Allottees are requested to preserve such letters of allotment, which will subsequently be exchanged for the Share Certificates. The allotment advice/letters of allotment and refund orders exceeding Rs.1,500 will be sent by registered post to the sole/first applicant’s registered address in India. Refund orders up to the value of Rs.1,500 will be sent under certificate of posting. Such refund orders will be payable at par at all places where the applications were originally accepted. The same will be marked “account payee only” and will be drawn in favour of the sole/first applicant. Adequate funds will be made available to the Registrar to the Issue for this purpose. The Company shall ensure at par facility is provided for encashment of refund orders or pay orders at the places where applications are accepted.
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In the case of Non Resident Equity Shareholders or applicants who remit their Application Money from funds held in NRE/FCNR Accounts, refunds and/or payment of interest or dividend and other disbursements, if any, shall be credited to such accounts, the details of which should be furnished in the CAF. Subject to the approval of the RBI, in case of Non Resident Equity Shareholders or applicants who remit their Application Money through Indian Rupee demand drafts purchased from abroad, refund and/or payment of dividend or interest and any other disbursement, shall be credited to such accounts and will be made net of bank charges or commission in USD, at the rate of exchange prevailing at such time. The Company will not be responsible for any loss on account of exchange rate fluctuations for conversion of the Indian Rupee amount into USD. The Share Certificate(s) will be sent by registered post to the address in India of the Non Resident Equity Shareholders or applicants. Printing of Bank Particulars on Refund Orders
As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the applicant’s bank account are mandatorily required to be given for printing on refund orders. Bank account particulars will be printed on the refund orders/refund warrants, which can then be deposited only in the account specified. The Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud. Mode of making Refunds
The payment of refund, if any, will be through various modes in the following order of preference: (a) ECS
Payment of refund shall be undertaken through ECS for applicants having an account at any of the following 68 centers notified by SEBI: Ahmedabad, Bengaluru, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram (managed by the RBI); Baroda, Dehradun, Nashik, Panaji, Surat, Trichy, Trichur, Jodhpur, Gwalior, Jabalpur, Raipur, Calicut, Siliguri (Non-MICR), Puducherry, Hubli, Shimla (Non-MICR), Tirupur, Burdwan (Non-MICR), Durgapur (Non-MICR), Sholapur, Ranchi, Tirupati (Non-MICR), Dhanbad (Non-MICR), Nellore (Non-MICR) and Kakinada (Non-MICR) (managed by State Bank of India); Agra, Allahabad, Jalandhar, Lucknow, Ludhiana, Varanasi, Kolhapur, Aurangabad, Mysore, Erode, Udaipur, Gorakpur and Jammu (managed by Punjab National Bank); Indore (managed by State Bank of Indore); Pune, Salem and Jamshedpur (managed by Union Bank of India); Visakhapatnam (managed by Andhra Bank); Mangalore (managed by Corporation Bank); Coimbatore and Rajkot (managed by Bank of Baroda); Kochi/Ernakulum (managed by State Bank of Travancore); Bhopal (managed by Central Bank of India); Madurai (managed by Canara Bank); Amritsar (managed by Oriental Bank of Commerce); Haldia (Non-MICR) (managed by United Bank of India); Vijaywada (managed by State Bank of Hyderabad); and Bhilwara (managed by State Bank of Bikaner and Jaipur). This mode of payment of refunds will be subject to availability of complete bank account details including the Magnetic Ink Character Recognition (“MICR”) code as appearing on a cheque leaf, from the Depositories. The payment of refunds through ECS is mandatory for applicants that have bank accounts at any of the 68 centers notified by SEBI, except where the applicant, being eligible, elects to receive refund through NEFT, direct credit or RTGS.
(b) NEFT
Payment of refund shall be undertaken through NEFT wherever the applicants’ bank has been assigned the Indian Financial System Code (“IFSC”), which can be linked to the MICR code, if any, available to that particular bank branch. The IFSC will be obtained from the website of the RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR codes. Wherever the applicants have registered their nine-digit MICR code and their bank account number while
opening and operating the demat account, the same will be duly mapped with the IFSC of that
particular bank branch and the payment of refund will be made to the applicants through this
method. (c) Direct Credit
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Applicants that have bank accounts with the Bankers to the Issue shall be eligible to receive refunds through direct credit. Charges, if any, levied by the Bankers to the Issue for the same will be borne by the Company.
(d) RTGS
Applicants that have bank accounts at any of the 68 centers notified by SEBI and whose refund amount exceeds Rs.10,00,000, have the option to receive refund through RTGS. Such eligible applicants who indicate their preference to receive refund through RTGS are required to provide the IFSC, the type of account, the account number and the branch where the account is maintained, in the CAF. In the event the IFSC is not provided, refund shall be made through ECS. Charges, if any, levied by the Refund Bank for the same will be borne by the Company. Charges, if any, levied by the applicant’s bank receiving the credit will be borne by the applicant.
(e) Please note that only applicants that have bank accounts at any of the 68 centers notified by SEBI
where clearing houses for ECS are managed by the RBI are eligible to receive refunds through the modes detailed in (a), (b), (c) and (d) hereinabove. For all other applicants, including those who have not updated their bank particulars with the MICR code, the refund orders of value up to Rs.1,500 will be dispatched “Under Certificate of Posting” and through registered post for refund orders of Rs.1,500 and above. Such refunds will be made by cheques, demand drafts or pay orders and will be payable at par.
For applicants opting for allotment in physical mode, bank account details as mentioned in the
CAF shall be considered for electronic credit or printing of refund orders, as the case may be.
Refund orders will be made by cheques, demand drafts or pay orders drawn on the Refund Bank
and will be payable at par at places where the applications were received and will be marked
account payee only and will be drawn in the name of the sole/first applicant. The bank charges, if
any, for encashing such cheques, demand drafts or pay orders at other centers will be payable by
the applicants. Option to receive Rights Equity Shares in Dematerialized Form
The Rights Equity Shares in the Issue shall be allotted to the Equity Shareholders or applicants in dematerialized (electronic) form at the option of the relevant Equity Shareholder or applicant. The Company has entered into a tripartite agreement with the NSDL on September 3, 2003 and with the CDSL on March 2, 2005, which enables the investors to hold and trade in securities in dematerialized form, instead of holding the securities in the form of physical certificates. In the Issue, the Equity Shareholders or applicants who have opted for Rights Equity Shares in dematerialized form will receive their Rights Equity Shares in the form of an electronic credit to their beneficiary account with a Depository Participant. Investors will have to give the relevant particulars for this purpose in the appropriate place in the CAF. CAFs that do not accurately contain this information will be issued the Equity Shares in physical form. No separate applications for Rights Equity Shares in physical and dematerialized form should be made. If such applications are made, the application for Rights Equity Shares in physical form will be treated as multiple applications and is liable to be rejected. In case of partial allotment, allotment will be made in dematerialized form for the shares sought in dematerialized form and the balance, if any, may be allotted in physical form. The Rights Equity Shares in the Issue will be listed on the BSE and the NSE and can be traded on the Stock Exchanges in dematerialized form only. The procedure for availing of the facility for allotment of Rights Equity Shares in the Issue in dematerialized form is as set out below: (a) Open a beneficiary account with any Depository Participant (care should be taken that the beneficiary
account should carry the name of the holder in the same manner as is exhibited in the records of the Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as recorded with the Company). In case of investors having various folios in the Company with different joint holders, the investors will have to open separate accounts for such
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holdings. Those Equity Shareholders who have already opened such beneficiary accounts need not
adhere to this step.
(b) For Equity Shareholders already holding Equity Shares of the Company in dematerialized form as on
the Record Date, the beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive the Rights Equity Shares by way of credit to such account, the necessary details of their beneficiary account should be completed in the space provided in the CAF. It may be noted that the allotment of the Rights Equity Shares arising out of the Issue may be made in dematerialized form even if the original Equity Shares of the Company are not dematerialized. Nonetheless, it should be ensured that the depository account is in the name of the Equity Shareholder, or the joint holders, as the case may be, with the names appearing in the same order as in the records of the Company.
(c) Responsibility for correctness of information (including the applicant’s age and other details)
completed in the CAF vis-à-vis such information with the applicant’s Depository Participant, will rest with the applicant. Applicants should ensure that the names of the applicants and the order in which they appear in the CAF should be the same as registered with the applicant’s Depository Participant.
(d) Applicants must necessarily complete the details (including the beneficiary account number or client
ID number) appearing in the CAF under the heading “Request for Shares in Electronic Form”. (e) The Rights Equity Shares allotted to an applicant in dematerialized form will be credited directly to the
applicant’s beneficiary account with the Depository Participant as provided in the CAF, and the Depository Participant will provide the applicant confirmation of such credit.
(f) Non-transferable allotment advice/refund orders will be directly sent to the applicant by the Registrar to
the Issue. (g) If incomplete/incorrect details are provided under the heading “Request for Shares in Electronic Form”
in the CAF, the applicant will be issued the Equity Shares in physical form. (h) Renouncees can also exercise the option to receive Rights Equity Shares in dematerialized form by
indicating in the relevant block and providing the necessary details about their beneficiary account. (i) It may be noted that Equity Shares in dematerialized form can be traded only on the Stock Exchanges
that have electronic connectivity with the NSDL or the CDSL. (j) Dividend or other benefits with respect to the Equity Shares held in dematerialized form will be paid to
those Equity Shareholders whose names appear in the list of beneficial owners given by the Depository Participant to the Company as on the Record Date.
VIII. General Instructions for Applicants
(a) Please read the instructions printed on the CAF carefully. (b) Except as provided under “Application on Plain Paper, the application should be made on the printed
CAF provided by the Company and should be completed in all respects. A CAF found incomplete with regard to any of the particulars required to be given therein, and/or which is not completed in conformity with the terms of this Draft Letter of Offer, is liable to be rejected and the Application Money paid, if any, in respect thereof will be refunded without interest and after deduction of any bank commission and other charges. The CAF must be completed in English and the names of all the applicants, details of occupation, address, father’s/husband’s name must be completed in block letters.
(c) The CAF together with a cheque/demand draft/pay order should be sent to the Bankers to the
Issue/bank collection centers or to the Registrar to the Issue, as the case may be, and not to the
Company or the Lead Manager. Applicants residing at places other than cities where the branches of the Bankers to the Issue have been authorized by the Company for collecting applications, will have to make payment by account payee cheques drawn on a local bank in Mumbai or a demand draft/pay order payable at Mumbai in favour of the Bankers to the Issue, crossed account payee only and marked “[●]” and send their application forms directly to the Registrar to the Issue, by registered post to reach
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them on or prior to the Issue Closing Date. If any portion of the CAF is detached or separated, such application is liable to be rejected.
(d) The applicant or in the case of an application in joint names, each of the applicants, should mention
his/her PAN allotted under the IT Act. CAFs without the PAN will be considered incomplete and
are liable to be rejected. In terms of a SEBI circular dated June 30, 2008, Central and State Government officials and officials appointed by the court (e.g., official liquidators and court receivers) may be exempt from specifying their PAN for transacting in the securities market, subject to submitting sufficient documentary evidence in support of their claim for exemption, provided that such transactions are undertaken on behalf of the Central and State Government and not in their personal capacity.
(e) APPLICANTS MAY PLEASE NOTE THAT FOR EQUITY SHARES HELD IN
DEMATERIALIZED MODE, THE BANK ACCOUNT DETAILS WILL BE OBTAINED
FROM THE DEPOSITORY PARTICIPANT. ACCORDINGLY, APPLICANTS SHOULD
ENSURE THAT THEIR BANK ACCOUNT DETAILS ARE UPDATED WITH THE
DEPOSITORIES. (f) Applicants are advised to provide information as to their savings/current account number, nine-digit
MICR code and the name of the bank and the branch with whom such account is held, in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees.
(g) The payment against the application should not be effected in cash if the amount to be paid is in excess
of Rs.20,000. In case payment is effected in contravention of this, the application may be deemed invalid and the Application Money will be refunded, without payment of any interest thereon. Payment against the application if made in cash, subject to the conditions mentioned above, should be made only to the Bankers to the Issue.
(h) Signatures should be either in English, Hindi or in any other language specified in the Eighth Schedule
to the Constitution of India. Signatures other than in English or Hindi, and thumb impressions, must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company.
(i) In case of an application under power of attorney or by a body corporate or by a society, a certified true
copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under the Issue and to sign the application and a copy of the memorandum and articles of association and/or bye laws of such body corporate or society must be lodged with the Registrar to the Issue, giving reference of the serial number of the CAF. In case these papers are sent to any other entity besides the Registrar to the Issue, or are sent after the Issue Closing Date, then the application is liable to be rejected.
(j) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as
per the specimen signature(s) recorded with the Company. Further, in case of joint applicants who are renouncees, the number of applicants should not exceed three. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant.
(k) Applications received from Non Residents, including from persons of Indian origin residing outside
India, for the allotment of Rights Equity Shares shall, inter alia, be subject to such conditions, as may be imposed from time to time by the RBI or any regulatory authority under FEMA and any other applicable law, rule or regulation in the matter of refund of Application Money, allotment of Rights Equity Shares, subsequent issue and allotment of Rights Equity Shares, export of the consolidated certificates, etc. In case a Non Resident Equity Shareholder has specific approval from the RBI in connection with his shareholding, he should enclose a copy of such approval with the CAF.
(l) All communication in connection with application for the Rights Equity Shares, including any change
in address of the Equity Shareholders should be addressed to the Registrar to the Issue, prior to the date of allotment in the Issue quoting the name of the first/sole applicant, folio numbers and serial number of the CAF. Please note that any intimation for change of address of Equity Shareholders, after the date
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of allotment, should be sent to the Registrar to the Issue in the case of Equity Shares held in physical form and to the respective Depository Participant, in case of Equity Shares held in dematerialized form.
(m) Split application forms cannot be re-split. (n) Only the person or persons to whom Rights Equity Shares have been offered, and not renouncees, shall
be entitled to obtain split application forms. (o) Applicants must write the serial number of their CAF on the reverse of the cheque/demand draft/pay
order.
(p) Only one mode of payment per application should be used. The payment must be either in cash (subject to the limits specified above) or by cheque/demand draft/pay order drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub-member of the bankers clearing house located at the center indicated on the reverse of the CAF where the application is to be submitted.
(q) A separate cheque/demand draft/pay order must accompany each CAF. Outstation cheques/demand
drafts/pay order or post-dated cheques and postal/money orders will not be accepted and applications accompanied by such cheques/demand drafts/money orders or postal orders will be rejected. For details of the restriction on payment in cash, please refer to paragraph (g) above.
(r) No receipt will be issued for the Application Money received. The Bankers to the Issue/Collecting
Bank/Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.
Grounds for Technical Rejections
Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following:
• The Application Money paid does not tally with the amount payable in respect of the Rights Equity Shares;
• In case of Equity Shares held in physical form, bank account details (for refund) are not given;
• The age of the first applicant is not given;
• The PAN is not given;
• In case of applications under powers of attorney or by limited companies, bodies corporate, trusts, etc., relevant documents are not submitted;
• If the signature of the existing Equity Shareholder does not match with the one given on the CAF, and for renouncees, if the signature does not match with the records available with their Depositories;
• If the applicant wishes to receive Rights Equity Shares in dematerialized form, but the CAF does not have the applicant’s depository account details;
• CAFs are not submitted by the applicants within the time prescribed as per the CAF and this Draft Letter of Offer;
• Applications are not duly signed by the sole/joint applicants;
• Applications by OCBs unless accompanied by specific approval from the RBI permitting the OCBs to invest in the Issue;
• Applications accompanied by Stockinvest;
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• In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the applicants (including the order of names of joint holders), the Depository Participant’s identity (DP ID) and the beneficiary’s identity;
• Applications that do not include the certification set out in the CAF to the effect that the subscriber is not a U.S. Person and is purchasing the Rights Equity Shares in an “offshore transaction” (as defined in Regulation S), and is authorized to acquire the Rights Equity Shares in compliance with all applicable laws and regulations;
• Applications by ineligible Non Residents (including on account of restrictions or prohibition under applicable local laws) and where a registered address in India has not been provided;
• Applications where the Company believes that the CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements; or
• Multiple applications, including where an applicant submits a CAF and a plain paper application. Disposal of CAFs and Application Money
The Board of Directors reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in each case without assigning any reason therefor. In case an application is rejected in full, the whole of the Application Money received will be refunded. Wherever an application is rejected in part, the balance of the Application Money, if any, after adjusting any money due on the Rights Equity Shares, will be refunded to the applicant within 15 days from the Issue Closing Date. For further instructions, please read the CAF carefully.
Important
• Please read this Draft Letter of Offer and the CAF carefully before taking any action. The instructions contained in the CAF accompanying this Draft Letter of Offer are an integral part of the conditions of this Draft Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected.
• All enquiries in connection with this Draft Letter of Offer or the CAF and requests for split application forms must be addressed (quoting the registered folio number/DP ID, the client ID number, the serial number of the CAF and the name of the first Equity Shareholder as mentioned on the CAF and superscribed “[●]” in case of resident Equity Shareholders and Non Resident Equity Shareholders applying on a non-repatriation basis or “[●]” in case of Non Resident Equity Shareholders applying on a repatriation basis on the envelope) to the Registrar to the Issue, at the following address: Link Intime India Private Limited
C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup ( West) Mumbai 400 078 Contact Person: Mr. Pravin Kasare
The Issue will be kept open for a minimum period of 15 days, but will not be kept open in excess of 30 days from the Issue Opening Date.
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MAIN PROVISIONS OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION
OF
MORARJEE TEXTILES LIMITED
A. MAIN PROVISIONS OF THE MEMORANDUM OF ASSOCIATION
The Memorandum sets out the following as the main objects of the Company:
1. carrying on the business of manufacturing and selling of fabrics; 2. to carry on the business of manufacturing and marketing of high value quality shirting products. 3. to carry on the business of manufactures, imports and exports wholesale and retail dealers of and in
men’s, women’s and children’s clothing and wearing apparel garments and dresses of all kinds.
B. MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION
Share Capital and Variation of Rights
Allotment of Shares
Article 2(4) provides that subject to and in accordance with section 81 of the Act and the Articles, the shares of the company shall be under the control of the Directors who may issue, allot or otherwise dispose off the same or any of them on such terms and conditions and at such times and either at a premium or at par or (subject to the provisions of section 79 of the Act) at a discount as the Board may deem fit and with the sanction of the Company in General Meeting to give to any person or persons the option or right to call for any shares either at premium or at par during such time and for such consideration as the Directors think fit, and may issue and allot shares in the capital of the company on payment in full or part of any property sold and transferred or for any services rendered to the company in the conduct of its business and any shares which may so be allotted may be issued as fully paid up shares and if so issued, shall be deemed to be fully paid shares. Provided that option of right to call of shares shall not be given to any person or persons without the sanction of the company in the General Meeting. Different classes of shares
If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of sections 106 and 107 of the Act, and whether or not the company is being wound up, be varied with the consent in writing of the holders of three-fourths of the issued shares of that class, or with the sanction of a special resolution passed at a separate meeting of the holders of the shares of that class. Variation of rights
Article 4 provides that rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith. Holding of shares upon trust
Article 6 provides that except as required by Law, no person shall be recognized by the company as holding any share upon any trust, and the company shall not be bound by, or be compelled in any way to recognize (even when having notice) any equitable, contingent, future or partial interest in any share, or any interest in any fractional part of a share, or (except only as by these Articles or by law otherwise provided) any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder. Underwriting and Brokerage
Article 5 provides that the Company may subject to the provisions of Section 76 and other applicable provisions (if any) of the Act at any time pay a commission to any person in consideration of his subscribing or agreeing to subscribe, for any shares or debentures of the Company. The rate of such commission shall not exceed the rate prescribed by Section 76 of the Act.
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Dematerialisation of Securities
Article 2(2) provides that the Company shall be entitled to issue dematerialized securities. Lien
First lien
Article 9 provides that the company shall have a first and paramount lien on every share (not being a fully-paid share), for all moneys (whatever presently payable or not) called, or payable at a fixed time, but not paid in respect of that share and the lien shall extend to all dividends payable on that share. Additionally, unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the company’s lien if any, on such shares. Sale of shares on which company has lien Article 10 provides that the company may sell in such manner as the board thinks fit, any shares on which the company has a lien Proceeds of sale
Article 12 provides that the proceeds of the sale shall be received by the company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable and the residue, if any, shall, subject to a like lien for sums not presently payable as existed upon the shares before the sale, be paid to the person entitled to the shares at the date of the sale. Calls on shares
Board’s power
Article 13 provides that the Board may, from time to time, make calls upon the members in respect of any moneys unpaid on their shares (whether on account of the nominal value of the shares or by way of premium) and not by the conditions of allotment thereof made payable at fixed times, provided that no call shall exceed one-fourth of the nominal value of the share or be payable at less than one month from the date fixed for the payment of the last preceding call. When call deemed to be made
A call shall be deemed to have been made at the time when the resolution of the Board authorizing the call was passed and may be required to be paid by installments. Joint liability to pay calls
The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. When interest on call or installment payable
Article 16 provides that if a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due, shall pay interest thereon from the day appointed for payment thereof to the time of actual payment at such rate, if any, as the Board may determine and the Board may also waive payment of any such interest wholly or in part. Payment of calls in advance
Article 18 provides that the Board may receive from any member willing to advance the same, all or any part of the moneys uncalled and unpaid upon any shares held by him. Upon all or any of the moneys so advanced, the Board may (until the same would, but for such advance, become presently payable) pay interest at such rate, if any, as may be agreed upon between the Board and the member paying such sum in advance. Provided that
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money paid in advance of calls shall not confer a right to participate in profits or dividend. The Directors may at any time repay the amount so advanced. Transfer of Shares
Declining registration
Article 21 provides that the Board may, subject to the provisions of the Act and the applicable clauses of the Listing Agreement of the Stock Exchanges on which the Company’s shares maybe listed, decline to register the transfer of shares (whether fully-paid or not) to any person (whether a member or not). But in such cases, the Directors shall within one month from the date on which the instrument of transfer was lodged with the Company, send to the transferee and transferor notice of the refusal to register such transfer. Refusal to recognize instrument of transfer
Article 22 provides that the Board may decline to recognize any instrument of transfer unless the instrument of transfer is duly stamped and completed and is accompanied by the certificate of the shares to which it relates, and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer. Suspension of registration
Article 23 states that subject to the provisions of section 154 of the Act and the applicable clauses of the Listing Agreements of the Stock Exchanges on which the Company’s shares maybe listed, the registration of transfers may be suspended at such times and for such periods as the Board may from time to time determine. Transmission of Shares
Recognition of title to shares
Article 25 provides that on the death of a member, the survivor/s where the member was a joint holder, and his legal representatives where he was a sole holder, shall be the only persons recognized by the company as having any title to his interest in the shares. Notice for registration
Article 26 provides that if the person who becomes entitled to shares in consequence of the death or insolvency of a member, shall elect to be registered as holder of the share himself, he shall deliver or send to the company a notice in writing signed by him stating that he so elects. Entitlement to dividends and other advantages
Article 28 provides that a person becoming entitled to a share and/or debenture by reason of the death or insolvency of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share and/or debenture, except that he shall not, before being registered as a member in respect of the share and/or debenture, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company. It is further provided that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the share and/or debenture, and if the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the share, until the requirements of the notice have been complied with. Forfeiture of shares
Notice for payment of call
Article 29 provides that if a member fails to pay any call or installment of a call, on the day appointed for the payment thereof, the Board may, at any time thereafter during such time as any part of the call or installment remains unpaid, serve a notice on him requiring payment of so much of the call or installment as is unpaid, together with any interest which may have accrued.
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Resolution of forfeiture
Article 31 states that if the requirements of any such notice are not complied with, any share in respect of which the notice has been given may, at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Board to that effect. Transfer of forfeited share
Article 34 states that a duly verified declaration in writing that the declarant is a director, the manager or the secretary of the company, and that a share in the company has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. The company may receive the consideration, if any, given for the share on any sale or disposal thereof and may execute a transfer of the share in favour of the person to whom the share is sold or disposed of. The transferee shall thereupon be registered as the holder of the share and shall not be bound to see to the application of the purchase money, if any, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share. Non-payment of any sum
Article 35 provides that the provisions of the Articles relating to forfeiture shall apply in the case of non-payment of any sum which by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the share or by way of premium, as if the same had been payable by virtue of a call duly made and notified. Conversion of shares into stock
Transfer of stocks
Article 37 provides that the holders of stock may transfer the same or any part thereof in the same manner as , and subject to the same Articles under which, the shares from which stock arose might before the conversion have been transferred, or as near thereto as circumstances admit, provided that the Board may, from time to time, fix the minimum amount of stock transferable, so however that such minimum shall not exceed the nominal amount of the shares from which the stock arose. Share Warrants
Issue of share warrants
Article 40 provides that the company may issue share warrants subject to, and in accordance with, the provisions of sections 114 and 115 of the Act; and accordingly the Board may in its discretion, with respect to any share which is fully paid up, on application in writing signed by the person registered as holder of the share, and authenticated by such evidence (if any) as the Board may, from time to time, require as to the identity of the person signing the application, and on receiving the certificate (if any) of the share, and the amount of the stamp duty on the warrant and such fee as the Board may from time to time require, issue a share warrant. Rules for issue of new warrant
Article 43 provides that the Board may, from time to time, make rules as to the terms on which (if it shall think fit) a new share warrant or coupon may be issued by way of renewal in case of defacement, loss or destruction. Alteration of Capital
Increase of share capital
Article 44 provides that the Company may, from time to time, by ordinary resolution increase the share capital by such sum, to be divided into shares of such amount, as may be specified in the resolution.
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Article 44A provides that the Company, by consent of the Board of Directors, may, when and if thought fit, buy-back such of the Company's own shares or securities as it may think necessary, subject to such limits, upon such terms and conditions, and in accordance with the provisions of sections 77A, 77AA and 77B of the Act. Article 45 provides that the company may by ordinary resolution consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the memorandum, subject, nevertheless, to the provisions of clause (d) of section (1) of section 94 of the Act; cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person. Article 46 states that the company may, by special resolution, reduce in any manner and with, and subject to, any incident authorized and consent required, by law its share capital, any capital redemption reserve account or any share premium account. Issue of Debentures, etc.
Article 47 provides that any debentures, debenture-stock or other securities may be issued at a discount, premium or otherwise and may be issued on condition that they shall be convertible into shares of any denomination and with any privileges and conditions as to redemption, surrender, drawing, allotment of shares, attending (but not voting) at the General Meeting, appointment of Directors or otherwise. Debentures with the right to conversion into or allotment of shares shall be issued only with the consent of the company in the General Meeting. Article 47A provides that the Company shall, have power to issue ADRs or GDRs or such other securities on such terms and in such manner as the Board deems fit including their conversion and repayment. Such terms may include, at the discretion of the Board, limitations on voting by holders of ADRs or GDRs or such other securities, including without limitation, exercise of voting rights in accordance with the directions of the Board or otherwise. General Meetings
Power of Board
Article 49 states that the Board may, whenever it thinks fit, call an extraordinary general meeting. If at any time there are not within India directors capable of acting who are sufficient in number to form a quorum, any director or any two members of the company may call an extraordinary general meeting, in the same manner as nearly as possible, as that in which such a meeting may be called by the Board. Proceedings at General Meetings
Quorum necessary for business
Article 50 provides that no business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business and that five members present in person, shall be a quorum. Chairman
Article 51 provides that the Chairman, if any, of the Board shall preside as chairman at every general meeting of the company. Article 52 provides that if there is no such chairman, or if he is not present within fifteen minutes after the time appointed for holding the meeting, or is unwilling to act as chairman of the meeting, the directors present shall elect one of their number to be chairman of the meeting. Article 53 provides that if no director is willing to act as chairman or if no director is present within fifteen minutes after the time appointed for holding the meeting, the members present shall choose one of their number to be chairman of the meeting.
Power to adjourn meeting
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Article 54 states that the Chairman may, with the consent of any meeting at which a quorum is present, and shall, if so directed by the meeting, adjourn the meeting from time to time and from place to place. It is further provided that no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting is adjourned for thirty days or more, notice of the same shall be given as in the case of an original meeting. Save as aforestated, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. Poll
Article 56 provides that any business other than that upon which a poll has been demanded may be proceeded with, pending the taking of the poll. Votes of Members
Right to vote
Article 60 provides that no member shall be entitled to vote at any general meeting unless all calls or other sums presently payable by hime in respect of shares in the company have been paid. Objection as to qualification of voter
Article 61 provides that no objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered, and every vote not disallowed at such meeting shall be valid for all purposes. Any objection made in due time shall be referred to the chairman of the meeting, whose decision shall be final and conclusive. Instrument appointing proxy
Article 62 states that the instrument appointing a proxy and the power of attorney or other authority, if any under which it is signed or a notorially certified copy of that power or authority, shall be deposited at the registered office of the company not less than 48 hours before the time for holding meeting at which the person named in the instrument proposes to vote and in default of the instrument of proxy shall not be treated as valid. Article 64 provides that a vote given in accordance with the terms of an instrument of proxy shall be valid, notwithstanding the previous death or insanity of the principal or the revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy is given, provided that no intimation in writing of such death, insanity, revocation or transfer shall have been received by the company at its office before the commencement of the meeting or adjourned meeting at which the proxy is used. Board of Directors
Number of Directors
Article 65 provides that the number of directors shall not be less than three (3) and not more than twelve (12). Other payments to directors
Article 66 provides that in addition to the remuneration payable to them in pursuance of the Act, the directors may be paid all travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the Board of directors or committee thereof or general meetings of the company or in connection with the business of the company. Qualification shares
Article 67 states that the directors shall not be required to hold any qualification shares in the company. Preliminary expenses
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Article 68 states that the Board may pay all expenses incurred in getting up and registering the company. Official seal for use abroad
Article 69 provides that the Company may exercise the powers conferred on it by section 50 with regard to having an official seal for use abroad, and such powers shall be vested in the Board. Foreign Registers
Article 70 enables the company to exercise the powers conferred on it by sections 157 and 158 of the Act with regard to the keeping of foreign registers and the Board may (subject to the provisions of those sections) make and vary such Articles as it may think fit respecting the keeping of any such register. Negotiable instruments
Article 71 provides that all cheques, promissory notes, drafts, hundis, bills of exchange and other negotiable instruments, and all receipts for moneys paid to the company, shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, by such person and in such manner as the Board shall from time to time by resolution determine. Additional/Alternate Directors
Article 73 provides that the Board shall have power at any time, and from time to time, to appoint a person as an additional director, provided the number of the directors and additional directors together shall not at any time exceed the maximum strength fixed for the Board by the articles. Such person shall hold office only up to the date of the next annual general meeting of the company but shall be eligible for appointment by the company as a director at that meeting subject to the provisions of the Act. It is further provided that the board may appoint an alternate director to act for a director during his absence for a period of not less than three months from the state in which the meetings of the Board are ordinarily held. Such an alternate director shall not hold office for a period longer than that permissible to the director in whose place he has been appointed and shall vacate office if and when the said director returns to that state. If the term of office of the original director is determined before he so returns, any provisions in the Act or in these Articles for the automatic appointment of a retiring Director in default of another appointment shall apply to the Original Director and not to the Alternate Director. It is also provided that subject to the provisions of sections 262 and 264 of the Act, the Board shall have the power at any time and from time to time to appoint any other person to be a director to fill a casual vacancy. Any person so appointed shall hold office only up to the date up to which the Director in whose place he is appointed would have held office if it had not been vacated by him. Proceedings of Board
Voting at a Board meeting
Article 75 states that save as otherwise expressly provided in the Act, questions arising at any meeting of the Board shall be decided by a majority of votes and in case of an equality of votes, the chairman of the Board, if any, shall have a second or casting vote. Continuing directors
Article 76 provides that the continuing directors may act notwithstanding any vacancy in the Board; but, if and so long as their number is reduced below the quorum fixed by the Act for a meeting of the Board, the Continuing directors or director may act for the purpose of increasing the number of directors to that fixed for the quorum or of summoning a general meeting of the company, but for no other purpose. Election of Chairman
Article 77 provides that the Board may elect a Chairman of its meetings and determine the period for which he is to hold office and if no such Chairman is elected, or if at any meeting the Chairman is not present within five minutes after the time appointed for holding the meeting, the directors present may choose one of their number to be Chairman of the meeting.
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Committees of Directors
Article 78 provides that the Board may, subject to the provisions of the Act, delegate any of its powers to committees consisting of such member or members of its body as it thinks fit and any committee so formed shall, in the exercise of the powers so delegated, conform to any Articles that may be imposed on it by the Board. Procedure of Committees’ Meetings
Article 80 provides that a committee may meet and adjourn as it thinks proper. Questions arising at any meeting of a committee shall be determined by a majority of votes of the members present, and in case of an equality of votes, the chairman shall have a second or casting vote. Acts of Committees
Article 81 states that all acts done by any meeting of the Board or of a committee thereof or by any person acting as a director, shall, notwithstanding that it may be afterwards discovered that there was some defect in the appointment of any one or more of such directors or of any person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such director or such person had been duly appointed and was qualified to be a director. Resolutions of Board and Committees
Article 82 states that save as otherwise expressly provided for in the Act, a resolution in writing, signed by all the members of the Board or of a committee thereof, for the time being entitled to receive notice of a meeting of the Board or committee, shall be as valid and effectual as if it had been passed at a meeting of the Board or committee, duly convened and held. Manager or Secretary
Article 84 provides that a provision of the Act or these Articles requiring or authorizing a thing to be done by or to a director and the manager or secretary shall not be satisfied by its being done by or to the same person acting both as director and as, or in place of, the manager or secretary. The Seal
Article 85 states that the Board shall provide for the safe custody of the seal and that every instrument to which the Seal is required to be affixed shall, unless the same is affixed and executed by a duly constituted attorney, be affixed shall, unless the same is affixed and executed by a duly constituted attorney, be affixed and signed by two Directors or one Director and the Secretary or some other person appointed by the Board for the purpose. Dividends and Reserve
Declaration of Dividend
Article 86 states that the company in general meeting may declare dividends, but no dividend shall exceed the amount recommended by the Board. Interim Dividend
Article 87 further provides that the Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of the company. Reserve
Article 88 states that the Board may, before recommending any dividend, set aside out of the profits of the company such sums as it thinks proper as a reserve or reserves which shall, at the discretion of the Board be applicable for any purpose to which the profits of the company may be properly applied, including provisions for meeting contingencies or for equalizing dividends; and pending such application, may at the like discretion, either be employed in the business of the company or be invested in such investments (other than shares of the
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company) as the Board may, from time to time, think fit. The Board may also carry forward any profits, which it may think prudent not to divide, without setting them aside as a reserve. Payment of dividends
Article 89 states that subject to the rights of persons, if any, entitled to shares with special rights as to dividends, all dividends shall be declared and paid according to the amounts paid or credited as paid on the shares in respect whereof the dividend s paid, but if and so long as nothing is paid upon any of the shares in the company, dividends may be declared and paid according to the amounts of the shares and no amount paid or credited as paid on a share in advance of calls shall be treated for the purposes of this regulation as paid on the share. Article 90 provides that all dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the shares during any portion or portions of the period in respect of which the dividend is paid; but if any share is issued on terms providing that it shall rank for dividend as from a particular date, such share shall rank for dividend accordingly. Board’s power
Article 91 provides that the Board may deduct from any dividend payable to any member all sums of money, if any, presently payable by him to the company on account of calls or otherwise in relation to the shares of the company. Payment by post
Article 92 provides that any dividend, interest or other moneys payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of one of the joint holders who is first named on the register of members, or to such person and to such address as the holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Receipts from joint holders
Any one of two or more joint holders of a share may give effectual receipts for any dividends, bonuses or other moneys payable in respect of such share. Notice of Dividend
Article 94 states that notice of any dividend that may have been declared shall be given to the persons entitled to the shares therein, in the manner mentioned in the Act. No dividend bearing interest against company Article 95 states that No dividend shall bear interest against the company. Unpaid/unclaimed dividend
Article 96 states that the Company shall comply with the applicable provisions of section 205A and 205C of the Act concerning transfer of unpaid/unclaimed dividend to the Unpaid Dividend Account and the Investors Education and Protection Fund as the case may be. Accounts
Article 97 states that the Board shall from time to time determine whether and to what extent and at what times and places and under what conditions the accounts and books of the company shall be open to the inspection of members not being directors. No member (not being a director) shall have any right of inspecting any account or book or document of the company except as conferred by law or authorized by the Board or by the company in general meeting. Capitalisation of Profits
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Article 98 provides that the company in general meeting may, upon the recommendation of the Board, resolve that it is desirable to capitalise any part of the amount for the time being standing to the credit of any of the company’s reserve accounts or to the credit of the profit and loss account or otherwise available for distribution, and that such sum be accordingly set free for distribution in the manner specified in clause (2) amongst the members who would have been entitled thereto, if distributed by way of dividend and in the same proportions. The sum aforesaid shall not be paid in cash but shall be applied, subject to the provision contained in clause (3), either in or towards paying up any amounts for the time being unpaid on any shares held by such members respectively; paying up in full, unissued shares of the company to be allotted and distributed, credited as fully paid up, to and amongst such members in the proportions aforesaid; or partly in the way specified in sub-clause (i) and partly in that specified in sub-clause(ii). It is further provided that a share premium account and capital redemption reserve account may, for the purposes of this regulation, only be applied in the paying up of unissued shares to be issued to members of the company as fully paid bonus shares. Article 99 then provides that whenever the Board passes a resolution mentioned in Article 98, the Board shall make all appropriations and applications of the undivided profits resolved to be capitalized thereby and all allotments and issues of fully paid shares, if any, and generally do all acts and things required to give effect thereto. The Board shall have full power to make such provision by the issue of fractional certificates or by payment in cash or otherwise as it thinks fit, for the case of shares or debentures becoming distributable in fraction; and also to authorize any person to enter, on behalf of all the members entitled thereto, into an agreement with the company providing for the allotment to them respectively, credited as fully paid up, of any further shares to which they may be entitled upon such captialisation, or (as the case may require) for the payment up by the company on their behalf, by the application thereto of their respective proportions of the profits resolved to be capitalized, of the amounts or any part of the amounts remaining unpaid on their existing shares. Any agreement made under such authority shall be effective and binding on all such members. Winding up
Article 100 provides that in case of winding up of the company, the liquidator may, with the sanction of a special resolution of the company and any other sanction required by the Act, divide amongst the members in specie or kind the whole or any part of the assets of the company, whether they shall consist of property of the same kind or not. For this purpose, the liquidator may set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. He may also, with like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories as the liquidator, with the like sanction shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability. Indemnity
Article 101 provides that every officer or agent for the time being of the company shall be indemnified out of the assets of the company against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or in connection with any application under section 633 of the Act in which relief is granted to him by the court. General Authority
Article 102 provides that wherever, in the Act, it has been provided that a Company shall have any right, privilege or authority or that a Company could carry out a transaction only if a Company is so authorized by its Articles, then and in that case this Article hereby authorizes and empowers the Company to have such right, privilege or authority and to carry out such transactions as have been permitted by the Act without there being any specific Article in that behalf herein provided.
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MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts (not being contracts entered into in the ordinary course of business carried on by the Company) which are or may be deemed material have been entered or are to be entered into by the Company. These contracts and also the documents for inspection referred to hereunder, may be inspected at the Peninsula Spenta, Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013 from 11.00 AM to 3.00 PM from the date of this Draft Letter of Offer until the date of closure of the Issue. A. Material Contracts
1. Memorandum of understanding dated April 17, 2009 between Company and Lead Manager. 2. Memorandum of understanding dated March 13, 2009 between Company and Registrar to the
Issue. 3. Engagement letter dated March 31, 2009 received from the Company appointing Enam
Securities Private Limited as the Lead Manager to the Issue.
B. Documents
1. Certificate of incorporation of the Company. 2. Memorandum and articles of association of the Company. 3. Certificate of change of name to Morarjee Textiles Limited dated January 4, 2005. 4. Shareholders resolution passed at the Annual General Meeting dated August 11, 2008
appointing Shah & Co., as statutory auditors for the financial year 2008-09. 5. Board of Directors resolution dated February 23, 2009 approving the Issue, declaring the
rights entitlement as 1 Rights Equity Share for every 1 fully paid up Equity Share held on the Record Date and constituting a Committee of Directors and delegated powers to the Committee to finalise the other terms of the Issue
6. Consents of the Directors, Auditors, Lead Manager to the Issue, Legal Counsel to the Issue, Bankers to the Issue, Bankers to the Company, Registrars to the Issue and Registrars to the Company and the Compliance Officer to include their names in this Draft Letter of Offer to act in their respective capacities.
7. Appointment of Company Secretary as Compliance Officer and consent thereto. 8. Letter dated March 21, 2009 from the Auditors confirming the tax benefits as mentioned in
this Draft Letter of Offer. 9. The report of the auditors, Shah & Co, as set out herein dated February 26, 2009 and March
21, 2009 on restated standalone and restated consolidated financials of the Company for the nine month period ended December 31, 2008 and fiscal years ending March 31, 2008, 2007, 2006, 2005 and 2004.
10. Annual Reports of the Company for the last five Financial Years. 11. Applications for in-principle listing approval dated [●] and [●] respectively to the BSE and
NSE. 12. In-principle listing approval dated [●] and [●] from BSE and the NSE. 13. Tripartite agreement with NSDL and CDSL dated September 3, 2003 and March 2, 2005
respectively. 14. Copy of resolution dated July 26, 2007 and August 11, 2008 appointing the Executive Vice-
Chairman and the Managing Director of the Company and setting out the terms of such appointment.
15. Agreement dated December 23, 2005 between the Company, Mr. Pradeep Modi, Just Textiles Limited and Just Exports Private Limited.
16. Share purchase agreement dated January 16, 2008 between our Subsidiary, Integra Apparels & Textiles Private Limited (now Integra Apparels & Textiles Limited), Mr. Sudhir Sekhri, Mr. Pradeep Sekhri and Mr. Vishwanath Sekhri and Pranit Consultants Private Limited.
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DECLARATION
No statement made in this Draft Letter of Offer contravenes any of the provisions of the Act and the rules made thereunder. All the legal requirements connected with the said Issue as also the guidelines, instructions etc. issued by SEBI, Government and any other competent authority in this behalf have been duly complied with. Yours faithfully On behalf of the Board of Directors of Morarjee Textiles Limited
Ms Urvi A Piramal Chairperson
Mr Harshvardhan A Piramal Executive Vice Chairman
Mr P K Gothi Managing Director
Mr Aditya Mangaldas Director
Mr Mahesh S Gupta Director
Mr Pradipta Mohaptra Director
Mr Ranjan Sanghi Director
Mr Shailesh Haribhakti Alternate Director to Mr Takao Yajima
Mr Shobhan Thakore Director
Mr S C Kashimpuria Head Finance and Accounts
Mr. S C Kashimpuria Compliance Officer
Place: Mumbai Date: April 20, 2009
