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Placement Document
Not for Circulation
Serial Number [.]
Dated January 29, 2013
PI INDUSTRIES LIMITED (Incorporated as The Mewar Oil and General Mills Limited on December 31, 1946 under the Mewar Companies Act of 1942 and commenced its business
vide certificate of commencement of business dated March 3, 1947. The name of our Company was changed to Pesticides India Limited pursuant to a fresh
certificate of incorporation dated January 1, 1990. Subsequently the name of our Company was again changed to PI Industries Limited vide a fresh certificate of incorporation dated October 13, 1992. The CIN number of our Company is L24211RJ1946PLC000469. The registered office of our Company
is located at Udaisagar Road, Udaipur – 313 001, Rajasthan (India). The corporate office of our Company is located at 5th Floor, Vipul Square, B Block,
Sushant Lok, Phase-1, Gurgaon -122 009, Haryana (India)
PI Industries Limited (“Company” / “Issuer”) is issuing upto 1,924,656 equity shares of face value ` 5 each, (“Placement Shares”), at a price of
` 609.60 per Placement Share, including a premium of ` 604.60 per Placement Share, aggregating to ` 1,173.27 Million, (“Issue ”)
ISSUE PURSUANT TO CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2009, AS AMENDED
THIS ISSUE AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING UNDERTAKEN PURSUANT TO THE PROVISIONS OF CHAPTER
VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS
AMENDED, (“SEBI ICDR REGULATIONS”) , AND OUTSIDE THE UNITED STATES IN RELIANCE ON REGULATION S (“REGULATION S”) UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”). THIS PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE
INVESTOR, AND DOES NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY OTHER
PERSON OR CLASS OF INVESTOR WITHIN OR OUTSIDE INDIA OTHER THAN QUALIFIED INSTITUTIONAL BUYERS (AS DEFINED IN SEBI ICDR
REGULATIONS).
Any invitation, offer and sale of the Placement Shares shall only be made pursuant to the Preliminary Placement Document, this Placement Document, the Application Form and
the Confirmation of Allocation Note. See “Issue Procedure” on page 144 of this Placement Document. The distribution of this Placement Document or the disclosure of its
contents without our Company’s prior consent to any person, other than Qualified Institutional Buyers, (as defined in the SEBI ICDR Regulations), (“QIBs”), and persons retained
by QIBs, to advise them with respect to their purchase of the Placement Shares, is unauthorised and prohibited. Each prospective Investor, by accepting delivery of this Placement
Document agrees to observe the foregoing restrictions, and not to make copies of this Placement Document or any other document referred herein.
THE PRELIMINARY PLACEMENT DOCUMENT AND THIS PLACEMENT DOCUMENT HAS NOT BEEN REVIEWED BY THE SECURITIES AND
EXCHANGE BOARD OF INDIA (“SEBI”), THE RESERVE BANK OF INDIA (“RBI”), BSE LIMITED (“BSE”), THE NATIONAL STOCK EXCHANGE OF INDIA
LIMITED (“NSE”), (“COLLECTIVELY REFERRED TO AS “STOCK EXCHANGES”), OR ANY OTHER REGULATORY OR LISTING AUTHORITY AND IS
INTENDED ONLY FOR USE BY QIBs. THE ISSUE AND THIS PLACEMENT DOCUMENT IS MEANT ONLY FOR QIBs, UNDER CHAPTER VIII OF THE SEBI
ICDR REGULATIONS ON A PRIVATE PLACEMENT BASIS AND IS NOT AN OFFER TO THE PUBLIC OR TO ANY OTHER CLASS OF INVESTORS.
This Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies (“RoC”) in India, and will not be circulated or distributed to the
public in India or any other jurisdiction and will not constitute a public offer in India or any other jurisdiction. The Issue proposed to be made pursuaant to this Placement
Document is meant solely for QIBs on private placement basis.
Investments in equity and equity-related securities involve a certain degree of risk and prospective investors should not invest any amount in this Issue unless they are
prepared to bear the risk of losing all or part of the amount invested by them. Prospective investors are advised to carefully read the chapter titled “Risk Factors” on
page 40 of this Placement Document before deciding to invest in this Issue. Each prospective investor is advised to consult its advisors about the particular consequences
of it of an investment in Placement Shares being issued pursuant to this Placement Document.
The information on our Company’s website or any website directly or indirectly linked to our Company’s website does not form part of this Placement Document and prospective
investors should not rely on such information contained in, or available through, such websites.
Except for the Placement Shares, all of our Company’s outstanding paid-up equity shares of face value ` 5 /- each, are listed on the Stock Exchanges. The closing price
of Equity Shares on the BSE and on the NSE on the date prior to the date of this Placement Document, i.e. January 28, 2013 was ` 626.45 and ` 622.40 per Equity Share,
respectively. Our Company has applied for and obtained the in-principle approval of the Stock Exchanges under Clause 24(a) of the Listing Agreement. Applications
shall be made for the listing of the Placement Shares offered through this Placement Document on the Stock Exchanges. The Stock Exchanges assume no responsibility
for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Placement Shares to trading on the Stock Exchanges
should not be taken as an indication of the merits of our Company or the Placement Shares.
YOU MAY NOT BE AND ARE NOT AUTHORISED TO (1) DELIVER THIS PLACEMENT DOCUMENT TO ANY OTHER PERSON; OR (2) REPRODUCE THIS
PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER. ANY DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS
UNAUTHORISED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY RESULT IN A VIOLATION OF THE SEBI ICDR REGULATIONS OR OTHER
APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.
A copy of the Preliminary Placement Document has been delivered to the Stock Exchanges. A copy of this Placement Document will be filed with the Stock Exchanges in
accordance with SEBI ICDR Regulations.
THIS PLACEMENT DOCUMENT HAS BEEN PREPARED BY OUR COMPANY SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH THE
PROPOSED ISSUE OF THE PLACEMENT SHARES DESCRIBED IN THIS PLACEMENT DOCUMENT.
The Placement Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’) and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S (“Regulation S”) under the Securities Act), except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Accordingly, the Placement Shares are
being offered and sold only outside the United States in offshore transactions in reliance on Regulation S under the Securities Act and the applicable laws of the jurisdiction where
those offers and sales occur. For further details, see “Selling Restrictions” and “Transfer Restrictions”. This Placement Document is dated January 29, 2013.
SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING LEAD MANAGER
Edelweiss Financial Services Limited
TABLE OF CONTENTS
NOTICE TO INVESTORS ............................................................................................................................ 1
REPRESENTATIONS BY INVESTORS ...................................................................................................... 3
OFFSHORE DERIVATIVE INSTRUMENTS .............................................................................................. 8
DISCLAIMER CLAUSE OF THE STOCK EXCHANGES ......................................................................... 9
PRESENTATION OF FINANCIAL AND OTHER INFORMATION ........................................................10
INDUSTRY AND MARKET DATA ...........................................................................................................11
FORWARD-LOOKING STATEMENTS .....................................................................................................12
ENFORCEMENT OF CIVIL LIABILITIES ................................................................................................14
EXCHANGE RATE INFORMATION .........................................................................................................15
CERTAIN DEFINITIONS AND ABBREVIATIONS .................................................................................16
SUMMARY OF THE ISSUE........................................................................................................................21
SUMMARY OF OUR BUSINESS ...............................................................................................................24
SELECTED FINANCIAL INFORMATION OF OUR COMPANY ............................................................28
RISK FACTORS ...........................................................................................................................................40
MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE EQUITY
SHARES ........................................................................................................................................................60
USE OF PROCEEDS ....................................................................................................................................64
CAPITALISATION ......................................................................................................................................65
DIVIDEND POLICY ....................................................................................................................................67
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ........................................................................................................................................68
INDUSTRY OVERVIEW .............................................................................................................................91
OUR BUSINESS .........................................................................................................................................106
BOARD OF DIRECTORS AND SENIOR MANAGEMENT ...................................................................118
PRINCIPAL SHAREHOLDERS ................................................................................................................135
REGULATIONS AND POLICIES .............................................................................................................139
ISSUE PROCEDURE .................................................................................................................................144
PLAN OF DISTRIBUTION ........................................................................................................................154
SELLING RESTRICTIONS .......................................................................................................................156
TRANSFER RESTRICTIONS.....................................................................................................................159 THE SECURITIES MARKET OF INDIA ..................................................................................................160
DESCRIPTION OF THE EQUITY SHARES ............................................................................................163
TAXATION ................................................................................................................................................167
LEGAL PROCEEDINGS ...........................................................................................................................173
RECENT DEVELOPMENTS .....................................................................................................................184
GENERAL INFORMATION......................................................................................................................185
FINANCIAL STATEMENTS .....................................................................................................................186
DECLARATION .........................................................................................................................................187
1
NOTICE TO INVESTORS
Our Company accepts full responsibility for the information contained in this Placement Document and to
the best of its knowledge and belief, having made all reasonable enquiries, confirms that this Placement
Document contains all information with respect to our Company and its Subsidiaries and the Placement
Shares, which is material in the context of this Issue. The statements contained in this Placement Document
relating to our Company and its Subsidiaries and the Placement Shares are, in all material respects, true
and accurate and not misleading, the opinions and intentions expressed in this Placement Document with
regard to our Company and its Subsidiaries and the Placement Shares are honestly held, have been reached
after considering all relevant circumstances, are based on information presently available to our Company
and are based on reasonable assumptions. There are no other facts in relation to our Company and its
Subsidiaries and the Placement Shares , the omission of which would, in the context of the Issue, make any
statement in this Placement Document misleading in any material respect. Further, all reasonable enquiries
have been made by our Company and its Subsidiaries to ascertain such facts and to verify the accuracy of
all such information and statements. The Sole Global Co-ordinator and Book Running Lead Manager has
not separately verified all the information contained in this Placement Document (financial, legal or
otherwise). Accordingly, neither the Sole Global Co-ordinator and Book Running Lead Manager nor any of
its members, employees, counsel, officers, directors, representatives, agents or affiliates makes any express
or implied representation, warranty or undertaking, and no responsibility or liability is accepted, by the
Sole Global Co-ordinator and Book Running Lead Manager, as to the accuracy or completeness of the
information contained in this Placement Document or any other information supplied in connection with
the Placement Shares. Each person receiving this Placement Document acknowledges that such person has
neither relied on the Sole Global Co-ordinator and Book Running Lead Manager nor on any person
affiliated with the Sole Global Co-ordinator and Book Running Lead Manager in connection with its
investigation of the accuracy of such information or its investment decision, and each such person must rely
on its own examination of our Company and its Subsidiaries and the merits and risks involved in investing
in the Placement Shares issued pursuant to the Issue. Any prospective investor should not construe
anything in this Placement Document as legal, business, tax, acounting or investment advice.
No person is authorised to give any information or to make any representation not contained in this
Placement Document and any information or representation not so contained must not be relied upon as
having been authorised by or on behalf of our Company or the Sole Global Co-ordinator and Book Running
Lead Manager. The delivery of this Placement Document at any time does not imply that the information
contained in it is correct as at any time subsequent to its date.
The Placement Shares have not been and will not be registered under the United States Securities
Act of 1933, as amended (the ‘‘Securities Act’’) and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S (“Regulation
S”) under the Securities Act), except pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act and applicable state securities laws.
Accordingly, the Placement Shares are being offered and sold only outside the United States in
offshore transactions in reliance on Regulation S under the Securities Act and the applicable laws of
the jurisdiction where those offers and sales occur. For further details, see “Selling Restrictions” and
“Transfer Restrictions”.
The distribution of this Placement Document and the Issue of the Placement Shares in certain jurisdictions
may be restricted by law. As such, this Placement Document does not constitute, and may not be used for
or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or
solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. In
particular, no action has been taken by our Company and its Subsidiaries and the Sole Global Co-ordinator
and Book Running Lead Manager which would permit an Issue of the Placement Shares or distribution of
this Placement Document in any jurisdiction, other than India.
2
Accordingly, the Placement Shares may not be offered or sold, directly or indirectly, and neither this
Placement Document nor any Issue materials in connection with the Placement Shares may be distributed
or published in or from any country or jurisdiction except under circumstances that will result in the
compliance with any applicable rules and regulations of any such country or jurisdiction. Please refer to the
section titled “Transfer Restrictions” on page 159 of this Placement Document.
In making an investment decision, investors must rely on their own examination of our Company and the
terms of this Issue, including the merits and risks involved. Investors should not construe the contents of
this Placement Document as legal, tax, accounting or investment advice. Investors should consult their own
counsel and advisors as to business, legal, tax, accounting and related matters concerning this Issue. In
addition, neither our Company nor the Sole Global Co-ordinator and Book Running Lead Manager are
making any representation to any offeree or purchaser of the Placement Shares regarding the legality of an
investment in the Placement Shares by such offeree or purchaser under applicable legal, investment or
applicable laws or regulations. Each purchaser of the Placement Shares in this Issue is deemed to have
acknowledged, represented and agreed that it is eligible to invest in India and in our Company under
Chapter VIII of the SEBI ICDR Regulations and is not prohibited by SEBI or any other regulatory
authority from buying, selling or dealing in securities. Each purchaser of the Placement Shares in this Issue
also acknowledges that it has been afforded an opportunity to request from our Company and review
information to our Company and the Equity Shares
The information on our Company’s website or the website of the Sole Global Co-ordinator and Book
Running Lead Manager, does not constitute or form part of this Placement Document. Prospective
investors should not rely on the information contained in or available through such websites. This
Placement Document contains summaries of certain terms of certain documents, which summaries are
qualified in their entirety by the terms and conditions of such documents.
3
REPRESENTATIONS BY INVESTORS
All references to “you” in this section are to the propective investors in the Issue.
By subscribing to any Placement Shares under the Issue, you are deemed to have agreed, acknowledged
warranted and represented to us and the Sole Global Co-ordinator and Book Running Lead Manager and
agreed as follows:
you are a QIB as defined in Regulation 2(1)(zd) of the SEBI ICDR Regulations (“QIB”), and
having valid and existing registrations under the applicable laws and regulations of India and
undertake to acquire, hold, manage or dispose of any Placement Shares that are allocated to you
for the purposes of your business in accordance with Chapter VIII of the SEBI ICDR Regulations;
if you are a QIB not resident in India that you are (i) a foreign institutional investor as defined in
the SEBI (Foreign Institutional Investor) Regulations, 1995 and registered with SEBI under
applicable laws in India, ("FII"), or (ii) a sub-account which is not a foreign corporate or foreign
individual, and have a valid and existing registration with SEBI under applicable law.
if you are Allotted Placement Shares pursuant to the Issue, you shall not, for a period of one year
from the date of Allotment, sell the Placement Shares so acquired except on the floor of the Stock
Exchanges;
you are aware that the Placement Shares have not been and will not be registered under the SEBI
ICDR Regulations or under any other law in force in India. The Preliminary Placement Document
and this Placement Document has not been reviewed, verified or affirmed by the SEBI, RBI or the
Stock Exchanges and will not be filed or registered with the Registrar of Companies. The
Preliminary Placement Document has been filed with the Stock Exchanges for record purposes
only and has been displayed on the websites of our Company and the Stock Exchanges;
you are entitled to subscribe for and acquire the Placement Shares under the laws of all relevant
jurisdictions and that you have all necessary capacity and have obtained all necessary consents and
authorisations, governmental or otherwise and complied with all necessary formalities and
applicable laws to enable you to commit to this participation in the Issue and to perform your
obligations in relation thereto (including, without limitation, in the case of any person on whose
behalf you are acting, all necessary consents and authorities to agree to the terms set out or
referred to in this Placement Document) and will honor such obligations;
you confirm that, either: (i) you have not participated in or attended any investor meetings or
presentations by our Company or its agents, (“Company’s Presentations”), with regard to our
Company, the Placement Shares or the Issue; or (ii) if you have participated in or attended any
Company’s Presentations: (a) you understand and acknowledge that the Sole Global Co-ordinator
and Book Running Lead Manager may not have knowledge of the statements that our Company or
its agents may have made at such Company’s Presentations and are therefore unable to determine
whether the information provided to you at such Company’s Presentations may have included any
material misstatements or omissions, and, accordingly you acknowledge that the Sole Global Co-
ordinator and Book Running Lead Manager have advised you not to rely in any way on any
information that was provided to you at such Company’s presentations, and (b) confirm that, to the
best of your knowledge, you have not been provided any price-sensitive information relating to
our Company and the Issue that was not made publicly available;
neither we nor the Sole Global Co-ordinator and Book Running Lead Manager nor any of their
respective shareholders, directors, officers, employees, counsel, representatives, agents or
affiliates is making any recommendations to you, advising you regarding the suitability of any
transactions it may enter into in connection with the Issue and that participation in the Issue is on
the basis that you are not and will not be a client of the Sole Global Co-ordinator and Book
4
Running Lead Manager and that the Sole Global Co-ordinator and Book Running Lead Manager
have no duties or responsibilities to you for providing the protection afforded to their clients or
clients or for providing advice in relation to the Issue and is in no way acting in a fiduciary
capacity to you;
you are aware that if you are Allotted more than 5% of the Equity Shares in this Issue, our
Company is required to disclose your name and the number of Equity Shares Allotted to the Stock
Exchanges and the Stock Exchanges will make the same information available on their website
and you consent to such disclosure;
all statements other than statements of historical fact included in this Placement Document,
including, without limitation, those regarding our Company’s financial position, business strategy,
plans and objectives of management for future operations (including development plans and
objectives relating to our Company’s business), are forward-looking statements. Such forward-
looking statements involve known and unknown risks, uncertainties and other important factors
that could cause actual results to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. Such forward-looking
statements are based on numerous assumptions regarding our Company’s present and future
business strategies and environment in which our Company will operate in the future. You should
not place undue reliance on forward-looking statements, which speak only as at the date of
Placement Document. Our Company assumes no responsibility to update any of the forward-
looking statements contained in this Placement Document;
you have been provided a serially numbered copy of the Preliminary Placement Document and
this Placement Document and have read the Preliminary Placement Document and this Placement
Document in its entirety, including, in particular, the section titled “Risk Factors”;
you are aware and understand that the Placement Shares are being offered only to QIBs and are
not being offered to the general public and the Allotment of the same shall be on a discretionary
basis;
you have made, or been deemed to have made, as applicable, the representations set forth under
section titled “Transfer Restrictions”;
you are purchasing the Placement Shares in reliance on Regulation S under the Securities Act;
that in making your investment decision, (i) you have relied on your own examination of our
Company and the terms of the Issue, including the merits and risks involved, (ii) you have made
and will continue to make your own assessment of our Company, the Placement Shares and the
terms of the Issue based on such information as is publicly available, (iii) you have consulted your
own independent advisors or otherwise have satisfied yourself concerning without limitation, the
effects of local laws, (iv) you have relied solely on the information contained in this Placement
Document and no other disclosure or representation by our Company or any other party; and (v)
you have received all information that you believe is necessary or appropriate in order to make an
investment decision in respect of our Company and the Placement Shares;
you have such knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of the investment in the Placement Shares and you and any
accounts for which you are subscribing the Placement Shares (i) are each able to bear the
economic risk of the investment in the Placement Shares; (ii) will not look to our Company and/or
the Sole Global Co-ordinator and Book Running Lead Manager for all or part of any such loss or
losses that may be suffered; (iii) are able to sustain a complete loss on the investment in the
Placement Shares; (iv) have no need for liquidity with respect to the investment in the Placement
Shares; and (v) have no reason to anticipate any change in your or their circumstances, financial or
5
otherwise, which may cause or require any sale or distribution by you or them of all or any part of
the Placement Shares;
the Sole Global Co-ordinator and Book Running Lead Manager or our Company have not
provided you with any tax advice or otherwise made any representations regarding the tax
consequences of the Placement Shares (including but not limited to the Issue and the use of the
proceeds from the Placement Shares). You will obtain your own independent tax advice and will
not rely on the Sole Global Co-ordinator and Book Running Lead Manager or our Company when
evaluating the tax consequences in relation to the Placement Shares (including but not limited to
the Issue and the use of the proceeds from the Placement Shares). You waive and agree not to
assert any claim against the Sole Global Co-ordinator and Book Running Lead Manager or our
Company with respect to the tax aspects of the Placement Shares or the Issue or as a result of any
tax audits by tax authorities, wherever situated;
that where you are acquiring the Placement Shares for one or more managed accounts, you
represent and warrant that you are authorised in writing, by each such managed account to acquire
the Placement Shares for each managed account; and to make the acknowledgements and
agreements herein for and on behalf of each such account, reading the reference to “you” to
include such accounts;
you are not a Promoter and are not a person related to our Promoters, either directly or indirectly
and your Application does not directly or indirectly represent our Promoters or Promoter Group of
our Company;
you have no rights under a shareholders agreement or voting agreement with our Promoters or
persons related to our Promoters, no veto rights or right to appoint any nominee director on the
Board of Directors of our Company other than the acquired in the capacity of a lender not holding
any of our Equity Shares which shall not be deemed to be a person related to our Promoter;
you have no right to withdraw your Application after the Issue Closing Date;
you are eligible to apply and hold Placement Shares so Allotted and together with any Placement
Shares held by you prior to the Issue. You further confirm that your holding upon the Issue of the
Placement Shares shall not exceed the level permissible as per any applicable regulation;
the application form submitted by you would not eventually result in triggering a requirement to
make public announcement to acquire Equity Shares in accordance with the SEBI (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011, as amended, (“Takeover Code”);
to the best of your knowledge and belief together with other prospective QIBs in the Issue that
belong to the same group or are under common control as you, the Allotment to you under the
present Issue shall not exceed 50 % of the Issue. For the purposes of this representation:
a. the expression ‘belongs to the same group’ shall derive meaning from the concept of
‘companies under the same group’ as provided in sub-section (11) of Section 372 of the
Companies Act.
b. ‘control’ shall have the same meaning as is assigned to it by clause (c) of Regulation 2 of the
Takeover Code.
you shall not undertake any trade in the Placement Shares credited to your Depository Participant
account until such time that the final listing and trading approval for the Placement Shares is
issued by the Stock Exchanges;
you are aware that our Company has made applications to the Stock Exchanges for in-principle
approval for listing and admission of the Placement Shares to trading on the Stock Exchanges’
6
market for listed securities;
you are aware that applications shall be made to the Stock Exchanges after the Allotment of the
Equity Shares in the Issue for approvals for listing and admission of the Equity Shares to trading
on the Stock Exchanges’ market for listed securities and there can be no assurance that such
approvals will be obtained on time or at all;
you are aware and understand that the Sole Global Co-ordinator and Book Running Lead Manager
has entered into a Placement Agreement with our Company whereby the Sole Global Co-ordinator
and Book Running Lead Manager has, subject to the satisfaction of certain conditions set out
therein, to use its reasonable endeavours to seek to procure subscription for the Placement Shares;
that the contents of this Placement Document are exclusively the responsibility of our Company
and that neither the Sole Global Co-ordinator and Book Running Lead Manager nor any person
acting on its behalf has or shall have any liability for any information, representation or statement
contained in this Placement Document or any information previously published by or on behalf of
our Company and will not be liable for your decision to participate in the Issue based on any
information, representation or statement contained in this Placement Document or otherwise. By
accepting a participation in this Issue, you agree to the same and confirm that you have neither
received nor relied on any other information, representation, warranty or statement made by or on
behalf of the Sole Global Co-ordinator and Book Running Lead Manager or our Company or any
other person and neither the Sole Global Co-ordinator and Book Running Lead Manager nor our
Company nor any other person will be liable for your decision to participate in the Issue based on
any other information, representation, warranty or statement that you may have obtained or
received;
that the only information you are entitled to rely on, and on which you have relied in committing
yourself to acquire the Placement Shares is contained in this Placement Document, such
information being all that you deem necessary to make an investment decision in respect of the
Placement Shares and that you have neither received nor relied on any other information given or
representations, warranties or statements made by the Sole Global Co-ordinator and Book
Running Lead Manager or our Company and the Sole Global Co-ordinator and Book Running
Lead Manager will not be liable for your decision to accept an invitation to participate in the Issue
based on any other information, representation, warranty or statement;
you agree to indemnify and hold our Company and the Sole Global Co-ordinator and Book
Running Lead Manager harmless from any and all costs, claims, liabilities and expenses
(including legal fees and expenses) arising out of or in connection with any breach of the
representations and warranties, acknowledgements and undertakings in this section. You agree
that the indemnity set forth in this section shall survive the resale of the Placement Shares by or on
behalf of the managed accounts;
that our Company, the Sole Global Co-ordinator and Book Running Lead Manager and others will
rely on the truth and accuracy of the foregoing representations, warranties, acknowledgements and
undertakings which are given to the Sole Global Co-ordinator and Book Running Lead Manager
on their own behalf and on behalf of our Company and are irrevocable;
that you are eligible to invest in India under applicable law, including the Foreign Exchange
Management (Transfer or Issue of Security by Person Resident Outside India) Regulations, 2000,
as amended, and any notifications, circulars or clarifications issued thereunder, and have not been
prohibited by the SEBI from buying, selling or dealing in securities;
that you understand that the Sole Global Co-ordinator and Book Running Lead Manager does not
have any obligation to purchase or acquire all or any part of the Placement Shares purchased by
you in the Issue or to support any losses directly or indirectly sustained or incurred by you for any
7
reason whatsoever in connection with the Issue, including non-performance by us of any of our
respective obligations or any breach of any representations or warranties by us, whether to you or
otherwise;
that you are a reputed investor who is seeking to purchase the Placement Shares for your own
investment and not with a view to distribution; In particular, you acknowledge that (i) an
investment in the Placement Shares involves a high degree of risk and that the Placement Shares
are, therefore, a speculative investment, (ii) you have sufficient knowledge, sophistication and
experience in financial and business matters so as to be capable of evaluating the merits and risk
of the purchase of the Placement Shares, and (iii) you are experienced in investing in private
placement transactions of securities of companies in a similar stage of development and in similar
jurisdictions and have such knowledge and experience in financial, business and investments
matters that you are capable of evaluating the merits and risks of your investment in the Placement
Shares; and
that all references to “you” are to the prospective investors in the Placement Shares; and that each
of the representations, warranties, acknowledgements and undertakings set out above shall
continue to be true and accurate at all times up to and including the Allotment of the Placement
Shares.
8
OFFSHORE DERIVATIVE INSTRUMENTS
Subject to compliance with and to the extent permitted by all applicable Indian laws, rules , regulations,
guidelines and approvals and in terms of Regulation 15A(1) of the Securities Exchange Board of India
(Foreign Institutional Investors) Regulation, 1995, as amended, foreign institutional investors as defined
therein, (“FIIs”), may issue, deal in or hold, off-shore derivative instruments such as participatory notes,
equity linked notes or any other similar instruments against Placement Shares allocated in this Issue (all
such off-shore derivative instruments referred to herein as “P-Notes”), listed or proposed to be listed on
any stock exchange in India only in favor of those entities which are regulated by any appropriate relevant
foreign regulatory authorities in the countries of their incorporation or establishment subject to compliance
of “know your client” requirements. The FII shall also ensure that no further issue or transfer of any
instrument referred to above is made to any person other than a regulated entity. P-Notes have not been
and are not being offered or sold pursuant to this Placement Document. This Placement Document does
not contain any information concerning P-Notes or the issuer(s) of any P-Notes, including, without
limitation, any information regarding any risk factors relating thereto.
Neither the Preliminary Placement Document nor this document contains or will contain any information
concerning P-Notes or the issuer(s) of any P-Notes, including, without limitation, any information
regarding any risk factors relating thereto.
Any P-Notes that may be issued are not securities of our Company and do not constitute any obligations
of, claim on, or interests in our Company. Our Company has not participated in any offer of any P-Notes,
or in the establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P-
Notes. Any P-Notes that may be offered are issued by, and are solely the obligations of, third parties that
are unrelated to our Company. Our Company and its affiliates do not make any recommendation as to any
investment in P-Notes and do not accept any responsibility whatsoever in connection with any P-Notes.
Any P-Notes that may be issued are not securities of the Sole Global Co-ordinator and Book Running Lead
Manager and do not constitute any obligations of, or claim on the Sole Global Co-ordinator and Book
Running Lead Manager.
Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate
disclosures as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes from
the issuer(s) of such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or
approved any P-Notes or any disclosure related thereto. Prospective investors are urged to consult
with their own financial, legal, accounting and tax advisors regarding any contemplated investment
in P-Notes, including whether P-Notes are issued in compliance with applicable laws and regulations.
9
DISCLAIMER CLAUSE OF THE STOCK EXCHANGES
As required, a copy of the Preliminary Placement Document has been submitted to the Stock Exchanges
and a copy of this Placement Document will be submitted to the Stock Exchanges. The Stock Exchanges do
not in any manner:
1. warrant, certify or endorse the correctness or completeness of any of the contents of the
Preliminary Placement Document and this Placement Document;
2. warrant that our Company’s Placement Shares will be listed or will continue to be listed on the
Stock Exchanges; or
3. take any responsibility for the financial or other soundness of our Company, its Promoters, its
management or any scheme or project of our Company;
and it should not for any reason be deemed or construed to mean that the Preliminary Placement
Document and this Placement Document has been cleared or approved by the Stock Exchanges.
Every person who desires to apply for or otherwise acquire any Placement Shares may do so
pursuant to an independent inquiry, investigation and analysis and shall not have any claim against
any of the Stock Exchanges whatsoever by reason of any loss which may be suffered by such
person consequent to or in connection with such subscription/acquisition whether by reason of
anything stated or omitted to be stated herein or for any other reason whatsoever.
10
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Certain Conventions
In this Placement Document, unless the context otherwise indicates or implies, references to “you,”
“offeree,” “purchaser,” “subscriber,” “recipient,” “investors” and “potential investor” are to the prospective
investors in this Issue, references to “our Company”, “the Company” or the “Issuer” are to PI Industries
Limited.
Financial and Other Information
Our Company and its Subsidiaries prepare their financial statements in accordance with Indian GAAP.
Indian GAAP differs in certain respects from accounting principles generally accepted in other countries,
including IFRS and U.S. GAAP. We do not provide a reconciliation of our financial statements to IFRS or
U.S. GAAP. Accordingly, the degree to which the financial statements prepared in accordance with Indian
GAAP included in this Placement Document will provide meaningful information is entirely dependent on
the reader’s level of familiarity with the respective accounting practices.
In this Placement Document, references to “USD”, “$” and “U.S. dollars” are to the legal currency of the
United States and references to, “`” ,“Rs.”, “INR” and “Rupees” are to the legal currency of India. All
references herein to the “U.S.” or the “United States” are to the United States of America and its territories
and possessions and all references to “India” are to the Republic of India and its territories and possessions.
Unless otherwise stated, references in this Placement Document to a particular year are to the calendar year
ended on December 31, and to a particular “Fiscal” or “Fiscal year” are to the fiscal year ended on March
31.
Our Company publishes its financial statements in Rupees. Our Company’s financial statements included
herein have been prepared in accordance with Indian GAAP and the Companies Act. Unless otherwise
indicated, all financial data in this Placement Document are derived from our Company’s financial
statements prepared in accordance with Indian GAAP. Indian GAAP differs in certain significant respects
from International Financial Reporting Standards, (“IFRS”), and U.S. GAAP. Our Company does not
provide a reconciliation of its financial statements to IFRS or U.S. GAAP financial statements. We urge
you to consult your own advisors regarding such differences and their impact on our financial data.
Accordingly, the degree to which the Indian GAAP financial statements included in this Placement
Document will provide meaningful information is entirely dependent on the reader’s level of familiarity
with Indian accounting practices. Any reliance by persons not familiar with Indian accounting practices on
the financial disclosures presented in this Placement Document should accordingly be limited.
The financial statements of our Company, including the Reformatted Consolidated Financial Statements
and the Reformatted Standalone Financial Statements of our Company as at and for the financial years
ended March 31, 2010, March 31, 2011 and March 31, 2012, which have been prepared in accordance with
Indian GAAP and the Limited Reviewed Standalone Financial Statements as at and for the quarter and the
half year period ended, September 30, 2012, which have been prepared in accordance with the
requirements of Cluse 41 of the Listing Agreement and reviewed in accordance with Standard on Review
Engagement (SRE) 2410, Engagements to Review Financial Statements issued by the Institute of Chartered
Accountants of India are included in “Financial Statements” on page 186 of this Placement Document.
Any discrepancies between the amounts listed and total thereof, in the tables included herein, are due to
rounding off.
11
INDUSTRY AND MARKET DATA
Information regarding market position, growth rates and other industry data pertaining to businesses of our
Company contained in this Placement Document consists of estimates based on data reports compiled by
government bodies, professional organizations and data from other external sources and knowledge of the
markets in which our Company competes. The statistical information included in this Placement Document
relating to the various sectors in which our Company operates has been reproduced from various trade,
industry and government publications and websites.
This data is subject to change and cannot be verified with complete certainty due to limits on the
availability and reliability of the raw data and other limitations and uncertainties inherent in any statistical
survey.
Neither our Company nor the Sole Global Co-ordinator and Book Running Lead Manager have
independently verified this data and neither our Company nor the Sole Global Co-ordinator and Book
Running Lead Manager makes any representation regarding the accuracy and completeness of such data.
Similarly, while our Company believes its internal estimates to be reasonable, such estimates have not been
verified by any independent sources and neither our Company nor the Sole Global Co-ordinator and Book
Running Lead Manager can assure potential investors as to their accuracy.
The extent to which the market and industry data used in this Placement Document is meaningful
depends on the reader’s familiarity with and understanding of the methodologies used in compiling
such data.
12
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Placement Document that are not statements of historical fact
constitute “forward-looking statements.” Investors can generally identify forward-looking statements by
terminology such as “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”,
“may”, “objective”, “plan”, “potential”, “project”, “pursue”, “shall”, “should”, “will”, “would”, or other
words or phrases of similar import. Similarly, statements that describe our strategies, objectives, plans or
goals are also forward-looking statements. All statements regarding our Company’s expected financial
condition and results of operations and business plans including potential acquisitions and prospects are
forward-looking statements. These forward-looking statements include statements as to our Company’s
business strategy, liquidity, growth, dividend policy, revenue and profitability, planned projects and other
matters discussed in this Placement Document that are not historical facts. All forward-looking statements
are subject to risks, uncertainties, assumptions and other factors about our Company that could cause actual
results, performance or acheivements to differ materially from those contemplated by the relevant forward-
looking statement. Important factors that could cause actual results, performance or acheivements to differ
materially from our Company’s expectations include, among others:
General, political, economic, social and business conditions in India and other countries;
Our Company’s ability to successfully implement its strategy, its growth and expansion plans and
technological changes;
Performance of the Indian debt and equity markets;
Occurrence of natural calamities or natural disasters affecting the areas in which our Company has
operations;
Changes in laws and regulations that apply to companies in India;
The current worldwide economic recession;
Conditions in the Indian securities market affecting the price or liquidity of Equity Shares;
Restrictions on daily movements in the price of the Equity Shares that may affect the price/ability
to sell such shares;
Taxes payable in India on income arising from capital gains;
Transfer restrictions set forth in this Placement Document;
Dilution of holdings by additional issuances of equity;
Significant change in the Government’s economic liberalization and deregulation policies;
Terrorist attacks and other acts of violence or war involving India or other countries;
Financial difficulty and other problems in certain financial institutions in India;
Decline in India’s foreign exchange reserves;
Downgrading of India’s debt rating by an international rating agency;
Anti takeover provisions under Indian law;
13
Risk of fluctuation in the price of Equity Shares;
Changes in the foreign exchange control regulations in India; and
Other factors discussed in this Placement Document, including under the section titled “Risk
Factors”.
All forward-looking statements are subject to risks, uncertainties and assumptions about our Company that
could cause actual results to differ materially from those contemplated by the relevant statement.
Additional factors that could cause actual results, performance or achievements to differ materially include,
but are not limited to, those discussed under the sections titled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations”, “Industry Overview” and “Our Business” on pages 68, 91
and 106 respectively of this Placement Document. The forward-looking statements contained in this
Placement Document are based on the beliefs of management, as well as the assumptions made by and
information currently available to management. Although our Company believes that the expectations
reflected in such forward-looking statements are reasonable at this time, it cannot assure prospective
investors that such expectations will prove to be correct. Given these uncertainties, investors are cautioned
not to place undue reliance on such forward-looking statements. If any of these risks and uncertainties
materialise, or if any of our Company’s underlying assumptions prove to be incorrect, our Company’s
actual results of operations or financial condition could differ materially from that described herein as
anticipated, believed, estimated or expected. All subsequent forward-looking statements attributable to our
Company are expressly qualified in their entirety by reference to these cautionary statements.
Our Company assumes no obligations to update the forward-looking statements contained herein to reflect
actual results, changes in assumptions or changes in factors affecting these forward-looking statements.
14
ENFORCEMENT OF CIVIL LIABILITIES
Our Company is a public listed company incorporated with limited liability under the laws of India. All of
our Company’s directors and key managerial personnel named herein are residents of India and all or a
substantial portion of assets of our Company or such persons are located in India. As a result, it may be
difficult for investors to affect service of process upon our Company or such persons outside India or to
enforce judgments obtained against such parties outside India.
Recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of the
Code of Civil Procedure, 1908, as amended (“Civil Code”), on a statutory basis. Section 13 of the Civil
Code provides that a foreign judgment shall be conclusive regarding any matter directly adjudicated upon
except: (i) where the judgment has not been pronounced by a court of competent jurisdiction; (ii) where the
judgment has not been given on the merits of the case; (iii) where it appears on the face of the proceedings
that the judgment is founded on an incorrect view of international law or a refusal to recognise the law of
India in cases in which such law is applicable; (iv) where the proceedings in which the judgment was
obtained were opposed to natural justice; (v) where the judgment has been obtained by fraud; and (vi)
where the judgment sustains a claim founded on a breach of any law in force in India.
Under the Civil Code, a court in India shall, upon the production of any document purporting to be a
certified copy of a foreign judgment, presume that the judgment was pronounced by a court of competent
jurisdiction, unless the contrary appears on record.
India is not a party to any international treaty in relation to the recognition or enforcement of foreign
judgments. However, Section 44A of the Civil Code provides that where a foreign judgment has been
rendered by a superior court within the meaning of that section in any country or territory outside India
which the Government has by notification declared to be in a reciprocating territory, it may be enforced in
India by proceedings in execution as if the judgment had been rendered by the relevant court in India.
However, Section 44A of the Civil Code is applicable only to monetary decrees not being in the nature of
any amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other
penalties and does not include arbitration awards.
Each of the United Kingdom, Singapore and Hong Kong has been declared by the Government to be a
reciprocating territory for the purposes of Section 44A of the Civil Code but the United States has not been
so declared. A judgment of a court in a jurisdiction which is not a reciprocating territory may be enforced
only by a fresh suit upon the judgment and not by proceedings in execution. The suit must be filed in India
within three years from the date of the judgment in the same manner as any other suit filed to enforce a
civil liability in India. It is unlikely that a court in India would award damages on the same basis as a
foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce
foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with Indian
public policy or would violate or contravene Indian law. Further, any judgment or award in a foreign
currency would be converted into Rupees on the date of such judgment or award and not on the date of
payment. A party seeking to enforce a foreign judgment in India is required to obtain approval from the
RBI to repatriate outside India any amount recovered pursuant to the execution of such a judgment. In
addition, any judgment in a foreign currency would be converted into Indian Rupees on the date of the
judgment and not on the date of payment and any such amount may be subject to income tax in accordance
with applicable laws.
15
EXCHANGE RATE INFORMATION
Fluctuations in the exchange rate between the Rupee and the U.S. Dollar will affect the U.S. Dollar
equivalent of the Rupee price of the Shares on the Stock Exchanges. These fluctuations will also
affect the conversion into U.S. Dollars of any cash dividends paid in Rupees on the Equity Shares
including the Placement Shares.
The following table sets forth, for the periods indicated, information with respect to the exchange rate
between the Rupee and the U.S. dollar (in Rupees per U.S. dollar) based on the reference rates
released by the Reserve Bank of India. In 1994, the Rupee was permitted to float fully for the first
time. The exchange rate as at December 31, 2012 was ` 54.78 = USD 1. (Source: Reserve Bank of
India).
No representation is made that the Rupee amounts actually represent such amounts in U.S. dollars or
could have been or could be converted into U.S. dollars at the rates indicated, any other rates, or at all.
Source: Reserve Bank of India (www.rbi.org.in)
Year ended March 31
Period End Average High Low
Year Ended March 31: (` per USD 1.00)
2010..................................................................... 45.14 47.42 50.53 44.94
2011...................................................................... 44.65 45.58 47.57 44.03
2012...................................................................... 51.16 47.95 54.24 43.95
Quarter ends
First Quarter Fiscal 2012 (ended June 30, 2012) 56.31 54.22 57.22 50.56
Second Quarter Fiscal 2012 (ended September
30, 2012)
52.70 55.24 56.38 52.70
Third Quarter Fiscal 2012 (ended December 31,
2012)
54.78 54.14 55.70 51.62
16
CERTAIN DEFINITIONS AND ABBREVIATIONS
Our Company has prepared this Placement Document using certain definitions and abbreviations which
you should consider when reading the information contained herein.
The following list of certain capitalised terms used in this Placement Document is intended for the
convenience of the reader/prospective investor only and is not exhaustive
The terms defined in this section shall have the meaning set forth herein, unless specified otherwise in the
context thereof, and references to any statue or regulations or policies shall include amendments thereto,
from time to time.
Company Related Terms
Term Description
Articles/Articles of Association The Articles of Association of our Company
Auditors / Statutory Auditors M/s S S Kothari Mehta & Co., Chartered Accountants, the statutory auditors of our
Company
Board / Board of Directors The Board of Directors of our Company or committees constituted thereof
Corporate Office 5th Floor, Vipul Square, B Block, Sushant Lok, Phase-1, Gurgaon -122009
“our Company”, “the Company”
or “the Issuer”
PI Industries Limited
“our” or “we” or “us” PI Industries Limited and its Subsidiaries, unless the context requires otherwise
Equity Shares All equity shares of face value ` 5 /- each of PI Industries Limited
ESOP Scheme Our Company’s Employee Stock Option Plan named “PII –ESOP 2010 Scheme”
PII ESOP Trust PII ESOP Trust , a trust settled by our Company to administer the ESOP Scheme
Limited Reviewed Standalone
Financial Statements
The statement of unaudited standalone financial results of our Company as at and
for the quarter and the half-year period ended September 30, 2012 subject to a
limited review by our Company’s Statutory Auditors, M/s. S.S. Kothari Mehta &
Co. in accordance with the requirements of Clause 41 of the Listing Agreement.
Memorandum or Memorandum
of Association
The Memorandum of Association of our Company
Placement Shares All equity shares of face value ` 5 each of PI Industries Limited offered and to be
placed, issued and allotted pursuant to the Issue
Promoter Promoters of our Company as defined in Regulation 2(1)(za) of the SEBI ICDR
Regulations namely Parteek Finance and Investement Co. Limited, Madhu Singhal,
Mayank Sinhgal and Salil Singhal
Promoter Group Promoter Group of our Company as defined in Regulation 2(1)(zb) of the SEBI
ICDR Regulations
Registered Office The registered office of our Company is at Udaisagar Road, Udaipur – 313001,
Rajasthan (India)
Reformatted Consolidated
Financial Statements The statement of reformatted consolidated assets and liabilities of our Company and
our Subsidiaries as at March 31, 2010, March 31, 2011 and as at March 31, 2012
and the related statement of reformatted consolidated statement of profit and loss
and the consolidated cash flow for the financial years ended March 31, 2010, March
31, 2011 and March 31, 2012 as examined by our Company’s Statutory Auditors.
The audited consolidated financial statements of our Company as at and for the
years ended March 31, 2010, 2011 and 2012 and the books of accounts underlying
such financial statements form the basis for such Reformatted Consolidated
Financial Statements.
Reformatted Standalone
Financial Statements
The statement of reformatted standalone assets and liabilities of our Company as at
March 31, 2010, March 31, 2011 and as at March 31, 2012 and the related statement
of reformatted standalone statement of profit and loss and the standalone cash flow
for the financial years ended March 31, 2010, March 31, 2011 and March 31, 2012
as examined by our Company’s Statutory Auditors.
The audited standalone financial statements of our Company as at and for the years
17
Term Description
ended March 31, 2010, 2011 and 2012 and the books of accounts underlying such
financial statements form the basis for such Reformatted Standalone Financial
Statements.
Subsidiaries The subsidiary companies of PI Industries Limited, namely, PI Life Science
Research Limited, PI Japan Company Limited and PILL Finance and Investments
Limited.
Issue Related Terms
Term Description
Allocated /Allocation The allocation of Placement Shares following the determination of the Issue Price to
Allotees on the basis of Application Forms submitted by them, in consultation with
the Sole Global Co-ordinator and Book Running Lead Manager in compliance with
Chapter VIII of the SEBI ICDR Regulations
Allotment/Allotted The allotment and issue of Placement Shares pursuant to this Issue
Allottees QIB’s to whom Placement Shares of our Company are Alloted pursuant to the Issue
Application(s) An offer by a QIB pursuant to the Application Form for subscription of Placement
Shares under this Issue.
Application Form(s) The form (including any revisions thereof) pursuant to which a QIB subscribes for
the Placement Shares
CAN/Confirmation of
Allocation Note
Note or advice or intimation to not more than 49 QIBs confirming the Allocation of
Placement Shares to such QIBs after discovery of the Issue Price and requiring
payment for the entire Issue Price for the Equity Shares allocated to such QIB
Cut-off Price The Issue Price of the Placement Shares which has been finalised by our Company
in consultation with the Sole Global Co-ordinator and Book Running Lead Manager
Escrow Agreement Escrow agreement dated January 23, 2013 executed between our Company, Sole
Global Co-ordinator and Book Running Lead Manager and Escrow Bank.
Escrow Bank Axis Bank Limited
Escrow Bank Account
A special bank account opened by our Company with the Escrow Bank in terms of
the arrangement between our Company, the Sole Global Co-ordinator and Book
Running Lead Manager and the Escrow Bank, into which the application monies
payable by QIBs in connection with subscription to Placement Shares pursuant to
the Issue shall be deposited
Floor Price The floor price of ` 609.60 per Placement Share, which has been calculated in
accordance with Regulation 85 of the SEBI ICDR Regulations
Investor / Applicant Any QIB who applied for Placement Shares under the Issue
Issue The offer, issue and placement of upto 1,924,656 Placement Shares to QIBs,
pursuant to Chapter VIII of the SEBI ICDR Regulations aggregating upto ` 1,173.27
million
Issue Closing Date January 29, 2013 Issue Opening Date January 25, 2013
Issue Period The period beginning on the Issue Opening Date and ending on the Issue Closing
Date between which Applications for Placement Shares could have been made by
QIBs
Issue Price A price of ` 609.60 per Equity Share, which is equal to the Floor Price
Issue Size The issue of upto 1,924,656 Placement Shares aggregating upto ` 1,173.27 million
Lock-up Letter The lock-up letters dated January 23, 2013 issued by our Promoters, namely, Parteek
Finance and Investement Co. Limited, Madhu Singhal, Mayank Sinhgal and Salil
Singhal to the Sole Global Co-ordinator and Book Running Lead Manager.
Lock-up Period Period commencing on the date of the Lock-up Letter and ending on one hundred
and eighty days after the date of Allotment of the Placement Shares.
Pay-in Date Last date specified in the CAN sent to QIBs, as applicable
Placement Agreement Placement agreement dated January 23, 2013 executed between the Sole Global Co-
ordinator and Book Running Lead Manager and our Company.
Placement Document This Placement Document dated January 29, 2013 issued in accordance with the
provisions of Regulation 84 in Chapter VIII of the SEBI ICDR Regulations
Preliminary Placement
Document
The Preliminary Placement Document dated January 25, 2013 issued in accordance
with Chapter VIII of the SEBI ICDR Regulations
QIBs or Qualified Institutional Qualified Institutional Buyer as defined under Regulation 2(1)(zd) of the SEBI
18
Term Description
Buyers ICDR Regulations
QIP Qualified Institutions Placement under Chapter VIII of the SEBI ICDR Regulations
RBI The Reserve Bank of India
RoC Registrar of Companies, Jaipur
Sole Global Co-ordinator and
Book Running Lead Manager
The Sole Global Co-ordinator and Book Running Lead Manager to the Issue, in this
case being, Edelweiss Financial Services Limited.
Stock Exchanges National Stock Exchange of India Limited and BSE Limited
Conventional and General Terms/ Abbreviations
Term/Abbreviation Full Form
AGM Annual General Meeting
AS Accounting Standards issued by the Institute of Chartered Accountants of India
AY Assessment Year
BOLT BSE On-line Trading
BSE BSE Limited
CCI Competition Commission of India
CEO Chief Executive Officer
CFO Chief Financial Officer
CIO Chief Information Officer
CAR Capital Adequacy Ratio
CDSL Central Depository Services (India) Limited
CESTAT Customs, Excise and Service Tax Appellate Tribunal
CIN Corporate Identification Number
CIT(A) Commisioner of Income Tax (Appeals)
Civil Code The Code of Civil Procedure, 1908
Companies Act The Companies Act, 1956, as amended
Delisting Regulations Securities Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, as
amended from time to time.
Depository A depository registered with SEBI under the SEBI (Depositories and Participant)
Regulations, 1996
Depositories Act The Depositories Act, 1996
DER Debt Equity Ratio
DP/Depository Participant A depository participant as defined under the Depositories Act, 1996
DP ID Depository Participant’s Identity
DIPP The Indian Department of Industrial Policy and Promotion, Ministry of Commerce and
Industry, Government of India
EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation
ECB External Commercial Borrowings
EPS Earnings Per Share
EGM Extraordinary General Meeting
ESIC Employee State Insurance Corporation
FDI Foreign Direct Investment
FEMA The Foreign Exchange Management Act, 1999
FII Foreign Institutional Investor (as defined under the SEBI (Foreign Institutional
Investors) Regulations,1995) registered with SEBI under applicable laws in India
Financial Year/Fiscal/FY Period of twelve months ending March 31 of that particular year
FIPB Foreign Investment Promotion Board
GDP Gross Domestic Product
GIR Number General Index Registry Number
GoI Government of India
IAS Indian Administrative Services
ICAI Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
India The Republic of India
Indian GAAP Generally Accepted Accounting Principles followed in India
IT Information Technology
ITAT Income Tax Appellate Tribunal
19
Term/Abbreviation Full Form
IT Act Indian Income Tax Act, 1961
ITES Information Technology Enabled Services
Listing Agreement The listing agreement in connection with our Equity Shares as entered into with the
Stock Exchanges
Mn/Million Million
Mutual Fund A mutual fund registered with SEBI under the SEBI (Mutual Funds) Regulations,
1996
NECS National Electronic Clearing Service
NSDL National Securities Depositaries Limited
NSE National Stock Exchange of India Limited
p.a. Per annum
P/E Ratio Price/Earnings Ratio
PAN Permanent Account Number
PAT Profit After Tax
PBT Profit Before Tax
RBI The Reserve Bank of India
Regulation S Regulation S under the Securities Act
Rs., `, or Rupees Rupees, being the lawful currency for the time being of India
SEBI Act The SEBI Act, 1992, as amended
SEBI The Securities and Exchange Board of India
SEBI ICDR Regulations The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as
amended
SEBI VCF Regulations SEBI (Venture Capital Fund) Regulations, 1996
Securities Act The U.S. Securities Act of 1933, as amended
SICA Sick Industrial Companies (Special Provisions) Act, 1985, as amended
STT Securities Transaction Tax
Takeover Code SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011, as
amended
UIN Unique Identification Number
US GAAP Generally Accepted Accounting Principles in the United States of America
WTO World Trade Organisation
Technical and Industry terms
Term/Abbreviation Description
BRIC Brazil, Russian Federation, India and China
CAGR Compounded Annual Growth Rate
CENVAT Central Value Added Tax
CSO Central Statistical Office
DRI Direct Reduced Iron
EBIDTA Earning before interest, depreciation, tax and amortisation
EMS-ISO Environmental Management Systems certification by ISO
ERP Enterprise Resource Planning
EXIM Bank Export and Import Bank of India
FAO Food and Agricultural Organisation of the United Nations
FLO Fair trade Labelling Organisation
GDP Gross Domestic Product
GLP Good Laboratory Practices
GM seeds Genetically Modified Seeds
IND AS Indian Accounting Standards (Ind AS) 101 “First-time Adoption of Indian Accounting
Standards”
IPM Integrated Pest Management
ISO Indian Standards of Organisation
MN/Mn. Million
MSP Minimum Support Prices
MT Million tonnes
20
Term/Abbreviation Description
NGCMA National GLP Compliance Monitoring Agency
NIMZ National Investment and Manufacturing Zones
NREGA National Rural Employment Guarantee Act, 2005
OECD Organisation for Economic Co-operations and Development
OEMs Original Equipment Manufacturer
OHSAS Occupational Health and Safety Advisory Services
PAT Profit after tax
R&D Research and Development
SEZ Special Economic Zone
SME’s Small and Medium Enterprises
SAP System Application and Products
21
SUMMARY OF THE ISSUE
The following is a general summary of the terms of the Issue. This summary should be read in
conjunction with and is qualified in its entirety by the more detailed information appearing elsewhere
in this Placement Document, including under the sections titled “Risk Factors”, “Use of Proceeds”,
“Issue Procedure” “Plan of Distribution” and “Description of the Equity Shares”.
Issuer PI Industries Limited
Issue Size Upto 1,924,656 Placement Shares of our Company of par value ` 5 /- each issued at a premium of ` 604.60 per Placement Share, aggregating
upto ` 1,173.27 million
A minimum of 10% of Issue Size shall be available for
allocation/allotment to Mutual Funds only. If no Mutual Fund is
aggreable to take up the minimum portion mentioned above, such
minimum portion or part thereof may be allotted to other eligible QIBs.
Floor Price The Floor Price for the Issue on the basis of Regulation 85 of the SEBI
ICDR Regulations is ` 609.60 per Placement Share.
Issue Price ` 609.60 per Placement Share.
Eligible Investors QIBs as defined in Regulation 2(1)(zd) of the SEBI ICDR Regulations.
See section titled “Issue Procedure – Qualified Institutional Buyers”.
Equity Shares paid-up
and outstanding
immediately prior to the
Issue
25,167,174 Equity Shares
Equity Shares paid-up
and outstanding
immediately after the
Issue
27,091,830 Equity Shares
Listing Our Company has obtained an in-principle approval for the Issue from
the Stock Exchanges and will apply and obtain the final listing and
trading approval for the Placement Shares.
Lock-up Our Company has agreed with the Sole Global Co-ordinator and Book
Running Lead Manager that it shall not, and shall not announce an
intention to, without the prior written consent of the Sole Global Co-
ordinator and Book Running Lead Manager, during the period
commencing on the date of the Placement Agreement and ending one
hundred and eighty days after the date of Allotment of the Placement
Shares, (the “Lock-up Period”), directly or indirectly: (a) issue, offer,
allot, contract to issue or allot, contract to purchase, purchase any
option or contract to sell, grant or sell any option, right or warrant to
purchase, make any short sale, lend or otherwise transfer or dispose of,
directly or indirectly, any Equity Shares, including but not limited to
any options or warrants to purchase any Equity Shares, or any securities
convertible into or exercisable or exchangeable for, or that represent the
right to receive, Equity Shares, (b) enter into any swap or other
agreement that transfers, directly or indirectly, in whole or in part, any
of the economic consequences of ownership of the Equity Shares or
any securities convertible into or exercisable or exchangeable for
Equity Shares, (c) deposit any Equity Shares, or any securities
convertible into or exercisable or exchangeable for the Equity Shares or
22
which carry the rights to subscribe for or purchase Equity Shares, in
any depository receipt facility or enter into any transaction (including a
transaction involving derivatives) having an economic effect similar to
that of a sale or deposit of Equity Shares in any depository receipt
facility, or, (d) publically announce any intention to enter into any
transaction described in (a), (b) or (c) above, whether any such
transaction described in (a), (b) or (c) above is to be settled by delivery
of the Equity Shares, or other securities, in cash or otherwise.
Provided that the foregoing restrictions shall not apply to any issuance,
allotment and distribution of securities pursuant to the exercise of any
stock options granted to employees of our Company or its Subsidiaries
pursuant to the subsisting ESOP Scheme of our Company.
Our Promoters have agreed with the Sole Global Co-ordinator and
Book Running Lead Manager that during the Lock-up Period, without
the prior written consent of the Sole Global Co-ordinator and Book
Running Lead Manager they have not and will not announce any
intention to enter into any transaction whether any such transaction
which is to be settled by delivery of Equity Shares, or such other
securities, in cash or otherwise, during the period commencing on the
date of the Lock-up Letter and ending 180 (one hundred and eighty)
days after the date of Allotment of the Placement Shares, (“Lock-up
Period”), directly or indirectly, transfer in any manner, offer, lend, sell,
contract to sell, pledge, encumber, sell any option or contract to
purchase, purchase any option, grant any option, right or warrant to
purchase, make any short sale, lend or otherwise transfer or dispose of,
directly or indirectly, any Equity Shares, including but not limited to
any options, warrants to purchase any Equity Shares, or any securities
convertible into or exercisable or exchangeable for, or that represent the
right to receive, Equity Shares or enter into any swap or other
agreement that transfers, directly or indirectly, in whole or in part, any
of the economic consequences of ownership of the Equity Shares or
any securities convertible into or exercisable or exchangeable for
Equity Shares or deposit any Equity Shares, or any securities
convertible into or exercisable or exchangeable for the Equity Shares or
which carry the rights to subscribe for or purchase Equity Shares, in
any depository receipt facility or enter into any transaction (including a
transaction involving derivatives) having an economic effect similar to
that of a sale or deposit of Equity Shares in any depository receipt
facility.
Provided that the foregoing restrictions, shall not apply to any
acquisition of Equity Shares by the individual Promoters, namely Mr.
Salil Singhal, Mr. Mayank Singhal or Ms. Madhu Singhal pursuant to
their exercise of any stock options granted to them under our
Company’s existing ESOP Scheme, if any, which vest during the Lock
up Period or have vested prior to it.
Transferability
Restrictions
The Placement Shares being Allotted pursuant to this Issue shall not be
sold for a period of one year from the date of Allotment except on the
floor of Stock Exchanges. The Placement Shares are subject to certain
transfer restrictions. See “Transfer Restrictions”.
Use of Proceeds The total proceeds of this Issue will be ` 1,173.27 million. After
deducting the issue expenses of approximately ` 20.00 million, the net
proceeds of this Issue will be approximately ` 1,153.27 million.
Our Company has identified several growth oppurtunities in its areas of
business and intends to use the net proceeds received from this Issue
for augmenting our long term resources for future expansion, to meet
23
long term working capital requirmeents, to meet other general corporate
business purposes allied to the business from time to time and for any
other uses subject to compliance with applicable statutory and/or
regulatory requirements.
For further details, please refer section titled “Use of Proceeds”.
Risk Factors See section titled “Risk Factors” for factors you should consider before
investing in Placement Shares of our Company.
Closing The Allotment of the Placement Shares offered pursuant to this Issue is
expected to be made on or before Friday, February 1, 2013.
Ranking The Placement Shares being issued shall be subject to the provisions of
our Company’s Memorandum and Articles of Association and shall
rank pari passu in all respects with the existing Equity Shares including
rights in respect of dividends. The shareholders will be entitled to
participate in dividends and other corporate benefits, if any, declared by
our Company after the Issue Closing Date, in compliance with the
Companies Act. Shareholders may attend and vote in shareholders’
meetings on the basis of one vote for every share held. See section
titled “Description of the Equity Shares”.
Security Codes for the
Equity Shares
ISIN : INE603J01022
BSE Code : 523642
NSE Code : PIIND
24
SUMMARY OF OUR BUSINESS
In this section any reference to “our Company” refers to PI Industries Limited on a standalone basis
and references to “we”, “us” or “our” refers to PI Industries Limited and its Subsidiaries on a
consolidated basis, as the context may require. Unless stated otherwise, the financial data in this
section is as per our Standalone Financial Statements and Consolidated Financial Statements, as set
forth “Financial Statements” on page 186 of this Placement Document.
The following disclosures in connection with our overview, strengths and strategies should be read
together with the risk factors as detailed in the section titled “Risk Factors” on page 40 of this
Placement Document.
OVERVIEW
Our Company is a chemicals manufacturing and marketing Company with over fifty years of
experience in the agrochemicals sector. We are an integrated entity with a differentiated business
model driven by respect for intellectual property across two market segments, i.e. the domestic market
and the export market.
In the domestic market we focus on manufacturing and/or marketing of agri input products through the
following model:
In-licensing of newly launched or patented molecules from multinational innovators to register
and market agri input products in India;
Manufacturing and marketing of branded generic agri input products (i.e. molecules whose
patents have expired);
Selectively partnering with global innovators with presence in India to co-market their early
stage lifecycle agri input products using our countrywide marketing set up in India.
In the export market we undertake custom synthesis and contract manufacturing of niche fine and
specialty chemicals, where we offer global innovators a one-stop shop for process scale up and large
scale manufacturing of their newly discovered molecules.
Through this differentiated business model, we have been able to demonstrate consistent financial
growth. Our Company’s net revenue from operations on a consolidated basis has grown at a CAGR of
27.30% from ` 5,424.46 million for Fiscal 2010 to ` 8,791.05 million in Fiscal 2012. Our PAT margins
have increased by 1.27% points from 7.76% for Fiscal 2010 to 9.03% in Fiscal 2012 and our EBITDA
margins have increased by 1.12% points from 15.27% for Fiscal 2010 to 16.39% in Fiscal 2012, on a
consolidated basis. Our basic EPS on a consolidated basis has grown from ` 19.37 per share in Fiscal
2010 to ` 41.49 per share in Fiscal 2012.
We have developed strong process research and manufacturing capabilities which are backed by
manufacturing facilities located at Panoli (Gujarat), Jammu and Jambusar (Gujarat) and a GLP and
ISO:17025 accredited laboratory set up in Udaipur.
Our Company has a robust marketing and distribution network which is spread across India and well
established in rural and agricultural belts. As on date, we have 211 people working in our marketing
team spread across the country. Our marketing team is partnered by a 2-3 tier distribution channel
which comprises of numerous retail points, over 10,000 distributors and direct dealers across the major
agriculture areas in the country, 27 stock points including our own depots and 18 C&F agents who
work on hub-and-spoke distribution model to ensure timely delivery.
We work closely with farmers and distribution channels to build our brand and create awareness for
our products. We accordingly have several successful brands such as “NOMINEE GOLD”,
“BIOVITA”, “FORATOX”, “CARINA”, “FOSMITE”, “ROKET”, “SOLARO”, “KITAZIN”
“OSHEEN”, etc.
25
Our Company has been conferred with the ‘Power Brand’ status from amongst 81 successful brands
and companies featured in the “Indian Power Brands – the Global Superpower Edition”. We were also
awarded a certificate of Excellence in “Supplier Sustainability Program 2011” from Bayer Group of
Companies in India.
Our Company currently has 3 subsidiaries, which includes PI Japan Company Limited (Japan) which
carries out business development activities in Japan, PI Life Science Research Limited, which deals in
contract research projects, and PILL Finance & Investments Limited, which is engaged in the business
of holding investments and providing short term funding.
OUR STRENGTHS
Our Company has over five decades of experience in the agri-chemicals sector, and has over the years
developed in house capabilities and vast experience in process research, plant engineering, process
scale ups, large scale chemical manufacturing, product registration and marketing & brand building.
We believe following are the key strengths of our Company:
Differentiated business model
Our Company has, over the years, evolved a differentiated non-conflicting business model driven by
respect for intellectual property. On one hand, in our domestic agri input segment, our Company
leverages on our pan India marketing and distribution network, brand building capabilities and
experienced team to focus on in-licensing and co-marketing arrangements, which allows us to
introduce novel products in the Indian market to enhance productivity of Indian farmers and thus
enables us to establish long term relations with the farmer community and global innovators. On the
other hand in our export segment, we leverage on our chemistry process research and manufacturing
capabilities, to focus on performing custom synthesis and contract manufacturing services with respect
to patented molecules that are in the early stages of their life cycles, which gives us the opportunity to
be the first or second suppliers for such products to the patent holders. We also benefit from increases
in volume production on the back of the innovators efforts to enhance sales volumes for the returns on
their R&D investments.
We derive synergistic benefits from our integrated business model such as (a) common infrastructure
for domestic agri inputs and custom synthesis exports and (b) develop knowledge and insight across the
entire value chain right from process development, scale up, manufacturing to marketing .
Long term relationship and reputation of trust and reliability with global innovators
We believe that we enjoy a reputation of trust and reliability with global innovators and we respect
their intellectual property and work in close partnership with them. On account of these relationships
and reputation we have been able to grow in both the domestic market and the export market and
consistently expand our product portfolio. Our strong relationship with global innovators has been
demonstrated by our consistent growth in both the Indian and export markets.
Wide distribution network and transparent distribution policies and practices
Our Company has over the years created a robust marketing and distribution network which is spread
throughout India and entrenched in rural and agricultural belts across India. Our wide spread
distribution network is further aided by our SAP based ERP system and effective business intelligence
tools which enables real-time transactions, efficient delivery mechanism, centralized controls and
proactive planning and monitoring. Our Company also practices straight forward and transparent
business policies with our customers and distributors thereby creating a healthy business environment
for mutual benefits. Clear commercial terms before the sale, no stock return, interest for delayed
payments, etc are certain practices which has helped us establish a strong and committed distribution
network. Our field staff is regularly trained to ensure that the systems we have created are well
sustained.
26
Brand building capabilities
As part of our marketing approach, we work closely with farmers and distribution channels to create
awareness for our products by demonstrating their use through the lifecycle of crops. This approach has
helped enhance our reputation and recognition in the domestic markets. Some of our key brands
include “NOMINEE GOLD”, “BIOVITA”, “FORATOX”, “CARINA”, “FOSMITE”, “ROKET”,
“SOLARO”, “KITAZIN” “OSHEEN”, etc.
End-to-end capabilities in custom synthesis
Over the years, we have been able to build strong capabilities in process research of diverse
chemistries, process engineering and large scale manufacturing. These capabilities have helped us to
develop a strong portfolio of products and the ability to offer increasing suite of services which has led
to a consistent growth in our business.
Entry barriers in our business
Our Company has invested significant resources, time and effort in building our reputation,
capabilities, relationships and reach which have been critical in evolving our differentiated business
model, which thereby serve as significant entry barriers in our business.
Experienced management team
We are a professionaly managed Company with a Board of Directors consisting of a mix of
experienced excutive directors who have been associated with our Company and the industry for a long
span of time and highly qualified independent directors from diverse disciplines ranging from the
agrochemicals and chemicals industry, accounting, banking and engineering to civil administration.
Headed by our Chairman and Managing Director, Mr. Salil Singhal, who has over 45 years of
experience in the agro-chemicals sector and has in the past has served as the Chairman of the Crop
Care Federation of India for 20 years, our key managerial personnel team comprises of experienced
and qualified professionals with diverse skills which include manufacturing, engineering, research,
marketing, sourcing, supply chain management, finance and human resources. The experience in
diverse disciplines of our management team has helped us to grow and expand our business
consistently.
OUR STRATEGIES
Continue expanding our domestic portfolio of in-licensed products
Our Company’s focus will continue to be on expanding our domestic portfolio of in-licensed products
by leveraging our strong relationships and reputation with global innovators. Our focus will be on new
products which provide better efficiencies and cost savings to the farmer. We have developed a robust
pipeline of potential products for the future. We are in the process of registering 2 new in-licensing
products and have also executed agreements with patent holders in the insecticide / herbicide /
fungicide segments to evaluate the potential for such molecules in the Indian market.
Adding new product categories to leverage our pan-India marketing network and customer reach
We propose to leverage on our pan-India marketing network and deep penetration and reach among the
farming community, to expand our categories of agri input products such as hybrid seeds, biocides,
nematicides, rodenticides etc.
Diversifying our presence across the agricultural value chain by leveraging our strong
understanding of the sector
We propose to capitalize on our vast experience in the agricultural sector and understanding of needs of
farmers by diversifying our presence across the agricultural value chain. As a part of this strategy we
intend to seek opportunities to acquire or partner with other corporates to access products, service and
technology that have large growth potential in the Indian agricultural market. We believe that pursuing
selective acquisitions, partnerships, or alliances would improve our competitiveness, further diversify
27
our product offerings and strengthen our market position.
Strengthening our relationship with existing clients
Leveraging on our process research and manufacturing capabilities, we propose to strengthen our
relationships with existing customers by undertaking custom synthesis and contract manufacturing for
new molecules across their various product segments.
Acquiring new clients
For our custom synthesis and contract manufacturing activities, we propose to cater to customers across
new industry verticals and in new geographies. We intend to explore acquisition or partnership
opportunities to access new customers, which would allow us to improve our competitiveness,
strengthen our market position and enhance our business.
28
SELECTED FINANCIAL INFORMATION OF OUR COMPANY
The summary of selected financial and operating data set forth below are extracted from our
Reformatted Standalone Financial Statements and Reformatted Consolidated Financial Statements for
Fiscal 2010, Fiscal 2011 and Fiscal 2012 and our Limited Reviewed Standalone Financial Statements
for the period ended September 30, 2012 included in “Financial Statements” on page 186 of this
Placement Document. The financial information included in this Placement Document does not reflect
our Company’s results of operations, financial position and cash flows for the future and its past
operating results are no guarantee of its future operating performance. For a summary of our
Company’s significant accounting policies and the basis of presentation of its financial statements, see
the notes to the financial statements under the section titled “Financial Statements”, of this Placement
Document. The selected financial and operational data set forth below should be read in conjunction
with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on
page 68 of this Placement Document.
SUMMARY OF OUR REFORMATTED STANDALONE BALANCE SHEET AS AT MARCH
31, 2012, MARCH 31, 2011 AND MARCH 31, 2010
(` In millions)
As at March 31,
2012
As at March 31, 2011 As at March 31,
2010
I EQUITY & LIABILITIES
1 Shareholders' Funds
a Share Capital 125.24 192.87 276.87
b Reserves and Surplus 3,066.78 1,913.46 1,246.91
Total Shareholders' Fund 3,192.02 2,106.33 1,523.78
2 Non Current Liabilities
a Long-term borrowings 1,190.57 589.86 720.38
b Deferred tax liabilities (Net) 324.29 322.90 269.97
c Other long-term liabilities 105.99 94.48 81.67
d Long-term provisions 17.70 13.69 13.60
Total Non- Current Liabilities 1,638.55 1,020.93 1,085.62
3 Current Liabilities
a Short-term borrowings 1,131.28 1,552.77 446.57
b Trade payables 963.86 1,057.03 977.01
c Other current liabilities 884.26 755.16 831.09
d Short-term provisions 162.49 119.84 39.68
Total Current Liabilities 3,141.89 3,484.80 2,294.35
TOTAL 7,972.46 6,612.06 4,903.75
II ASSETS
1 Non Current Asset
a Fixed asset
Tangible asset 2,922.82 2,506.64 1,980.75
Intangible asset 17.89 11.54 11.11
Capital work-in-progress 777.69 313.63 86.35
29
(` In millions)
As at March 31,
2012
As at March 31, 2011 As at March 31,
2010
Intangible asset under development 32.33 7.08 -
Total Fixed Assets 3,750.73 2,838.89 2,078.21
b Non-current investments 19.67 19.67 19.67
c Long term loans & advances 190.74 187.69 156.75
d Other assets 16.24 13.98 13.85
Total Non-Current Assets 3,977.38 3,060.23 2,268.48
2 Current Asset
a Inventories 1,787.51 1,409.80 1,028.11
b Trade receivables 1,718.69 1,747.66 1,178.78
c Cash and Bank Balances 76.27 67.69 35.48
d Short-term loans and advances 393.58 313.99 379.84
e Other assets 19.03 12.69 13.06
Total Current Assets 3,995.08 3,551.8 3 2,635.27
TOTAL 7,972.46 6,612.06 4,903.75
30
SUMMARY OF OUR REFORMATTED STANDALONE PROFIT AND LOSS ACCOUNT
FOR FISCAL 2012, FISCAL 2011 AND FISCAL 2010
(` In millions)
Fiscal 2012 Fiscal 2011 Fiscal 2010
I. Revenue from Operations
Sale of products 9,987.19 8,336.69 6,172.66
Less: Discount (778.10) (715.52) (527.61)
Less: Excise Duty (459.40) (461.92) (247.76)
8,749.69 7,159.25 5,397.29
Sale of services; - 0.56 1.93
Other operating Revenues; 21.21 23.49 16.93
II. Other Income 51.91 105.06 64.20
III. Total Revenue (I+II) 8,822.81 7,288.36 5,480.35
IV. Expenses:
Cost of Materials consumed 4,866.81 4,173.81 3,024.75
Purchase of Stock in Trade 390.00 326.46 135.67
Changes in Inventories of finished
goods, work in progress and stock
in trade (335.98) (295.08) 22.53
Employee Benefits expenses 701.71 582.10 457.23
Finance Costs 201.09 186.02 185.23
Depreciation and amortisation 171.09 155.91 131.17
Other Expenses 1,737.75 1,260.81 963.66
Total Expenses 7,732.47 6,390.03 4,920.24
V.
Profit before exceptional and
extraordinary items and tax
(III-IV) 1,090.34 898.33 560.11
VI. Exceptional Items 303.43 - -
VII.
Profit before extraordinary
items and tax 1,393.77 898.33 560.11
VIII. Extraordinary Items - -
IX. Profit Before Tax (VII- VIII) 1,393.77 898.33 560.11
Consisting of :
- Profit/ (Loss) on Continuing
Operations 1,090.69 843.16 518.58
- Profit/ (Loss) on Discontinued
Operations (0.35) 55.17 41.53
- Exceptional Items Profit/ Loss 303.43 -
Less: Provision for Current Tax
of continuing operations (387.01) (184.18) (116.01)
Less: Provision for Current Tax
of discontinued operations
0.05
(20.58)
(16.35)
Less: Provision for Deferred tax (1.39) (52.93) (20.30)
Add: Income Tax of earlier years - 0.53 2.00
X Profit After Tax 1,005.42 641.17 409.45
Consisting of:
31
(` In millions)
Fiscal 2012 Fiscal 2011 Fiscal 2010
- Profit/ (Loss) on Continuing
Operations
777.80
606.58
384.27
- Profit/ (Loss) on Discontinued
Operations
(0.30)
34.59
25.18
- Exceptional Items Profit/ Loss 227.92 - -
XI Profit/ (loss) for the period 1,005.42 641.17 409.45
XII Earnings per Equity shares.
1) Basic (in `) 40.27 28.76 18.93
2) Diluted (in `) 39.98 25.72 17.64
Earnings per share ` -
Continuing Business
1) Basic (in `) 40.28 27.20 17.77
2) Diluted (in `) 39.98 24.33 16.55
Earnings per share ` -
Discontinued Business
1) Basic (in `) (0.01) 1.56 1.16
2) Diluted (in `) (0.00) 1.39 1.09
Face value per share (in `) 5.00 10.00 10.00
32
SUMMARY OF OUR REFORMATTED STANDALONE CASH FLOW STATEMENT FOR
FISCAL 2012, FISCAL 2011 AND FISCAL 2010
(` In millions)
PARTICULARS Fiscal 2012 Fiscal 2011 Fiscal 2010
A. Cash Flow from Operating
Activities
Net Operating Profit before
Tax & Extraordinary Items
1,393.77 898.33 560.11
Adjustments for:
Net operating profit before tax
Depreciation 171.09 155.91 131.17
Interest Expenses 201.09 186.02 185.23
Provision for Doubtful Debts
and Advances
37.91 16.93 14.24
Interest Income (41.22) (27.63) (22.42)
Dividend Income (0.00) (0.00) (0.00)
Employee Stock Option Expense 10.90 - -
(Profit)/Loss on sale of Fixed
Assets (Net)
12.86 0.40 1.77
Bad Debts written off 0.18 0.07 5.09
Miscellaneous Liability Written
back
- (2.45)
Unrealised Foreign Exchange
Loss/(Gain) (Net)
6.84 (16.60) (1.39)
Deferred Revenue expenditure
written off during the year
3.70
Exceptional Items
- Sale of Polymer Business (303.43)
96.22 315.10 314.94
Operating Profit before
Working Capital changes
1,489.99 1,213.43 875.05
(Increase) / Decrease in Short
Term Trade Receivables
6.44 (574.78)
(292.17)
(Increase) / Decrease in Short
term Loans and advances
(100.42) 62.01
(120.46)
(Increase) / Decrease in Long
term Loans and advances
(2.05) (7.38) (5.33)
(Increase) / Decrease in Other
assets
(7.32) (1.60) 2.12
(Increase)/Decrease in
Inventories
(377.71) (381.69) 14.12
Increase / (Decrease) in Short
term Trade Payables/ Provisions
(84.17) 107.06 431.07
Increase / (Decrease) in Long
term Trade Payables/ Provisions
4.01 0.09 1.63
Increase / (Decrease) in Other
Short term Liabilities
193.26 (66.82) 171.42
Increase / (Decrease) in Other
Long term Liabilities
11.51 (356.45) 12.80 (850.31) 14.26
216.66
Cash generated from
Operations before tax and
exceptional items
1,133.54 363.12 1,091.70
Net Direct Taxes paid (395.51) (177.64) (114.40)
Exceptional Item 303.43 - -
Net cash from Operating
Activities
1,041.46 185.48 977.30
B. Cash flow from Investing
Activities
33
(` In millions)
PARTICULARS Fiscal 2012 Fiscal 2011 Fiscal 2010
Purchase of Fixed Assets
including Capital work in
progress, intangible assets and
Capital advances
(1,171.05) (942.98) (471.89)
Investment in Shares of Joint
Venture / Subsidiary Companies
- - (1.55)
Sale of Fixed Assets 85.95 2.15 1.41
Interest Received 41.22 27.63 22.42
Dividend Received 0.00 0.00 0.00
Net cash used in investing
activities
(1,043.88) (913.20) (449.61)
Net cash from Operating and
Investing Activities
(2.42) (727.72) 527.69
C. Cash flow from Financing
Activities
Issue of Equity Share capital 13.37 41.00
(Repayment)/Issue of Preference
Share Capital
(81.00) (125.00) 206.00
(Repayment/ Redemption) /Issue
of Debentures
(294.00) - 294.00
Share Premium Account 334.04 84.00 -
Short Term Borrowings (Net) (434.16) 1,093.39 (633.67)
Long Term Borrowings (Net of
Repayments)
811.55 (147.88) (213.26)
Cash Flow Hedge Reserve (49.26) - -
Interest paid (Net) (198.75) (178.00) (183.06)
Dividend Distribution (100.13) (14.93) 0.00
Net Cash from Financing
activities
1.66 752.58 (529.99)
Net Cash from Operating,
Investing & Financing
Activities
(0.76) 24.86 (2.30)
Net increase in Cash & Cash
equivalent
(0.76) 24.86 (2.30)
Opening balance of Cash &
Cash equivalent
39.71 14.85 17.15
Closing balance of Cash &
Cash equivalent
38.95 39.71 14.85
Note: Cash and cash equivalents included in the Cash Flow Statement comprise of the following:-
i) Cash Balance on Hand 0.59 0.85 0.50
ii) Balance in Current
Account
38.36 38.86 14.35
Total 38.95 39.71 14.85
34
SUMMARY OF OUR REFORMATTED CONSOLIDATED BALANCE SHEET AS AT
MARCH 31, 2012, MARCH 31, 2011 AND MARCH 31, 2010
(` In millions)
As at March 31,
2012
As at March 31, 2011 As at March 31,
2010
I EQUITY & LIABILITIES
1 Shareholders' Funds
a Share Capital 125.24 192.87 276.87
b Reserves and Surplus 3,129.20 1,944.44 1,268.97
Total Shareholders' Fund 3,254.44 2,137.31 1,545.84
2 Non Current Liabilities
A Long-term borrowings 1,190.57 589.86 720.38
B Deferred tax liabilities (Net) 328.77 325.77 269.97
C Other long-term liabilities 105.99 94.48 81.66
d Long-term provisions 17.98 13.92 13.90
Total Non- Current Liabilities 1,643.31 1,024.03 1,085.91
3 Current Liabilities
a Short-term borrowings 1,105.78 1,546.77 440.57
b Trade payables 958.39 1,058.06 965.36
c Other current liabilities 887.57 754.33 832.53
d Short-term provisions 166.17 119.44 38.56
Total Current Liabilities 3,117.91 3,478.60 2,277.02
TOTAL 8,015.66 6,639.94 4,908.77
II ASSETS
1 Non Current Asset
a Fixed asset
Tangible asset 2,957.00 2,528.99 1,989.94
Intangible asset 17.89 11.54 11.11
Capital work-in-progress 777.69 327.51 86.35
Intangible asset under development 32.33 7.08 -
Total Fixed Assets 3,784.91 2,875.12 2,087.40
b Non-current investments 5.18 5.18 5.18
c Long term loans & advances 192.41 189.17 156.75
d Other assets 16.24 13.98 13.85
Total Non-Current Assets 3,998.74 3,083.45 2,263.18
2 Current Asset
A Inventories 1,787.51 1,409.80 1,028.11
B Trade receivables 1,722.28 1,749.55 1,182.04
35
(` In millions)
As at March 31,
2012
As at March 31, 2011 As at March 31,
2010
C Cash and Bank Balances 94.11 70.04 40.55
d Short-term loans and advances 393.99 314.41 381.76
E Other assets 19.03 12.69 13.13
Total Current Assets 4,016.92 3,556.49 2,645.59
TOTAL 8,015.66 6,639.94 4,908.77
36
SUMMARY OF OUR REFORMATTED CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR FISCAL 2012, FISCAL 2011 AND FISCAL 2010
(` in millions)
Fiscal 2012 Fiscal 2011 Fiscal 2010
I. Revenue from Operations
Sale of products 9,987.19 8,336.69 6,172.66
Less: Discount (778.10) (715.52) (527.61)
Less: Excise Duty (459.40) (461.92) (247.76)
8,749.69 7,159.25 5,397.29
Sale of services; 20.15 17.35 10.24
Other operating Revenues; 21.21 23.49 16.93
II. Other Income 51.01 104.44 64.07
III. Total Revenue (I+II) 8,842.06 7,304.53 5,488.53
IV. Expenses:
Cost of Materials consumed 4,868.94 4,173.79 3,024.75
Purchase of Stock in Trade 390.00 326.46 135.86
Changes in Inventories of finished
goods, work in progress and stock
in trade (335.98) (295.08) 22.53
Employee Benefits expenses 719.00 596.96 469.90
Finance Costs 198.70 185.42 184.66
Depreciation and amortisation 172.91 156.90 131.80
Other Expenses 1,715.39 1,246.12 947.11
Total Expenses 7,728.96 6,390.57 4,916.61
V.
Profit before exceptional and
extraordinary items and tax
(III-IV) 1,113.10 913.96 571.92
VI. Exceptional Items 320.99 - -
VII. Profit before extraordinary
items and tax 1,434.09 913.96 571.92
VIII. Extraordinary Items - -
IX. Profit Before Tax (VII- VIII) 1,434.09 913.96 571.92
Consisting of :
- Profit/ (Loss) on Continuing
Operations 1,113.45 858.79 530.39
- Profit/ (Loss) on Discontinued
Operations (0.35) 55.17 41.53
- Exceptional Items Profit/ Loss 320.99 - -
Less: Provision for Current Tax
of continuing operations (395.50) (187.24) (118.30)
37
(` in millions)
Fiscal 2012 Fiscal 2011 Fiscal 2010
Less: Provision for Current Tax
of discontinued operations
0.05
(20.58)
(16.35)
Less: Provision for Deferred tax (3.01) (55.80) (20.30)
Add: Income Tax of earlier years 0.29 0.70 2.05
X Profit After Tax 1,035.92 651.04 419.02
Consisting of:
- Profit/ (Loss) on Continuing
Operations 790.74 616.45 393.84
- Profit/ (Loss) on Discontinued
Operations (0.30) 34.59 25.18
- Exceptional Items Profit/ Loss 245.48 - -
XI Profit/ (loss) for the period 1,035.92 651.04 419.02
XII Earnings per Equity shares.
1) Basic (in `) 41.49 29.20 19.37
2) Diluted (in `) 41.19 26.12 18.05
Earnings per share ` -
Continuing Business
1) Basic (in `) 41.50 27.65 18.20
2) Diluted (in `) 41.19 24.74 16.97
Earnings per share ` -
Discontinued Business
1) Basic (in `) (0.01) 1.56 1.16
2) Diluted (in `) (0.00) 1.39 1.09
Face value per share (in `) 5.00 10.00 10.00
38
SUMMARY OF OUR REFORMATTED CONSOLIDATED CASH FLOW STATEMENT FOR
FISCAL 2012, FISCAL 2011 AND FISCAL 2010
(` in millions)
PARTICULARS Fiscal 2012 Fiscal 2011 Fiscal
2010
A. Cash Flow from Operating
Activities
Net Operating Profit before Tax
& Extraordinary Items
1,434.09 913.96 571.92
Adjustments for:
Net operating profit before tax
Depreciation 172.91 156. 90 131.80
Interest Expenses 198.70 185.42 184.66
Provision for Doubtful Debts and
Advances
37.91
16.93
14.24
Interest Income (41.35) (27.44) (22.42)
Dividend Income (0.05) (0.03) (0.03)
Employee Stock Option Expense 10.89 -
(Profit)/Loss on sale of Fixed Assets
(Net)
12.86 0.40 1.78
Miscellaneous Liability Written
back
(2.45)
Bad Debts written off 0.18 0.07 5.21
Unrealised Foreign Exchange
Loss/(Gain) (Net)
6.84 (16.02) (0.10)
Deferred Revenue expenditure
written off during the year
3.70
Foreign Currency Translation
reserve
0.84 (0.96) (0.23)
Exceptional Items
- Sale of Polymer Business (320.99) -
78.74 315.27 316.16
Operating Profit before Working
Capital changes
1,512.83 1,229.23 888.08
(Increase) / Decrease in Short Term
Trade Receivables
4.74 (573.40)
(295.55)
(Increase) / Decrease in Short term
Loans and advances
(100.40) 63.54 (121.77)
(Increase) / Decrease in Long term
Loans and advances
(2.25) (8.86) (3.96)
(Increase) / Decrease in Other
assets
(7.31) (1.54) 2.02
(Increase)/Decrease in Inventories (377.71) (381.69) 14.12
Increase / (Decrease) in Short term
Trade Payables/ Provisions
(90.59) 119.27 420.18
Increase / (Decrease) in Long term
Trade Payables/ Provisions
4.05 0.02 1.82
Increase / (Decrease) in Other Short
term Liabilities
197.38 (69.09) 171.77
Increase / (Decrease) in Other Long
term Liabilities
11.51 (360.58) 12.80 (838.95) 14.25 202.88
Cash generated from Operations
before tax and exceptional items
1,152.25 390.28 1,090.96
Net Direct Taxes paid (399.69) (179.91) (118.70)
Exceptional Item 320.99 - -
Net cash from Operating
Activities
1,073.55 210.37 972.26
B. Cash flow from Investing
Activities
Purchase of Fixed Assets including
Capital work in progress, intangible
assets and Capital advances
(1,171.37)
(971.02)
(471.88)
39
(` in millions)
PARTICULARS Fiscal 2012 Fiscal 2011 Fiscal
2010
Investment in Shares 0.00 0.00 (1.56)
Sale of Fixed Assets 86.62 2.15 1.49
Interest Received 41.35 27.44 22.42
Dividend Received 0.05 0.03 0.03
Net cash used in investing
activities
(1,043.35) (941.40)
(449.50)
Net cash from Operating and
Investing Activities
30.20
(731.03)
522.76
C. Cash flow from Financing
Activities
Issue of Equity Share capital 13.36 41.00
(Repayment)/Issue of Preference
Share Capital
(81.00) (125.00) 206.00
(Repayment/ Redemption) /Issue of
Debentures
(294.00) - 294.00
Share Premium Account 334.04 84.00
Short Term Borrowings (Net) (453.66) 1,093.91 (634.19)
Long Term Borrowings (Net of
Repayments)
811.55 (147.89) (213.26)
Cash Flow Hedge Reserve (49.26) - -
Interest paid (Net) (196.37) (177.40) (182.49)
Dividend Distribution (100.13) (14.93) 0.00
Net Cash from Financing
activities
(15.47) 753.69 (529.94)
Net Cash from Operating,
Investing & Financing Activities
14.73 22.66 (7.18)
Net increase in Cash & Cash
equivalent
14.73 22.66 (7.18)
Opening balance of Cash & Cash
equivalent
42.06 19.40 26.58
Closing balance of Cash & Cash
equivalent
56.79 42.06 19.40
Note: Cash and cash equivalents included in the Cash Flow Statement comprise of the following:-
i) Cash Balance on Hand 0.60 0.86 0.50
ii) Balance in Current Account 56.19 41.20 18.90
Total 56.79 42.06 19.40
40
RISK FACTORS
Investing in the Placement Shares involves a high degree of risk. Prospective investors should carefully
consider the risks and other uncertainties described below, in addition to the other information
contained in this Placement Document, before making any investment decision relating to the
Placement Shares. The occurrence of any of the following events could have a material adverse effect
on our Company’s business, results of operations, financial condition and future prospects which may
result in loss of all or a part of your investment and/or our Company’s ability to pay dividends could be
impaired. In particular, any potential investor in or purchaser of the Equity Shares should pay
particular attention to the fact that our Company is a company governed by Indian legal and
regulatory requirements which may differ from those which prevail in other countries. Unless specified
or quantified in the relevant risk factors detailed below, we are not in a position to quantify the
financial or other implications of any of the risks described in this section.
Additionally, our business operations could also be affected by additional factors that are not presently
known to us or that we currently consider as immaterial to our operations. The following factors have
been considered for determining their materiality:
1. Some events may not be material individually but may be found material collectively.
2. Some events may have a material impact qualitatively instead of quantitatively.
3. Some events may not be material at present but may have material impacts in the future.
In making an investment decision, prospective investors must rely on their own examination of our
Company and the terms of the Issue, including the merits and risks involved.
Risks relating to our business and operations
1. During the course of business or otherwise, legal proceedings have been initiated against
our Company, our directors and our Promoters. Any unfavourable or adverse decision in
such pending proceedings may adversely affect our results of operations, financial
condition and/or reputation.
A summary of pending legal proceedings against our Company, our directors and our
Promoters and the amounts involved, where quantifiable, are set forth below:
Nature of proceedings/claims Number of
proceedings
outstanding
Amount involved
(in ` in millions)*
Company
Criminal 27 Negligible
Tax 9 38.69
Civil 33 7.47
Labour 8 Negligible
Other regulatory proceedings 11 --
Show Cause Notices under Companies Act 1 --
Directors
Criminal 6 18.5
Tax -- --
Civil -- --
Labour -- --
Other regulatory proceedings 1 --
Promoters
41
Nature of proceedings/claims Number of
proceedings
outstanding
Amount involved
(in ` in millions)*
Criminal -- --
Tax -- --
Civil -- --
Labour -- --
Total amount* 96 64.66
* To the extent quantifiable.
For further details, please refer to the section titled “Legal Proceedings” on page 173 of this
Placement Document. These legal proceedings are pending at different levels of adjudication
before various courts and tribunals. We can give no assurance that these legal proceedings will
be decided in favor of our Company, our directors or our Promoters, as the case may be.
Further, we may also not be able to quantify all the claims in the aforementioned proceedings.
Any unfavourable or adverse decision in such proceedings may adversely affect our results of
operations, financial condition and/or reputation.
2. Our Company has sought compounding of certain offences under the Companies Act,
which as per law are compoundable. This may have a material adverse effect on our
business, financial condition or results of operations. While our Company has filed the
aforesaid compounding applications, the Company Law Board and/or the relevant Regional
Director may reject to compound each instance of non-compliance. Any subsisting non-
compliances by our Company may individually, or in the aggregate, have a material adverse
effect on our business, financial condition or results of operations.
Our Company had filed the following applications under Section 621A of the Companies Act
with the Company Law Board in connection with compounding of certain
irregularities/defaults under the Companies Act.
Sr
No
Date Section of the
Companies Act for
Violation of which the
application was made
Present status
1. January 1, 2012 Section 125 read with
section 127 of the
Companies Act
Company had filled
Form-61 with
Registrar Of
Companies
2. April 1, 2011 Section 211(3A), (3B)
and (3C) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
3. April 1, 2011 Section 211(3A), (3B)
and (3C) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
4. April 1, 2011 Section 217(3) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
5. April 1, 2011 Section 211(3A) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
6. April 1, 2011 Section 211(3A), (3B)
and (3C) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
7. April 1, 2011 Section 211(3A), (3B) Company had filled
42
Sr
No
Date Section of the
Companies Act for
Violation of which the
application was made
Present status
and (3C) of the
Companies Act
Form-61 with
Registrar of
Companies
8. April 1, 2011 Section 217 (2AA) of
the Companies Act
Company had filled
Form-61 with
Registrar of
Companies
9. April 1, 2011 Section 176 of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
10. September 9, 2010 Section 303(1)(a) of
the Companies Act
Company had filled
Form-61 with
Registrar of
Companies
Our Company has sought to address these non-compliances of the Companies Act by filing
the aforesaid compounding applications. However, the Company Law Board and/or the
relevant Regional Director may not compound each instance of such non-compliance. Any
subsisting non-compliances by our Company may individually, or in the aggregate, be subject
to the statutorily prescribed penalty, which could adversely affect on our business, financial
condition or results of operations.
3. Our agri input products cater to the agricultural industry, which is seasonal and cyclical in
nature and subject to the vagaries of nature to the extent of monsoon and prevailing
climatic conditions. Accordingly, if the agricultural sector in India or in any region thereof,
and particularly the crops to which our products cater to are adversely affected by
unfavourable weather/climatic conditions, poor rainfall, seasonal fluctuations and
commodity crop price variations, the demand for our agri input products could be adversely
affected.
The agri input industry and the agricultural industry (on which our Company’s agri input
activities are dependent) are subject to climatic conditions, rainfall, seasonal and weather
factors, which make the performance of the agricultural sector as a whole or the levels of
production of a particular crop relatively unpredictable. The weather can affect the presence of
disease and pest infestations in the short term on a regional basis, and accordingly may
negatively affect the demand for agri input products and the mix of products used. In addition,
sales of agri input products in the domestic retail market are highly seasonal due to the
monsoon and the Rabi and Kharif crop seasons in India. Accordingly, if the agricultural sector
in India or in any region thereof, and particularly the crops to which our products cater are
adversely affected by unfavourable climatic conditions, poor rainfall, seasonal fluctuations,
commodity crop price fluctuations and/or any other extraneous events, the demand for our agri
input products, and hence the results of our agri input activities and our financial condition
could be adversely affected.
4. Any change in Government policies vis-à-vis expenditure, subsidies and incentives etc. in
agriculture sector or failure of farmers to realize expected prices could affect crop
economics for farmers which in turn could affect their ability to spend on agri input
products, thereby affecting our agri input activities.
Any changes in government policies relating to the agriculture sector such as reduction of
government expenditure in agriculture, withdrawal or changes in incentives and subsidy
systems, export restrictions on crops, or adverse changes in commodity prices and/or
minimum support prices could have an adverse effect on the ability of farmers to spend on
agri input products, which thereby could adversely affect our agri input activities.
43
5. Our agri input activities could be adversely affected by introduction of alternative pest
management and crop protection measures such as bio technology products, pest resistant
seeds or genetically modified crops.
Our Company’s agri input activities may be adversely affected by increased use of
biotechnology products, pest resistant seeds, genetically modified crops and other organic
crop protection substitutes for agrochemicals. The adoption of the products derived through
biotechnology or alternative pest management and crop protection measures could have a
negative impact on traditional agrochemicals. Genetically modified (“GM”) crops are likely to
have more resistance to pests and disease than non-GM crops and therefore require
significantly less agrochemical usage than non-GM crops. The growth and acceptance of such
alternative pest management and crop protection products and measures by consumers may
have an adverse effect on sales of our Company’s agrochemical products which thereby may
affect our financial condition and results of operations.
6. If we are unable to compete successfully with our competitors, our market position and
profitability could be adversely impacted.
The market for the production and distribution of agrochemicals, industrial and specialty
chemicals is competitive in India. The basis of competition includes availability of new
products, product range, price and customer service. We compete against our competitors on
the basis of quality, technical competence, distribution channels, logistics facilities, prices,
business terms and conditions, customer relationships etc. There is no assurance that we will
continue to compete successfully in future. Some of our competitors may be able to price their
products more attractively or may be able to distribute their products more effectively through
establishing better distribution networks, or may have greater access to capital, superior
manufacturing techniques, research and development, marketing and other resources. If we are
unable to remain sufficiently competitive, or are unable to keep pace with them, our business
and operating results will be adversely affected.
7. Our business and profitability will suffer if we fail to anticipate and introduce new products
in order to keep pace with rapid changes in customer preferences and the industry on which
we focus.
The agrochemical business is characterized by constant product innovation due to
technological change and evolving industry standards. To compete successfully in the
industry, we must be able to identify and respond to changing demands and preferences.
Changes in product mix impacts our operating results and our margins. We cannot assure you
that our products will always gain buyer acceptance and we will always be able to offer
competitive custom synthesis services to meet customer expectations. Failure to identify and
respond to changes in consumer preferences could, among other things, limit our ability to
differentiate our products, adversely affect consumer acceptance of our products, and lower
sales and gross margins. Further, our competitors may offer products/services/terms and
conditions which could render our offerings non-competitive or force us to reduce prices,
thereby adversely affecting our margins. Any of these factors could have a material adverse
effect on our business and results of operations.
8. As a part of our strategy, we propose to launch new products from time to time. The process
for registering any new product is expensive and time consuming. If we are unable to
successfully launch our proposed products on account of any delay in or refusal of
registration or for any other reason we may lose out on the market opportunities and/or
may fail to recover the costs incurred towards registration and other pre-launch activities.
This could adversely affect our growth, profitability and market position.
As a part of our strategy, we propose to launch new products from time to time. With respect
to any new proposed agri input product, our Company invests time and money inter alia on the
registration procedures and fees, data generation, trials, various brand building and pre-launch
marketing activities. The launch of a product depends upon our ability to obtain registration of
the product in a timely manner or at all as well as on other factors. The submission of an
application for registration to the relevant regulatory authority does not guarantee that
44
registration will be granted. Accordingly, if we are unable to obtain the necessary regulatory
registration / approvals for our products or successfully launch our product in a timely manner
or at all, we may not be able to recover the costs incurred towards registration and pre-launch
activities in connection with such product. Further, in such a case we may miss out on the
market opportunity with respect to such new products, which could adversely affect our
growth, profitability, financial condition and market position.
9. All agro chemical products sold by us are required to be registered under the Insecticides
Act 1968, and Rules 1972. Further, custom synthesis and contract manufacturing products
also are often required to be registered by our customers in the relevant jurisdictions. These
registrations are liable to be cancelled or the manufacture/sale/distribution etc. of such
products may be restricted. In case any product/s registration is cancelled, or its use etc.
restricted, then it could adversely affect our results of operations or growth prospects.
The agri input sector and the sectors to which our custom synthesis and contract
manufacturing products cater to are usually highly regulated requiring registration of products
and strict compliance with various statutory and regulatory requirements and parameters. If
the registration of our agri input products and/or the custom synthesis and contract
manufacturing products are cancelled on grounds of alleged non compliances with such
statutory and/or regulatory requirements, we will not be able to market or manufacture such
products, as the case may be, which could adversely affect our results of operations and
reputation. Further, we may not be able to recover the expenses incurred for the marketing
and/or manufacturing of such products, and in certain cases, the relevant regulatory authority
could also impose penalties on us under the relevant statute / regulation.
Furthermore, in case of any proceedings initiated or threatened against us challenging the
registration of our products, we would have to divert management time and resources in
defending such proceedings which could adversely affect our profitability, reputation and
growth prospects.
10. Not all our contracts for contract manufacturing are on a long term basis and going
forward too that may not be the case. If we are unable to enter into long term contracts for
our custom synthesis and contract manufacturing activities, our revenues could be variable
in future. Any adverse variations in our revenues as a result could adversely impact our
results of operations and growth.
Long term agreements for our custom synthesis and contract manufacturing activities give us
visibility for long term growth. Not all our contracts for contract manufacturing are on a long
term basis and going forward too that may not be the case. If we are unable to enter into long
term agreements, our revenue may be subject to variability because of fluctuations in demand
for such products and services. Accordingly, if we are unable to enter into long term contracts
for this segment of our business our results of operations and growth could be adversely
impacted.
11. We currently prefer to enter into exclusive licenses to market in-licensed products developed
by global innovators in the Indian markets. If going forward we are unable to continue
such activities on an exclusive basis, we may face competition with respect to such products,
which may adversely affect our future market position, growth and results of operations.
As a part of our in-licensing arrangements with global innovators, we currently prefer to enter
into exclusive licenses to market products developed by them in the Indian markets for a
stipulated time period, which enables us to introduce new and novel products in the Indian
markets, thereby giving us a competitive advantage in our markets. However going forward, if
we are unable to obtain such exclusive licenses from global innovators, and/or if similar
licenses for the same product are also granted to any of our competitors in India, we may face
competition with respect to such products, which may adversely affect our future market
position, growth and results of operations.
45
12. If any of the global innovators from whom we in-license agri input products establish a
presence in the Indian market, we could lose out on the opportunity to market new products
of such global innovators exclusively or at all in India, which could adversely affect our
results of operations, market position and growth.
If global innovators from whom we in-license agri input products, establish a presence in
India either through incorporation of a new entity, through acquisition of any agri input entity
in India, or otherwise, we could lose out on the opportunity to market new or novel products
of such global innovators exclusively or at all. As a result, our results of operations, market
position and growth could be adversely affected.
13. As per the current business model, our growth is dependent on our relationship with global
innovators in our business. Any adverse changes in such relationships could adversely
affect our growth, operations and profitability.
In our current business model, in our domestic agro input segment our focus has been on
launching new products through in-licensing and co-marketing relationships with global
innovators and in our export segment, our focus has been on undertaking custom synthesis and
contract manufacturing services with respect to new molecules developed by global
innovators. Accordingly, in case of any adverse changes in such relationships, we may not be
able to, (i) introduce new and innovative agri input products from time to time through our in-
licensing and co-marketing arrangements, (ii) take up custom synthesis and contract
manufacturing services with respect to new and innovative molecules developed by global
innovators, (iii) procure repeat orders for custom synthesis / contract manufacturing, which in
turn would adversely affect our growth, operations and profitability.
14. Our top 5 products contributed to 41.67% of our gross sales (net of discount) from
operations Fiscal 2012. Any decline in sales or market position of these top 5 products
could adversely affect our results of operations and market position.
Our top 5 products collectively contributed to 41.67% of our gross sales (net of discount) from
operations Fiscal 2012. Should there be any decline in sales or market position of the aforesaid
products our results of operations and profitability could be adversely affected.
15. Our top 5 customers contributed 40.75% of our gross sales (net of discount) from
operations for Fiscal 2012. Our failure to continue business activities with any of these
customers could adversely affect our results of operations.
Our top 5 customers contributed 40.75% of our gross sales (net of discount) from operations
for Fiscal 2012. Our failure to continue business activities with any of these customers could
adversely affect our results of operations.
16. The registration of intellectual property, such as brand names and trademarks, is integral
and critical to our growth and profitability. Any failure in the future, to register and protect
intellectual property rights, or any infringement thereof could adversely affect our
competitive position, our operations, and profitability.
Our success is greatly dependent on the branding of our products and our ability to
competitively protect intellectual property rights in connection with our brands and products.
Such intellectual property rights are a precursor to our sales and marketing efforts. Currently,
21 applications for registration of trade and service marks under different classes are pending
before the relevant trademark authorities, out of which the application for registration of one
of our trademarks has been disputed. Further, we do not have registered trademarks for certain
brands/logos used by us currently. If we are unable to register such trademarks in a timely
manner or at all, our goodwill, brand position and/or profitability could be adversely affected
due to use of the same brand name by others.
Further, there can be no assurance that such brand names and logos will not be infringed. Use
of these brand names or logos, in activities similar to those of our Company, by third parties
could affect the reputation of our brand which could in turn adversely affect our business,
46
financial condition and results of operations. Further, we may need to undertake expensive
and time-consuming litigation to protect our intellectual property rights. If for any reason, we
are unable to regularly register or adequately manage and protect intellectual property rights,
our brand building exercises, business plans, and profitability could be adversely impacted.
17. If we are unable to obtain or to maintain any of the required statutory and regulatory
approvals, licenses, permits, certifications and registrations as required for our business
activities, our operations and profitability could be adversely affected.
We require various approvals, licenses, registrations and permissions for our business
activities. Each authority may impose its own requirements or delay or refuse to grant
approval. In the future, our Company may be required to renew such permits and approvals or
to obtain new permits and approvals
There can be no assurance that the relevant authorities will issue any such permits or
approvals in the time-frame anticipated by our Company or at all. Failure to renew, maintain
or obtain the required permits, approvals and licenses may interrupt our Company’s operations
and may have a material adverse effect on our Company’s results of operations, financial
condition and prospects.
18. Any loss resulting from operating risks at our manufacturing, formulation, processing and
R&D units, could have an adverse impact on our profitability.
Our manufacturing and R&D units are subject to various operating risks, including, inter alia,
(i) the breakdown or failure of equipment, (ii) power and water supply disruptions, (iii)
performance below expected levels of output or efficiency, (iv) obsolescence, (v) labour
disputes, (vi) natural disasters, and, (vii) industrial accidents. Our units use complex
equipment and machinery, and the breakdown or failure of equipment or machinery may
result in us having to make repairs or procure replacements which may require considerable
time and expense. Any of the abovementioned factors could have an adverse impact on our
operations/profitability
19. Not all of our raw materials are purchased on long term contracts. Any price volatility in
our raw material or our inability to source raw materials in a timely manner or at all could
adversely affect our operations and profitability.
Not all our raw material are purchased on long term contracts. The prices of these raw
materials are subject to fluctuations. We do not have control over the factors affecting prices
of raw materials. Any volatility in their prices or availability in a timely manner or at all,
could adversely impact our operations and profitability. Further, any failure by our suppliers
to (i) deliver the required raw materials in the necessary quantities, (ii) adhere to delivery
schedules, or, (iii) provide the raw materials as per the specified quality and technical
specifications, would also adversely affect our operations and productivity, and hence our
financial performance.
20. Our failure to accurately forecast and manage inventory could result in an unexpected
shortfall and / or surplus of products, which could adversely affect our operations and
profitability.
We monitor our inventory levels based on our own projections of future demand. Because of
the time required to produce/market quantities of our products, we may make
production/marketing decisions well in advance of sales. If we are unable to appropriately
estimate variations in demand for products for any reason, the same could result in surplus of
inventory levels or unavailability of products in high demand resulting in below potential
sales. Any of the aforesaid circumstances could adversely affect our operations and
profitability.
21. Our operations and profitability are dependent upon the availability of timely and cost
efficient transportation and other logistic facilities. Their prolonged disruption or
unavailability in a timely manner could result in delays or non supply and thereby could
adversely affect our operations, profitability, reputation and market position.
47
Our operations and profitability could be adversely affected by a number of logistical factors,
such as prolonged interruptions in transport schedules, (whether dues to strikes, natural
disasters, a change in market conditions, or otherwise), for our products or raw materials. Any
logistical or prolonged transportation unavailability or failure that adversely affects the timely
delivery of our products to end users or of our raw material could adversely affect our
operations, profitability, reputation and market position.
22. We rely on computerized systems to manage our sales, supply chain, production process,
logistics, research and development, and, other integral parts of our business operations.
Any failure or malfunction in connection with these systems, could adversely affect our
business, financial conditions and operations.
Our Company’s business processes run on a SAP based ERP system and include virtually all
areas such as production, sales, human resources, finance and accounts, supply chain, R&D
etc. Any failure or malfunction in connection with these computerized systems could result in
business interruptions, including disruption in our production, supply chain, distribution and
management, etc. This can result in damaged reputation, weakening of our competitive
position, operation efficiencies/failures which in turn would have a material adverse effect on
our business and financial condition.
23. A pan-India reach and penetration among the farmer community is an important factor for
our agri-input sales and also a determinant for global innovators for giving in-licensing
products to us. Accordingly, if we are unable to maintain adequate penetration in the
domestic market or to competitively expand our distribution network or sales, then our
operations and profitability could be adversely impacted.
A pan-India reach and penetration among the farmer community is an important factor for our
agri-input sales and also a determinant for global innovators for giving in-licensing products
to us. For maintaining this pan-India reach, we rely on our distribution network and
dealerships to distribute, market and sell our agri input products in India through our
marketing team spread across the country. Our marketing team is partnered by a 2-3 tier
distribution channel which comprises of numerous retail points, over 10,000 distributors and
direct dealers across the major agriculture areas in the country, 27 stock points including our
own depots and 18 C&F agents who work on hub-and-spoke distribution model to ensure
timely delivery. Hence, our operations are dependent on maintaining good relationships with
our distributors and dealers and ensuring that our distributors and dealers are successful.
There is no assurance that our current distributors and dealers will continue to do business
with us on favorable terms or at all. Accordingly, if we are unable to maintain adequate
penetration in the domestic market or to competitively expand our distribution network, our
sales, competitiveness, goodwill, operations and profitability could be adversely impacted.
24. Being in the business of chemicals manufacturing, compliance with, and changes in, safety,
health and environmental laws, workplace and related laws and regulations applicable in
jurisdictions in which we operate, may increase our compliance costs and as such adversely
affect our business, prospects, results of operations and financial condition.
We are subject to various safety, health and environmental laws, workplace and related laws
and regulations. Such statutory / regulatory requirements include:
i. obtaining environmental clearance for the manufacture of agrochemicals and
specialty chemicals from relevant central and state regulatory environmental
authorities;
ii. controls on and obtaining permissions / no objections for the disposal/abatement of
hazardous materials, noise emissions, air and water discharges;
iii. controls on the handling, discharge and disposal of chemicals, toxic and inflammable
objects;
iv. restrictions on employee exposure to hazardous substances and other aspects of our
operations.
48
Any damage caused by the discharge of chemicals, hazardous waste and/or other pollutants
into the air, soil or water may cause us to be liable to government and regulatory bodies or to
third parties. In addition, we may be required to incur costs to remedy the damage caused by
such discharges, pay fines or other penalties for non-compliance. Compliance with, and
changes in, safety, health and environmental laws and various labour, workplace and related
laws and regulations may increase our compliance costs and as such adversely affect our
business, prospects, results of operations and financial condition.
25. Many of our raw materials used and stored and/or chemicals produced at our factories are
hazardous in nature. In the event of any accidents involving any such hazardous materials
and substances, our Company may be held liable for subsequent damages and litigations.
Any mishandling / accident / errors while manufacturing and/or storing hazardous material
and/or substances at our units may cause personal injury or loss of life and may further lead to
severe damage or destruction to property or equipment and environmental damage and may
result in the suspension of operations and the imposition of civil and criminal liabilities.
Further, we depend on third party transporters’ capability to transport these hazardous
materials/substances. Any mishandling of hazardous substances by these carriers could affect
our business adversely and may impose liabilities on our Company. Liabilities incurred as a
result of these events have the potential to adversely impact our financial position.
26. Our insurance cover may not adequately protect us against all of the significant risks that
our Company faces, or may in the future face, in connection with our business activities.
Our financial condition and operations could be adversely affected by any liabilities or risks
that arise, which are not completely covered by insurance policies entered into by us
Our Company has entered into various insurance policies, in light of our business being
exposed to potential liability from its customers or end users for defects in products or
services. Product liability claims are a commercial risk for our Company and our Company’s
business involves the handling, production and transportation of various hazardous or toxic
materials. Although, our Company maintains product liability insurance with respect to our
major manufactured products, if any product liability claim is not adequately covered by
insurance, or at all, our Company’s profitability, reputation and marketability of products and
services could be adversely affected.
Other significant insurance policies entered into by us also provide cover for risks relating to
physical loss, theft or damage to our assets, as well as business interruption losses, but there
can be no assurance that our insurance policies will at all times cover all the risks associated
with our business. There is also the risk of an insurer interpreting our insurance claims in a
manner that leads to long and costly litigation and/or denial of our claims. Accordingly, our
financial condition and operations could be adversely affected by any liabilities or risks that
arise in case of denial or inadequate or delayed compensation under our various insurance
policies.
27. The availability of counterfeit agri input products and agri input products passed off by
others as our products, could adversely affect our goodwill and results of operations.
The spurious pesticides market size in India is estimated to be USD 233 million in 2010
(Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India:
Sustainable Growth of the Chemical Sector”). Entities in India could pass off their own
spurious/sub-standard products as ours, including counterfeit or pirated products. Certain
entities could imitate our brand name, packaging materials or attempt to create look-alike
products. The proliferation of unauthorised copies of our products, and the time and attention
lost to defending claims and complaints about counterfeit products could have an adverse
effect on our goodwill, market share, growth prospects, results of operations and financial
condition could be adversely affected.
28. Quality concerns and negative publicity if any, would adversely affect the value of our
brand, and our sales
49
Our business is dependent on the trust our customers have in the quality of our products. Any
negative publicity regarding our Company’s, brand, or products, including those arising from
any allegations on the quality of our products from our vendors, or any other unforeseen
events could adversely affect our reputation our brand value, our operations and our results
from operations.
29. Adverse changes in statutory / regulatory requirements (including any fiscal or non fiscal
measures), or unfavourable interpretation of statutory/regulatory requirements governing
our Company, our products or the industries or geographies to which our products pertain
to could adversely affect our business.
Our agri input products and the sectors to which our custom synthesis and contract
manufacturing products cater to are usually highly regulated requiring various registration
requirements and strict compliance with various statutory and regulatory requirements and
parameters. Any unfavourable changes in statutory or regulatory requirements in India or
globally, including any fiscal or non fiscal measures, could adversely affect our ability to
conduct our business in its present form, which thereby could adversely affect our operations
and profitability. Further, if the interpretation of the regulators and authorities vary from our
interpretation, we could be subject to duties, penalties, restrictions and/or other hardship.
30. As a strategy we plan our capital expenditure in our contract manufacturing segment
against contracts that are either signed or being negotiated, and have in recent years
invested in capital expenditure for expanding our manufacturing infrastructure in this
segment. Our failure to successfully enter into contracts under negotiation or to get
adequate compensation upon cancellation could adversely affect our results of operations.
The custom synthesis and contract manufacturing activities is a major growth driver for our
Company. We have accordingly invested capital expenditure in expanding our manufacturing
and process research infrastructure and capabilities to augment growth in such activities. We
have recently commissioned a multi product plant in Jambusar to cater to the requirements of
this segment. Although, as a strategy we plan our capital expenditure in this segment against
contracts that are either signed or being negotiated, we may not be able to recoup or benefit
from such capital expenditure in case we are unable to successfully enter into contracts under
negotiation. The same would apply if we do not adequate compensation upon any cancellation
of orders. Any of the above could adversely affect our results of operations.
31. If we are unable to expand our capacities in a timely manner or at all we may not be able to
execute contract manufacturing orders in a timely manner or at all, which could adversely
affect our goodwill, growth and results of operations.
We typically plan capacity expansion against contracts which have been finalized or are in the
process of being negotiated for our contract manufacturing activities. In a situation where all
our manufacturing facilities are being utilized to their optimum capacities, and we are unable
to undertake capacity expansion in a timely manner or at all, our ability to execute orders will
be hampered. This could curtail our growth and adversely affect our turn around time for
orders thereby affecting our goodwill and results of operations.
32. We may require capital expenditure in the future in connection with our growth plans
which may require additional financing. In the event such financing is not obtained on
favourable terms, in a timely manner or at all, our operations and financial condition may
be materially and adversely affected.
There can be no certainty that our Company can generate revenues that would be sufficient to
fund our future expansions. Accordingly, we may need to obtain additional external financing
in the future. There can be no assurance that any such additional financing will be available,
on terms favourable to us, in a timely manner or at all. Any such additional financing may also
be subject to interest rate fluctuations, which could affect our results of operations adversely.
Accordingly, our failure to finance our capital expenditure in future on commercially
favourable terms, in a timely manner or at all could adversely affect our operations and
financial condition.
50
33. Our operations require infusion of working capital from time to time. If we are unable to
obtain and/or maintain sufficient cash flow, credit facilities and other sources of working
capital funding, in a timely manner, or at all, to meet our requirement of working capital or
pay our debts, our operations, financial condition and profitability could be adversely
affected.
Our operations require infusion of working capital from time to time. We need to obtain
and/or maintain adequate cash flows and working capital funding facilities, from time to time,
in order to, inter-alia, finance the purchase of raw materials, operate, upgrade and maintain our
research and manufacturing facilities. If we are unable to obtain and/or maintain sufficient
cash flow, credit facilities and other sources of working capital funding, in a timely manner, or
at all, to meet our requirement of working capital or pay our debts, our operations, financial
condition and profitability could be adversely affected.
34. As of March 31, 2012 we had unsecured loans amounting to ` 485.55 million on a
consolidated basis and repayment of any of these loans may be required on demand. In
such event, we may have to raise funds to refinance these obligations.
As of March 31, 2012 our Company had unsecured loans amounting to ` 485.55 million on a
consolidated basis and repayment of any of these loans may be required on demand. In such
event, we may have to raise funds to refinance these obligations. This requirement to refinance
loans on short notice may have a material and adverse effect on our business operations and
financial condition.
35. We have availed of borrowing most of which include various conditions and covenants. We
may be unable to comply with covenants and conditions or to obtain necessary consents
required thereunder in connection with borrowings availed of/to be availed of by our
Company. This could lead to termination of our credit facilities, accelerated repayment of
all amounts due thereunder, enforcement of any security provided and trigger of cross
default provisions. Any of the above actions taken by the relevant lender could adversely
impact our credit rating, financial condition and results of operations.
Our Company had long term borrowings, on a consolidated basis, of `1,362.08 millions as on
March 31, 2012 and long term borrowings, on a standalone basis of `1,305.91 millions as on
September 30, 2012, respectively. Our Company had short term borrowings, on a consolidated
basis, of `1,105.78 millions as on March 31, 2012 and short term borrowings, on a standalone
basis of `1,397.24 millions as on September 30, 2012, respectively. Most of our borrowing
agreements include various conditions and covenants that require us to obtain lender consents
prior to carrying out certain activities and entering into certain transactions, which could
restrict our ability to conduct our business and operations in the manner we desire. For
instance, under some of our financing agreements, we require, consents from the relevant
lenders for, among others, the following matters:
a. entering into any scheme of merger, amalgamation or reorganization;
b. selling or transferring all or a substantial portion of our assets;
c. promoters maintaining a particular percentage of the equity share capital of our Company;
d. making any change in capital structure or control or constitution of our Company;
e. making amendments in our Memorandum and Articles of Association;
f. creating any further security interest on the assets upon which the existing lenders have a
prior charge; and raising funds by way of any fresh capital issue.
Our operations and/or profitability could be adversely impacted if we are unable to obtain, on
a timely basis or at all, the relevant approvals or no objection certificates from such lenders for
the commencement and completion of any of the said restricted activities by our Company. A
failure to observe the covenants under our financing arrangements or to obtain necessary
consents required thereunder may lead to the termination of our credit facilities, acceleration
of all amounts due under such facilities and the enforcement of any security provided. Any
acceleration of amounts due under such facilities may also trigger cross default provisions
under our other financing agreements. Any of these circumstances could adversely affect our
credit rating, financial condition and results of operations.
51
36. Fluctuating foreign exchange rates could adversely impact the financial results of our
Company.
The business of our Company is dependent on imports and exports entailing large foreign
exchange transactions. We also have external commercial borrowings. We are therefore
subject currency exchange rate exposures. Foreign exchange fluctuation affects both our
revenues and expenditures. To this extent, the revenues and expenditures will be higher or
lower depending on the prevalent foreign exchange rates. A weakening of the Rupee against
the foreign currencies may have an adverse effect on our cost of borrowing in Rupee terms
and on the cost of our imports. An appreciating rupee may adversely affect our export
earnings. Our management typically monitors our foreign currency exposure periodically and
our Company has adopted a policy of hedging a pre-determined percentage of the difference
between our foreign current exposure to exports and imports, by entering into forward
contracts. However, there can be no assurance that such hedging measures would at all times
be adequate to cover us from any losses arising out of fluctuations in foreign exchange rates.
37. Of the 73 properties used by our Company, we own 1 property while 72 properties including
our Corporate Office and manufacturing facilities at Jammu, Panoli and Jambusar are on
leasehold/licensed basis. Any termination of the relevant lease or leave and license
agreements in connection with such properties or our failure to renew the same could
adversely affect our activities. Further, we may not be able to enforce our rights in
connection with lease or leave and license agreements which are not registered, which may
affect our operations and profitability.
Currently, except 1 property at Udaipur which is owned by our Company, none of the other
properties used by our Company for the purposes of our business activities, including our
Corporate Office at Gurgaon and manufacturing facilities at Jammu, Panoli and Jambusar, are
owned by us. Termination of the lease / leave and license agreements in connection with such
properties which are not owned by us or failure to renew the lease / licenses which expire in
future on favourable conditions, in a timely manner or at all, could require us to vacate such
premises at short notice, which could adversely affect our operations, financial condition and
profitability. Further, some of the aforementioned leave and license or lease deeds are not
registered. Accordingly, we may not be able to enforce our rights in connection with lease or
leave and license agreements which are not registered, which may affect our operations and
profitability.
38. To enhance our existing business we may seek opportunities to acquire or partner with
other corporates, whom we have not identified. If we are unable to acquire or partner with
such corporates in a commercially viable manner or at all or to realize expected benefits
synergies from such acquisitions or partnerships in a profitable manner our growth
prospects, operations and profitability could adversely be affected.
To enhance our existing business we may seek opportunities to acquire or partner with other
corporates. We cannot assure you that we will be able to successfully acquire and/or partner
with such corporates in a commercially viable manner or at all. Further, if we do acquire or
partner with such corporates, there can be no assurance that we will be able to realize the
expected benefits synergies from such acquisitions or partnerships in a profitable manner. Any
of the above factors could adversely affect our growth prospects, operations and profitability.
39. Our success significantly depends on our management and operational teams and other
skilled professionals. Our operations and profitability would be adversely affected if we fail
to identify, attract, retain, motivate and manage such personnel.
We are dependent on the experience and strategic inputs of the senior members of our
management and our operational teams, (including our research and development teams). The
senior members of our management are responsible, inter alia, for, (i) identifying business
risks and mitigating the same, and, (ii) formulating strategic plans for manufacturing,
marketing, procurement, research and development. Further, we depend on our operational
teams for our day to day core operations, such as sales, manufacturing and R&D. Their
experience based strategic inputs are critical to our operations and profitability. Accordingly,
52
if we are unable to appropriately identify, attract, retain, motivate and manage such personnel,
our operations and profitability could be adversely affected.
40. Our historical financial information may not be indicative of future growth. Historically
we have demonstrated growth on account of successful implementation of our strategies. If
for some reason our strategies do not result in the same level of success, our results of
operations could be adversely affected.
Our Company has historically continued to demonstrate growth in revenues year after year.
Our Company’s net revenue from operations on a consolidated basis has grown at a CAGR of
27.30% from ` 5,424.46 million for Fiscal 2010 to ` 8,791.05 million in Fiscal 2012, and our
PAT margins on a consolidated basis have increased by 1.27% points from 7.76% for Fiscal
2010 to 9.03% in Fiscal 2012. The historical financial information however may not be
indicative of our future growth.
Our future growth will depend, among other things, upon the continued success of our
business model and our ability to successfully implement our strategies which inter-alia
include the following:
continue expanding our domestic portfolio of in-licensed products;
adding new product categories to leverage our pan-India marketing network and
customer reach;
diversifying our presence across the agricultural value chain by leveraging our strong
understanding of the sector;
strengthening our relationship with existing clients;
acquiring new clients.
Our results of future operations may be adversely affected if these strategies do not get
succesfully implemented for any reason.
41. The requirement and proposed use of proceeds of the Issue have not been appraised by any
bank, financial institution or other independent agency and are based on internal
management estimates. Our management will have significant flexibility in applying the
proceeds from the Issue, which may affect the results of our operations.
The fund requirement and use of the proceeds of the Issue as specified in “Use of Proceeds”
on page 64 of this Placement Document are based on internal management estimates and have
not been appraised by any bank, financial institution or other independent agency. The actual
operations due to unforeseen circumstances, change in business situation, etc. or otherwise
may be different from management estimates and our Company may not be able to deploy
funds as planned. Accordingly, our management will have significant flexibility in applying
the proceeds received by us from the Issue. This may affect our results of operation.
42. Our contingent liabilities, in our financial statements as on March 31, 2012, aggregated to
` 83.89 million on a standalone and consolidated basis. If such contingent liabilities
materialize, our financial condition could be adversely affected.
Our contingent liabilities, in our financial statements as on March 31, 2012, aggregated to
` 83.89 million on a standalone and consolidated basis, as further detailed below:
(` in millions)
S.No Particulars As at March 31,
2012
1. Disputed Taxation demands not acknowledged as debts:
(i) Sales Tax 17.64
(ii) Excise Duty 8.50
(iii) Income Tax 24.31
(iv) Customs Duty 7.11
2. Anti Dumping Duty 23.04
3. Counter Guarantees to GIDC 3.29
Total 83.89
53
If such contingent liabilities materialize, our financial condition could be adversely affected.
43. We have experienced negative cash flows in Fiscal 2012, Fiscal 2011 and Fiscal 2010. Any
significant or sustained negative operating cash flows in the future could adversely affect
our financial condition.
We have experienced a negative cash flow from investing activities and financing activities on
a consolidated basis for Fiscal 2012, Fiscal 2011 and Fiscal 2010 as detailed below:
(` in Millions)
Sl.
No.
Particulars For the Year
ended March
31, 2012
For the Year
ended March
31, 2011
For the Year
ended March
31, 2010
1. Net cash used in investing
activities
(1,043.35) (941.40) (449.50)
2. Net cash used in financing
activities
(15.47) 753.69 (529.94)
Any negative cash flows in the future could adversely affect our financial condition. In the
event that we are unable to make arrangements to meet our cash requirements, it could have
an adverse effect on our business, financial condition and results of operations.
44. Our consolidated financial statements as at and for the Fiscals 2012, 2011 and 2010, have
been prepared based on financial statements of one of our Subsidiaries, namely PI Japan
Company Limited, which are not audited and prepared based on the certification furnished
by the directors of PI Japan Company Limited.
Our consolidated financial statements as at and for the Fiscals 2012, 2011 and 2010, have been
prepared based on financial statements of one of our Subsidiaries, namely PI Japan Company
Limited, which have not been audited for any of the aforementioned periods. The financial
statement PI Japan Company Limited reflect (a) total assets of ` 9.62 million, ` 6.75 million,
` 3.96 million, (b) total revenue of ` 27.61 million, ` 21.80 million and ` 16.48 million and
(c) net cash flows amounting to ` 2.89 million, ` 2.01 million and ` 0.67 million for the years
ended March 31, 2012, March 31, 2011 and March 31, 2010 respectively. These financial
statements have been certified by the directors PI Japan Company Limited and consolidation
with respect to PI Japan Company Limited is based solely on such certificate.
45. Our Promoters and Directors may from time to time have interests in our Company other
than reimbursement of expenses incurred or normal remuneration or benefits.
Our Promoters and Directors may from time to time have interests in our Company other than
reimbursement of expenses incurred or normal remuneration or benefits. For instance (i) Mr.
Raj Kaul, a director on our Board, has entered into an agreement with our Company for
providing services in a professional capacity to our Company, and (ii) one of our Promoters
Mrs. Madhu Singhal has pursuant to a lease deed dated March 1, 2012 leased a property to our
Company for which she is currently entitled to a rent of ` 56,000 per month. Our Promoters
and Directors may also from time to time be interested to the extent of any transaction entered
into by our Company with any other company or firm in which they are directors or partners.
46. Members of our Promoter Group will continue to retain significant control in our Company
after the Issue, which will allow them to influence the outcome of matters submitted to
shareholders for approval. Such a concentration of ownership may also have the effect of
delaying, preventing or deterring a change in control.
Currently, our Promoter Group hold 63.35% of the paid up Equity Share capital of our
Company and will continue to hold a substantial percentage of our paid up Equity Share
capital post completion of the Issue. As a result, our Promoter will continue to exercise
significant control over determining decisions which require simple or special majority voting,
and our other shareholders will be unable to affect the outcome of such voting. Our Promoter
Group may take or block actions with respect to our business, which may conflict with our
interests or the interests of our minority shareholders, such as actions which delay, defer or
54
cause a change of our control or a change in our capital structure, merger, consolidation,
takeover or other business combination involving us, or which discourage or encourage a
potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
We cannot assure you that the members of our Promoter Group will act in our interest while
exercising their rights in such entities, which may in turn materially and adversely affect our
business and results of operations. We cannot assure you that our Promoter Group will act to
resolve any conflicts of interest in our favour. If our Promoter Group sells a substantial
number of their Equity Shares in the public market, or if there is a perception that such sale or
distribution could occur, the market price of the Equity Shares could be adversely affected. No
assurance can be given that such Equity Shares that are held by our Promoter Group will not
be sold any time after the Issue, which could cause the price of the Equity Shares to decline.
Risks Relating to India
47. An adverse economic, political and/or regulatory environment in India could cause our
business to suffer and in turn lead to a loss of revenue.
We are incorporated in India, and almost all of our assets and employees are located in India.
As a result, we are highly dependent on the prevailing economic, political and regulatory
environment in India. Any adverse changes in these socio-economic factors could adversely
affect our ability to implement our strategic initiatives, in a timely manner or at all, and our
operations and profitability.
Our business, and the market price and liquidity of the Equity Shares, are directly affected by
the Indian economy, which in turn may be affected, inter alia, by foreign exchange rates and
controls, interest rates, changes in government policy, taxation, social and civil unrest,
economic/trade policies of equity market perceptions, comments by leaders/economists etc.
Political instability and/or unfavorable changes in the policies of the Government in India,
could delay the liberalization of the Indian economy, and consequently adversely affect
economic conditions in India generally, and our business in particular. Since 1991, successive
Indian Governments have pursued policies of economic liberalization, including significantly
relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state
governments in the Indian economy as producers, consumers and regulators has remained
significant. The continuance or change in the various policies, rules, regulations, taxation etc.
can neither be predicted nor taken for granted. The rate of economic liberalization could
change, and specific laws, policies taxation affecting our industry, foreign investment and
other matters affecting investment in our securities could change as well. Any change in
India’s economic policies could adversely affect business and economic conditions in India
generally, and our business in particular.
48. Instability in financial markets could materially and adversely affect our results of
operations and financial condition.
The Indian economy and financial markets are significantly influenced by worldwide
economic, financial and market conditions. Any financial turmoil, especially in the U.S. or
Europe, may have a negative impact on the Indian economy. Although economic conditions
differ in each country, investors’ reaction to any significant developments in one country can
have adverse effects on the financial and market conditions in other countries. A loss in
investor confidence in the financial systems, particularly in other emerging markets, may
cause increased volatility in Indian financial markets. Any prolonged financial crisis may have
an adverse impact on the Indian economy and us, thereby resulting in a material and adverse
effect on our business, operations, financial condition, profitability and price of our
Company’s Placement Shares.
49. Investors may be restricted in their ability to exercise preemptive rights under Indian law
and thereby may suffer future dilution of your ownership position.
Under the Companies Act, a public limited company incorporated in India must offer holders
of its equity shares preemptive rights to subscribe and pay for a proportionate number of
55
shares to maintain their existing ownership percentages before the issuance of any new equity
shares, unless the preemptive rights have been waived by adoption of a special resolution by
holders of three-fourths of the equity shares that are present at the relevant meeting. If you are
in a jurisdiction that requires registration or qualification of the new securities, you may be
unable to exercise your preemptive rights for the Equity Shares unless such registration or
qualification is effective with respect to the rights or an exemption from the registration or
qualification requirements is available to you. Our Company may elect not to file a
registration statement or otherwise qualify the preemptive rights available by Indian law to
investors in your jurisdiction. To the extent that an Investor is unable to exercise preemptive
rights granted in respect of the Equity Shares, its proportional interests in our Company would
be reduced.
50. Rights of shareholders under Indian law may be more limited than statutory/regulatory
rights of shareholders in other jurisdictions.
The Companies Act and related regulations, our Company's Articles of Association and the
Equity Listing Agreements govern the corporate affairs of our Company. Legal principles
relating to these matters and the validity of corporate procedures, directors' fiduciary duties
and liabilities, and shareholders' rights may differ from those that would apply to a company
in another jurisdiction. Shareholders' rights under Indian law may not be as extensive as
shareholders' rights under the laws of other countries or jurisdictions. Investors may have
more difficulty in asserting their rights as a shareholder of a company incorporated in India
than as a shareholder of a corporation in another jurisdiction.
51. Any down-grading of India’s debt rating by an international rating agency could have a
negative impact on our business and the price of the Equity Shares.
Any adverse revisions to India's credit ratings for domestic and international debt by
international rating agencies may adversely impact the price of our Equity Shares and also our
ability to raise additional debt and/or capital on commercially viable terms, in a timely manner
or at all. This could have an adverse effect on our business, our financial condition, and / or
the price of the Equity Shares.
52. A decline in India’s foreign exchange reserves may affect liquidity and interest rates in the
Indian economy, which could adversely impact our financial condition.
Flows to foreign exchange reserves can be volatile, and past declines may have affected the
valuation of the Rupee. Further declines in foreign exchange reserves, as well as other factors,
could adversely affect the valuation of the Rupee and could result in reduced liquidity and
higher interest rates that could adversely affect our future financial performance and the
market price of the Equity Shares.
53. Companies operating in India are subject to a variety of central and state government taxes
and surcharges.
Tax and other levies imposed by the central, state and municipal governments in India that
affect our tax liability include central and state taxes and other levies, income tax, value added
tax, turnover tax, service tax, stamp duty, etc. and other special taxes and surcharges which are
introduced on a temporary or permanent basis from time to time. Moreover, the central and
state tax scheme in India is extensive and subject to change from time to time. Any such future
amendments may affect the overall tax efficiency of companies operating in India and may
result in significant additional taxes becoming payable and could adversely affect our business
and profitability.
54. Public companies in India, including our Company, may be mandated to prepare financial
statements under the IFRS or a variation thereof, namely IND AS. The transition to IND
AS is still unclear and may negatively affect the financial results of our Company.
Public companies in India, including our Company, may be required to prepare their annual
and interim financial statements under IFRS or a variation thereof. Recently, the ICAI has
released a near final version of the Indian Accounting Standards (Ind AS) 101 “First-time
56
Adoption of Indian Accounting Standards” (“IND AS”). The Ministry of Corporate Affairs,
Government of India, on February 25, 2011 has notified that the IND AS will be implemented
in a phased manner and the date of such implementation will be notified at a later date. As on
the date of this Placement Document the Ministry of Corporate Affairs, Government of India
has not yet notified the date of implementation of the IND AS. There is currently a significant
lack of clarity on the adoption of and convergence with IND AS and we currently do not have
a set of established practices on which to draw on in forming judgments regarding its
implementation and application. We are therefore not able to determine with any degree of
certainty the impact that such adoption will have on our financial reporting. Additionally, IND
AS has fundamental differences with the IFRS and therefore financial statements prepared
under IND AS may differ substantially from financial statements prepared under IFRS. There
is no way to predict that our financial condition, results of operations, cash flows or changes
in income/expenditure reporting etc. will not appear materially different under IND AS, Indian
GAAP or IFRS in comparison to the present reporting. As we adopt IND AS reporting, we
may encounter difficulties in the ongoing process of implementing and enhancing our
management information systems. There can be no assurance that our adoption of IND AS, if
required, will not affect our reported results of operations, financial condition and failure to
successfully adopt IND AS in accordance with prescribed statutory and/or regulatory
requirements within the timelines as may be prescribed, and this may have an adverse effect
on our financial reports/reporting and results of operations.
55. Our business may be adversely affected by recent changes in competition law in India.
The Competition Act, 2002, as amended, (“Competition Act”), was enacted for the purpose
of preventing practices having an adverse effect on competition in India, and has mandated the
Competition Commission of India, (“CCI”), to regulate such practices. Under the
Competition Act, any arrangement, understanding or action, whether formal or informal,
which causes or is likely to cause an appreciable adverse effect on competition in India is void
and may result in substantial penalties. Any agreement among competitors which directly or
indirectly determines purchase or sale prices; directly or indirectly results in bid rigging or
collusive bidding; limits or controls production, supply, markets, technical development,
investment or the provision of services; or shares the market or source of production or
provision of services by way of allocation of geographical area or types of goods or services
or number of customers in the relevant market or any other similar way, is presumed to have
an appreciable adverse effect on competition in the relevant market in India and shall be void.
Further, the Competition Act prohibits the abuse of dominant position by any enterprise. If it
is proved that the contravention committed by a company took place with the consent or
connivance or is attributable to any neglect on the part of, any director, manager, secretary or
other officer of such company, that person shall be guilty of the contravention and may be
punished. If we or any of our employees is penalized under the Competition Act, our business
may be adversely affected.
On March 4, 2011, the Government of India notified and brought into force the provisions
under the Competition Act in relation to combinations, (“Combination Regulation
Provisions”), with effect from June 1, 2011. The Combination Regulation Provisions require
that acquisition of shares, voting rights, assets or control or mergers or amalgamations, which
cross the prescribed asset and turnover based thresholds, shall be mandatorily notified to and
pre-approved by the CCI. In addition, on May 11, 2011, the CCI issued the final Competition
Commission of India (Procedure in regard to the transaction of business relating to
combinations) Regulations, 2011. These regulations, as amended, set out the mechanism for
implementation of the Combination Regulation Provisions under the Competition Act. The
manner in which the Competition Act and the CCI affect the business environment in India
may adversely affect our business operations and consequently, our profitability.
56. Natural disasters could have a negative impact on the Indian economy and cause our
business to suffer.
India has experienced significant natural disasters such as earthquakes, a tsunami, floods,
drought, fires and spread of pandemic diseases such as the H5N1 avian flu and the H1N1
swine flu, in the past few years. The extent and severity of these natural disasters and has an
57
impact on the Indian economy and infrastructure. Prolonged spells of abnormal rainfall and
other natural calamities could have an adverse impact on the Indian economy in which we
operate, which could adversely affect our business and the price of our Equity Shares.
Risks Associated with the Placement Shares
57. Your ability to acquire and sell Placement Shares is restricted by the distribution,
solicitation and transfer restrictions set forth in this Placement Document.
The Placement Shares have not and will not be registered under the U.S. Securities Act, any
U.S. state securities laws or the laws of any jurisdiction other than India. Furthermore, the
Placement Shares are subject to restrictions on transferability and resale. You are required to
inform yourself about and observe these restrictions. See the discussions in this Placement
Document under the sections titled “Selling Restrictions” and “Transfer Restrictions”
beginning on pages 156 and 159, respectively, of this Placement Document. We, our
representatives and our agents will not be obligated to recognize any acquisition, transfer or
resale of the Placement Shares made other than in compliance with applicable legal
restrictions.
58. The ability of persons resident outside India to acquire and sell the Placement Shares may
be restricted under Indian law.
The acquisition and sale of the Placement Shares by persons resident outside India will be
subject to Indian exchange control regulations of the RBI and under the Foreign Exchange
Management Act, 1999, as amended (“FEMA”). Such exchange control regulations impose
certain restrictions on the acquisition and sale of securities by persons resident outside India.
Restrictions on acquisition and/or sale of the Placement Shares under such exchange control
regulations in India may restrict your ability to acquire and/or sell the Placement Shares.
More specifically, in respect of an FII/ SEBI approved sub-accounts, the total investment of
the FII/sub-account of the FII cannot exceed 10% of the total issued capital of our Company.
If the sub-account is held by foreign corporates or individuals, the maximum permissible limit
is 5% for each such sub-account. The total holding of FIIs or sub accounts of FIIs put together
cannot exceed 24% of our Company’s paid up equity capital, except if pursuant to the passing
of a board resolution followed by a special resolution of the shareholders the 24% limit is
increased to the applicable sectoral cap / statutory ceiling, subject to RBI intimation.
However, as of the date of this Placement Document, no such resolution has been
recommended for adoption to our Board or our shareholders. Accordingly, if any of the
aforesaid limits are breached, a QIB which is an FII /SEBI registered sub-account would be
restricted from acquiring Placement Shares pursuant to the Issue.
Further, under the foreign exchange regulations currently in force in India, transfers of shares
between non-residents and residents are freely permitted (subject to certain exceptions) if they
comply with the requirements specified by the RBI and other applicable governmental
authorities. If the transfer of shares is not in compliance with such requirements or falls under
any of the specified exceptions, then prior approval of the RBI and other applicable
governmental authorities will be required. In addition, shareholders who seek to convert the
Rupee proceeds from a sale of shares in India into foreign currency and repatriate that foreign
currency from India will require a no-objection or tax clearance certificate from the income
tax authority. We cannot assure you that any of the aforesaid approvals required from the RBI
or any other applicable government authority can be obtained on any particular terms or at all.
59. An active market for our Equity Shares may not be sustained, which may cause the price of
our Company’s Placement Shares to fall.
There can be no assurance regarding the continuity of the existing active or liquid market for
our Equity Shares, the ability of investors to sell their Placement Shares or the prices at which
investors may be able to sell their Placement Shares. In addition, the market for debt and
equity securities in markets such as the Indian capital markets has been subject to various
factors that have caused volatility in the prices of equity securities. There can be no assurance
58
that the market for the Placement Shares offered hereunder will not be subject to similar
volatility. Any disruption in these markets may have an adverse effect on the market price of
our Company’s Placement Shares.
60. Since our Equity Shares are quoted in Indian rupees in India, investors may be subject to
potential losses arising out of exchange rate risk on the Indian Rupee and risks associated
with the conversion of Indian Rupee proceeds into foreign currency.
Investors are subject to currency fluctuation risk and convertibility risk since the Equity
Shares are quoted in Indian Rupees on the Stock Exchanges on which they are listed.
Dividends on the Equity Shares will also be paid in Indian Rupees. The volatility of the Indian
Rupee against the U.S. dollar and other currencies subjects investors who convert funds into
Indian Rupees to purchase our Equity Shares, to currency fluctuation risks.
61. Any further issue of Equity Shares and offering of equity-linked instruments by our
Company may dilute an investor's shareholding, further, significant sales of Equity Shares
by any major shareholder/s may affect the trading price of the Placement Shares.
Any future equity offerings by our Company may lead to the dilution of investor shareholding
in our Company or affect the market price of the Equity Shares. Additionally, sales of a large
number of the Equity Shares by our Company's principal shareholders could adversely affect
the market price of the Equity Shares. In addition, any perception by investors that such
issuances might occur could also affect the market price of the Equity Shares. There can be no
assurance that our Company will not issue further Equity Shares or that the major
shareholders will not dispose of, pledge or otherwise encumber their Equity Shares. In
addition, any perception by investors that such issuances or sales might occur could also affect
the trading price of our Equity Shares.
62. An investor will not be able to sell any of the Placement Shares subscribed in the Issue
other than on recognized Stock Exchanges for a period of one year from the date of the
allotment of the Placement Shares.
Pursuant to Regulation 91 of the SEBI ICDR Regulations, for a period of one year from the
date of the allotment of the Placement Shares in the Issue, investors subscribing to Placement
Shares in the Issue may only sell their Placement Shares on any of the Stock Exchange(s).
These restrictions will impact your ability to sell the Placement Shares through any off-market
transfer or under a private arrangement.
63. Holders may be subject to Indian taxes arising out of capital gains on the sale of the
Placement Shares.
The sale of Placement Shares by any holder may give rise to tax liability in India, as discussed
in section titled “Taxation” on page 167 of this Placement Document.
64. There is no guarantee that the Placement Shares will be listed on any or all of the Stock
Exchange(s) in a timely manner or at all, further, any trading closures at the Stock
Exchange(s) may adversely affect the trading price of our Equity Shares or a shareholder's
ability to sell its Equity Shares.
In accordance with Indian law and practice, permission for listing of the Placement Shares
will not be granted until after the Placement Shares offered in the Issue have been issued and
allotted. Approval will require all other relevant documents authorizing the issuing of
Placement Shares to be submitted. There could be a failure or delay in listing the Placement
Shares on the Stock Exchanges. Any failure or delay in obtaining the approval would restrict
your ability to dispose of your Placement Shares.
The regulation and monitoring of Indian securities markets and the activities of investors,
brokers and other participants differ, in some cases significantly, from those in Europe and the
U.S. The BSE and the NSE have in the past experienced problems, including temporary
exchange closures, broker defaults, settlements delays and strikes by brokerage firm
employees, which, if continuing or recurring, could affect the market price and liquidity of the
59
securities of Indian companies, including the Placement Shares, in both domestic and
international markets.
A closure of, or trading stoppage on, either of the Stock Exchanges could adversely affect the
trading price of the Equity Shares or a shareholder’s ability to sell Equity Shares at a particular
point in time. Historical trading prices may not be indicative of the prices at which the Equity
Shares will trade in the future.
60
MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE
EQUITY SHARES
As of December 31, 2012, our Company’s share capital comprised of 25,167,174 subscribed and fully
paid up Equity Shares.
Our Company’s Equity Shares have been listed on BSE and NSE w.e.f. January 6, 1993 and June 15,
2011 respectively. The tables below set forth, for the periods indicated the high, low and average
market prices and the trading volumes on BSE and NSE for our Company’s Equity Shares.
For the purpose of this section:
Year is a Fiscal year
Average price(*) is the average of the daily closing prices of the equity Shares of our company
for the year, or the month as the case may be
Average price(**) is the total volume for the period divided by total number of equity shares
traded in the period or the month as the case may be
High price is the maximum of the daily high prices and Low price is the minimum of the daily
low prices of the Equity shares of our Company for the year, or the month as the case may be
In case of two days with the same high/low/closing price, the date with higher volume has
been considered.
Pre-Split (Equity shares of face value of ` 10)
The following tables set forth the reported high and low prices of our Equity Shares (of face value of `
10 each) on the BSE and the NSE and the number of Equity Shares traded on the days such high and
low prices were recorded, for the Fiscal years 2010, 2011 and 2012.
BSE
Fiscal
Year
High
(`)
Date of
High
Number
of
Equity
Shares
traded
on date
of high
Volume
on date
of high
(` In
Million)
Low
(`)
Date of
Low
Number
of
Equity
Shares
traded
on date
of low
Volume
on date
of low
(` In
Million)
Average
price
for the
year
(`)*
Average
price
for the
year
(`)**
2010 452.80 March
30, 2010
2,900 1.26 117.00 August
13, 2009
900 0.11 236.81 296.67
2011 710.00 July 6,
2010
1,938 1.33 383.00 May 6,
2010
4,200 1.69 505.04 524.73
(Post Bonus)
2011 647.00 March
28, 2011
3,076 1.86 388.00 December
13, 2010
47 0.02 513.14 526.90
2012 1,209.40 July 28,
2011
26,108 29.57 583.50 April 1,
2011
1,123 0.66 780.50 901.44
NSE#
Fiscal
Year
High
(`)
Date
of
High
Number
of Equity
Shares
traded on
date of
high
Volume
on date
of high
(` In
Million)
Low
(`)
Date
of
Low
Number
of Equity
Shares
traded on
date of
low
Volume
on date
of low (`
In
Million)
Average
price for
the year
(`)*
Average
price for
the year
(`)**
2012 1,290.00 July
28,
2011
40,467 45.86 680.00 June
21,
2011
31 0.02 859.58 990.66
61
# Trading of our Equity Shares began on NSE w.e.f June 15, 2011
Post-Split (Equity shares of face value of ` 5)
The following tables set forth the reported high and low prices of our Equity Shares (of face value of
` 5 each) on the BSE and the NSE and the number of Equity Shares traded on the days such high and
low prices were recorded, for the Fiscal years 2012 and 2013.
BSE
Fiscal
Year
High
(`)
Date of
High
Number
of
Equity
Shares
traded
on date
of high
Volume
on date
of high
(` In
Million)
Low
(`)
Date of
Low
Number
of
Equity
Shares
traded
on date
of low
Volume
on date
of low
(` In
Million)
Average
price
for the
year
(`)*
Average
price
for the
year
(`)**
2012 630.00 August
26, 2011
12,178 7.30 424.00 January
25,
2012
6,088 2.66 532.26 548.35
2013*** 614.95 December
20, 2012
17,646 10.66 425.00 May
15,
2012
4,000 1.78 520.35 555.52
*** Prices considered till December 31, 2012
NSE#
Fiscal
Year
High
(`)
Date of
High
Number
of
Equity
Shares
traded
on date
of high
Volume
on date
of high
(` In
Million)
Low
(`)
Date of
Low
Number
of
Equity
Shares
traded
on date
of low
Volume
on date
of low
(` In
Million)
Average
price
for the
year
(`)*
Average
price
for the
year
(`)**
2012 628.95 August
26, 2011
19,318 11.70 420.00 January
25,
2012
10,747 4.72 533.07 542.40
2013*** 615.00 December
20, 2012
29,230 17.68 429.95 May
15,
2012
3,045 1.39 520.28 543.92
# Trading of our Equity Shares began on NSE w.e.f June 15, 2011
*** Prices considered till December 31, 2012
Source: market price information is sourced from www.bseindia.com.
Source: market price information is sourced from www.nseindia.com.
The following tables set forth the reported high and low prices of our Equity Shares on the BSE and the
NSE, the number of Equity Shares traded on the days such high and low prices were recorded and the
volume of securities traded in each month during the last six months preceding the date of filing of this
Placement Document.
62
BSE
Month,
Year
High
(`)
Date of
High
Number
of
Equity
Shares
traded
on date
of high
Volume
on date
of high
(` In
Million)
Low
(`)
Date of
Low
Number
of
Equity
Shares
traded
on date
of low
Volume
on date
of low
(` In
Million)
Average
price
for the
month
(`)*
Average
price
for the
month
(`)**
July 2012 549.80 July 19,
2012
1,045 0.54 465.05 July 16,
2012
535 0.25 489.61 492.15
August
2012
543.00 August
31, 2012
63 0.03 500.15 August
10, 2012
1,179 0.61 519.40 522.76
September
2012
555.00 September
26, 2012
65,929 36.25 511.00 September
12, 2012
5,196 2.71 533.93 546.50
October
2012
595.00 October 3,
2012
876,585 500.02 476.00 October
30, 2012
5,836 2.84 531.28 567.16
November
2012
535.10 November
13, 2012
436 0.23 492.00 November
7, 2012
201 0.10 512.41 527.66
December
2012
614.95 December
20, 2012
17,646 10.66 522.50 December
3, 2012
370 0.19 560.24 542.77
Source: market price information is sourced from www.bseindia.com.
NSE
Month,
Year
High
(`)
Date of
High
Number
of
Equity
Shares
traded
on date
of high
Volume
on date
of high
(` In
Million)
Low
(`)
Date of
Low
Number
of
Equity
Shares
traded
on date
of low
Volume
on date
of low
(` In
Million)
Average
price
for the
month
(`)*
Average
price
for the
month
(`)**
July 2012 550.05 July 19,
2012
9,558 4.99 461.00 July 10,
2012
2,261 1.07 492.07 496.05
August
2012
545.00 August
30, 2012
1,371 0.74 495.10 August 6,
2012
280 0.14 519.35 526.88
September
2012
555.00 September
25, 2012
5,694 3.10 512.00 September
12, 2012
10,555 5.50 535.07 543.08
October
2012
595.00 October 3,
2012
375,917 214.26 474.95 October
30, 2012
18,065 8.93 531.98 560.59
November
2012
538.95 November
13, 2012
2,653 1.39 495.00 November
8, 2012
14,033 7.26 512.35 522.67
December
2012
615.00 December
20, 2012
29,230 17.68 475.00 December
11, 2012
10,131 5.58 561.91 553.82
Source: market price information is sourced from www.nseindia.com.
63
Details of the number of equity shares and volumes of business transacted during the last six months
and the Fiscal years ended 2010, 2011 and 2012 on the Stock Exchanges are given below.
Month BSE NSE#
Volume
(No. of Shares)
Turnover
(in ` mn)
Volume
(No. of Shares)
Turnover
(in ` mn)
July 2012 10,703 5.27 104,780 51.98
August 2012 35,501 18.56 62,278 32.81
September 2012 87,144 47.62 198,969 108.06
October 2012 1,029,751 584.04 544,286 305.12
November 2012 89,031 46.98 171,820 89.81
December 2012 306,816 166.53 584,488 323.70
Fiscal 2010 143,000 42.42 N.A. N.A.
Fiscal 2011 114,747 60.21 N.A. N.A.
Fiscal 2011 (Post Bonus) 654,852 345.04 N.A. N.A.
Fiscal 2012 1,012,254 912.49 594,157 588.61
Fiscal 2012 (Post Split) 1,792,517 982.92 1,201,415 651.65
Fiscal 2013* 1,624,969 902.71 1,887,873 1,026.85
Source: www.nseindia.com; www.bseindia.com
# Trading of our Equity Shares began on NSE w.e.f June 15, 2011
* Prices considered till December 31st, 2012
The following table sets forth the market price of our Equity Shares on the Stock Exchanges on
December 7, 2012, the first working day following the day of the Board meeting approving the Issue.
Date BSE NSE
Open High Low Close Numbe
r of
Equity
Shares
traded
Volume
(` In
Million
)
Open High Low Close Number
of Equity
Shares
traded
Volume
(` In
Million
)
December 7,
2012
577.55 595.25 540.00 543.45 8,474 4.72 582.00 595.95 540.00 549.00 20,802 11.55
Source: www.nseindia.com; www.bseindia.com
64
USE OF PROCEEDS
The total proceeds of this Issue is expected to be ` 1,173.27 million. The net proceeds of the Issue, after
deduction of the Issue management fees (which includes the fees and reimbursements to the Sole Global
Co-Ordinator and Book Running Lead Manager to the Issue, the Domestic Legal Advisor to the Issue, the
Auditors to the Company), Placement fees (which includes fees in connection with the placement, issue and
allotment of equity shares pursuant to the Offering) any other expenses associated with the Issue, are
estimated to be approximately ` 1,153.27 million, (“Net Proceeds”).
Our Company has identified several growth oppurtunities in its areas of business and intends to use the net
proceeds received from this Issue for augmenting our long term resources for future expansion, to meet
long term working capital requirments, to meet other general corporate business purposes allied to the
business from time to time and for any other uses subject to compliance with applicable statutory and/or
regulatory requirements.
65
CAPITALISATION
The following table sets forth our Company’s capitalisation as of, March 31, 2012 and/or September 30,
2012, which has been extracted from our Company’s Reformatted Consolidated Financial Statements,
Reformatted Standalone Financial Statements and Limited Reviewed Standalone Financial Statements
which will be adjusted to give effect to the issuance and Allotment of the Placement Shares by us in this
Issue.
This capitalisation table should be read together with “Selected Financial Information of our Company”,
“Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations”, and the “Financial Statements” on pages 28, 40, 68 and 186, respectively of this Placement
Document.
(a) Capitalisation on a standalone basis: Based on the audited financial statements of the Company for
the year ended March 31, 2012, and the limited reviewed Unaudited financial Statements for the period
ended September 30, 2012 the statements of capitalization of the Company are as under:
(` In Millions)
Particulars As on March
31, 2012
(Audited)
As At
September 30,
2012
(unaudited)
As adjusted
for the Issue
Long Term Borrowings
Secured 1,138.80 983.04 983.04
Unsecured 51.77 58.87 58.87
Total 1,190.57 1,041.91 1,041.91
Short Term Borrowings
Secured 684.69 1,108.99 1,108.99
Unsecured 446.59 288.25 288.25
Current maturity of long term debts
Secured 158.82 253.80 253.80
Unsecured 12.69 10.21 10.21
Total 1,302.79 1,661.25 1,661.25
Total Indebtedness (A) 2,493.36 2,703.16 2,703.16
Shareholders’ Funds
Share Capital 125.24 125.84 135.46
Reserves and Surplus# 3,066.78 3,662.89 4,806.54*
Total Shareholders’ Funds (B) 3,192.02 3,788.73 4,942.00
Total Capitalisation (A) + (B) 5,685.38 6,491.89 7,645.16
*Net of share issue expenses of ` 20 millions as certfied by the management.
# Includes as below :-
(` In Millions)
Particulars As at March 31, 2012 As at September 30, 2012
Capital Reserve 14.75 14.75
Revaluation Reserve 17.96 17.96
Cash Flow Hedge Reserve (49.26) 23.87
66
The aforementioned capitalisation statement is based on a certificate dated January 29, 2013 issued by the
Statutory Auditors of our Company.
Contingent liabilities as per standalone audited financial statements of the Company as at March 31, 2012
amounts to ` 83.89 million.
(b) Capitalisation on a consolidated basis: Based on the Reformatted Consolidated Financial
Statements of our Company for the year ended March 31, 2012 the statements of capitalization of our
Company are as under:
(` In Millions)
Particulars As on March 31,
2012
(Audited)
As adjusted for
the Issue
Long Term Borrowings
Secured 1,138.80 1,138.80
Unsecured 51.77 51.77
Total 1,190.57 1,190.57
Short Term Borrowings
Secured 684.69 684.69
Unsecured 421.09 421.09
Current maturity of long term debts
Secured 158.82 158.82
Unsecured 12.69 12.69
Total 1,277.29 1,277.29
Total Indebtedness (A) 2,467.86 2,467.86
Shareholders’ Funds
Share Capital 125.24 134.86
Reserves and Surplus# 3,129.20 4,272.85*
Total Shareholders’ Funds (B) 3,254.44 4,407.71
Total Capitalisation (A) + (B) 5,722.30 6,875.57
*Net of share issue expenses of ` 20 millions as certfied by the management.
# Includes as below:-
(` In Millions)
Particulars As at March 31, 2012
Capital Reserve 14.75
Capital Redemption Reserve 3.50
Revaluation Reserve 17.96
Cash Flow Hedge Reserve (49.26)
The aforementioned capitalisation statement is based on a certificate dated January 29, 2013 issued by the
Statutory Auditors of our Company.
Contingent liabilities as per the consolidated audited financial statements of the Company as at March 31,
2012 amounts to ` 83.89 million.
67
DIVIDEND POLICY
Dividend Policy
The declaration and payment of dividend will be recommended by the Board of Directors and approved
by the shareholders at their discretion and will depend on our Company’s revenues, cash flows, financial
condition (including capital position) and other factors. The declaration and payment of equity dividend
would be governed by the applicable provisions of the Companies Act and Articles of Association of our
Company.
The following table details the dividend declared by our Company on the Equity Shares for the Financial
Years ended , March 2010, March 2011 and March 2012:
Particulars
March 31, 2010 March 31, 2011 March 31, 2012
Face Value of Equity Shares (` per
share)
10 10 5
Rate of Dividend (%) 20% 40% 100%
Dividend per Equity Share (`) 2.00 4.00 5.00
Dividend declared (`) 14,916,665 50,023,583 125,241,890
Tax on Dividend (`) 25,35,087 8,308,292 20,315,487
The amounts paid as dividend in the past are not necessarily indicative of the dividend amounts, if any,
payable or to be paid in the future.
68
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations
together with our Reformatted Standalone Financial Statements and Reformatted Consolidated Financial
Statements, including the notes thereto, and other financial data on page 186 of this Placement Document.
You should also read the sections titled “Risk Factors” and “Forward-Looking Statements” on pages 40
and 12, respectively, of this Placement Document, which discuss a number of factors or contingencies that
could affect our financial condition and results of operations.
In this section any reference to “our Company” refers to PI Industries Limited on a standalone basis and
“our Group”, “we”, “us” or “our” refers to PI Industries Limited and/or its Subsidiaries, on a
consolidated basis, as the context may require. Unless stated otherwise, the financial data in this section is
as per our Reformatted Standalone Financial Statements and Reformatted Consolidated Financial
Statements, as set forth in “Financial Statements” on page 186 of this Placement Document.
The following discussion and analysis of our financial condition and results of operation is based on our
Reformatted Consolidated Financials as of and for the years ended March 31, 2012. 2011 and 2010 and
Limited Reviewed Standalone Financial Statements for the quarter and the six months period ended
September 30, 2012 and 2011. Our fiscal year ends on March 31 of every year. Unless otherwise stated,
“fiscal year” or “fiscal” refers to the twelve month period ending March 31 of that year.
OVERVIEW
Our Company is a chemicals manufacturing and marketing Company with over fifty years of experience in
the agrochemicals sector. We are an integrated entity with a differentiated business model driven by
respect for intellectual property across two market segments, i.e. the domestic market and the export
market.
In the domestic market we focus on manufacturing and/or marketing of agri input products through the
following model:
In-licensing of newly launched or patented molecules from multinational innovators to register
and market agri input products in India on an exclusive basis;
Manufacturing and marketing of branded generic agri input products (i.e. molecules whose patents
have expired);
Selectively partnering with global innovators with presence in India to co-market their early stage
lifecycle agri input products using our countrywide marketing set up in India.
In the export market we undertake custom synthesis and contract manufacturing of niche fine and specialty
chemicals, where we offer global innovators a one-stop shop for process scale up and large scale
manufacturing of their newly discovered molecules.
Through this differentiated business model, we have been able to demonstrate consistent financial growth.
Our Company’s net revenue from operations on a consolidated basis has grown at a CAGR of 27.30% from
` 5,424.46 million for Fiscal 2010 to ` 8,791.05 million in Fiscal 2012. Our PAT margins have increased
by 1.27% points from 7.76% for Fiscal 2010 to 9.03% in Fiscal 2012 and our EBITDA margins have
increased by 1.12% points from 15.27% for Fiscal 2010 to 16.39% in Fiscal 2012, on a consolidated basis.
Our basic EPS on a consolidated basis has grown from ` 19.37 per share in Fiscal 2010 to ` 41.49 per share
in Fiscal 2012.
69
We have developed strong process research and manufacturing capabilities which are backed by
manufacturing facilities located at Panoli (Gujarat), Jammu and Jambusar (Gujarat) and a GLP and
ISO:17025 accredited laboratory set up in Udaipur.
Our Company has a robust marketing and distribution network which is spread across India and well
established in rural and agricultural belts. As on date, we have 211 people working in our marketing team
spread across the country. Our marketing team is partnered by a 2-3 tier distribution channel which
comprises of numerous retail points, over 10,000 distributors and direct dealers across the major agriculture
areas in the country, 27 stock points including our own depots and 18 C&F agents who work on hub-and-
spoke distribution model to ensure timely delivery.
We work closely with farmers and distribution channels to build our brand and create awareness for our
products. We accordingly have several successful brands such as “NOMINEE GOLD”, “BIOVITA”,
“FORATOX”, “CARINA”, “FOSMITE”, “ROKET”, “SOLARO”, “KITAZIN” “OSHEEN”, etc.
Our Company has been conferred with the ‘Power Brand’ status from amongst 81 successful brands and
companies featured in the “Indian Power Brands – the Global Superpower Edition”. We were also awarded
a certificate of Excellence in “Supplier Sustainability Program 2011” from Bayer Group of Companies in
India.
Our Company currently has 3 subsidiaries, which includes PI Japan Company Limited (Japan) which
carries out business development activities in Japan, PI Life Science Research Limited, which deals in
contract research projects, and PILL Finance & Investments Limited, which is engaged in the business of
holding investments and providing short term funding.
SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our financial condition and results of operations are affected by a number of factors. Some of the factors
affecting our results of operations include:
Factors affecting the agricultural industry and particularly the crops to which our products cater
The agri input industry and the agricultural industry (on which our Company’s agri input activities are
dependent) are subject to climatic conditions, rainfall, seasonal and weather factors, which make the
performance of the agricultural sector as a whole or the levels of production of a particular crop relatively
unpredictable. The weather can affect the presence of disease and pest infestations in the short term on a
regional basis, and accordingly affect the demand for agri input products and the mix of products used. In
addition, sales of agri input products in the domestic retail market are highly seasonal due to the monsoon
and the Rabi and Kharif crop seasons in India. Accordingly, the effect of climatic conditions, rainfall,
seasonal fluctuations, commodity crop price fluctuations and/or any of the abovementioned events on the
agricultural sector in India or in any region thereof, and particularly the crops to which our products cater
drive the demand for our agri input products, and hence the results of our agri input activities and our
financial condition depend on such factors.
Further, changes in government policies relating to the agriculture sector such as government expenditure
in agriculture, changes in incentives and subsidy systems, export policy for crops, commodity pricing,
ability of farmers to realize minimum support prices could also have an effect on the ability of farmers to
spend on agri input products, which thereby could affect our agri input activities.
Ability to register and successfully launch products
As a part of our strategy we propose to launch new products from time to time. With respect to any new
proposed agri input product, our Company invests time and money inter alia on the registration procedures
and fees, trials, various brand building and pre-launch marketing activities. The launch of a product
depends upon our ability to obtain registration of the product in a timely manner or at all as well as on other
factors. Accordingly, our profitability, financial condition and market position is dependent on our ability
70
to obtain the necessary regulatory registration / approvals for our products in a timely manner and to
successfully launch and market our products.
Competition
The agri input sector in India is highly competitive. Our ability to grow and our results of operations and
profitability depends upon our ability to manage competition efficiently. The introduction of competing or
improved products through R&D efforts or otherwise which are more effective and/or more cost effective
than our existing agri input products may result in our existing products being rendered obsolete which may
result in us losing our market share and/or witness a decline in sales.
Use of substitutes for agrochemicals
Our Company’s agri input activities may be adversely affected by increased use of biotechnology products,
hybrid seeds, genetically modified crops and other organic crop protection substitutes for agrochemicals.
The adoption of the products derived through biotechnology or alternative pest management and crop
protection measures could have a negative impact on traditional agrochemicals. Genetically modified
(“GM”) crops are likely to have more resistance to pests and disease than non-GM crops and therefore
require significantly less agrochemical usage than non-GM crops. The growth and acceptance of such
alternative pest management and crop protection products and measures by consumers may have an
adverse effect on sales of our Company’s agrochemical products which thereby may affect our financial
condition and results of operations.
Relationships with global innovators
Our growth in both the domestic and export segments depends upon our ability to maintain and strengthen
our existing relationships with global innovators or to establish relationships with new global innovators.
These relationships give us the opportunity introduce new agri input products from time to time through
our in-licensing arrangements, perform custom synthesis and contract manufacturing services with respect
to new molecules developed by global innovators, and procure repeat orders for custom synthesis / contract
manufacturing, which impact our long term growth, operations and profitability.
Global innovators establishing a presence in India
Our results of operations could be affected if global innovators from whom we in-license agri input
products, establish a presence in India either through incorporation of a new entity, through acquisition of
any agri input entity in India, or otherwise, as we could lose out on the opportunity to market new or novel
products of such global innovators exclusively or at all.
Ability to manage raw material costs and other operational costs
The prices for our key raw materials are subject to fluctuations. We do not and will not have control over
the factors affecting prices of raw materials and volatility thereof. Any volatility in the cost and timely
availability of raw materials or our ability to enter into contracts to source raw materials in a timely manner
or at all impact our operations and profitability. Further, the ability of our suppliers to (i) deliver the
required raw materials in the necessary quantities, (ii) adhere to delivery schedules, or, (iii) provide the raw
materials as per the specified quality standards and technical specifications, also affect our operations and
productivity.
Fluctuating foreign exchange rates
We are subject currency exchange rate exposures on account of our export operations, imports and foreign
currency external commercial borrowings. Foreign exchange fluctuation affects both our revenues and
expenditures. To this extent, the revenues and expenditures will be higher or lower depending on the
prevalent foreign exchange rates. A weakening of the Rupee against the foreign currencies may have an
adverse effect on our cost of borrowing in Rupee terms and on the cost of our imports. An appreciating
71
rupee may adversely affect our export earnings. Our management typically monitors our foreign currency
exposure periodically and our Company has adopted a policy of hedging a pre-determined percentage of
the difference between our foreign current exposure to exports and imports, by entering into forward
contracts. However, there can be no assurance that such hedging measures would at all times be adequate to
cover us from any losses arising out of fluctuations in foreign exchange rates.
OUR CRITICAL ACCOUNTING POLICIES FOR FISCAL 2012
Our audited financial statements are prepared and presented in accordance with Indian GAAP. The most
significant accounting conventions and principles used by us and our critical accounting policies followed
by us in preparing our financial statements are set out below. For details, see “Significant Accounting
Policies” in the section titled “Financial Statements” on page 186 of this Placement Document.
BASIS OF PREPARATION
The financial statements have been prepared to comply in all material respects with the Notified
Accounting Standards pursuant to the Companies (Accounting Standards) Rules, 2006 and the relevant
provisions of the Companies Act, 1956.The financial statements have been prepared under the historical
cost convention, as a going concern, on an accrual basis except in case of assets for which provision for
impairment is made and revaluation is carried out. The accounting policies have been consistently applied
by our Company.
Changes in Accounting Policy
During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act, 1956,
has become applicable to our Company, for preparation and presentation of its financial statements. The
adoption of Revised Schedule VI does not impact the recognition and measurement principles followed for
preparation of the financial statements. However, it had significant impact on presentation and disclosures
made in the financial statements.
All Assets and Liabilities have been classified as current or non-current as per our Company’s normal
operating cycle and other criteria set out in the Schedule VI to the Companies’ Act, 1956. Based on the
nature of services provided and time between the rendering of services and their realization in cash and
cash equivalents, our Company has ascertained its operating cycle as 12 months for the purpose of current
and non-current classification of assets and liabilities.
Our Company has adopted Accounting Standard 30 (AS 30) “Financial Instruments: Recognition and
Measurement”. Based on the Recognition and Measurement principles set out in AS 30, changes in the fair
values of derivative financial instruments, the net foreign exchange exposure over a period of one year
against the committed order in hand hedged through forward contracts, are designated as effective cash
flow hedges and marked to market loss/gain arising on aid foreign currency instruments are transferred to
“Cash Flow Hedge Reserve” directly in the Balance Sheet under Reserves & Surplus and later the same is
reclassified into Profit & Loss account upon the occurrence of the hedging transaction.
USE OF ESTIMATES
The presentation of financial statements requires estimates and assumptions that affect the reported amount
of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the
reported amount of revenues and expenses during the reporting period. Differences between the actual
results and estimates are recognised in the period in which the results are known/ materialised.
REVENUE RECOGNITION
Revenue is recognized to the extent it is probable that the economic benefits will flow to our Company and
the revenue can be reliably measured.
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Sale of Goods: Revenue is recognised when the significant risks and rewards of ownership of the goods
have passed to the buyer and is stated net of trade discount, returns and Sales Tax / VAT but includes
Excise Duty.
Revenue from services: Revenue is recognised as the service is performed by the completed service method
and no significant uncertainty exists regarding the amount of consideration that will be derived from
rendering the services.
Interest: Revenue is recognized on a time proportion basis taking into account the amount outstanding and
the rate applicable.
Lease rent Income: Lease income is recognised on straight line basis over the lease term.
Dividends: Revenue is recognized when the shareholder’s right to receive payment is established by the
Balance Sheet date.
Export Benefits / Incentives: Export entitlement under Duty Entitlement Pass Book (‘DEPB’) Scheme are
recognised in the Profit & Loss Account when the right to receive credit as per terms of the scheme is
established in respect of export made and where there is no significant uncertainty regarding the ultimate
collection of the relevant export proceeds.
EXPENDITURE
Rebate, claims & settlement on goods sold are accounted for as and when these are ascertained with
reasonable accuracy.
FIXED ASSETS AND DEPRECIATION
a) Fixed Assets are stated at cost or as revalued, less accumulated depreciation and impairment losses,
if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its
working condition for its intended use. Borrowing costs relating to acquisition of fixed assets, if
material, are also included in cost to the extent they relate to the period till such assets are ready to
be put to use. Expenditure during construction / erection period is included under capital work-in-
progress and is allocated to the respective fixed assets on completion of construction / erection.
b) Depreciation on Building, Plant & Machinery and R&D Equipments of Pesticides Division at
Udaipur (in respect of fixed assets commissioned on or after July 1, 1988), Pesticides Division at
Panoli & Jammu and Polymer Division Panoli is provided on Straight Line method and depreciation
on all other fixed assets is provided on Written Down Value method at the rates specified in
Schedule XIV to the Companies Act, 1956.
c) Leasehold land and Cost of improvement on leasehold building is being amortised over the lease
period.
d) Revaluation of Fixed assets: Depreciation on the increased amount of assets due to revaluation is
computed on the basis of the residual life of the assets as estimated by the valuers on straight-line
method.
e) Leasehold Improvements are amortised over its useful life of 15 years on Declining Balance method.
- Equipments over 200000 yen are depreciated on Declining Balance method over its useful life of 3
years.
- Equipments (100000-200000 yen) are depreciated on straight line basis over its useful life of 3
years.
73
INTANGIBLE ASSETS
Intangible Assets are stated at cost of acquisition less accumulated amortisation as below
Software:- Software is stated at cost of acquisition and includes all attributable expenditure on making the
assets ready for their intended use.
Product Development costs:- Product Development costs considered to have finite useful lives, are
capitalised and recognized as intangible assets are stated at cost less any impairment losses.
Amortisation:- Amortisation of intangible asset is provided on the basis of estimated useful life of the
assets as below:
Software: Amortised on straight line basis over a period of 6 years.
Product Development: Amortised on straight line basis over a period of 5 years.
IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An
impairment loss is charged to the profit & loss account in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change
in the estimate of recoverable amount.
After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining
useful life.
INVENTORIES
a) Inventories of Finished Goods, Work in progress, Raw materials, Packing materials and Stores &
Spares are stated at lower of cost and net realisable value. By-products are valued at estimated
realisable value.
b) Cost of Raw Materials, Packing Materials, Stores and Spares, Trading and other products are
determined on weighted average basis and are net of Cenvat credit.
c) Cost of Work in progress and Finished Goods is determined considering direct material cost and
appropriate portion of manufacturing overheads based on normal operating capacity. Cost of finished
goods include excise duty.
d) Obsolete, slow moving and defective inventories are identified at the time of physical verification of
inventories
and where necessary, the same are written off or provision is made for such inventories.
EMPLOYEE BENEFITS
a) Defined Contribution Plan: Employees benefits in the form of our Company’s contribution to
Provident Fund, Pension scheme, Superannuation Fund and Employees State Insurance is a defined
contribution scheme and contributions are charged to the Profit &Loss Account of the year when the
contribution to the respective fund is due.
b) Defined Benefit Plan: Retirement benefits in the form of gratuity and leave encashment are considered
as defined benefit obligations and are provided for on the basis of an actuarial valuation as at the date
of the Balance Sheet using the projected unit credit method.
c) Actuarial gains/losses, if any, are immediately recognised in the Profit & Loss Account.
74
d) Short Term Employee benefits: Short term benefits are charged off at the undiscounted amount in the
year in which the related service is rendered.
DEFERRED REVENUE EXPENDITURE
Expenditure incurred towards the Voluntary Retirement Scheme of our Company is treated as Deferred
Revenue Expenditure and charged to the Profit & Loss Account over a period of five years.
FOREIGN CURRENCY TRANSACTIONS
a) Initial Recognition: Foreign currency transactions are recorded in the reporting currency, by applying
to the foreign currency amount the exchange rate between the reporting currency and the foreign
currency at the date of the transaction.
b) Conversion: Foreign currency monetary items are reported using the closing rate.
c) Exchange Difference: Any gain or loss on account of exchange difference arising either on the
settlement or on reinstatement of foreign currency monetary items is recognised in the Profit & Loss
account, except exchange difference arising on long term foreign currency monetary items relating to
acquisition of depreciable fixed assets, which is adjusted to the carrying amount of such assets.
An asset shall be designated as a long term foreign currency monetary item, if the asset or liability is
expressed in foreign currency and has a term of 12 months or more at the date of origination of the
asset or liability.
d) Translation of non integral foreign operations: In translating the financial statements of a non-
integral foreign operation for incorporation in financial statements, the assets and liabilities, both
monetary and non monetary of the non-integral foreign operation are translated at the closing rate;
income and expenses items of the non-integral foreign operations are translated at the average rate
prevailing during the year; and all resulting exchange differences are accumulated in the foreign
currency translation reserve until the disposal of net investment.
RESEARCH AND DEVELOPMENT
Capital Expenditure incurred for Research and Development is capitalised when commissioned and
included in the gross block of fixed assets. Revenue expenditure on research and development is charged to
the Profit & Loss account in the period in which it is incurred. Expenditure incurred on projects to develop
new products is capitalized and deferred only when our Company can demonstrate the technical feasibility
of completing the intangible asset so that it will be available for use or sale. Product development
expenditure which do not meet these criteria are expensed when incurred.
PRIOR PERIOD ADJUSTMENTS
Earlier year items, adjustment/claims, arisen / settled / noted during the year, if material in nature, are
debited / credited to prior period Expenses/Income or respective heads of account, if not material in nature.
INVESTMENTS
Investments that are readily realisable and intended to be held for not more than a year are classified as
current investments. All other investments are classified as long-term investments. Current investments are
carried at lower of cost and fair value. Long -term investments are stated at cost. Provision for diminution
in the value of investments is made, if it is other than temporary.
BORROWING COST
Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised
75
as part of the cost of such asset. A qualifying asset is one that necessarily takes a substantial period of time
to get ready for intended use. All other borrowing costs are recognised as an expense in the period in which
they are incurred.
TAXATION
a) Provision for Current Tax is made after considering benefits, exemptions and deductions available
under the Income Tax Act, 1961.
b) Deferred tax is recognised subject to consideration of prudence, on timing differences, representing the
difference between the taxable income/(loss) and accounting income/(loss) that originated in one
period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities
are measured using the tax rates and tax laws that have been enacted or substantively enacted by the
Balance Sheet date.
LEASES
Operating Lease: Lease rentals in respect of assets taken on operating leases are charged to the profit and
loss account with reference to lease terms and other consideration.
PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement are recognised when there is a
present obligation as a result of past events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in notes. Contingent assets are neither recognised
nor disclosed in the financial statements.
SEGMENT REPORTING
The accounting policies adopted by our Company for segment reporting are in line with the accounting
standard on Segmental Reporting.
Primary Segment:
Business Segment: Our Company’s operating business is organized and managed separately according to
the nature of products, with each segment representing a strategic business unit that offers different
products. The identified segments are Chemicals and Others.
Secondary Segment:
Geographical Segment: The analysis of geographical segment is based on the geographical location of the
customers. The geographical segments considered for disclosure are as follows:
(a) Sales within India
(b) Sales outside India
Segment Expenses, Segment Assets and Segment Liabilities have been allocated to segments on the basis
of their relationship the operating activities of the segment. Revenue, expenses, assets and liabilities which
relate to our Company as a whole and are not allocable to segments on reasonable basis, have been
included under Unallocated Revenue/Expenses/Assets/Liabilities.
CASH FLOW STATEMENTS
Cash-flow statements are prepared in accordance with “Indirect Method” as explained in the Accounting
Standard on Cash Flow Statements (AS-3) notified under the Companies (Accounting Standards) Rules,
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2006. The cash flows from regular revenue generating, financing and investing activity of our Company are
segregated.
EARNING PER SHARE
Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity
shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earning per Share, the net profit or loss for the period attributable to
Equity Shareholders and the weighted average number of shares outstanding during the period are adjusted
for the effects of all dilutive potential Equity Shares.
DERIVATIVE INSTRUMENTS
Our Company has adopted Accounting Standard 30 (AS 30) “Financial Instruments: Recognition and
Measurement”.
Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of
derivative financial instruments, the net foreign exchange exposure over a period of one year against the
committed order in hand hedged through forward contracts, are designated as effective cash flow hedges
and marked to market loss/gain arising on said foreign currency instruments are transferred to “Cash Flow
Hedge Reserve” directly in the Balance Sheet under Reserves & Surplus and later the same is reclassified
into Profit & Loss account upon the occurrence of the hedging transaction. Changes in the fair value of
ineffective hedges taken are recognized directly to Profit & Loss account.
EMPLOYEE STOCK OPTION BASED COMPENSATION
Accounting value of stock options is determined on the basis of ‘intrinsic value’ representing the excess of
the market price on the date of grant over the exercise price of the options granted under the ‘Employees
Stock Option Scheme’ of our Company, and is being amortised as ‘Deferred employee compensation’ on a
straight-line basis over the vesting period in accordance with the SEBI (Employees Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines,1999 and Guidance Note No.18 ‘Share Based
Payments’ issued by the ICAI.
PRINCIPLES OF CONSOLIDATION
(i) The consolidated financial statements relate to PI Industries Ltd. and its wholly owned subsidiary
companies.
The consolidated financial statements have been prepared on the following basis:
The financial statements of our Company and its subsidiary companies have been combined on a
line by line basis by adding together the book values of like items of assets, liabilities, income and
expenses after eliminating intra-group balances and intra-group transactions resulting in unrealised
profits or losses.
The consolidated financial statements have been prepared using uniform accounting policies for
the transactions and other events in similar circumstances and are prepared to the extent possible
in the same manner as our Company’s separate financial statements.
(ii) The subsidiary companies considered in the consolidated financial statements are:
Name of the company Country of Incorporation % voting power held as
at March 31, 2012
PILL Finance & Investment Limited India 100
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Name of the company Country of Incorporation % voting power held as
at March 31, 2012
PI Life Science Research Limited India 100
PI Japan Company Limited Japan 100
DESCRIPTION OF PRINCIPAL COMPONENTS OF INCOME AND EXPENDITURE
Total Revenue
Our total revenue consists of revenue from operations and other income.
Revenue from operations
Our revenue from operations comprises (i) sale of products (finished goods and traded goods) net of
discount and excise duties (ii) sale of services (including job work and research and development activities)
and (iii) other operating revenues (including scrap sales, export incentives etc.).
Other Income
Other income primarily includes (i) dividend income from long term investments and (ii) income from
short term investments which includes interest income, gain on sale of fixed assets, foreign exchange gain
and other non operating income.
Expenditure
Our expenditure comprises of (i) cost of materials consumed, (ii) purchase of stock in trade, (iii) changes in
inventories of finished goods, work-in-progress and stock in trade, (iv) employee benefits expenses, (v)
finance costs, (vi) depreciation and amortization and (vii) other expenses.
Description of expenditures items
Cost of materials consumed
Our cost of materials consumed comprises of cost of raw materials and packing material consumed such as
basic chemicals, active ingredients, solvent, packaging material, catalyst and emulsifiers.
Purchase of stock in trade
Our expenses on purchase of stock in trade comprises of costs incurred towards purchase of primarily
finished goods for trading purposes.
Changes in inventories of finished goods, work-in-progress and stock in trade
Our expenses due to changes in inventories comprises of inventories for finished goods, traded goods and
work-in-progress. Our traded goods comprise of mainly agro chemicals and others, our work in progress
comprise of agro chemicals, specialty chemicals, plant nutrient and polymers and our finished goods
comprise of agro chemicals, specialty chemicals, plant nutrients, polymers and others.
Employee benefits expense
Our employee benefits expenses comprise of (i) salaries, wages and bonus, (ii) contribution to provident
fund and other funds, (iii) gratuity and leave encashment expenses, (iv) employee welfare expenses and (v)
expense on employee stock option scheme.
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Finance Costs
Our finance costs comprises of (i) interest expenses on fixed loans, working capital and others, (ii) other
borrowing costs and (iii) exchange difference.
Depreciation and amortization expense
Depreciation comprises of (i) depreciation on tangible assets and (ii) depreciation on intangible assets, net
of recoupment from revaluation reserves.
Other Expenses
Our other expenses comprises of power, fuel & water, stores & spares consumed, repairs & maintenance to
building, plant & machinery & others, environmental & pollution control expenses, laboratory & testing
charges, freight & cartage, advertisement & sale promotion, traveling & conveyance, foreign exchange
difference, rent, rates, taxes, & fees, insurance, donation, loss on sale of fixed assets (net), auditors
remuneration, communication expenses, bad debts written off (net), provisions for bad and doubtful debt
& advances, director sitting fees, legal & professional expenses, commission on sale, bank charges, prior
period expenses and miscellaneous expenses.
The following table sets out the principal components of our profit and loss line items and as a percentage
of our total income, for the year ended March 31 2012, 2011 and 2010.
Results of Operations for Fiscal 2012, 2011 and 2010
Particulars
For the year ended March 31, (on a consolidated basis)
2012 2011 2010
` in
million
As a% of
Total
Income
` in
million
As a% of
Total
Income
` in
million
As a% of
Total
Income
I Revenue from
operations
Sale of products (net of
Discount and excise duty)
8,749.69 98.95 7,159.25 98.01 5,397.29 98.34
Sale of services
20.15
0.23 17.35 0.24 10.24 0.18
Other operating revenue
21.21
0.24 23.49 0.32 16.93 0.31
II Other income
51.01
0.58 104.44 1.43 64.07 1.17
III Total Revenue((I+II ) 8,842.06 100.00 7,304.53 100.00 5,488.53 100.00
IV Expenses
Cost of Materials
consumed
4,868.94 55.06 4,173.79 57.14 3,024.75 55.11
Purchase of Stock in Trade 390.00 4.41 326.46 4.47 135.86 2.48
Changes in inventories of
finished good, work in
progress and stock in trade
(335.98) (3.80) (295.08) (4.04) 22.53 0.41
Employee Benefit
Expenses
719.00 8.13 596.96 8.17 469.90 8.56
Finance Costs 198.70 2.25 185.42 2.54 184.66 3.36
79
Particulars
For the year ended March 31, (on a consolidated basis)
2012 2011 2010
` in
million
As a% of
Total
Income
` in
million
As a% of
Total
Income
` in
million
As a% of
Total
Income
Depreciation and
amortization
172.91 1.96 156. 90 2.15 131.80 2.40
Other Expenses 1,715.39 19.40 1,246.12 17.06 947.11 17.26
Total Expenses 7,728.96 87.41 6,390.57 87.49 4,916.61 89.58
V Profit before
exceptional and
extraordinary items and
tax (III-IV
1,113.10 12.59 913.96 12.51 571.92 10.42
VI Exceptional Items 320.99 3.63 - - - -
VII Profit before
extraordinary items and
tax
1,434.09 16.22 913.96 12.51 571.92 10.42
VIII Extraordinary
Items
- - - - - -
IX Profit Before Tax
(Vii-VIII)
1,434.09 16.22 913.96 12.51 571.92 10.42
X Profit After Tax 1,035.92 11.72 651.04 8.91 419.02 7.63
XI Profit/Loss for the
Period
1,035.92 11.72 651.04 8.91 419.02 7.63
Results for Fiscal 2012 compared to Fiscal 2011
Revenue
Our total revenue increased by 21.05% from ` 7,304.53 million in Fiscal 2011 to ` 8,842.06 million in
Fiscal 2012 primarily due to a significant increase in our revenue from operations.
Revenue from operations
Our net revenue from operations increased by 22.10% from ` 7,200.09 million in Fiscal 2011 to ` 8,791.05
million in Fiscal 2012. This was primarily on account of growth in sales of our existing products and
introduction of new products during Fiscal 2012 in both our domestic and exports business segments.
The volume of chemicals sold including traded products increased by 8.50% from 46,575 tonnes in Fiscal
2011 to 50,534 tonnes in Fiscal 2012. Further, we improved our product mix during Fiscal 2012 towards
high value products and accordingly the aggregate value of chemicals sold including traded products
increased by 32.57% from `7,524.22 million in Fiscal 2011 to `9,974.77 million in Fiscal 2012.
The aggregate value of finished goods sold increased by 19.42% from `7,941.99 million in Fiscal 2011 to
`9,483.94 million in Fiscal 2012, which included an increase of 63.63% in sales of specialty chemicals, a
17.76% increase in sales of agro chemicals, a marginal increase of 1.69% increase in sale of plant nutrients.
In Fiscal 2012 there was an increase in our sales from trading activities as well and the sales of our traded
goods increased by 27.50% from `394.70 million in Fiscal 2011 to `503.25 million in Fiscal 2012
primarily on account of a 90.08% increase in sale of agro-chemicals as a part of our trading activities.
80
Our segment revenues from activities within India increased by 3.65% from `5,916.89 million in Fiscal
2011 to `6133.06 million in Fiscal 2012. Our segment revenues for activities outside India increased
substantially by 53.85% from `2,565.09 million in Fiscal 2011 to `3,946.50 million in Fiscal 2012.
Other income
Our other income reduced by 51.16% from ` 104.44 million in Fiscal 2011 to ` 51.01 million in Fiscal
2012 largely due to the exchange gains of ` 72.94 million in Fiscal 2011 which was Nil in Fiscal 2012.
Expenditure
Our total expenditure increased by 20.94% from ` 6,390.57 million in Fiscal 2011 to ` 7,728.96 million in
Fiscal 2012 primarily due to the following reasons:
1. Our cost of material consumed increased by 16.65% from ` 4,173.79 million in Fiscal 2011 to
`4,868.94 million in Fiscal 2012, which was primarily due to an increase in the production and sales
our products, our purchase of stock in trade increased by 19.47% from ` 326.46 million in Fiscal
2011 to ` 390.00 million in Fiscal 2012 due to a marginal increase in our trading activities.
However, cost of total material consumed (including traded goods and inventories of finished goods,
work in progress and stock in trade) as a percentage of our total revenues reduced from 57.57% in
Fiscal 2011 to 55.68% in Fiscal 2012.
2. Our employee benefit expenses increased by 20.44% from `596.96 million in Fiscal 2011 `719.00
million in Fiscal 2012 primarily on account of increase in salaries and wages paid to employees of
our Company. However employee benefit expenses as a percentage of our total revenues reduced
from 8.17% in Fiscal 2011 to 8.13% in Fiscal 2012.
3. Our finance costs increased by 7.16% from ` 185.42 million in Fiscal 2011 to `198.70 million in
Fiscal 2012 primarily due to an increase in working capital borrowings which lead to a marginal
increase in interest expenses on working capital loans from ` 102.64 million in Fiscal 2011 to
` 109.82 million in Fiscal 2012.
4. Other expenses increased by 37.66% from ` 1,246.12 million for Fiscal 2011 to ` 1,715.39 million
for Fiscal 2012. This is primarily on account of an increase in `94.86 million increase in costs
incurred for power, fuel and water, `33.38 million increase in expenses towards stores and spares
consumed, `96.05 million increase in environmental and pollution control expenses and ` 67.73
million increase in advertisement and sales promotion.
5. Our depreciation and amortization costs increased by 10.20% from ` 156.90 million in Fiscal 2011
to ` 172.91 million in Fiscal 2012, primarily on account of capitalisation of capital work in progress
and other expenses.
Exceptional Items
Exceptional items include income from sale of polymer business of ` 303.43 million for Fiscal 2012. This
is on account of our Company receiving a total purchase consideration of ` 665.96 million from sale of the
same, on a slump sale basis to M/s Rhodia Polymers Limited. The said transaction was concluded on April
11, 2011.
Profit for the Year
Our Profit Before Tax increased by 56.91% from ` 913.96 million in Fiscal 2011 to `1,434.09 million in
Fiscal 2012 on account of the abovementioned and our net profit (after tax) increased by 59.12% from
`651.04 million in Fiscal 2011 to `1,035.92 million in Fiscal 2012.
81
Results for Fiscal 2011 compared to Fiscal 2010
Revenue
Our total revenue increased by 33.09% from ` 5,488.53 million in Fiscal 2010 to ` 7,304.53 million in
Fiscal 2011 primarily due to a significant increase in our revenue from operations.
Revenue from operations
Our revenue from operations increased by 32.73% from ` 5,424.46 million in Fiscal 2010 to ` 7,200.09
million in Fiscal 2011. This was primarily on account of growth in sales of our existing products and
introduction of new products during Fiscal 2011 in both our domestic and exports business segments.
The volume of chemicals sold including traded products increased by 9.82% from 42,409 tonnes in Fiscal
2010 to 46,575 tonnes in Fiscal 2011. Further, we improved our product mix during Fiscal 2011 towards
high value products and accordingly the aggregate value of chemicals sold including traded products
increased by 32.88% from `5,662.44 million in Fiscal 2010 to `7,524.22 million in Fiscal 2011. The
aggregate value of finished goods sold increased by 33.89% from `5,931.79 million in Fiscal 2010 to
`7,941.99 million in Fiscal 2011, which included an increase of 20.97% in sales of specialty chemicals, an
increase of 44.31% in sales of agro chemicals, a marginal increase of 13.84% increase in sales of plant
nutrients and an increase of 36.96% in sales of polymers. In Fiscal 2011 there was an increase in our sales
from trading activities as well and the sales of our traded goods sold increased by 63.86% from `240.87
million in Fiscal 2010 to `394.70 million in Fiscal 2011 primarily on account of a 17.75% increase in sale
of agro-chemicals and an increase of 249.85% in sales of other goods traded as a part of our trading
activities.
Our segment revenues from activities within India increased by 40.90% from `4,199.21 million in Fiscal
2010 to `5,916.89 million in Fiscal 2011. Our segment revenues for activities outside India increased by
24.24% from `2,064.68 million in Fiscal 2010 to `2,565.09 million in Fiscal 2011.
Other income
Our other income increased by 63.02% from `64.07 million in Fiscal 2010 to ` 104.44 million in Fiscal
2011 largely due to increase in the exchange gains from ` 36.50 million in Fiscal 2010 to `72.94 million in
Fiscal 2011.
Expenditure
Our total expenditure increased by 29.98% from ` 4,916.61 million in Fiscal 2010 to ` 6,390.57 million in
Fiscal 2011 primarily due to the following reasons:
1. Our cost of material consumed increased by 37.99% from ` 3,024.75 million in Fiscal 2010 to
`4,173.79 million in Fiscal 2011, which was primarily due to an increase in the production and sales
our products, our purchase of stock in trade increased by 140.29% from ` 135.86 million in Fiscal
2010 to ` 326.46 million in Fiscal 2011 due to an increase in our trading activities. However, cost of
total material consumed (including traded goods and inventories of finished goods, work in progress
and stock in trade) as a percentage of our total revenues reduced marginally from 58.00% in Fiscal
2010 to 57.57% in Fiscal 2011.
2. Our employee benefit expenses increased by 27.04% from ` 469.90 million in Fiscal 2010 `596.96
million in Fiscal 2011 primarily on account of increase in salaries and wages paid to employees of
our Company. However employee benefit expenses as a percentage of our total revenues reduced
from 8.56% in Fiscal 2010 to 8.17% in Fiscal 2011.
3. Our finance costs increased very marginally by 0.41% from ` 184.66 million in Fiscal 2010 to
82
`185.42 million in Fiscal 2011 primarily due to an increase in working capital borrowings which
lead to a marginal increase in interest expenses on working capital loans from ` 90.52 million in
Fiscal 2010 to ` 102.64 million in Fiscal 2011 and on account of other interest expenses of `5.66
million in Fiscal 2011 which was Nil in Fiscal 2010. Our interest expenses on fixed loans however,
reduced from ` 84.55 million in Fiscal 2010 to `68.13 million in Fiscal 2011.
4. Other expenses increased by 31.57% from ` 947.11 million for Fiscal 2010 to ` 1,246.12 million for
Fiscal 2011. This is primarily on account of an increase in `58.85 million increase in costs incurred
for power, fuel and water, `115.66 million increase in environmental and pollution control expenses
and ` 56.54 million increase in advertisement and sales promotion.
5. Our depreciation and amortization costs increased by 19.05% from ` 131.80 million in Fiscal 2010
to `156.90 million in Fiscal 2011, primarily on account of capitalisation of capital work in progress
and other expenses.
Profit for the Year
Our Profit Before Tax increased by 59.80% from ` 571.92 million in Fiscal 2010 to `913.96 million in
Fiscal 2011 on account of the abovementioned and our net profit (after tax) increased by 55.37% from
`419.02 million in Fiscal 2010 to `651.04 million in Fiscal 2011.
RESULTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 2012 ON A
STANDALONE BASIS:
(` in million)
S.
No
.
Particulars Quarter Ended Half Year Ended
Septembe
r 30, 2012
June 30,
2012
Septembe
r 30, 2011
Septembe
r 30, 2012
Septembe
r 30, 2011
Half-
yearly
Growth
Un-
Audited
Un-
Audited
Un-
Audited
Un-
Audited
Un-
Audited
1 Income From
Operations
(a) Net Sales/ Income
from operations
2,980.27
2,389.07
2,448.50
5,369.34
4,511.13 19.02
(Net of Discount &
Excise Duty)
-
-
-
-
-
(b) Other Operating
income
4.01
2.42
2.82
6.43
5.62 14.48
Total income from
Operations (net)
2,984.28
2,391.49
2,451.32
5,375.77
4,516.75
2 Expenses
(a) Cost of Material
Consumed
1,733.29
1,329.22
1,563.41
3,062.51
2,875.83 6.49
(b) Purchases of stock -
in- trade
52.27
96.48
85.84
148.75
202.75 (26.63)
(c) Changes in
inventories of
finished goods,
work in progress
and stock in trade
14.54
(133.34)
(224.18)
(118.80)
(553.24) (78.53)
(d) Employee Benefit 17.83
83
S.
No
.
Particulars Quarter Ended Half Year Ended
Septembe
r 30, 2012
June 30,
2012
Septembe
r 30, 2011
Septembe
r 30, 2012
Septembe
r 30, 2011
Half-
yearly
Growth
Un-
Audited
Un-
Audited
Un-
Audited
Un-
Audited
Un-
Audited
expenses 229.72 180.08 180.98 409.80 347.79
(e) Depreciation and
amortisation
expenses
49.66
49.19
42.07
98.85
83.65 18.18
(f) Other Expenses
518.04
425.77
470.00
943.81
859.98 9.75
-
-
-
-
-
Total Expenses
2,597.52
1,947.40
2,118.12
4,544.92
3,816.76
3 Profit/ (Loss) from
operations before
other income,
finance costs,
exchange
difference and
exceptional items
(1-2)
386.76
444.09
333.20
830.85
699.99 18.69
4 Other Income
10.93
17.04
7.98
27.97
18.56 50.71
5 Profit/ (Loss) from
ordinary activities
before finance
costs, exchange
difference and
exceptional items
(3+4)
397.69
461.13
341.18
858.82
718.55 19.52
-
-
-
-
-
6
(a)
Finance Costs
49.52
54.38
50.77
103.90
103.83 0.06
6
(b)
Exchange
Fluctuation (Gain)/
Loss
(21.33)
67.83
12.68
46.50
(2.73)
(1,803.41)
7 Profit/ (Loss) from
ordinary activities
after finance costs,
but before
exceptional items
(5-6)
369.50
338.92
277.73
708.42
617.45 14.73
8 Exceptional items
-
-
(0.00)
-
303.43 (100.00)
84
S.
No
.
Particulars Quarter Ended Half Year Ended
Septembe
r 30, 2012
June 30,
2012
Septembe
r 30, 2011
Septembe
r 30, 2012
Septembe
r 30, 2011
Half-
yearly
Growth
Un-
Audited
Un-
Audited
Un-
Audited
Un-
Audited
Un-
Audited
9 Profit/ (loss) from
ordinary activities
before tax (7+8)
369.50
338.92
277.73
708.42
920.88 (23.07)
10 Tax expense
111.16
104.36
84.09
215.52
247.71 (12.99)
11 Net Profit / (Loss)
from ordinary
activities after tax
(9-10)
258.34
234.56
193.64
492.90
673.17 (26.78)
12 Extraordinary items
(Net of tax expense
-
-
-
-
-
13 Net Profit/ (Loss)
for the period
(11+12) after taxes
258.34
234.56
193.64
492.90
673.17 (26.78)
Standalone Results for the Half Year Ended September 30, 2012 compared to the Half Year Ended
September 30, 2011
Revenue
Our total revenue increased by 19.02% from ` 4,516.75 million for the half year ended September 30, 2011
to ` 5,375.77 million for the half year ended September 30, 2012 primarily due to a significant increase in
our revenue from operations.
Our revenue from operations increased by 19.02% from ` 4,511.13 million for the half year ended
September 30, 2011 to ` 5,369.34 million for the half year ended September 30, 2012. This was primarily
on account of growth in sales of our existing products and introduction of new products during the half year
ended September 30, 2012 in both our domestic and exports business segments. Our other income
increased marginally by 14.48% from ` 5.62 million for the half year ended September 30, 2011 to ` 6.43
million for the half year ended September 30, 2012.
Expenditure
Our total expenditure increased by 19.08 % from ` 3,816.76 million for the half year ended September 30,
2011 to ` 4,544.92 million for the half year ended September 30, 2012 primarily due to an increase by
6.49% in cost of material consumed (on account of an increase in the production and sales our products), an
increase of 17.83% in our employee benefit expenses (on account of increase in salaries and wages paid to
employees) of our Company, an increase in other expenses by 9.75% and an increase in depreciation and
amortization by 18.18%.
Exceptional Items
Income from sale of polymer business of ` 303.43 million is shown an exceptional item for the half year
85
ended September 30, 2011. This is on account of our Company receiving a total purchase consideration of
` 665.96 million from sale of its polymer division as a going concern on a slump sale basis to M/s Rhodia
Polymers Limited. The said transaction was concluded on April 11, 2011.
Profit for the Half-year
Our Profit Before Tax reduced by 23.07% from ` 920.88 million for the half year ended September 30,
2011 to `708.42 million for the half year ended September 30, 2012 primarily on account of the
exceptional item of income from sale of polymer business of ` 303.43 million being netted of from the
profit before tax and accordingly our net profit (after tax) reduced by 26.78% from `673.17 million for the
half year ended September 30, 2011 to `492.90 million for the half year ended September 30, 2012.
FINANCIAL CONDITION AS AT MARCH 31, 2012, 2011 and 2010
Liabilities:
The following table sets forth the principal components of our total liabilities for the Fiscal years 2012,
2011 and 2010 on a consolidated basis:
Particulars As at March 31,
2012
As at March 31,
2011
As at March 31,
2010
Non Current Liabilities
Long-term borrowings
1,190.57
589.86
720.38
Deferred tax liabilities (Net)
328.77
325.77
269.97
Other long-term liabilities
105.99
94.48
81.66
Long-term provisions
17.98
13.92
13.90
Total Non- Current Liabilities
1,643.31
1,024.03
1,085.91
Current Liabilities
Short-term borrowings
1,105.78
1,546.77
440.57
Trade payables
958.39
1,058.06
965.36
Other current liabilities
887.57
754.33
832.53
Short-term provisions
166.17
119.44 38.56
Total Current Liabilities
3,117.91
3,478.60 2277.02
Total 4,761.22 4,502.63 3362.93
Our total liabilities increased by 5.74% from ` 4,502.63 million as at March 31, 2011 to ` 4,761.22 million
as at March 31, 2012 primarily on account of a substantial increase in long term borrowings in March 31,
2012 as compared to March 31, 2011, as further detailed below.
Our total liabilities increased by 33.89% from ` 3,362.93million as at March 31, 2010 to ` 4,502.63 million
as at March 31, 2011 primarily on account of an increase in short term borrowings, as further detailed
below.
Non-current liabilities
Our total non-current liabilities increased by 60.47% from ` 1,024.03 million in March 31, 2011 to
` 1,643.31 million in March 31, 2012 primarily on account of a substantial increase in long term
borrowings by 101.84% which was primarily the result of a substantial increase by 315.89% in term loans
86
from banks and financial institutions from `273.82 millions as at March 31, 2011 to `1,138.80 million as at
March 31, 2012 and an increase of 134.89% in unsecured deposits from `22.04 million as at March 31,
2011 to `51.77 million as at March 31, 2012.
Our total non-current liabilities reduced by 5.70% from ` 1,085.91 million as at March 31, 2010 to
` 1,024.03 million in March 31, 2011 primarily on account of a reduction in long term borrowings by
18.12%, which was primarily the result of a reduction by 27.64% in term loans from banks and financial
institutions from `378.42 million as at March 31, 2010 to `273.82 million as at March 31, 2011 and a
reduction by 51.68% in deposits from `45.61 million as at March 31, 2010 to `22.04 million as at March
31, 2011.
Current liabilities
Our total current liabilities reduced by 10.37% from ` 3,478.60 million in March 31, 2011 to `3,117.91
million in March 31, 2012 on account of a reduction in short term borrowings by 28.51%, which was
primarily the result of a reduction by 36.72% in secured working capital loans from banks from `1,081.95
million as at March 31, 2011 to `684.69 million as at March 31, 2012 and a reduction by 8.13% in
unsecured packing credit from foreign currency loans from `445.82 million as at March 31, 2011 to
`409.59 million as at March 31, 2012.
Our total current liabilities increased substantially by 52.77% from ` 2,277.02 million in March 31, 2010 to
`3,478.60 million in March 31, 2011 primarily on account of a substantial increase in short term
borrowings by 251.08%, which was primarily the result of a substantial increase of 249.16% in secured
working capital loans from banks from ` 309.87 million as at March 31, 2010 to `1,081.95 million as at
March 31, 2011 and a substantial increase of 275.59% in unsecured packing credit from foreign currency
loans from `118.70 million as at March 31, 2010 to `445.82 million as at March 31, 2011.
Consolidated Shareholders’ Fund
Shareholders funds comprises share capital and reserves and surplus. The following table sets out the
shareholders funds as at March 31, 2012, 2011 and 2010:
(` in million)
Particulars As at March 31, 2012 As at March 31, 2011 As at March 31, 2010
Share Capital 125.24 192.87 276.87
Reserves and Surplus 3,129.20 1,944.44 1,268.97
Total Shareholders’
Funds 3,254.44 2,137.31 1,545.84
Our Total Shareholders Funds increased by 52.27% from `2,137.31 million as at March 31, 2011 to `
3,254.44 million as at March 31, 2012 primarily on account of the following:
(a) 810,000 compulsorily convertible preference shares held by Standard Chartered Private Equity
(Mauritius) Limited and Standard Chartered Private Equity (Mauritius) II Limited were converted
into 311,658 equity shares at a premium of ` 249.90 per equity share.
(b) 2,664,053 optionally convertible debentures held by Standard Chartered Investments and Loans
(India) Limited were converted into 1,025,030 equity shares at a premium of `249.90 per equity
share and the remaining 275,947 optionally convertible debentures were redeemed.
As a consequence of the above the total paid-up Equity Share capital increased from `111.87 million
as at March 31, 2011 to `125.24 million as at March 31, 2012.
(c) Increase in reserves and surplus by 60.93% primarily as a result of an increase in securities premium
account (on account of premium on issue of Equity Shares on conversion of compulsorily
convertible preference shares and optionally convertible debentures in Fiscal 2012 as detailed above)
by 397.67% from `84.00 million as at March 31, 2011 to `418.04 million as at March 31, 2012, an
increase in general reserve by 21.76% from `462.04 million as at March 31, 20101 to `562.58
million as at March 31, 2012 and an increase in surplus in profit and loss account of 58.09% from
`1,359.58 million as at March 31, 2011 to `2,149.39 million as at March 31, 2012.
87
Our Total Shareholders Funds increased by 38.26% from ` 1,545.84 million as at March 31, 2010 to `
2,137.31 million as at March 31, 2011 primarily on account of the following:
(a) 1,250,000 compulsorily convertible preference shares held by Standard Chartered Private Equity
(Mauritius) Limited and Standard Chartered Private Equity (Mauritius) II Limited were converted
into 370,826 equity shares at a premium of ` 327.09 per equity share.
(b) In Fiscal 2011 our Company issued 3,729,164 equity shares of face value of `10 each by capitalizing
the share premium account.
As a consequence of the above, the total paid-up Equity Share capital increased from `70.87 million
as at March 31, 2010 to `111.87 million as at March 31, 2011.
(c) Increase in reserves and surplus by 53.23% primarily as a result of an increase in securities premium
account (on account of the fresh allotment of equity shares at a premium in Fiscal 2011 as detailed
above) from Nil as at March 31, 2010 to `84.00 million as at March 31, 2011, an increase in general
reserve by 16.11% from `397.92 million as at March 31, 2010 to `462.04 million as at March 31,
2011 and an increase of 63.61% in surplus in profit and loss account from `831.00 million as at
March 31, 2010 to `1,359.58 million as at March 31, 2012.
Consolidated Assets
` in Millions
Particulars As at March 31,
2012
As at March 31,
2011
As at March 31,
2010
Non Current Asset
Fixed asset
Tangible asset
2,957.00
2,528.99
1,989.94
Intangible asset
17.89
11.54
11.11
Capital work-in-progress
777.69
327.51
86.35
Intangible asset under development
32.33
7.08
-
Total Fixed Assets
3,784.91
2,875.12
2,087.40
Non-current investments
5.18
5.18
5.18
Long term loans & advances
192.41
189.17
156.75
Other assets
16.24
13.98
13.85
Total Non-Current Assets
3,998.74
3,083.45
2,263.18
Current Asset
Inventories
1,787.51
1,409.80
1,028.11
Trade receivables
1,722.28
1,749.55
1,182.04
Cash and Bank Balances
94.11
70.04
40.55
88
Particulars As at March 31,
2012
As at March 31,
2011
As at March 31,
2010
Short-term loans and advances
393.99
314.41
381.76
Other assets
19.03
12.69
13.13
Total Current Assets
4,016.92
3,556.49
2,645.59
Total
8,015.66
6,639.94
4,908.77
Our total assets increased by 20.72% from ` 6,639.94 million as at March 31, 2011 to ` 8,015.66 million as
at March 31, 2012. This increase was primarily due to an increase in total current assets from ` 3,556.49
million as at March 31, 2011 to ` 4,016.92 million as of March 31, 2012 and an increase in non current
assets from `3,083.45 million as at March 31, 2011 to ` 3,998.74 million as at March 31, 2012. The
increase in our current assets was primarily due to an increase in inventories by 26.79% from ` 1,409.80
million as at March 31, 2011 to ` 1,787.51 million as at March 31, 2012, an increase in cash and bank
balances by 34.37% from `70.04 million as at March 31, 2011 to ` 94.11 million as at March 31, 2012 and
an increase in short term loans and advances by 25.31% from `314.41 million as at March 31, 2011 to
`393.99 million as at March 31, 2012. The increase in non-current assets was primarily on account of an
increase in tangible assets, intangible assets and capital work in progress on account of our expansion
activities at our Panoli plant and setting up of a new plant in Jambusar during Fiscal 2012.
Our total assets increased by 35.27% from ` 4,908.77 million as at March 31, 2010 to ` 6,639.94 million as
at March 31, 2011. This increase was primarily due to an increase in total current assets from ` 2,645.59
million as at March 31, 2010 to ` 3,556.49 million as of March 31, 2011 and an increase in non current
assets from ` 2,263.18 million as of March 31, 2010 to ` 3,083.45 million as of March 31, 2011. The
increase in our current assets was primarily due to an increase in inventories by 37.13% from ` 1,028.11
million as at March 31, 2010 to `1,409.80 million as at March 31, 2011, an increase in trade receivables by
48.01% from ` 1,182.04 million as at March 31, 2010 to `1,749.55 million as at March 31, 2011, an
increase in cash and bank balances by 72.71% from `40.55 million as at March 31, 2010 to ` 70.04 million
as at March 31, 2011 and an decrease in short term loans and advances by 17.64% from `381.76 million as
at March 31, 2010 to `314.41 million as at March 31, 2011. The increase in non-current assets was
primarily on account of an increase in tangible assets and capital work in progress on account of our
expansion activities at our Panoli plant during Fiscal 2011.
Consolidated Cash Flows (` in million)
Particulars
For Fiscal
2012
For Fiscal
2011
For Fiscal
2010
Net cash from Operating Activities 1,073.55
210.37 972.26
Net cash from Operating and Investing Activities 30.20
(731.03) 522.76
Net Cash from Operating, Investing & Financing
Activities 14.73
22.66 (7.18)
Net increase in Cash & Cash equivalent 14.73
22.66 (7.18)
Opening balance of Cash & Cash equivalent 42.06
19.40 26.58
Closing balance of Cash & Cash equivalent 56.79
42.06 19.40
89
Net cash from operating activities
Net cash from operating activities in Fiscal 2012 was ` 1,073.55 million and our operating cash flow before
working capital changes for that period was ` 1,512.83 million. The difference was mainly attributable to a
` 102.65 million increase in loans and advances, `377.71 million increase in inventories, ` 122.35 million
increase in trade payables and other liabilities and direct taxes paid amounting to ` 399.69 million.
Net cash from operating activities in Fiscal 2011 was ` 210.37 million and our operating cash flow before
working capital changes for that period was ` 1,229.23 million. The difference was mainly attributable to a
` 573.40 million increase in trade receivables, ` 54.68 million decrease in loans and advances, ` 381.69
million increase in inventories, ` 63.00 million increase in trade payables and other liabilities and direct
taxes paid amounting to ` 179.91 million.
Net cash from operating activities in Fiscal 2010 was ` 972.26 million and our operating cash flow before
working capital changes for that period was ` 888.08 million. The difference was mainly attributable to a
` 295.55 million increase in trade receivables, ` 608.02 million increase in trade payables and other
liabilities and direct taxes paid amounting to ` 118.70 million.
Net cash Flow from investing activities
In Fiscal 2012, our net cash outflow from investing activities after extraordinary items was ` 1,043.35
million. This mainly reflected the payments of ` 1,171.37 million towards purchase of fixed assets which
primarily consists of plant & machinery and leasehold land purchased for new plant during the year and
amount of ` 86.62 million received primarily on account of sale of our polymer business under slump sale.
Interest received by us on account of overdue debts, Fixed Deposit etc. amounting to ` 41.35 million.
In Fiscal 2011, our net cash outflow from investing activities was ` 941.40 million. This mainly reflected
the payments of ` 971.02 million for purchase of fixed assets consisting of plant & machinery and building.
Interest received by us on account of overdue debts, Fixed Deposit etc. amounting to ` 27.44 million.
In Fiscal 2010, our net cash outflow from investing activities was ` 449.50 million. This mainly reflected
the payments of ` 471.88 million towards purchase of fixed assets which primarily consists of plant &
machinery and Building. Interest received by us on account of overdue debts, Fixed Deposit etc. amounting
to ` 22.42 million.
Net cash from/used in financing activities
In Fiscal 2012, our net cash outflow from financing activities was ` 15.47 million. This mainly reflected
` 196.37 million paid as interest, ` 100.13 million as dividend payment, ` 357.89 million as net borrowings
and repayment against debentures not converted to equity amounting to ` 27.60 million.
In Fiscal 2011, our net cash inflow from financing activities was ` 753.69 million. This mainly reflected
` 177.40 million paid as interest, proceeds from borrowings net of repayment amounting to ` 946.02
million.
In Fiscal 2010, our net cash outflow from financing activities was ` 529.94 million. This mainly reflected
` 182.49 million paid as interest and repayment of loans net of borrowings amounting to ` 847.45 million
and ` 500 million received on issue of CCPS and OCDs.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, derivative instruments or other relationships with
unconsolidated entities that were established for the purpose of facilitating off-balance sheet arrangements.
90
Transactions with Related Parties
We have engaged in the past, and may engage in the future, in transactions with related parties, including
with our affiliates and certain key management members on an arm’s length basis.
For a description of our related party transactions, see “Reformatted Consolidated Financials” on page 186
of this Placement Document.
Quantitative and Qualitative Disclosure about Market Risk
Market risk is the risk of loss related to adverse changes in market prices, including interest rate risk and
commodity risk. We are exposed to interest rate risk, foreign exchange risk, inflation risk and credit risk in
the normal course of our business. For further details please see sections titled “Risk Factors” and “Our
Business” on page 40 and 106, respectively of this Placement Document.
Effect of New Accounting Pronouncements
There are no recent accounting pronouncements that were not yet effective as at March 31, 2012 that will
result in a change in our Company’s significant accounting policies.
Public companies in India, including our Company, may be required to prepare their annual and interim
financial statements under IFRS or a variation thereof. Recently, the ICAI has released a near final version
of the Indian Accounting Standards (Ind AS) 101 “First-time Adoption of Indian Accounting Standards”
(“IND AS”). The Ministry of Corporate Affairs, Government of India, on February 25, 2011 has notified
that the IND AS will be implemented in a phased manner and the date of such implementation will be
notified at a later date. As on the date of this Placement Document the Ministry of Corporate Affairs,
Government of India has not yet notified the date of implementation of the IND AS. There is currently a
significant lack of clarity on the adoption of and convergence with IND AS and we currently do not have a
set of established practices on which to draw on in forming judgments regarding its implementation and
application, we have not determined with any degree of certainty the impact that such adoption will have
on our financial reporting. Additionally, IND AS has fundamental differences with the IFRS and therefore
financial statements prepared under IND AS may differ substantially from financial statements prepared
under IFRS. There can be no assurance that our financial condition, results of operations, cash flows or
changes in shareholders’ equity will not appear materially different under IND AS, Indian GAAP or IFRS.
As we adopt IND AS reporting, we may encounter difficulties in the ongoing process of implementing and
enhancing our management information systems. There can be no assurance that our adoption of IND AS,
if required, will not affect our reported results of operations, financial condition.
91
INDUSTRY OVERVIEW
The information in this section is derived from various government publications and other industry sources.
Neither we, nor any other person connected with the issue has verified this information. Industry sources
and publications generally state that the information contained therein has been obtained from sources
generally believed to be reliable, but their accuracy, completeness and underlying assumptions are not
guaranteed and their reliability cannot be assured and accordingly, investment decisions should not be
based on such information.
OVERVEIW OF THE GLOBAL AGRICULTURE AND FOOD INDUSTRY
The current world food and agricultural situation is characterized by continued high and volatile
international food prices and the persistence of hunger and malnutrition in many parts of the world. This is
generating growing concerns about the long-term sustainability of agricultural and food systems. These
problems lie at the heart of recent discussions by the G20 Ministers of agriculture and the United Nations
conference on Sustainable development (Rio+20 Summit), both held in June 2012, which emphasized the
need for sustainable growth in agricultural productivity to help eradicate hunger and ensure more efficient
use of natural resources. Source: FAO, State of Food and Agriculture 2012- Investing in Agriculture for a
Better Future
Global agricultural production growth declined somewhat from the 1960s through the 1980s before
resuming higher rates of growth in recent years. Total production growth for crops largely mirrors that for
all agriculture, whereas total production growth for livestock has not increased in the most recent period,
perhaps because prices for livestock products have not risen as much as for crops. In per capita terms,
growth in agricultural production declined very slightly in the latter decades of the last century before
accelerating significantly since 2000. The decline and subsequent recovery of per capita production was
more pronounced for crops than for all agriculture. Source: FAO, State of Food and Agriculture 2012-
Investing in Agriculture for a Better Future
Region-wise Production
The production responses by the different regions over the last decade have been very diverse. In Latin
America, agricultural production increased by more than 50 percent from 2000 to 2012, with Brazil
expanding production by more than 70 percent. Sub-Saharan Africa saw agricultural production growth of
more than 40 percent. Eastern Europe and Central Asia expanded production by almost 40 percent, and the
region is emerging as a key global supplier. In North America and Western Europe, on the other hand,
92
agricultural output has increased only by about 20 percent and 6 percent, respectively, since 2000. Indeed,
the OECD countries as a group increased output by only 14 percent over the period, while the BRIC
countries (Brazil, Russian Federation, India and China) increased it by 39 percent, the least-developed
countries by 54 percent and the remaining developing countries by 45 percent. Source: FAO, State of Food
and Agriculture 2012- Investing in Agriculture for a Better Future
Food consumption
Despite higher prices, rapid income growth has supported robust increases in per capita food consumption
in most emerging and developing countries. Eastern Europe and Central Asia experienced the strongest
growth in per capita food consumption since 2000 at 24 percent, followed by Asia at almost 20 percent. In
sub-Saharan Africa, per capita consumption grew quickly from 2000 to 2005, but higher prices in the latter
part of the decade appear to have limited further growth, and per capita consumption in the region was only
11 percent higher in 2012 than in 2000. Not surprisingly, per capita consumption of food has been stagnant
in Western Europe and declining in North America, given the already high consumption levels. Source:
FAO, State of Food and Agriculture 2012- Investing in Agriculture for a Better Future
OVERVEIW OF THE AGRICULTURE INDUSTRY IN INDIA
Agriculture is the principal source of livelihood for more than 58% of the population of this country.
Agriculture provides the bulk of wage goods required by non-agriculture sectors and most of the raw
materials for the industries sector. The combined efforts of Central Government, State Governments and
the farming community have succeeded in achieving record production of 244.78 million tonnes of
foodgrains during 2010-11. This record production has been achieved through effective transfer of latest
crop production technologies to farmers under various crop development schemes being implemented by
the Department of Agriculture & Cooperation backed by remunerative prices for various crops through
enhanced minimum support prices. Source: Annual Report 2011-12, Government of India, Ministry of
Agriculture, Department of Agriculture and Cooperation.
93
Agriculture GDP
The Agriculture and Allied Sector is estimated to contribute approximately 13.9% of India’s GDP (at
constant 2004- 05 prices) during 2011-12 as per advance estimate released by CSO on 07.02.2012. Gross
Domestic Product (GDP) of Agriculture and Allied Sectors and its share in the total GDP of the country
during the last 4 years, including Fiscal 2012, at 2004-05 prices, is as follows:
Particulars 2007-08 2008-09 2009-10 2010-11 2011-12 GDP of Agriculture and
Allied Sectors (` in
millions)
6,550,800 6,556,890 6,625,090 7,091,030 7,271,610
Percentage of Total GDP 16.8 15.8 14.7 14.5 13.9
Source: Annual Report 2011-12, Government of India, Ministry of Agriculture, Department of Agriculture
and Cooperation; Central Statistics Office, Ministry of Statistics and Programme Implementation,
Government of India
There has been a continuous decline in the share of Agriculture and Allied Sectors in the GDP from 16.8
percent in 2007-08 to 13.9 percent in 2011-12 at 2004-05 prices. Falling share of Agriculture and Allied
Sectors in GDP is an expected outcome in a fast growing and structurally changing economy. Source:
Annual Report 2011-12, Government of India, Ministry of Agriculture, Department of Agriculture and
Cooperation
Overall Growth of the Agricultural Sector in India
The growth performance of the agriculture sector has been fluctuating. It witnessed a growth rate of 4.8 per
cent between 1992–97. However, the agrarian situation saw a downturn towards the beginning of 1997–
2002 and 2002–07, when the agricultural growth rate came down to 2.5 percent and 2.4 percent
respectively. This crippling growth rate of 2.4 percent in agriculture as against a robust annual average
overall growth rate of 7.6 per cent for the economy during the tenth plan period was clearly a cause for
concern. The trend rate of growth during the period 1992-93 to 2010-11 is 2.8 percent while the average
annual rate of growth in agriculture & allied sectors-GDP during the same period is 3.2 percent. Source:
State of Indian Agriculture 2011-12
Agriculture Production
As per second advance estimates of kharif production for 2011-12 released by the Ministry of Agriculture
on February 3, 2012, production of food grains and cotton are estimated at all time record levels of 250.42
million tonnes and 34.09 million bales (of 170 kg each) respectively. Production of pulses and oilseeds is
estimated at 17.28 million tonnes and 30.53 million tonnes respectively. Compared to 2010-11, food grains
output is estimated to go up by 2.30 per cent, oilseeds decline by 6.00 per cent, sugarcane output is
estimated to go up by 1.60 per cent, and cotton by 3.30 per cent. The higher production estimates compared
to last year are primarily due to significant improvement in productivity of major foodgrain crops resulting
from favourable weather conditions and various initiatives taken by Ministry of Agriculture. Source:
Annual Report 2011-12, Government of India, Ministry of Agriculture, Department of Agriculture and
Cooperation
94
Growing Demand for Food
The demand for food and processed commodities is increasing due to growing population and rising per
capita income. There are projections that demand for foodgrains would increase from 192 million tonnes in
2000 to 345 million tonnes in 2030. Hence in the next 20 years, production of foodgrains needs to be
increased at the rate of 5.5 million tonnes annually. Source: Indian Council of Agricultural Research –
Vision 2030
In Million Tonnes
Source: Indian Council of Agricultural Research – Vision 2030
OVERVIEW OF THE GLOBAL CHEMICAL INDUSTRY
Global chemical industry market size was estimated at $3.6 trillion in 2011 and is expected to grow at 4-5%
per annum over the next decade to reach ~$5.8 trillion by 2021. Source: Tata Strategic Management Group
– India Chem 2012 - "Emerging India: Sustainable Growth of the Chemical Sector”
The Asian region has emerged as the largest contributor to the global chemical industry, accounting for
nearly half the global sales (€ 1,147 billion) followed by Europe (€ 578 billion). Individually, China was
the largest market for chemicals with sales aggregating to € 575 billion, followed by USA (€ 395 billion),
Japan (€ 153 billion), Germany (€ 142 billion) and France (€ 76 billion). India, with sales of € 56 billion
was ranked the eighth largest market in 2010. Source: EXIM Bank Research Brief - Indian Chemical
Industry: Exploring Global Demand, June 2012
14 33
64 81
192
43
93 76
30
102 95
156
355
110
180 182
Puls
es
Cere
als
Wheat
Ric
e
Foodgra
ins
Fru
its
Vegeta
ble
s
Milk
2000 2030
95
International trade in chemical products has witnessed a continuous rise with global exports of chemicals
recording an average annual increase of 6.2% during 2006-2010 to amount to US$ 545 billion in 2010 as
compared to US$ 451 billion in 2006. USA was the largest exporter of chemicals with exports aggregating
US$ 63.9 billion, followed by China (US$ 49.3 billion), Germany (US$ 48.2 billion), Belgium (US$ 36.6
billion) and Japan (US$ 31.9 billion). However, in terms of dynamism in exports, it was led by the
emerging markets of Asia-Pacific, Middle East and Africa. While the average annual increase in exports
from Asia-Pacific region was 11.9% during the 2006- 2010 period, it was as high as 21.9% each in the case
of Middle East and Africa. Consequently, the shares of these regions in world exports of chemicals
registered a consistent increase. Source: EXIM Bank Research Brief - Indian Chemical Industry: Exploring
Global Demand, June 2012
OVERVIEW OF THE INDIAN CHEMICALS INDUSTRY
India accounted for only 3.3 % of the total chemical market with a market size of ~$ 0.1 trillion in 2011.
Indian chemical industry is also a much diversified industry with more than 70,000 commercial products. It
accounted for ~13% of the gross value added by the industry segment. It accounted for ~13% of the total
India's export. Indian chemical sector is very crucial for the economic development of country. For the
purposes of such industry classification, the chemical industry is assumed to include chemical sector, petro
chemical sector, fertilizers and pharmaceuticals.
Indian chemical industry is a much diversified industry with more than 70,000 commercial products. It
accounted for ~13% of the gross value added by the industry segment. Indian chemical sector is very
crucial for the economic development of country. With significant capacity additions coming into place, the
focus has also been towards investments in R&D. India's competence in this knowledge intensive industry
is increasing however still the tapped potential is very limited. India has a very strong outlook for the key
end user industries (e.g. Packaging is expected to grow at ~17% p.a. over the next five years, electronic is
expected to grow at ~15% p.a. over the next five years, construction and automotive both sectors are
expected to grow at ~14% p.a. over the next five years). Hence, going ahead the demand of chemical
products is expected to surge strongly at 10-11 % p.a. over the next five years. To meet this increasing
demand either the local production will have to ramp up or the imports will have to go up. The anticipation
is that R&D investment for companies in India is expected to grow to 5-6% of their turnover making them
more competitive. India is observing increasing tie ups of industry and academia which will facilitate the
technology access further. The diversification within the chemical industry is huge and covers more than
thousands of commercial products. The current low per capita consumption (~7 kgs for polymers in India
as compared to world average of 25 kgs) suggests that the demand potential is also yet to be realized.
Hence, going ahead the demand of chemical products is expected to surge strongly at 10-11 % p.a. over the
next five years. Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India:
Sustainable Growth of the Chemical Sector”
India is today seen as a growth market for many western companies. Domestic companies have built
significant assets and have the opportunity to leverage them and will need to strengthen them further to
withstand global competition. It could be worthwhile to explore partnerships, in select areas, for mutual
beneficial development.
OVERVIEW OF THE GLOBAL AGRO CHEMICALS INDUSTRY
Global agrochemical industry has grown strongly at ~7.9% p.a. since Fiscal 2008 to reach ~USD 57 Bn in
Fiscal 2012. Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India:
Sustainable Growth of the Chemical Sector”
96
Geographical Distribution:
Europe has the largest share in the agrochemical market followed by Asia, Latin America & North
America. There has been an increased usage of products in Europe due to high commodity prices & to
boost yield and quality. Asia is catching up in global scenario with its share of the market having increased
from 23% in 2008 to 25% now. Increased demand for palm oil is boosting the usage of herbicides in Japan,
Malaysia & Indonesia and strong rice prices are increasing the agrochemical consumption in India. In Latin
America, increased production of soybean and sugarcane for animal feed and bio fuel is the driving the
growth of agrochemical consumption. Source: Tata Strategic Management Group – India Chem 2012 -
"Emerging India: Sustainable Growth of the Chemical Sector”
Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
INDIAN AGRO CHEMICALS INDUSTRY
Overview and Outlook
India is the fourth largest producer of crop protection chemicals globally, after United States, Japan &
China. The crop protection industry is a significant industry for the Indian economy. The crop protection
chemicals accounts for ~2% of the total chemicals market. For Fiscal 2011, Indian crop market is estimated
at ~USD 2 Bn and has been growing in double digits in the recent years. Greater export opportunities and
introduction of newer molecules have led to high growth rates. Currently, the exports of crop protection
chemicals are estimated at ~USD1.8 Bn. In India a high spent on food and being the largest employer status
97
makes agriculture a significant part of economy. Agriculture even though accounts for only ~17% of GDP
it employs 55-60% of the workforce. However Indian agriculture is faced with challenges like limited
farmland availability and low crop yields. India's crop yields in major crops like rice, lentils, corn and soya-
bean is more than 50% below China's. One of the major reasons for this has been the low average crop
protection consumption in India. India's agrochemicals consumption is one of the lowest in the world with
per hectare consumption of just0.58 Kg compared to US (4.5 Kg/ha) and Japan (11 Kg/ha). Source: Tata
Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of the Chemical
Sector”
Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
Crop wise usage of Agrochemicals
In India, paddy accounts for the maximum share of pesticide consumption, around 28%, followed by cotton
(20%). Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable
Growth of the Chemical Sector”
Rice/Paddy (28%)
Cotton (20%)
Pulses and Oilseeds (13%)
Wheat (9%)
Vegetables (9%)
Fruits (7%)
Chillies (4%)
Others (10%)
Source: Ministry of Agriculture, Government of India; Directorate of Economics and Statistics
98
Industry Structure
In India, there are about 125 technical grade manufacturers (10 multinationals), 800 formulators, over
145,000 distributors. 60 technical grade pesticides are being manufactured indigenously. Technical grade
manufacturers sell high purity chemicals in bulk (generally in drums of 200-250 Kg) to formulators.
Formulators, in turn, prepare formulations by adding inert carriers, solvents, surface active agents,
deodorants etc. These formulations are packed for retail sale and bought by the farmers. The Indian
agrochemicals market is characterized by low capacity utilization. The total installed capacity in Fiscal
2011 was 146,000 tons and total production was 87,000 tons leading to a low capacity utilization of ~60%.
The industry suffers from high inventory (owing to seasonal & irregular demand on account of monsoons)
and long credit periods to farmers, thus making operations 'working capital' intensive. India due to its
inherent strength of low-cost manufacturing and qualified low-cost manpower is a net exporter of
pesticides to countries such as USA and some European & African countries. Exports formed ~47% of total
industry turnover in Fiscal 2011. Source: Tata Strategic Management Group – India Chem 2012 -
"Emerging India: Sustainable Growth of the Chemical Sector”
Key Segments
Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
Insecticides: Insecticides are used to ward off or kill insects. Insecticides form the largest segment of the
domestic crop protection chemicals market accounting for 55% of the total market. It is mostly dependent
on rice and cotton crops.
Fungicides: Fungicides, used to control disease attacks on crops, account for 20% of the total crop
protection market and are used for fruits and vegetables and rice. The growing horticulture market in India
owing to the government support has given a boost to fungicide usage. The market share of fungicides has
increased from 16% in 2005 to 20% in 2010.
Herbicides: Herbicides are the largest growing segment and currently account for 20% of the total crop
protection chemicals market. Sales are seasonal, owing to the fact that weeds flourish in damp, warm
weather and die in cold spells. Rice and wheat crops consume the major share of herbicides. Their main
competition is cheap labor employed to manually pull out weeds, however, increasing cost of farm labour
is expected to drive sales of herbicides going forward.
99
Bio-pesticides: Bio-pesticides are pesticides derived from natural substances like animals, plants, bacteria
and certain minerals. Bio-pesticides include all biological materials organisms, which can be used to
control pests. Currently a small segment, biopesticides market is expected to grow in the future owing to
government support and increasing awareness about use of non-toxic, environment friendly pesticides.
Others: Plant growth regulators, Nematocides, rodenticides, fumigants etc. Rodenticides and plant growth
regulators are the stars of this segment.
Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
Key Trends
Market Trends
Focus on developing environmentally safe pesticides by both the industry and the Government. The
Department of Chemicals has initiated a nationwide programme for "Development and production of
neem products as Environment Friendly Pesticides" with financial assistance from United Nations
Development Programme.
Focus by larger companies on brand building by conducting awareness camps for farmers and
providing complete solutions.
Increase in strategic alliances among large players for greater market reach and acquisitions of
smaller companies globally to diversify product portfolio.
Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
100
Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
Technology Trends
Increased R&D expected for development of new molecules and low dosage, high potency
molecules.
Focus on R&D in bio-pesticides segment with increasing preference for environmentally safe
products in the market.
Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
Growth Drivers
Even though the Indian agricultural sector is highly dependent on monsoons, the market for agrochemicals
is expected to grow at a high growth rate of ~11% p.a. to reach ~ USD 6.4Bn by Fiscal 2016.
Key market drivers include:
1. Growth in demand for food grains: With increasing GDP, the Indian middle-class could grow
from 31 million households in 2008 to 148 million households by 2030, with quadrupled
consumption. (Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India:
Sustainable Growth of the Chemical Sector”). Furthermore, India’s total population is expected to
increase to 1,523 million, (Source: United Nations Population Division) while India's urban
population is expected to increase by 275 million people by 2030. This will result in consumption-
led double-digit growth in key end markets over the next decade and an increased need for better
products and services. Increasing population and high emphasis on achieving food grain self-
sufficiency as highlighted in the Fiscal 2010 budget, is expected to drive growth. Source: Tata
Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of the
Chemical Sector”
101
Rising Population Levels in India (Crores)
Source: United Nations (Population Division)
2. Limited farmland availability and stagnant production: India has ~190 Mn hectares of gross
cultivated area and the scope for bringing new areas under cultivation is severely limited. Source:
Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
Further, the production of foodgrains in India has increased only marginally between 2001-2002 to
2009-2010 from 212.85 million tonnes in 2001-2002 to 218.11 million tonnes in 2009-2010.
Source: Directorate of Economics and Statistics, Department of Agriculture and Cooperation.
The stagnant food production has led to a gap in yield of food grains in India as compared to the
average yield levels globally.
Yield for select major crops (Tons/ Hectare)
World India Yield Gap
Rice 4.2 2.3 1.9
Wheat 3.0 2.8 0.2
Corn 5.0 2.2 2.8
0
50
100
150
200
250
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
102
Yield for select major crops (Tons/ Hectare)
World India Yield Gap
Sugarcane 74.0 67.0 7.0
Soybean 2.2 0.9 1.3
Rapeseed 1.9 1.1 0.8
Source: Tata Strategic Management Group – India Chem 2011
3. Growth of horticulture & floriculture: Buoyed by 50% growth experienced by Indian floriculture
industry in last 3 years, Government of India has launched a national horticulture mission to double
production by 2012. Growing horticulture and floriculture industries will result in increasing demand
for agrochemicals, especially fungicides. Also the farmers are now shifting their focus to value
added crops like fruits and vegetables from just basic crops. The more assured returns from these
and their relatively shorter harvesting duration makes them more profitable. With the increased ease
of usage of agrochemicals in fruits and vegetables the demand for agrochemicals will rise. Source:
Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
4. Shortage of labor: With increasing urbanization and NREGA the labor available for farming has
become costlier. This will push the farmers to adopt more usage of agrochemicals and reduce
dependence on manual labour. Source: Tata Strategic Management Group – India Chem 2012 -
"Emerging India: Sustainable Growth of the Chemical Sector”
The above factors demonstrate that there is a necessity to improve yield per hectare for food grains,
which can be achieved through increased usage of agrochemicals.
103
Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
5. Increasing awareness and Affordability: As per Government of India estimates, total value of
crops lost due to non-use of pesticides is around USD 17 Bn every year. Companies are increasingly
training farmers regarding the right use of agrochemicals in terms of quantity to be used, the right
application methodology and appropriate chemicals to be used for identified pest problems. With
increasing awareness, the use of agrochemicals is expected to increase. Also the minimum support
prices (MSP) is much better now and likely to increase further. This will ensure enough financial
incentive to increase productivity and increase profits. More and more focus is now towards value
added crop/ short duration crops. Source: Tata Strategic Management Group – India Chem 2012 -
"Emerging India: Sustainable Growth of the Chemical Sector”
Minimum Support Prices have shown a continuous upward trend in the past decade (in `)
Source: Government of India
Pertinently, the increase in MSPs will improve the ability of the farmers to afford agrochemicals.
Moreover, government initiatives to support farmers in recent years have also led to increased
affordability. There has been increase in the flow of institutional credit in recent years, from `
1,253,090 millions in 2004-2005 to ` 3,845,140 million in 2009-2010.
Government has actively increased MSPsso as to support the farmers
520 540 560 560 580 590 600 650
775
930
1,030 1,030
580 610
620 620 630
640
700 850
1,000
1,080 1,100
1,170
1,105 1,200
1,320 1,320 1,360 1,390 1,400 1,410
1,590
2,000
2,300
3,000
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11
Paddy of Grade 'A' Wheat Arhar or Tur
104
India’s agricultural subsidy has also increased from `561 billion in 2004-2005 to ` 1,229 billion in 2008-
2009.
Key Challenges
1. High R&D costs: R&D to develop a new agrochemical molecule takes an average of 9 years and ~
USD 180 Mn Indian companies typically have not focused on developing newer molecules and will
face challenges in building these capabilities, while continuing to remain cost competitive. Source:
Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
2. Threat from Genetically Modified (GM) seeds: Genetically modified seeds possess self-immunity
towards natural adversaries which have the potential to negatively impact the business of
agrochemicals. Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India:
Sustainable Growth of the Chemical Sector”
3. Need for efficient distribution systems: Since, the number of end users is large and widespread,
effective distribution via retailers is essential to ensure product availability. Lately, companies have
been directly dealing with retailers by cutting the distributor from the value chain thereby reducing
distribution costs, educating retailers on product usage and offering competitive prices to farmers.
Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable
Growth of the Chemical Sector”
105
4. Support for Integrated Pest Management (IPM) & rising demand for organic farming:
Promotion of IPM, zero budget farming and usage of bio-pesticides by Indian Government and
NGOs is gaining momentum. With increasing demand for organic food, farmers in certain states like
Karnataka have reduced chemical usage and have adopted organic farming. Agrochemical
companies will have to tackle the rising environmental awareness and address concerns on negative
impact of pesticide usage. Source: Tata Strategic Management Group – India Chem 2012 -
"Emerging India: Sustainable Growth of the Chemical Sector”
5. Counterfeit Products: The spurious pesticides market size in India is estimated to be USD 233 Mn
in 2009. This negatively impacts the revenues of the organized sector. Source: Tata Strategic
Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of the Chemical
Sector”
6. Regulatory Hindrances: The functioning of regulators is a concern for the industry and their
investments. Most of the players believe that the current approval process is slow, especially for
newer molecules. The government announced (in recent financial budget) that it plans to provide
150% depreciation for farm extension will be allowed, however no progress is observed for the
same. The industry needs good plans and their expedited implementation to grow strongly. Source:
Tata Strategic Management Group – India Chem 2012 - "Emerging India: Sustainable Growth of
the Chemical Sector”
Key Opportunities
1. Scope for increase in usage: With ~35-40% of the total farmland under crop protection, there is a
significant unserved market to tap into. By educating farmers and conducting special training
programmes regarding the need to use agrochemicals, Indian companies can hope to increase
pesticide consumption. Source: Tata Strategic Management Group – India Chem 2012 - "Emerging
India: Sustainable Growth of the Chemical Sector”
2. Huge export potential: The excess production capacity is a perfect opportunity to increase exports
by utilizing India’s low cost producer status. Source: Tata Strategic Management Group – India
Chem 2012 - "Emerging India: Sustainable Growth of the Chemical Sector”
3. Development of newer molecules: There is an increasing focus of end consumers on environment
friendly pesticides and the need for further yield enhancement. This translates into development of
newer molecules whose volume of consumption may be limited but higher value is likely to increase
the market size. Source: Tata Strategic Management Group – India Chem 2012 - "Emerging India:
Sustainable Growth of the Chemical Sector”
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OUR BUSINESS
In this section any reference to “our Company” refers to PI Industries Limited on a standalone basis and
references to “we”, “us” or “our” refers to PI Industries Limited and its Subsidiaries on a consolidated
basis, as the context may require. Unless stated otherwise, the financial data in this section is as per our
Standalone Financial Statements and Consolidated Financial Statements, as set forth “Financial
Statements” on page 186 of this Placement Document.
The following disclosures in connection with our overview, strengths and strategies should be read
together with the risk factors as detailed in the section titled “Risk Factors” on page 40 of this Placement
Document.
OVERVIEW
Our Company is a chemicals manufacturing and marketing Company with over fifty years of experience in
the agrochemicals sector. We are an integrated entity with a differentiated business model driven by
respect for intellectual property across two market segments, i.e. the domestic market and the export
market.
In the domestic market we focus on manufacturing and/or marketing of agri input products through the
following model:
In-licensing of newly launched or patented molecules from multinational innovators to register
and market agri input products in India;
Manufacturing and marketing of branded generic agri input products (i.e. molecules whose patents
have expired);
Selectively partnering with global innovators with presence in India to co-market their early stage
lifecycle agri input products using our countrywide marketing set up in India.
In the export market we undertake custom synthesis and contract manufacturing of niche fine and specialty
chemicals, where we offer global innovators a one-stop shop for process scale up and large scale
manufacturing of their newly discovered molecules.
Through this differentiated business model, we have been able to demonstrate consistent financial growth.
Our Company’s net revenue from operations on a consolidated basis has grown at a CAGR of 27.30% from
` 5,424.46 million for Fiscal 2010 to ` 8,791.05 million in Fiscal 2012. Our PAT margins have increased
by 1.27% points from 7.76% for Fiscal 2010 to 9.03% in Fiscal 2012 and our EBITDA margins have
increased by 1.12% points from 15.27% for Fiscal 2010 to 16.39% in Fiscal 2012, on a consolidated basis.
Our basic EPS on a consolidated basis has grown from ` 19.37 per share in Fiscal 2010 to ` 41.49 per share
in Fiscal 2012.
We have developed strong process research and manufacturing capabilities which are backed by
manufacturing facilities located at Panoli (Gujarat), Jammu and Jambusar (Gujarat) and a GLP and
ISO:17025 accredited laboratory set up in Udaipur.
Our Company has a robust marketing and distribution network which is spread across India and well
established in rural and agricultural belts. As on date, we have 211 people working in our marketing team
spread across the country. Our marketing team is partnered by a 2-3 tier distribution channel which
comprises of numerous retail points, over 10,000 distributors and direct dealers across the major agriculture
areas in the country, 27 stock points including our own depots and 18 C&F agents who work on hub-and-
spoke distribution model to ensure timely delivery.
We work closely with farmers and distribution channels to build our brand and create awareness for our
products. We accordingly have several successful brands such as “NOMINEE GOLD”, “BIOVITA”,
“FORATOX”, “CARINA”, “FOSMITE”, “ROKET”, “SOLARO”, “KITAZIN” “OSHEEN”, etc.
107
Our Company has been conferred with the ‘Power Brand’ status from amongst 81 successful brands and
companies featured in the “Indian Power Brands – the Global Superpower Edition”. We were also awarded
a certificate of Excellence in “Supplier Sustainability Program 2011” from Bayer Group of Companies in
India.
Our Company currently has 3 subsidiaries, which includes PI Japan Company Limited (Japan) which
carries out business development activities in Japan, PI Life Science Research Limited, which deals in
contract research projects, and PILL Finance & Investments Limited, which is engaged in the business of
holding investments and providing short term funding.
OUR STRENGTHS
Our Company has over five decades of experience in the agri-chemicals sector, and has over the years
developed in house capabilities and vast experience in process research, plant engineering, process scale
ups, large scale chemical manufacturing, product registration and marketing & brand building.
We believe following are the key strengths of our Company:
Differentiated business model
Our Company has, over the years, evolved a differentiated non-conflicting business model driven by
respect for intellectual property. On one hand, in our domestic agri input segment, our Company leverages
on our pan India marketing and distribution network, brand building capabilities and experienced team to
focus on in-licensing and co-marketing arrangements, which allows us to introduce novel products in the
Indian market to enhance productivity of Indian farmers and thus enables us to establish long term relations
with the farmer community and global innovators. On the other hand in our export segment, we leverage
on our chemistry process research and manufacturing capabilities, to focus on performing custom synthesis
and contract manufacturing services with respect to patented molecules that are in the early stages of their
life cycles, which gives us the opportunity to be the first or second suppliers for such products to the patent
holders. We also benefit from increases in volume production on the back of the innovators efforts to
enhance sales volumes for the returns on their R&D investments.
We derive synergistic benefits from our integrated business model such as (a) common infrastructure for
domestic agri inputs and custom synthesis exports and (b) develop knowledge and insight across the entire
value chain right from process development, scale up, manufacturing to marketing .
Long term relationship and reputation of trust and reliability with global innovators
We believe that we enjoy a reputation of trust and reliability with global innovators and we respect their
intellectual property and work in close partnership with them. On account of these relationships and
reputation we have been able to grow in both the domestic market and the export market and consistently
expand our product portfolio. Our strong relationship with global innovators has been demonstrated by our
consistent growth in both the Indian and export markets.
Wide distribution network and transparent distribution policies and practices
Our Company has over the years created a robust marketing and distribution network which is spread
throughout India and entrenched in rural and agricultural belts across India. Our wide spread distribution
network is further aided by our SAP based ERP system and effective business intelligence tools which
enables real-time transactions, efficient delivery mechanism, centralized controls and proactive planning
and monitoring. Our Company also practices straight forward and transparent business policies with our
customers and distributors thereby creating a healthy business environment for mutual benefits. Clear
commercial terms before the sale, no stock return, interest for delayed payments, etc are certain practices
which has helped us establish a strong and committed distribution network. Our field staff is regularly
trained to ensure that the systems we have created are well sustained.
108
Brand building capabilities
As part of our marketing approach, we work closely with farmers and distribution channels to create
awareness for our products by demonstrating their use through the lifecycle of crops. This approach has
helped enhance our reputation and recognition in the domestic markets. Some of our key brands include
“NOMINEE GOLD”, “BIOVITA”, “FORATOX”, “CARINA”, “FOSMITE”, “ROKET”, “SOLARO”,
“KITAZIN” “OSHEEN”, etc.
End-to-end capabilities in custom synthesis
Over the years, we have been able to build strong capabilities in process research of diverse chemistries,
process engineering and large scale manufacturing. These capabilities have helped us to develop a strong
portfolio of products and the ability to offer increasing suite of services which has led to a consistent
growth in our business.
Entry barriers in our business
Our Company has invested significant resources, time and effort in building our reputation, capabilities,
relationships and reach which have been critical in evolving our differentiated business model, which
thereby serve as significant entry barriers in our business.
Experienced management team
We are a professionaly managed Company with a Board of Directors consisting of a mix of experienced
excutive directors who have been associated with our Company and the industry for a long span of time
and highly qualified independent directors from diverse disciplines ranging from the agrochemicals and
chemicals industry, accounting, banking and engineering to civil administration. Headed by our Chairman
and Managing Director, Mr. Salil Singhal, who has over 45 years of experience in the agro-chemicals
sector and has in the past has served as the Chairman of the Crop Care Federation of India for 20 years, our
key managerial personnel team comprises of experienced and qualified professionals with diverse skills
which include manufacturing, engineering, research, marketing, sourcing, supply chain management,
finance and human resources. The experience in diverse disciplines of our management team has helped us
to grow and expand our business consistently.
OUR STRATEGIES
Continue expanding our domestic portfolio of in-licensed products
Our Company’s focus will continue to be on expanding our domestic portfolio of in-licensed products by
leveraging our strong relationships and reputation with global innovators. Our focus will be on new
products which provide better efficiencies and cost savings to the farmer. We have developed a robust
pipeline of potential products for the future. We are in the process of registering 2 new in-licensing
products and have also executed agreements with patent holders in the insecticide / herbicide / fungicide
segments to evaluate the potential for such molecules in the Indian market.
Adding new product categories to leverage our pan-India marketing network and customer reach
We propose to leverage on our pan-India marketing network and deep penetration and reach among the
farming community, to expand our categories of agri input products such as hybrid seeds, biocides,
nematicides, rodenticides etc.
Diversifying our presence across the agricultural value chain by leveraging our strong understanding of
the sector
We propose to capitalize on our vast experience in the agricultural sector and understanding of needs of
farmers by diversifying our presence across the agricultural value chain. As a part of this strategy we intend
109
to seek opportunities to acquire or partner with other corporates to access products, service and technology
that have large growth potential in the Indian agricultural market. We believe that pursuing selective
acquisitions, partnerships, or alliances would improve our competitiveness, further diversify our product
offerings and strengthen our market position.
Strengthening our relationship with existing clients
Leveraging on our process research and manufacturing capabilities, we propose to strengthen our
relationships with existing customers by undertaking custom synthesis and contract manufacturing for new
molecules across their various product segments.
Acquiring new clients
For our custom synthesis and contract manufacturing activities, we propose to cater to customers across
new industry verticals and in new geographies. We intend to explore acquisition or partnership
opportunities to access new customers, which would allow us to improve our competitiveness, strengthen
our market position and enhance our business.
OUR BUSINESS ACTIVITIES
We are an integrated entity with a non-conflicting approach driven by respect for intellectual property
across two market segments, wherein we share synergies arising from our expertise, infrastructure,
relationships and goodwill developed over the years. A summary of the market segments is as follows:
Domestic market - agri input
In the domestic market our Company has over the years developed brand recognition and a pan-India
distribution network for our products in India. Agri input products offered by us include agro chemicals,
specialty fertilizers and plant nutrients. Our Company has exclusive marketing rights from global
innovators for distribution of newly commercialized molecules in India.
Our domestic business comprises of three kinds of activities, namely
In-licensing of newly launched or patented molecules from multinational innovators to register
and market agri input products in India;
Manufacturing and marketing of branded generic agri input products (i.e. molecules whose patents
have expired);
Selectively partnering with multi national companies present in India to co-market their early stage
lifecycle agri input products using our countrywide marketing set up in India.
In-licensing of agri input products from multi national innovators
In recent years, our Company has adopted a differentiated business model of in-licensing agri input
products from multi-national Companies, who are generally not present in India, for marketing and
distribution of their products in India. We enter into exclusive arrangements with these companies to carry-
out product evaluation/trials, data generation, registration, introduction and market development for the
same in India.
Current Product Portfolio
Our current array of in-licensed products includes the following:
Name of the Product Chemical Name Category
Biovita Granules Seaweed (Ascophyllum nodusum) Specialty Plant Nutrient
Biovita Liquid Seaweed (Ascophyllum nodusum) Specialty Plant Nutrient
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Name of the Product Chemical Name Category
Kitazin Iprobenfos 48% EC Fungicide
Nominee Gold Bispyribac Sodium 10% SC Herbicide
Osheen Dinotefuran 20 % SG Insecticide
Pipeline
We are in the process of registering 2 new in-licensing products. Further, our Company has executed
various agreements with patent holders in the insecticide / herbicide / fungicide segments to evaluate the
potential for such molecules in the Indian market.
Manufacture and distribution of branded generic agri input products
Manufacturing, formulating, marketing and distributing branded generic agri input products under our own
brand has been our traditional business activity.
Current Product Portfolio
Name of the Product Chemical Name Category
Roket Profenofos 40% + Cypermethrin
4%
Insecticide
Simbaa Propargite 57% EC Insecticide
Carina Profenofos 50% EC Insecticide
Colfos Ethion 40% + Cypermethrin 5%
EC
Insecticide
Foratox 10 G Phorate 10% G Insecticide
Fosmite Ethion 50% EC Insecticide
Logik Tricyclozole 75% WP Fungicide
Maxima Thiamethoxam 25 WG Insecticide
Solaro Atrazine 50% WP Herbicide
Colt Cypermethrin 25% EC Insecticide
Inro Imazethapyr 10 SL Herbicide
Jumbo Imidacloprid 17.8% SL Insecticide
Oval Acephate 75 SP Insecticide
PI Bupro Buprofezin 25% SC Insecticide
PI Glypho Glyphosate 41% SL Herbicide
Snailkil Metaldehyde 2.5% DP Insecticide
Co-marketing arrangements for agri input products
Our Company selectively partners with global innovators who have presence in India for co-marketing
their new or early-stage lifecycle products using our countrywide marketing set up in India, under our own
brand.
Current Product Portfolio
Name of the Product Chemical Name Category
Voltage Spiromecifen 22.9 SC Insecticide
Fluton Flubendiamide 20% WG Insecticide
Clutch Pyraclostrobin 5%+Metiram 55%
WG
Fungicide
Lepido Chlorfenapyr 10% SC Insecticide
Lurit Dimethomorph 50% WP Fungicide
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Export market - Custom synthesis and contract manufacturing
We have been in this segment since the mid 1990s and provide custom synthesis and contract
manufacturing services to global innovators in relation to niche fine and specialty chemicals. This segment,
backed with in-house process research, process engineering and large scale manufacturing capabilities,
offers global innovators a one-stop shop for process scale up and large scale manufacturing of their newly
discovered molecules. We have over the years built long standing relationships with the leading
multinationals for custom synthesis and contract manufacturing of their newly launched and to be launched
products in the global markets.
In this segment we focus on molecules which:
are patented;
are in the early stages of their life cycles;
of high/medium value and low volume;
involve complex chemistries;
we believe would lead to high growth rates on successful commercialization across geographies.
We believe that our focus on early stage participation enables us to capitalize on the growth phase of these
products and also gives us the opportunity to be the first or second suppliers for such molecules under
global patents. We believe that our custom synthesis and contract manufacturing activities have been a
successful growth driver for us, with good visibility of business in the coming few years.
While the agro-chemical sector had been the major focus for us in this business, our Company also
undertakes custom synthesis of pharmaceutical intermediates and other fine chemicals.
Service Offerings
In this segment we offer the following end-to-end services:
Contract Research
Process Development
Analytical Method Development
Synthesis of purity and impurities of molecules for analytical reference standards
5 batch analysis under GLP conditions
Scale up studies
Process detailed engineering
Commercial scale production
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End-to-end process flow chart for custom synthesis and contract manufacturing
Infrastructure
We have an integrated infrastructure for this business segment and are equipped to undertake end-to-end
activities from process evaluation, bench scale trials, kilo lab, and pilot plant to commercial production.
Reaction capabilities
Our Company seeks to continuously add to its reaction capabilities in order to meet customer requirements.
Some of the reaction capabilities possessed by our Company are as follows:
Reaction Type (Example)
Pyrazoles N-Methyl substituted using Mono methyl hydrazine
Suzuki Coupling Reactions Substituted Biphenyls
Chiral Chemistry Chiral transformations
Acylation Friedel-Craft, Houben-Hoesch, Vilsmeier-Haak Fries rearrangement
Reduction Beechamp reduction, Hydrogenation, Clemmensen and Hydride
Darzen's Reaction Glycidic ester
Diazotisation Anilines
Halogenation Photochlorination,Bromination, Chlorination
Nitration Aromatic Compounds
Olefin Formation Wittig
113
Reaction Type (Example)
Phosphorylation Organo phosphorous & sulfur compounds
Sandmeyer Reaction Synthetic intermediates
Thionation Organo phosphorous & sulfur compounds
Rearrangement Thermal Cyclisation
Multi Phase Reactions Phase-transfer catalysis
Alkylation C, O & N alkylation
Esterification Phenols & carboxylic acid esters
Organometallic Grignard, Wittig
High Temperature Reactions Up to 260º C
High Pressure Reactions Up to 25 bars
Acetylation Alcohols and Phenols
Cyanation Cyano hydrins from Aldehydes and Ketones
Pyridines Substituted derivatives
As the new products under development by global innovators are often complex and large in structure
requiring multiple processes and reactions, our technological multiple reaction capabilities are immensely
advantageous, and enables us to provide end to end solutions, and fits in very well with our customer
requirements.
RESEARCH AND MANUFACTURING FACILITIES
Research Facilities
We have strong research and development capabilities which have helped us to develop new processes and
chemical formulations to suit the requirements and specifications of our customers in both our agri inputs
and custom synthesis business. Our research and development team continues to work on new areas of our
fine chemical business and have successfully carried out synthesis and scale-up for several new molecules
in the area of agrochemicals, pharmaceutical intermediates and imaging chemicals. In Fiscal 2012, our
Company’s research and development facility at Udaipur was accredited for Good Laboratory Practices,
(“GLP”) and Norms on OECD Principles by National GLP Monitoring Authority, (“NGCMA”),
Government of India in the field of Physical – Chemical Testing. The physical /chemistry related data
generated in Company’s GLP accredited laboratory are acceptable by the registration authorities
(agrochemicals / pharma etc.) in OECD countries such as USA, Europe, Japan etc. This is in addition to the
ISO 17025 accreditation to our laboratories.
Our process R&D infrastructure includes:
Work stations with complete online utilities and safety systems to support complicated chemical
reactions
Facilities to do high and low temperature reactions and high pressure reactions
Extensive in house library
Manufacturing Facilities
Our research initiatives are well supported by our strong manufacturing capabilities. Our Company has
manufacturing facilities at three locations, namely at Panoli (Gujarat), Jammu and in Jambusar (in a Special
Economic Zone).
Our formulation facilities encompass formulation in the form of water dispersible granule, wettable
powder, soluble concentrate, suspension concentrate, emulsifiable concentrate, emulsion, oil in water and
flowable concentrate for seed treatment. We also have an integrated process development team to handle
scale up, safety and waste treatment. Our manufacturing facilities are equipped with waste treatment
facilities for solid, liquid and gaseous waste. We possess high quality plant and machinery, vessels and heat
exchange systems with full utilities support. Our entire processes and systems are inter-connected and
centralized through a SAP developed ERP system which ensures efficiency and quick turn around times.
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Description of Physical Infrastructure Facilities
Location Area (in Sq. Metres) Type of Facility Activities
Udaipur,
Rajasthan 2,000
Research and
Development
Validation studies, fundamental
research and process improvement
trials of various intermediates/active
ingredients/fine chemicals;
Process development, development
of analytical methods, validation,
cost optimization, effluent
minimization/management;
Isolation and characterization of
impurities and intermediates.
Kilo Lab Study the process at multiple
kilogram scale, to determine various
engineering parameters and for
modifying and improving the
process.
Pilot Lab Scale up studies of processes
received from the R&D department
before the processes are brought
forward for commercial scale
manufacturing
Panoli, Gujarat 79,000 Manufacturing
Facilities
Manufacturing of agri input
products and commercial scale
production of intermediates / Active
ingredients of Fine / specialty
chemicals and formulations.
Jambusar,
Gujarat
88,000 Manufacturing
Facilities
Commercial scale production of
intermediates / Active ingredients of
Fine / specialty chemicals.
Jammu 10,000 Formulation Units Formulation of plant nutrients in
liquid and granular form and
packaging of the same
Quality and Safety Standards
Our manufacturing locations have in place an Integrated Quality Management System and our Company
has been accredited with global quality, health and safety standards such as ISO 9001, ISO 14001, OHSAS
18001 and ISO 17025. We also have a gas based power plant which caters to our captive power
requirements.
RAW MATERIAL MANAGEMENT
Key raw material
Our key raw materials include Ethyl Mercaptan, Paraformaldehyde, Phosphorus Pentasulphide, special
denatured spirit, Methylene Dibromide, Bentonite granule, Acadian technical, Propagite technical, Atrazine
technical, Bispyribac Sodium and Dinotefuran.
Procurement of key raw material
Bentonite granule and special denatured spirit is procured from the domestic market, and Phosphorus
115
Pentasulphide is both imported and procured from the domestic markets.
Nature of contracts / arrangements for procurement
We enter into contracts/arrangements with generally yearly fixed rates for the procurement of some of the
raw materials e.g. Acadian technical, Propagite technical, Atrazine technical, Bispyribac Sodium and
Dinotefuran.
We typically enter into monthly contracts/arrangements for procurement of special denatured spirits.
We enter into contracts/arrangements with generally quarterly fixed rates for the procurement of Ethyl
Mercaptan, Paraformaldehyde, Phosphorus Pentasulphide, Methylene Dibromide, Bentonite granule.
DISTRIBUTION NETWORK
Our Company has a robust marketing and distribution network which is spread throughout India and deeply
penetrated in rural and agricultural belts across India. As on date, we have 211 people working in our
marketing team spread across the country. Our marketing team is partnered by a 2-3 tier distribution
channel which comprises of numerous retail points, over 10,000 distributors and direct dealers across the
major agriculture areas in the country, 27 stock points including our own depots and 18 C&F agents who
work on hub-and-spoke distribution model to ensure timely delivery. Our wide spread distribution network
is further aided by our connectivity to a centralized SAP based ERP system which enables an effective
delivery turnaround time.
Our Company also practices straight forward and transparent trade policies with our customers and
distributors to avoid any disputes. Clear commercial terms before the sale, no stock return, interest for
delayed payments, etc are certain practices which have helped us establish a strong and committed
distribution network.
MARKETING AND BRAND BUILDING INITIATIVES
Over the years, our Company has built a track record of brand building and concept selling through
technical knowledge initiatives. Our Company provides product stewardship as a part of its marketing
philosophy. Our Company undertakes various initiatives in close association with the farmer community
for creating awareness about the proper, judicious and safe use of plant protection chemicals and scientific
solutions for crop management and at the same time promoting our products and brands. As part of our
marketing approach, we work closely with farmers and distribution channels to create awareness for our
products by demonstrating their use through the lifecycle of crops.
COMPETITION
For generic agri input products, the Indian agrochemicals market is highly fragmented in nature. The
market for the production and distribution of agrochemicals, industrial and specialty chemicals is
competitive in India. In the domestic markets, our competition in this segment is primarily with the
organized sector players such as Bayer Crop Science, Syngenta India, Rallis India, United Phosphorous and
many other multi national companies and large Indian companies. The basis of competition includes
availability of new products, product range, price and customer service.
For our custom synthesis and contract manufacturing services, we believe that we do not compete with any
domestic players for the range of chemistries, the scope of services and the diverse applications that we
cater to. We generally compete with research and synthesis players such as Hikal, Lonza, Saltigo,
Chemfine, etc.
ENVIRONMENT HEALTH AND SAFETY
Compliance with stringent emission standards for manufacturing facilities and other environmental
116
regulations are critical for our businesses. Research and development and manufacturing of products
involve hazardous chemicals, processes and by-products and are subjected to stringent regulations. The
environmental laws and regulations in the jurisdictions where our Company operates, may become more
restrictive and may be enforced even more strictly in the future. Customer requirements related to the
quality and safety of products will also continue to increase. In anticipation of such requirements, our
Company has invested substantial resources to proactively adopt and implement manufacturing processes
to increase adherence to environmental quality standards and enhance industrial safety levels, and
accreditations under as ISO 9001, ISO 14001 and OHSAS 18001 are a part of our Company’s efforts to
ensure best possible adherence to environmental management. practices.
EMPLOYEES
Our employees contribute significantly to our business operations. We recruit young graduates and
postgraduates from leading engineering, agriculture and business Schools e.g. IIM, XLRI, IIT, and ISB
etc. A well-structured development program focused and aligned to our business needs is in place for new
hires. As of December 31, 2012, we had 2,711 employees across all of our locations, including 1,372
permanent employees and 1,339 temporary employees.
The break-up of employees of our Company can be summarised as follows:
Particulars Executi
ve
Directo
rs
Senior
Management
(Permanent)
Middle
Managem
ent
(Permane
nt)
Staff
and
Worke
rs
(Perma
nent)
Total
No. of
permane
nt
employe
es
No. of
tempora
ry
employe
es
Total
Head office at
Gurgaon
3 8 44 27 82 10 92
Manufacturing
facilities at
Jambusar
1 19 135 155 136 291
Formulation unit
at Jammu
2 6 8 22 30
Manufacturing
facilities at Panoli
5 63 714 782 524 1,306
Sales and
Marketing
86 125 211 586 797
Registered office
and R&D facilities
at Udaipur
3 29 102 134 61 195
Grand Total 3 17 243 1,109 1,372 1,339 2,711
We place a significant emphasis on the recruitment and retention of our personnel and provide continuous
training for employees to achieve high quality skills, and to imbibe our Company’s value system.
INTELLECTUAL PROPERTY
In addition we have registered 116 trademarks for various brands under which our products are marketed
and have applied for registration of 21 trademarks which are in the process of being approved for
registration.
AWARDS AND CERTIFICATIONS
We have received the following awards and recognitions:
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Month and
Year
Award/Recognition
March 2012 Certificate of Bayer Group of Companies in India
December
2011
‘Power Brand’ status from amongst 81 successful brands and featured in the “Indian
Power Brands – the Global Superpower Edition”
September
2011
GLP Certificate from the National GLP Compliance Monitoring Authority, Government of
India
118
BOARD OF DIRECTORS AND SENIOR MANAGEMENT
Board of Directors
The general supervision, direction and management of our operation and business is vested with our Board,
which exercises its powers subject to our Memorandum and Articles of Association and the requirements of
Indian laws. As per our Articles of Association, we are required to have not have less than three (3)
directors and not more than eleven (11) directors. Currently, our Company has eleven (11) directors out of
which three (3) are executive and eight (8) non-executive directors. Further, out of eleven (11) directors,
five (5) are non-independent and six (6) are independent directors. Mr. Salil Singhalis the Chairman and
Managing Directorof our Company.
The following table sets forth details regarding the Board of Directors as at the date of this Placement
Document:
Name , Designation,
Address, Director
Identification Number
(“DIN”), Occupation and
Current Term of Director
Age (Years) Directorships in other companies
Mr. Salil Singhal
Chairman and Managing
Director
Singhal Farm House, Near
Airforce Station, Rajokri,
New Delhi - 110038
DIN – 00006629
Occupation : Industrialist
Term: Three (3) years with
effect from July 1, 2010 to
June 30, 2013
66 Secure Meters Limited
Wolkem India Limited
PILL Finance & Investments
Limited
Somany Ceramics Limited
Usha Martin Limited
Lake Palace Hotels & Motels
Private Limited
Historic Resort Hotels Private
Limited
Secure International Holdings Pte
Limited
Mr. Mayank Singhal
Managing Director and
CEO
Singhal Farm House, Near
Airforce Station, Rajokri,
New Delhi - 110038
DIN – 00006651
Occupation : Industrialist
Term: Five (5) years with
effect from December 1, 2009
to November 30, 2014
39
PILL Finance & Investments
Limited
PI Life Science Research Limited
TP Buildtech Private Ltd
Mr. Rajnish Sarna
Whole Time Director
House No. N-163, Ground
43 Nil
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Name , Designation,
Address, Director
Identification Number
(“DIN”), Occupation and
Current Term of Director
Age (Years) Directorships in other companies
Floor, Mayfield Garden,
Sector 51, Shamaspur,
Gurgaon, Haryana – 122 001
DIN – 06429468
Occupation : Professional
Term: Five (5) years with
effect from November 7, 2012
to November 6, 2017
Mr. Anurag Surana
Non-executive and Non-
Independent Director
222-D, Block – H, Pushpa
Bhawan, Sainik Farms, New
Delhi – 110 062
DIN – 00006665
Occupation: Professional
Term: Resigned as a Whole
time director on September
15, 2012 and continued to be
on the Board as a Non-
Executive Non Independent
Director.* Liable to retire by
rotation.
*His resignation from the post of
whole time director of our
Company was accepted by the
Board at its meeting held on
November 7, 2012.
48 PILL Finance & Investments
Limited
PI Life Science Research Limited
SS Agrisolutions Private Limited
ESCO Agencies Private Limited
Mr. Pradyumna Natvarlal
Shah
Non Executive and
Independent Director
Shanti Niketan, 5th
floor,
Block no. 51- 52, Plot no. 96,
Prabhat Colony, Road No. 1,
Santacruz (East), Mumbai-
400 055
DIN – 00096793
Occupation : Professional
84 Secure Meters Limited
Wolkem India Limited
Taparia Tools Limited
Indocount Industries Limited
Pranavaditya Spinning Mills
Limited
120
Name , Designation,
Address, Director
Identification Number
(“DIN”), Occupation and
Current Term of Director
Age (Years) Directorships in other companies
Term: Last re-appointed on
July 16, 2011. Liable to retire
by rotation
Mr. Narayan K. Seshadri
Non Executive and
Independent Director
Flat no. – 10, 7th
Floor,
Skylark Co-operative Housing
Society Limited, Little Gibbs
Road, Malabar Hill, Mumbai
– 400 006
DIN – 00052285
Occupation : Professional
Term: Last re-appointed on
July 16, 2011. Liable to retire
by rotation
55 Halcyon Resources and
Management Private Limited
Arthveda Fund Management Private
Limited
A2O Software India Private Limited
Magma Fincorp Limited
Kalpataru Power Transmission
Limited
WABCO India Limited
SBI Capital Markets Limited
Tranzmute Capital & Management
Private Limited
Radiant Life Care Private Limited
IRIS Business Services Limited
TVS Investments Limited
Astrazeneca Pharma India Limited
Lindner Investment Limited BVI
Halcyon Enterprises Private Limited
Dimexon International Holdings BV
Indrise Investment, Cayman Islands
Mr. Pravinbhai Kanubhai
Laheri
Non Executive and
Independent Director
A-404, Bageshree, Opposite
Fun Republic, Satellite Road,
Ahmedabad – 380 054
DIN – 00499080
Occupation: Retired IAS
Officer
Term: Last reappointed on
July 19, 2010. Liable to retire
by rotation
67 Gujarat Pipavav Port Limited
Pahal Financial Services Pvt
Limited
Amap Management & Consultancy
PrivateLimited
New Light Hotels and Resorts
Limited
Narayani Hotels and Resorts Private
Limied
RBG Mineral Industries Lmited
Ambuja Cement Foundation
DMCC Oil Terminals (Navlakhi)
Limited
Mr. Bimal Kishore Raizada
Non-Executive and
Independent Director
L-32/7, DLF City, Phase –II,
Gurgaon, Haryana – 122002
DIN – 00102436
68 Insta Power Limited
Pinewood Diagnostics Limited
Zenotech Laboratories Limited
New India Bio Pharma Private
Limited
Amira Nature Foods Limited
121
Name , Designation,
Address, Director
Identification Number
(“DIN”), Occupation and
Current Term of Director
Age (Years) Directorships in other companies
Occupation : Professional
Term: Last re-appointed on
July 19, 2010. Liable to retire
by rotation
Mrs. Ramni Nirula
Non-Executive and
Independent Director
A-14, Anand Niketan,
New Delhi- 110021
DIN – 00015330
Occupation: Professional
Term: Last re-appointed on
July 16, 2011. Liable to retire
by rotation
60 Usha Martin Limited
Jubilant Foodworks Limited
McLeod Russel India Limited
Comm Trade Services Limited
Vardhman Special Steels Limited
Sona Koyo Steering Systems
Limited
Avantha Power & Infrastructure
Limited
Utkarsh Micro Finance Private
Limited
Goldman Sachs Trustee Company
(India) Private limited
DRN Investments and Agriculture
Private Limited
TAMA Investments and Finance
Private Limited
IKP Knowledge Park (non profit
company)
Computer Age Management
Services Private Limited
Mr. Raj Kaul
Non-Executive and Non-
Independent Director
Cecilien Allee 33, Dusseldorf
– 40474, Germany
DIN – 00394139
Occupation: Consultant
Term: Last re-appointed on
September 14, 2012. Liable to
retire by rotation
70 RJR Group, Gowan Company, USA
Dr. Venkatrao S Sohoni
Additional Director (Non-
Executive Independent
Director)
79, Ross Circle, Oakland, CA
94618
USA
70 Fullford India Limited
Advinus Therapeutics Limited
122
Name , Designation,
Address, Director
Identification Number
(“DIN”), Occupation and
Current Term of Director
Age (Years) Directorships in other companies
DIN – 00012010
Occupation: Professional
Term: Appointed as additional
director on November 7,
2012. To be regularised in the
ensuing Annual General
Meeting
Brief profiles of Directors
Mr.Salil Singhal, aged 66 years, is the Chairman and Managing Director of our Company. He is a graduate
from St. Xavier’s College, Mumbai and has more than 45 years’ experience in the fields of chemicals,
intermediate and agrochemicals industries. Mr. Salil Singhal brings a strong marketing and business
development focus to the businesses. Mr. Singhal was Chairman of the Pesticides Association of India,
now called Crop Care Federation of India for 20 years. He is a well-known person within the
agrochemical/agricultural business in India and has been on several committees of the Government of India
on agriculture and pesticide related policies. He is an active member of Confederation of Indian Industry’s
National Environment Council and their task force on integrity and task transparency in Governance. He is
currently the Chairman of the Confederation of Industries of India.
Mr. Mayank Singhal, aged 39 years, is an Engineering & Management Graduate from United Kingdom.
He joined the Board of our Company in 1998 and was appointed as Whole Time Director of our Company
in the year 2000. Subsequently, he was appointed as Joint Managing Director in year 2004 and thereafter as
the Managing Director and CEO of our Company in the year 2009. Mr. Mayank Singhal has been
responsible for changes in the policies, operations and systems of our Company to handle rapid growth and
broadening the customer base of our Company. He has over 15 years of experience in the agro- chemical
industry.
Mr. Rajnish Sarna, aged 43 years, is a qualified Chartered Accountant with a diverse experience of over
two decades in areas of Business Development & Strategy, Customer Relationship Management,
Operations, Finance & Risk Management, Legal Contracting & Compliances, Investor relations, Corporate
planning & reporting, information technology and Process re-engineering. He has been associated with our
Company for more than 16 years and in the past has held a number of senior leadership roles including that
of the CFO. Presently he is a whole-time director of our Company. He has been a key member of the
executive team instrumental in overall transformation of our Company over the last few years. In his
current role he shall focus on strengthening the custom synthesis exports, evolving new
business/partnership models, transforming research and development and operations into cost effective
service model, further strengthening corporate planning, finance, information technology and investor
relations processes at our Company.
Mr. Anurag Surana, aged 48 years, is the Non-Executive Non-Independent Director of our Company. He
holds degree in B.Com (Honours) from University of Delhi. He has over 25 years of experience in the
agro-chemical industry and has been associated with our Company for the past 18 years. He was associated
with our Company as a whole-time director till September 15, 2012 and managed the entire manufacturing
operations and projects.
Mr. Pradyumna Natvarlal Shah, aged 84 years, is a Non Executive and Independent Director of our
Company. He is a member of Institute of Chartered Accountants of India (“ICAI”). He has in the past been
123
the President of ICAI and is currently a partner at Shah & Co. He has held the post of the President of the
Bombay Chartered Accountants Society for the year 1968-1969. He has vast experience in the field of
corporate laws, accountancy and taxation laws. Mr. Pradyumna Natvarlal Shah has received the “Life Time
Service Award” from the Chamber of Tax Consultants in October 2002.
Mr. Narayan K Seshadri, aged 55 years, is a Non- Executive and Independent Director of our Company.
He is member of Institute of Chartered Accountants of India and has over thirty (30) years of experience in
the field of accountancy and management advisory and has been associated with our Company for the past
6 years. He is a member of Andersen’s Global CEO advisory council, the only Indian partner to hold such a
position. Mr. Seshadri has worked in the United Kingdom, Middle East and India and helped on various
global initiatives and engagements during his consulting career. Besides the industry sectors that he
currently works with, Mr. Narayan K Seshadri has advised the power, banking and financial services,
agribusiness, health care and IT sectors at different levels such as from policy formulation to corporate
strategy, restructuring and organization transformation. He is the founder of Tranzmute Capital and
Management Private Limited established with the objective of working with the 1st generation
entrepreneurs and family businesses to enable rapid growth in their businesses by providing new ideas,
management and capital.
Mr. Pravinbhai Kanubhai Laheri, aged 67 years, is a Non Executive and Independent Director of our
Company. He graduated from Bombay University in 1965 with political science, sociology and
comparative studies in constitutions. He was awarded Sir Charles Fulton Prize for his top rank in legal
studies. He holds a postgraduate degree in Economics from the University of Wales, Centre for
Development Studies at Swansea. He is a retired Indian Administrative Services officer, Gujarat having an
experience of more than 45 years of experience in handling various positions mainly in public sector
undertakings / public sector. He initiated special credit scheme under which more than 200,000 small
artisans are financed successfully by the banks. He served in the Government of Gujarat in various
capacities –Principal Secretary to five Chief Ministers of Gujarat, Principal Secretary of Rural
Development Department and Chief Secretary to Government of Gujarat. As Chief Secretary of
Government of Gujarat he was overall in-charge of administrative machinery and looking after the
governance as well as developmental aspects of the state. He was also the Chairman and Managing
Director of Sardar Sarovar Narmada Nigam Limited. He has been associated with our Company for the past
3 years.
Mr. Bimal Kishore Raizada, aged 68 years, is a Non Executive and Independent Director of our
Company. He is a fellow member of the Institute of Chartered Accountancy from England and Wales and
also of the Institute of Chartered Accountants of India. He is also a member of the Board of Governors,
Institute of Internal Auditors and Treasurer of the Association of UK Chartered Accountants in India. Mr.
Bimal Kishore Raizada was part of the core team at Ranbaxy which saw rapid growth of Ranbaxy having
diverse businesses of drugs and pharmaceuticals, custom synthesis, diagnostics etc. He has worked in
various positions at Ranbaxy and was subsequently appointed as the Director in-charge of Ranbaxy’s
clinical reference laboratory – Specialty Ranbaxy Limited
Mrs. Ramni Nirula, aged 60 years, is a Non Executive and Independent Director of our Company. She
holds a Bachelor’s degree in economics and master’s degree in business administration from Delhi
University. She has more than three decades of experience in the financial services sector. She began her
career with ICICI Limited in the year 1976 in project appraisal division. Since then she has held various
leadership positions in areas of project financing, strategy, planning and resources and corporate banking.
She was part of the management team instrumental in transforming ICICI Bank from a term lending
institution into a technology led diversified financial services group with a strong presence in India’s retail
financial services market. Ms. Ramni Nirula has held key position as Managing Director and CEO of ICICI
Securities Limited. She was also responsible for government banking group and corporate agri groups at
ICICI Bank, where she handled the interface with the Government and various ministries and departments
thereof and initiatives for priority sector lending, respectively.
Mr. Raj Kaul, aged 70 years, is a Non Executive and Non Independent Director of our Company. He
holds bachelor’s degree in electrical engineering from Birla Institute of Technology and Science, Ranchi.
124
He has 15 years of experience in the field of engineering consulting and consumer products marketing
management. He has been associated with our Company for the past 5 years. He was with Bayer
CropScience AG in the capacity of Senior Vice President from 1989 to 2007. He has spent over 25 years in
general management and M&A for Bayer in the agro business and related businesses and has completed
transactions of different types such as licensing, joint ventures, research agreements, partnerships,
acquisitions and divestment. He retired as a member of Group Leadership Circle of Bayer AG and senior
Vice President of Bayer CropScience AG. Currently, he offers advisory services to our Company which
includes providing of key market analysis, indicate and analyze possible threat to the business and suggest
policies and processes that will provide for such contingencies.
Dr. Venkatrao S. Sohoni, aged 70 years, is a Non- Executive and Independent Director of our Company.
He holds B.Tech (Honours) degree in Electronics Engineering from IIT, Kharagpur and has also done PhD
in Information Systems for Banking from IIT, Mumbai. He has over 48 years of experience with MNCs in
India and USA and has spent over 30 years as General Manager/Managing Director/ CEO of agrochemical
and pharmaceutical industry. He has been associated with our Company for the past 2 months. He has in
the past served as the Managing Director of Rallis India Limited. He holds a record for ensuring growth,
both organic and through acquisitions and mergers, building successful teams, meeting established goals
and increasing profits. He has identified and implemented innovative approaches for expansion of business
and achieved success in gaining corporate approval for significant acquisitions and business development
initiatives.
Relationship of the Directors
Except Mr. Salil Singhal, Chairman and Managing Director and Mr. Mayank Singhal, Managing Director
and CEO who are related to each other as father and son, none of our other Directors on the Board are
related to each other.
Borrowing Powers of the Directors
Pursuant to a resolution dated July 26, 2012 passed by way of postal ballot by the shareholders of our
Company, the consent of the members of our Company is accorded to the Board of Directors to borrow
monies together with monies already borrowed by our Company (apart from temporary loans obtained
from the bankers of our Company in the ordinary course of business) upto `6,000 million as outstanding at
any time and from time to time.
Shareholding of Directors
Ason January 25, 2013, the details of the Equity Shares held by our Directors is as follows:
Sr.
No.
Particulars No. of EquityShares Percentage (%) of paid-up
and subscribed share
capital
1. Mr. Salil Singhal 181,278 0.72
2. Mr. Mayank Singhal 44,052 0.18
3. Mr. Narayan K Seshadri 261,756 1.04
4. Mr. Rajnish Sarna 19,195* 0.08
5. Mr. Anurag Surana 22,288** 0.09
*Mr. Rajnish Sarna also holds 27,914 stock options as per the ESOP Scheme.
** Mr. Anurag Surana also holds 24,960 stock options as per the ESOP Scheme
125
Remuneration to Executive Directors of our Company:
1. Mr. Salil Singhal, Chairman and Managing Director:
Pursuant to a resolution dated May 17, 2010 passed by the Board of Directors of our Company
and shareholders resolution dated July 19, 2010 passed at an Annual General Meeting of our
Company, Mr. Salil Singhal, has been re-appointed as the Chairman and Managing Director of
our Company for a period of 3 years commencing from July 1, 2010. The terms of his
appointment are as follows:
Period: Three (3) years with effect from July 1, 2010
Basic Salary: `8,00,000 per month in the range of `8,00,000 to `12,00,000 per month with
such increment from time to time as the Board/Committee of Directors may deem fit.
Commission: Such remuneration by way of commission, in addition to salary, perquisites and
allowances payable, calculated with reference to net profits of our Company at the end of the
particular financial year as may be determined by the Board of Directors of our Company at the
end of each financial year, subject to the provisions of the Companies Act, 1956.
Perquisites: The perquisites, allowances payable to Mr. Salil Singhal, would be subject to an
overall ceiling of `75,00,000 per annum as under:
i. Housing: Our Company will provide rent free residential accommodation (furnished or
otherwise) or house rent and house maintenance allowance in lieu thereof. Our
Company shall also the reimbursement of expense for utilities such as gas, electricity,
water, furniture/furnishings, repairs, servant’s salaries and services of sweepers,
watchman, gardener.
ii. Medical: Expenses incurred for him and his family shall be reimbursed subject to
ceiling of one month’s salary in a year or three month’s salary over a period of three
years.
iii. Leave Travel: Expenses towards leave travel shall be reimbursed for himself and his
family (including dependents) twice in block of 4 years in accordance with rules
specified by our Company
iv. Club Fees: Fees of clubs subject to a maximum of two clubs.
v. Personal Accident Insurance: Our Company will pay the premium for the personal
accident insurance policy taken for self.
vi. Car and telephone: The provision for use of our Company’s business and telephone at
residence will not be considered as perquisites. Personal long distance calls on
telephone and use of car for private purposes shall be billed by our Company to him.
vii. Provident Find, Superannuation Fund, Gratuity and Leave Encashment: Company’s contribution to provident fund and superannuation fund and payment of
gratuity and encashment of leave would be as per the rules of our Company. However
our Company’s contribution to provident fund and superannuation fund to the extent
these (either singly or together) are not taxable under the Income tax Act, gratuity
payable as per the rules of our Company and encashment of leave at the end of tenure
shall not be included in the computation of limits for the remuneration or perquisites
aforesaid.
Minimum remuneration: Notwithstanding anything to the contrary contained herein, where in
any financial year during the currency of tenure of Mr. Salil Singhal as Chairman and Managing
126
Directors, our Company has no profits or its profits are inadequate, our Company will pay the
above remuneration (including perquisites) as the minimum remuneration.
Subsequently, the basic salary of Mr. Salil Singhal was increased to `1,000,000 per month with effect
from July 1, 2012 pursuant to a resolution passed by the Board of Directors on a recommendation of the
Remuneration Committee at its meeting held on July 26, 2012.
2. Mr. Mayank Singhal, Managing Director and CEO:
Mr. Mayank Singhal was appointed as the Joint Managing Director for a period of five (5) years
with effect from December 1, 2004 by the shareholders of our Company in the meeting held on
September 30, 2005. Pursuant to a resolution dated October 24, 2009 passed by the Board of
Directors of our Company and shareholders resolution dated November 30, 2009 passed at an
Extra Ordinary General Meeting of our Company, Mr. Mayank Singhal, was appointed as the
Managing Director and CEO of our Company for a period of five (5) years commencing from
December 1, 2009 and terms of his appointment are as follows:
Period: Five (5) years with effect from December 1, 2009
Basic Salary: `6,00,000 per month in the range of `6,00,000 to `10,00,000 per month with
such increment from time to time as the Board/Committee of Directors may deem fit.
Commission: Such remuneration by way of commission, in addition to salary, perquisites and
allowances payable, calculated with reference to net profits of our Company at the end of the
particular financial year as may be determined by the Board of Directors/Remuneration
Committee of our Company at the end of each financial year, subject to overall ceiling stipulated
in sections 198 and 309 of the Companies Act, 1956.
Perquisites: The perquisites, allowances payable to Mr. Mayank Singhal, would be subject to an
overall ceiling of `30,00,000 per annum as under:
i. Housing: Our Company to provide rent free residential accommodation (furnished or
otherwise) or house rent and house maintenance allowance in lieu thereof. The
reimbursement of expenses for utilities such as gas, electricity, water, furniture/furnishings,
repairs, servant’s salaries and services of sweepers, watchman, gardener, the monetary value
of which shall be evaluated as per Income Tax Rules.
ii. Medical: Expenses incurred for him and his family shall be reimbursed subject to ceiling of
one month’s salary in a year or three month’s salary over a period of three years.
iii. Leave Travel: Expenses towards leave travel shall be reimbursed for himself and his family
(including dependents) twice in block of 4 years in accordance with rules specified by our
Company
iv. Club Fees: Fees of clubs subject to a maximum of two clubs.
v. Personal Accident Insurance: Our Company to pay the premium for the personal accident
insurance policy taken for self.
vi. Car and telephone: The provision for use of our Company’s business and telephone at
residence will not be considered as perquisites. Personal long distance calls on telephone
and use of car for private purposes shall be billed by our Company to him.
vii. Provident Find, Superannuation Fund, Gratuity and Leave Encashment: Company’s
contribution to provident fund and superannuation fund and payment of gratuity and
encashment of leave would be as per the rules of our Company. However our Company’s
127
contribution to provident fund and superannuation fund to the extent these (either singly or
together) are not taxable under the Income tax Act, gratuity payable as per the rules of our
Company and encashment of leave at the end of tenure shall not be included in the
computation of limits for the remuneration or perquisites aforesaid.
viii. Tax on on-monetary perquisites: Income tax on non-monetary perquisites (to be evaluated
as per Income Tax Rules, wherever applicable and actual cost to our Company’s furnished
accommodation gas, electricity, water, furnishings, use of car etc. to be provided to Mr.
Mayank Singhal shall be subject to section 17 and 192 (1A) of the Income Tax Act, 1961, be
borne by our Company.
Minimum remuneration: Notwithstanding anything to the contrary contained herein, where in
any financial year during the currency of tenure of Mr. Mayank Singhal, our Company has no
profits or its profits are inadequate, our Company will pay the above remuneration (including
perquisites) as the minimum remuneration.
Subsequently, the basic salary of Mr. Mayank Singhal was increased to ` 800,000 with effect from
December 1, 2011 pursuant to a resolution passed by the Board of Directors on a recommendation of the
Remuneration Committee at its meeting held on May 29, 2012.
3. Mr. Rajnish Sarna, Whole-time Director:
Pursuant to a resolution dated November 7, 2012 passed by the Board of Directors of our
Company and as approved by the shareholders pursuant to a resolution passed by way of a postal
ballot, results of which have been declared on January 18, 2013, Mr. Rajnish Sarna has been
appointed as the Whole-time Director of our Company for a period of 5 years commencing from
November 7, 2012.The terms of his appointment are as set out below:
Period: Five (5) years with effect from November 7, 2012
Remuneration: `430,000 per month in the range of ` 430,000 to ` 800,000 per month with such
increment from time to time as the Board/Committee of Directors may deem fit.
Perquisites: The perquisites, allowances payable to Mr. Rajnish Sarna by our Company shall
include the following:
i. Housing: Our Company will provide rent free residential accommodation (furnished or
otherwise) or house rent and house maintenance allowance in lieu thereof. The
reimbursement of expenses for utilities such as gas, electricity, water, furniture/furnishings,
repairs, servant’s salaries and services of sweepers, watchman, gardener, the monetary value
of which shall be evaluated as per Income Tax Rules.
ii. Medical: Expenses incurred for him and his family shall be reimbursed subject to ceiling of
one month’s salary in a year.
iii. Leave Travel: Expenses towards leave travel shall be reimbursed for himself and his family
(including dependents) twice in block of 4 years in accordance with rules specified by our
Company
iv. Club Fees: Fees of clubs subject to a maximum of two clubs.
v. Personal Accident Insurance: Our Company will pay the premium for the personal
accident insurance policy taken for self.
128
vi. Car and telephone: The provision for use of our Company’s business and telephone at
residence will not be considered as perquisites. Personal long distance calls on telephone
and use of car for private purposes shall be billed by our Company to him.
vii. Provident Find, Gratuity and Leave Encashment: Company’s contribution to provident
fund, payment of gratuity and encashment of leave would be as per the rules of our
Company. However our Company’s contribution to provident fund to the extent it is not
taxable under the Income tax Act, gratuity payable as per the rules of our Company and
encashment of leave at the end of tenure shall not be included in the computation of limits
for the remuneration or perquisites aforesaid.
Annual increment shall fall on April 1 each year during continuation of this agreement.
Minimum remuneration: Notwithstanding anything to the contrary contained herein, where in
any financial year during the currency of tenure of Mr. Rajnish Sarna as Whole-time director of
our Company has no profits or its profits are inadequate, our Company will pay the above
remuneration (including perquisites) as the minimum remuneration.
Details of remuneration paid to the executive directors during Fiscal 2012
Name Salary (`) Perquisites (`) Provident Fund
and
Superannuation
(`)
Commission (`)
Mr. Salil Singhal 10,500,000 1,714,946 2,950,504 5,000,000
Mr. Mayank
Singhal
8,800,000 973,008 2,472,804 5,000,000
Mr. Anurag
Surana*
6,810,000 600,000 741,604 NA
Mr. Rajnish
Sarna**
NA NA NA NA
*Mr Anurag Surana ceased to be whole-time director of our Company with effect from September 15, 2012 and continued on our
Board as a Non-Executive and Non-Independent Director. **Mr. Rajnish Sarna was appointed as a Whole time director on the Board of our Company with effect from November 7, 2012
Source: Annual report
Remuneration of Non-Executive Directors
All fees/compensation to non-executive directors on our Board, including independent Directors have
been fixed by our Board pursuant to the approval granted by our shareholders in their Annual General
Meetings held on July 21, 2007 and subsequently in July 19, 2010, respectively. Sitting fees payable to
non-executive directors on our Board are within the limits prescribed under the Companies Act. No
shareholder approval is required for fees/compensation payable to any of our non-executive directors on
our Board, including independent directors.
Details of remuneration paid to the non-executive directors during Fiscal 2012
Commission paid for the year March 31, 2012 was duly approved by our Board in their meeting held on
May 29, 2012. Detail of sitting fees and commission paid to non-executive Directors for the financial year
2011-12 is as follows. It may further be noted that Non-Executive Directors have not been paid any
remuneration except sitting fees for attending Board and Committee meetings and commission for the
year ended March 31, 2012:
Name Sitting fees for attending meetings
(`)
Commission (`)
Mr. Pradyumna Natvarlal Shah 120,000 500,000
129
Name Sitting fees for attending meetings
(`)
Commission (`)
Mr. Narayan K Seshadri 130,000 500,000
Mr. Raj Kaul 60,000 500,000
Mr. Bimal Kishore Raizada 200,000 500,000
Mr. Pravin K Laheri 40,000 500,000
Mrs. Ramni Nirula 30,000 500,000
Mr. Anurag Surana* Nil Nil
Dr. Venkatrao S. Sohoni** Nil Nil *Mr. Anurag Surana was re-designated as a Non-Executive and Non-Independent Director post his resignation as a Whole-time director on September 15, 2012. Hence, no sitting fees was payable to him for the year ended March 31, 2012.
**Dr. Venkatrao S. Sohoni was appointed as additional director on the Board of our Company with effect from November 7, 2012
Source: Annual report
Interest of Directors
All the Directors , including our independent directors, 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 thereof as well as to the
extent of other remuneration and reimbursement of expenses payable to them under our Articles of
Association. All the non-executive Directors of our Company are entitled to sitting fees for every meeting
of the Board or a committee thereof and also commission. The Executive Directors of our Company are
interested to the extent of remuneration paid for services rendered as an officer or employee of our
Company.
All the Directors of our Company, including independent and non-independent directors, may also be
deemed to be interested to the extent of Equity Shares, if any, held by them or by companies, firms and
trusts in which they are interested as directors, partners, members or trustees and also to the extent of any
dividend payable to them and other corporate actions in respect of the said Equity Shares.
Further, Mr., Raj Kaul has entered into an agreement with our Company dated June 18, 2009 for providing
advisory services for a period of three (3) years commencing from July 1, 2009. Subsequently the
agreement was renewed vide a supplemental advisory agreement dated November 5, 2011 and term of the
agreement was extended upto March 31, 2015. The fees payable to Mr., Raj Kaul for providing advisory
services is € 70,000 per annum. Necessary approval under section 297 of the Companies Act, 1956 has
been taken by the company as required under the provisions of the Companies Act, 1956. Approval for the
last supplement agreement entered on November 5, 2011 was granted by the Office of Regional Director
vide its letter no. RD(NWR)/Sec. 297/141/2011-12/1149 dated July 9, 2012.
All our Directors may be deemed to be interested in the contracts, agreements/arrangements entered into or
to be entered into by our Company with any company in which they hold directorships or any partnership
firm in which they are partners as declared in their respective declarations.
There are no existing loans which the Directors have taken from our Company.
Corporate Governance
Overview
Our Company is in compliance with the corporate governance regime in accordance with the standards
imposed by the SEBI, the BSE, the NSE and other regulatory authorities in India.
We have complied with the mandatory requirements relating to corporate governance detailed in Clause
49 of the Listing Agreement, including those relating to composition of the board of directors and the
constitution of committees.
130
Our Company has maintained an optimum combination of Executive and Non-Executive Directors.
Currently, our Company has eleven (11) directors of which three (3) are executive directors and eight (8)
are non-executive directors. Our Chairman and Managing Director being an executive director, and as per
Clause 49 of the Listing Agreement at least half our Board is required to be composed of independent
directors. Currently, out of eleven (11) directors, five (5) are non-independent and six (6) are independent
directors. During the period from April 1, 2012 to December 31, 2012, four (4) meetings of the Board were
held on May 29, 2012, July 26, 2012, November 7, 2012 and December 6, 2012.
The management of our Company is headed by our Chairman and Managing Director, Mr. Salil Singhal,
who operates under the overall supervision, direction and control of the Board. The Board reviews and
approves strategy and oversees the actions and results of the management to ensure that the long-term
objectives of enhancing stakeholder value are met.
Committees of our Board: A brief description of each of our committees as follows:
Audit Committee
The Audit Committee was constituted pursuant to the resolution dated June 30, 2001 passed by the Board
of Directors of our Company.
Our Board of Directors has re-constituted an Audit Committee pursuant to the resolution dated
November 7, 2012 passed by the Board of Directors of our Company. The Audit Committee presently
comprises of Mr. Pradyumna Natvarlal Shah, Mr. Rajnish Sarna, Mr. Narayan K Seshadri and Mr Bimal K
Raizada. Mr. Pradyumna Natvarlal Shah has been appointed as Chairman of the Audit Committee
The terms of reference of the Audit Committee includes the following:
(a) Overseeing the company’s financial reporting process and the disclosure of its financial information
to ensure that the financial statements are correct, adequate and credible;
(b) Recommending to the Board, the appointment, re-appointment and, if required, the replacement or
removal of the statutory auditors and the fixation of audit fee;
(c) Approval of payment to statutory Auditors for services rendered by the statutory Auditors.
(d) Recommending to the Board, the appointment and fixation of remuneration of Cost Auditors.
(e) Reviewing with the management the Annual financial statements before submission to the Board for
approval.
(f) Reviewing, with the management, performance of statutory and internal auditors, and adequacy of
internal control system.
(g) Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit
department, reporting structure coverage and frequency of internal audit.
(h) Reviewing reports of internal audit and discussion with internal auditors on any significant findings
of any internal investigations by the internal auditors and the executive management’s response on
matters and follow-up thereon;
(i) Reviewing the company’s financial and risk management policies;
(j) Looking into the reasons for substantial defaults, if any, in payment to the depositors, debenture
holders, shareholders (in case of nonpayment of declared dividends) and creditors;
(k) Reviewing the Management discussion and analysis of financial condition and results of operation.
(l) Reviewing the Statement of significant related party transactions (as defined by the audit
committee).
(m) Reviewing the Management letters / letters of internal control weaknesses issued by the statutory
auditors.
During the period April 1, 2012 to December 31, 2012, 3 (three) meetings of the Audit Committee were
held on May 29, 2012, July 26, 2012 and November 7, 2012.
131
Investor’s Grievances Committee
The Investor’s Grievances Committee was constituted pursuant to the resolution dated June 29, 2002
passed by the Board of Directors of our Company.
Our Board of Directors has re-constituted the Investor’s Grievances Committee pursuant to the resolution
dated November 7, 2012passed by the Board of Directors of our Company. The Investor’s Grievances
Committee presently comprises of Mrs. Ramni Nirula, Mr. Salil Singhal and Mr. Mayank Singhal.
MrsRamni Nirula has been appointed as the Chairman of the Investor’s Grievances Committee.
The terms of reference of the Investor’s Grievances Committee includes the following functions, inter alia,
those covered under the listing agreement:
(a) The committee is entrusted with the powers related to transfers, transmissions, consolidation,
splitting, issue of share certificates in exchange of sub-divided/consolidated etc. and overseeing the
performance of Registrar & Transfer Agents.
(b) The committee focuses on the following:
(i) Reviewing and redressing Shareholders and Investors complaints/ grievances.
(ii) Replying to the queries received from the investors
(iii) Review of the corporate actions related work.
(iv) Recommending measures for overall improvement in the quality of services being
provided to the shareholders/investors.
(v) All the matter related to Share transfer/ transmission etc.
During the period April 1, 2012 to December 31, 2012, 3 (three) meetings of the Investor’s Grievances
Committee were held on April 6, 2012, July 19, 2012 and October 4, 2012.
Remuneration Committee
The Remuneration Committee was constituted pursuant to the resolution dated June 29, 2002 passed by the
Board of Directors of our Company.
Our Board of Directors has re-constituted the Remuneration Committee pursuant to the resolution dated
November 7, 2012 passed by the Board of Directors of our Company. The Remuneration Committee
presently comprises of Mr. Narayan K Seshadri, Dr. Venkatrao S. Sohoni, Mr Bimal Raizada and Mrs
Ramni Nirula. Mr Bimal Kishore Raizada acts as the Chairman of the Remuneration Committee.
The Remuneration Committee recommends to the Board the compensation terms of executive Directors in
accordance with the guidelines laid out by the statute and the listing agreement executed with the Stock
Exchanges.
During the period April 1, 2012 to December 31, 2012, 3 (three) meetings of the Remuneration Committee
were held on May 29, 2012, July 26, 2012 and November 7, 2012.
QIP Issue Committee
The QIP Issue Committee of the directors was constituted pursuant to resolution dated December 6, 2012
passed by the Board of Directors of our Company.
The QIP Issue Committee comprises of Mr. Salil Singhal, Mr. Mayank Singhal, Mr. Rajnish Sarna, Mr.
Bimal Kishore Raizada and Ms. Ramni Nirula. Mr. Salil Singhal acts as the Chairman of the QIP Issue
Committee.
The QIP Issue Committee has the power to approve the offer, issue and allotment of Equity Shares of the
Company and/or offer, issue and allotment of any other instrument or security offered along with
exchangeable or exercisable for or convertible into Equity Shares of the Company
132
(“Equity Linked Securities”) and issue, allotment of Equity Shares of the upon exercise, exchange or
conversion of such Equity Linked Securities and the consequent listing of such Equity Shares and/or
Equity Linked Securities.
The QIP Issue Committee has had only one meeting post its constitution which was held on January 18,
2013.
Apart from above, our Company also has constituted Administrative committee, Insider Trading
Committee, Compensation Committee, Corporate Social Responsibility Committee, Audit –Sub
Committee
Organisational Structure
KEY MANAGEMENT
Mr. R D Kapoor, aged 60 years, is the Head - Sales & Marketing of our Company. He is a Post Graduate-
M.Sc.(Agriculture) from GB Pant University of Agriculture & Technology. He has over 36 years of
experience and has been associated with the group for the past 2 years & 7 months.
Mr. D K Ray, aged 48 years, is the Head - Productions of our Company. He is an Engineering graduate-
B.Tech.(Chem.Tech.) from Kanpur University. He has over 25 years of experience and has been associated
with the Group for the past 2 years & 7 months.
Mr. Sanjay Pai, aged 41 years, is the Chief Financial Officer of our Company. He is a qualified Chartered
Accountant from ICAI. He has over 19 years of experience. He is associated with the Group for the past 5
months.
Ms. Jeyamalini N., aged 36 years, is the Head - Human Resources & Administration of our Company. She
holds Post Graduate Diploma in Business Administration from Loyola Institute of Business Administration,
Chennai. She has over 12 years experience and has been associated with the group for the past 1 year & 10
months.
Mr. Jhamak Nagda, aged 38 years, is the Head -Legal of our Company. He is L.L.M. from Mohan Lal
Sukhadia University, Udaipur. He has over 16 years of experience & has been associated with the group for
the past 10 years.
Board of Directors:
CMD: Mr. Salil Singhal
CEO: Mr. Mayank Singhal
ED: Mr. Rajnish Sarna
Sales & Marketing:
Mr. R.D.Kapoor
Supply chain &
Logistics –Mr. Gor
Quality Assuaranc
e – Dr. Atul
Gupta
Operations: Mr.
D.K.Ray
Finance, Accounts
& Secretarial: Mr. Sanjay
Pai
HR, Administration: Ms. Jeyamalin
i
R&D: Dr. Mittal
IT – Mr. Chawla
Legal: Mr. Nagda
133
Mr. Naresh Kapoor aged 39 years, is the Company Secretary of our Company. He is a qualified Company
Secretary from ICSI (India) & ICSA (London) besides being a law graduate from Delhi University. He has
over 16 years of experience & has been associated with the group for the past 1 year & 9 months.
Mr. Vineet Chawla aged 43 years, is Head - Information Technology of our Company. He holds Post
Graduate Diploma in Business Management from Symbiosis Institute of Management Studies & Advance
Post Graduate Diploma in Computer Management from Computer point Limited. He has over 21 years of
experience and has been associated with the group for the past 8 months.
Dr. Anuj Mittal aged 45 years, is the Head - Research & Development of our Company. He holds a PhD in
Chemistry from the University of Lucknow, Uttar Pradesh. He has over 17 years of experience & has been
associated with the group for the past 7 years & 6 months.
Dr. Atul Gupta aged 43 years, is Head - Quality Assurance. He holds a PhD in Chemistry from Shri Shahu
Ji Maharaja University Kanpur, Uttar Pradesh. He has over 17 years of experience and has been associated
with the group for the past 13 years & 7 months.
Mr. Raxit Gor, aged 49 years, is Head – Supply Chain & Logistics. He is B.E. from Gujarat University,
Ahmedabad & Diploma in Management from Indira Gandhi National Open University. He has over 26
years of experience and has been associated with the group for the past 4 years & 2 months.
Employees Stock Option Scheme 2010
Our Company had formed a Stock Option Plan named ‘PII -ESOP 2010 Scheme’ (“ESOP Scheme”) in
order to reward the employees for their past association and performance as well as to motivate them to
contribute to the growth and profitability of our Company and with an intent to attract and retain talent in
the organization, The aforesaid scheme was duly approved by our Board in its meeting held on December
15, 2010. The said scheme is administered through independent trust named ‘PII- ESOP TRUST’ (“ESOP
Trust”) which was created vide trust deed dated December 15, 2011. In terms of the ESOP Scheme 2010,
Company may issue such options convertible into Equity Shares where the aggregate number of Equity
Shares issued upon conversion shall not exceed 5% of the issued equity share capital of our Company at
any time. The aforesaid options shall vest not less than one year and not more than six years from the date
of grant of such options.
There are two kinds of options under the ESOP Scheme, namely the loyalty options and the performance
options. For Loyalty Options vesting of options under the ESOP Scheme is subject to continued
employment with our Company and thus the options would vest on passage of time between 1-6 years. For
Performance Options the vesting of options is subject to certain performance parameters being fulfilled by
an eligible employee.
Our Company has made 2 grants of stock options under the ESOP Scheme. The first grant of options under
the ESOP Scheme was made to eligible employees on April 2, 2011 which consisted of 199,000 Loyalty
Options and 164,835 Performance Options. Further, the second grant of options under the ESOP Scheme
was made to eligible employees on July 26, 2012 which consisted of 98,765 Performance Options.
The exercise price of options granted have been arrived at by giving discount to the closing market price of
the equity share on BSE/NSE (wherever trading volume is higher) one day prior to the date of grant of
option. As on the date of this Placement Document, 462,600 options have been granted under the ESOP
Scheme 2010.
Our Board granted an interest free loan of ` 29 million to the ESOP Trust in order to enable it to acquire
Equity Shares of our Company and administer the ESOP Scheme. Compensation Committee pursuant to its
meeting held on July 26, 2012 allotted of 118,796 Equity Shares to the ESOP Trust.
Details of the options granted under the ESOP Scheme 2010 as on January 25, 2013 have been provided
below:
134
(Nos. unless indicated otherwise)
Particulars Loyalty Options Performance Options Total
Options granted so far 1,99,000 263,600 462,600
Options vested 96,000 22,796 118,796
Options exercised 81,500 14,427 95,927
Shares issued on exercise of
options*
81,500 14,427 95,927
Options lapsed 7,000 4,073 11,073
Variation of terms of
options
Nil Nil Nil
Money realized by exercise
of options (` In million)
1,906.12 379.60 2,285.72
Total number of options in
force
1,10,500 2,45,100 3,55,600
*Out of 118,796 shares Equity Shares issued to the ESOP Trust, 95,927 Equity Shares have been
transferred to eligible employees upon exercise of options.
Note: The above data does not include those options which have been exercised but money has not been
realized. Also, the above data includes options granted/vested/exercised by Directors of the Company.
Options granted to the Directors including the Managing Director
We have granted options to the Directors of our Company and one of our Subsidiaries under the ESOP
Scheme 2010, the details of which are set out below:
Names of Directors to
whom Stock Options
have been granted
No. of options
Granted
Options exercised till
date
Balance
Mr. Anurag Surana 35,541 10,581 24,960
Mr. Junichi Nakano,
President and Director
(PI Japan Co. Ltd.)
18,401 Nil 18,401
Mr. Rajnish Sarna 35,414 7,500 27,914
135
PRINCIPAL SHAREHOLDERS
Capital structure
As of the date of this Issue, our Company’s capital structure is as indicated in the following table:
(in millions)
Particulars Amount
(`)
Authorised Share Capital
40,000,000 Equity Shares of ` 5 each 200.00
5,000,000 Preference Shares ` 100 each 500.00
Issued Share Capital before this Issue
25,202,489 Equity Shares of ` 5 each
126.01
Subscribed and Paid-up before this Issue
25,167,174 Equity Shares of ` 5 each*
125.84
* The difference between the Issued Equity Share capital and the Subscribed and Paid up Equity Share capital is on
account of allotment of lesser number of Equity Shares in the past rights issues of our Company.
Shareholding Pattern
The shareholding pattern of our Company as on December 31, 2012 is as follows:
Category
Code
Category Of
Shareholder
Total Shareholding
As A % Of Total No
Of Shares
Shares Pledge Or Otherwise
Encumbered
No Of
Sharehol
ders
Total Number Of
Shares
No Of
Shares Held
In
Dematerializ
ed Form
As A
Percenta
ge Of
(A+B)
As A
Percenta
ge Of
(A+B+C)
Number
Of Shares
As A
Percentage
(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX)=(VIII)/(I
V)*100
(A) Promoter And
Promoter
Group*
(1) INDIAN
(a) Individual /HUF 4 1,353,744 1,353,744 5.38 5.38 0 0.00
(b) Central
Government/Stat
e Government(s)
0 0 0 0.00 0.00 0 0.00
(c) Bodies Corporate
3 14,590,278 14,590,278 57.97 57.97 0 0.00
(d) Financial
Institutions / Banks
0 0 0 0.00 0.00 0 0.00
(e) Others 0 0 0 0.00 0.00 0 0.00
Sub-Total A(1)
:
7 15,944,022 15,944,022 63.35 63.35 0 0.00
(2) FOREIGN
(a) Individuals
(NRIs/Foreign
Individuals)
0 0 0 0.00 0.00 0 0.00
136
Category
Code
Category Of
Shareholder
Total Shareholding
As A % Of Total No
Of Shares
Shares Pledge Or Otherwise
Encumbered
No Of
Sharehol
ders
Total Number Of
Shares
No Of
Shares Held
In
Dematerializ
ed Form
As A
Percenta
ge Of
(A+B)
As A
Percenta
ge Of
(A+B+C)
Number
Of Shares
As A
Percentage
(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX)=(VIII)/(I
V)*100
(b) Bodies
Corporate
0 0 0 0.00 0.00 0 0.00
(c) Institutions 0 0 0 0.00 0.00 0 0.00
(d) Qualified
Foreign Investor
0 0 0 0.00 0.00 0 0.00
(e) Others 0 0 0 0.00 0.00 0 0.00
Sub-Total A(2)
:
0 0 0 0.00 0.00 0 0.00
Total
A=A(1)+A(2)
7 15,944,022 15,944,022 63.35 63.35 0 0.00
(B) Public
Shareholding
(1) INSTITU
TIONS
(a) Mutual Funds /UTI
15 810,586 810,586 3.22 3.22
(b) Financial
Institutions /Banks
0 0 0 0.00 0.00
(c) Central
Government /
State Government(s)
0 0 0 0.00 0.00
(d) Venture Capital
Funds
0 0 0 0.00 0.00
(e) Insurance Companies
0 0 0 0.00 0.00
(f) Foreign
Institutional Investors
13 3,781,908 3,781,908 15.03 15.03
(g) Foreign Venture
Capital Investors
0 0 0 0.00 0.00
(h) Qualified Foreign Investor
0 0 0 0.00 0.00
(i) Others 0 0 0 0.00 0.00
Sub-Total B(1)
:
28 4,592,494 4,592,494 18.25 18.25
(2) NON-
INSTITUTION
S
(a) Bodies
Corporate
147 861,519 861,519 3.42 3.42
(b) Individuals
(i) Individuals
holding nominal share capital
upto `1 lakh
1,974 926,351 720,264 3.68 3.68
(ii) Individuals
holding nominal share capital in
excess of `1
lakh
18 857,928 7,28,328 3.41 3.41
137
Category
Code
Category Of
Shareholder
Total Shareholding
As A % Of Total No
Of Shares
Shares Pledge Or Otherwise
Encumbered
No Of
Sharehol
ders
Total Number Of
Shares
No Of
Shares Held
In
Dematerializ
ed Form
As A
Percenta
ge Of
(A+B)
As A
Percenta
ge Of
(A+B+C)
Number
Of Shares
As A
Percentage
(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX)=(VIII)/(I
V)*100
(c) Others
Directors And
Their Relatives
2 88,502 88,502 0.35 0.35
Foreign Bodies 1 1,159,801 1,159,801 4.61 4.61
Directors 3 302,739 302,739 1.20 1.20
Non Resident
Indians
73 45,707 45,707 0.18 0.18
Clearing
Members
16 2,578 2,578 0.01 0.01
Trusts 3 385,533 385,533 1.53 1.53
(d) Qualified
Foreign Investor
0 0 0 0.00 0.00
Sub-Total B(2)
:
2,237 4,630,658 4,294,971 18.40 18.40
Total
B=B(1)+B(2) :
2,265 9,223,152 8887465 36.65 36.65
Total (A+B): 2,272 2,5167,174 24,831,487 100.00 100.00
(C) Shares held by custodians,
against which
Depository
Receipts have been issued
(1) Promoter and
Promoter Group
(2) Public 0 0 0 0.00 0.00
GRAND
TOTAL
(A+B+C) :
2,272 25,167,174 24,831,487 100.00 0.00 0 0.00
*Note: Samaya Investment and Trading Private Limited and Lucrative Leasing Finance and Investment Company Limited
transferred their entire undertaking vide a scheme of amalgamation entered into with Parteek Finance and Investment Company Limited in accordance with section 391 and 394 of the Companies Act, 1956. The said scheme was approved by the High Court of
Delhi vide order dated October 12, 2012 with effect from January 1, 2013 and pursuant to the same the shareholding of Samaya
Investment and Trading Private Limited and Lucrative Leasing Finance and Investment Company Limited in our Company was transferred to Parteek Finance and Investment Company Limited, which post the effective date of the aforementioned scheme holds
14,590,278 Equity Shares representing 57.97% of the total paid up Equity Share capital of our Company.
Persons and Entities owning more than 1% (one %) of our Equity Shares
Each person or entity known to our Company to beneficially own more than 1% (one percent) of our
outstanding Equity Shares is listed below. Each shareholder listed below is both the holder on record and
the beneficial owner with the sole power to vote and invest in our Equity Shares listed next to his name
138
below. The following table sets out the persons and entities who beneficially own more than 1% (one
percent) of our Equity Shares as at December 31, 2012:
S. No. Name Number of
Equity Shares
Percentage (%)
Promoter and Promoter Group
1. Parteek Finance and Investment Co. Ltd.* 5,872,602 23.33
2. Lucrative Leasing Finance and Inv. Co. Ltd.* 5,639,796 22.41
3. Samaya Investment and Trading Pvt. Ltd* 3,077,880 12.23
4. Madhu Singhal 848,340 3.37
5. Madhu Singhal jointly held with Salil Singhal 280,074 1.11
Total 15,944,022 63.35
Non Promoter Group
1. Citigroup Global Markets Mauritius Private Limited 1,200,000 4.77
2. Rowanhill Investments Limited 1,159,801 4.61
3. Ironwood Investment Holdings 1,107,838 4.40
4. Copthall Mauritius Investment Limited 947,507 3.76
5. Bengal Finance & Investment Pvt. Ltd 429,054 1.70
6. Govind Swarup (Trustee, Alto Trust) 326,554 1.30
7. Narayan Keelveedhi Seshadri 261,756 1.04
Total 5,432,510 21.59 *Note: Samaya Investment and Trading Private Limited and Lucrative Leasing Finance and Investment Company Limited
transferred their entire undertaking vide a scheme of amalgamation entered into with Parteek Finance and Investment Company
Limited in accordance with section 391 and 394 of the Companies Act, 1956. The said scheme was approved by the High Court of Delhi vide order dated October 12, 2012 with effect from January 1, 2013 and pursuant to the same the shareholding of Samaya
Investment and Trading Private Limited and Lucrative Leasing Finance and Investment Company Limited in our Company was
transferred to Parteek Finance and Investment Company Limited, which post the effective date of the aforementioned scheme holds 14,590,278 Equity Shares representing 57.97% of the total paid up Equity Share capital of our Company.
139
REGULATIONS AND POLICIES
The following description is an overview of certain laws and regulations in India, which are relevant to our
Company. Information detailed in this chapter has been obtained from publications available in the public
domain. The regulations set out below are not exhaustive, and are only intended to provide general
information to Applicants 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, and other miscellaneous regulations and statutes such as labour laws apply to us as they do to
any other Indian company. The statements below are based on the current provisions of laws, and the
judicial and administrative interpretations thereof, which are subject to change or modification by
subsequent legislative, regulatory, administrative or judicial decisions.
REGULATIONS AND POLICIES IN CONNECTION WITH THE BUSINESS OF THE COMPANY
Certain other laws and regulations that are relevant to the operation of our Company’s business include
the following:
INDUSTRY RELATED STATUTORY AND REGULATORY REQUIREMENTS
The Insecticides Act, 1968, (“Insecticides Act”): The Insecticides Act regulates the import, manufacture,
sale, transport, distribution and use of insecticides with a view to prevent risk to human beings or animals
and other matters connected therewith. Any person who desires to import or manufacture any insecticide is
required to apply to the Registration Committee for the registration of such insecticide. Any person who
desires to manufacture or to sell, stock or exhibit for sale or distribute any insecticide, or to undertake
commercial pest control operations with the use of any insecticide may make an application to the
licensing officer for the grant of a license under the Insecticides Act. Our Company is also required to
comply with the guidelines, regulations and rules issued by the Central Insecticides Board.
The Insecticides Rules, 1971, (“Insecticides Rules”): The Central Government, in exercise of the powers
conferred by Section 36 of the Insecticides Act, (“Act”), and after consultation with the Central Insecticides
Board, (“Board”), made rules. These rules assign functions to the Board in addition to those assigned by the
Act, and assign functions to the Registration Committee and the Laboratory. The Insecticides Rules make
detailed provisions for, inter alia, the registration of insecticides, grant of license to manufacture
insecticides and specifications relating to packaging, transportation and labelling of insecticides, the
appointment, powers, duties, functions etc. of Insecticide Analysts and Inspectors.
Public Liability Insurance Act, 1991, (“Public Liability Act”): The Public Liability Act provides for
public liability insurance for the purpose of providing immediate relief to the persons affected by accidents
occurring while handling any hazardous substance, as defined under the Public Liability Act and for
matters connected therewith or incidental thereto. Every owner shall take out, before he starts handling any
hazardous substance, one or more insurance policies for availing contracts of insurance so that he is insured
against the liability to give relief under this Act. In addition every owner shall also pay, together with the
premium, such amount not exceeding the amount of the premium, to be credited to the Environment Relief
Fund.
The Indian Boilers Act, 1923, (“Boilers Act”): The Boilers Act consolidates and amends the law relating
to steam boilers. The Boilers Act applies to inter alia, boilers, feed pipes, economisers, and makes
provisions for the registration of the same and renewal of certificates of registration so granted. The Boilers
Act empowers the State Government to appoint the Chief Inspector, Deputy Chief Inspector and other
Inspectors. This Act also envisages the constitution of a Central Boilers Board authorised to make
regulations consistent with this Act.
140
Foreign Trade (Development and Regulation) Act, 1992, (The “Foreign Trade Act”): The Foreign Trade
Act was enacted to provide for the development and regulation of foreign trade by facilitating imports into
and augmenting exports from India. The Foreign Trade Act prohibits the undertaking of any import or
export except under an importer-exporter code number granted by the Director General of Foreign Trade or
an officer authorized by him in this behalf, in accordance with the procedure specified in this Act.
The Poisons Act, 1919 (“Poisons Act”): The Poisons Act aims at amending the law regulating the
importation, possession and sale of poisons. The Poisons Act empowers the State Government to regulate
within the whole or any part of the territories under its administration, the possession for sale and the sale
of any specified poison. In particular and without prejudice to the generality of the aforementioned power,
such rules may provide for, inter alia, the grant of licenses to possess any specified poison for sale,
wholesale or retail and fixing of the fee (if any) to be charged for such licenses, the classes of persons to
whom such licenses may be granted. Extensive penalty provisions have been provided for breach of the
Poisons Act or any rules thereunder or conditions of license for poison granted to any person.
Hazardous Waste (Management and Handling) Rules, 1989 (“Hazardous Waste Rules”): The Hazardous
Waste Rules have been enacted by the Central Government in the exercise of powers conferred by Sections
6, 8 and 25 of the Environment (Protection) Act, 1986. These rules apply to hazardous wastes, as specified
and classified in the Schedule to the Hazardous Waste Rules and shall not apply to the categories of wastes
enumerated in the section entitled “Applications”. These Rules posit responsibilities regarding the handling
of hazardous wastes on the occupier generating the said waste and with regard to transport, labelling and
packaging of hazardous wastes.
GENERAL STATUTORY AND REGULATORY REQUIREMENTS
Labour Related Laws: India has stringent labour related legislation. We are required to comply with
certain labour and industrial laws, which includes the Industries (Development and Regulation) Act, 1951,
the Employees’ Provident Funds and Miscellaneous Provisions Act 1952, the Minimum Wages Act, 1948,
the Payment of Bonus Act 1965, Workmen’s Compensation Act, 1923, the Payment of Gratuity Act, 1972,
the Payment of Wages Act, 1936, and the Factories Act, 1948a, the Maternity Benefit Act, 1961, Child
Labour (Prohibition and Regulation) Act, 1986, Industrial Disputes Act, 1947 amongst others.
The Industries (Development and Regulation) Act, 1951 (“Industries Act”): The Industries Act provides
for the development and regulation of certain industries. The Industries Act envisages the establishment of
the Central Advisory Council and the Development Councils and lays down the functions to be performed
by the Councils. The Industries Act regulates Scheduled Industries and empowers the Central Government
to assume management or control of an industrial undertaking in certain cases and makes provisions for the
direct management or control of industrial undertakings by the Central Government.
Employees (Provident Fund and Miscellaneous Provisions) Act, 1952 (“EPF Act”): The EPF Act applies
to establishments employing more than twenty employees and to every establishment which is a factory,
engaged in any industry specified in Schedule I to the EPF Act, employing twenty or more persons. This
Act shall also be applicable to such other establishments and industrial undertakings as notified by the
Central Government in the Official Gazette. Under the provisions of the EPF Act, employers are required
to contribute the prescribed %age of the basic wages, dearness allowances and retaining allowance payable
to employees, to the Employees’ Provident Fund, whether such employees are employed directly or
through a contractor. The employees’ contribution shall be an amount equal to the amount payable by the
employer with respect to him, subject to other provisions of the EPF Act.
Minimum Wages Act, 1948 (“Minimum Wages Act”): The Minimum Wages Act provides for a basic rate
of wages that shall be payable and cost of living allowance, as per the provisions of Section 4. Other
specifications regarding minimum wages may be found under Section 4, and the said minimum wages may
be revised under the provisions of Section 5. This Act also deals with, inter alia, the manner of payment of
wages, fixing the hours of work constituting a normal working day and payment to be made for overtime.
Penalties for contravening the provisions of this Act are enshrined in Sections 22, 22-1A, 22A, 22B and
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22C. The appropriate Government shall, in accordance with the provisions of this Act, fix the minimum
rates or wages payable to employees as specified under the provisions of this Act.
The Payment of Bonus Act, 1956 (“The Bonus Act”): The Payment of Bonus Act provides for the
payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of
production or productivity and for matters connected therewith. The Bonus Act provides that, subject to the
other provisions of this Act, every employer shall be bound to pay to every employee in respect of the
accounting year, a minimum bonus which shall be 8.33% of the salary or wage earned by that employee
during the accounting year or `100, whichever is higher, whether or not the employer has any allocable
surplus in that accounting year. The Act also provides for the maximum bonus payable by an employer and
the manner of its computation. The Act also deals penalties for contravention of the provisions of this Act
and for offences by companies under Section 29.
The Payment of Gratuity Act, 1972 (“Gratuity Act”): The Gratuity Act puts forth a scheme for the
payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway
companies, shops or other establishments and for matters connected therewith or incidental thereto. The
Gratuity Act makes provisions for compulsory insurance to be provided by every employer and also makes
detailed provisions regarding the determination of the amount of gratuity payable under the said Act.
Section 9 makes provisions for inter alia, penalising an employer who contravenes the provisions of this
Act, or any rule or regulation made thereunder.
Payment of Wages Act, 1936, (“Payment of Wages Act”): The Payment of Wages Act regulates the
payment of wages to certain classes of employed persons. This Act regulates the period and payment of
wages, overtime wages and also regulates the working hours, overtime, weekly holidays of certain classes
of employed persons and fines. The Payment of Wages Act also contains extensive provisions dealing with
deductions to be made, inter alia, for absence from duty, damage or loss, recovery of advances and services
rendered. Every employer shall be responsible for the payment in current coin or in currency notes, to
persons employed by him, of all wages required to be paid under this Act. The Payment of Wages Act
requires the persons responsible for payment of wages to maintain certain registers and records giving such
particulars inter alia, of persons employed by him, the work performed by them.
Factories Act, 1948, (“Factories Act”): The Factories Act provides that the occupier of a factory, as
defined under this Act, must ensure, so far as it is reasonably practicable, the health, safety and welfare of
all workers while they are at work in the factory such as, inter alia, in respect of safety and proper
maintenance of the factory such that it does not pose health risks, provision of adequate instruction, training
and supervision to ensure workers’ health and safety, cleanliness and safe working conditions and the safe
use, handling, storage and transport of factory articles and substances. Each State Government may make
rules in respect of the prior submission of plans and the manner of granting approval for the establishment
of factories and registration and licensing of factories. This Act also makes provisions for compliance with
safety standards as prescribed, and prohibits inter alia, the employment of children below the age of
fourteen years in a factory.
The Industrial Employment (Standing Orders) Act, 1946, (“Standing Orders Act”): The Standing Orders
Act requires employers in industrial establishments to formally define conditions of employment under
them. The Standing Orders Act states that it is expedient to require employers in industrial establishments
to define with sufficient precision the conditions of employment under them and to make the said
conditions known to workmen employed by them. This Act establishes the procedure and manner of
submission of draft standing orders and conditions for certification of standing orders. Draft standing orders
submitted under the provisions of the Standing Orders Act shall be certified and the certified copy shall be
prominently posted by the employer in English and in the language understood by the majority of his
workmen on special boards to be maintained for the purpose, at or near the entrance through which the
majority of workmen enter the industrial establishment and in all departments.
The Employees State Insurance Act, 1948, (“ESI Act”): The ESI Act necessitates the provision of certain
benefits to employees in case of sickness, maternity, employment injury and for certain other matters in
relation thereto. It applies to all factories, as defined under the ESI Act (including government factories but
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excluding seasonal factories). The ESI Act envisages the establishment of an Employees’ State Insurance
Corporation, (“Corporation”), a Standing Committee and a Medical Benefit Council in accordance with the
provisions of Chapter II. All contributions paid under this Act and all moneys received on behalf of the
Corporation shall be paid into a fund called the Employees’ State Insurance Fund, which shall be held and
administered by the Corporation and used for the purposes enumerated in Section 28 of this Act, which
include, inter alia, payment of benefits and provision of medical treatment and attendance to insured
persons, establishment and maintenance of hospitals, dispensaries, and other institutions. The Corporation
is also authorized to appoint such persons as Social Security Officers, as it think fit for the purposes of this
Act.
The Contract Labour (Regulation and Abolition) Act, 1970, (“CLRA”): The CRLA regulates the
employment of contract labour in certain establishments and provides for its abolition in certain
circumstances and for other matters connected to contract labour. It applies to every contractor who
employs, or who has employed on any day of the preceding 12 months, twenty or more workmen and in
which twenty or more workmen are or were employed on any day of the preceding 12 months as contract
labour (“Establishment”). This Act provides for the registration of Establishments as prescribed, and states
that no contractor shall undertake or execute any work through contract labour except under and in
accordance with a licence issued in that behalf by the licensing officer under this Act. It is the duty of every
contractor employing contract labour in connection with the work of an Establishment to provide and
maintain, inter alia, a sufficient supply of wholesome drinking water, latrines and urinals and washing
facilities. If such amenities are not provided by the contractor within the prescribed time, such amenities
shall be provided by the principal employer of the Establishment.
.
The Contract Labour (Regulation and Abolition) Central Rules, 1971, (“Contract Labour Rules”): The
Contract Labour Rules were enacted in exercise of the powers conferred by S.35 of the Contract Labour
(Regulation and Abolition) Act, 1970 (“Act”), to carry out the purposes of the Act. Application for
registration shall be made in triplicate in Form I to the appropriate registering officer accompanied by a
demand draft showing payment of fees. The certificate shall be issued in Form II containing the requisite
particulars. Applications for license by the Contractor made in Form IV shall be accompanied by a
certificate from the principal employer in Form V stating that the applicant has been employed by him as a
contractor in relation to his establishment and that he undertakes to be bound by all the provisions of the
Act and the rules made thereunder.
Environmental Laws: Manufacturing projects must also ensure compliance with environmental legislation
such as the Water (Prevention and Control of Pollution) Act 1974 (“Water Act”) as amended, the Air
(Prevention and Control of Pollution) Act, 1981 (“Air Act”) as amended, and the Environment Protection
Act, 1986(“Environment Act”) as amended.
The Environment (Protection) Act, 1986 (“Environment Act”): The Environment Act has been enacted
for the protection and improvement of the environment. The Environment Act empowers the Central
Government to take the necessary measures for protecting and improving the quality of the environment
and preventing, controlling and abating environmental pollution by, inter alia, laying down standards for
emission or discharge of pollutants, providing for restrictions regarding areas where industries may operate.
The central government is also empowered to make rules for regulating environmental pollution.
Water (Prevention and Control of Pollution) Act, 1974, (“Water Act”): The Water Act provides for the
prevention and control of water pollution and the maintaining or restoring of wholesomeness of water, for
the establishment, with a view to carrying out the purposes aforesaid, of Central and State Pollution Control
Boards for the prevention and control of water pollution, for conferring on and assigning to such boards
powers and functions relating thereto and for matters connected therewith. Accordingly, the previous
consent of the board constituted under the Water Act must be obtained, for establishing or taking steps to
establish any industry, operation or process, or any treatment and disposal system or any extension or
addition thereto, which is likely to discharge sewage or trade effluent into a stream or well or sewer or on
land. This Act also provides for intimation of occurrence of certain specific types of accidents, acts or
events to the appropriate Board. Chapter VII of the Water Act deals with the penalties and procedures in
relation to failure for non-compliance with the provisions of the said Act.
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Air (Prevention and Control of Pollution) Act, 1981, (“Air Act”): The Air Act provides for the prevention,
control and abatement of air pollution and for the establishment of Central and State Pollution Control
Boards (“Boards”), with a view to carrying out the aforesaid purposes. The Air Act confers and assigns to
such Boards, powers and functions relating thereto and for matters connected therewith. Under the Air Act,
the Central Pollution Control Board has powers, inter alia, to specify standards for quality of air, while the
State Pollution Control Boards have powers, inter alia, to inspect any control equipment, industrial plant or
manufacturing process, to advise the state government with respect to the suitability of any premises or
location for carrying on any industry and to obtain information from any industry. Subject to the provisions
of the Air Act, no person shall establish or operate any industrial plant within an air pollution control area,
without the previous consent of the State Pollution Control Board. The penalties for the failure to comply
with the provisions of the Air Act are enshrined in Chapter VI.
Environment Impact Assessment Notifications: The Environment Impact Assessment Notification S.O.60
(E), issued by the Central Government on January 27, 1994 (“1994 Notification”) under the provisions of
the Environment Act, directs that expansion or modernization of any activity (if pollution load is to exceed
the existing one) or a new project listed in Schedule I of this notification shall not be undertaken in any part
of India unless it has been accorded environmental clearance by the Ministry of Environment and Forest
(“MoEF”). The environmental clearance must be obtained according to the procedure specified in the 1994
Notification. The application to the MoEF shall be accompanied by a project report which should include,
inter alia, an Environmental Impact Assessment Report and an Environment Management Plan. The
Impact Assessment Authority evaluates the report and plan submitted. The project authorities concerned
shall submit a half yearly report to the Impact Assessment Agency to enable the latter to effectively
monitor the implementation of the recommendations and conditions subject to which the environmental
clearance has been granted.
On September 14, 2006, the Environmental Impact Assessment Notification S.O. 1533 (“2006
Notification”) superseded the 1994 Notification. Under the 2006 Notification, the environmental clearance
process for new projects consists of four stages – screening, scoping, public consultation and appraisal.
After completion of public consultation, the applicant shall address all the material environmental concerns
and shall make appropriate changes in the draft Environment Impact Assessment Report and the
Environment Management Plan. The final Environment Impact Assessment Report has to be submitted to
the concerned regulatory authority for appraisal. The regulatory authority is required to give its decision
within 105 days of the receipt of the final Environment Impact Assessment Report and where such report is
not required within 105 days of receipt of the complete application with requisite documents.
Water (Prevention and Control of Pollution) Cess Act, 1977, (“Water Cess Act”): The Water Cess Act
provides for the levy and collection of a cess on water consumed by persons carrying on certain industries
and by local authorities, with a view to augment the resources of the Central Pollution Control Board and
the State Pollution Control Boards for the prevention and control of water pollution constituted under the
Water (Prevention and Control of Pollution) Act, 1977. This Act provides for penalties inter alia, for non-
compliance with the obligation to furnish a return and evasion of cess.
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ISSUE PROCEDURE
Below is a summary of the procedure relating to the application, payment, Allocation and Allotment of
Placement Shares. The procedure followed in the Issue may differ from the one mentioned below and the
investors are assumed to have appraised themselves of the same from our Company or the Sole Global Co-
ordinator and Book Running Lead Manager. The investors are advised to inform themselves of any
restrictions or limitations that may be applicable to them and are required to consult their respective
advisers in this regard. Investors that apply in this Issue will be required to confirm and will be deemed to
have represented to our Company, the Sole Global Co-ordinator and Book Running Lead Manager and
their respective directors, officers, agents, affiliates and representatives that they are eligible under all
applicable laws, rules, regulations, guidelines and approvals to acquire Placement Shares of our
Company. Our Company and the Sole Global Co-ordinator and Book Running Lead Manager and their
respective directors, officers, agents, affiliates and representatives accept no responsibility or liability for
advising any investor on whether such investor is eligible to acquire Placement Shares of our Company.
Also see “Selling Restrictions”, “Transfer Restrictions” and “Plan of Distribution” respectively of this
Placement Document.
Qualified Institutions Placements
The Issue is being made in India in reliance upon Chapter VIII of the SEBI ICDR Regulations through the
mechanism of Qualified Institutions Placements (“QIP”) wherein a listed company may issue and allot
equity shares, non-convertible debt instruments along with warrants and convertible securities other than
warrants to Qualified Institutional Buyers as defined in Regulation 2 (1)(zd) of the SEBI ICDR Regulations
(“QIBs”) on a private placement basis, provided that:
A special resolution approving the Issue has been passed by its shareholders
Equity shares of the same class of such company are listed on a stock exchange in India that has
nationwide trading terminals for a period of at least one year prior to the date of issuance of notice to
its shareholders for convening the meeting to pass the special resolution; and
Provided that where an issuer, being a transferee company in a scheme of merger, de-merger,
amalgamation or arrangement sanctioned by a High Court under sections 391 to 394 of the Companies
Act, 1956, makes qualified institutions placement, the period for which the equity shares of the same
class of the transferor company were listed on a stock exchange having nation wide trading terminals
shall also be considered for the purpose of computation of the period of one year;
Such company complies with the minimum public shareholding requirements set out in the listing
agreement with the stock exchanges referred to above.
Additionally, there is a minimum pricing requirement under the SEBI ICDR Regulations. The issue price of
the Placement Shares shall not be less than the average of the weekly high and low of the closing prices of
the related Equity Shares quoted on the relevant Stock Exchange during the two weeks preceding the
relevant date. Provided that the Company may offer a discount of not more than 5% on the price so
calculated for the qualified institutions placement, subject to approval of shareholders.
The “relevant date” referred to above means the date of the meeting in which the Board or the committee of
directors duly authorized by the Board of our Company decides to open the Issue, and the “relevant stock
exchange” means any of the recognized Stock Exchanges in which the Equity Shares of our Company of
the same class are listed and on which the highest trading volume in such Equity Shares has been recorded
during the two weeks immediately preceding the relevant date.
The Placement Shares must be allotted within 12 months from the date of the shareholders resolution
approving the Issue. The Placement Shares issued pursuant to the Issue must be issued on the basis of the
Preliminary Placement Document and this Placement Document that shall contain all material information
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including the information specified in Schedule XVIII of the SEBI ICDR Regulations. The Preliminary
Placement Document and this Placement Document are private documents provided to not more than 49
investors through serially numbered copies and is required to be placed on the website of the Stock
Exchanges and of our Company with a disclaimer to the effect that it is in connection with an issue to QIBs
and no offer is being made to the public or to any other category of investors.
The aggregate of the Issue and all previous QIPs made in the same financial year shall not exceed five
times the net worth of our Company as per our audited balance sheet of the previous financial year. Our
Company has furnished a copy of the Preliminary Placement Document and will furnish a copy of this
Placement Document to the Stock Exchanges.
Securities allotted to a QIB pursuant to the Issue shall not be sold for a period of one year from the date of
allotment except on a recognized stock exchange in India.
Our Company has received in-principle approval of the Stock Exchanges under Clause 24 (a) of their
respective Listing Agreements for listing of the Placement Shares on the Stock Exchanges. Our Company
has also filed a copy of the Preliminary Placement Document with the Stock Exchanges and will file a copy
of this Placement Document with them.
Issue Procedure
1. Our Company and the Sole Global Co-ordinator and Book Running Lead Manager has identified
the eligible Investors and has circulated serially numbered copies of the Preliminary Placement
Document and the Application Form, either in electronic form or physical form, to not more than
49 QIBs.
2. The list of 49 QIBs to whom the Application Form is delivered has been determined by the Sole
Global Co-ordinator and Book Running Lead Manager and our Company. Unless a serially
numbered Preliminary Placement Document along with the Application Form is addressed
to a particular QIB, no invitation to subscribe has been made to such QIB. Even if such
documentation has come into the possession of any person other than the intended recipient, no
offer or invitation to offer has deemed to have been made to such person.
3. Our Company has intimated the Issue Opening Date to the Stock Exchanges.
4. QIBs have submitted the Application Form (including revisions, if any) during the Issue Period to
the Sole Global Co-ordinator and Book Running Lead Manager.
5. QIBs have indicated the following in the Application Form:
a. Name of the QIB to whom the Placement Shares are to be Allotted;
b. Number of Placement Shares applied for;
c. Price at which they are agreeable to apply for the Placement Shares, provided that such
price will be at or above the minimum price calculated in accordance with Regulation 85
of the SEBI ICDR Regulations i.e. the Floor Price; and
d. The details of the Depositary Participant account(s) to which the Placement Shares
should be credited.
Note: Each sub-account of an FII other than a sub-account which is a foreign corporate or
foreign individual have been considered as an individual QIB and separate application forms
have been obtained from each such sub-account for submitting Application Form(s). Each
scheme/fund of a mutual fund has submitted a separate Application Form.
6. FIIs or sub-account of FII have indicated the SEBI and FII / Sub account registration number in
the application form.
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7. Once the duly filled Application Form is submitted by the QIB, such Application Form shall
constitute an irrevocable offer and cannot be withdrawn after the Issue Closing Date. The Issue
Closing Date shall be notified to Stock Exchanges and QIBs will be deemed to have been given
notice of the same.
8. Upon the receipt of the Application Form, our Company shall decide the Issue Price and the
number of Placement Shares to be issued which shall be done in consultation with the Sole Global
Co-ordinator and Book Running Lead Manager. The Issue Price shall be at or above the price
calculated as per Regulation 85 of the SEBI ICDR Regulations, i.e. the Floor Price. On
determination of the Issue Price, the Sole Global Co-ordinator and Book Running Lead Manager
will send the CAN to the QIBs who have been Allocated Placement Shares. The dispatch of CAN
shall be deemed a valid, binding and irrevocable contract for the QIBs to pay the entire Issue Price
for all the Placement Shares Allocated to such QIB. The CAN shall contain details like the number
of Placement Shares Allocated to the QIB and payment instructions including the details of the
amounts payable by the QIB for Allotment of the Placement Shares in its name and the Pay-In
Date as applicable to the respective QIB.
9. Pursuant to receiving the CAN, the QIBs would have to make the payment of the entire
application monies for the Placement Shares indicated in the CAN at the Issue Price, through
electronic transfer of the application monies to the Escrow Account of our Company, namely, “PI
Industries Limited – QIP Escrow Account” by the Pay- In Date as specified in the CAN sent to
the respective QIBs.
10. Upon receipt of the application monies from the QIBs, our Company shall issue and allot the
Placement Shares as per the details in the CAN to the QIBs. Our Company shall not issue
Placement Shares to more than 49 QIBs. Our Company will intimate to the Stock Exchanges the
details of the Allotment.
11. After passing the Allotment resolution and prior to crediting the Placement Shares into the
beneficial accounts of the eligible QIBs with the depository participants, our Company shall apply
to the Stock Exchanges for the final approval for listing of the Placement Shares.
12. After receipt of the final listing approval from the Stock Exchanges, our Company shall credit the
Placement Shares into the beneficial accounts of the eligible QIBs with the depository participants
of the respective QIBs.
13. Our Company shall then apply for the final trading permissions from the Stock Exchanges.
14. The Placement Shares that have been credited to the Depository Participant accounts of the QIBs,
as mentioned above shall be eligible for trading on the Stock Exchanges only upon the receipt of
final trading approvals from the Stock Exchanges.
15. As per the applicable laws, the Stock Exchanges notify the final listing and trading permissions,
which are ordinarily available on their websites. Upon intimation of such approval our Company
shall communicate the receipt of the final listing and trading permissions from the Stock
Exchanges to the QIBs who have been Allotted Placement Shares.
16. Our Company and the Sole Global Co-ordinator and Book Running Lead Manager shall not be
responsible for any delay or non-receipt of the communication of the final listing / trading
permissions from the Stock Exchanges or any loss arising from such delay or non-receipt. QIBs
are advised to appraise themselves of the status of the receipt of the permissions from the Stock
Exchanges or our Company.
Qualified Institutional Buyers
Only QIBs as defined in Regulation 2 (1) (zd) of the SEBI ICDR Regulations and not otherwise excluded
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pursuant to Regulation 86 (1) (b) of the SEBI ICDR Regulations are eligible to invest. Currently the
definition of QIB includes:
Mutual fund/s, venture capital fund/s, Alternative Investment Fund/s, and foreign venture capital
investor/s registered with SEBI;
Foreign institutional investors and sub-account (other than a sub-account which is a foreign
corporate or foreign individual), registered with SEBI;
Public financial institutions as defined in section 4A of the Companies Act;
Scheduled commercial bank/s;
Multilateral and bilateral development financial institution/s;
State industrial development corporation/s;
Insurance companies registered with Insurance Regulatory and Development Authority;
Provident funds with minimum corpus of `250 million;
Pension funds with minimum corpus of `250 million;
National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23,
2005 of the Government of India published in the Gazette of India;
Insurance funds set up and managed by army, navy or air force of the Union of India;
Insurance funds set up and managed by Department of Posts, India
Please note that, a sub-account of an FII that is a foreign corporate or foreign individual is no longer
included under the definition of a QIB.
FIIs are permitted to participate in this Issue through the portfolio investment scheme subject to
compliance with all applicable laws and such that the shareholding of the FIIs does not exceed
specified limits as prescribed under applicable laws in this regard.
The issue and allotment of Placement Shares to a single FII should not exceed 10 percent of the post Isue
Equity Share capital of our Company. In respect of an FII investing in the Placement Shares on behalf of its
sub-accounts, the investment on behalf of each sub-account shall not exceed 10 percent of the total issued
Equity Share capital of our Company.
No Allotment shall be made pursuant to the Issue, either directly or indirectly, to any QIB being a
Promoter of our Company or any person related to our Promoter(s). QIBs which have all or any of the
following rights shall be deemed to be persons related to Promoter(s):
a) rights under a shareholders agreement or voting agreement entered into with the Promoters or
persons related to the Promoters;
b) veto rights; or
c) right to appoint any nominee director on the Board.
Provided that a QIB who does not hold any Equity Shares in our Company and who has acquired the
aforesaid rights in the capacity of a lender shall not be deemed to be a person related to our Promoters.
Our Company and the Sole Global Co-ordinator and Book Running Lead Manager are not liable for
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any amendments or modification or changes in applicable laws or regulations, which may occur after
the date of this Placement Document. QIBs are advised to make their independent investigations and
satisfy themselves that they are eligible to apply. QIBs are advised to ensure that any single
Application from them does not exceed the investment limits or maximum number of Equity Shares
that can be held by them under applicable law or regulation or as specified in this Placement
Document. Further, QIBs are required to satisfy themselves that their Applications would not
eventually result in triggering a tender offer under the Takeover Code and the QIB shall be solely
responsible for compliance with tender offer and disclosure obligations under the Takeover Code,
SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended and other applicable laws,
rules, regulations, guidelines and circulars.
A minimum of 10.00% of the Placement Shares in this Issue shall be Allotted to Mutual Funds. If no
Mutual Fund is agreeable to take up the minimum portion as specified above, such minimum portion
or part thereof may be Allotted to other QIBs.
Note: Affiliates or associates of the Sole Global Co-ordinator and Book Running Lead Manager who are
QIBs may participate in the Issue in compliance with applicable laws.
APPLICATION PROCESS
Application Form
QIBs are permitted to only use the serially numbered Application Forms supplied by the Sole Global Co-
ordinator and Book Running Lead Manager in either electronic form or by physical delivery for the
purpose of submitting an application (including revisions, if any) in terms of the Preliminary Placement
Document and this Placement Document.
By submitting an application (including revisions, if any) for the Placement Shares through an Application
Form, the QIBs have made the following representations and warranties and the representations, warranties
and agreements made under the sections titled “Transfer Restrictions”, “Selling Restrictions”, “Notice to
Investors” and “Representations by Investors” in this Placement Document:
1. The QIB has confirmed that it is a QIB in terms of Regulation 2 (1) (zd) of the SEBI ICDR
Regulations and is eligible to participate in this Issue;
2. The QIB has confirmed that it is neither a Promoter and nor a person related to our Promoters,
either directly or indirectly and its Application Form does not directly or indirectly represent the
Promoter or promoter group of our Company
3. The QIB has confirmed that it has no rights under the shareholder agreement or voting agreement
with our Promoters or persons related to our Promoters, no veto rights or right to appoint any
nominee director on the Board of our Company other than such rights acquired in the capacity of a
lender (not holding any Equity Shares);
4. The QIB has no right to and shall not withdraw its application after the Issue Closing Date;
5. The QIB has confirmed that if Placement Shares are Allotted through this Issue, it shall not, for a
period of one (1) year from Allotment, sell such Placement Shares otherwise than on the floor of
the Stock Exchanges;
6. The QIB has confirmed that the QIB is eligible to apply and hold Placement Shares so allotted and
together with any Equity Shares held by the QIB prior to the Issue. The QIB has further confirmed
that the holding of the QIB, does not and shall not, exceed the level permissible as per any
applicable regulations applicable to the QIB;
149
7. The QIB has confirmed that the Application Form would not eventually result in triggering a
tender offer under the Takeover Code;
8. The QIB has confirmed that to the best of its knowledge and belief together with other QIBs in the
Issue that belong to the same group or are under common control, the Allotment to the QIB shall
not exceed 50.00% of the Issue Size. For the purposes of this statement:
a. The expression “belongs to the same group” shall derive meaning from the concept of
“companies under the same group” as provided in sub-section (11) of Section 372 of the
Companies Act; and
b. “Control” shall have the same meaning as is assigned to it by clause (e) of Regulation 2
(1) of the Takeover Code.
9. The QIBs shall not undertake any trade in the Placement Shares credited to its Depository
Participant account until such time that the final trading approval for the Placement Shares are
issued by the Stock Exchanges.
The QIBs have been sent a serially numbered Preliminary Placement Document either in electronic form or
by physical delivery.
QIBS HAVE PROVIDED THEIR DEPOSITORY ACCOUNT DETAILS, THEIR DEPOSITORY
PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND
BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. QIBS HAVE ENSURED
THAT THE NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE
NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, SUB-
ACCOUNTS OF A FII IS BE CONSIDERED AS AN INDEPENDENT QIB.
IF SO REQUIRED BY THE SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING LEAD
MANAGER, THE QIB APPLYING, ALONG WITH THE APPLICATION FORM, WILL ALSO
HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO EVIDENCE THEIR STATUS AS A “QIB”
AS DEFINED HEREINABOVE.
IF SO REQUIRED BY THE SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING LEAD
MANAGER, COLLECTION BANK(S) OR ANY STATUTORY OR REGULATORY AUTHORITY
IN THIS REGARD, INCLUDING AFTER ISSUE CLOSURE, THE QIB SUBMITTING A BID
AND/OR BEING ALLOTTED PLACEMENT SHARES IN THE ISSUE, WILL ALSO HAVE TO
SUBMIT REQUISITE DOCUMENT(S) TO FULFILL THE KNOW YOUR CUSTOMER (KYC)
NORMS.
Demographic details like address, bank account etc. will be obtained from the Depositories as per the
Depository Participant account details given above.
The submission of Application Form by the QIBs shall be deemed a valid, binding and irrevocable offer for
the QIB to pay the entire Issue Price for its share of Allotment (as indicated by the CAN) and becomes a
binding contract on the QIB, upon issuance of the CAN by our Company in favour of the QIB.
By submitting the Application Form, the eligible QIBs have made the representations and warranties as
specified in the paragraph titled “Application Process”, mentioned above and further that such eligible QIB
shall not undertake any trade in the Placement Shares credited to its depository participant account until
such time that the final trading approval for the Placement Shares is issued by the Stock Exchanges.
Eligible QIBs are advised to instruct their Depository Participant to accept the Placement Shares that may
be allotted to them pursuant to this Issue.
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Applications by Mutual Funds
The Applications made by the asset management companies or custodian of mutual funds shall specifically
state the names of the concerned schemes for which the Applications are made. Each scheme/fund of a
mutual fund will have to submit separate Application Form.
Each mutual fund will have to submit separate Application Forms for each of its participating schemes.
Such applications will not be treated as multiple Applications provided that the Applications clearly
indicate the scheme for which the Application has been made. However, for the purpose of calculating the
number of allotters/applicants, various schemes of the same mutual fund will be considered as a single
allotted/applicant.
Demographic details like address, bank account etc. will be obtained from the Depositories as per the
demat account details given above.
As per the current regulations, the following restrictions are applicable for investments by mutual funds:
No mutual fund scheme shall invest more than 10.00% of its net asset value in Placement Shares or equity
related instruments of any company provided that the limit of 10.00% shall not be applicable for
investments in index funds or sector or industry specific funds. No mutual fund under all its schemes
should own more than 10.00% of any company's paid-up capital carrying voting rights.
The above information is given for the benefit of the Applicants. Our Company and the Sole Global Co-
ordinator and Book Running Lead Manager, are not liable for any amendments or modification or changes
in applicable laws or regulations, which may happen after the date of this Placement Document. Investors
are advised to make their independent investigations and ensure that the number of Placement Shares on
which Application has been made for do not exceed the applicable limits under the applicable laws and
regulations.
Submission of Application Form
All Application Forms shall be required to be duly completed with information including the name of the
QIB, the price and the number of Placement Shares applied. The Application Form shall be submitted to
the Sole Global Co-ordinator and Book Running Lead Manager either through electronic form or through
physical delivery at either of the following address:
Edelweiss Financial Services Limited
Edelweiss House, 14th
Floor,
Off C S T Road, Kalina,
Mumbai - 400098
Contact Person: Mr. Sumeet Lath / Mr. Abhishek Agarwal
Tel: +91 22 4086 3535
Fax: +91 22 4086 3610
Email: [email protected]
Investor Grievance Email: [email protected]
The Sole Global Co-ordinator and Book Running Lead Manager shall not be required to provide any
written acknowledgement of the same.
PRICING AND ALLOCATION
Build up of the book
The QIBs shall submit their applications (including revisions, if any) through the Application Form within
the Issue Period to the Sole Global Co-ordinator and Book Running Lead Manager.
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Price discovery and allocation
Our Company, in consultation with the Sole Global Co-ordinator and Book Running Lead Manager, shall
finalize the Issue Price for the Placement Shares which shall be at or above the price calculated as per
Regulation 85 of the SEBI ICDR Regulations, i.e. the Floor Price. After finalization of the Issue Price, our
Company has updated the Preliminary Placement Document with the Issue Price details in the form of this
Placement Document and will file this Placement Document with the Stock Exchanges.
Method of Allocation
Our Company shall determine the Allocation in consultation with the Sole Global Co-ordinator and Book
Running Lead Manager on a discretionary basis and in compliance with Chapter VIII of the SEBI ICDR
Regulations.
Application Forms received from the QIBs at or above the Issue Price shall be grouped together to
determine the total demand. The Allocation to all such QIBs will be made at the Issue Price. Allocation to
Mutual Funds for up to a minimum of 10.00% of the Issue Size shall be undertaken subject to valid
Applications being received at or above the Issue Price.
THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE SOLE GLOBAL CO-
ORDINATOR AND BOOK RUNNING LEAD MANAGER IN RESPECT OF ALLOCATION
SHALL BE FINAL AND BINDING ON ALL QIBs. QIBs MAY NOTE THAT ALLOCATION OF
PLACEMENT SHARES IS AT THE SOLE AND ABSOLUTE DISCRETION OF OUR COMPANY
IN CONSULTATION WITH THE SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING
LEAD MANAGER AND QIBS MAY NOT RECEIVE ANY ALLOCATION EVEN IF THEY
HAVE SUBMITTED VALID APPLICATION FORMS AT OR ABOVE THE ISSUE PRICE.
NEITHER OUR COMPANY NOR THE SOLE GLOBAL CO-ORDINATOR AND BOOK
RUNNING LEAD MANAGER ARE OBLIGED TO ASSIGN ANY REASONS FOR SUCH NON-
ALLOCATION.
Number of Allottees
The minimum number of allottees in the Issue shall not be less than:
(a) two, where the issue size is less than or equal to ` 2,500 million; and
(b) five, where the issue size is greater than ` 2,500 million.
Provided that no single allottee shall be Allotted more than 50.00% of the aggregate amount of the Issue
Size.
Provided further that QIBs belonging to the same group or those who are under common control shall be
deemed to be a single Allottee for the purpose of this clause. For details of what constitutes “same group”
or “common control”, see “Application Form” under the paragraph “Application Process” above.
The maximum number of Allottees of Placement Shares is not permitted to be greater than 49
Allottees. Further the Placement Shares will be allotted within 12 months from the date of the
shareholders’ resolution approving the Issue.
Confirmation of Allocation Note (CAN)
Based on the Application Forms received, our Company and the Sole Global Co-ordinator and Book
Running Lead Manager will, in their sole and absolute discretion, decide the list of QIBs to whom the
serially numbered CAN shall be sent, pursuant to which the details of the Placement Shares allocated to
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them and the details of the amounts payable for Allotment of the same in their respective names shall be
notified to such QIBs. Additionally, the CAN would include details of the bank account(s) for transfer of
funds if done electronically, Pay-In Date as well as the probable designated date (“Designated Date”),
being the date of credit of the Placement Shares to the QIB’s account, as applicable to the respective QIBs.
The QIBs would also be sent a serially numbered Placement Document either in the electronic form or by
physical delivery along with the serially numbered CAN.
The dispatch of the serially numbered Placement Document and the CAN to the QIB shall be deemed a
valid, binding and irrevocable contract for the QIB to furnish all details that may be required by the Sole
Global Co-ordinator and Book Running Lead Manager and to pay the entire Issue Price for all the
Placement Shares allocated to such QIB.
Account for Payment of Application Money
Our Company has opened a special bank account, namely “PI Industries Limited – QIP Escrow
Account”, (the “Escrow Account”) with Axis Bank Limited in terms of the arrangement between our
Company, the Sole Global Co-ordinator and the Book Running Lead Manager and Axis Bank (acting as the
Escrow Bank). The QIB will be required to deposit the entire amount payable for the Shares allocated to it
by the Pay-In Date as mentioned in the respective CAN.
If the payment is not made favouring the abovementioned Escrow Account within the time stipulated in the
CAN, the Application Form and the CAN of the QIB are liable to be cancelled.
In case of cancellations or default by the QIBs, our Company and the Sole Global Co-ordinator and Book
Running Lead Manager have the right to reallocate the Placement Shares at the Issue Price among existing
or new QIBs at their sole and absolute discretion, subject to the compliance with the requirement of
ensuring that the Application Forms are sent to not more than 49 QIBs.
Payment Instructions
The payment of application money shall be made by the QIBs in the name of “PI Industries Limited –
QIP Escrow Account” as per the payment instructions provided in the CAN.
QIBs should make payment only through electronic fund transfer.
Note: Payment of the amounts through high value cheques will be rejected.
Designated Date and Allotment of Placement Shares
1. The Placement Shares will not be Allotted unless the QIBs pay the Issue Price to the Escrow Account
as stated above.
2. In accordance with the SEBI ICDR Regulations, Placement Shares will be issued and Allotment shall
be made only in the dematerialized form to the Allottees. Allottees will have the option to re-
materialize the Placement Shares, if they so desire, as per the provisions of the Companies Act and the
Depositories Act.
3. Our Company reserves the right to cancel the Issue at any time up to Allotment without assigning any
reasons whatsoever.
4. Post Allotment and credit of the Placement Shares into the QIBs Depository Participant account, our
Company would apply for final trading approvals from the Stock Exchanges.
5. In the unlikely event of the any delay in the Allotment or credit of the Placement Shares, or receipt of
final listing and trading approvals or cancellation of the Issue, no interest or penalty would be payable
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by our Company.
6. The monies lying to the credit of the Escrow Account shall not be released till such time as the
approval of the Stock Exchanges, for the trading of the Placement Shares issued pursuant to the Issue
is delivered to our Company.
7. After finalization of the Issue Price, our Company has updated the Preliminary Placement Document
with the Issue Price details in the form of this Placement Document and will file this Placement
Document with the Stock Exchanges.
Other Instructions
Permanent Account Number or PAN
Each QIB should mention its Permanent Account Number (PAN) allotted under the IT Act. The copy of
the PAN card or PAN allotment letter is required to be submitted with the Application Form.
Applications without this information will be considered incomplete and will be rejected. It is to be
specifically noted that applicant should not submit the GIR number instead of the PAN as the Application
Form is liable to be rejected on this ground.
Our Right to Reject Applications
Our Company, in consultation with the Sole Global Co-ordinator and Book Running Lead Manager, may
reject Applications, in part or in full, without assigning any reasons whatsoever. The decision of our
Company and Sole Global Co-ordinator and Book Running Lead Manager in relation to the rejection of
Applications shall be final and binding.
Placement Shares in dematerialised form with NSDL or CDSL
As per the provisions of section 68B of the Companies Act, the Allotment of the Placement Shares in this
Issue shall be only in de-materialized form, (i.e., not in the form of physical certificates but be fungible and
be represented by the statement issued through the electronic mode).
1. A QIB applying for Placement Shares must have at least one beneficiary account with a
Depository Participant of either NSDL or CDSL prior to making the application.
2. Allotment to a successful QIB will be credited in electronic form directly to the beneficiary
account (with the Depository Participant) of the QIB.
3. Placement Shares in electronic form can be traded only on the stock exchanges having electronic
connectivity with NSDL and CDSL. The Stock Exchanges have electronic connectivity with
CDSL and NSDL.
4. The trading of the Placement Shares would be in dematerialized form only for all QIBs in the
demat segment of the respective Stock Exchanges.
5. Our Company will not be responsible or liable for the delay in the credit of Placement Shares due
to errors in the Application Form or otherwise on part of the QIBs.
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PLAN OF DISTRIBUTION
Placement Agreement
The Sole Global Co-ordinator and Book Running Lead Manager have entered into a placement agreement
with our Company, (“Placement Agreement”), pursuant to which the Sole Global Co-ordinator and Book
Running Lead Manager have agreed to procure subscriptions for the Placement Shares to be issued
pursuant to the Issue on a reasonable efforts basis.
The Placement Agreement contains customary representations, warranties and indemnities from our
Company and the Sole Global Co-ordinator and Book Running Lead Manager, and it is subject to
termination in accordance with the terms contained therein.
This Placement Document has not been, and will not be, registered as a prospectus with the RoC and, no
Placement Shares will be offered in India or overseas to the public or any members of the public in India or
any other class of investors, other than QIBs. Our Company has obtained an in-principle approval for the
Issue from each of the Stock Exchanges and will apply and obtain the final listing and trading approval for
the Placement Shares upon their Allotment. No assurance can be given on liquidity or sustainability of
trading market for the Placement Shares of our Company post Issue, the ability of the holders of the
Placement Shares to sell their Placement Shares or the price at which they would be able to sell such
Placement Shares.
Lock-up
Our Company has agreed with the Sole Global Co-ordinator and Book Running Lead Manager that it shall
not, and shall not announce an intention to, without the prior written consent of the Sole Global Co-
ordinator and Book Running Lead Manager, during the period commencing on the date of the Placement
Agreement and ending one hundred and eighty days after the date of Allotment of the Placement Shares,
(the “Lock-up Period”), directly or indirectly: (a) issue, offer, allot, contract to issue or allot, contract to
purchase, purchase any option or contract to sell, grant or sell any option, right or warrant to purchase,
make any short sale, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares,
including but not limited to any options or warrants to purchase any Equity Shares, or any securities
convertible into or exercisable or exchangeable for, or that represent the right to receive, Equity Shares, (b)
enter into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the
economic consequences of ownership of the Equity Shares or any securities convertible into or exercisable
or exchangeable for Equity Shares, (c) deposit any Equity Shares, or any securities convertible into or
exercisable or exchangeable for the Equity Shares or which carry the rights to subscribe for or purchase
Equity Shares, in any depository receipt facility or enter into any transaction (including a transaction
involving derivatives) having an economic effect similar to that of a sale or deposit of Equity Shares in any
depository receipt facility, or, (d) publically announce any intention to enter into any transaction described
in (a), (b) or (c) above, whether any such transaction described in (a), (b) or (c) above is to be settled by
delivery of the Equity Shares, or other securities, in cash or otherwise.
Provided that the foregoing restrictions shall not apply to any issuance, allotment and distribution of
securities pursuant to the exercise of any stock options granted to employees of our Company or its
Subsidiaries pursuant to the subsisting ESOP Scheme of our Company.
Our Promoters have agreed with the Sole Global Co-ordinator and Book Running Lead Manager that
during the Lock-up Period, without the prior written consent of the Sole Global Co-ordinator and Book
Running Lead Manager they have not and will not announce any intention to enter into any transaction
whether any such transaction which is to be settled by delivery of Equity Shares, or such other securities, in
cash or otherwise, during the period commencing on the date of the Lock-up Letter and ending 180 (one
hundred and eighty) days after the date of Allotment of the Placement Shares, (“Lock-up Period”), directly
or indirectly, transfer in any manner, offer, lend, sell, contract to sell, pledge, encumber, sell any option or
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contract to purchase, purchase any option, grant any option, right or warrant to purchase, make any short
sale, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares, including but not
limited to any options, warrants to purchase any Equity Shares, or any securities convertible into or
exercisable or exchangeable for, or that represent the right to receive, Equity Shares or enter into any swap
or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic
consequences of ownership of the Equity Shares or any securities convertible into or exercisable or
exchangeable for Equity Shares or deposit any Equity Shares, or any securities convertible into or
exercisable or exchangeable for the Equity Shares or which carry the rights to subscribe for or purchase
Equity Shares, in any depository receipt facility or enter into any transaction (including a transaction
involving derivatives) having an economic effect similar to that of a sale or deposit of Equity Shares in any
depository receipt facility.
Provided that the foregoing restrictions, shall not apply to any acquisition of Equity Shares by the
individual Promoters, namely Mr. Salil Singhal, Mr. Mayank Singhal or Ms. Madhu Singhal pursuant to
their exercise of any stock options granted to them under our Company’s existing ESOP Scheme, if any,
which vest during the Lock up Period or have vested prior to it.
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SELLING RESTRICTIONS
The distribution of this Placement Document and the offer, sale or delivery of the Placement Shares is
restricted by law in certain jurisdictions. Persons who come into possession of this Placement Document
are advised to take legal advice with regard to any restrictions that may be applicable to them and to
observe such restrictions. This Placement Document may not be used for the purpose of an offer or sale in
any circumstances in which such offer or sale is not authorized or permitted.
General
No action has been or will be taken in any jurisdiction that would permit a public offering of the Placement
Shares or the possession, circulation or distribution of this Placement Document or any other material
relating to us or the Placement Shares in any jurisdiction where action for the purpose is required.
Accordingly, the Placement Shares may not be offered or sold, directly or indirectly and neither this
Placement Document nor any other offering material or advertisements in connection with the Placement
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.
The Issue will be made in compliance with the applicable SEBI ICDR Regulations. Each subscriber of the
Placement Shares in the Issue will be required to make, or to be deemed to have made, as applicable, the
acknowledgments and agreements as described under “Transfer Restrictions”.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus
Directive (each, a “Relevant Member State”), an offer of the Placement Shares to the public may not be
made in that Relevant Member State prior to the publication of a prospectus in relation to the Placement
Shares which has been approved by the competent authority in that Relevant Member State or, where
appropriate, approved in another Relevant Member State and notified to the competent authority in that
Relevant Member State, all in accordance with the Prospectus Directive, except that an offer of Placement
Shares to the public in that Relevant Member State at any time may be made:
(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so
authorized or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last
Financial Year; (2) a total balance sheet of more than Euro 43,000,000 and (3) an annual net turnover of
more than Euro 50,000,000, as shown in its last annual or consolidated accounts; or
(c) in any other circumstances which do not require the publication by us of a prospectus pursuant to
Article 3 of the Prospectus Directive.
Provided that no such offer of Placement Shares shall result in the requirement for the publication by our
Company or the Sole Global Co-ordinator and Book Running Lead Manager of a prospectus pursuant to
Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of Placement Shares to the public” in relation to
any Placement Shares in any Relevant Member State means the communication in any form and by any
means of sufficient information on the terms of the offer and the Placement Shares to be offered so as to
enable an investor to decide to purchase or subscribe the Placement Shares, as the same may be varied in
that Member State by any measure implementing the Prospectus Directive in that Member State and the
expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing
measure in each Relevant Member State.
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Hong Kong
The Placement Shares may only be offered or sold in Hong Kong (i) to 'professional investors' as defined in
the Securities and Future Ordinance (Cap 571) ("SFO") and any rules made under the SFO, or (ii) in other
circumstances which do not result in the document being a 'prospectus' as defined in the Companies
Ordinance (Cap. 32) or which do not constitute an offer to the public within the meaning of that Ordinance;
and the Sole Global Co-ordinator and Book Running Lead Manager has not issued, or had in its possession
for the purposes of the Issue, and will not issue, or have in its possession for the purposes of the Issue,
whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Placement
Shares, which is directed at, or the contents of which are likely to be accessed or read by, the public in
Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to
Placement Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to
'professional investors' as defined in the SFO and any rules made under the SFO.
Luxembourg
The Placement Shares offered in this Placement Document may not be offered, sold or delivered to the
public within the Grand Duchy of Luxembourg. This Placement Document is only intended for institutional
investors. It is personal to each offeree and does not constitute an offer to any other person or to the public
generally in Luxembourg to subscribe for or otherwise acquire the Placement Shares. Distribution of this
Placement Document to any person other than the offeree and those persons, if any, retained to advise such
offeree with respect thereto is unauthorized and any disclosure of any of its contents, without prior written
consent of our Company, is prohibited.
Mauritius
This Placement Document is not intended to be distributed to the public in Mauritius and shall not be
distributed, circulated directly or indirectly or issued to the public in Mauritius or to Mauritius residents and
the Placement Shares are not being offered or sold to the public in Mauritius, nor may they be offered or
sold, directly or indirectly, in Mauritius or to, or for the account or benefit of, any resident of Mauritius.
Singapore
This Placement Document has not been registered as a prospectus with the Monetary Authority of
Singapore under the Securities and Futures Act, Chapter 289 of Singapore (the "Securities and Futures
Act"). The Placement Shares may not be offered or sold or made the subject of an invitation for
subscription or purchase nor may this Placement Document or any other document or material in
connection with the offer or sale or invitation for subscription or purchase of any Placement Shares be
circulated or distributed, whether directly or indirectly, to the public or any member of the public in
Singapore other than (a) to an institutional investor or other person falling within Section 274 of the
Securities and Futures Act, (b) to a relevant person, or any person pursuant to Section 275(1A) of the
Securities and Futures Act, and in accordance with the conditions specified in Section 275 of the Securities
and Futures Act, or (c) otherwise than pursuant to, and in accordance with the conditions of, any other
applicable provision of the Securities and Futures Act.
Each of the following relevant persons specified in Section 275 of the Securities and Futures Act which has
subscribed or purchased Placement Shares, namely a person who is: (a) a corporate (which is not an
accredited investor) the sole business of which is to hold investments and the entire share capital of which
is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the
trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an
accredited investor, should note that shares, debentures and units of shares and debentures of that
corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after
that corporation or that trust has acquired the Placement Shares under Section 275 of the Securities and
Futures Act except: (1) to an institutional investor under Section 274 of the Securities and Futures Act or to
a relevant person, or any person pursuant to Section 275(1A) of the Securities and Futures Act, and in
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accordance with the conditions, specified in Section 275 of the Securities and Futures Act; (2) where no
consideration is given for the transfer; or (3) by operation of law.
United Arab Emirates
This Placement Document is strictly private and confidential and is being distributed to a limited number of
investors and must not be provided to any person other than the original recipient, and may not be
reproduced or used for any other purpose.
By receiving this Placement Document, the person or entity to whom it has been issued understands,
acknowledges and agrees that this Placement Document has not been approved by the U.A.E. Central
Bank, the U.A.E. Ministry of Economy and Planning or any other authorities in the U.A.E., nor has the
Sole Global Co-ordinator and Book Running Lead Manager, received authorization or licensing from the
U.A.E. Central Bank, the U.A.E. Ministry of Economy and Planning or any other authorities in the United
Arab Emirates to market or sell securities within the United Arab Emirates. No marketing of any financial
products or services has been or will be made from within the United Arab Emirates and no subscription to
any securities, products or financial services may or will be consummated within the United Arab Emirates.
It should not be assumed that the Sole Global Co-ordinator and Book Running Lead Manager, is a licensed
broker, dealer or investment advisor under the laws applicable in the United Arab Emirates, or that it
advises individuals resident in the United Arab Emirates as to the appropriateness of investing in or
purchasing or selling securities or other financial products. The interests in the Placement Shares may not
be offered or sold directly or indirectly to the public in the United Arab Emirates. This does not constitute a
public offer of securities in the United Arab Emirates in accordance with the Commercial Companies Law,
Federal Law No. 8 of 1984 (as amended) or otherwise.
By receiving this Placement Document, the person or entity to whom it has been issued understands,
acknowledges and agrees that the Placement Shares have not been and will not be offered, sold or publicly
promoted or advertised in the Dubai International Financial Centre other than in compliance with laws
applicable in the Dubai International Financial Centre, governing the issue, offering or sale of securities.
The Dubai Financial Services Authority has not approved this Placement Document nor taken steps to
verify the information set out in it, and has no responsibility for it.
United Kingdom
The Sole Global Co-ordinator and Book Running Lead Manager:
(a) has not offered or sold, and prior to the expiry of a period of six months from the issue date of any
Placement Shares, will not offer or sell any securities of our Company to persons in the United
Kingdom except to 'qualified investors' as defined in section 86(7) of the Financial Services and
Markets Act, 2000 ("FSMA") or otherwise in circumstances which have not resulted in an offer to
the public in the United Kingdom;
(b) has complied and will comply with all applicable provisions of FSMA with respect to anything
done by it in relation to the Placement Shares in, from or otherwise involving the United Kingdom;
and
(c) in the United Kingdom, will only communicate or cause to be communicated an invitation or
inducement to engage in investment activity (within the meaning of section 21 of the FSMA) to
persons that are 'qualified investors' and who are (i) 'investment professionals' falling within Article
19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the
"Order") or (ii) high net worth entities and/or other persons to whom it may lawfully be
communicated falling within Article 49(2)(a) to (d) of the Order in circumstances in which section
21(1) of the FSMA does not apply to our Company.
Nothing contained in this Placement Document is intended to constitute investment, legal, tax, accounting
or other professional advice. This Placement Document is for your information only and nothing in this
Placement Document is intended to endorse or recommend a particular course of action. You should
consult with an appropriate professional for specific advice rendered on the basis of your situation.
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TRANSFER RESTRICTIONS
Due to the following restrictions, investors are advised to consult legal counsel prior to making any resale,
pledge or transfer of the Placement Shares.
The Placement Shares have not been and will not be registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in
Regulation S), except pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and applicable state securities laws. Accordingly, the Placement Shares
are being offered and sold only outside the United States in offshore transactions in reliance on Regulation
S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur.
Purchasers of the Placement Shares in this Issue are not permitted to sell the Placement Shares for a period
of one year from the date of allotment except through the Stock Exchanges.
Subject to the foregoing:
Each purchaser of Placement Shares outside the United States pursuant to Regulation S under the Securities
Act, by accepting delivery of this Placement Document and our Company’s Placement Shares, will be
deemed to have represented and agreed as follows:
It is authorized to consummate the purchase of the Placement Shares in compliance with all applicable
laws and regulations.
It acknowledges (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed
to it that such customer acknowledges) that such Placement Shares have not been and will not be
registered under the Securities Act.
It certifies that either (A) it is, or at the time the Placement Shares are purchased will be, the beneficial
owner of the Placement Shares and it is not a U.S. person and is located outside the United States
(within the meaning of Regulation S) or (B) it is a broker-dealer acting on behalf of its customer and
its customer has confirmed to it that (i) such customer is, or at the time the Placement Shares are
purchased will be, the beneficial owner of the Placement Shares, and (ii) such customer is not a U.S.
person and is located outside the United States (within the meaning of Regulation S).
It agrees (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed to it that
such customer agrees) that, it (or such customer) will not offer, sell, pledge or otherwise transfer such
Placement Shares except in an offshore transaction complying with Rule 903 or Rule 904 of
Regulation S or pursuant to any other available exemption from registration under the Securities Act
and in accordance with all applicable securities laws of the states of the United States and any other
jurisdiction.
It acknowledges that our Company, the Sole Global Co-ordinator and Book Running Lead Manager,
their affiliates, and others, will rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements and agrees that, if any of such acknowledgments, representations or
agreements deemed to have been made by virtue of its purchase of the Placement Shares are no longer
accurate, it will promptly notify our Company, and if it is acquiring any Placement Shares as a
fiduciary or agent for one or more accounts, it represents that it has sole investment discretion with
respect to each such account and that it has full power to make the foregoing acknowledgments,
representations and agreements on behalf of each such account.
Any resale or other transfer or attempted resale or other transfer, made other than in compliance with
above-stated restrictions shall not be recognized by our Company.
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THE SECURITIES MARKET OF INDIA
The information in this section has been extracted from publicly available documents from various
sources, including officially prepared materials from the SEBI, the BSE and the NSE, and has not been
prepared or independently verified by our Company, the Sole Global Co-ordinator and Book Running Lead
Manager, or any of its respective affiliates or advisers. The laws and regulations described herein are
subject to change from time to time.
The Indian Securities Market
India has a long history of organized securities trading. In 1875, the first stock exchange was established in
Mumbai. The BSE and the NSE together hold a dominant position among the stock exchanges in terms of
the number of listed companies, market capitalisation and trading activity.
Stock Exchange Regulation
Indian stock exchanges are regulated primarily by SEBI, as well as by the Government of India acting
through the Ministry of Finance, Capital Markets Division, under the SCRA and the SCRR, which, along
with rules, bye-laws and regulations of the respective stock exchanges, regulate the recognition of stock
exchanges, the qualifications for membership thereof and the manner in which contracts are entered into
and enforced between members of the stock exchanges.
The SEBI Act, under which the SEBI was established by the Government of India, granted powers to SEBI
to promote, develop and regulate the Indian securities markets, including stock exchanges and other
financial intermediaries in the capital markets, to protect the interests of investors, to promote and monitor
self-regulatory organisations, to prohibit fraudulent and unfair trade practices and insider trading and to
regulate substantial acquisitions of shares and takeovers of companies. SEBI has also issued regulations
concerning minimum disclosure requirements by public companies, rules and regulations concerning
investor protection, insider trading, substantial acquisition of shares and takeovers of companies, buyback
of securities, delisting of securities, employee stock option schemes, stockbrokers, merchant bankers,
underwriters, mutual funds, FIIs credit rating agencies and other capital market participants.
Listing
The listing of securities on recognised stock exchanges in India is regulated by the applicable Indian laws
including Companies Act, the SCRA, the SCRR, the SEBI Act and various guidelines issued by SEBI and
the Listing Agreements. Under the SCRR, the governing body of each stock exchange is empowered to
suspend trading of or dealing in a listed security for breach by a listed company of its obligations under
such Listing Agreement or for any other reason, subject to such company receiving prior notice of such
intent of the stock exchange and upon granting of a hearing in the matter. In the event that a suspension of a
company’s securities continues for a period in excess of 90 days, our Company may appeal to the
Securities Appellate Tribunal against the suspension. SEBI has the power to vary or veto a stock exchange
decision in this regard. SEBI also has the power to amend such Listing Agreements and the bye-laws of
stock exchanges in India.
Delisting of Securities
SEBI has, pursuant to a notification dated June 10, 2009, notified the SEBI (Delisting of Equity Shares)
Regulations, 2009 in relation to the voluntary and compulsory delisting of securities from the stock
exchanges. In addition, certain amendments to the SCRR have also been notified in relation to delisting.
Minimum Level of Public Shareholding
All listed companies are required to ensure that their minimum level of public shareholding remains at or
above 25% and have been given a period of three years to comply with such requirement.
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Index-Based Market-Wide Circuit Breaker System
In order to restrict abnormal price volatility in any particular stock, SEBI has instructed stock exchanges to
apply daily circuit breakers which do not allow transactions beyond a certain level of price volatility. The
index-based market-wide circuit breaker system (equity and equity derivatives) applies at three stages of
the index movement, at 10%, 15% and 20%. These circuit breakers, when triggered, bring about a co-
ordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit
breakers are triggered by movement of either the SENSEX of the BSE or the S&P CNX NIFTY of the
NSE, whichever is breached earlier.
In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-
wise price bands of 20% movements either up or down. However, no price bands are applicable on scrips
on which derivative products are available or scrips included in indices on which derivative products are
available.
Recognized stock exchanges in India can also exercise the power to suspend trading during periods of
market volatility. Margin requirements are imposed by stock exchanges that are required to be paid by the
stockbrokers.
BSE
The BSE is one of the stock exchanges in India on which our Equity Shares are listed. Established in 1875,
it is the first stock exchange in India to have obtained permanent recognition in 1956 from the Government
of India under the SCRA and has evolved over the years into its present status as one of the largest stock
exchange in India. As of December 31, 2012, the BSE had 1,388 members, comprising 209 individual
members, 1,150 Indian companies and 29 FIIs. Only a member of the BSE has the right to trade in the
stocks listed on the BSE. As of December 31, 2012 there were 5,191 listed companies trading on the BSE
(excluding permitted companies). The estimated market capitalisation of stocks trading on the BSE was `
69,218 billion as on December 31, 2012. In December 2012, the average daily equity turnover on the BSE
was ` 25.20 billion. As of December 31, 2012, the BSE had 15,727 trader work stations spread over 240
cities.
NSE
Our Equity Shares are also listed in India on the NSE. The NSE was established by financial institutions
and banks to provide nationwide on-line satellite-linked, screen-based trading facilities to market makers,
to provide electronic clearing and settlement for securities including government securities, debentures,
public sector bonds and units. Deliveries for trades executed “on-market” are exchanged through the
National Securities Clearing Corporation Limited. After recognition as a stock exchange under the SCRA
in April 1993, the NSE commenced operations in the wholesale debt market segment in June 1994 and
operations in the derivatives segment in June 2000.
The average daily turnover for December 2012 was ` 130.3 billion. The NSE launched the NSE 50 index,
now known as S&P CNX NIFTY, on April 22, 1996 and the Mid-cap Index on January 1, 1996. As of
December 31, 2012 the NSE had 1,625 companies listed and market capitalisation of approximately
`67,638 billion. The NSE has a wide network in major metropolitan cities and has a screen based trading
and a central monitoring system.
Trading Hours
Trading on both the BSE and the NSE normally occurs Monday through Friday, between 9:00 a.m. and
3:30 p.m. The BSE and the NSE are closed on public holidays. Recently, the stock exchanges have been
permitted to set their own trading hours (in cash and derivative segments) subject to the condition that (i)
the trading hours are between 9 a.m. and 5 p.m.; and (ii) the stock exchange has in place risk management
system and infrastructure commensurate to the trading hours.
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Internet-Based Securities Trading and Services
SEBI approved internet trading in January 2000. Internet trading takes place through order routing systems,
which route client orders to exchange trading systems for execution. This permits clients throughout the
country to trade using brokers’ internet trading systems. Stock brokers interested in providing this service
are required to apply for permission to the relevant stock exchange and to comply with certain minimum
conditions stipulated by SEBI and other applicable laws. NSE became the first exchange to grant approval
to its members for providing Internet-based trading services. Internet trading is possible on both the
‘equities’ as well as the ‘derivatives’ segments of the NSE.
Trading Procedure
In order to facilitate smooth transactions, the BSE replaced its open outcry system with BSE On-line
Trading (BOLT) facility in 1995. This totally automated screen based trading in securities was put into
practice nation-wide. This has enhanced transparency in dealings and has assisted considerably in
smoothening settlement cycles and improving efficiency in back-office work. NSE also provides on-line
trading facilities through a fully automated screen based trading system called ‘National Exchange for
Automated Trading’ (NEAT).
Takeover Code
Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the
specific regulations in relation to substantial acquisition of shares and takeover. Since our Company is an
Indian listed company, the provisions of the Takeover Code apply to our Company. The Takeover Code
prescribes certain thresholds or trigger points that give rise to these obligations.
Insider Trading Regulations
Specific regulations have been notified by SEBI to prohibit and penalize insider trading in India. An insider
is, inter alia, prohibited from dealing in the securities of a listed company when in possession of
unpublished price sensitive information.
Depositories
The Depositories Act provides a legal framework for the establishment of depositories to record ownership
details and effect transfers in book-entry form. Further, SEBI framed regulations in relation to, inter alia,
the formation and registration of such depositories, the registration of participants as well as the rights and
obligations of the depositories, participants, companies and beneficial owners. The depository system has
significantly improved the operation of the Indian securities markets.
Derivatives (Futures and Options)
Trading in derivatives is governed by the SCRA, the SCRA Rules and the SEBI Act. The SCRA was
amended in February 2000 and derivative contracts were included within the term ‘securities’, as defined
by the SCRA. Trading in derivatives in India takes place either on separate and independent derivatives
exchanges or on a separate segment of an existing stock exchange.
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DESCRIPTION OF THE EQUITY SHARES
Set forth below is certain information relating to our Company’s share capital, including brief summaries
of certain provisions of our Memorandum and Articles of Association, the Companies Act, the Securities
Contracts (Regulation) Act, 1956 and certain related legislations of India, all as currently in effect
relating to the rights attached to the Equity Shares.
General
As on the date of this Placement Document, the authorised share capital of our Company is
` 700,000,000 divided into 40,000,000 Equity Shares of ` 5 each and 5,000,000 Preference Shares of ` 100 each. Our Equity Shares are listed on the BSE and the NSE. Out of our Company’s aggregate issued
Equity Share capital of 25,202,489 Equity Shares and subscribed and paid-up Equity Share capital of
25,167,174 Equity Shares prior to this Issue, all our paid-up Equity Shares are listed on the Stock
Exchanges. The aforementioned difference in the issued Equity Share capital of our Company and the
paid-up Equity Share capital of our Company is on account of lesser number of Equity Shares allotted in
past rights issues of our Company.
The security identification codes for our Equity Shares are as follows:
ISIN : INE603J01022
BSE Code : 523642
NSE Code : PIIND
Articles of Association
Our Company is governed by our Articles of Association.
Dividends
Under the Companies Act, an Indian company pays dividend upon a recommendation by its board of
directors and subject to approval by a majority of the members, who have the right to decrease but not to
increase the amount of the dividend recommended by the board of directors. However, the board of
directors is not obligated to recommend a dividend. According to the Articles of Association of our
Company, no Dividend shall be declared or paid by our Company year except out of the profits of our
Company or out of both or out of money provided by the Central Government or State Government for the
payment of dividend in pursuance of a guarantee given by the Government and no dividend shall carry
interest against our Company. Our Articles of Association prohibit the declaration of dividends larger than
as recommended by the Board of Directors.
Under the equity listing agreement, listed companies are mandated to declare dividend on per share basis
only. The directors may without the sanction of a general meeting pay interim dividend to one or more
classes of shares to the exclusion of others, at rates which may be differing from class to class, if in their
opinion the position of our Company justifies the same. While declaring such a dividend the directors
should satisfy themselves that the preference shares, which have a prior claim in respect of payment of
dividend, should have their entire rated dividend at the time of final preparation of accounts for that period.
Under the Companies Act, dividends can only be paid in cash to shareholders listed on the register of
shareholders or those persons whose names are entered as beneficial owners in the record of the depository
on the date specified as the “record date” or “book closure date.”
No unpaid or unclaimed dividend shall be forfeited unless the claim thereto becomes barred by law. Our
Company shall comply with the provisions of sections 205A of the Companies Act in respect of unpaid or
unclaimed dividend.
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Under the Companies Act, dividends may be paid out of profits of a company in the year in which the
dividend is declared or out of the undistributed profits or reserves of the previous fiscal years or out of both
in compliance with the provisions of Companies (Declaration of Dividend out of Reserves) Rules, 1975.
Capitalisation of Reserves
Our Company may capitalise the whole or part of the amount for the time being standing in credit of any of
our Company’s reserve account or to the profit or loss account or available for distribution, upon
recommendation of our Board of Directors. The Articles of Association of our Company provide that our
Company in general meeting may pass a resolution that any moneys, investments or other assets forming
part of the undivided profits of our Company standing to the credit of the Reserves, or the Capital
Redemption Reserve Account or in the hands of our Company and available for dividend or representing
premiums received on the issue of shares and standing to the credit of the Share Premium Account for
dividend may be capitalized.
A General Meeting may resolve that any surplus money arising from the realisation of any capital assets of
our Company or any investments or any other undistributed profits of our Company not subject to charge
for Income Tax, be distributed among the members on the footing that they receive the same as capital.
The Board of Directors may settle any difficulty which may arise in regard of the distribution as it thinks
expedient and in particular may issue fractional certificates.
Alteration of Share Capital
Our Company in a general meeting may upon the recommendation of the Board of Directors resolve to
alter the conditions of its Memorandum of Association as follows:
(a) Consolidate and divide all or any of its share capital into shares of larger amounts than its existing
shares;
(b) Sub-divide its shares or any of them into shares of smaller amount so however that in the sub-division
the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be
the same as it was in the case of the share from which the reduced share is derived; and
(c) 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 and diminish the amount of its share capital by the amount of the shares so
cancelled.
The Board of Directors may also determine, where any share is sub-divided, that one or more of such
shares shall have some preference or special advantage as regards dividends, capital, voting or otherwise as
compared with the others.
General Meetings of Shareholders
In accordance with section 166 of the Companies Act, a company must hold its annual general meeting
each year within 15 months of the previous annual general meeting or within six months after the end of
each accounting year, whichever is earlier, unless extended by the Registrar of Companies at the request of
the company for any special reason.
The Articles of Association of our Company provide that the Board of Directors may, whenever it thinks
fit, call an extraordinary general meeting on the requisition of such number of members as hold, at the date
of the deposit of the requisition, not less than one-tenth of such of the paid-up capital of our Company as at
that date that carried the right of voting in regard to the matter to be considered at such meeting. Written
notices convening a meeting setting out the date, place and agenda of the meeting must be given to the
members at least 21 days prior to the date of the proposed meeting in accordance with section 171 of the
Companies Act. The accidental omission to give notice of any meeting to or the non-receipt of any notice
by the member or other person to whom it should be given shall not invalidate the proceedings at the
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meetings. The Articles of our Company provide that no business shall be transacted at any general meeting
unless a quorum of members is present throughout the meeting. Five members present in person shall
constitute the quorum. If the quorum is not present within half an hour of the time appointed for a meeting,
the meeting, if convened upon such requisition as aforesaid, shall be dissolved; but in any other case it shall
stand adjourned in accordance with provisions of sub-sections (3), (4) and (5) of Section 174 of the
Companies Act.
Voting Rights
Every member present in person shall have one vote and on poll, the voting rights shall be as laid down in
section 87 of the Companies Act, provided that no company shall vote by proxy as long as a resolution of
its directors under section 187 of the Companies Act. Where a company or a body corporate is a member of
our Company, a person duly appointed by the member company to represent it at a meeting of our
Company, shall not be deemed to be a proxy.
Registration of Transfers and Register of Members
Our Company is required to maintain a register of members wherein the particulars of the members of our
Company are entered. Under the listing agreements of the stock exchanges on which our Company’s
outstanding Equity Shares are listed, our Company may, upon at least seven days’ advance notice to such
stock exchanges, set a record date and/or close the register of shareholders in order to ascertain the identity
of shareholders. The trading of Equity Shares and the delivery of certificates in respect thereof may
continue while the register of shareholders is closed.
Directors
The directors shall be appointed by our Company in the general meeting subject to the provisions of the
Companies Act and the Articles of Association. Unless otherwise determined by special resolution, our
Articles of Association authorize the appointment of a minimum of three and a maximum of eleven
directors. Not less than two-thirds of the directors of our Company shall be persons whose period of office
is liable to determination by retirement of directors by rotation.
The directors have the power to appoint any other persons as an addition to the Board of Directors but any
director so appointed shall hold office only up to the date of the next following annual general meeting of
our Company but shall be eligible for re-election at such meeting. Subject to the provisions of section 313
of the Companies Act the Board of Directors shall also have the power to appoint any person to act as an
alternate director for a director during the latter’s absence for a period of not less than three months from
the state in which the meeting of the directors is ordinarily held. Pursuant to the Companies Act not less
than two-thirds of the total numbers of directors shall be persons whose period of office is subject to
retirement by rotation and one third of such directors, or if their number is not three or a multiple of three,
then the number nearest to one-third, shall retire from office at every annual general meeting. The directors
to retire are those who have been the longest in the office since their last appointment.
Balance Sheet and Accounts
A copy of every such Profit and Loss Account and Balance Sheet (including Auditor’s Report and every
other document required by law to be annexed to the Balance Sheet), shall at least twenty-one days before
the meeting at which the same are to be laid before the members, be sent to the members of our Company.
There shall be attached to, every Balance Sheet laid before our Company, a report by the Board of
Directors complying with section 217 of the Companies Act.
Transfer and Transmission
Our Company is required to maintain a register of transfers wherein the particulars of every transfer of
shares are entered. Every instrument of transfer shall be executed both by transferor and the transferee. No
transfer of shares may be made to a minor or a person with unsound mind, without the prior approval of the
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Board of Directors. The Board of Directors may at its own absolute and uncontrolled discretion and without
assigning any reason, decline to register or acknowledge any transfer of shares. A person entitled to a share
by transmission shall, subject to the right of the Directors to retain such dividends or money, be entitled to
receive and any may give discharge for any dividends or other moneys payable in respect of the share. The
certificate or certificates of the share or shares to be transferred must be delivered to our Company along
with a properly stamped and executed instrument of transfer.
The executor or administrator of a deceased member (not being one of several joint holders) shall be the
only person recognized by our Company as having any title to the share registered in the name of such
member.
Winding Up
The Articles of Association of our Company provide that the liquidator on any winding up (whether
voluntary, under supervision or compulsory) may, with the sanction of a Special Resolution divide among
the contributories, in specie or in kind, any part of the assets of our Company and may with the like
sanction; vest any part of the assets of our Company in trustees upon such trusts for the benefit of the
contributories as the liquidator, with the like sanction shall think fit.
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TAXATION
The information provided below sets out the possible tax benefits available to the shareholders in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of equity shares, under the current tax laws presently in force in India. It is not exhaustive or comprehensive and is not intended to be a substitute for professional advice. Investors are advised to consult their own tax consultants with respect to the tax implications of an investment in the Equity Shares particularly in view of the fact that certain recently enacted legislation may not have a direct legal precedent or may have a different interpretation on the benefits, which an investor can avail.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE INDIAN TAX IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF EQUITY SHARES IN YOUR PARTICULAR SITUATION.
To,
Board of Directors,
PI Industries Limited,
5th
Floor, Vipul Square, B Block,
Sushant Lok Phase-1, Gurgaon
Dear Sirs,
Statement of Possible Tax Benefits available to our Company and its potential shareholders i.e.
Qualified Institutional Buyers (“QIB”)
We hereby report that the enclosed Annexure, prepared by PI Industries Limited (the Company) states the
possible tax benefits available to the Company and QIBs under the Income-tax Act, 1961 and Wealth Tax
Act, 1957, presently in force in India. Several of these benefits are dependent on the Company or QIBs
fulfilling the conditions prescribed under the relevant provisions of the Act. Hence, the ability of the
Company or QIB to derive the tax benefits is dependent upon fulfilling such conditions, which based on the
business imperatives, the Company may or may not choose to fulfill.
The benefits discussed in the enclosed Annexure are not exhaustive. The preparation of the contents stated
in the enclosed Annexure is the responsibility of the Company’s management. We are informed that the
enclosed Annexure is only intended to provide general information to the investors and hence is neither
designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the
tax consequences and the changing tax laws, each investor is advised to consult his or her own tax
consultant with respect to the specific tax implications arising out of their participation in the issue.
We do not express any opinion or provide any assurance as to whether:
i. the conditions prescribed for availing the benefits, where applicable have been / would be met with; or
ii. the Company or its shareholders will continue to obtain these benefits in future.
The contents of the enclosed Annexure and our opinion are based on information, explanations and
representations obtained from the Company and on the basis of our understanding of the business activities
and operations of the Company.
For S.S. Kothari Mehta & Co.
Firm registration no: 000756N
Chartered Accountants
Partner H P Agarwal
Membership No. 008211
Place: New Delhi Date: January 18, 2013
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Annexure: Statement of possible tax benefits available to PI Industries Limited and qualified
institutional buyers
I. Benefits available to the Company under the Income-tax Act, 1961 (“Act”)
(A) Special tax benefits
1. The Company has installed Captive power plant (CPP) at Panoli (Gujarat) which qualifies as power
generating unit as per the provisions of Section 80-IA. The CPP was commissioned in 2004-05. As
per the provisions of Section 80-IA of the Act, the profits and gains from the business of generation of
power will be eligible for deduction of 100% for a period of 10 consecutive years in a block 15 years
starting from the year in which the company starts generating power, subject to compliance with
conditions specified in Section 80-IA of the Act. The Company has started claiming deduction under
Section 80-IA of the Act from the financial year 2005-06.
2. The Company has established an industrial undertaking in Jammu which is an industrially backward
State specified in the Eight Schedule and thus, is eligible for claiming deduction under the provision
of section 80-IB. The undertaking was established in the year 2005-06. As per the provisions of
Section 80-IB of the Act, the profits and gains from the undertaking are eligible for deduction at the
rate of 100% for first five assessment years beginning with the initial assessment year and thereafter,
at the rate of 30%. However, the total period of deduction cannot exceed 10 consecutive assessment
years.
3. The Company has established an industrial undertaking at Jambusar (Gujarat) which is referred to in
clause (zc) of Section 2 of the Special Economic Zones Act, 2005. As per the provisions of the
Section 10AA of the Income Tax Act, 1961, the undertaking would be eligible for deduction of 100%
of the profits and gains derived from the export of such articles or things or from services for a period
of five consecutive assessment years relevant to the previous year in which the Unit begins to
manufacture or produce such article or things or provide services, and 50% of such profits and gains
for further five assessment years and thereafter for the next five consecutive assessment years, so
much of the amount not exceeding 50%, of the profits as is debited to profit & loss account of the
previous year in respect of which the deduction is to be allowed and credited to a reserve account (to
be called the "Special Economic Zone Re-investment Reserve Account") to be created and utilised for
the purposes of the business of the assessee in the manner laid down in subsection (2).
(B) General tax benefits
1. The Company will be entitled to claim depreciation allowance at the prescribed rates on assets under
Section 32 of the Act. Further, subject to fulfillment of conditions prescribed in Section 32(1)(iia) of
the Act, the Company will be entitled to claim accelerated depreciation of 20 per cent of the actual
cost of certain new machinery or plant which has been acquired and installed after 31st March, 2005.
If, however, the assets are put to use for less than 180 days in the year in which they are acquired, the
rate of accelerated depreciation will be 10 per cent. Unabsorbed depreciation, if any, for any
assessment year can be carried forward and set off against any source of income in subsequent
assessment years as per Section 32 of the Act.
2. Subject to fulfillment of conditions, the Company will be eligible, inter alia, for deduction under
Sections 35(1)(i) and (iv) of the Act, in respect of any revenue or capital expenditure incurred on
scientific research related to the business of the Company, other than expenditure on the acquisition of
any land.
3. As per Section 10(34) of the Act, any income by way of dividend received from domestic companies
referred to in Section 115-O of the Act (i.e. dividend declared, distributed or paid on or after 1st April,
2003 by domestic companies) on the shares held by the Company will be exempt from tax.
4. As per Section 14A of the Act expenses incurred in relation to income which does not form part of the
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total income under the Act will not be allowed as a deduction.
5. Under section 10(38) of the Act, the long term capital gains arising on transfer of equity shares in any
other company or units of an equity oriented funds, which are chargeable to securities transaction tax,
are exempt from tax in the hands of the Company. However, the said exemption will not be available
to the Company while computing the book profit and income tax payable under Section 115JB.
6. 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).
However, as per the proviso to that section, the long-term capital gains resulting from transfer of listed
securities or units or zero coupon bonds are subject to tax at the rate of 20% worked out after
considering indexation benefit (plus applicable surcharge and education cess), which would be
restricted to 10% worked out without considering indexation benefit (plus applicable surcharge and
education cess).
7. 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 or of units of any equity oriented fund (as defined in
section 10(38) of the Act), are subject to tax @ 15% (plus applicable surcharge and education cess), if
such a transaction is subjected to securities transaction tax.
8. Short-term capital gains arising from transfer of shares held in the Company not covered under point
(7) above will be chargeable to tax at the rate of 30% (plus applicable surcharge and education cess.)
9. 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 gain if such capital gain is invested
(maximum investment permitted is rupees fifty lakhs), 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
section. However if the new asset is transferred or converted into money or takes any loan or advance
on the security of such specified assets 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.
10. Under Section 50B of the Act, the Company will be entitled to claim the benefit of special provision
for computation of capital gain arising in case of the transfer of an undertaking/business on slump sale
basis.
11. The Company will be entitled to a deduction under Section 80G of the Act in respect of amounts
contributed as donations to various charitable institutions and funds covered under that Section,
subject to fulfillment of conditions prescribed therein.
12. As per Section 74 of the Act, short-term capital loss suffered by the Company during the financial
year will be allowed to be set-off against short-term as well as long-term capital gains of the same
year. Balance loss, if any, which cannot be set-off will be allowed to be carried forward for eight
years for claiming set-off against subsequent years’ short-term as well as long-term capital gains.
Long-term capital loss suffered during the year will be allowed to be set-off against long-term capital
gains only. Balance loss, if any, which cannot be set-off will be allowed to be carried forward for
eight years for claiming set-off against subsequent years long-term capital gains.
13. Under section 115JAA(1A) of the Act, credit is allowed in respect of any minimum alternate tax
(‘MAT’) paid under section 115JB of the Act for any assessment year commencing on or after April
1, 2006. Tax credit eligible to be carried forward will be the difference between MAT paid and the tax
computed as per the normal provisions of the Act for that assessment year. Such MAT credit is
allowed to be carried forward for set off purposes for up to 10 years succeeding the year in which the
MAT credit is allowed.
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II. Benefits available to QIB shareholders of the Company
a) Shareholders being Foreign Institutional Investors (‘FIIs’)
1. As per Section 10(34) of the Act, any income by way of dividend received from domestic companies
referred to in Section 115-O of the Act (i.e. dividends declared, distributed or paid on or after 1st
April, 2003 by domestic companies) will be exempt from tax in the hands of shareholders.
2. Income arising on transfer of the shares of the company will be exempt under Section 10(38) of the
Act if the said shares are long-term capital assets and securities transaction tax has been charged on
the said transaction.
3. Under Section 115AD(1)(b)(iii) of the Act, income by way of long-term capital gains arising from the
transfer of shares held in the company not covered under point (2) above will be chargeable to tax at
the rate of 10% (plus applicable surcharge and education cess).
4. Under Section 115AD(1)(b)(ii) of the Act, income by way of short-term capital gains arising on
transfer of the shares of the company will be chargeable to tax at the rate of 15% (plus applicable
surcharge and education cess) as per the provisions of Section 111A of the Act if securities transaction
tax has been charged on the said transaction.
5. Under Section 115AD(1)(b)(ii) of the Act, income by way of short-term capital gains arising from the
transfer of shares held in the company not covered under point (4) above will be chargeable to tax at
the rate of 30% (plus applicable surcharge and education cess).
6. The benefit of indexation and foreign currency fluctuation protection as provided by Section 48 of the
Income-tax Act is not applicable to FIIs while computing capital gains. Further, if gross total income
of FII’s includes any short-term capital gains referred to above, deduction under chapter VI-A of the
Income-tax Act shall be allowed from the gross total income as reduced by such short-term capital
gains.
7. Under the provisions of Section 90(2) of the Act, a FII will be governed by the provisions of the
Agreement for Avoidance of Double Taxation (AADT) between India and the country of residence of
the FII if the said provisions are more beneficial than the provisions under the Act.
8. Where the business income of shareholder includes profits and gains arising from transactions on
which securities transaction tax has been charged, such securities transaction tax shall be a deductible
expense from business income as per the provisions of Section 36(1)(xv) of the Act.
b) Shareholders being Mutual Funds:
Under Section 10(23D) of the Act, any income earned by a Mutual Fund registered under the
Securities and Exchange Board of India Act, 1992, or a Mutual Fund set up by a public sector bank or
a public financial institution, or a Mutual Fund authorised by the Reserve Bank of India would be
exempt from income-tax, subject to such conditions as the Central Government may by notification in
the Official Gazette specify in this behalf.
c) Shareholders being Provident Funds:
Under Section 10(25) of the Act any income received by the trustees on behalf of a recognized
provident fund or on behalf of an approved superannuation fund or on behalf of an approved gratuity
fund will be exempt from income tax. Further, the interest earned on securities by provident fund to
which the Provident Funds Act, 1925 applies, and any capital gains of the fund arising from the sale,
exchange or transfer of securities will also be exempt from tax.
171
d) QIB resident shareholders other than those discussed above
1. As per Section 10(34) of the Act, any income by way of dividend received from domestic companies
referred to in Section 115-O of the Act (i.e. dividend declared, distributed or paid on or after 1st April,
2003 by domestic companies) will be exempt from tax in the hands of shareholders.
2. As per Section 14A of the Act expenses incurred in relation to income which does not form part of the
total income under the Act will not be allowed as a deduction.
3. Income arising on transfer of the shares of the company will be exempt under Section 10(38) of the
Act if the said shares are long-term capital assets and securities transaction tax has been charged on
the said transaction.
4. The long-term capital gains accruing to the shareholders of the company from the transfer of the
shares of the company otherwise than as mentioned in point (3) above shall be chargeable to tax at the
rate of 20% (plus applicable surcharge and education cess) of the capital gains computed after
indexing the cost of acquisition or at the rate of 10% (plus applicable surcharge and education cess) of
the capital gains computed before indexing the cost of acquisition, whichever is lower.
5. Short-term capital gains arising on transfer of the shares of the company will be chargeable to tax at
the rate of 15% (plus applicable surcharge and education cess) as per the provisions of Section 111A
of the Act if securities transaction tax has been charged on the said transaction.
6. Short-term capital gains arising from the transfer of shares held in the company not covered under
point (5) above will be chargeable to tax at the rate of 30% (plus applicable surcharge and education
cess).
7. In accordance with, and subject to the conditions, including the limit of investment of ` 5.0 million,
and to the extent specified in Section 54EC of the Act, long-term capital gains arising on transfer of
the shares of the company not covered under point (3) above will be exempt from capital gains tax if
the gains are invested within six months from the date of transfer in the purchase of long-term
specified assets.
8. Where the business income of shareholder includes profits and gains from transactions on which
securities transaction tax has been charged, such securities transaction tax shall be a deductible
expense from business income as per the provisions of Section 36(1)(xv) of the Act.
III. Benefits available under the Wealth tax Act,1957 and Gift tax Act, 1958:
1. ‘Asset’ as defined under Section 2(ea) of the Wealth-tax Act, 1957 does not include shares in
companies and hence, the shares of the Company held by a shareholder are not liable to wealth-tax.
2. Since the provisions of The Gift Tax Act, 1958 have ceased to apply with effect from October 1,1998,
gift of shares made on or after October 1, 1998 will not be liable to Gift Tax under the Gift Tax Act,
1958. However, pursuant to the Finance Act, 2009, Section 56 of the Act has been amended to
provide that the value of any property, including shares and securities, received without consideration
or for inadequate consideration (from persons or in situations other than those exempted under section
56 (vii) of the Act) will be included in the computation of total income of the recipient and be subject
to tax.
Notes:
(i) All the above benefits are as per the current tax law and will be available only to the sole/ first named
holder in case the shares are held by joint holders.
(ii) In view of the individual nature of tax consequences, each investor is advised to consult their own tax
172
advisor with respect to specific tax consequences of his/her participation in the scheme.
(iii) The above statement of possible direct tax benefits set out the provisions of law in a summary manner
only and is not a complete analysis or listing of all potential tax consequences of the purchase,
ownership and disposal of equity shares.
173
LEGAL PROCEEDINGS
Except as described below, there are no outstanding litigations, suits, civil or criminal prosecutions,
proceedings before any judicial, quasi-judicial, arbitral or administrative tribunals, including pending
proceedings for violation of statutory regulations or, alleging criminal or economic offences or tax
liabilities or any other offences (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) against our Company that would have a material adverse effect on our business. Further
there are no defaults, nonpayment or overdue of statutory dues, institutional/bank dues and dues payable to
holders of debentures, bonds and arrears of cumulative preference shares that would have a material
adverse effect on our business.
Save as detailed herein there are no:
a. pending legal proceedings which, if result in an adverse outcome, would materially and adversely
affect the operations or the financial position of our Company;
b. Matters which are pending or which have arisen in the immediately preceding ten years involving:
(i) Issues of moral turpitude or criminal liability on the part of our Company;
(ii) Material violations of statutory regulations by our Company
Economic offences where proceedings have been initiated against our Company
I. Proceedings initiated against our Company:
a. Civil Proceedings:
SR.
NO.
FORUM
[SUIT/APPEAL
ETC. NO.]
INITIATED BY PARTICULARS QUANTUM
(` IN
MILLIONS)
(APPROX.)
CURRENT
STATUS
1. Civil Judge
(Junior
Division),
Chandigarh
[169/2011]
Controller of
Stores, Punjab
(“Plaintiff”)
The Plaintiff initiated proceedings
claiming inter alia, damages, on
account of risk purchase and alleged
failure of our Company to supply
insecticides to the Punjab
Government.
2.65
(plus
interest)
Pending
hearing
and final
disposal.
2. Rajasthan
High Court,
Jodhpur
[18/92/1991]
Municipal
Council,
Udaipur
Appeal proceedings initiated against
the decree in connection with refund
of octroi payment passed in favour of
our Company by the Additional
District Judge, Udaipur.
0.02 with
interest at
the rate
1.6% from
the date of
filing
Pending
hearing
and final
disposal.
3. Rajasthan
High Court,
Jodhpur
[147/1999 ]
T.K.Kachru
(“Appellant”)
Appeal proceedings initiated against a
decree in connection with refund of
advance paid by the Company to the
Appellant in connection with a diesel
generator set as passed in favour of
our Company by the Civil Court,
Udaipur.
0.03 Pending
hearing
and final
disposal.
4. Supreme
Court of India
[Civil
Appeal proceedings initiated against
the award passed by the Gujarat
Electricity Regulatory Commission in
NA Pending
hearing
and final
174
SR.
NO.
FORUM
[SUIT/APPEAL
ETC. NO.]
INITIATED BY PARTICULARS QUANTUM
(` IN
MILLIONS)
(APPROX.)
CURRENT
STATUS
Appellate
Jurisdiction
8527-8529 of
2009]
favour of our Company whereby it
was decided that the supply of
electricity to the polymer division of
the Company through its captive
generating plant was not sale under
the provisions of the Electricity Act,
2003.
disposal.
5. Collector of
Girwa,
Udaipur
[11/2011]
State through
Tehsildar
The Tehsildar (Girwa), Udaipur,
passed an order against our Company
stating that the Company was in
unauthorized occupation of certain
land, as the Company was allegedly
using agricultural land for industrial
purposes. Our Company has filed an
appeal against the said Order before
the Collector, Udaipur.
NA Pending
hearing
and final
disposal.
6. District
Consumer
Forum,
Sonepat
(Haryana)
[511/2012]
Harkishan
(“Plaintiff”)
The Plaintiff has initiated these
proceedings against our Company
pursuant to Section 12 of the
Consumer Protection Act, 1986, in
connection with, inter alia, the alleged
damage caused to the crops of the
Plaintiff by the use of our product
“Tata Tark”.
0.13 Pending
hearing
and final
disposal.
7. Court of
Principal Civil
Judge,
Jambusar
District,
Gujarat
[138 of 2012]
Liyakat
Hussain and
others
(collectively
“Plaintiffs”)
The Plaintiffs initiated proceedings for
permanent and mandatory injunction
in connection with laying of pipeline
by the Company alleging, inter alia,
that the construction of the pipeline
leads to environmental hazards.
NA Pending
hearing
and final
disposal.
8. Court of
Principal Civil
Judge,
Jambusar
District,
Gujarat
[139 of 2012]
Pankaj and
others
(collectively
“Plaintiffs”)
Plaintiffs initiated proceedings for
permanent and mandatory injunction
in connection laying of a pipeline by
the Company alleging, inter alia, that
the construction of the said pipeline
leads to environmental hazards.
NA Pending
hearing
and final
disposal.
9. High Court of
Punjab and
Haryana
[477/2002]
Surya
Enterprises
The Plaintiff initiated proceedings
against our Company for the recovery
of amounts deposited by it with the
Company. the said proceedings were
disposed of in favour of the plaintiff
by the District Judge, Faridkot. Our
Company has initiated an appeal
against the aforementioned order.
0.07 plus
interest @
24% per
annum
Pending
hearing
and final
disposal.
175
Additionally:
1. Twenty (20) proceedings have been initiated against our Company before various courts in
connection with compensation claims pursuant to alleged negligence of a chauffeur of the
Company. The aggregate of the amounts claimed in these proceedings is ` 3.36 million. These
proceedings are pending hearing and final disposal.
2. Four (4) proceedings have been initiated against our Company before various consumer
forums/courts pursuant to Section 12 of the Consumer Protection Act, 1986, in connection with,
inter alia, the alleged damage caused to the crops by the use of the Company’s products, viz.,
“Nominee Gold” (three proceedings) and “Fosmite 50% EC” (one proceeding). The aggregate of
the amounts claimed in these proceedings is ` 1.21 million. These proceedings are pending
hearing and final disposal.
b. Criminal Proceedings:
SR
NO.
FORUM
[SUIT/APPEAL
ETC. NO.]
INITIATED BY PARTICULARS QUANTUM
(` IN
MILLIONS)
(APPROX.)
CURRENT
STATUS
1. Court of Chief
Judicial
Magistrate,
Ankleshwar
[833/2004]
State of
Gujarat
Proceedings initiated against our
Company under the provisions of
Section 25 (T) and section 25(U) of
the Industrial Disputes Act, 1947,
alleging that, inter alia, our Company
is involved in unfair labour practices.
Our Company has raised an objection
seeking dismissal of the complaint
under Section 468 of the Code of
Criminal Procedure, 1973.
NA Pending
hearing
and final
disposal.
Additionally, twenty-six (26) proceedings have been initiated against our Company before various courts
pursuant to various provisions of the Insecticides Act, 1968, inter alia, in connection with the alleged
misbranding of various products by our Company. There is a negligible amount of money claim involved in
these proceedings and the said proceedings are pending hearing and final disposal.
c. Labour Proceedings:
SR
NO.
FORUM
[SUIT/APPEAL
ETC. NO.]
INITIATED BY PARTICULARS QUANTUM
(IN ` IN
MILLIONS)
(APPROX.)
CURRENT
STATUS
1. Labour Court
and Industrial
Tribunal,
Baroda,
Gujarat
[138/2002]
Hiren S. Patel
(“Plaintiff”)
The Plaintiff initiated
proceedings filed a writ petition
against our Company alleging,
inter alia, a mala fide intention
on part of the Company in
connection with his transfer.
Said writ petition has been
dismissed, pursuant to which a
letters patent appeal has been
filed by our Company which has
also been dismissed and the
dispute is currently pending
before the Labour Court and
NA Pending
hearing
and final
disposal.
176
SR
NO.
FORUM
[SUIT/APPEAL
ETC. NO.]
INITIATED BY PARTICULARS QUANTUM
(IN ` IN
MILLIONS)
(APPROX.)
CURRENT
STATUS
Industrial Tribunal, Baroda.
2. Labour Court
and Industrial
Tribunal,
Baroda,
Gujarat
[75/2004]
Factory Kamdar
Mandal
The workmen of the Company
initiated proceedings against the
Company in connection with
their demand for higher wages
which was refused by the
Company.
Bonus @
20% and
ex gratia
amount of
`5,000
Pending
hearing
and final
disposal.
3. Labour Court
and Industrial
Tribunal,
Baroda,
Gujarat
[31/2006]
Govind Singh
(“Plaintiff”)
The Plaintiff initiated
proceedings against our
Company alleging, inter alia,
that the show cause notice
issued by the Company was
wrongful in law and amounted
to unfair labour practice.
NA Pending
hearing
and final
disposal.
4. Labour Court
and Industrial
Tribunal,
Baroda,
Gujarat
[35/2006]
Sandeep Patel
(“Plaintiff”)
The Plaintiff initiated
proceedings against the
Company alleging, inter alia,
that the action of the Company
in relation to the findings of a
domestic enquiry conducted by
the Company be stayed on
account of his being a protected
workman under the Industrial
Disputes Act, 1947.
NA Pending
hearing
and final
disposal.
5. Labour Court,
Karkadooma,
New Delhi
[1063/2006]
Shri Bhawani Singh
(“Plaintiff”)
The Plaintiff initiated
proceedings against our
Company alleging forceful
termination of his services. The
Plaintiff has prayed for, inter
alia, reinstatement along with
full back wages and other
consequential benefits.
NA Pending
hearing
and final
disposal.
6. High Court of
Rajasthan
[SBCW No.
842/2006]
Ranjeet Singh
(“Plaintiff”)
The Plaintiff initiated
proceedings against our
Company alleging, inter alia,
wrongful retrenchment from the
service of the Company. The
Plaintiff has accordingly prayed
for; inter alia, reinstatement and
arrears of salary and allowances
with interest, costs and other
consequential benefits.
NA Pending
hearing
and final
disposal.
7. Labour Court
and Industrial
Tribunal,
Baroda,
Gujarat
[46/2012]
Ramesh Khimsuriya
(“Plaintiff”)
The Plaintiff initiated
proceedings against our
Company challenging the
termination of his service by the
Company. The Plaintiff has
accordingly prayed for, inter
alia, reinstatement and back
wages.
NA Pending
hearing
and final
disposal.
8. Labour Court Factory Kamdar The Plaintiff through its Trade NA Pending
177
SR
NO.
FORUM
[SUIT/APPEAL
ETC. NO.]
INITIATED BY PARTICULARS QUANTUM
(IN ` IN
MILLIONS)
(APPROX.)
CURRENT
STATUS
and Industrial
Tribunal,
Baroda,
Gujarat
[16/2005]
Mandal (“Plaintiff”) Union has raised an industrial
dispute that the wages being
paid by the company are
inadequate on the various
grounds demanded for higher
wages which was refused by the
Company.
hearing
and final
disposal.
d) Tax Proceedings
SR.
NO.
FORUM
[SUIT/APPEAL
ETC. NO.]
INITIATED BY PARTICULARS QUANTUM
(IN ` IN
MILLIONS)
(APPROX.)
CURRENT
STATUS
1. Sales Tax
Appellate
Tribunal,
Andhra
Pradesh
State of
Andhra
Pradesh
The Appellate Deputy Commissioner,
Commercial Taxes, Andhra Pradesh
passed an order against our Company
claiming an amount of ` 2.85 million
as sales tax due from the Company for
the assessment year 2003-2004 by
denying the exemption from sales tax
on annual discounts. Our Company
has filed an appeal against the said
order claiming inter alia that the said
order be set aside. The High Court of
Andhra Pradesh has stayed the
collection of the said amount vide its
order dated May 13, 2009. Pursuant to
the same our Company has deposited
the 50% of the disputed tax amount to
the assessing authority as surety
subject to the disposal of the appeal by
the Sales Tax Appellate Tribunal,
Andhra Pradesh.
2.85 Pending
hearing
and final
disposal.
2. Sales Tax
Appellate
Tribunal,
Andhra
Pradesh
State of
Andhra
Pradesh
The Appellate Additional
Commissioner, Commercial Taxes,
Andhra Pradesh passed an order
against our Company claiming an
amount of ` 1.72 million as sales tax
due from the Company for the
assessment year 2001-2002 by
denying the exemption from sales tax
on annual discounts. Our Company
has filed an appeal against the said
order claiming inter alia that the said
order be set aside. The High Court of
Andhra Pradesh has stayed the
collection of the said amount vide its
order dated August 29, 2008. Pursuant
1.72 Pending
hearing
and final
disposal.
178
SR.
NO.
FORUM
[SUIT/APPEAL
ETC. NO.]
INITIATED BY PARTICULARS QUANTUM
(IN ` IN
MILLIONS)
(APPROX.)
CURRENT
STATUS
to the same our Company has
deposited 50% of the disputed tax
amount to the assessing authority as
surety subject to the disposal of the
appeal by the Sales Tax Appellate
Tribunal, Andhra Pradesh.
3. Deputy
Commissioner
of Taxes
(Appeal),
Guwahati
Deputy
Commissioner
of Taxes
The Deputy Commissioner of Taxes,
Guwahati has made a demand of
`0.15 million as taxes dues by the
Company for the assessment year
2007-2008 under the Central Sales
Tax (Assam) rules, 1957 against
which our Company has initiated
appeal proceedings before the Deputy
Commissioner of Taxes (Appeal).
0.15 Pending
hearing
and final
disposal.
4. Appellate
Board of
Madhya
Pradesh
Commercial
Tax
Commissioner
of Commercial
Tax, Indore
The Commissioner of Commercial
Taxes. Indore imposed a penalty of `
0.4 million under the Madhya Pradesh
Value Added Tax Act, 2002 alleging,
inter alia, non-compliance of section
57(2) on part of the Company. Our
Company has initiated appeal
proceedings against the same before
the Appellate Board of Madhya
Pradesh Commercial Tax.
0.4 Pending
hearing
and final
disposal.
5. Assistant
Commissioner
of Commercial
Taxes, Kolkata
Commercial
Tax Officer
Appeal proceedings initiated by the
Company against the ex-parte
assessment order passed by
Commercial Tax Officer alleging,
inter alia, that the said order is against
the principles of natural justice and
praying for an opportunity to
represents its case.
1.59 Pending
hearing
and final
disposal.
6. Deputy
Commissioner
(Appeals)
Commercial
Taxes,
Kottayam
Commercial
Tax Officer
The Commercial Taxes Officer raised
demand of ` 0.26 million (plus
interest) against our Company under
the Kerala Value Added Tax Rules,
2005 for the assessment year 2008-09.
Our Company has inititated appeal
proceedings against the said demand
before the Deputy Commissioner
(Appeals), Kottayam
0.26 (plus
interest)
Pending
hearing
and final
disposal.
7. Deputy
Commissioner
(Appeals)
Commercial
Taxes,
Kottayam
Commercial
Tax Officer
The Commercial Taxes Officer raised
demand of ` 0.18 million against our
Company under the Kerala Value
Added Tax Rules, 2005 for the
assessment year 2008-09. Our
Company has inititated appeal
proceedings against the said demand
before the Deputy Commissioner
(Appeals), Kottayam
0.18 Pending
hearing
and final
disposal.
179
SR.
NO.
FORUM
[SUIT/APPEAL
ETC. NO.]
INITIATED BY PARTICULARS QUANTUM
(IN ` IN
MILLIONS)
(APPROX.)
CURRENT
STATUS
8. Commissioner
(Appeals),
Central
Excise,
Customs and
Service Tax,
Surat
Assistant
Commissioner
of Central
Excise and
Customs, Surat
The Deputy Commissioner of Central
Excise and Customs passed an order
rejecting the plea of our Company for
provisional assessment under rule
9(B) of the Central Excise Rules, 1944
upon the alleged failure of our
Company to furnish security. Our
Company has appealed against the
said order claiming a refund of ` 8.5
million.
8.5 Pending
hearing
and final
disposal.
9. Supreme
Court of India
Union on India
(“Appellants”)
The Designated Authority initiated
proceedings against our Company and
others (collectively, “Respondents”)
alleging dumping Diethyl Thio
Phosphoryl Chloride (DETPC) and
levied provisional anti-dumping duty
on the imports of the (DETPC) against
which the Respondents filed a revision
petition before the Supreme Court of
India wherein the court granted stay
on collection of the anti-dumping
duty. Aggrieved by the said stay order,
the Appellants have filed the said
appeal.
23.04 Pending
hearing
and final
disposal
e) Show Cause Notices
Our Company has received a show cause notice dated January 28, 2011 from the office of the
Registrar of Companies, Rajasthan, alleging that the Director’s report on the Company’s balance
sheet for the financial year ended March 31, 2006, March 31, 2007 and March 31, 2008 did not
contain the details as required under Section 217(2A) of the Companies Act in connection with
employees drawing remuneration of not less than two lacs per month and accordingly the said
section of the Company’s Act was allegedly violated. The Regional Director, Ministry of Corporate
Affairs had issued a letter dated March 29, 2010 in this regard to which our Company had
responded vide a letter dated April 8, 2010 stating that the said provision of the Companies Act was
not applicable to listed companies in light of the provisions of Section 219(1)(b)(iv) of the
Companies Act. In the aforesaid show cause notice dated January 28, 2011, the Registrar of
Companies, Rajasthan has called upon our Company to show cause as to why the same should not
be viewed as a violation and also highlighted that the Company may seek to compound the same
under Section 621 A of the Companies Act. Our Company thereafter obtained a legal opinion dated
August 16, 2012 which states that the aforementioned provisions of the Companies Act does not
apply to listed companies in light of the provisions of Section 219(1)(b)(iv) of the Companies Act.
Other past regulatory/statutory proceedings:
Our Company has sought compounding under Section 621A of the Companies Act with the Company Law
Board in connection with compounding of certain irregularities/defaults under the Companies Act.
The brief particulars of the applications filed are as follows:
180
Sr
No
Date Section of the
Companies Act for
Violation of which the
application was made
Present status
1. January 1, 2012 Section 125 read with
section 127 of the
Companies Act
Company had filled
Form-61 with
Registrar Of
Companies
2. April 1, 2011 Section 211(3A), (3B)
and (3C) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
3. April 1, 2011 Section 211(3A), (3B)
and (3C) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
4. April 1, 2011 Section 217(3) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
5. April 1, 2011 Section 211(3A) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
6. April 1, 2011 Section 211(3A), (3B)
and (3C) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
7. April 1, 2011 Section 211(3A), (3B)
and (3C) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
8. April 1, 2011 Section 217 (2AA) of
the Companies Act
Company had filled
Form-61 with
Registrar of
Companies
9. April 1, 2011 Section 176 of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
10. September 9, 2010 Section 303(1)(a) of the
Companies Act
Company had filled
Form-61 with
Registrar of
Companies
II. Proceedings initiated by our Company:
a. Civil Proceedings:
181
SR
NO.
FORUM
[SUIT/APPEA
L ETC. NO.]
INITIATED
AGAINST
PARTICULARS QUANTU
M (IN `
IN
MILLION
S)
(APPROX
.)
CURRENT
STATUS
1. Court of the
District
Judge,
Chengalpet
[765/2007]
Southern
Insecticides &
Fertilizers
(“Defendant”)
Execution proceedings initiated by
pursuant to a decree passed in
favour of our Company in a suit for
recovery against the Defendant.
0.69 with
interest
@24 %
per
annum
Pending
hearing
and final
disposal.
2. Court of City
Civil Judge,
Ahmedabad
[2003]
Industries and
Chemicals,
Ranipet
Proceedings initiated by the
Company for recovery of payment
dues under order no. 37 of the Code
of Civil Procedure, 1963.
0.5 with
interest
@24%
per
annum
Pending
hearing
and final
disposal.
3. Court of City
Civil Judge,
Senior
Division,
Bharuch
[342/2002]
V.D Swami and
Company
Limited
Proceedings initiated by the
Company for recovery of payment
dues.
1.6 with
interest
@18%
per
annum
Pending
hearing
and final
disposal.
4. Court of City
Civil Judge,
Senior
Division,
Bharuch
[336/2002]
Monalisa
Infotech Limited
Proceedings initiated by the
Company for recovery of payment
dues.
6.6 with
interest
@18%pe
r annum
Pending
hearing
and final
disposal.
5. Court of City
Civil Judge,
Senior
Division,
Bharuch
[/2002]
Bhaskar Agro
Chemicals
Limited
Proceedings initiated by the
Company for recovery of payment
dues.
4.07 with
interest
@18%pe
r annum
Pending
hearing
and final
disposal.
6. High Court of
Delhi
HPM Industries
Limited
Proceedings initiated by the
Company for recovery of payment
dues.
2.61 with
interest
@24%
per
annum
Pending
hearing
and final
disposal.
7. High Court of
Rajasthan
[1352/87]
State of
Rajasthan
Proceedings initiated by the
Company challenging the
notification issued by the State of
Rajasthan enhancing the permit fee
from Re.2 to Re.3 per litre on
utilization of de-natured spirit.
Further, our Company also filed an
application for stay of recovery of
the said enhanced fee.
NA Pending
hearing
and final
disposal.
8. High Court of
Punjab and
Haryana
[CWP
13327/2011]
State of Haryana
and others
Proceedings initiated against the
Defendant in connection with the
order of State of Haryana directing
the Company to cease the
manufacture, sale and distribution
of its product “BIOVITA” claiming,
NA Pending
hearing
and final
disposal.
182
SR
NO.
FORUM
[SUIT/APPEA
L ETC. NO.]
INITIATED
AGAINST
PARTICULARS QUANTU
M (IN `
IN
MILLION
S)
(APPROX
.)
CURRENT
STATUS
inter alia, that the said order is in
violation of Article 301, 304 and
19(1)(g) of the Constitution of
India.
9. High Court of
Punjab and
Haryana
[2012]
State of Punjab
(“Defendant”)
Proceedings initiated against the
Defendant in connection with
alleged threats and unnecessary
harassment by the Defendant, as
faced by certain vendors of certain
bio-products of the Company. Our
Company alleged, inter alia, that the
Government was in violation of
Articles 301, 304 and 19(1)(g) of
the Constitution of India.
NA Pending
hearing
and final
disposal.
9. High Court of
Rajasthan,
Jodhpur
[2005]
Satyanarain
Agarwal
(“Defendant”)
Proceedings initiated by the
Company against the order of the
Labour Court and Industrial
Tribunal dated July 6, 2005
directing the reinstatement of the
Defendant with 20% back wages .
NA Pending
hearing
and final
disposal.
10. High Court of
Rajasthan,
Jodhpur
[12/2009
C.A.]
Acmevac Sales
Private Limited
Execution proceedings for the
execution of decree passed in favour
of our Company for issue of
attachment warrant.
1.39 Pending
hearing
and final
disposal.
b. Criminal Proceedings:
Eighty-one (81) proceedings have been initiated by our Company pursuant to Section 138 of the Negotiable
Instruments Act, 1881, which proceedings involve an aggregate amount of ` 54.44 million. All of these
proceedings are pending hearing and final disposal.
III. Proceedings involving the directors of our Company
a. Proceedings initiated against the directors of our Company
Criminal Proceedings
SR
NO.
FORUM
[SUIT/APPEAL
ETC. NO.]
INITIATED BY PARTICULARS QUANTUM
(`` IN
MILLIONS)
(APPROX.)
CURRENT
STATUS
1. Court of Chief
Judicial
Magistrate,
Ankleshwar
[833/2004]
State of Gujarat Proceedings initiated
against our Company and
director Mr. Anurag
Surana under the
provisions of section 25
(T) and section 25(U) of
the Industrial Disputes
N/A Pending
hearing
and final
disposal.
183
SR
NO.
FORUM
[SUIT/APPEAL
ETC. NO.]
INITIATED BY PARTICULARS QUANTUM
(`` IN
MILLIONS)
(APPROX.)
CURRENT
STATUS
Act, 1947 pursuant to
which our Company has
raised an objection
seeking dismissal of the
complaint under section
468 of the Code of
Criminal Procedure, 1973.
Additionally,
1. Four (4) proceedings have been initiated against our Company and director Mr. Salil Singhal before
various courts pursuant to various provisions of the Insecticides Act, 1968, inter alia, in connection with
alleged misbranding of various products by our Company. These proceedings do not involve any money
claim and the proceedings are pending hearing and final disposal.
2. A recovery suit involving an amount of ` 18.5 million was initiated before the Additional Judicial
Magistrate, Bangalore against our director Mr. Bimal Kishore Raizada in his capacity as an alternate
director on the Board of Directors of Hindustan Technologies Private Limited. The suit is pending for
service of processes on the accused and no further action has been taken by the Court in this regard.
Other regulatory proceedings
A writ petition was filed before the High Court of Andhra Pradesh by Zenotech Laboratories Limited
against an order dated March 27, 2012 of the Bombay Stock Exchange which suspended of trading of their
shares on the trading platforms of the Bombay Stock Exchange. In this regard, the Bombay Stock
Exchange issued a show cause notice dated January 9, 2012 against our director Mr. Bimal Kishore
Raizada in his capacity as a director on the Board of Directors of Zenotech Laboratories Limited with
regard to alleged non-compliance of listing agreement on his part. The said order dated March 27, 2012
was set aside by the High Court of Andhra Pradesh and the proceedings against Bimal Kishore Raizada
have been stayed.
184
RECENT DEVELOPMENTS
There have been no developments since, September 30, 2012 which effect the operations, or financial
condition of our Company except as follows:
Our Company has commenced commercial production at its newly commissioned unit located at
SEZ, Jambusar in the state of Gujarat from January 2013.
Our Company appointed Mr. Venkatrao S. Sohoni and Mr. Rajnish Sarna on the Board of
Directors of the Company pursuant to a resolution passed by our Board of Directors at their
meeting held on November 7, 2012.
Pursuant to a resolution passed by way of a postal ballot by our shareholders vide a postal ballot
notice dated December 6, 2012 the results of which were declared on January 18, 2013, Mr.
Rajnish Sarna was appointed as a whole time director of our Company.
Samaya Investment and Trading Private Limited and Lucrative Leasing Finance and Investment
Company Limited transferred their entire undertaking vide a scheme of amalgamation entered
into with Parteek Finance and Investment Company Limited in accordance with section 391 and
394 of the Companies Act, 1956. The said scheme was approved by the High Court of Delhi vide
order dated October 12, 2012 having effect from January 1, 2013 (“Effective Date”) and
pursuant to which, the shareholding of Samaya Investment and Trading Private Limited and
Lucrative Leasing Finance and Investment Company Limited in our Company was transferred to
Parteek Finance and Investment Company Limited, which post the Effective Date of the
aforementioned scheme holds14,590,278 Equity Shares representing 57.97% of the total paid up
Equity Share capital of our Company.
185
GENERAL INFORMATION
1. Our Company was incorporated as The Mewar Oil and General Mills Limited under the Mewar
Companies Act of 1942 as a company limited by shares, pursuant to a certificate of incorporation
dated December 31, 1946 and commenced its business vide certificate of commencement of
business dated March 3, 1947.The name of our Company was changed to Pesticides India Limited
pursuant to a fresh certificate of incorporation dated January 1, 1990. Subsequently the name of
our Company was again changed to PI Industries Limited vide a fresh certificate of incorporation
dated October 13, 1992.
2. The registered office of our Company is located at Udaisagar Road, Udaipur – 313 001, Rajasthan
(India)
3. Our Company’s Equity Shares have been listed on BSE and NSE w.e.f. January 6, 1993 and June
15, 2011 respectively.
4. Our Company has applied for in-principle approvals in connection with the Issue. Our Company
has received in-principle approvals dated January 24, 2013 from the BSE and the NSE, in
connection with the Issue.
5. The Issue was authorised and approved by the Board of Directors on December 6, 2012 and
approved by the shareholders of our Company through a special resolution passed by way of a
postal ballot pursuant to a postal ballot notice dated December 6, 2012 the results of which were
announced by the Chairman on January 18, 2013.
6. Copies of Memorandum and Articles of Association of our Company will be available for
inspection during usual business hours on any weekday (except Saturdays and public holidays) at
our Company’s registered office.
7. Our Company has obtained all consents, approvals and authorizations required in connection with
this Issue.
8. There has been no material change in our Company’s financial position since September 30, 2012,
the date of the latest financial statements except as otherwise disclosed in “Recent Developments”
on page 184 of this Placement Document.
9. Except as disclosed in this Placement Document, there are no material litigation or arbitration
proceedings against or affecting our Company or its assets or revenues, nor is our Company aware
of any pending or threatened litigation or arbitration proceedings, which are or might be material
in the context of this Issue of Placement Shares.
10. Our Company’s Auditors are M/s S S Kothari Mehta & Co., Chartered Accountants who have
audited the consolidated and standalone financial statements of our Company as of and for the
years ended, March 31, 2010, March 31, 2011 and, March 31, 2012 and performed a limited
review of our standalone financial statements for the quarter and six month period ending
September 30, 2012.
11. Our Company confirms that it is in compliance with the minimum public shareholding
requirements as required under the terms of the listing agreements with the Stock Exchanges.
12. The Floor Price for the Issue is ` 609.60 per Placement Share, calculated in accordance with
Regulation 85 of the SEBI ICDR Regulations, as certified by M/s S S Kothari Mehta & Co.,
Chartered Accountants.
186
FINANCIAL STATEMENTS
Our Reformatted Standalone Financial Statements and Reformatted Consolidated Financial Statements are
extracted from our audited standalone and consolidated financial statements as of and for the years ended
March 31, 2010, 2009 and 2011. The examination reports of M/s S S Kothari Mehta & Co., Chartered
Accountants on the Reformatted Standalone Financial Statements and Reformatted Consolidated Financial
Statements is included in this Placement Document. Our Limited Reviewed Standalone Financial Statements
and the review report of M/s S S Kothari Mehta & Co., Chartered Accountants thereon under Auditing and
Assurance Standard SRE 2410 issued by the Institute of Chartered Accountants of India are included in this
Placement Document.
Sl.
No.
Particulars Page No.
1. Auditor’s Examination Report on the Reformatted Standalone Financial Statements
of our Company as at and for the year ended March 31, 2012, March 31, 2011 and
March 31, 2010
F-1
2. Reformatted Standalone Financial Statements of our Company as at and for the year
ended March 31, 2012, March 31, 2011 and March 31, 2010
F-3
3. Auditor’s Examination Report on the Reformatted Consolidated Financial
Statements of our Company as at and for the year ended March 31, 2012, March 31,
2011 and March 31, 2010
F-27
4. Reformatted Consolidated Financial Statements of our Company as at and for the
year ended March 31, 2012, March 31, 2011 and March 31, 2010
F-29
5. Auditor’s Limited Review Report for the Limited Reviewed Standalone Financial
Statements of our Company as at and for the period ended September 30, 2012
F-54
6. Limited Reviewed Standalone Financial Statements of our Company as at and for the
period ended September 30, 2012
F-55
AUDITORS’ REPORT
To,
The Board of Directors, PI Industries Limited Udaipur
Dear Sirs,
1. We have examined the accompanying Reformatted standalone financial statements as at and for the yearsended March 31, 2012, 2011 and 2010 (‘ Reformatted statements’) of PI Industries Limited (‘theCompany’) annexed to this report for the purposes of inclusion in the Preliminary Placement Documentand Placement Document (hereinafter collectively referred to as the ‘Placement Documents’), asapproved by Board of Directors of the Company, prepared by the Company, in accordance with theprovisions of Chapter VIII of the Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations, 2009, as amended to date, to the extent considered applicable (‘the ICDRRegulations’), the Guidance Note on Reports in Company Prospectus (Revised) issued by the Institute ofChartered Accountants of India, and in terms of our engagement agreed upon with you in accordancewith our engagement letter dated 6th December, 2012 in connection with the proposed QualifiedInstitutions Placement (‘QIP’) of its equity shares by the Company. The preparation of such reformattedstatements is the responsibility of the Company’s management. Our responsibility is to report on suchstatements based on our procedures
2. All figures and disclosures in the Reformatted Statements have been extracted by the management fromthe audited standalone financial statements for the years ended 31 March 2012, 2011 and 2010 on whichwe jointly with B.D. Gargieya & Co. Chartered Accountants have issued our Auditors’ Report dated 29thMay, 2012, 14th April, 2011 and 17th May, 2010 respectively. The amounts mentioned in theReformatted Statements and the related notes thereto have been rounded off to the nearest million ofIndian Rupees.
3. The Reformatted statements have been examined by us. The reformatted statements annexed to thisreport are as they were produced in the respective years’ audited financial statements after makingadjustment for material reclassification, if any. The figures for the year ended 31st March, 2010 has beenreclassified by the management from the audited financial statement, as per the revised schedule VIrequirement of the Companies Act 1956. The accounting policies and notes to accounts have beenreproduced as they were disclosed in the financial statement for the respective years. Accordingly, anyevents subsequent to the said Auditors’ Report dates have not been considered/ adjusted in theseReformatted Statements.
4. As stated in our Auditors’ Report referred to in paragraph 2 above, we have conducted our audits inaccordance with the auditing standards generally accepted in India to enable us to issue an opinion on theGeneral Purpose Financial Statements. Those Standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audits provided a reasonable basis for our opinion.
F-1
5. We have not audited any financial statements of the Company as of any date or for any period subsequentto the 31st March, 2012. Accordingly, we express no opinion on the financial position, results of operationor cash flows of the company as of any date or for any period subsequent to 31st March, 2012.
6. This report should not be in any way construed as a re-issuance or re-dating of any of the previous auditreports issued by us, nor should this report be construed as a new opinion on any of the StandaloneFinancial Statements referred to herein.
7. We have no responsibility to update our report for events and circumstances occurring after the dates ofour audit reports mentioned in paragraph 2 of this examination report.
8. This report is intended solely for your information and for inclusion in the Placement Documents inconnection with the proposed Issue by the Company and is not to be used, referred to or distributed forany other purpose without our prior written consent.
For S. S. Kothari Mehta & Co. Chartered Accountants Firm Reg. No.: 000756N
-Sd- Krishan Kant Tulshan Partner Membership No. 85033
Place: New Delhi Date: 18th January 2013
F-2
F-3
REFORMATTED STANDALONE BALANCE SHEET
(Rs. In millions)
Note No. As at 31st March
2012 As at 31st March
2011 As at 31st March
2010 I EQUITY & LIABILITIES
1 Shareholders' Fundsa Share Capital B1 125.24 192.87 276.87 b Reserves and Surplus B2 3,066.78 1,913.46 1,246.91
Total Shareholders' Fund 3,192.02 2,106.33 1,523.78
2 Non Current Liabilitiesa Long-term borrowings B3 1,190.57 589.86 720.38 b Deferred tax liabilities (Net) B4 324.29 322.90 269.97 c Other long-term liabilities B5 105.99 94.48 81.67 d Long-term provisions B6 17.70 13.69 13.60
Total Non- Current Liabilities 1,638.55 1,020.93 1,085.62
3 Current Liabilitiesa Short-term borrowings B7 1,131.28 1,552.77 446.57 b Trade payables B8 963.86 1,057.03 977.01 c Other current liabilities B9 884.26 755.16 831.09 d Short-term provisions B6 162.49 119.84 39.68
Total Current Liabilities 3,141.89 3,484.80 2,294.35
TOTAL 7,972.46 6,612.06 4,903.75
II ASSETS1 Non Current Asset
a Fixed assetTangible asset B10 2,922.82 2,506.64 1,980.75 Intangible asset B12 17.89 11.54 11.11 Capital work-in-progress B11 777.69 313.63 86.35 Intangible asset under development B13 32.33 7.08 - Total Fixed Assets 3,750.73 2,838.89 2,078.21
b Non-current investments B13 19.67 19.67 19.67 c Long term loans & advances B14 190.74 187.69 156.75 d Other assets B15 16.24 13.98 13.85
Total Non-Current Assets 3,977.38 3,060.23 2,268.48
2 Current Asseta Inventories B16 1,787.51 1,409.80 1,028.11 b Trade receivables B17 1,718.69 1,747.66 1,178.78 c Cash and Bank Balances B18 76.27 67.69 35.48 d Short-term loans and advances B14 393.58 313.99 379.84 e Other assets B15 19.03 12.69 13.06
Total Current Assets 3,995.08 3,551.83 2,635.27
TOTAL 7,972.46 6,612.06 4,903.75
F-4
REFORMATTED STANDALONE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED
(Rs. In Millions)
Note No. 31st March 2012 31st March 2011 31st March 2010I. Revenue from Operations
Sale of products B19 9,987.19 8,336.69 6,172.66 Less: Discount (778.10) (715.52) (527.61) Less: Excise Duty (459.40) (461.92) (247.76)
8,749.69 7,159.25 5,397.29 Sale of services; - 0.56 1.93 Other operating Revenues; 21.21 23.49 16.93
II. Other Income B20 51.91 105.06 64.20 III. Total Revenue (I+II) 8,822.81 7,288.36 5,480.35 IV. Expenses:
Cost of Materials consumed B21 4,866.81 4,173.81 3,024.75 Purchase of Stock in Trade 390.00 326.46 135.67 Changes in Inventories of finished goods, work in progress andstock in trade B22 (335.98) (295.08) 22.53 Employee Benefits expenses B23 701.71 582.10 457.23 Finance Costs B27 201.09 186.02 185.23 Depreciation and amortisation B26 171.09 155.91 131.17 Other Expenses B24 1,737.75 1,260.81 963.66 Total Expenses 7,732.47 6,390.03 4,920.24
V. Profit before exceptional and extraordinary items and tax (III-IV) 1,090.34 898.33 560.11
VI. Exceptional Items B25 303.43 - -
VII. Profit before extraordinary items and tax 1,393.77 898.33 560.11
VIII. Extraordinary Items - - -
IX. Profit Before Tax (VII- VIII) 1,393.77 898.33 560.11
Consisting of :- Profit/ (Loss) on Continuing Operations 1,090.69 843.16 518.58 - Profit/ (Loss) on Discontinued Operations (0.35) 55.17 41.53 - Exceptional Items Profit/ Loss 303.43 - -
Less: Provision for Current Tax of continuing operations (387.01) (184.18) (116.01) Less: Provision for Current Tax of discontinued operations 0.05 (20.58) (16.35) Less: Provision for Deferred tax (1.39) (52.93) (20.30) Add: Income Tax of earlier years - 0.53 2.00
X Profit After Tax 1,005.42 641.17 409.45 Consisting of:- Profit/ (Loss) on Continuing Operations 777.80 606.58 384.27 - Profit/ (Loss) on Discontinued Operations (0.30) 34.59 25.18 - Exceptional Items Profit/ Loss 227.92 - -
XI Profit/ (loss) for the period 1,005.42 641.17 409.45
XII Earnings per Equity shares.1) Basic (in Rs.) B31 40.27 28.76 18.93 2) Diluted (in Rs.) 39.98 25.72 17.64
Earnings per share Rs. - Continuing Business1) Basic (in Rs.) 40.28 27.20 17.77 2) Diluted (in Rs.) 39.98 24.33 16.55
Earnings per share Rs. - Discontinued Business1) Basic (in Rs.) (0.01) 1.56 1.16 2) Diluted (in Rs.) (0.00) 1.39 1.09
Face value per share (in Rs.) 5.00 10.00 10.00
F-5
REFORMATTED CASH FLOW FOR STANDALONE FINANCIAL STATEMENT(Rs. In Million)
PARTICULARS
A. Cash Flow from Operating Activities Net Operating Profit before Tax & Extraordinary Items 1,393.77 898.33 560.11 Adjustments for:
Depreciation 171.09 155.91 131.17 Interest Expenses 201.09 186.02 185.23 Provison for Doubtful Debts and Advances 37.91 16.93 14.24 Interest Income (41.22) (27.63) (22.42) Dividend Income (0.00) (0.00) (0.00) Employee Stock Option Expense 10.90 - - (Profit)/Loss on sale of Fixed Assets (Net) 12.86 0.40 1.77 Bad Debts written off 0.18 0.07 5.09 Miscellaneous Liability Written back - - (2.45) Unrealised Foreign Exchange Loss/(Gain) (Net) 6.84 (16.60) (1.39) Deferred Revenue expenditure written off during the year - - 3.70
Exceptional Items- Sale of Polymer Business (303.43) - -
96.22 315.10 314.94 Operating Profit before Working Capital changes 1,489.99 1,213.43 875.05
(Increase) / Decrease in Short Term Trade Receivables 6.44 (574.78) (292.17) (Increase) / Decrease in Short term Loans and advances (100.42) 62.01 (120.46) (Increase) / Decrease in Long term Loans and advances (2.05) (7.38) (5.33) (Increase) / Decrease in Other assets (7.32) (1.60) 2.12 (Increase)/Decrease in Inventories (377.71) (381.69) 14.12
Increase / (Decrease) in Short term Trade Payables/ Provisions (84.17) 107.06 431.07 Increase / (Decrease) in Long term Trade Payables/ Provisions 4.01 0.09 1.63 Increase / (Decrease) in Other Short term Liabilities 193.26 (66.82) 171.42 Increase / (Decrease) in Other Long term Liabilities 11.51 (356.45) 12.80 (850.31) 14.26 216.66
Cash generated from Operations before tax and exceptional items 1,133.54 363.12 1,091.70 Net Direct Taxes paid (395.51) (177.64) (114.40) Exceptional Item 303.43 - - Net cash from Operating Activities 1,041.46 185.48 977.30 B. Cash flow from Investing Activities
Purchase of Fixed Assets including Capital work in progress, intangible assets and Capital advances (1,171.05) (942.98) (471.89) Investment in Shares of Joint Venture / Subsidiary Companies - - (1.55) Sale of Fixed Assets 85.95 2.15 1.41 Interest Received 41.22 27.63 22.42 Dividend Received 0.00 0.00 0.00 Net cash used in investing activities (1,043.88) (913.20) (449.61)
Net cash from Operating and Investing Activities (2.42) (727.72) 527.69 C. Cash flow from Financing Activities Issue of Equity Share capital 13.37 41.00 (Repayment)/Issue of Preference Share Capital (81.00) (125.00) 206.00 (Repayment/ Redemption) /Issue of Debentures (294.00) - 294.00 Share Premium Account 334.04 84.00 - Short Term Borrowings (Net) (434.16) 1,093.39 (633.67) Long Term Borrowings (Net of Repayments) 811.55 (147.88) (213.26) Cash Flow Hedge Reserve (49.26) - - Interest paid (Net) (198.75) (178.00) (183.06) Dividend Distribution (100.13) (14.93) 0.00 Net Cash from Financing activities 1.66 752.58 (529.99)
Net Cash from Operating, Investing & Financing Activities (0.76) 24.86 (2.30) Net increase in Cash & Cash equivalent (0.76) 24.86 (2.30) Opening balance of Cash & Cash equivalent 39.71 14.85 17.15 Closing balance of Cash & Cash equivalent 38.95 39.71 14.85
Note: Cash and cash equivalents included in the Cash Flow Statement comprise of the following:- i) Cash Balance on Hand 0.59 0.85 0.50 ii) Balance in Current Account 38.36 38.86 14.35 Total 38.95 39.71 14.85
For the year ended31st March 201131st March 2012
For the year ended For the year ended31st March 2010
F-6
REFORMATTED SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
A SIGNIFICANT ACCOUNTING POLICIES
1) BASIS OF PREPARATION
The financial statements have been prepared to comply in all material respects with the Notified Accounting Standards pursuant to the Companies(Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under thehistorical cost convention, as a going concern, on an accrual basis except in case of assets for which provision for impairment is made and revaluation iscarried out. The accounting policies have been consistently applied by the Company.
Changes in Accounting Policy
During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act, 1956, has became applicable to the Company, for
preparation and presentation of its financial statements. The adoption of Revised Schedule VI does not impact the recognition and measurement principles
followed for preparation of the financial statements. However, it had significant impact on presentation and disclosures made in the financial statements.
All Assets and Liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in theSchedule VI to the Companies’ Act, 1956. Based on the nature of services provided and time between the rendering of services and their realization in cashand cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets andliabilities.The Company has adopted Accounting Standard 30 (AS 30) " Financial Instruments: Recognition and Measurement" during the financial year 2011-12.Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of derivative financial instruments, the net foreignexchange exposure over a period of one year against the committed order in hand hedged through forward contracts, are designated as effective cash flowhedges and marked to market loss/gain arising on said foreign currency instruments are transferred to "Cash Flow Hedge Reserve" directly in the BalanceSheet under Reserves & Surplus and later the same is reclassified into Profit & Loss account upon the occurrence of the hedging transaction.
2) USE OF ESTIMATES
The presentation of financial statements requires estimates and assumptions that affect the reported amount of assets and liabilities and disclosure ofcontingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differencesbetween the actual results and estimates are recognised in the period in which the results are known/ materialised.
3) REVENUE RECOGNITION
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.Sale of Goods - Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and is stated net of tradediscount, returns and Sales Tax / VAT but includes Excise Duty. Interest - Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.Dividends - Revenue is recognized when the shareholder's right to receive payment is established by the Balance Sheet date.Export Benefits / Incentives - Export entitlement under Duty Entitlement Pass Book ('DEPB') Scheme are recognised in the Profit & Loss Account whenthe right to receive credit as per terms of the scheme is established in respect of export made and where there is no significant uncertainty regarding theultimate collection of the relevant export proceeds.
4) EXPENDITURE
Rebate, claims & settlement on goods sold are accounted for as and when these are ascertained with reasonable accuracy.
5) FIXED ASSETS AND DEPRECIATION
a) Fixed Assets are stated at cost or as revalued, less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and anyattributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets, if material, arealso included in cost to the extent they relate to the period till such assets are ready to be put to use.Expenditure during construction / erection period is included under capital work-in-progress and is allocated to the respective fixed assets on completion ofconstruction / erection.
b) Depreciation on Building, Plant & Machinery and R&D Equipments of Pesticides Division at Udaipur (in respect of fixed assets commissioned on or afterJuly 1, 1988), Pesticides Division at Panoli & Jammu and Polymer Division at Panoli is provided on Straight Line method and depreciation on all otherfixed assets is provided on Written Down Value method at the rates specified in Schedule XIV to the Companies Act,1956.
c) Leasehold land and Cost of improvement on leasehold building is being amortised over the lease period.d) Revaluation of Fixed assets: Depreciation on the increased amount of assets due to revaluation is computed on the basis of the residual life of the assets as
estimated by the valuers on straight-line method.
6) INTANGIBLE ASSETS
Intangible Assets are stated at cost of acquisition less accumulated amortisation as belowSoftware:- Software is stated at cost of acquisition and includes all attributable expenditure on making the assets ready for their intended use.Product Development costs:- Product Development costs considered to have finite useful lives, are capitalised and recognised as intangible assets arestated at cost less any impairment losses.Amortisation:- Amortisation of intangible asset is provided on the basis of estimated useful life of the assets as below:Software: Amortised on straight line basis over a period of 6 years.Product Development: Amortised on straight line basis over a period of 5 years.
F-7
REFORMATTED SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
7) IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit & loss account inthe year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in theestimate of recoverable amount.After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
8) INVENTORIES
a) Inventories of Finished Goods, Work in progress, Raw materials, Packing materials and Stores & Spares are stated at lower of cost and net realisablevalue. By-products are valued at estimated realisable value.
b) Cost of Raw Materials, Packing Materials, Stores and Spares, Trading and other products are determined on weighted average basis and are net of Cenvatcredit.
c) Cost of Work in progress and Finished Goods is determined considering direct material cost and appropriate portion of manufacturing overheads based onnormal operating capacity. Cost of finished goods include excise duty.
d) Obsolete, slow moving and defective inventories are identified at the time of physical verification of inventories and where necessary, the same are writtenoff or provision is made for such inventories.
9) EMPLOYEE BENEFITS
a) Defined Contribution Plan :Employees benefits in the form of the Company's contribution to Provident Fund, Pension scheme, Superannuation Fund and Employees State Insurance isa defined contribution scheme and contributions are charged to the Profit & Loss Account of the year when the contribution to the respective fund is due.
b) Defined Benefit Plan :Retirement benefits in the form of gratuity and leave encashment are considered as defined benefit obligations and are provided for on the basis of anactuarial valuation as at the date of the Balance Sheet using the projected unit credit method.
c) Actuarial gains/losses, if any, are immediately recognised in the Profit & Loss Account.d) Short Term Employee benefits:
Short term benefits are charged off at the undiscounted amount in the year in which the related service is rendered.
10)
Expenditure incurred towards the Voluntary Retirement Scheme of the Company is treated as Deferred Revenue Expenditure and charged to the Profit &Loss Account over a period of five years.
11) FOREIGN CURRENCY TRANSACTIONS
a) Initial RecognitionForeign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reportingcurrency and the foreign currency at the date of the transaction.
b) ConversionForeign currency monetary items are reported using the closing rate.
c) Exchange DifferenceAny gain or loss on account of exchange difference arising either on the settlement or on reinstatement of foreign currency monetary items is recognised inthe Profit & Loss account, except exchange difference arising on long term foreign currency monetary items relating to acquisition of depreciable fixedassets, which is adjusted to the carrying amount of such assets.An asset shall be designated as a long term foreign currency monetary item, if the asset or liability is expressed in foreign currency and has a term of 12months or more at the date of origination of the asset or liability.
12) RESEARCH AND DEVELOPMENT
Capital Expenditure incurred for Research and Development is capitalised when commissioned and included in the gross block of fixed assets. Revenue
expenditure on research and development is charged to the Profit & Loss account in the period in which it is incurred. Expenditure incurred on projects to
develop new products is capitalised and deferred only when the Company can demonstrate the technical feasibility of completing the intangible asset so
that it will be available for use or sale. Product development expenditure which do not meet these criteria are expensed when incurred.
13) PRIOR PERIOD ADJUSTMENTS
Earlier year items, adjustment/claims, arisen / settled / noted during the year, if material in nature, are debited / credited to prior period Expenses/Income orrespective heads of account, if not material in nature.
14) INVESTMENTS
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments areclassified as long-term investments. Current investments are carried at lower of cost and fair value. Long -term investments are stated at cost. Provision fordiminution in the value of investments is made, if it is other than temporary.
DEFERRED REVENUE EXPENDITURE
F-8
REFORMATTED SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
15) BORROWING COST
Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of such asset. A qualifyingasset is one that necessarily takes a substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in theperiod in which they are incurred.
16) TAXATION
a) Provision for Current Tax is made after considering benefits, exemptions and deductions available under the Income Tax Act,1961.b) Deferred tax is recognised subject to consideration of prudence, on timing differences, representing the difference between the taxable income/(loss) and
accounting income/(loss) that originated in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities aremeasured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.
17)
Operating Lease: Lease rentals in respect of assets taken on operating leases are charged to the profit and loss account with reference to lease terms andother consideration.
18) PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it isprobable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in notes. Contingent assets are neitherrecognised nor disclosed in the financial statements.
19) SEGMENT REPORTING
The accounting policies adopted by the Company for segment reporting are in line with the accounting standard on Segmental Reporting.Primary Segment:Business Segment: The Company's operating business is organized and managed separately according to the nature of products, with each segmentrepresenting a strategic business unit that offers different products. The identified segments are Chemicals and Others.Secondary Segment:Geographical Segment: The analysis of geographical segment is based on the geographical location of the customers. The geographical segmentsconsidered for disclosure are as follows:(a) Sales within India(b) Sales outside IndiaSegment Expenses, Segment Assets and Segment Liabilities have been allocated to segments on the basis of their relationship to the operating activities ofthe segment. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis, havebeen included under “Unallocated Revenue/Expenses/Assets/Liabilities”.
20) CASH FLOW STATEMENTS
Cash-flow statements are prepared in accordance with “Indirect Method” as explained in the Accounting Standard on Cash Flow Statements (AS-3)notified under the Companies (Accounting Standards) Rules, 2006. The cash flows from regular revenue generating, financing and investing activity of theCompany are segregated.
21) EARNING PER SHARE
Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number ofequity shares outstanding during the period. For the purpose of calculating diluted Earning per Share, the net profit or loss for the period attributable to Equity Shareholders and the weighted averagenumber of shares outstanding during the period are adjusted for the effects of all dilutive potential Equity Shares.
22) DERIVATIVE INSTRUMENTS
The Company has adopted Accounting Standard 30 (AS 30) " Financial Instruments: Recognition and Measurement". Based on the Recognition andMeasurement principles set out in AS 30, changes in the fair values of derivative financial instruments, the net foreign exchange exposure over a period ofone year against the committed order in hand hedged through forward contracts, are designated as effective cash flow hedges and marked to marketloss/gain arising on said foreign currency instruments are transferred to "Cash Flow Hedge Reserve" directly in the Balance Sheet under Reserves &Surplus and later the same is reclassified into Profit & Loss account upon the occurrence of the hedging transaction.
23) EMPLOYEE STOCK OPTION BASED COMPENSATIONAccounting value of stock options is determined on the basis of 'intrinsic value' representing the excess of the market price on the date of grant over theexercise price of the options granted under the 'Employees Stock Option Scheme' of the Company, and is being amortised as 'Deferred employeecompensation' on a straight-line basis over the vesting period in accordance with the SEBI (Employees Stock Option Scheme and Employee StockPurchase Scheme) Guidelines, 1999 and Guidance Note No.18 'Share Based Payments' issued by the ICAI.
LEASES
F-9
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In MillionsB NOTES TO ACCOUNTS
1 SHARE CAPITAL 31st March 2012 31st March 2011 31st March 2010
Authorised Shares200.00 200.00 200.00
500.00 500.00 500.00
700.00 700.00 700.00 Issued Shares
125.42 112.05 71.05
- 81.00 206.00
125.42 193.05 277.05
Subscribed & Fully Paid up Shares125.24 111.87 70.87
- 81.00 206.00
Total subscribed and fully paid up share capital 125.24 192.87 276.87
a.b.c. Terms/ rights attached to Equity shares
d. Terms/ rights attached to Preference shares
e. Terms of securities convertible into equityCompulsorily Convertible Preference Shares (CCPS)Refer Note 1(d)
Optionally Convertible Debentures (OCDs)
f. Fractional Shares
g. Split of Shares
h. Reconciliation of Shares outstanding at the beginning and at the end of the reporting period
Issued Share Capital
Equity SharesParticulars
2011-12 2010-11 2009-10 2011-12 2010-11 2009-10Share outstanding at beginning of period 11,205,158.5 7,105,165.5 3,561,411.5 112.05 71.05 35.61
Bonus Shares issued during the period (Refer Note 1(i)) - 3,729,167 3,543,754 - 37.29 35.44
Preference Shares Converted into Equity (Refer Note 1(e)) 311,658 370,826 - 3.12 3.71 -
Debentures Converted into Equity (Refer Note 1(e)) 1,025,030 - - 10.25 - -
Split of shares (Refer Note 1(g)) 12,541,846.5 - - - - -
Share outstanding at end of period 25,083,693 11,205,158.5 7,105,165.5 125.42 112.05 71.05
The difference between the issued and subscribed capital is on account of less number of shares allotted in right issue in earlier years.
400,00,000 Equity Shares of Rs.5/- each, (March 2011: 200,00,000 Equity Shares of Rs. 10 each, March 2010: 200,00,000 Equity Shares of Rs. 10 each)
50,00,000 Preference Shares of Rs.100/- each (March 2011: 50,00,000 Preference Share, March 2010: 50,00,000 Preference shares)
25,083,693 Equity Shares of Rs.5/- each (March 2011: 11,205,158.5 Equity Shares of Rs. 10/- each, March 2010: 7,105,165.5 Equity Shares of Rs. 10/- each.)
Nil (March 2011: 810,000, March 2010: 2,060,000) 0.01% Non-Cumulative compulsorily Convertible Preference shares (CCPS) of Rs. 100/- each
25,048,378 Equity Shares of Rs.5/- each (March 2011: 11,187,501 Equity Shares of Rs. 10/- each, March 2010: 7,087,508 Equity Shares of Rs. 10/- each).
Nil (March 2011: 810,000, March 2010: 2,060,000) 0.01% Non-Cumulative compulsorily Convertible Preference shares (CCPS) of Rs. 100/- each
The issued share capital of previous years includes fractional coupons of Rs. 5/- each fully paid, allotted as bonus shares in earlier years.
Equity Share (No. of Shares) Equity Share (Value of Shares) (in Rs. Millions)
The Company has only one class of equity shares having a par value of Rs. 5 per share (Previous Years Rs. 10 per share). Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting except interim dividend.During the year ended 31st March 2012, the Company had declared interim dividend of Rs. 2 per share of face value of Rs. 5/- each to the equity shareholders and final dividend of Rs. 3 per share is recognised as distribution to the equity shareholders at the year end (March 2011: Final dividend of Rs. 4 per share of face value of Rs. 10/- each, March 2010: Final dividend of Rs. 2 per share of face value of Rs. 10/- each.)
Pursuant to the Special Resolution passed at the Extra Ordinary General Meeting of Shareholders on 12th October 2009, the Company, on October 24, 2009, has alloted 10,30,000 Non-Cummulative Compulsorily Convertible Preference Shares(CCPS) each, at a face value of Rs. 100/- per CCPS on Preferential basis to Standard Chartered Private Equity (Mauritius) Limited and Standard Chartered Private Equity (Mauritius) II Limited, aggregating to 20,60,000 CCPS.
As per the terms of the issue, the holder of CCPS had option to convert its preference shares into equity within 18 months of the date of issue i.e. 24th October 2009. The CCPS carried a coupon rate of 0.01% p.a. and had lock in period of one year.
As per the terms of issue(i) 1,250,000 CCPS were converted into 370,826 equity shares of Rs. 10 each at a premium of Rs. 327.085 per share during the Financial year ending 31st March 2011.(ii) the balance 810,000 preference shares have been converted into 311,658 equity shares of Rs. 10/- each, allotted to both Standard Chartered Private Equity (Mauritius) Limited and Standard Chartered Private Equity (Mauritius) II Limitedequally, at a premium of Rs. 249 .9003 per share.
Refer Note 3 (a)During the year 1,025,030 equity shares were issued and allotted by the Company to Standard Chartered Investments and Loans (India) Limited at a premium of Rs. 249.9003 per equity share of face value on conversion of 2,664,053 OCDs and thebalance 275,947 OCDs were redeemed.
During the year 18 fractional shares were sold off in the market on 15th October 2011 at prevailing market price and the proceeds were reimbursed to the beneficiaries.
Pursuant to the approval of the shareholders in their meeting held on 16th July 2011, the Company has sub-divided the existing equity shares of Rs. 10/- each fully paid up into 2 equity shares of Rs. 5/- each.
F-10
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions
Preference SharesParticulars
2011-12 2010-11 2009-10 2011-12 2010-11 2009-10Share outstanding at beginning of period 810,000 2,060,000 - 81.00 206.00 -
Shares issued during the period - - 2,060,000 - - 206.00
Shares Converted into Equity (Refer Note 1(e)) (810,000) (1,250,000) - (81.00) (125.00) -
Share outstanding at end of period - 810,000 2,060,000 - 81.00 206.00
Subscribed & Paid up
Equity SharesParticulars
2011-12 2010-11 2009-10 2011-12 2010-11 2009-10Share outstanding at beginning of period 11,187,501 7,087,508 3,543,754 111.87 70.87 35.43
Bonus Shares issued during the period (Refer Note 1 (i)) - 3,729,167 3,543,754 - 37.29 35.44
Preference Shares Converted into Equity (Refer Note 1 (e)) 311,658 370,826 - 3.12 3.71 -
Debentures Converted into Equity (Refer Note 1 (e)) 1,025,030 - - 10.25 - -
Split of shares (Refer Note 1(g)) 12,524,189 - - - - -
Share outstanding at end of period 25,048,378 11,187,501 7,087,508 125.24 111.87 70.87
Preference SharesParticulars
2011-12 2010-11 2009-10 2011-12 2010-11 2009-10Share outstanding at beginning of period 810,000 2,060,000 - 81.00 206.00 -
Shares issued during the period - - 2,060,000 - - 206.00
Shares Converted into Equity (Refer Note 1(e)) (810,000) (1,250,000) - (81.00) (125.00) -
Share outstanding at end of period - 810,000 2,060,000 - 81.00 206.00
i.
Year of Issue No. of Shares
2010-11 3,729,167 2009-10 3,543,754
j. Shares reserved for issue under option
Shares reserved for issue under ESOP - Refer Note 35
k. Details of shareholders holding more than 5% shares in the Company
Equity SharesName of Shareholders
No of Shares % of Holding No of Shares % of Holding No of Shares % of Holding
1 Parteek Finance & Inv. Co. Ltd. 5,872,602 23.45 2,936,001 26.24 1,957,334 27.62 2 Lucrative Leasing Finance & Inv. Co. Ltd. 5,639,796 22.52 2,819,898 25.21 1,879,932 26.52 3 Samaya Investment & Trading Pvt. Ltd. 3,077,880 12.29 1,538,940 13.76 1,025,960 14.48 4 Standard Chartered Inv. & Loans (I) Ltd. 2,025,060 8.08 - - - - 5 Rowanhill Investments Ltd. 1,359,801 5.43 1,200,424 10.73 914,800 12.91 6 Mrs. Madhu Singhal 1,128,414 4.50 564,207 5.04 376,138 5.31
Preference SharesName of Shareholders
No of Shares % of Holding No of Shares % of Holding No of Shares % of Holding1 Standard Chartered Private Equity Mauritius Ltd Nil - 1,030,000 50% 1,030,000 50%2 Standard Chartered Private Equity Mauritius II Ltd Nil - 1,030,000 50% 1,030,000 50%
Preference Share (No. of Shares) Preference Share (Value of Shares) (Rs. In Millions)
Equity Share (No. of Shares) Equity Share (Value of Shares) (Rs. In Millions)
Preference Share (No. of Shares) Preference Share (Value of Shares) (Rs. In Millions)
Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares brought back during the period of five years immediately preceding the reporting period
31st March 2012 31st March 2011 31st March 2010 Equity Shares allotted as fully paid up Bonus shares by capitalisation of reserves 7,272,921 7,272,921 3,543,754
2011-12 2010-11 2009-10
2011-12 2010-11 2009-10
F-11
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions
2 RESERVES & SURPLUS
a. Capital Reserve14.75 14.75 14.75
Addition during the year Financial year - - - Deduction during the Financial year - 14.75 - 14.75 - 14.75
b. Securities Premium AccountBalance at the Beginning of the Financial year 84.00 - -
334.04 121.29 -
Less: Capitalised for Bonus Shares - 418.04 (37.29) 84.00 - -
c. Revaluation ReserveBalance at the beginning of the Financial year 20.18 20.45 20.77 Less: Depreciation on revalued amount adjusted (2.22) 17.96 (0.27) 20.18 (0.31) 20.46
d. Share Option Outstanding AccountBalance at the Beginning of the Financial year - - - Addition during the Financial year 16.46 - - Less: Written back during the Financial year - - - Less: Deferred employee stock compensation (5.56) 10.90 - - - -
e. Cash Flow Hedge ReserveBalance at the Beginning of the Financial year - - - Addition during the Financial year (49.26) - - Less: Written back during the Financial year - (49.26) - - - -
f. General Reserve Balance at the beginning of the Financial year 462.04 397.92 385.15 Less: Capitalised for Bonus Shares - - (17.94) Add: Transferred during the Financial year 100.54 562.58 64.12 462.04 30.71 397.92
g. Surplus in Profit & Loss AccountBalance at the beginning of the Financial year 1,332.49 813.78 452.51 Addition during the Financial year 1,005.42 641.17 409.45 Less: Transfer to General Reserves (100.54) (64.12) (30.71)
(50.10) - -
(75.15) (50.02) (14.92)
(0.00) (0.01) (0.01)
Less: Dividend Distribution Tax on Equity shares (20.31) (8.31) (2.54) Less: Dividend Distribution Tax on Preference shares (0.00) (0.00) (0.00)
2,091.81 1,332.49 813.78 TOTAL 3,066.78 1,913.46 1,246.91
31st March 2012 31st March 2011 31st March 2010
Balance at the beginning and end of the Financial year
Add: Premium on issue of Equity shares on conversion of CCPS and OCD
Less: Interim Dividend on Equity Shares @ Rs. 2 per share (March 2011: Rs. Nil, March 2010: Rs. Nil)Less: Proposed Dividend on Equity Shares{Rs. 3 Per share (March 2011: Rs. 4 Per share, March 2010: Rs. 2 Per share)}Less: Proposed Dividend on Preference Shares {Rs. 0.01 % (March 2011: 0.01%, March 2010: 0.01%)}
During the year, interim dividend amounting to Rs. 2.60 millions for financial year 2011-12 & final dividend amounting to Rs. 4.60 millions for the financial year 2010-11 was paid in foreign currency to one of the shareholder on 1,300,848 shares and 1,150,424 respectively. During the financial year 2009-10, final dividend of 1.83 million was paid in foreign currency to one shareholder holding 9,14,800 shares.
F-12
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions3 LONG TERM BORROWINGS
31st March 2012 31st March 2011 31st March 2010 31st March 2012 31st March 2011 31st March 2010
Bonds/ Debentures- 294.00 294.00 - - -
Term Loans - From Banks and Financial InstitutionsIndian Rupee Loans from Banks (secured) 65.00 173.82 328.42 108.82 152.85 196.24 Foreign Currency Loans from Banks (secured) 1,023.80 - - - - - From Financial Institutions (secured) 50.00 100.00 50.00 50.00 50.00 50.00
1,138.80 273.82 378.42 158.82 202.85 246.24 Deferred Payment LiabilitiesInterest Free Sales Tax Loan (unsecured) - - 2.35 - 2.35 2.35
- - 2.35 - 2.35 2.35 Deposits (unsecured)Directors 13.46 5.65 9.77 2.11 8.73 3.11 Shareholders 4.59 11.25 7.66 7.99 1.94 2.57 Others 33.72 5.14 28.18 2.59 30.77 3.37
51.77 22.04 45.61 12.69 41.44 9.05
TOTAL 1,190.57 589.86 720.38 171.51 246.64 257.64
The above amount includes Secured borrowings 1,297.62 476.67 624.66 Unsecured borrowings 64.46 359.83 353.36 Net Amount 1,362.08 836.50 978.02
a.
b.
c.
d. Loans from Financial Institutions includes:
e.
f.
g. As on the Balance sheet date there is no default in repayment of loans and interest.
31st March 2012 31st March 2011 31st March 20104 DEFERRED TAX LIABILITIES
Deferred tax assets/ liabilities are attributable to the following items;Deferred Tax AssetsEffects of expenditure debited to P&L account in the current year 32.40 20.81 12.78 but allowed for tax purposes in the following yearSub- Total (a) 32.40 20.81 12.78 Deferred Tax LiabilitiesDifference in depreciation and amortisation in block of fixed assets 356.69 343.71 282.75 as per Income Tax Act and books of accounts & OthersSub- Total (b) 356.69 343.71 282.75 Net Deferred Tax Liability (b)-(a) 324.29 322.90 269.97
Nil (March 2011: 2.94 millions, March 2010: Rs. 2.94 millions) Zero Coupon Optionally Convertible Debentures (unsecured) of face value of Rs. 100/- each
Non- Current Current Maturities
Deposits from Directors, shareholders and others carries interest ranging from 9% to 11% depending upon the amount of deposit. Non- cummulative deposits have a maturity period of two years and are paid interest at the interval of every sixmonths. Cummulative deposits have maturity period of three years and the interest is compounded six monthly.
On 24th October 2009, the Company had issued 2,940,000 Optionally Convertible Debentures (OCD) of Rs. 100/- each to Standard Chartered Investments and Loans (India) Ltd., on preferential basis on October 24, 2009. The OCD had lock in period of one year from the date of allotment. The OCD were optionally convertible into equity shares within the period of 18 months from the date of allotment as per the terms of issue. The uncovered portion of OCD, if any, shall be redeemed at the end of 18 months or may be further extended by another 18 months, if mutually agreed.
Indian Rupee Loan from Banks includes:- Loan amounting to Rs. 24.90 millions outstanding as on 31st March 2012 from State Bank of Bikaner & Jaipur Bank carrying interest rate of BPLR minus 1.25% repayable in balance 4 Quarterly installments of Rs. 6.25 millions each which would be repaid by March 2013. The loan is secured by first pari passu charge on the fixed assets and second charge on the current assets of the Company. Further, the entire loan sanctioned amounting to Rs. 175 millions is guaranteed by personal guarantee of the Chairman and Managing Director (CMD) and Managing Director (MD) of the Company.
- Loan amount of Rs. 11.11 millions outstanding as on 31st March 2012 from Axis Bank carrying interest rate of BPLR minus 3.25% would be repaid in June 2012. The loan is secured by first pari passu charge on the existing and future fixed assets and second charge on the current assets of the Company. The loan amount sanctioned amounting to Rs. 200 millions is guaranteed by personal guarantee by the Managing Director (MD) of the Company.
- Loan from HDFC Bank outstanding amounting to Rs. 32.81 millions carrying interest rate @ HDFC -CPLR plus 0.25 basis points and is repayable in balance 3 Quarterly installments of Rs. 10.94 millions each. The same would be repaid by December 2012. The loan is secured by first pari passu charge on the fixed assets of the Company. The loan sanctioned amounting to Rs. 175 millions is guaranteed by personal guarantee of the Chairman and Managing Director (CMD) and Managing Director (MD) of the Company.
- Loan from IDBI Bank outstanding amounting to Rs. 22.50 millions carrying interest rate of BPLR minus 1.5% and is repayable in 9 Quarterly installments of Rs. 2.5 millions which would be repaid by June 2014. The loan is secured by first mortgage and charge on all movable and immovable properties, both present and future of the Company and second charge on the current assets of the Company . Further, the entire loan amount sanctioned amounting to Rs. 50 millions is guaranteed by irrevocable and unconditional guarantee of Managing Director (MD) of the Company.
- Loan amounting to Rs. 82.50 millions is outstanding from IDBI Bank as on 31st March 2012 which carries interest rate of BPLR minus 1%. This amount is repayable in 11 Quarterly installments of Rs. 7.50 millions each and the same would be repaid by December 2014.The loan is secured by first pari passu charge on all movable and immovable assets and second charge on the current assets of the Company. Further, the loan sanctioned amounting to Rs. 150 millions is guaranteed by personal guarantee of the Managing Director (MD) of the Company.
Foreign Currency Loans includes:- ECB from Standard Chartered Bank amounting to USD 20 millions carrying interest rate of 90 days LIBOR plus 2.75% and is repayable in 15 Quarterly installments of USD 1.333 millions each beginning from April 2013. The loan is secured by first exclusive charge on movable and immovable fixed assets of the Company situated at Jambusar, Gujarat.
Term Loan from Financial Institutions includes loan amounting to Rs. 100 millions from EXIM bank at interest on PLR rate, repayable in 8 quarterly installment of Rs. 12.5 millions and would be repaid by 31st March 2014. The loan is secured by Pari passu first charge over the entire fixed assets including immovable properties of the Company both present and future (excluding assets, which are exclusively charged to other lenders) and Pari passu second charge over the entire current assetsof the Company, pari passu with all the existing lenders, excluding assets exclusively charged to other lenders.
Deferred Tax Sales Tax Loan is Interest Free which was payable in 5 yearly installments of Rs. 2.35 million each beginning from 30th May 2006. The last installment was paid on 13th April 2011.
F-13
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions5 OTHER LONG TERM LIABILITIES
31st March 2012 31st March 2011 31st March 2010Other PayablesSecurity Deposits from Dealers 99.82 88.67 - 72.96 Security Deposits from Contractors 1.68 1.32 - 4.22 Miscellaneous payables 4.49 4.49 - 4.49
TOTAL 105.99 94.48 81.67
6 PROVISIONS31st March 2012 31st March 2011 31st March 2010 31st March 2012 31st March 2011 31st March 2010
Provision for Employee BenefitsLeave Encashment 17.70 13.69 13.60 4.26 3.04 1.20 Gratuity - - - 12.85 8.32 -
17.70 13.69 13.60 17.11 11.36 1.20 Other ProvisionsProvision for Income Tax {Net of Advance Tax of Rs. 723.18 millions 58.04 50.14 21.01 (March 2011: Rs. 344.12 millions, March 2010: Rs. 110.41 millions)} Provision for Proposed Dividend on Equity Shares 75.15 50.02 14.92 Provision for Proposed Dividend on Preference Shares 0.00 0.01 0.01 Provision for Dividend Distribution Tax 12.19 8.31 2.54
- - - 145.38 108.48 38.48 TOTAL 17.70 13.69 13.60 162.49 119.84 39.68
7 SHORT TERM BORROWINGS31st March 2012 31st March 2011 31st March 2010
Loans Repayable on Demand
Working Capital Loans from Banks (secured) 684.69 1,081.95 309.87 Inter- Corporate Deposits (unsecured) - From Promoter Companies 11.50 19.00 12.00 - From Subsidiary Companies 25.50 6.00 6.00
721.69 1,106.95 327.87 Other Loans and AdvancesPacking Credit Foreign Currency Loan (unsecured) 409.59 445.82 118.70
409.59 445.82 118.70
TOTAL 1,131.28 1,552.77 446.57
The above amount includesSecured Borrowings 684.69 1,081.95 309.87 Unsecured Borrowings 446.59 470.82 136.70
a.
b.
8 TRADE PAYABLES31st March 2012 31st March 2011 31st March 2010
Trade Payables -Due to micro and small enterprises (Refer note 44) 35.11 32.28 53.93 -Other Trade Payables* 928.75 1,024.75 923.08
TOTAL 963.86 1,057.03 977.01
* Other Trade payable includes amount due to Subsidiary companies amounting to Rs. 6.22 millions (March 2011: Rs. 3.10 millions, March 2010: 12.71 millions )
9 OTHER CURRENT LIABILITIES31st March 2012 31st March 2011 31st March 2010
Current maturities of long-term debt (Refer Note 3) 171.51 246.64 257.64 Project Vendors 33.83 53.97 46.35 Security Deposits Contractors 3.18 2.90 3.07 Interest accrued but not due on borrowings 16.50 8.24 6.59 Income received in advance/ Customer advances 317.31 131.96 316.28 Unpaid dividends* 0.66 0.21 0.10 Other payables - - - - Employee Balances 99.56 81.58 45.45 - Statutory Dues Payable 42.47 54.01 41.40 - Miscellaneous Payable 149.98 175.65 114.21 Hedge Liability 49.26 - -
TOTAL 884.26 755.16 831.09
Non- Current Current
Working capital loans are secured by way of first charge on pari passu basis by hypothecation of stocks of raw materials, finished and semi finished goods, stores and spares not related to plant and machinery, bills receivable, book debts and all other movable properties and additionally secured by way of second charge on all the immovable properties of the Company in favour of the consortium bankers. The working capital loans were secured by personal guarantee of the directors of the Company till 31st March 2011. The same does not carry any guarantee as on the reporting date.
* The amount does not include amount due/ outstanding to be credited to Investor Education & Protection Fund, same shall be credited as and when due.
F-14
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)
10 TANGIBLE ASSETS Leasehold land Freehold Land Buildings Plant &
Machinery Furniture &
FixturesOffice Equipments Vehicles Library Tools and
Equipment Total
Gross Carrying ValueAs at 1st April 2009 66.15 18.86 180.23 2,208.33 14.45 32.93 25.57 9.45 0.27 2,556.24 Additions - 4.69 47.26 255.77 4.07 0.59 0.98 0.38 - 313.74 Disposals - - - (12.12) (0.43) (0.01) (3.05) - - (15.61) Other Adjustments '- Exchange Difference - - - - - - - - - - '- Borrowing Costs - - 2.65 12.41 0.18 0.02 - - - 15.26 '- Stores & Spares - - - - - - - - - - '- Other Expenses including Salary - - 2.83 13.26 0.19 0.03 - - - 16.31 As at 31st March 2010 66.15 23.55 232.97 2,477.65 18.46 33.56 23.50 9.83 0.27 2,885.94 Additions - - 60.83 583.37 1.38 1.45 0.41 0.18 - 647.62 Disposals - - - (3.67) (0.07) - (2.36) - - (6.10) Other Adjustments - '- Exchange Difference - - - - - - - - - - '- Borrowing Costs - - 0.84 11.85 - - - - - 12.69 '- Stores & Spares - - - 5.16 - - - - - 5.16 '- Other Expenses including Salary - - 1.37 14.25 - - - - - 15.62 As at 31st March 2011 66.15 23.55 296.01 3,088.61 19.77 35.01 21.55 10.01 0.27 3,560.93 Additions 151.95 - 56.17 397.74 7.31 9.00 0.23 - - 622.40 Disposals - - (7.96) (5.97) (7.05) (5.24) (1.98) - (0.27) (28.47)
Transfer on account of discontinued operation - - (8.50) (127.48) (0.19) (0.23) - (0.04) - (136.44) Other Adjustments - '- Exchange Difference - - - 1.52 - - - - - 1.52 '- Borrowing Costs - - - 4.64 - - - - - 4.64 '- Stores & Spares - - - 24.54 - - - - - 24.54 '- Other Expenses including Salary - - - 31.03 - - - - - 31.03 As at 31st March 2012 218.10 23.55 335.72 3,414.63 19.84 38.54 19.80 9.97 - 4,080.15
DepreciationAs at 1st April 2009 0.29 - 57.49 667.86 10.27 22.61 18.86 6.85 - 784.23 Charge for the year 0.04 - 3.71 120.00 0.85 1.47 1.79 0.30 - 128.16 Disposals - - - (4.33) (0.01) (0.31) (2.55) - - (7.20) As at 31st March 2010 0.33 - 61.20 783.53 11.11 23.77 18.10 7.15 - 905.19 Charge for the year 0.04 - 5.45 142.62 1.41 1.39 1.46 0.28 - 152.65 Disposals - - - (1.46) (0.06) - (2.03) - - (3.55) As at 31st March 2011 0.37 - 66.65 924.69 12.46 25.16 17.53 7.43 - 1,054.29 Charge for the year 0.04 - 8.82 155.72 1.60 1.67 1.04 0.26 - 169.15 Disposals - - (1.10) (2.29) (5.62) (4.23) (1.69) 0.00 - (14.93)
Transfer on account of discontinued operation - - (2.53) (48.37) (0.10) (0.15) - (0.03) - (51.18) As at 31st March 2012 0.41 - 71.84 1,029.75 8.34 22.45 16.88 7.66 - 1,157.33
Net Carrying ValueAs at 31st March 2010 65.82 23.55 171.77 1,694.12 7.35 9.79 5.40 2.68 0.27 1,980.75 As at 31st March 2011 65.78 23.55 229.36 2,163.92 7.31 9.85 4.02 2.58 0.27 2,506.64 As at 31st March 2012 217.69 23.55 263.88 2,384.88 11.50 16.09 2.92 2.31 - 2,922.82
a.b.
c.d. Addition to Building includes Leasehold improvement of Rs. 35.88 millions (March 2011: Nil, March 2010: Nil)
The Company revalued Tangible assets on 30th June 1988, at fair values determined by an independent external valuer. The valuer determined the fair value by reference to market based evidence.Depreciation for the year includes depreciation amounting to Rs. 3.86 mllions (March 2011: Rs. 3.79 millions, March 2010: Rs. 3.60) on assets used for Research & Development. During the year Company incurred Rs. 5.03 millions (March 2011: Rs. Nil, March 2010: Rs. 6.36 millions) towards capital expenditure for Research & Development (Refer Note 28)Amount transferred on account of exchange difference, borrowing costs and other administrative costs have been transferred from Capital Work in progress.
F-15
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)
11 Amount of Capital Work in
progress
Intangible Assets under Development
As at 1st April 2009 74.11 - Additions 287.74 - Amount transferred from CWIP (317.44) - Other Adjustments* '- Exchange Difference - - '- Borrowing Costs 16.12 - '- Stores & Spares 1.01 - '- Other Expenses including Salary 24.81 - As at 31st March 2010 86.35 - Additions 760.37 7.08 Amount transferred from CWIP (617.15) Other Adjustments* '- Exchange Difference - - '- Borrowing Costs 11.98 - '- Stores & Spares 26.27 - '- Other Expenses including Salary 45.81 - As at 31st March 2011 313.63 7.08 Additions 889.60 25.25 Amount transferred from CWIP (518.05) - Other Adjustments* '- Exchange Difference 12.43 - '- Borrowing Costs 15.48 - '- Stores & Spares 8.16 - '- Other Expenses including Salary 56.44 - As at 31st March 2012 777.69 32.33
12 INTANGIBLE ASSETSSoftware
Gross Carrying ValueAs at 1st April 2009 21.96 Additions 4.37 Disposals (0.05) As at 31st March 2010 26.28 Additions 3.96 Disposals - As at 31st March 2011 30.24 Additions 10.51 Disposals -
Transfer on account of discontinued operation - As at 31st March 2012 40.75
DepreciationAs at 1st April 2009 11.85 Charge for the year 3.32 Disposals - As at 31st March 2010 15.17 Charge for the year 3.53 Disposals - As at 31st March 2011 18.70 Charge for the year 4.16 Disposals -
Transfer on account of discontinued operation - As at 31st March 2012 22.86
Net Carrying ValueAs at 31st March 2010 11.11 As at 31st March 2011 11.54 As at 31st March 2012 17.89
CAPITAL WORK IN PROGRESS & INTANGIBLES ASSETS UNDER DEVELOPMENT
* Refer Note No. 38
F-16
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions13 NON CURRENT INVESTMENTS
Long Term Investments (At cost) : Non Trade
Unquoted Shares (Equity)
1 a) Panoli Enviro Technology Ltd. 0.30 0.30 0.30
b) Bharuch Enviro Infrastructure Ltd. 0.02 0.02 0.02
c) Bharuch Eco-Aqua Infrastructure Ltd. 4.44 4.44 4.44
0.00 0.00 0.00
e) Abhilasha Tower Co-operative Service Housing Society Ltd. 0.00 0.00 0.00 4.76 4.76 4.76
2 Investment in wholly-owned subsidiary
PILL Finance & Investment Limited 3.60 3.60 3.60
PI Life Science Research Limited 9.45 9.45 9.45
PI Japan Company Limited 1.86 1.86 1.86
14.91 14.91 14.91
TOTAL 19.67 19.67 19.67
Aggregate book value of Quoted Investments NIL NIL NILAggregate book value of Un-Quoted Investments 19.67 19.67 19.67
14 LOANS AND ADVANCES
31st March 2012 31st March 2011 31st March 2010 31st March 2012 31st March 2011 31st March 2010
Capital Advances (Unsecured)Considered good 150.82 149.78 126.21 - - - Doubtful 0.06 - - - - - Less: Allowance for Doubtful Capital Advances (0.06) - - - - -
A 150.82 149.78 126.21 - - - Security Deposits (Unsecured)Considered good* 35.47 29.01 25.58 3.51 9.21 10.50 Doubtful - - - - - -
B 35.47 29.01 25.58 3.51 9.21 10.50 Loans and advances to related parties (unsecured)Considered good (Refer Note 40) - - - 1.15 3.10 -
C - - - 1.15 3.10 - Other Loans and advances (Unsecured)Advances to Vendors, considered good - - - 122.80 73.26 258.44 Advances to Vendors, Doubtful - - - 24.67 3.85 - Less: Allowance for Doubtful advances - - - (24.67) (3.85) - Balance with Central Excise Authorities, Customs etc. - - - 80.59 81.61 15.70 Prepaid Expenses - - - 11.16 14.66 10.03 Employee Advances - 4.00 - 8.47 1.23 0.72 Other Statutory Advances 0.85 - 4.96 116.97 64.71 53.35 Other Miscellaneous Advances 3.60 4.90 - 48.93 66.21 31.10
D 4.45 8.90 4.96 388.92 301.68 369.34 TOTAL (A+B+C+D) 190.74 187.69 156.75 393.58 313.99 379.84
* Includes Rs. 0.05 millions (March 2011: Rs. 0.05 millions, March 2010: Rs. 0.05 millions) rent deposit to PILL Finance & Investment Ltd.
15 OTHER ASSETS
31st March 2012 31st March 2011 31st March 2010 31st March 2012 31st March 2011 31st March 2010
- - - 19.03 12.69 13.06 - - - 6.45 5.47 3.50 - - - (6.45) (5.47) (3.50)
16.24 13.98 13.85 - - - 16.24 13.98 13.85 19.03 12.69 13.06
TOTAL 16.24 13.98 13.85 19.03 12.69 13.06
16 INVENTORIES( Valued at lower of cost and net realizable value) 31st March 2012 31st March 2011 31st March 2010
473.08 520.91 438.56
Work in Progress 463.65 308.53 177.83 Finished Goods, including By - products. 588.11 433.84 292.56 Traded Goods 73.39 46.80 23.71 Stores & Spares, Laboratory Chemicals & Apparatus 189.28 99.72 95.45
TOTAL 1,787.51 1,409.80 1,028.11
31st March 2010
CurrentNon- Current
Current
5 (March 2011: 5, March 2010: 5) Equity Shares of Rs.50/- each fully paid
10 (March 2011: 10, March 2010: 10 ) Equity Shares of Rs. 250/- each fully paid
3,60,000 (March 2011: 3,60,000, March 2010: 3,60,000) Equity Shares of Rs. 10/- each fully paid
31st March 2012 31st March 2011
30,000 (March 2011: 30,000, March 2010: 30,000) Equity Shares of Rs.10/- each fully paid
Interest and Other charges recoverable from customers- GoodInterest and Other charges recoverable from customers- DoubtfulLess: Allowance for Interest and other charges recoverable from customersDeposits lodged with Excise & Sales Tax department*
945,000 (March 2011: 945,000, March 2010: 945,000) Equity Shares of Rs.10/- each fully paid
100 (March 2011: 100, March 2010: 100) Equity Shares of Rs.18600/- each fully paid - (JPY 50,000/- each )
Non- Current
2,100 (March 2011: 2,100, March 2010: 2100) Equity Shares of Rs.10/- each fully paid
4,44,339 (March 2011: 4,44,339, March 2010: 4,44,339 ) Equity Shares of Rs.10/- each fully paid
d) Angan Apartment Co-opt Hsg. Society Ltd (Services) Bharuch
*Deposits includes Rs. 15.88 millions (March 2011: Rs. 13.98 millions, March 2010: 13.85 millions) towards security deposit lodged with the Rajasthan excise department and Rs. 0.36 millions (March 2011: Rs. Nil, March 2010: Rs. Nil) lodged with Commercial Taxes Kottayam.
Raw Materials and Packing Materials {(includes Stock-in-Transit Rs. 32.24 millions (March 2011: Rs. 8.71 millions, March 2010: Rs. Nil )}
* Includes Fixed deposits with more than twelve months maturity from date of acquisition: Rs.16.24 millions (March 2011: Rs. 13.98 millions, March 2010: 13.85); and Fixed deposits upto 3 months maturity from date of acquisition: Rs. NIL (March 2011: Rs. NIL, March 2010: Rs. NIL)
F-17
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions17 TRADE RECEIVABLES
31st March 2012 31st March 2011 31st March 2010
Unsecured, considered good unless stated otherwise
-Considered Good 16.38 19.68 26.68 -Doubtful 19.42 14.34 10.53
35.80 34.02 37.21 Less: Allowance for Doubtful Debts (19.42) (14.34) (10.53)
A 16.38 19.68 26.68 Others Debts -Considered Good 1,702.31 1,727.98 1,152.10 -Doubtful 0.84 0.63 0.21
1,703.15 1,728.61 1,152.31 Less: Allowance for Other Doubtful Debts (0.84) (0.63) - (0.21)
B 1,702.31 1,727.98 1,152.10
TOTAL (A+B) 1,718.69 1,747.66 1,178.78
18 CASH AND BANK BALANCES31st March 2012 31st March 2011 31st March 2010
Cash & Cash Equivalents- Balance with banks: On Current Accounts 38.36 38.86 14.35 - Cash on hand: 0.59 0.85 0.50
Other Bank Balances In Deposit accounts held as margin money* 36.66 27.77 20.53 In Unpaid Dividend Accounts ** 0.66 0.21 0.10
TOTAL 76.27 67.69 35.48
19 REVENUE FROM OPERATIONS31st March 2012 31st March 2011 31st March 2010
Revenue from Operations includesa) Sale of products;
'- Finished Goods 9,483.94 7,941.99 5,931.79 '- Traded Goods 503.25 394.70 240.87
9,987.19 8,336.69 6,172.66
b) Sale of services; - 0.56 1.93 - 0.56 1.93
c) Other operating Revenues; '- Scrap Sales 6.06 4.49 3.49 '- Others* 15.15 19.00 13.44
21.21 23.49 16.93 Revenue From Operations (Gross) (a+b+c) 10,008.40 8,360.74 6,191.52
Less: Excise Duty; 459.40 461.92 247.76 Less: Discount 778.10 715.52 527.61 Revenue From Operations (Net) 8,770.90 7,183.30 5,416.15
d) Details of products sold31st March 2012 31st March 2011 31st March 2010
(i) Finished goods soldSpecialty Chemicals 3,771.25 2,304.69 1,905.21 Agro Chemicals 5,187.92 4,405.48 3,052.83 Plant Nutrient 507.63 499.21 438.50 Polymer 12.42 727.72 531.32 Others 4.72 4.89 3.93
9,483.94 7,941.99 5,931.79
(ii) Traded Goods SoldAgro Chemicals 431.97 227.26 193.01 Others 71.28 167.44 47.86
503.25 394.70 240.87
(iii) Details of services renderedJob Work - 0.56 1.93
- 0.56 1.93 * Other operating revenue includes Export incentive of Rs. 10.40 millions (March 2011: Rs. 19 millions, March 2010: Rs. 13.44 millions)
** Not available for use by the Company as they represent corresponding unclaimed dividend liabilities.
Debts outstanding for a period exceeding six months from the date they are due for payment
* Deposit account includes Rs. 36.66 millions (March 2011: Rs.27.77 millions, March 2010: Rs. 20.53 millions) towards margin money pledged with banks for Bank Guarantees and Letter of Credit.* Includes Fixed deposits with more than twelve months maturity from date of acquisition: Rs.36.66 millions (March 2011: Rs. 27.77 millions, March 2010: Rs. 20.53 millions); and Fixed deposits upto 3 months maturity from date of acquisition:Rs. Nil (March 2011: Rs. Nil, March 2010: Nil)
F-18
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions20 OTHER INCOME
31st March 2012 31st March 2011 31st March 2010Income from Long term InvestmentDividend Income from Long Term Investment 0.00 0.00 0.00
Income from Short term InvestmentInterest Income; - Margin Money Deposits 4.35 1.68 2.22 - Others 36.87 25.95 20.20 Other Non-operating Income 10.69 3.91 5.06 Exchange Gain - 73.52 36.72
TOTAL 51.91 105.06 64.20
21 COST OF RAW MATERIAL AND PACKING MATERIAL CONSUMED
Details of Raw material and packing material consumed31st March 2012 31st March 2011 31st March 2010
Basic Chemicals 2,129.21 1,623.19 1,603.72 Active Ingredients 956.15 842.15 368.57 Solvent 476.11 307.88 258.72 Packaging Material 329.45 559.55 265.31 Catalyst & Emulsifiers 134.73 96.86 82.37 Others 841.16 744.18 446.06
TOTAL 4,866.81 4,173.81 3,024.75
Details of Inventory 31st March 2012 31st March 2011 31st March 2010Basic Chemicals 199.01 236.46 186.37 Packaging Material 109.67 102.86 74.72 Active Ingredients 101.85 83.75 90.89 Solvent 26.31 22.90 15.42 Catalyst & Emulsifiers 25.24 21.88 24.50 Others 11.00 53.06 46.66
TOTAL 473.08 520.91 438.56
22 ( INCREASE)/DECREASE IN INVENTORY
31st March 2012 31st March 2011 31st March 2010Inventories at the end of the yearFinished Goods 588.11 433.84 292.56 Traded Goods 73.39 46.80 23.71 Work in Process 463.65 1,125.15 308.53 789.17 177.82 494.09 Inventories at the beginning of the yearFinished Goods 433.84 292.56 283.92 Traded Goods 46.80 23.71 15.98 Work in Process 308.53 789.17 177.82 494.09 216.72 516.62
TOTAL (335.98) (295.08) 22.53
a) Details of Purchases of Traded Goods31st March 2012 31st March 2011 31st March 2010
Agro Chemicals 354.02 185.18 135.67 Others 35.98 141.28 -
TOTAL 390.00 326.46 135.67
b) Details of Inventory
Traded Goods 31st March 2012 31st March 2011 31st March 2010Agro Chemicals 72.01 45.42 23.71 Others 1.38 1.38 -
TOTAL 73.39 46.80 23.71
Work In Progress 31st March 2012 31st March 2011 31st March 2010Agro Chemicals 141.96 41.76 65.62 Speciality Chemicals 311.67 258.04 112.15 Plant Nutrient 10.02 8.17 0.01 Polymer - 0.56 0.04
TOTAL 463.65 308.53 177.82
31st March 2012 31st March 2011 31st March 2010Finished GoodsAgro Chemicals 428.46 239.37 150.09 Speciality Chemicals 35.93 77.18 22.66 Plant Nutrients 24.66 20.89 12.03 Polymer - 50.15 43.88 Others 99.06 46.25 63.90
TOTAL 588.11 433.84 292.56
23 EMPLOYEE BENEFIT EXPENSES31st March 2012 31st March 2011 31st March 2010
Salaries, Wages and Bonus 604.22 504.80 407.40 Contribution to Provident & other funds 35.68 37.59 25.13 Gratuity and Leave encashment expenses (Refer Note 34) 22.38 15.08 6.81 Employees Welfare Expenses 28.53 24.63 17.89 Expense on Employee Stock Option Scheme (Refer Note 35) 10.90 - -
TOTAL 701.71 582.10 457.23
F-19
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions24 OTHER EXPENSES
31st March 2012 31st March 2011 31st March 2010Power, Fuel & Water 361.64 267.25 208.65 Stores & Spares Consumed 84.82 51.44 82.33 Repairs & Maintenance to : - - - - Buildings 3.77 4.39 2.62 - Plant & Machinery 28.04 18.44 15.53 - Other Repairs 19.55 18.11 17.89 Environment & Pollution Control expenses 298.63 202.57 86.92 Laboratory & Testing Charges 34.14 30.50 22.96 Freight & Cartage 203.06 174.43 131.57 Advertisement & Sales Promotion 222.88 155.51 99.64 Travelling & Conveyance 167.25 142.63 115.36 Exchange Difference 44.81 - - Rent 37.35 28.04 26.43 Rates, Taxes & Fees 17.69 11.96 17.88 Insurance 15.33 10.43 9.73 Donation 1.71 0.65 1.47 Deferred revenue expenditure written off - - 3.70 Loss On Sale of Fixed Assets (Net) 12.86 0.40 1.77 Auditor's Remuneration 1.58 1.62 0.85 Communication Expenses 19.73 15.00 11.13 Bad debts written off (Net) 0.18 0.07 5.09 Provision for Bad and Doubtful debts & Advances 37.91 16.93 14.24 Director Sitting Fees 3.70 0.58 0.62 Legal & Professional Expenses 39.15 31.18 22.14 Commission on sale - 7.58 10.91 Bank Charges 15.74 17.72 13.23 Prior period expenses 0.37 0.03 0.03 Miscellaneous Expenses 65.86 53.35 40.97
TOTAL 1,737.75 1,260.81 963.66
a. Travelling Expenditure includes Directors Travelling amounting to Rs. 17.47 millions (March 2011: Rs. 11.45 millions, March 2010: Rs. 11.19 millions)b. Auditors' Remuneration 31st March 2012 31st March 2011 31st March 2010
-Audit Fees 1.00 1.00 0.50 -Tax Audit Fees 0.15 0.15 0.10 -Certificates & other matters 0.06 0.12 0.01 -Reimbursement of expenses 0.37 0.35 0.24
TOTAL 1.58 1.62 0.85
25 EXCEPTIONAL ITEM31st March 2012 31st March 2011 31st March 2010
Income from sale of polymer Business 303.43 - - TOTAL 303.43 - -
26 DEPRECIATION AND AMORTIZATION EXPENSES31st March 2012 31st March 2011 31st March 2010
Depreciation on Tangible Assets 169.15 152.65 128.16 Depreciation on Intangible Assets 4.16 3.53 3.32
173.31 156.18 131.48 Less: Recoupment from revaluation reserve (2.22) (0.27) (0.31)
TOTAL 171.09 155.91 131.17
27 FINANCE COSTInterest On Fixed Loans 69.25 68.73 84.55 On Working Capital 109.82 102.64 91.12 Others 13.93 193.00 5.66 177.03 - 175.67 Other Borrowing Costs 4.59 8.99 9.56 Exchange Difference 3.50 - -
TOTAL 201.09 186.02 185.23
28 RESEARCH & DEVELOPMENT EXPENSES
a) Revenue Expenditure31st March 2012 31st March 2011 31st March 2010
Employee Benefit ExpensesSalaries, Wages & Bonus 32.98 28.36 22.92 Contributions to Provident & other funds 0.29 2.81 2.31 Employee Welfare Expenses 0.08 0.52 0.15
33.35 31.69 25.38
Raw & Packing Materials Consumed 3.31 1.56 1.35
Other ExpensesLaboratory & testing Material 8.71 10.78 12.82 Power, Fuel & Water 1.05 0.94 1.42 Stores & Spares Consumed 3.73 2.38 4.11 Testing & Analysis 0.22 0.28 0.99 Travelling & Conveyance 2.10 2.60 1.18 Rates, Taxes & Fees 0.04 0.15 0.13 Printing & Stationery 0.19 0.06 0.01 Legal & Professional Charges 0.90 0.56 - Miscellaneous Expenses 0.44 0.62 0.50
17.38 18.37 21.16 DepreciationDepreciation 3.86 3.79 3.60
TOTAL 57.90 55.41 51.49 b) Capital Expenditure
Description 31st March 2009 Addition during the year
31st March 2010 Addition during the year
31st March 2011 Addition during the year
31st March 2012
Buildings 1.81 1.81 1.81 - 1.81 Equipments & Others 77.05 6.36 83.41 - 83.41 5.03 88.44
TOTAL 78.86 6.36 85.22 - 85.22 5.03 90.25
31st March 2012 31st March 2011
During the year, the Company has disposed off its Polymer compounding business on slump sale basis to M/s Rhodia Polymers Ltd. as a going concern. The net gain of Rs. 303.43 millions is shown as an exceptional item in the Profit & Loss account.
Details of Expenditure on Research & Development Facilities/ division of the Company recognised by Department of Scientific & Industrial Research.
31st March 2010
F-20
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions
29
30 DISCONTINUED OPERATIONS
The Additional Disclosure as per AS-24, issued pursuant to the Companies(Accounting Standards) Rules 2006,is set out below:
Particulars Discontinued Operations
Discontinuing Operations
Discontinuing Operations
11th April 2011 31st March 2011 31st March 2010
Gross Sales 12.41 812.47 552.21 Operating Expense 12.76 745.63 495.50 Pre-Tax profit (loss) from operating activities (0.35) 66.84 56.71 Interest expense - 11.67 15.18 Profit (loss) before Tax (0.35) 55.17 41.53 Income Tax expense (0.05) 20.59 16.35 Profit (loss) after Tax (0.30) 34.58 25.18
The carrying amount of total assets and liabilities pertaining to the business are as follows:
Particulars As at 11th April 2011 31st March 2011 31st March 2010
Total Assets 447.45 447.09 343.64 Total Liabilities 111.20 104.54 59.01
As on 31st March 2012 the carrying amount of Assets and liabilities of discontinued business is Rs. Nil
Cash Flow Disclosure Related to Discontinued Operations
Particulars As at 11th April 2011 31st March 2011 31st March 2010
Cash Flow from operations (0.14) 73.64 63.26 Net Working Capital Changes (23.33) (52.87) (42.21) Net Cash flow from Operating Activities (23.47) 20.77 21.05 Net Cash flow from Investing Activities (0.30) (2.09) (2.61) Net Cash flow from Financing Activities 6.64 (11.67) (15.17)
Net Cash inflow/ (outflow) (17.13) 7.01 3.27
31 EARNING PER SHARE31st March 2012 31st March 2011 31st March 2010
a) Net Profit for Basic & Diluted EPS 1,005.42 641.17 409.45
b) Number of Equity Shares at the beginning of the year 11,187,501 7,087,508 3,543,754 Add: Bonus Shares issued during the period ended 31st March 2011 & 2010 - 3,729,167 7,272,921 Add: - 370,826 -
Add: 1,336,688 - -
Add: 12,524,189 11,187,501 10,816,675
25,048,378 22,375,002 21,633,350 24,968,031 22,292,709 21,633,350
87,019 2,636,790 1,577,928
95,605 - - 25,150,655 24,929,499 23,211,278
Earning Per Share - Basic (Rs.) 40.27 28.76 18.93
Earning per share - Diluted (Rs.) 39.98 25.72 17.64
Face value per share (Rs.) 5/- 10/- 10/-
32 NOTE ON AS 30 ADOPTION
33 NOTE ON ADOPTION OF REVISED SCHEDULE VI
Weighted average number of Equity Shares outstanding during the year - BasicWeighted average number of Equity shares arising out of outstanding Compulsorily Convertible Preference Sharesand Optionally Convertible Debentures that have dilutive effect on EPSWeighted Average number of Equity Shares arising out of grant of Employee Stock optionWeighted average number of Equity Shares outstanding during the year - Diluted
The Company has adopted Accounting Standard 30 (AS 30) " Financial Instruments: Recognition and Measurement". Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of derivative financial instruments, the net foreign exchange exposure over a period of one year against the committed order in hand hedged through forward contracts, are designated as effective cash flow hedges and marked to market loss/gain arising on said foreign currency instruments are transferred to "Cash Flow Hedge Reserve" directly in the Balance Sheet under Reserves & Surplus and later the same is reclassified into Profit & Loss account upon the occurrence of the hedging transaction. Accordingly
marked to market loss of Rs. 49.26 millions arising on foreign currency instruments qualifying for hedge accounting as on 31st March 2012 has been transferred to Cash Flow Hedge Reserve Account. During the financial year 2010-11, the Company, consequent to the announcement issued by the Institute of Chartered Accountants of India in March 2008, Accounting for Derivatives, has recognised marked to market foreign currency loss of Rs. 2.24 million (March 2010: gain of Rs. 5.87 millions, not recognised, as a matter of pruduence) on the outstanding forward contracts.
These financial Statements comprising the balance sheet and statement of profit and loss and notes have been prepared in accordance with Revised Schedule VI which has been made applicable for financial year commencing on or after 1st April, 2011, vide MCA’s notification no. S.O. 653(E) dated 30th March, 2011.
*Pursuant to the approval of the shareholders in their meeting held on 16th July 2011, the Company has sub-divided the existing equity shares of Rs. 10/- each fully paid up into 2 equity shares of Rs. 5/- each. Further, in accordance with AccountingStandard (AS-20), the earning per share for the current and comparative period has been recomputed after adjusting for the sub-division of the shares.
Sub-division of Equity Shares @ Rs 5 eachTotal Number of shares outstanding at the end of the year
The Company has entered into a Business Transfer Agreement on 20th December, 2010 for selling its polymer division as a going concern on slump sale basis for net sale consideration of Rs. 665.96 millions This transaction was concluded on 11th April 2011. The Company recognised profit of Rs. 227.92 millions (Net of taxes) on account of sale of the business.
Partial conversion of Compulsorily Convertible Preference Shares into Equity Shares during the year 2010-11
Conversion of CCPS and OCD into Equity Shares during the year
In the opinion of the management and to the best of their knowledge and belief, the value on realisation of loans, advances and other current assets, in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet and provisions has been made for all known liabilities.
The following statement shows the revenue and expenses of Discontinued operations for the year ended 31st March 2012, 2011 and 2010 respectively
F-21
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions
34 GRATUITY & LEAVE ENCASHMENT
a) Defined Contribution Plans:-
b) Defined benefits plans - as per actuarial valuation
Particulars Gratuity Leave Encashment Gratuity Leave Encashment Gratuity Leave Encashment
Funded Non -Funded Funded Non -Funded Funded Non -FundedRs./Millions Rs./Millions Rs./Millions Rs./Millions Rs./Millions Rs./Millions
I Change in present value of obligation during the year1 Present value of obligation at the beginning of the year 40.56 16.72 32.48 14.79 28.95 10.81 2 Current Service Cost 6.40 5.11 4.93 3.61 3.99 3.05 3 Interest Cost 3.45 1.42 2.60 1.18 2.17 0.81 4 Past Service Cost - - 5.18 - - - 5 Net Actuarial (Gain)/Loss 4.94 3.18 1.07 (0.15) (0.77) 1.79 6 Benefits Paid (5.28) (4.48) (5.70) (2.71) (1.86) (1.68) 7 50.07 21.95 40.56 16.72 32.48 14.78
II Change in Fair Value of Plan Assets during the year1 32.24 - 34.65 - 24.26 - 2 2.74 - 2.77 - 2.06 - 3 (0.80) - 0.52 - 0.50 - 4 8.32 - - 9.69 - 5 (5.28) - (5.70) - (1.86) - 6 37.22 - 32.24 - 34.65 -
III
1 50.07 21.95 40.56 16.72 32.48 14.78 2 37.22 - 32.24 - 34.65 - 3 (12.85) (21.95) (8.32) (16.72) 2.17 (14.78) 4 (12.85) (21.95) (8.32) (16.72) 2.17 (14.78)
IV Expenses recognised in the Profit and Loss Account1 6.40 5.11 4.93 3.61 3.99 3.05 2 3.45 1.42 2.60 1.18 2.17 0.81 3 - - 5.18 - - - 4 (2.74) - (2.77) - (2.06) - 5 5.74 3.18 0.55 (0.15) (1.27) 1.79 6 12.85 9.71 10.49 4.64 2.83 5.65
V1 8.50% 8.50% 8.00% 8.00% 7.50% 7.50%2 8.50% - 8.00% - 8.00% - 3 LIC (1994-96) LIC (1994-96) LIC (1994-96) duly
modified LIC (1994-96) duly
modified LIC (1994-96) duly
modified LIC (1994-96) duly
modified 4 6.00% 6.00% 5.50% 5.50% 5% 5%
35 EMPLOYEE STOCK OPTION PLANSThe Company provides share-based payment schemes to its employees. The relevant details of the scheme are as follows:
Loyalty Options Performance Options
Date of Grant 2nd April 2011 2nd April 2011Options Granted (No. of Shares) 1,99,000* 1,64,836*Exercise price # (per share) Rs. 233.88* Rs. 263.12*Vesting Period 1-2 Years 1-4 YearsExercise period 6 years from the
date of vesting of options
6 years from the date of vesting of options
* Post Split# arrived at discount to the closing market price of company share at BSE prior to the date of grant
The details of exercise price for stock option outstanding at the end of the year
No. of options Weighted average exercise price (Rs.)
No. of options Weighted average exercise price (Rs.)
- - - - 363836 247.13 - -
- - - - - - - - - - - -
363836 247.13 - - - - - -
The details of Exercise Price for stock options outstanding at the end of the year
Range of Exercise price No. of Options Outstanding
Weighted Average Remaining
Weighted Average Exercise price
No. of Options Outstanding
Weighted Average Remaining Contractual Life (in
Weighted Average Exercise price
PII ESOP 2010 PLAN200-300 363836 7.08 247.13 - - -
2011-12 2010-11
-
Weighted average fair value of options granted (per share) 172.35 -
Outstanding at the beginning of the yearGranted during the yearForfeited during the yearExercised during the yearExpired during the yearOutstanding at the end of the yearExercisable at the end of the year
7.08Weighted average remaining contractual life of outstanding options (in Years)
Mortality Table
Salary Escalation
2011-12 2010-11
Interest CostPast service CostExpected return on plan assetsNet Actuarial (Gain)/LossTotal Expense
Actuarial Assumptions
In December 2010, the Board of Directors approved the PII ESOP 2010 Scheme in order to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company
(including subsidiary companies) with an intent to attract and retain talent in the organization, The aforesaid scheme was duly approved by shareholders in its EGM held on 21st January, 2011 and is administered through independent trust. During
the year, Compensation Committee of the Board granted following options under PII ESOP 2010 Scheme to certain category of employees as per criteria laid down by Compensation Committee of the Board.
Discount RateExpected rate of return on plan assets
Present Value of obligation as at year-endFair value of plan assets at year -endFunded status {(Surplus/Deficit)}Net Asset/(Liability)
Current Service Cost
Expected return on plan assetsActuarial Gain/(Loss) on plan assetsEmployer's contributionBenefits paidPlan assets at the end of the year
Reconciliation of Present value of Defined Benefit Obligation and Fair Value of Plan Assets
Present Value of obligation as at year-end
Plan assets at the beginning of the year
2011-12 2010-11
As per Accounting Standard (AS)- 15 "Employee Benefits", the disclosure of employee benefits as defined in the accounting standard is given below:
The Company has recognised an expense of Rs. 35.68 millions (March 2011: Rs. 37.59 millions, March 2010: Rs. 28.94 millions) towards the defined contribution plan.
2009-10
F-22
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions
Methods and Assumptions used to estimate the fair value of options granted during the year:
2011-12
The fair value has been calculated using the Black Scholes Option Pricing model
The assumptions used in the model are as follows:
Variables Loyalty Option- 2nd April 2011
Performance Options- 2nd April 2011
1 Risk Free Interest rate 7.42% 7.42%-7.67%2 Expected Life 4 years- 5 years 4 years- 7 years3 Expected Volatility 56.54% - 56.77% 56.54% - 66.65%4 Dividend Yield 0.68% 0.68%5 292.35 292.35
Pro- Forma Adjusted Net Income and Earning per share
Particulars Rs. in millionsNet Income as reported 1,005.42 Add: Intrinsic Value Compensation Cost 10.90 Less: Fair Value Compensation cost (37.00) Adjusted Pro Forma Net income 979.32
Earning Per Share: BasicAs Reported 40.27
Adjusted Pro Forma 39.22
Earning Per Share: DilutedAs Reported 39.98
Adjusted Pro Forma 38.94
36 CAPITAL & OTHER COMMITMENT 31st March 2012 31st March 2011 31st March 2010a. 679.93 145.62 74.67
b. Bank Guarantees 37.98 25.09 13.38 c. Letter of Credit 168.05 327.06 411.12
37 LEASES
31st March 2012 31st March 2011 31st March 2010- Payable within one year 60.89 40.89 22.55 -Later than one year and not later than five years 151.04 88.71 18.41 -Later than five years 64.22 - - -Lease payments recognised in P&L account 50.16 35.51 28.13
38 CAPITALISATION OF EXPENDITURE
Pre-operative expenditure capitalised as a part of Fixed Assets and carried forward is as under:
31st March 2012 31st March 2011 31st March 2010A. Brought forward from the earlier year 70.64 20.05 9.69
B. Expenditure incurred during the year:Staff Costs 43.27 28.99 9.09 Other Expenses 36.04 12.80 17.02 Interest and commitment charges 15.47 11.98 16.12 Stores Consumption 10.55 30.28 1.01 Exchange Difference 12.43 - (1.30)
117.76 84.05 41.94C. Capitalised as part of :
Plant & Machinery 61.73 30.80 25.67 Building - 2.66 5.49 Furniture, Fixtures & Office equipments - - 0.42
61.73 33.46 31.58
D. Carried forward as part of capital work in progress 126.67 70.64 20.05
Price of the underlying share in market at the time of the option granted (Rs.)
Estimated Amount of Contracts remaining to be executed on capital account and not provided for ( Net of advances of Rs. 150.87 millions (March 2011: Rs. 145.62 millions, March 2010: 126.21 millions)
The Company is a lessee under various operating leases. Total of future minimum lease payments under non-cancellable operating leases for each of the following periods:
The Company has entered a lease agreement with some of the parties for lease for the corporate office during the financial year 2011-12. The lease rent would be increased by 12.5% after every 3 years.
The stock based compensation cost calculated as per the intrinsic value method for the financial year 2011-12 is Rs. 10.89 millions. If the stock-based compensation cost was calculated as per the fair value method, the total cost to be recognised in
the financial statements for the year 2011-12 would be Rs 36.99 millions. The effect of adopting the fair value method on the net income and earnings per share is presented below:
F-23
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions
39 SEGMENT INFORMATION
a) Primary Segment Information (Business Segments)
Particulars Chemicals Others Total Chemicals Others Total Chemicals Others Total1 Revenue
External Revenue (Gross) 10,047.89 12.42 10,060.31 7,653.33 812.47 8,465.80 5,703.50 552.21 6,255.71
Inter Segment Revenue - - - - - - - - -
Segment Revenue Total 10,047.89 12.42 10,060.31 7,653.33 812.47 8,465.80 5,703.50 552.21 6,255.71
2 Segment Result 1,250.56 (0.35) 1,250.21 989.86 66.86 1,056.72 674.59 48.33 722.92
Segment Result Total 1,250.56 (0.35) 1,250.21 989.86 66.86 1,056.72 674.59 48.33 722.92
Profit before Interest, etc, and taxationLess: Interest 201.09 186.02 185.23
Add: Interest Income 41.22 27.63 22.42
Add: Dividend Income 0.00 0.00 (0.00)
Profit / (Loss) before Tax 1,090.34 898.33 560.11
3 Segment Assets 7,972.46 - 7,972.46 6,165.25 446.82 6,612.07 4,352.17 551.58 4,903.75
4 Segment Liabilities 4,780.43 - 4,780.43 4,381.85 123.87 4,505.72 3,165.72 214.26 3,379.98
5 Capital Expenditure
Total Cost incurred during the year to acquire segment assets
1,669.30 - 1,669.30 1,496.69 8.44 1,505.13 679.18 0.18 679.36
6 Depreciation
Segment Depreciation 170.89 0.21 171.09 149.10 6.80 155.91 124.61 6.56 131.17
7 Non Cash Expenses
Segment non-cash expenses other than depreciation/ amortisation
50.94 0.01 50.95 17.32 0.07 17.39 18.89 2.21 21.10
Unallocable Non-cash expenses - 2.24 3.70
Total Non-cash expenses 50.95 19.64 24.80
b) 31st March 2012 31st March 2011 31st March 2010
1 Segment Revenue- Within India 6,113.81 5,900.71 4,200.52 - Outside India 3,946.50 2,565.09 2,055.19
Total Revenue 10,060.31 8,465.80 6,255.71 2 Segment Assets*
- Within India 6,673.54 5,689.64 4,539.01 - Outside India 1,298.92 922.43 364.75
Total Assets 7,972.46 6,612.07 4,903.75
* Segment Assets outside India is entirely related to Sundry Debtors.
Secondary Segment information (Geographical Segments)
2011-12 2009-102010-11
F-24
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions
40 RELATED PARTY DISCLOSURESRelated party disclosure, as required by Accounting Standard-18, is as below:
a) List of Related Parties
i Where control exists during the year:Subsidiaries - (a) PILL Finance and Investments Ltd, (b) PI Life Science Research Ltd. and (c ) PI Japan Co.Ltd.
ii
iii Key Managerial Personnel & their relatives (KMP): (a) Key Managerial Personnel (KMP):
Mr. Salil Singhal Chairman & Managing DirectorMr. Mayank Singhal Managing Director & CEOMr. Anurag Surana Whole time DirectorMr. Junichi Nakano (FY 2009-10) Whole time Director
(b) Relatives of Key Managerial Personnel:-Relation with Key Managerial Personnel Mr. Salil Singhal Mr. Mayank SinghalFather Salil SinghalMother Saraswati Singhal Madhu SinghalWife Madhu SinghalSister Pooja Singhal
Shefali Khushlani
Son Mayank SinghalDaughter Pooja Singhal
Shefali Khushlani
iv Enterprises over which KMP and their relatives are able to exercise significant influence :-
b) The following transactions were carried out with related parties in the ordinary course of business:(Rs. In Millions)
Nature of TransactionType of relation Balance
outstanding Dr (Cr)
Balance outstanding Dr (Cr)
Balance outstanding Dr (Cr)
Recd/Pur. Paid/Sales Recd/Pur. Paid/Sales Recd/Pur. Paid/Sales Purchase/Sales of goods and services
a(i)(b), a(i)(c ), a(iv)(b) & a(iv)(c)
41.35 - (1.90) 35.47 11.72 2.81 30.74 5.99 10.28
Remuneration to directors a(iii) (a) - 42.36 (10.00) - 38.40 (6.50) - 28.53 - Interest a(i)(a), a(iii)(a),
a(iii)(b) & a(iv) - 11.09 (4.47) 3.36 8.45 - 4.23 8.17 -
Rent & Power Cost a(i)(a), a(i)(b) a(iii) & a(iv)(a)
2.26 10.61 (3.40) 0.47 11.76 (0.31) 0.44 11.09 1.90
Deposits Received and Paid a(iii) 45.85 50.67 (59.03) 9.53 8.80 (61.91) 5.25 12.87 57.03 Security Deposits a(i)(b),a (iii) &
a(iv)(a)6.98 - 0.05 - 0.53 (3.16) - 2.58 -
Recovery of Dues on account of expenses incurred
a(i)(b), a(iv)(b), a(iv)(c )
3.30 - 1.57 5.30 - - 4.23 - 1.99
Reimbursement on account of expenses
a(iv)(c ) - 0.47 - - - - - 0.01 0.01
Advance to Subsidiary a(i)(b) - - - - 1.34 (1.34) - - - Loans Granted a(i)(b), a(iv)(a) - - - 107.50 107.50 - 250.00 250.00 - Inter Corporate Deposit a(i)(a), a(ii) &
a(iv)(a)23.50 11.50 (37.00) 7.00 - (25.00) 1.00 - (18.00)
Donation a(iv)(e) - 1.00 - - 0.50 - - 0.05 - Salary a(iii)(b) - 0.12 - - - - - Travel & Other expenditure incurred
a(iii) - 23.09 0.21 - 15.94 0.16 16.83 0.34
41 CONTINGENT LIABILITIES 31st March 2012 31st March 2011 31st March 2010Disputed Taxation demands not acknowledged as debts:-Sales Tax 17.64 16.28 14.00 - Excise Duty 8.50 8.50 8.50 - Income Tax 24.31 - - - Custom Duty 7.11 - - Anti Dumping Duty 23.04 23.04 - Counter Guarantee to GIDC 3.29 3.29 3.29
(a) Samaya Investment and Trading Pvt. Ltd; (b) Wolkem India Ltd.; (c) Secure Meters Ltd., (d) Salil Singhal (HUF), (e) Singhal Foundation, (f) PI Apparels and (g) Hycron Electronics.
2009-10Transactions during the period
2011-12 2010-11Transactions during the period Transactions during the period
Enterprises in respect of which reporting enterprise is an associate: (a) Lucrative Leasing Finance and Investment Company Ltd; (b) Parteek Finance and Investment Company Ltd;
F-25
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions42 DERIVATIVES INSTRUMENTS AND HEDGED/ UNHEDGED FOREIGN CURRENCY EXPOSUREi) All financial and derivative contracts entered into by the Company are for hedging purposes.
ii) Forward Contract outstanding as at Balance Sheet date(in Milions)
Amount Outstanding as at 31st March,
2012
Amount Outstanding as at 31st March'
11
Amount Outstanding as at
31st March' 10
Buy / Sell Purpose
26.65 20.00 12.50 Sell Hedging- 8.00 Sell Hedging
These forward covers are against export debtors and future receivables over a period of one year against committed orders in hand.
iii) Particulars for Hedged Foreign Currency Exposure( in Millions)
Particulars Currency Amount as at 31st March' 12
(in Foreign Currency)
Amount as at 31st March' 11
(in INR)
Amount as at 31st March' 11 (in
Foreign Currency)
Amount as at 31st March' 11 (INR)
Amount as at 31st March' 10 (in
Foreign Currency)
Amount as at 31st March' 10 (INR)
Export Debtors USD 7.72 367.55 6.43 302.67 4.75 218.47 EURO - - 0.44 27.00 - -
iv) Foreign currency exposure that are not hedged by derivative or forward contracts as at Balance Sheet Date( in Millions)
Particulars Currency Amount as at 31st March' 12
(in Foreign Currency)
Amount as at 31st March' 12
(in INR)
Amount as at 31st March' 11 (in
Foreign Currency)
Amount as at 31st March' 11 (INR)
Amount as at 31st March' 10 (in
Foreign Currency)
Amount as at 31st March' 10 (INR)
1 ECB Term loan USD 20.00 1,023.80 - - 0.38 17.24 2 PCFC Loan USD 8.00 409.59 12.19 544.52 2.64 118.70 3 Buyers Credit USD - - 0.28 12.66 - - 4 EEFC Account USD 0.07 33.83 0.07 2.96 - -
USD 4.54 232.30 6.77 302.48 2.77 125.04 EURO - - 0.06 3.59 0.59 35.96 GBH - - (0.00) (0.25) - - CHF - - (0.02) (0.93) (0.00) (0.03) JPY 5.03 3.14 48.08 25.48 1.28 0.06 USD 17.37 889.18 13.15 587.37 2.88 129.14 EURO 0.58 39.50 - - 0.01 0.47 JPY 4.31 2.69 10.00 5.40 34.83 16.67
43 DEFERRAL/ CAPITALISATION OF EXCHANGE DIFFERENCE
The unamortised amount of exchange fluctuation as on the reporting date is Rs. 16.41 millions (March 2011: Rs. 4.33 millions, March 2010: Rs.5.90 millions)
44
Principal Amount Interest Amount
Principal Amount Interest Amount
Principal Amount Interest Amount
35.11 - 32.28 - 53.93 -
118.51 2.35 220.86 5.87 230.45 6.19
- - - - - -
- - - - - -
- - - - - -
THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT (MSMED) ACT, 200631st March 2012 31st March 2011
Principal amount and Interest due thereon remaining unpaid to any supplieras on 31st March 2012
Interest paid by the Company in terms of section 16 of the MSMED Actalong with the amounts of the payment made to the supplier beyond theappointed day during the accounting year
Interest due and payable for the period of delay in making payment (whichhave been paid but beyond the appointed day during the year) but withoutadding the interest specified under MSMED Act.
Interest accrued and remaining unpaid at the end of the year
Further interest remaining due and payable in succeeding years, until suchdate when the interest dues as above are actually paid to the small enterprisefor the purpose of disallowance as a deductable expenditure under section23 of MSMED Act.
31st March 2010
Pursuant to notification dated March 31, 2009 and December 29, 2011 issued by the Ministry the Ministry of Corporate Affairs, Government of India, the Company decided to exercise the option of accounting for Exchange differences arising on
reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period or reported in the previous financial statements in so far as they relate to the acquisition of depreciable capital
assets by addition to/ deduction from the cost of the asset and depreciate the same over the balance life of the asset. Accordingly, the current year exchange losses amounting to Rs. 12.43 millions have been adjusted to the cost of fixed assets/CWIP.
5 Import Creditors (Net)
6 Export Debtors
Currency
USDEURO
F-26
REFORMATTED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
Rs. In Millions45 VALUE OF IMPORTS CALCULATED ON CIF BASIS
31st March 2012 31st March 2011 31st March 2010Raw Materials 1,855.14 1,669.67 1,139.55 Spare Parts & Components 26.40 16.86 3.42 Capital Goods 46.01 25.86 9.58
46 EARNINGS IN FOREIGN CURRENCY 31st March 2012 31st March 2011 31st March 2010
Export of Goods on FOB Basis 3,915.03 2,470.95 2,010.10
47 EXPENDITURE IN FOREIGN CURRENCY31st March 2012 31st March 2011 31st March 2010
Professional 4.00 5.93 3.14 Consultancy 0.80 0.26 1.29 Interest 6.23 6.47 1.21 Travelling 1.63 1.15 0.37 Salary 1.60 4.25 2.70 Others 26.82 33.88 21.40
48 ACTUAL PRODUCTION, PURCHASES, SALES AND STOCK OF GOODS MANUFACTURED
S.No.
Product Opening Production Stock Purchases Sales Closing Stock
(I) QUANTITY (IN TONNES)March 2012a) Chemicals including by-product/Traded goods
4,816 49,046 800.00 50,534 4,128.00
b) Polymer* 549 - - 549 - TOTAL 5,365 49,046 800 51,083 4,128
March 2011a) Chemicals including by-product/Traded goods
4,216 45,876 1,299 46,575 4,816
b) Polymer 803 6,232 - 6,486 549 TOTAL 5,019 52,108 1,299 53,061 5,365
March 2010a) Chemicals including by-product/Traded goods
4,678 41,640 307 42,409 4,216
b) Polymer 702 5,005 - 4,904 803 5,380 46,645 307 47,313 5,019
(II) IN VALUE (Rs. In millions)March 2012a) Chemicals including by-product/Traded goods
740.41 - 390.00 9,974.77 1,125.15
b) Polymer 48.76 - - 12.42 - TOTAL 789.17 - 390.00 9,987.19 1,125.15
March 2011a) Chemicals including by-product/Traded goods
450.01 - 326.46 7,524.22 740.41
b) Polymer 44.09 - - 812.47 48.76 TOTAL 494.10 - 326.46 8,336.69 789.17
March 2010a) Chemicals including by-product/Traded goods
475.25 - 135.67 5,662.44 450.01
b) Polymer 41.37 - - 510.22 44.09 TOTAL 516.62 - 135.67 6,172.66 494.10
* Sale of Polymer includes amount transferred to Rhodia Polymer.
49 VALUE OF IMPORTED AND INDIGENOUS RAW MATERIAL, COMPONENTS AND SPARE PARTS CONSUMED
Qty (in Tonnes) (in Rs. Millions) Qty (in Tonnes) (in Rs. Millions) Qty (in Tonnes) (in Rs. Millions)
Technical Pesticides 374 149.39 442 155.25 446.00 155.83 Inert Chemicals & Adjuvants 156,306 3,952.70 161,406 3,236.23 107,920.00 2,337.01 Polymers 184 15.78 6,030 506.54 5,002.00 360.15 Others - 748.94 - 408.04 - 185.93
TOTAL 156,864.00 4,866.81 167,878.00 4,306.06 113,368.00 3,038.92
PARTICULARS% (in Rs. Millions) % (in Rs. Millions) % (in Rs. Millions)
i Raw Material Imported 48.64 2,162.48 36.19 1,415.42 47.86 1,326.43 Indigenous 51.36 2,283.78 63.81 2,495.15 52.14 1,445.28
ii Packing Material Imported - - 2.89 11.42 - - Indigenous 100.00 420.55 97.11 384.08 100.00 267.21
50 Figures of previous years have been regrouped and/ or rearranged wherever necessary to make them comparable with those of the current year.
31st March 2012 31st March 2011
31st March 2012 31st March 2011
31st March 2010
31st March 2010
AUDITORS’ REPORT
To,
The Board of Directors, PI Industries Limited Udaipur
Dear Sirs,
1. We have examined the accompanying Reformatted consolidated financial statements as at and for theyears ended March 31, 2012, 2011 and 2010 (‘Reformatted consolidated statements’) of PI IndustriesLimited (‘the Company’) annexed to this report for the purposes of inclusion in the PreliminaryPlacement Document and Placement Document (hereinafter collectively referred to as the ‘PlacementDocuments’), as approved by Board of Directors of the Company, prepared by the Company, inaccordance with the provisions of Chapter VIII of the Securities and Exchange Board of India (Issue ofCapital and Disclosure Requirements) Regulations, 2009, as amended to date, to the extent consideredapplicable (‘the ICDR Regulations’), the Guidance Note on Reports in Company Prospectus (Revised)issued by the Institute of Chartered Accountants of India, and in terms of our engagement agreed uponwith you in accordance with our engagement letter dated 6th December, 2012 in connection with theproposed Qualified Institutions Placement (‘QIP’) of its equity shares by the Company. The preparationof such reformatted statements is the responsibility of the Company’s management. Our responsibility isto report on such statements based on our procedures.
2. All figures and disclosures in the Reformatted consolidated Statements have been extracted by themanagement from the audited consolidated financial statements for the years ended 31 March 2012,2011 and 2010 on which we jointly with B.D. Gargieya & Co. Chartered Accountants have issued ourAuditors’ Report dated 29th May,2012, 14th April,2011 and 17th May, 2010 respectively. The amountsmentioned in the Reformatted consolidated statements and the related notes thereto have been roundedoff to the nearest million of Indian Rupees.
3. The Reformatted consolidated statements have been examined by us. The reformatted consolidatedstatements annexed to this report are as they were produced in the respective years’ audited consolidatedfinancial statements after making adjustment for material reclassification, if any. The figures for the yearended 31st March,2010 has been reclassified by the management from the audited consolidated financialstatement , as per the revised schedule VI requirement of the Companies Act 1956. The accountingpolicies and notes to accounts have been reproduced as they were disclosed in the consolidated financialstatement for the respective years. Accordingly, any events subsequent to the said Auditors’ Report dateshave not been considered/ adjusted in these Reformatted Statements.
4. As stated in our Auditors’ Report referred to in paragraph 2 above,
a) we conducted our audits in accordance with the auditing standards generally accepted in India to enableus to issue an opinion on the General Purpose Financial Statements. Those Standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audits provided a reasonable basis for ouropinion.
b) We did not audit the financial statements of the subsidiaries whose financial statement reflect totalassets of Rs. 81.19 Millions, Rs. 43.83 Millions, Rs. 32.99 Millions as at March 31, 2012, 31st March,
F-27
2011 and 31st March,2010 respectively. Total revenue of Rs. 35.32 Millions, Rs.24.46 Millions, Rs. 19.44 Millions and net cash flows amounting to Rs.12.51 Millions, Rs. 0.71 Millions and Rs. 5.04 Millions for the year ended 31st March, 2012, 31st March, 2011 and 31st March, 2010 respectively. These financial statements and other financial information have been audited by other auditors whose report has been furnished to us, and our opinion is based solely on the report of other auditors.
c) The financial statement of subsidiary namely PI Japan Co. Ltd which reflect total assets of Rs. 9.62Millions, Rs. 6.75 Millions, Rs.3.96 Millions as at March 31, 2012, 31st March, 2011 and 31st
March,2010 respectively. Total revenue of Rs. 27.61 Millions, Rs. 21.80 Millions and Rs. 16.48Millions and net cash flows amounting to Rs. 2.89 Millions, Rs. 2.01 Millions and Rs. 0.67 Millionsfor the year ended March 31, 2012, 31st March, 2011 and 31st March, 2010 respectively have not beenaudited by us or any other auditor and has been certified by their Directors whose certificate has beenfurnished to us and converted by the management as per the requirement of Indian GAAP. Ouropinion, in so far as it relates to the amount included in respect of PI Japan Co. Ltd., is based solely oncertificate of the Directors.
d) We report that the consolidated financial statements have been prepared by the Company’smanagement in accordance with the requirements of Accounting Standard (AS) 21, ConsolidatedFinancial Statements, prescribed by the Companies (Accounting Standards) Rules, 2006.
5. We have not audited any financial statements of the Company or its Subsidiary as of any date or for anyperiod subsequent to the 31st March, 2012. Accordingly, we express no opinion on the financial position,results of operation or cash flows of the company or its subsidiary as of any date or for any periodsubsequent to 31st March, 2012.
6. This report should not be in any way construed as a re-issuance or re-dating of any of the previous auditreports issued by us, nor should this report be construed as a new opinion on any of the ConsolidatedFinancial Statements referred to herein.
7. We have no responsibility to update our report for events and circumstances occurring after the dates ofour audit reports mentioned in paragraph 2 of this examination report.
8. This report is intended solely for your information and for inclusion in the Placement Documents inconnection with the proposed Issue by the Company and is not to be used, referred to or distributed forany other purpose without our prior written consent.
For S. S. Kothari Mehta & Co. Chartered Accountants Firm Reg. No.: 000756N
-Sd/- Krishan Kant Tulshan Partner Membership No. 85033
Place: New Delhi Date: 18th January 2013
F-28
F-29
REFORMATTED CONSOLIDATED BALANCE SHEET
(Rs. In millions)
Note No. As at 31st March
2012 As at 31st March
2011 As at 31st March
2010 I EQUITY & LIABILITIES
1 Shareholders' Fundsa Share Capital B1 125.24 192.87 276.87 b Reserves and Surplus B2 3,129.20 1,944.44 1,268.97
Total Shareholders' Fund 3,254.44 2,137.31 1,545.84
2 Non Current Liabilitiesa Long-term borrowings B3 1,190.57 589.86 720.38 b Deferred tax liabilities (Net) B4 328.77 325.77 269.97 c Other long-term liabilities B5 105.99 94.48 81.66 d Long-term provisions B6 17.98 13.92 13.90
Total Non- Current Liabilities 1,643.31 1,024.03 1,085.91
3 Current Liabilitiesa Short-term borrowings B7 1,105.78 1,546.77 440.57 b Trade payables B8 958.39 1,058.06 965.36 c Other current liabilities B9 887.57 754.33 832.53 d Short-term provisions B6 166.17 119.44 38.56
Total Current Liabilities 3,117.91 3,478.60 2,277.02
TOTAL 8,015.66 6,639.94 4,908.77
II ASSETS1 Non Current Asset
a Fixed assetTangible asset B10 2,957.00 2,528.99 1,989.94 Intangible asset B12 17.89 11.54 11.11 Capital work-in-progress B11 777.69 327.51 86.35 Intangible asset under development B13 32.33 7.08 - Total Fixed Assets 3,784.91 2,875.12 2,087.40
b Non-current investments B13 5.18 5.18 5.18 c Long term loans & advances B14 192.41 189.17 156.75 d Other assets B15 16.24 13.98 13.85
Total Non-Current Assets 3,998.74 3,083.45 2,263.18
2 Current Asseta Inventories B16 1,787.51 1,409.80 1,028.11 b Trade receivables B17 1,722.28 1,749.55 1,182.04 c Cash and Bank Balances B18 94.11 70.04 40.55 d Short-term loans and advances B14 393.99 314.41 381.76 e Other assets B15 19.03 12.69 13.13
Total Current Assets 4,016.92 3,556.49 2,645.59
TOTAL 8,015.66 6,639.94 4,908.77
F-30
REFORMATTED CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED
(Rs.in millions)
Note No.31st March
201231st March
201131st March
2010I. Revenue from Operations
Sale of products B19 9,987.19 8,336.69 6,172.66 Less: Discount (778.10) (715.52) (527.61) Less: Excise Duty (459.40) (461.92) (247.76)
8,749.69 7,159.25 5,397.29 Sale of services; 20.15 17.35 10.24 Other operating Revenues; 21.21 23.49 16.93
II. Other Income B20 51.01 104.44 64.07 III. Total Revenue (I+II) 8,842.06 7,304.53 5,488.53 IV. Expenses:
Cost of Materials consumed B21 4,868.94 4,173.79 3,024.75 Purchase of Stock in Trade 390.00 326.46 135.86 Changes in Inventories of finished goods, work in progress and stock in trade B22 (335.98) (295.08) 22.53 Employee Benefits expenses B23 719.00 596.96 469.90 Finance Costs B27 198.70 185.42 184.66 Depreciation and amortisation B26 172.91 156.90 131.80 Other Expenses B24 1,715.39 1,246.12 947.11 Total Expenses 7,728.96 6,390.57 4,916.61
V. Profit before exceptional and extraordinary items and tax(III-IV) 1,113.10 913.96 571.92
VI. Exceptional Items B25 320.99 - -
VII. Profit before extraordinary items and tax 1,434.09 913.96 571.92
VIII. Extraordinary Items - - -
IX. Profit Before Tax (VII- VIII) 1,434.09 913.96 571.92
Consisting of :- Profit/ (Loss) on Continuing Operations 1,113.45 858.79 530.39 - Profit/ (Loss) on Discontinued Operations (0.35) 55.17 41.53 - Exceptional Items Profit/ Loss 320.99 - -
Less: Provision for Current Tax of continuing operations (395.50) (187.24) (118.30) Less: Provision for Current Tax of discontinued operations 0.05 (20.58) (16.35) Less: Provision for Deferred tax (3.01) (55.80) (20.30) Add: Income Tax of earlier years 0.29 0.70 2.05
X Profit After Tax 1,035.92 651.04 419.02 Consisting of:- Profit/ (Loss) on Continuing Operations 790.74 616.45 393.84 - Profit/ (Loss) on Discontinued Operations (0.30) 34.59 25.18 - Exceptional Items Profit/ Loss 245.48 - -
XI Profit/ (loss) for the period 1,035.92 651.04 419.02
XII Earnings per Equity shares.1) Basic (in Rs.) B31 41.49 29.20 19.37 2) Diluted (in Rs.) 41.19 26.12 18.05
Earnings per share Rs. - Continuing Business1) Basic (in Rs.) 41.50 27.65 18.20 2) Diluted (in Rs.) 41.19 24.74 16.97
Earnings per share Rs. - Discontinued Business1) Basic (in Rs.) (0.01) 1.56 1.16 2) Diluted (in Rs.) (0.00) 1.39 1.09
Face value per share (in Rs.) 5.00 10.00 10.00
F-31
REFORMATTED CASH FLOW FOR CONSOLIDATED FINANCIAL STATEMENT(Rs. In Million)
PARTICULARS
A. Cash Flow from Operating Activities Net Operating Profit before Tax & Extraordinary Items 1,434.09 913.96 571.92 Adjustments for:Depreciation 172.91 156.90 131.80 Interest Expenses 198.70 185.42 184.66 Provison for Doubtful Debts and Advances 37.91 16.93 14.24 Interest Income (41.35) (27.44) (22.42) Dividend Income (0.05) (0.03) (0.03) Employee Stock Option Expense 10.89 - - (Profit)/Loss on sale of Fixed Assets (Net) 12.86 0.40 1.78 (Profit)/Loss on sale of Investments (0.00) - Miscellaneous Liability Written back - - (2.45) Bad Debts written off 0.18 0.07 5.21 Unrealised Foreign Exchange Loss/(Gain) (Net) 6.84 (16.02) (0.10) Deferred Revenue expenditure written off during the year 3.70 Foreign Currency Translation reserve 0.84 (0.96) (0.23)
Exceptional Items- Sale of Polymer Business (320.99) - -
78.74 315.27 316.16 Operating Profit before Working Capital changes 1,512.83 1,229.23 888.08 (Increase) / Decrease in Short Term Trade Receivables 4.74 (573.40) (295.55) (Increase) / Decrease in Short term Loans and advances (100.40) 63.54 (121.77) (Increase) / Decrease in Long term Loans and advances (2.25) (8.86) (3.96) (Increase) / Decrease in Other assets (7.31) (1.54) 2.02 (Increase)/Decrease in Inventories (377.71) (381.69) 14.12
Increase / (Decrease) in Short term Trade Payables/ Provisions (90.59) 119.27 420.18 Increase / (Decrease) in Long term Trade Payables/ Provisions 4.05 0.02 1.82 Increase / (Decrease) in Other Short term Liabilities 197.38 (69.09) 171.77 Increase / (Decrease) in Other Long term Liabilities 11.51 (360.58) 12.80 (838.95) 14.25 202.88 Cash generated from Operations before tax and exceptional items 1,152.25 390.28 1,090.96 Net Direct Taxes paid (399.69) (179.91) (118.70) Exceptional Item 320.99 - - Net cash from Operating Activities 1,073.55 210.37 972.26 B. Cash flow from Investing Activities
Purchase of Fixed Assets including Capital work in progress, intangible assets and Capital advances (1,171.37) (971.02) (471.88) Investment in Shares 0.00 0.00 (1.56) Sale of Fixed Assets 86.62 2.15 1.49 Interest Received 41.35 27.44 22.42 Dividend Received 0.05 0.03 0.03 Net cash used in investing activities (1,043.35) (941.40) (449.50)
Net cash from Operating and Investing Activities 30.20 (731.03) 522.76
C. Cash flow from Financing ActivitiesIssue of Equity Share capital 13.36 41.00 - (Repayment)/Issue of Preference Share Capital (81.00) (125.00) 206.00 (Repayment/ Redemption) /Issue of Debentures (294.00) - 294.00 Share Premium Account 334.04 84.00 - Short Term Borrowings (Net) (453.66) 1,093.91 (634.19) Long Term Borrowings (Net of Repayments) 811.55 (147.89) (213.26) Cash Flow Hedge Reserve (49.26) - - Interest paid (Net) (196.37) (177.40) (182.49) Dividend Distribution (100.13) (14.93) 0.00 Net Cash from Financing activities (15.47) 753.69 (529.94)
Net Cash from Operating, Investing & Financing Activities 14.73 22.66 (7.18) Net increase in Cash & Cash equivalent 14.73 22.66 (7.18) Opening balance of Cash & Cash equivalent 42.06 19.40 26.58 Closing balance of Cash & Cash equivalent 56.79 42.06 19.40 Note: Cash and cash equivalents included in the Cash Flow Statement comprise of the following:-i) Cash Balance on Hand 0.60 0.86 0.50 ii) Balance in Current Account 56.19 41.20 18.90 Total 56.79 42.06 19.40
For the year ended31st March 2012
For the year ended31st March 2011
For the year ended31st March 2010
F-32
REFORMATTED SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
SIGNIFICANT ACCOUNTING POLICIES AND ADDITIONAL INFORMATION
A SIGNIFICANT ACCOUNTING POLICIES
1) BASIS OF PREPARATION
The financial statements have been prepared to comply in all material respects with the Notified Accounting Standards pursuant to the Companies (AccountingStandards) Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention,as a going concern, on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policieshave been consistently applied by the Company.
Changes in Accounting Policy
During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act, 1956, has became applicable to the Company, for preparationand presentation of its financial statements. The adoption of Revised Schedule VI does not impact the recognition and measurement principles followed forpreparation of the financial statements. However, it had significant impact on presentation and disclosures made in the financial statements.
All Assets and Liabilities have been classified as current or non-current as per the company’s normal operating cycle and other criteria set out in the Schedule VI to the Companies’ Act, 1956. Based on the nature of services provided and time between the rendering of services and their realization in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
The Company has adopted Accounting Standard 30 (AS 30) " Financial Instruments: Recognition and Measurement" during the financial year 2011-12. Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of derivative financial instruments, the net foreign exchange exposure overa period of one year against the committed order in hand hedged through forward contracts, are designated as effective cash flow hedges and marked to marketloss/gain arising on said foreign currency instruments are transferred to "Cash Flow Hedge Reserve" directly in the Balance Sheet under Reserves & Surplus andlater the same is reclassified into Profit & Loss account upon the occurrence of the hedging transaction.
2) USE OF ESTIMATES
The presentation of financial statements requires estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingentliabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actualresults and estimates are recognised in the period in which the results are known/ materialised.
3) REVENUE RECOGNITION
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
Sale of Goods - Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and is stated net of trade discount,returns and Sales Tax / VAT but includes Excise Duty. Revenue from services- Revenue is recognised as the service is performed by the completed service method and no significant uncertainty exists regarding theamount of consideration that will be derived from rendering the services. Interest - Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.Lease rent Income: Lease income is recognised on straight line basis over the lease term.Dividends - Revenue is recognized when the shareholder's right to receive payment is established by the Balance Sheet date.Export Benefits / Incentives - Export entitlement under Duty Entitlement Pass Book ('DEPB') Scheme are recognised in the Profit & Loss Account when the right toreceive credit as per terms of the scheme is established in respect of export made and where there is no significant uncertainty regarding the ultimate collection ofthe relevant export proceeds.
4) EXPENDITURE
Rebate, claims & settlement on goods sold are accounted for as and when these are ascertained with reasonable accuracy.
5) FIXED ASSETS AND DEPRECIATION
a) Fixed Assets are stated at cost or as revalued, less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributablecost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets, if material, are also included in cost tothe extent they relate to the period till such assets are ready to be put to use.Expenditure during construction / erection period is included under capital work-in-progress and is allocated to the respective fixed assets on completion ofconstruction / erection.
b) Depreciation on Building, Plant & Machinery and R&D Equipments of Pesticides Division at Udaipur (in respect of fixed assets commissioned on or after July 1,
1988), Pesticides Division at Panoli & Jammu and Polymer Division at Panoli is provided on Straight Line method and depreciation on all other fixed assets is
provided on Written Down Value method at the rates specified in Schedule XIV to the Companies Act,1956.c) Leasehold land and Cost of improvement on leasehold building is being amortised over the lease period.d) Revaluation of Fixed assets: Depreciation on the increased amount of assets due to revaluation is computed on the basis of the residual life of the assets as estimated
by the valuers on straight-line method.e) -Leasehold Improvements are amortised over its useful life of 15 years on Declining Balance method.
- Equipments over 200000 yen are depreciated on Declining Balance method over its useful life of 3 years.- Equipments (100000-200000 yen) are depreciated on straight line basis over its useful life of 3 years.
F-33
REFORMATTED SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
6) INTANGIBLE ASSETS
Intangible Assets are stated at cost of acquisition less accumulated amortisation as below
Software:- Software is stated at cost of acquisition and includes all attributable expenditure on making the assets ready for their intended use.
Product Development costs:- Product Development costs considered to have finite useful lives, are capitalised and recognised as intangible assets are stated at cost
less any impairment losses.
Amortisation:- Amortisation of intangible asset is provided on the basis of estimated useful life of the assets as below:
Software: Amortised on straight line basis over a period of 6 years.
Product Development: Amortised on straight line basis over a period of 5 years.
7) IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit & loss account in the yearin which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate ofrecoverable amount.After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.
8) INVENTORIES
a) Inventories of Finished Goods, Work in progress, Raw materials, Packing materials and Stores & Spares are stated at lower of cost and net realisable value. By-products are valued at estimated realisable value.
b) Cost of Raw Materials, Packing Materials, Stores and Spares, Trading and other products are determined on weighted average basis and are net of Cenvat credit.
c) Cost of Work in progress and Finished Goods is determined considering direct material cost and appropriate portion of manufacturing overheads based on normaloperating capacity. Cost of finished goods include excise duty.
d) Obsolete, slow moving and defective inventories are identified at the time of physical verification of inventories and where necessary, the same are written off orprovision is made for such inventories.
9) EMPLOYEE BENEFITS
a) Defined Contribution Plan :
Employees benefits in the form of the Company's contribution to Provident Fund, Pension scheme, Superannuation Fund and Employees State Insurance is adefined contribution scheme and contributions are charged to the Profit & Loss Account of the year when the contribution to the respective fund is due.
b) Defined Benefit Plan :Retirement benefits in the form of gratuity and leave encashment are considered as defined benefit obligations and are provided for on the basis of an actuarialvaluation as at the date of the Balance Sheet using the projected unit credit method.
c) Actuarial gains/losses, if any, are immediately recognised in the Profit & Loss Account.d) Short Term Employee benefits:
Short term benefits are charged off at the undiscounted amount in the year in which the related service is rendered
10)
Expenditure incurred towards the Voluntary Retirement Scheme of the Company is treated as Deferred Revenue Expenditure and charged to the Profit & LossAccount over a period of five years.
11) FOREIGN CURRENCY TRANSACTIONS
a) Initial RecognitionForeign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currencyand the foreign currency at the date of the transaction.
b) ConversionForeign currency monetary items are reported using the closing rate.
c) Exchange DifferenceAny gain or loss on account of exchange difference arising either on the settlement or on reinstatement of foreign currency monetary items is recognised in theProfit & Loss account, except exchange difference arising on long term foreign currency monetary items relating to acquisition of depreciable fixed assets, which isadjusted to the carrying amount of such assets.An asset shall be designated as a long term foreign currency monetary item, if the asset or liability is expressed in foreign currency and has a term of 12 months ormore at the date of origination of the asset or liability.
d) Translation of non integral foreign operations:In translating the financial statements of a non-integral foreign operation for incorporation in financial statements, the assets and liabilities, both monetary and non
monetary of the non-integral foreign operation are translated at the closing rate; income and expenses items of the non-integral foreign operations are translated atthe average rate prevailing during the year; and all resulting exchange differences are accumulated in the foreign currency translation reserve until the disposal ofnet investment.
12) RESEARCH AND DEVELOPMENT
Capital Expenditure incurred for Research and Development is capitalised when commissioned and included in the gross block of fixed assets. Revenue expenditureon research and development is charged to the Profit & Loss account in the period in which it is incurred. Expenditure incurred on projects to develop new productsis capitalised and deferred only when the Company can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use orsale. product development expenditure which do not meet these criteria are expensed when incurred.
13) PRIOR PERIOD ADJUSTMENTS
Earlier year items, adjustment/claims, arisen / settled / noted during the year, if material in nature, are debited / credited to prior period Expenses/Income orrespective heads of account, if not material in nature.
DEFERRED REVENUE EXPENDITURE
F-34
REFORMATTED SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
14) INVESTMENTS
Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified aslong-tem investments. Current investments are carried at lower of cost and fair value. Long -term investments are stated at cost. Provision for diminution in thevalue of investments is made, if it is other than temporary.
15) BORROWING COST
Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of such asset. A qualifying asset is onethat necessarily takes a substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the period in which theyare incurred.
16) TAXATION
a) Provision for Current Tax is made after considering benefits, exemptions and deductions available under the Income Tax Act,1961.b) Deferred tax is recognised subject to consideration of prudence, on timing differences, representing the difference between the taxable income/(loss) and accounting
income/(loss) that originated in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using thetax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.
17)
Operating Lease: Lease rentals in respect of assets taken on operating leases are charged to the profit and loss account with reference to lease terms and other consideration.
18) PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probablethat there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in notes. Contingent assets are neither recognised nor disclosedin the financial statements.
19) SEGMENT REPORTING
The accounting policies adopted by the Company for segment reporting are in line with the accounting standard on Segmental Reporting.
Primary Segment:Business Segment: The Company's operating business is organized and managed separately according to the nature of products, with each segment representing astrategic business unit that offers different products. The identified segments are Chemicals and Others.Secondary Segment:Geographical Segment: The analysis of geographical segment is based on the geographical location of the customers. The geographical segments considered fordisclosure are as follows:(a) Sales within India(b) Sales outside IndiaSegment Expenses, Segment Assets and Segment Liabilities have been allocated to segments on the basis of their relationship to the operating activities of thesegment. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis, have been includedunder “Unallocated Revenue/Expenses/Assets/Liabilities”.
20) CASH FLOW STATEMENTS
Cash-flow statements are prepared in accordance with “Indirect Method” as explained in the Accounting Standard on Cash Flow Statements (AS-3) notified underthe Companies (Accounting Standards) Rules, 2006. The cash flows from regular revenue generating, financing and investing activity of the Company aresegregated.
21) EARNING PER SHARE
Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted Earning per Share, the net profit or loss for the period attributable to Equity Shareholders and the weighted average number ofshares outstanding during the period are adjusted for the effects of all dilutive potential Equity Shares.
LEASES
F-35
REFORMATTED SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
22) DERIVATIVE INSTRUMENTS
The Company has adopted Accounting Standard 30 (AS 30) " Financial Instruments: Recognition and Measurement". Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of derivative financial instruments designated as effective cash flow hedges are recognised as "Cash Flow Hedge Reserve" directly in the Balance Sheet under Reserves & Surplus and later reclassified into Profit & Loss account upon the occurence of the hedging transaction. Changes in the fair value of ineffective hedges taken are recognised directly to Profit & Loss account.
23) EMPLOYEE STOCK OPTION BASED COMPENSATIONAccounting value of stock options is determined on the basis of 'intrinsic value' representing the excess of the market price on the date of grant over the exerciseprice of the options granted under the 'Employees Stock Option Scheme' of the Company, and is being amortised as 'Deferred employee compensation' on astraight-line basis over the vesting period in accordance with the SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,1999 and Guidance Note No.18 'Share Based Payments' issued by the ICAI.
24) PRINCIPLES OF CONSOLIDATION
(i) The consolidated financial statements relate to PI Industries Ltd. and its wholly owned subsidiary companies.The consolidated financial statements have been prepared on the following basis:
The financial statements of the Company and its subsidiary companies have been combined on a line by line basis by adding together the book values of like itemsof assets, liabilities, income and expenses after eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses.
The consolidated financial statements have been prepared using uniform accounting policies for the transactions and other events in similar circumstances and areprepared to the extent possible in the same manner as the Company 's separate financial statements.
(ii) The subsidiary companies considered in the consolidated financial statements are:Name of the Company Country of Incorporation %voting power held as at 31st March 2012PILL Finance & Investment Limited India 100%PI Life Science Research Limited India 100%PI Japan Co. Ltd. Japan 100%
F-36
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)B NOTES TO ACCOUNTS
1 SHARE CAPITAL 31st March 2012 31st March 2011 31st March 2010
Authorised Shares200.00 200.00 200.00
500.00 500.00 500.00
700.00 700.00 700.00 Issued Shares
125.42 112.05 71.05
- 81.00 206.00
125.42 193.05 277.05 Subscribed & Fully Paid up Shares
125.24 111.87 70.87
- 81.00 206.00
Total subscribed and fully paid up share capital 125.24 192.87 276.87
a.b.c. Terms/ rights attached to Equity shares
d. Terms/ rights attached to Preference shares
e. Terms of securities convertible into equityCompulsorily Convertible Preference Shares (CCPS)
Optionally Convertible Debentures (OCDs)
f. Fractional Shares
g. Split of Shares
h. Reconciliation of Shares outstanding at the beginning and at the end of the reporting period
Issued Share Capital
Equity SharesParticulars
2011-12 2010-11 2009-10 2011-12 2010-11 2009-10Share outstanding at beginning of period 11,205,158.5 7,105,165.5 3,561,411.5 112.05 71.05 35.61
Bonus Shares issued during the period (Refer Note 1(i)) - 3,729,167 3,543,754 - 37.29 35.44
Preference Shares Converted into Equity (Refer Note 1(e)) 311,658 370,826 - 3.12 3.71 -
Debentures Converted into Equity (Refer Note 1(e)) 1,025,030 - - 10.25 - -
Split of shares (Refer Note 1(g)) 12,541,846.5 - - - - -
Share outstanding at end of period 25,083,693 11,205,158.5 7,105,165.5 125.42 112.05 71.05
The difference between the issued and subscribed capital is on account of less number of shares alloted in right issue in earlier years.
40,000,000 Equity Shares of Rs.5/- each, (March 2011: 20,000,000 Equity Shares of Rs. 10 each, March 2010: 200,00,000 Equity Shares of Rs. 10 each)
5,000,000 Preference Shares of Rs.100/- each (March 2011: 5,000,000 Preference Share, March 2010: 5,000,000 Preference shares)
25,083,693 Equity Shares of Rs.5/- each (March 2011: 11,205,158.5 Equity Shares of Rs. 10/- each, March 2010: 7,105,165.5 Equity Shares of Rs. 10/- each.)Nil (March 2011: 810,000, March 2010: 2,060,000) 0.01% Non-Cumulative compulsorily Convertible Preference shares (CCPS) of Rs. 100/- each
25,048,378 Equity Shares of Rs.5/- each (March 2011: 11,187,501 Equity Shares of Rs. 10/- each, March 2010: 7,087,508 Equity Shares of Rs. 10/- each).Nil (March 2011: 810,000, March 2010: 2,060,000) 0.01% Non-Cumulative compulsorily Convertible Preference shares (CCPS) of Rs. 100/- each
The issued share capital of previous year includes fractional coupons of Rs. 5/- each fully paid, alloted as bonus shares in earlier years.
Pursuant to the approval of the shareholders in their meeting held on 16th July 2011, the Company has sub-divided the existing equity shares of Rs. 10/- each fully paid up into 2 equity shares of Rs. 5/- each.
The Company has only one class of equity shares having a par value of Rs. 5 per share (Previous Year Rs. 10 per share). Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors issubject to the approval of the shareholders in the ensuing Annual General meeting except interim dividend.During the year ended 31st March 2012, the Company had declared interim dividend of Rs. 2 per share of face value of Rs. 5/- each to the equity shareholders and final dividend of Rs. 3 per share is recognised as distribution to the equityshareholders at the year end (March 2011: Final dividend of Rs. 4 per share of face value of Rs. 10/- each, March 2010: Final dividend of Rs. 2 per share of face value of Rs. 10/- each.)
Pursuant to the Special Resolution passed at the Extra Ordinary General Meeting of Shareholders on 12th October 2009, the Company, on October 24, 2009, has alloted 10,30,000 Non-Cummulative Compulsorily Convertible PreferenceShares (CCPS) each, at a face value of Rs. 100/- per CCPS on Preferential basis to Standard Chartered Private Equity (Mauritius) Limited and Standard Chartered Private Equity (Mauritius) II Limited, aggregating to 20,60,000 CCPS.
As per the terms of the issue, the holder of CCPS had option to convert its preference shares into equity within 18 months of the date of issue i.e. 24th October 2009. The CCPS carried a coupon rate of 0.01% p.a. and had lock in periodof one year.
Refer Note 1(d)As per the terms of issue(i) 1,250,000 CCPS were converted into 370,826 equity shares of Rs. 10 each at a premium of Rs. 327.085 per share during the previous year, and(ii) the balance 810,000 preference shares have been converted into 311,658 equity shares of Rs. 10/- each, allotted to both Standard Chartered Private Equity (Mauritius) Limited and Standard Chartered Private Equity (Mauritius) IILimited equally, at a premium of Rs. 249.9003 per share.
Refer Note 3 (a)During the year 1,025,030 equity shares were issued and allotted by the Company to Standard Chartered Investments and Loans (India) Limited at a premium of Rs. 249.9003 per equity share of face value on conversion of 2,664,053OCDs and the balance 275,947 OCDs were redeemed.
During the year 18 fractional shares were sold off in the market on 15th October 2011 at prevailing market price and the proceeds were reimbursed to the beneficiaries.
Equity Share (No. of Shares) Equity Share (Value of Shares) (in Rs. Millions)
F-37
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)Preference SharesParticulars
2011-12 2010-11 2009-10 2011-12 2010-11 2009-10Share outstanding at beginning of period 810,000 2,060,000 - 81.00 206.00 -
- Shares issued during the period - - 2,060,000 - - 206.00
- Shares Converted into Equity (Refer Note 1(e)) (810,000) (1,250,000) - (81.00) (125.00) -
Share outstanding at end of period - 810,000 2,060,000 - 81.00 206.00
Subscribed & Paid up
Equity SharesParticulars
2011-12 2010-11 2009-10 2011-12 2010-11 2009-10Share outstanding at beginning of period 11,187,501 7,087,508 3,543,754 111.87 70.87 35.43
Bonus Shares issued during the period (Refer Note 1(i)) - 3,729,167 3,543,754 - 37.29 35.44
Preference Shares Converted into Equity (Refer Note 1(e)) 311,658 370,826 - 3.12 3.71 -
Debentures Converted into Equity (Refer Note 1(e)) 1,025,030 - - 10.25 - -
Split of shares (Refer Note 1(g)) 12,524,189 - - - - -
Share outstanding at end of period 25,048,378 11,187,501 7,087,508 125.24 111.87 70.87
Preference SharesParticulars
2011-12 2010-11 2009-10 2011-12 2010-11 2009-10Share outstanding at beginning of period 810,000 2,060,000 - 81.00 206.00 -
Shares issued during the period - - 2,060,000 - - 206.00
Shares Converted into Equity (Refer Note 1(e)) (810,000) (1,250,000) - (81.00) (125.00) -
Share outstanding at end of period - 810,000 2,060,000 - 81.00 206.00
i.
Year of Issue No. of Shares 2010-11 3,729,167 2009-10 3,543,754
j. Shares reserved for issue under option
Shares reserved for issue under ESOP - Refer Note 35
k. Details of shareholders holding more than 5% shares in the Company
Equity SharesName of Shareholders
No of Shares % of Holding No of Shares % of Holding No of Shares % of Holding
1 Parteek Finance & Inv. Co. Ltd. 5,872,602 23.45 2,936,001 26.24 1,957,334 27.62 2 Lucrative Leasing Finance & Inv. Co. Ltd. 5,639,796 22.52 2,819,898 25.21 1,879,932 26.52 3 Samaya Investment & Trading Pvt. Ltd. 3,077,880 12.29 1,538,940 13.76 1,025,960 14.48 4 Standard Chartered Inv. & Loans (I) Ltd. 2,025,060 8.08 - - 5 Rowanhill Investments Ltd. 1,359,801 5.43 1,200,424 10.73 914,800 12.91 6 Mrs. Madhu Singhal 1,128,414 4.50 564,207 5.04 376,138 5.31
Preference SharesName of Shareholders
No of Shares % of Holding No of Shares % of Holding No of Shares % of Holding1 Standard Chartered Private Equity Mauritius Ltd Nil - 1,030,000 50% 1,030,000 50%2 Standard Chartered Private Equity Mauritius II Ltd Nil - 1,030,000 50% 1,030,000 50%
Preference Share (No. of Shares) Preference Share (Value of Shares) (In Rs. Millions)
Equity Share (No. of Shares) Equity Share (Value of Shares) (in Rs. Millions)
Preference Share (No. of Shares) Preference Share (Value of Shares) (Rs. In millions)
Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares brought back during the period of five years immediatelypreceding the reporting period
31st March 2012 31st March 2011 31st March 2010Equity Shares allotted as fully paid up Bonus shares by capitalisation of reserves 7,272,921 7,272,921 3,543,754
2011-12 2010-11 2009-10
2011-12 2010-11 2009-10
F-38
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)
2 RESERVES & SURPLUS
a. Capital ReserveBalance at the beginning and end of the Financial year 14.75 14.75 14.75 Addition during the Financial year - - - Deduction during the Financial year - 14.75 - 14.75 - 14.75
b. Capital Redemption ReserveBalance at the beginning and end of the Financial year 3.50 3.50 21.00 Addition during the year Financial year - - Deduction during the Financial year - 3.50 - 3.50 (17.50) 3.50
c Foreign Currency Translation ReserveBalance at the beginning and end of the Financial year 0.38 1.34 1.57 Addition during the year Financial year 0.96 Deduction during the Financial year - 1.34 (0.96) 0.38 (0.23) 1.34
d. Securities Premium AccountBalance at the Beginning of the Financial year 84.00 - - Add: Premium on issue of Equity shares on conversion of CCPS and OCD 334.04 121.29 - Less: Capitalised for Bonus Shares - 418.04 (37.29) 84.00 - -
e. Revaluation ReserveBalance at the beginning of the Financial year 20.18 20.46 20.77 Less: Depreciation on revalued amount adjusted (2.22) 17.96 (0.27) 20.19 (0.31) 20.46
f. Share Option Outstanding AccountBalance at the Beginning of the Financial year - - - Addition during the Financial year 16.46 - - Less: Written back during the Financial year - - - Less: Deferred employee stock compensation (5.56) 10.90 - - - -
g. Cash Flow Hedge ReserveBalance at the Beginning of the Financial year - - - Addition during the Financial year (49.26) - - Less: Written back during the Financial year - (49.26) - - - -
h. General ReserveBalance at the beginning of the Financial year 462.04 397.92 385.15 Less: Capitalised for Bonus Shares - - (17.94) Add: Transferred during the Financial year 100.54 562.58 64.12 462.04 30.71 397.92
i. Surplus in Profit & Loss AccountBalance at the beginning of the Financial year 1,359.58 831.00 460.15 Addition during the Financial year 1,035.92 651.04 419.02 Less: Transfer to General Reserves (100.54) (64.12) (30.71)
(50.10) - -
(75.15) (50.02) (14.92)
(0.00) (0.01) (0.01)
Less: Dividend Distribution Tax on Equity shares (20.32) (8.31) (2.53) Less: Dividend Distribution Tax on Preference shares (0.00) (0.00) (0.00)
2,149.39 1,359.58 831.00 TOTAL 3,129.20 1,944.44 1,268.97
31st March 2012 31st March 2011 31st March 2010
Less: Interim Dividend on Equity Shares @ Rs. 2 per share (March 2011:Rs. Nil, March 2010: Rs. Nil)Less: Proposed Dividend on Equity Shares{Rs. 3 Per share (March 2011:Rs. 4 Per share, March 2010: Rs. 2 Per share)}
Less: Proposed Dividend on Preference Shares {Rs. .01 % (March 2011:.01%, March 2010: .01% )}
During the year, interim dividend amounting to Rs. 2.60 millions for financial year 2011-12 & final dividend amounting to Rs. 4.60 millions for the financial year 2010-11 was paid in foreign currency to one of the shareholder on 1300848 shares and 1150424 respectively. During the financial year 2009-10, final dividend of 1.83 million was paid in foreign currency to one shareholder holding 914800 shares.
F-39
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)3 LONG TERM BORROWINGS
31st March 2012 31st March 2011 31st March 2010 31st March 2012 31st March 2011 31st March 2010
Bonds/ Debentures- 294.00 294.00 - - -
Term Loans - From Banks and Financial InstitutionsIndian Rupee Loans from Banks (secured) 65.00 173.82 328.42 108.82 152.85 196.24 Foreign Currency Loans from Banks (secured) 1,023.80 - - - - - From Financial Institutions (secured) 50.00 100.00 50.00 50.00 50.00 50.00
1,138.80 273.82 378.42 158.82 202.85 246.24 Deferred Payment LiabilitiesInterest Free Sales Tax Loan (unsecured) - - 2.35 - 2.35 2.35
- - 2.35 - 2.35 2.35 Deposits (unsecured)Directors 13.46 5.65 9.77 2.11 8.73 3.11 Shareholders 4.59 11.25 7.66 7.99 1.94 2.57 Others 33.72 5.14 28.18 2.59 30.77 3.37
51.77 22.04 45.61 12.69 41.44 9.05 TOTAL 1,190.57 589.86 720.38 171.51 246.64 257.64
The above amount includes Secured borrowings 1,297.62 476.67 624.66 Unsecured borrowings 64.46 359.83 353.36 Net Amount 1,362.08 836.50 978.02
a.
b.
c.
d. Loans from Financial Institutions includes:
e.
f.
g. As on the Balance sheet date there is no default in repayment of loans and interest.31st March 2012 31st March 2011 31st March 2010
4 DEFERRED TAX LIABILITIESDeferred tax assets/ liabilities are attributable to the following items;Deferred Tax AssetsEffects of expenditure debited to P&L account in the current year 32.40 20.81 12.78 but allowed for tax purposes in the following yearSub- Total (a) 32.40 20.81 12.78 Deferred Tax LiabilitiesDifference in depreciation and amortisation in block of fixed assets 361.17 346.58 282.75 as per Income Tax Act and books of accounts & OthersSub- Total (b) 361.17 346.58 282.75 Net Deferred Tax Liability (b)-(a) 328.77 325.77 269.97
- Loan from HDFC Bank outstanding amounting to Rs. 32.81 millions carrying interest rate @ HDFC -CPLR plus 0.25 basis points and is repayable in balance 3 Quarterly installments of Rs. 10.94 millions each. The same would be repaid by December 2012. The loan is secured by first pari passu charge on the fixed assets of the Company. The loan sanctioned amounting to Rs. 175 millions is guaranteed by personal guarantee of the Chairman and Managing Director (CMD) and Managing Director (MD) of the Company.
Non- Current Current Maturities
Nil (March 2011: 2.94 millions, March 2010: Rs. 2.94 millions) Zero Coupon Optionally Convertible Debentures (unsecured) of face value of Rs. 100/- each
On 24th October 2009, the Company had issued 2940000 Optionally Convertible Debentures (OCD) of Rs. 100/- each to Standard Chartered Investments and Loans (India) Ltd., on preferential basis on October 24, 2009. The OCD had lock in period of one year from the date of allotment. The OCD were optionally convertible into equity shares within the period of 18 months from the date of allotment as per the terms of issue. The uncovered portion of OCD, if any, shall be redeemed at the end of 18 months or may be further extended by another 18 months, if mutually agreed.
Indian Rupee Loan from Banks includes:- Loan amounting to Rs. 24.90 millions outstanding as on 31st March 2012 from State Bank of Bikaner & Jaipur Bank carrying interest rate of BPLR minus 1.25% repayable in balance 4 Quarterly installments of Rs. 6.25 millions each which would be repaid by March 2013. The loan is secured by first pari passu charge on the fixed assets and second charge on the current assets of the Company. Further, the entire loan sanctioned amounting to Rs. 175 millions is guaranteed by personal guarantee of the Chairman and Managing Director (CMD) and Managing Director (MD) of the Company.
- Loan amount of Rs. 11.11 millions outstanding as on 31st March 2012 from Axis Bank carrying interest rate of BPLR minus 3.25% would be repaid in June 2012. The loan is secured by first pari passu charge on the existing and future fixed assets and second charge on the current assets of the Company. The loan amount sanctioned amounting to Rs. 200 millions is guaranteed by personal guarantee by the Managing Director (MD) of the Company.
- Loan from IDBI Bank outstanding amounting to Rs. 22.50 millions carrying interest rate of BPLR minus 1.5% and is repayable in 9 Quarterly installments of Rs. 2.5 millions which would be repaid by June 2014. The loan is secured by first mortgage and charge on all movable and immovable properties, both present and future of the Company and second charge on the current assets of the Company . Further, the entire loan amount sanctioned amounting to Rs. 50 millions is guaranteed by irrevocable and unconditional guarantee of Managing Director (MD) of the Company.
- Loan amounting to Rs. 82.50 millions is outstanding from IDBI Bank as on 31st March 2012 which carries interest rate of BPLR minus 1%. This amount is repayable in 11 Quarterly installments of Rs. 7.50 millions each and the same would be repaid by December 2014.The loan is secured by first pari passu charge on all movable and immovable assets and second charge on the current assets of the Company. Further, the loan sanctioned amounting to Rs. 150 millions is guaranteed by personal guarantee of the Managing Director (MD) of the Company.
Foreign Currency Loans includes:- ECB from Standard Chartered Bank amounting to USD 20 millions carrying interest rate of 90 days LIBOR plus 2.75% and is repayable in 15 Quarterly installments of USD 1.333 millions each beginning from April 2013. The loan is secured by first exclusive charge on movable and immovable fixed assets of the Company situated at Jambusar, Gujarat.
Term Loan from Financial Institutions includes loan amounting to Rs. 100 millions from EXIM bank at interest on PLR rate, repayable in 8 quarterly installment of Rs. 12.5 millions and would be repaid by 31st March 2014. The loan issecured by Pari passu first charge over the entire fixed assets including immovable properties of the Company both present and future (excluding assets, which are exclusively charged to other lenders) and Pari passu second charge overthe entire current assets of the Company, pari passu with all the existing lenders, excluding assets exclusively charged to other lenders.
Deferred Tax Sales Tax Loan is Interest Free which was payable in 5 yearly installments of Rs. 2.35 million each beginning from 30th May 2006. The last installment was paid on 13th April 2011.
Deposits from Directors, shareholders and others carries interest ranging from 9% to 11% depending upon the amount of deposit. Non- cummulative deposits have a maturity period of two years and are paid interest at the interval ofevery six months. Cummulative deposits have maturity period of three years and the interest is compounded six monthly.
F-40
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)5 OTHER LONG TERM LIABILTIES
31st March 2012 31st March 2011 31st March 2010Other payablesSecurity Deposits from Dealers 99.82 88.67 72.96 Security Deposits from Contractors 1.68 1.32 4.21 Miscellaneous payables 4.49 4.49 4.49
TOTAL 105.99 94.48 81.66
6 PROVISIONS31st March 2012 31st March 2011 31st March 2010 31st March 2012 31st March 2011 31st March 2010
Provision for Employee BenefitsLeave Encashment 17.81 13.78 13.90 4.29 3.04 1.10 Gratuity 0.17 0.14 - 12.89 8.32 -
17.98 13.92 13.90 17.18 11.36 1.10 Other ProvisionsProvision for Income Tax {Net of Advance Tax of Rs. 730.56 Millions 61.65 49.74 19.99 (March 2011: Rs. 351.10 Millions, March 2010: Rs. 113.08 millions)} Provision for Proposed Dividend on Equity Shares 75.15 50.02 14.92 Provision for Proposed Dividend on Preference Shares 0.00 0.01 0.01 Provision for Dividend Distribution Tax 12.19 8.31 2.54
- - - 148.99 108.08 37.46 TOTAL 17.98 13.92 13.90 166.17 119.44 38.56
7 SHORT TERM BORROWINGS31st March 2012 31st March 2011 31st March 2010
Loans Repayable on Demand
Working Capital Loans from Banks (secured) 684.69 1,081.95 309.87 Inter- Corporate Deposits (unsecured) - From Promoter Companies 11.50 19.00 12.00
696.19 1,100.95 321.87 Other Loans and AdvancesPacking Credit Foreign Currency Loan (unsecured) 409.59 445.82 118.70
409.59 445.82 118.70 TOTAL 1,105.78 1,546.77 440.57
The above amount includesSecured Borrowings 684.69 1,081.95 309.87 Unsecured Borrowings 421.09 464.82 130.70
a.
b.
8 TRADE PAYABLES31st March 2012 31st March 2011 31st March 2010
Trade Payables -Due to micro and small enterprises (Refer note 44) 35.11 32.28 53.93 -Other Trade Payables 923.28 1,025.78 911.43
TOTAL 958.39 1,058.06 965.36
9 OTHER CURRENT LIABILITIES31st March 2012 31st March 2011 31st March 2010
Current maturities of long-term debt (Refer Note 3) 171.51 246.64 257.64 Project Vendors 33.84 53.97 46.36 Security Deposits Contractors 3.18 2.90 3.07 Interest accrued but not due on borrowings 16.51 8.24 6.59 Income received in advance/ Customer advances 317.31 131.96 316.28 Unpaid dividends* 0.66 0.21 0.10 Other payables - Employee Balances 100.31 82.22 45.90 - Statutory Dues Payable 42.63 54.08 41.92 - Miscellaneous Payable 152.36 174.11 114.67 Hedge Liability 49.26 - -
TOTAL 887.57 754.33 832.53
* The amount does not include amount due/ outstanding to be credited to Investor Education & Protection Fund, same shall be credited as and when due.
Non-Current Current
Working capital loans are secured by way of first charge on pari passu basis by hypothecation of stocks of raw materials, finished and semi finished goods, stores and spares not related to plant and machinery, bills receivable, book debts and all other movable properties and additionally secured by way of second charge on all the immovable properties of the company in favour of the consortium bankers. The working capital loans were secured by personal guarantee of the directors of the company till 31st March 2011. The same does not carry any guarantee as on the reporting date.
F-41
REFORMATTED CONSOLIDATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in millions)
10 TANGIBLE ASSETS Leasehold land Freehold Land Leasehold
Improvement Buildings Plant &
Machinery Furniture &
FixturesOffice Equipments Vehicles Library Tools and
Equipment Total
Gross BlockAs at 1st April 2009 66.15 20.77 0.19 180.23 2,216.53 14.77 33.98 25.57 9.45 0.27 2,567.91 Additions - 4.69 - 47.26 255.77 4.07 0.59 0.98 0.38 - 313.74 Disposals - - - - (12.12) (0.44) (0.04) (3.05) - - (15.65) Other Adjustments - '- Exchange Difference - - - - - - - - - - - '- Borrowing Costs - - - 2.65 12.41 0.18 0.02 - - - 15.26 '- Stores & Spares Consumed - - - - - - - - - - - '- Other expenses including salary - - - 2.83 13.26 0.19 0.03 - - - 16.31 As at 31st March 2010 66.15 25.46 0.19 232.97 2,485.85 18.77 34.58 23.50 9.83 0.27 2,897.57 Additions - - - 60.83 596.54 1.38 2.38 0.41 0.18 - 661.72 Disposals - - - - (3.67) (0.07) - (2.36) - - (6.10) Other Adjustments - - - - - - - - - - - '- Exchange Difference - - - - - - - - - - - '- Borrowing Costs - - - 0.84 11.90 - - - - - 12.74 '- Stores & Spares Consumed - - - - 5.16 - - - - - 5.16 '- Other expenses including salary - - - 1.37 14.25 - - - - - 15.62 As at 31st March 2011 66.15 25.46 0.19 296.01 3,110.03 20.08 36.96 21.55 10.01 0.27 3,586.71 Additions 151.95 (0.00) (0.00) 56.17 406.87 7.36 13.88 0.23 0.00 (0.00) 636.46 Disposals - - - (7.96) (5.97) (7.05) (5.24) (1.98) - (0.27) (28.47)
Transfer on account of discontinued operation - (0.67) - (8.50) (127.48) (0.19) (0.24) - (0.04) - (137.12) Other Adjustments - - - - - - - - - - - '- Exchange Difference - - - - 1.52 - - - - - 1.52 '- Borrowing Costs - - - - 4.64 - - - - - 4.64 '- Stores & Spares Consumed - - - - 24.54 - - - - - 24.54 '- Foreign currency exchange reserve - - 0.16 - - - (0.01) - - - 0.15 '- Other expenses including salary - - - - 31.03 - - - - - 31.03 As at 31st March 2012 218.10 24.79 0.35 335.72 3,445.18 20.20 45.35 19.80 9.97 0.00 4,119.46
DepreciationAs at 1st April 2009 0.29 - 0.06 57.49 669.11 10.42 22.96 18.86 6.85 - 786.04 Charge for the year 0.04 - 0.03 3.72 120.39 0.88 1.64 1.79 0.30 - 128.79 Disposals - - - - (4.33) (0.01) (0.31) (2.55) - - (7.20) As at 31st March 2010 0.33 - 0.09 61.21 785.17 11.29 24.29 18.10 7.15 - 907.63 Charge for the year 0.04 - 0.03 5.45 143.37 1.43 1.58 1.45 0.29 - 153.64 Disposals - - - - (1.46) (0.06) - (2.03) - - (3.55) As at 31st March 2011 0.37 - 0.12 66.66 927.08 12.66 25.87 17.52 7.44 - 1,057.72 Charge for the year 0.04 - 0.03 8.82 157.03 1.63 2.12 1.04 0.26 (0.00) 170.97 Disposals - - - (1.10) (2.29) (5.63) (4.22) (1.69) - - (14.93)
Transfer on account of discontinued operation - - - (2.53) (48.37) (0.10) (0.15) - (0.03) - (51.18) Difference on account of Foreign currency exchange reserve - - 0.05 - 0.06 - (0.23) - - - (0.12) As at 31st March 2012 0.41 - 0.20 71.85 1,033.51 8.56 23.39 16.87 7.67 (0.00) 1,162.46
Net BlockAs at 31st March 2010 65.82 25.46 0.10 171.76 1,700.68 7.48 10.29 5.40 2.68 0.27 1,989.94 As at 31st March 2011 65.78 25.46 0.07 229.35 2,182.95 7.42 11.09 4.03 2.57 0.27 2,528.99 As at 31st March 2012 217.69 24.79 0.15 263.87 2,411.67 11.64 21.96 2.93 2.30 0.00 2,957.00
a. b.
c. d. Addition to Building includes Leasehold improvement of Rs. 35.88 millions (March 2011: Nil, March 2010: Nil)
The Company revalued Tangible assets on 30th June 1988, at fair values determined by an independent external valuer. The valuer determined the fair value by reference to market based evidence. Depreciation for the year includes depreciation amounting to Rs. 3.86 mllions (March 2011: Rs. 3.79 millions, March 2010: Rs. 3.60) on assets used for Research & Development. During the year Company incurred Rs. 5.03 millions (March 2011: Rs. Nil, March 2010: Rs. 6.36 millions) towardscapital expenditure for Research & Development (Refer Note 28)Amount transferred on account of exchange difference, borrowing costs and other administrative costs have beed transferred from Capital Work in progress.
F-42
REFORMATTED CONSOLIDATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in millions)
11 Amount of Capital Work in progress
Intangible Assets under Development
As at 1st April 2009 74.11 - Additions 287.74 - Amount transferred from CWIP (317.44) - Other Adjustments '- Exchange Difference - - '- Borrowing Costs 16.12 - '- Stores & Spares Consumed 1.01 - '- Other expenses including salary 24.81 - As at 31st March 2010 86.35 - Additions 774.25 7.08 Amount transferred from CWIP (617.15) - Other Adjustments '- Exchange Difference - - '- Borrowing Costs 11.98 - '- Stores & Spares Consumed 26.27 - '- Other expenses including salary 45.81 - As at 31st March 2011 327.51 7.08 Additions 889.60 25.25 Amount transferred from CWIP (531.92) - Other Adjustments '- Exchange Difference 12.43 - '- Borrowing Costs 15.48 - '- Stores & Spares Consumed 8.16 - '- Other expenses including salary 56.43 - As at 31st March 2012 777.69 32.33
12 INTANGIBLE ASSETSSoftware
Gross BlockAs at 1st April 2009 21.96 Additions 4.37 Disposals (0.05) As at 31st March 2010 26.28 Additions 3.96 Disposals - As at 31st March 2011 30.24 Additions 10.51 Disposals -
Transfer on account of discontinued operation - As at 31st March 2012 40.75
DepreciationAs at 1st April 2009 11.85 Charge for the year 3.32 Disposals - As at 31st March 2010 15.17 Charge for the year 3.53 Disposals - As at 31st March 2011 18.70 Charge for the year 4.16 Disposals -
Transfer on account of discontinued operation - As at 31st March 2012 22.86
Net BlockAs at 31st March 2010 11.11 As at 31st March 2011 11.54 As at 31st March 2012 17.89
CAPITAL WORK IN PROGRESS & INTANGIBLES ASSETS UNDER DEVELOPMENT
F-43
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)13 NON CURRENT INVESTMENTS
Long Term Investments (At cost) : Non TradeFace value No. of Shares Amount No. of Shares Amount No. of Shares Amount
1) Quoted SharesUnited Credit Ltd. 10 700 0.02 700 0.02 700 0.02 ICI India Ltd. 10 50 0.01 Summit Securities 12 - 12 - - - Akzo Nobel India Ltd. 10 50 0.01 50 0.01 - - BASF India Ltd. 10 976 0.05 976 0.05 976 0.05 Sudershan Chemical Industries Ltd. 10 90 0.00 90 0.00 90 0.00 Rallis India Ltd. * 1 2,070 0.01 2,070 0.01 138 0.01 Bayers Crop Science Ltd. 10 66 0.02 66 0.02 66 0.02 Punjab Chemicals & Crop Protection Ltd. 10 248 0.01 248 0.01 248 0.01 Wyeth Ltd. 10 42 0.02 42 0.02 42 0.02 Aventis Pharma Ltd. 10 100 0.00 100 0.00 100 0.00 L.M.L.Ltd. 10 150 0.00 150 0.00 150 0.00 United Sprit Ltd. 10 188 0.01 188 0.01 188 0.01 RPG Life Sciences Ltd. 10 360 0.02 360 0.02 360 0.02 Voltas Ltd. 1 100 0.00 100 0.00 100 0.00 ICICI Bank Ltd. 10 460 0.24 460 0.24 460 0.24 TOTAL (A) 0.41 0.41 0.41 * Share sub-divided from face value of Rs.10/- each to Rs. 1/- each w.e.f 17.07.2011
2) Unquoted Shares (Equity)1 a) Panoli Enviro Technology Ltd. 0.30 0.30 0.30
b) Bharuch Enviro Infrastructure Ltd. 0.02 0.02 0.02
c) Bharuch Eco-Aqua Infrastructure Ltd. 4.44 4.44 4.44
0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00 0.00
0.01 0.01 0.01
TOTAL ((B) 4.77 4.77 4.77 TOTAL (A)+(B) 5.18 5.18 5.18
Aggregate book value of Quoted Investments 0.41 0.41 0.41 Aggregate book value of Un-Quoted Investments 4.77 4.77 4.77
155,480 Equity shares of Rs. 10 Each of Bharuch Eco-Aqua Infrastructure Ltd. purchased during the year 2009-10
10 Equity Shares of Rs. 250 each of Abhilasha Towers were alloted during the year 2009-10 against the share application money.
14 LOANS AND ADVANCES
31st March 2012 31st March 2011 31st March 2010 31st March 2012 31st March 2011 31st March 2010
Capital Advances (Unsecured)Considered good 150.81 149.78 126.21 - - - Doubtful 0.06 - - - - - Less: Allowance for Doubtful Capital Advances (0.06) - - - - -
A 150.81 149.78 126.21 - - - Security Deposits (Unsecured)Considered good 37.15 30.49 25.58 3.46 9.17 10.50 Doubtful - - - - - -
B 37.15 30.49 25.58 3.46 9.17 10.50 Loans and advances to related parties (unsecured)Considered good (Refer Note 40) - - - 1.15 3.10 -
C - - - 1.15 3.10 - Other Loans and advances (Unsecured)Advances to Vendors, considered good - - - 122.80 73.25 259.96 Advances to Vendors, Doubtful - - - 24.67 3.85 - Less: Allowance for Doubtful advances - - - (24.67) (3.85) - Balance with Central Excise Authorities, Customs etc. - - - 80.59 81.61 15.70 Prepaid Expenses - - - 11.49 14.85 10.20 Employee Advances - 4.00 - 8.47 1.23 0.72 Other Statutory Advances 0.85 - 4.96 117.10 64.99 53.59 Other Miscellaneous Advances 3.60 4.90 - 48.93 66.21 31.09
D 4.45 8.90 4.96 389.38 302.14 371.26 TOTAL (A+B+C+D) 192.41 189.17 156.75 393.99 314.41 381.76
15 OTHER ASSETS
31st March 2012 31st March 2011 31st March 2010 31st March 2012 31st March 2011 31st March2010
- - - 19.03 12.69 13.13 - - - 6.45 5.47 3.50 - - - (6.45) (5.47) (3.50)
16.24 13.98 13.85 - - - 16.24 13.98 13.85 19.03 12.69 13.13
TOTAL 16.24 13.98 13.85 19.03 12.69 13.13
16 INVENTORIES( Valued at lower of cost and net realizable value) 31st March 2012 31st March 2011 31st March 2010
473.08 520.91 438.56
Work in Progress 463.65 308.53 177.83 Finished Goods, including By - products. 588.11 433.84 292.56 Traded Goods 73.39 46.80 23.71 Stores & Spares, Laboratory Chemicals & Apparatus 189.28 99.72 95.45
TOTAL 1,787.51 1,409.80 1,028.11
Interest and Other charges recoverable from customers- Good
5 (March 2011: 5, March 2010: 5) Equity Shares of Rs.50/- each fully paid e) Abhilasha Tower Co-operative Service Housing Society Ltd.10 (March 2011: 10, March 2010: 10 ) Equity Shares of Rs. 250/- each fully paidf) Sygenta India Limited160 (March 2011: 160, March 2010: 160) Equity Shares of Rs. 10/- each fully paid upg) Ciba CKD Biochem Ltd.
CurrentNon- Current
Current
100 (March 2011: 100, March 2010: 100) Equity Shares of Rs. 10/- each fully paid up
Non- Current
The Company was holding 80 Equity Shares of Ciba India Ltd. of Rs.10/- each fully paidup which was merged with BASF India Ltd. & the company received 72 Equity Shares of BASF India Ltd. in pursuance of the exchange ratio of 90 Equity Shares of BASF India Ltd during the financial year 2009-10, for every 100 Equity Shares of Ciba India Ltd. of Rs. 10/- each fully paid up. Under the scheme of amalgamation of Shaw Wallace & Company Ltd. & Primo Distributors Pvt. Ltd. with United Spirits Ltd. on 17.07.2009, 188.234 Equity Shares were allotted by United Spirits Ltd. against 800 shares of Shaw Wallace & Company Ltd in the ratio of 4:17. The merged Company United Spirit Ltd. has paid the sale proceeds of fractional shares at market value.
31st March 201031st March 2012 31st March 2011
30,000 (March 2011: 30,000, March 2010: 30,000) Equity Shares of Rs.10/- each fully paid
2,100 (March 2011: 2,100, March 2010: 2100) Equity Shares of Rs.10/- each fully paid
4,44,339 (March 2011: 4,44,339, March 2010: 4,44,339 ) Equity Shares of Rs.10/- each fully paidd) Angan Apartment Co-opt Hsg. Society Ltd (Services) Bharuch
*Deposits includes Rs. 15.88 millions (March 2011: Rs. 13.98 millions, March 2010: 13.85 millions) towards security deposit lodged with the Rajasthan excise department and Rs. 0.36 millions (March 2011: Rs. Nil, March 2010: Rs.Nil) lodged with Commercial Taxes Kottayam.* Includes Fixed deposits with more than twelve months maturity from date of acquisition: Rs.16.24 millions (March 2011: Rs. 13.98 millions, March 2010: 13.85 millions); and Fixed deposits upto 3 months maturity from date ofacquisition: Rs. NIL (March 2011: Rs. NIL, March 2010: Rs. NIL)
Interest and Other charges recoverable from customers- DoubtfulLess: Allowance for Interest and other charges recoverable from customersDeposits with Excise & Sales Tax Department *
Raw Materials and Packing Materials {(includes Stock-in-Transit Rs. 32.24 millions (March 2011: Rs. 8.71 millions, March 2010: Rs. Nil )}
F-44
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)
17 TRADE RECEIVABLES31st March 2012 31st March 2011 31st March 2010
Unsecured, considered good unless stated otherwise
-Considered Good 16.38 19.68 26.68 -Doubtful 19.42 14.34 10.53
35.80 34.02 37.21 Less: Allowance for Doubtful Debts (19.42) (14.34) (10.53)
A 16.38 19.68 26.68 Others Debts -Considered Good 1,705.90 1,729.87 1,155.36 -Doubtful 0.84 0.63 0.21
1,706.74 1,730.50 1,155.57 Less: Allowance for Other Doubtful Debts (0.84) (0.63) (0.21)
B 1,705.90 1,729.87 1,155.36
TOTAL (A+B) 1,722.28 1,749.55 1,182.04
18 CASH AND BANK BALANCES31st March 2012 31st March 2011 31st March 2010
Cash & Cash Equivalents- Balance with banks : On Current Accounts 56.19 41.20 18.90
- Cash on hand 0.60 0.86 0.50
Other Bank Balances In Deposit accounts held as margin money* 36.66 27.77 21.05 In Unpaid Dividend Accounts ** 0.66 0.21 0.10
TOTAL 94.11 70.04 40.55
** Not available for use by the Company as they represent corresponding unclaimed dividend liabilities.
19 REVENUE FROM OPERATIONS31st March 2012 31st March 2011 31st March 2010
Revenue from Operations includesa) Sale of products;
'- Finished Goods 9,483.94 7,941.99 5,931.79 '- Traded Goods 503.25 394.70 240.87
9,987.19 8,336.69 6,172.66
b) Sale of services; 20.15 17.35 10.24 20.15 17.35 10.24
c) Other operating Revenues; '- Scrap Sales 6.06 4.49 3.49 '- Others* 15.15 19.00 13.44
21.21 23.49 16.93 Revenue From Operations (Gross) 10,028.55 8,377.53 6,199.83
Less: Excise Duty; 459.40 461.92 247.76 Less: Discount 778.10 715.52 527.61 Revenue From Operations (Net) 8,791.05 7,200.09 5,424.46
d) Details of products sold31st March 2012 31st March 2011 31st March 2010
(i) Finished goods soldSpeciality Chemicals 3,771.25 2,304.70 1,905.21 Agro Chemicals 5,187.92 4,405.48 3,052.83 Plant Nutrient 507.63 499.21 438.50 Polymer 12.42 727.72 531.32 Others 4.72 4.88 3.93
9,483.94 7,941.99 5,931.79
(ii) Traded Goods SoldAgro Chemicals 431.97 227.26 193.01 Others 71.28 167.44 47.86
503.25 394.70 240.87
Total Sale of Products 9,987.19 8,336.69 6,172.66
(iii) Details of services renderedJob Work - 0.56 1.93 Research & Development Activities 20.15 16.79 8.31
20.15 17.35 10.24
* Other operating revenue includes Export incentive of Rs. 10.40 millions (March 2011: Rs. 19 millions, March 2010: Rs. 13.44 millions)
Debts outstanding for a period exceeding six months from the date they are due for payment
* Deposit account includes Rs. 36.66 millions (March 2011: Rs.27.77 millions, March 2010: Rs. 21.05 millions) towards margin money pledged with banks for Bank Guarantees and Letter of Credit.* Includes Fixed deposits with more than twelve months maturity from date of acquisition: Rs.36.66 millions (March 2011: Rs. 27.77 millions, March 2010: Rs. 21.05 millions); and Fixed deposits upto 3 months maturity from date ofacquisition: Rs. Nil (March 2011: Rs. Nil, March 2010: Nil)
F-45
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)20 OTHER INCOME
31st March 2012 31st March 2011 31st March 2010
Income from Long term InvestmentDividend Income from Long Term Investment 0.05 0.03 0.03
Income from Short term InvestmentInterest Income; - Margin Money Deposits 4.35 1.68 7.03 - Others 37.01 25.76 15.39
Net gain/ loss on sale of Investments ; 0.00 - - Other Non-operating Income 9.60 4.03 5.12 Exchange Gain - 72.94 36.50
TOTAL 51.01 104.44 64.07
21 COST OF RAW MATERIAL AND PACKING MATERIAL CONSUMEDa) Details of Raw material and packing material consumed
31st March 2012 31st March 2011 31st March 2010Basic Chemicals 2,129.21 1,623.19 1,603.72 Active Ingredients 956.16 842.15 368.57 Solvent 476.11 307.88 258.72 Packaging Material 329.45 559.55 265.31 Catalyst & Emulsifiers 134.73 96.86 82.37 Others 843.28 744.16 446.06
TOTAL 4,868.94 4,173.79 3,024.75
b) Details of Inventory 31st March 2012 31st March 2011 31st March 2010Basic Chemicals 199.01 236.46 186.37 Packaging Material 109.67 102.86 74.72 Active Ingredients 101.85 83.74 90.89 Solvent 26.31 22.90 15.42 Catalyst & Emulsifiers 25.25 21.88 24.50 Others 10.99 53.07 46.66
TOTAL 473.08 520.91 438.56
22 ( INCREASE)/DECREASE IN INVENTORY
31st March 2012 31st March 2011 31st March 2010Inventories at the end of the yearFinished Goods 588.11 433.84 292.56 Traded Goods 73.39 46.80 23.71 Work in Process 463.65 1,125.15 308.53 789.17 177.82 494.09
Inventories at the beginning of the yearFinished Goods 433.84 292.56 283.92 Traded Goods 46.80 23.71 15.98 Work in Process 308.53 789.17 177.82 494.09 216.72 516.62
TOTAL (335.98) (295.08) 22.53
a) Details of Purchases of Traded Goods31st March 2012 31st March 2011 31st March 2010
Agro Chemicals 354.02 185.18 135.67 Others 35.98 141.28 0.19
TOTAL 390.00 326.46 135.86
b) Details of Inventory31st March 2012 31st March 2011 31st March 2010
Traded GoodsAgro Chemicals 72.01 45.42 23.71 Others 1.38 1.38 -
TOTAL 73.39 46.80 23.71
31st March 2012 31st March 2011 31st March 2010Work in ProgressAgro Chemicals 141.96 41.76 65.62 Speciality Chemicals 311.67 258.04 112.15 Plant Nutrient 10.02 8.17 0.01 Polymer - 0.56 0.04
TOTAL 463.65 308.53 177.82
31st March 2012 31st March 2011 31st March 2010Finished GoodsAgro Chemicals 428.46 239.37 173.80 Speciality Chemicals 35.93 77.18 22.66 Plant Nutrients 24.66 20.89 12.03 Polymer - 50.15 43.88 Others 99.06 46.25 40.19
TOTAL 588.11 433.84 292.56
23 EMPLOYEE BENEFIT EXPENSES31st March 2012 31st March 2011 31st March 2010
Salaries, Wages and Bonus 620.25 518.72 419.44 Contribution to Provident & other funds 35.89 37.60 25.13 Gratuity and Leave encashment expenses (Refer Note 34) 22.52 15.17 6.90 Employees Welfare Expenses 29.45 25.47 18.43 Expense on Employee Stock Option Scheme (Refer Note 35) 10.89 - -
TOTAL 719.00 596.96 469.90
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REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)24 OTHER EXPENSES
31st March 2012 31st March 2011 31st March 2010Power, Fuel & Water 362.59 267.73 208.88 Stores & Spares Consumed 84.82 51.44 82.32 Repairs & Maintenance to : - Buildings 3.77 4.39 2.62 - Plant & Machinery 28.83 18.59 16.20 - Other Repairs 19.55 18.11 17.89 Environment & Pollution Control expenses 298.63 202.58 86.92 Laboratory & Testing Charges 21.64 26.17 14.30 Freight & Cartage 203.31 174.52 131.58 Advertisement & Sales Promotion 224.93 157.20 100.67 Travelling & Conveyance 170.92 146.62 116.85 Exchange Difference 44.84 - - Rent 39.73 30.56 28.85 Rates, Taxes & Fees 17.70 11.96 17.89 Insurance 15.33 10.43 9.74 Donation 1.71 0.65 1.48 Deferred revenue expenditure written off - - 3.70 Loss On Sale of Fixed Assets (Net) 12.86 0.40 1.78 Auditor's Remuneration 1.61 1.65 0.87 Communication Expenses 20.80 15.52 11.51 Bad debts written off (Net) 0.18 0.07 5.21 Provision for Bad and Doubtful debts & Advances 37.91 16.93 14.24 Director Sitting Fees 3.70 0.58 0.62 Legal & Professional Expenses 46.00 34.17 23.46 Commission on sale - 7.58 10.91 Bank Charges 15.79 17.77 13.23 Prior Period expenses (0.56) 0.03 0.03 Miscellaneous Expenses 38.80 30.47 25.36
TOTAL 1,715.39 1,246.12 947.11
a. Travelling Expenditure includes Directors Travelling amounting to Rs. 17.47 millions (March 2011: Rs. 11.45 millions, March 2010: Rs. 11.19 millions)b. Auditors' Remuneration 31st March 2012 31st March 2011 31st March 2010
-Audit Fees 1.03 1.03 0.51 -Tax Audit Fees 0.15 0.15 0.10 -Certificates & other matters 0.06 0.12 0.02 -Reimbursement of Expenses 0.37 0.35 0.24
TOTAL 1.61 1.65 0.87
25 EXCEPTIONAL ITEM31st March 2012 31st March 2011 31st March 2010
Income from sale of polymer Business 320.99 - - TOTAL 320.99 - -
26 DEPRECIATION AND AMORTIZATION EXPENSES31st March 2012 31st March 2011 31st March 2010
Depreciation on Tangible Assets 170.97 153.64 128.79 Depreciation on Intangible Assets 4.16 3.53 3.32
175.13 157.17 132.11 Less: Recoupment from revaluation reserve (2.22) (0.27) (0.31)
TOTAL 172.91 156.90 131.80
27 FINANCE COST 31st March 2012 31st March 2011 31st March 2010Interest On Fixed Loans 66.86 68.13 84.55 On Working Capital 109.82 102.64 90.52 Others 13.93 190.61 5.66 176.43 - 175.07 Other Borrowing Costs 4.59 8.99 9.59 Exchange Difference to the extent considered as an adjustment to borrowing costs 3.50 - -
TOTAL 198.70 185.42 184.66
28 RESEARCH & DEVELOPMENT EXPENSES
a) Revenue Expenditure31st March 2012 31st March 2011 31st March 2010
Employee Benefit ExpensesSalaries, Wages & Bonus 32.98 28.35 22.92 Contributions to Provident & other funds 2.89 2.81 2.31 Employee Welfare Expenses 0.81 0.52 0.15
36.68 31.68 25.38
Raw & Packing Materials Consumed 3.31 1.56 1.35
Other ExpensesLaboratory & testing Material 8.71 10.78 12.82 Power, Fuel & Water 1.05 0.94 1.42 Stores & Spares Consumed 3.73 2.38 4.11 Testing & Analysis 0.22 0.28 0.99 Travelling & Conveyance 2.10 2.60 1.18 Rates, Taxes & Fees 0.04 0.15 0.13 Printing & Stationery 0.19 0.06 0.01 Legal & Professional Charges 0.90 0.56 - Miscellaneous Expenses 0.44 0.62 0.50
17.38 18.37 21.16 DepreciationDepreciation 3.86 3.79 3.60
TOTAL 61.23 55.40 51.49 b) Capital Expenditure
Description 31st March 2009 Addition during the year
31st March 2010 Addition during the year
31st March 2011 Addition during the year
31st March 2012
Buildings 1.81 - 1.81 - 1.81 - 1.81 Equipments & Others 77.05 6.36 83.41 - 83.41 5.03 88.44
TOTAL 78.86 6.36 85.22 - 85.22 5.03 90.25
During the year, the Company has disposed off its Polymer compounding business on slump sale basis as a going concern to M/s Rhodia Polymers Ltd at net gain of Rs. 303.43 millions. Also, one of the subsidiary company M/s PILL
Finance & Investment Ltd. sold part of its land to the aforesaid party at net gain of Rs. 17.56 millions. The total net gain of Rs. 320.99 millions is shown as an exceptional item in the profit & loss account.
Details of Expenditure on Research & Development Facilities/ division of the Company recognised by Department of Scientific & Industrial Research.
F-47
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)29
30 DISCONTINUED OPERATIONS
The Additional Disclosure as per AS-24, issued pursuant to the Companies(Accounting Standards) Rules 2006,is set out below:
Particulars Discontinued Operations
Discontinuing Operations
Discontinuing Operations
11th April 2011 31st March 2011 31st March 2010
Gross Sales 12.41 812.47 552.21 Operating Expense 12.76 745.63 495.50 Pre-Tax profit (loss) from operating activities (0.35) 66.84 56.71 Interest expense - 11.67 15.17 Profit (loss) before Tax (0.35) 55.17 41.54 Income Tax expense (0.05) 20.59 16.35 Profit (loss) after Tax (0.30) 34.58 25.19
The carrying amount of total assets and liabilities pertaining to the business are as follows:
Particulars As at 11th April 2011 31st March 2011 31st March 2010
Total Assets 447.45 447.09 343.64 Total Liabilities 111.20 104.54 59.01
As on 31st March 2012, the carrying amount of Assets & Liabilities of discontinued business is Rs. NIL.
Cash Flow Disclosure Related to Discontinued Operations
Particulars As at 11th April 2011 31st March 2011 31st March 2010
Cash Flow from operations (0.14) 73.64 63.26 Net Working Capital Changes (23.33) (52.87) (42.21) Net Cash flow from Operating Activities (23.47) 20.77 21.05 Net Cash flow from Investing Activities (0.30) (2.09) (2.61) Net Cash flow from Financing Activities 6.64 (11.67) (15.17)
Net Cash inflow/ (outflow) (17.13) 7.01 3.27
31 EARNING PER SHARE31st March 2012 31st March 2011 31st March 2010
a) Net Profit for Basic & Diluted EPS 1,035.92 651.04 419.02
b) Number of Equity Shares at the beginning of the year 11,187,501 7,087,508 3,543,754 Add: - 3,729,167 7,272,921 Add: - 370,826 -
Add: 1,336,688 - Add: 12,524,189 11,187,501 10,816,675
25,048,378 22,375,002 21,633,350 24,968,031 22,292,709 21,633,350
87,019 2,636,790 1,577,928
95,605 - - 25,150,655 24,929,499 23,211,278
Earning Per Share - Basic (Rs.) 41.49 29.20 19.37
Earning per share - Diluted (Rs.) 41.19 26.12 18.05
Face value per share (Rs.) 5/- 10/- 10/-
32 NOTE ON AS 30 ADOPTION
33 NOTE ON ADOPTION OF REVISED SCHEDULE VI
Bonus Shares issued during the period ended 31st March 2011 & 2010Partial conversion of Compulsorily Convertible Preference Shares into Equity Shares during the year 2010-11
Conversion of CCPS and OCD into Equity Shares during the year
*Pursuant to the approval of the shareholders in their meeting held on 16th July 2011, the Company has sub-divided the existing equity shares of Rs. 10/- each fully paid up into 2 equity shares of Rs. 5/- each. Further, in accordance withAccounting Standard (AS-20), the earning per share for the current and comparative period has been recomputed after adjusting for the sub-division of the shares.
The Company has adopted Accounting Standard 30 (AS 30) " Financial Instruments: Recognition and Measurement". Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of derivative
financial instruments, the net foreign exchange exposure over a period of one year against the committed order in hand hedged through forward contracts, are designated as effective cash flow hedges and marked to market loss/gain
arising on said foreign currency instruments are transferred to "Cash Flow Hedge Reserve" directly in the Balance Sheet under Reserves & Surplus and later the same is reclassified into Profit & Loss account upon the occurrence of the
hedging transaction. Accordingly marked to market loss of Rs. 49.26 millions arising on foreign currency instruments qualifying for hedge accounting as on 31st March 2012 has been transferred to Cash Flow Hedge Reserve Account. During the financial year 2010-11, the Company, consequent to the announcement issued by the Institute of Chartered Accountants of India in March 2008, Accounting for Derivatives, has recognised marked to market foreign currency loss of Rs. 2.24 million (March 2010: gain of Rs. 5.87 millions, not recognised, as a matter of pruduence) on the outstanding forward contracts.
These financial Statements comprising the balance sheet and statement of profit and loss and notes have been prepared in accordance with Revised Schedule VI which has been made applicable for financial year commencing on or after 1st April, 2011, vide MCA’s notification no. S.O. 653(E) dated 30th March, 2011.
In the opinion of the management and to the best of their knowledge and belief, the value on realisation of loans, advances and other current assets, in the ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet and provisions has been made for all known liabilities.
The Company has entered into a Business Transfer Agreement on 20th December, 2010 for selling its polymer division as a going concern on slump sale basis for net sale consideration of Rs. 665.96 millions This transaction was concluded on 11th April 2011. The Company recognised profit of Rs. 227.92 millions (Net of taxes) on account of sale of the business.
The following statement shows the revenue and expenses of Discontinued operations for the year ended 31st March 2012, 2011 and 2010 respectively
Sub-division of Equity Shares @ Rs 5 eachTotal Number of shares outstanding at the end of the yearWeighted average number of Equity Shares outstanding during the year - BasicWeighted average number of Equity shares arising out of outstanding Compulsorily Convertible Preference Sharesand Optionally Convertible Debentures that have dilutive effect on EPSWeighted Average number of Equity Shares arising out of grant of Employee Stock optionWeighted average number of Equity Shares outstanding during the year - Diluted
F-48
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)
34 GRATUITY & LEAVE ENCASHMENT
a) Defined Contribution Plans:-
b) Defined benefits plans - as per actuarial valuation
Particulars Gratuity Leave Encashment
Gratuity Leave Encashment
Gratuity Leave Encashment
Funded Non -Funded Funded Non -Funded Funded Non -FundedRs./millions Rs./millions Rs./millions Rs./millions Rs./millions Rs./millions
I1 40.71 16.81 32.68 14.90 29.09 10.82 2 6.45 5.11 4.96 3.63 4.03 3.05 3 3.46 1.42 2.61 1.19 2.18 0.81 4 - - 5.18 - - - 5 4.95 3.18 1.07 (0.14) (0.73) 1.90 6 (5.28) (4.48) (5.79) (2.77) (1.89) (1.68) 7 50.29 22.04 40.71 16.81 32.68 14.90
II1 32.24 - 34.65 - 24.26 - 2 2.74 - 2.77 - 2.06 - 3 (0.80) - 0.52 - 0.50 - 4 8.32 - - - 9.69 - 5 (5.28) - (5.70) - (1.89) - 6 37.22 - 32.24 - 34.62 -
III
1 50.29 22.05 40.71 16.81 32.69 14.90 2 37.22 - 32.24 - 34.62 - 3 (13.07) (22.05) (8.47) (16.81) 1.93 (14.90) 4 (13.07) (22.05) (8.47) (16.81) 1.93 (14.90)
IV1 6.45 5.11 4.96 3.63 4.03 3.05 2 3.46 1.42 2.61 1.19 2.18 0.81 3 - - 5.18 - - - 4 (2.74) - (2.77) - (2.06) - 5 5.75 3.18 0.55 (0.14) (1.23) 1.90 6 12.92 9.71 10.53 4.68 2.92 5.76
V1 8.50% 8.50% 8.00% 8.00% 7.50% 7.50%2 8.50% 0.00% - - 8.50% 0.00%3 LIC (1994-96) LIC (1994-96) LIC (1994-96)
duly modified LIC (1994-96)
duly modified LIC (1994-96)
modified LIC (1994-96)
duly modified
4 6.00% 6.00% 5.50% 5.50% 5.00% 5.00%
35 EMPLOYEE STOCK OPTION PLANSThe Company provides share-based payment schemes to its employees. The relevant details of the scheme are as follows:
Loyalty Options Performance Options
Date of Grant 2nd April 2012 2nd April 2012Options Granted 1,99,000* 1,64,836*Exercise price # Rs. 233.88* Rs. 263.12*Vesting Period 1-2 Years 1-4 YearsExercise period 6 years from the
date of vesting of options
6 years from the date of vesting of options
* Post Split
# arrived at discount to the closing market price of company share at BSE prior to the date of grant
The details of exercise price for stock option outstanding at the end of the year
No. of options Weighted average exercise price (Rs.)
No. of options Weighted average exercise price (Rs.)
- - - - 363836 247.13 - -
- - - - - - - - - - - -
363836 247.13 - - - - - -
The details of Exercise Price for stock options outstanding at the end of the year
No. of Options Outstanding
Weighted Average Remaining Contractual Life (in years)
Weighted Average Exercise price
No. of Options Outstanding
Weighted Average Remaining Contractual Life (in years)
Weighted Average Exercise price
363836 7.08 247.13 - - -
Range of Exercise price
PII ESOP 2010 PLAN200-300
Weighted average fair value of options granted 172.35 -
2011-12 2010-11
Expired during the yearOutstanding at the end of the yearExercisable at the end of the yearWeighted average remaining contractual life of outstanding options 7.08 -
2011-12 2010-11
Outstanding at the beginning of the yearGranted during the yearForfeited during the yearExercised during the year
Actuarial AssumptionsDiscount RateExpected rate of return on plan assetsMortality Table
Salary Escalation
In December 2010, the Board of Directors approved the PII ESOP 2010 Scheme in order to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the
Company (including subsidiary companies) with an intent to attract and retain talent in the organization, The aforesaid scheme was duly approved by shareholders in its EGM held on 21st January, 2011 and is administered through
independent trust. During the year, Compensation Committee of the Board granted following options under PII ESOP 2010 Scheme to certain category of employees as per criteria laid down by Compensation Committee of the Board.
Current Service CostInterest CostPast service CostExpected return on plan assetsNet Actuarial (Gain)/LossTotal Expense
Reconciliation of Present value of Defined Benefit Obligation and Fair Value of Plan AssetsPresent Value of obligation as at year-endFair value of plan assets at year -endFunded status {(Surplus/Deficit)}Net Asset/(Liability)
Expenses recognised in the Profit and Loss Account
Plan assets at the end of the year
Interest CostPast Service CostNet Actuarial (Gain)/LossBenefits PaidPresent Value of obligation as at year-end
Change in Fair Value of Plan Assets during the year
Change in present value of obligation during the yearPresent value of obligation at the beginning of the yearCurrent Service Cost
Plan assets at the beginning of the yearExpected return on plan assetsActuarial Gain/(Loss) on plan assetsEmployer's contributionBenefits paid
2011-12 2010-11
As per Accounting Standard (AS)- 15 "Employee Benefits", the disclosure of employee benefits as defined in the accounting standard is given below:
The Company has recognised an expense of Rs. 35.89 millions (March 2011 Rs. 37.6 millions, March 2010: Rs. 28.94 millions) towards the defined contribution plan.
2009-10
F-49
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)Methods and Assumptions used to estimate the fair value of options granted during the year:
2011-12
The fair value has been calculated using the Black Scholes Option Pricing model
The assumptions used in the model are as follows:
Variables Loyalty Option- 2nd April 2011
Performance Options- 2nd April 2011
1 Risk Free Interest rate 7.42% 7.42%-7.67%2 Expected Life 4 years- 5 years 4 years- 7 years3 Expected Volatility 56.54% - 56.77% 56.54% - 66.65%4 Dividend Yield 0.68% 0.68%5 292.35 292.35
Pro- Forma Adjusted Net Income and Earning per share
Particulars Rs. In MillionsNet Income as reported 1,035.92 Add: Intrinsic Value Compensation Cost 10.89 Less: Fair Value Compensation cost (36.99) Adjusted Pro Forma Net income 1,009.82
Earning Per Share: BasicAs Reported 41.49
Adjusted Pro Forma 40.44
Earning Per Share: DilutedAs Reported 41.19
Adjusted Pro Forma 40.15
3631st March 2012 31st March 2011 31st March 2010
a. 679.93 145.62 74.67
b. Bank Guarantees 37.98 25.09 13.38 c. Letter of Credit 168.05 327.06 411.12
37 LEASES
31st March 2012 31st March 2011 31st March 2010- Payable within one year 60.89 40.89 22.55 -Later than one year and not later than five years 151.04 88.71 18.41 -Later than five years 64.22 - - -Lease payments recognised in P&L account 50.16 35.51 28.13
38 CAPITALISATION OF EXPENDITURE
Pre-operative expenditure capitalised as a part of Fixed Assets and carried forward is as under: 31st March 2012 31st March 2011 31st March 2010
A. Brought forward from the earlier year 70.64 20.05 9.69
B. Expenditure incurred during the year:Staff Costs 43.27 28.99 9.09 Administrative expenses 36.04 12.80 17.02 Interest and commitment charges 15.47 11.98 16.12 Stores Consumption 10.55 30.28 1.01 Exchange Difference 12.43 - (1.30)
117.76 84.05 41.94C. Capitalised as part of :
Plant & Machinery 61.73 30.80 25.67 Building - 2.66 5.49 Furniture, Fixtures & Office equipments - - 0.42
61.73 33.46 31.58
D. Carried forward as part of capital work in progress 126.67 70.64 20.05
The Company has entered a lease agreement with some of the parties for lease for the corporate office during the financial year 2011-12. The lease rent would be increased by 12.5% after every 3 years.
Estimated Amount of Contracts remaining to be executed on capital account and not provided for (Net of advances)is Rs. 150.87 millions (March 2011: Rs. 145.62 millions, March 2010: Rs. 126.21 millions)
Price of the underlying share in market at the time of the option granted (Rs.)
CAPITAL & OTHER COMMITMENTS
The stock based compensation cost calculated as per the intrinsic value method for the financial year 2011-12 is Rs. 10.89 millions. If the stock-based compensation cost was calculated as per the fair value method, the total cost to be
recognised in the financial statements for the year 2011-12 would be Rs 36.99 millions. The effect of adopting the fair value method on the net income and earnings per share is presented below:
The Company is a lessee under various operating leases. Total of future minimum lease payments under non-cancellable operating leases for each of the following periods:
F-50
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)39 SEGMENT INFORMATION
a) Primary Segment Information (Business Segments) Amount (Rs. In Millions)
Particulars Chemicals Others Total Chemicals Others Total Chemicals Others Total1 Revenue
External Revenue (Gross) 10,047.89 31.67 10,079.56 7,653.33 828.65 8,481.98 5,703.06 560.83 6,263.89
Inter Segment Revenue - - - - - - - - -
Segment Revenue Total 10,047.89 31.67 10,079.56 7,653.33 828.65 8,481.98 5,703.06 560.83 6,263.89
2 Segment Result 1,250.56 19.84 1,270.40 989.86 82.05 1,071.91 675.77 58.37 734.14
Segment Result Total 1,250.56 19.84 1,270.40 989.86 82.05 1,071.91 675.77 58.37 734.14
Profit before Interest, etc, and taxationLess: Interest 198.70 185.42 184.66
Add: Interest Income 41.35 27.44 22.42
Add: Dividend Income 0.05 0.03 0.03
Profit / (Loss) before Tax 1,113.10 913.96 571.93
3 Segment Assets 7,972.46 43.20 8,015.66 6,165.25 474.68 6,639.93 3,982.73 926.04 4,908.77
4 Segment Liabilities 4,780.43 (19.21) 4,761.22 4,381.85 120.78 4,502.63 1,008.29 2,354.63 3,362.92
5 Capital Expenditure
Total Cost incurred during the year to acquire segment assets
1,669.30 14.06 1,683.36 1,496.69 36.47 1,533.16 679.18 0.18 679.36
6 Depreciation
Segment Depreciation 170.89 2.02 172.91 149.10 7.80 156.90 124.93 6.87 131.80
7 Non Cash Expenses
Segment non-cash expenses other than depreciation/ amortisation
50.94 0.01 50.95 17.32 0.07 17.39 18.89 2.33 21.22
Unallocable Non-cash expenses - 2.24 3.70
Total Non-cash expenses 50.95 19.63 24.92
b) 31st March 2012 31st March 2011 31st March 2010
1 Segment Revenue- Within India 6,133.06 5,916.89 4,199.21 - Outside India 3,946.50 2,565.09 2,064.68
Total Revenue 10,079.56 8,481.98 6,263.89 2 Segment Assets*
- Within India 6,713.14 5,714.18 4,542.15 - Outside India 1,302.52 925.75 366.62
Total Assets 8,015.66 6,639.93 4,908.77
* Segment Assets outside India is entirely related to Sundry Debtors.
Secondary Segment information (Geographical Segments)
2011-12 2010-11 2009-10
F-51
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)40 RELATED PARTY DISCLOSURES
Related party disclosure, as required by Accounting Standard-18, is as below:
a) List of Related Parties
i.
ii. Key Managerial Personnel & their relatives (KMP): (a) Key Managerial Personnel
Mr. Salil Singhal Chairman & Managing DirectorMr. Mayank Singhal Managing Director & CEOMr. Anurag Surana Whole time DirectorMr. Junichi Nakano (FY 2009-10) Whole time Director
(b) Relatives of Key Managerial Personnel:-Relation with Key Managerial Personnel Mr. Salil Singhal Mr. Mayank SinghalFather Salil SinghalMother Saraswati Singhal Madhu SinghalWife Madhu SinghalSister Pooja Singhal
Shefali Khushlani
Son Mayank SinghalDaughter Pooja Singhal
Shefali Khushlani
iii Enterprises over which KMP and their relatives are able to exercise significant influence :-
b) The following transactions were carried out with related parties in the ordinary course of business:(Rs. in Millions)
Nature of Transactions Type of relation Balance outstanding Dr (Cr)
Balance outstanding Dr (Cr)
Balance outstanding Dr (Cr)
Recd/Pur. Paid/Sales Recd/Pur. Paid/Sales Recd/Pur. Paid/Sales Purchase/Sales of goods and services a(iii)(b) &
a(iii)(c )0.28 - (0.01) 5.26 11.72 2.59 4.30 5.76 0.80
Remuneration to directors a(ii)(a) - 50.22 (10.00) - 45.36 (6.50) - 35.38 - Interest a(ii)(a), a(ii)(b)
& a(iii)- 8.70 (4.47) 3.17 7.85 - 4.23 7.57 -
Rent a(ii) & a(iii) - 10.56 (0.22) - 11.68 0.40 - 11.01 (0.38) Deposits Received and Paid a(ii) 45.85 50.67 (59.03) 9.53 8.80 (61.91) 5.25 12.87 (57.03) Security Deposits a(ii) & a(iii) 6.98 - - - 0.53 3.11 - 2.58 - Recovery of Dues on account of expenses incurred
a(iii)(b) & a(iii)(c )
2.39 - 1.57 2.85 - - 3.45 - (1.99)
Reimbursement on account of expenses a(iii)(c ) - 0.47 - - - - - 0.01 0.01
Loans Granted a(iii)(a) - - - 100.00 100.00 - 250.00 250.00 - Inter Corporate Deposit a(iii) 4.00 11.50 (11.50) 7.00 - (19.00) 1.00 - (12.00) Donation a(iii) - 1.00 - - 0.50 - - 0.50 - Salary a(ii)(b) - 0.12 - - - - - - - Traveling & Other Expenditure a(ii) - 23.09 0.21 - 15.94 0.16 - 16.83 0.34
41 CONTINGENT LIABILITIES 31st March 2012 31st March 2011 31st March 2010Disputed Taxation demands not acknowledged as debts:-Sales Tax 17.64 16.28 14.00 - Excise Duty 8.50 8.50 8.50- Income Tax 24.31 - - - Custom Duty 7.11 - - Anti Dumping Duty 23.04 23.04 - Counter Guarantee to GIDC 3.29 3.29 3.29
42 DERIVATIVES, INSTRUMENTS AND HEDGED/ UNHEDGED FOREIGN CURRENCY EXPOSUREi) All financial and derivative contracts entered into by the Company are for hedging purposes.
ii) Forward Contract outstanding as at Balance Sheet date (in Milions)
Amount Outstanding as at 31st March,
2012
Amount Outstanding as at
31st March' 11
Amount Outstanding as at
31st March' 10
Buy / Sell Purpose
26.65 20.00 12.50 Sell Hedging- 8.00 - Sell Hedging
These forward covers are against export debtors and future receivables over a period of one year against committed orders in hand.
iii) Particulars for Hedged Foreign Currency Exposure( in Millions)
Particulars Currency Amount as at 31st March' 12
(in Foreign Currency)
Amount as at 31st March' 11 (in
INR)
Amount as at 31st March' 11 (in
Foreign Currency)
Amount as at 31st March' 11 (INR)
Amount as at 31st March' 10 (in
Foreign Currency)
Amount as at 31st March' 10 (INR)
Export Debtors USD 7.72 367.55 6.43 302.67 4.75 217.01 EURO - - 0.44 27.00 - -
iv) Foreign currency exposure that are not hedged by derivative or forward contracts as at Balance Sheet Date(in Millions)
Particulars Currency Amount as at 31st March' 12
(in Foreign Currency)
Amount as at 31st March' 12 (in
INR)
Amount as at 31st March' 11 (in
Foreign Currency)
Amount as at 31st March' 11 (INR)
Amount as at 31st March' 10 (in
Foreign Currency)
Amount as at 31st March' 10 (INR)
1 ECB Term loan USD 20.00 1,023.80 - - 0.04 1.72 2 PCFC Loan USD 8.00 409.59 12.19 544.52 0.26 11.87 3 Buyers Credit USD - - 0.28 12.66 - - 4 EEFC Account USD 0.07 3.38 0.07 2.96 - -
USD 4.54 232.30 6.77 302.48 0.28 12.50 EURO - - 0.06 3.68 0.06 3.60 GBH - - (0.00) (0.25) - - CHF - - (0.02) (0.93) (0.00) (0.00) JPY 6.32 3.95 48.08 25.48 0.13 0.06 USD 17.44 892.78 13.21 589.93 2.95 132.46 EURO 0.58 39.50 - - 0.01 0.47 JPY 4.31 2.69 11.40 6.15 34.83 16.67
Enterprises in respect of which reporting enterprise is an associate: a) Lucrative Leasing Finance and Investment Company Ltd; b) Parteek Finance and Investment Company Ltd;
(a) Samaya Investment and Trading Pvt. Ltd; (b) Wolkem India Ltd.; (c) Secure Meters Ltd., (d) Salil Singhal (HUF), (e) Singhal Foundation, (f) PI Apparels and (g) Hycron Electronics.
6 Export Debtors
2011-12 2010-11Transactions during the period Transactions during the period
5 Import Creditors (Net)
2009-10Transactions during the period
Currency
USDEURO
F-52
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)43 DEFERRAL/ CAPITALISATION OF EXCHANGE DIFFERENCE
The unamortised amount of exchange fluctuation as on the reporting date is Rs. 16.41 millions (March 2011: Rs. 4.33 millions, March 2010: Rs.5.90 millions)
44
Principal Amount Interest Amount
Principal Amount Interest Amount
Principal Amount Interest Amount
35.11 - 32.28 - 53.93 -
118.51 2.35 220.86 5.87 230.45 6.19
- - - - - -
- - - - - -
- - - - - -
45 VALUE OF IMPORTS CALCULATED ON CIF BASIS31st March 2012 31st March 2011 31st March 2010
Raw Materials 1,856.20 1,670.50 1,139.55 Spare Parts & Components 26.40 16.86 3.42 Capital Goods 46.01 39.56 9.58
46 EARNINGS IN FOREIGN CURRENCY 31st March 2012 31st March 2011 31st March 2010
Export of Goods on FOB Basis 3,936.39 2,487.74 2,019.58
47 EXPENDITURE IN FOREIGN CURRENCY31st March 2012 31st March 2011 31st March 2010
Professional 6.80 5.93 3.14 Consultancy 0.80 0.26 2.78 Interest 6.23 6.47 1.21 Travelling 1.63 1.15 1.76 Salary 1.60 4.25 12.56 Others 26.82 33.88 10.14
48 ACTUAL PRODUCTION, PURCHASES, SALES AND STOCK OF GOODS MANUFACTURED
S.No. Product Opening Production Stock Purchases Sales Closing Stock(I) QUANTITY (IN TONNES)
March 2012a) Chemicals including by-product/Traded goods
4,816 49,046 800 50,534 4,128
b) Polymer* 549 - - 549 - TOTAL 5,365 49,046 800 51,083 4,128
March 2011a) Chemicals including by-product/Traded goods
4,216 45,876 1,299 46,575 4,816
b) Polymer 803 6,232 - 6,486 549 TOTAL 5,019 52,108 1,299 53,061 5,365
March 2010
a) Chemicals including by-product/Traded goods
4,678 41,640 307 42,409 4,216
b) Polymer 702 5,005 - 4,904 803 5,380 46,645 307 47,313 5,019
(II) IN VALUE (Rs. In millions)March 2012a) Chemicals including by-product/Traded goods
740.41 - 390.00 9,974.77 1,125.15
b) Polymer 48.76 - - 12.42 - TOTAL 789.17 - 390.00 9,987.19 1,125.15
March 2011a) Chemicals including by-product/Traded goods
450.01 - 326.46 7,524.22 740.41
b) Polymer 44.09 - - 812.47 48.76 TOTAL 494.10 - 326.46 8,336.69 789.17
March 2010a) Chemicals including by-product/Traded goods
475.25 - 135.86 5,662.44 450.01
b) Polymer 41.37 - - 510.22 44.09 TOTAL 516.62 - 135.86 6,172.66 494.10
THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT (MSMED) ACT, 2006
31st March 2011 31st March 2011
Pursuant to notification dated March 31, 2009 and December 29, 2011 issued by the Ministry the Ministry of Corporate Affairs, Government of India, the Company decided to exercise the option of accounting for Exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period or reported in the previous financial statements in so far as they relate to the acquisition of depreciable capital assets by addition to/ deduction from the cost of the asset and depreciate the same over the balance life of the asset. Accordingly, the current year exchange losses amounting to Rs. 12.43 millions have been adjusted to the cost of fixed assets/CWIP.
31st March 2010
Principal amount and Interest due thereon remaining unpaid to any supplieras on 31st March 2012
Interest paid by the Company in terms of section 16 of the MSMED Actalong with the amounts of the payment made to the supplier beyond theappointed day during the accounting year
Interest due and payable for the period of delay in making payment (whichhave been paid but beyond the appointed day during the year) but withoutadding the interest specified under MSMED Act.
Interest accrued and remaining unpaid at the end of the year
Further interest remaining due and payable in succeeding years, until suchdate when the interest dues as above are actually paid to the small enterprisefor the purpose of disallowance as a deductable expenditure under section 23of MSMED Act.
F-53
REFORMATTED CONSOLIADATED NOTES TO BALANCE SHEET AND PROFIT & LOSS ACCOUNT
(Rs in Millions)
49 VALUE OF IMPORTED AND INDIGENOUS RAW MATERIAL, COMPONENTS AND SPARE PARTS CONSUMED
Qty (in Tonnes) (in Rs. Millions) Qty (in Tonnes) (in Rs. Millions) Qty (in Tonnes) (in Rs. Millions)
Technical Pesticides 374 149.39 442 155.25 446 155.83 Inert Chemicals & Adjuvants 156,306 3,952.70 161,406 3,236.23 107,920 2,337.01 Polymers 184 15.78 6,030 506.54 5,002 360.15 Others - 751.07 - 408.04 - 185.93
TOTAL 156,864 4,868.94 167,878 4,306.06 113,368 3,038.92
PARTICULARS% in Rs. Millions % in Rs. Millions % in Rs. Millions
i Raw Material Imported 48.64 2,163.54 36.19 1,415.42 47.86 1,326.43 Indigenous 51.36 2,284.85 63.81 2,495.15 52.14 1,445.28
ii Packing Material Imported - - 2.89 11.42 - - Indigenous 100.00 420.55 97.11 384.08 100.00 267.21
50 Figures of previous year have been regrouped and/ or rearranged wherever necessary to make them comparable with those of the current year.
31st March 2010
31st March 2010
31st March 2012 31st March 2011
31st March 2012 31st March 2011
To
The Board of Directors of PI Industries Ltd.
LIMITED REVIEW REPORT ON UN-AUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED 30.09.2012 OF PI INDUSTRIES LTD.
We have reviewed the accompanying statement of Un-audited Financial Results of PI Industries Ltd. for the quarter ended 30th September, 2012 except for the disclosures regarding ‘Public Shareholding’ and ‘Promoter and Promoter Group Shareholding’ which have been traced from disclosures made by the management and have not been audited by us. This statement is the responsibility of the Company’s management and has been approved by the Board of Directors. Our responsibility is to issue a report on these financial statements based on our review.
We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquires of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion.
Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying statement of un-audited financial results prepared in accordance with applicable accounting standards and other recognized accounting practices and policies has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it contains any material misstatement.
For S.S. Kothari Mehta & Co. Chartered Accountants Firm Reg. No. 000756N
-Sd/- CA Yogesh Kr. Gupta Partner M. No.093214
Place: Gurgaon Date: 7th November 2012
F-54
F-55
PI INDUSTRIES LTD
UN-AUDITED FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED 30TH SEPTEMBER 2012
PART 1Statement of Un-Audited Standalone Results for the Quarter and Half Year ended 30th September 2012
(in Rs. Millions)S.No. Particulars Year ended
30.09.2012 30.06.2012 30.09.2011 30.09.2012 30.09.2011 31.03.2012Un-Audited Un-Audited Un-Audited Un-Audited Un-Audited Audited
1 Income From Operations(a) Net Sales/ Income from operations 2,980.27 2,389.07 2,448.50 5,369.34 4,511.13 8,749.69
(Net of Discount & Excise Duty)(b) Other Operating income 4.01 2.42 2.82 6.43 5.62 21.21
Total income from Operations (net) 2,984.28 2,391.49 2,451.32 5,375.77 4,516.75 8,770.90
2 Expenses(a) Cost of Material Consumed 1,733.29 1,329.22 1,563.41 3,062.51 2,875.83 4,866.81 (b) Purchases of stock -in- trade 52.27 96.48 85.84 148.75 202.75 390.00 ( c) Changes in inventories of finished goods, work in progress and
stock in trade 14.54 (133.34) (224.18) (118.80) (553.24) (335.98) (d) Employee Benefit expenses 229.72 180.08 180.98 409.80 347.79 701.71 (e) Depreciation and amortisation expenses 49.66 49.19 42.07 98.85 83.65 171.09 (f) Other Expenses 518.04 425.77 470.00 943.81 859.98 1,692.94
Total Expenses 2,597.52 1,947.40 2,118.12 4,544.92 3,816.76 7,486.57
3 Profit/ (Loss) from operations before other income, finance costs, exchange difference and exceptional items (1-2) 386.76 444.09 333.20 830.85 699.99 1,284.33
4 Other Income 10.93 17.04 7.98 27.97 18.56 51.91
5 Profit/ (Loss) from ordinary activities before finance costs, exchange difference and exceptional items (3+4) 397.69 461.13 341.18 858.82 718.55 1,336.24
6 (a) Finance Costs 49.52 54.38 50.77 103.90 103.83 201.09 6 (b) Exchange Fluctuation (Gain)/ Loss (21.33) 67.83 12.68 46.50 (2.73) 44.81
7 Profit/ (Loss) from ordinary activities after finance costs, but before exceptional items (5-6) 369.50 338.92 277.73 708.42 617.45 1,090.34
8 Exceptional items - - (0.00) - 303.43 303.43
9 Profit/ (loss) from ordinary activities before tax (7+8) 369.50 338.92 277.73 708.42 920.88 1,393.77
10 Tax expense 111.16 104.36 84.09 215.52 247.71 388.35
11 Net Profit / (Loss) from ordinary activities after tax (9-10) 258.34 234.56 193.64 492.90 673.17 1,005.42
12 Extraordinary items (Net of tax expense - - - - - - 13 Net Profit/ (Loss) for the period (11+12) after taxes 258.34 234.56 193.64 492.90 673.17 1,005.42
14 Paid-up equity share capital(Face value of Rs 5/- each (Previous Year Rs. 10/-)) 125.84 125.24 125.24 125.84 125.24 125.24
15 Reserves excluding Revaluation Reserves as per Balance sheet of previous accounting year. - - - - - 3,048.82
16 Earning per Share *(of Rs.5/- Each (Previous Year Rs. 10/- each)(a) Basic (in Rs.) 10.28 9.36 7.78 19.61 27.05 40.27 (b) Diluted (in Rs.) 10.24 9.33 7.71 19.54 26.79 39.98
* Actuals for the quarter not annualisedPART II
Year ended 30.09.2012 30.06.2012 30.09.2011 30.09.2012 30.09.2011 31.03.2012
Audited
A Particulars of Shareholdings1 Public Shareholding
- Number of shares 9223152 9104356 9104356 9223152 9104356 9104356- Percentage of shareholding 36.65% 36.35% 36.35% 36.65% 36.35% 36.35%
2 Promoters and Promoter Group Shareholdinga) Pledged / Encumbered
- Number of shares Nil Nil Nil Nil Nil Nil- Percentage of shares (as a % of total shareholding of promoter and promoter group 0% 0% 0% 0% 0% 0%- Percentage of shares (as a % total shareholding of total share capital of the Company. 0% 0% 0% 0% 0% 0%
b) Non- Encumbered- Number of shares 15944022 15944022 15944022 15944022 15944022 15944022- Percentage of shares (as a % of total shareholding of promoter and promoter group 100% 100% 100% 100% 100% 100%- Percentage of shares (as a % total shareholding of total share capital of the Company. 63.35% 63.65% 63.65% 63.35% 63.65% 63.65%
ParticularsB Investor Complaints
Pending at the beginning of the quarter NilReceived during the quarter 3 Disposed of during the quarter 3 Remaining unresolved at the end of the quarter Nil
Quarter Ended Half Year Ended
S.No. ParticularsQuarter Ended
Un-Audited
F-56
STATEMENT OF ASSETS & LIABILITIES (in Rs. Millions) As at Half Year
ended As at Year ended 30.09.2012 31.03.2012
A EQUITY & LIABILITIES
1 Shareholders' Funda) Share Capital 125.84 125.24 b) Reserves & Surplus 3,662.88 3,066.78
Sub-total- Shareholders' funds 3,788.72 3,192.02
2 Non- Current Liabilitiesa) Long-Term Borrowings 1,041.91 1,190.57 b) Deferred tax liabilities (net) 328.21 324.29 c) Other long-term liabilities 125.98 105.99 d) Long-Term Provisions 21.61 17.70
Sub-total- Non-Current Liabilities 1,517.71 1,638.55
3 Current Liabilitiesa) Short- term borrowings 1,397.24 1,131.28 b) Trade Payables 2,049.34 963.86 c) Other Current liabilities 1,046.07 884.26 d) Short- term provisions 168.30 162.49
Sub-total-Current Liabilities 4,660.95 3,141.89
TOTAL - EQUITY AND LIABILITY 9,967.38 7,972.46
B ASSETS
1 Non-current Assetsa) Fixed Assets 4,390.59 3,750.73 b) Non-current Investments 19.67 19.67 c) Long-term loans and advances 221.71 190.74 d) Other non-current assets 16.24 16.24
Sub-total- Non-Current Assets 4,648.21 3,977.38
2 Current Assetsa) Current Investments - - b) Inventories 2,640.68 1,787.51 c) Trade Receivables 2,131.95 1,718.69 d) Cash and cash equivalents 94.53 76.27 e) Short-term loans and advances 395.56 393.58 f) Other Current assets 56.45 19.03
Sub-total- Current Assets 5,319.17 3,995.08
TOTAL - ASSETS 9,967.38 7,972.46
SEGMENT-WISE REVENUE, RESULTS AND CAPITAL EMPLOYED(in Rs. Millions)
Year ended 30.09.2012 30.06.2012 30.09.2011 30.09.2012 30.09.2011 31.03.2012Un-Audited Un-Audited Un-Audited Un-Audited Un-Audited Audited
1 Segment Revenue(Net income from operations from each segment)Chemicals 2,984.28 2,391.49 2,451.32 5,375.77 4,505.49 8,759.64 Others - - - - 11.26 11.26
Sub Total 2,984.28 2,391.49 2,451.32 5,375.77 4,516.75 8,770.90 Less: Inter Segment revenue - - - - - Net sales / income from operations 2,984.28 2,391.49 2,451.32 5,375.77 4,516.75 8,770.90
2 Segment Results Profit(+)/Loss(-) before tax, interest and exchange difference from each segmenta. Chemicals 397.69 461.13 38.10 858.82 718.90 1,336.59 b. Others - - 303.08 - 303.08 303.08
Sub Total 397.69 461.13 341.18 858.82 1,021.98 1,639.67 Less: Interest/Financial Charges (Net) & (Gain)/ Loss on Foreign Exchange Transactions 28.19 122.21 63.45 150.40 101.10 245.90
Total Profit Before Tax 369.50 338.92 277.73 708.42 920.88 1,393.77
3 Capital Employeda. Chemicals 6,209.91 5,907.93 4,477.22 6,209.91 4,477.22 5,495.91 b. Others - - - - - - Total Capital Employed 6,209.91 5,907.93 4,477.22 6,209.91 4,477.22 5,495.91 Notes
1
2 The Statutory auditors of the Company have carried out a limited review of the results.
3
4
5
6
For PI Industries Ltd.
Place: Gurgaon Salil SinghalDate: 07th November 2012 Chairman & Managing Director
During the quarter, the Compensation Committee of the Board had alloted 118796 Equity Shares to PII ESOP Trust under PII ESOP Scheme 2010. Further, fresh grant of 98765 performance options were also made to eligible employees as per the aforesaid Scheme .
The previous period's figures have been regrouped/ rearranged/ reclassified wherever necessary.
S.No. ParticularsQuarter ended
The above financial results were reviewed and recommended by the Audit Committee of the Board and approved by the Board of Directors at their meeting held on 07.11.2012
During the quarter ended 30th June 2011, the Company had completed transaction for sale of its polymer compounding business on slump sale basis as a going concern and gain of Rs. 303.43 millions is shown under Exceptional item in the previous half year ended 30th September 2011 and year ended 31st March 2012.
The Company had adopted the principle of hedge accounting in the previous year as set out in ‘Accounting Standard 30 – Financial Instruments Recognition and Measurement’ issued by theInstitute of Chartered Accountant of India to implement the foreign exchange risk management policy under which the net foreign exchange exposure over a period of one year against thecommitted order in hand, is hedged through forward contracts. Accordingly marked to market gain of Rs. 23.87 millions arising on foreign currency instruments qualifying for hedge accounting ason 30th September 2012 has been transferred to Cash Flow Hedge Reserve Account.
DECLARATION
Our Company certifies that all relevant provisions of Chapter VIII read with schedule XVIII of the SEBI
ICDR Regulations have been complied with and no statement made in this Placement Document is contrary
to the provisions of Chapter VIII and Schedule XVIII of the SEBI ICDR Regulations and that all approvals
and permissions required to carry on our business have been obtained, are currently valid and have been
complied with. Our Company further certifies that all the statements in this Placement Document are true
and correct.
Signed by:
-Sd-
___________________________
Mr. Salil Singhal
Chairman and Managing Director
Signed by:
-Sd -
______________________________
Mr. Rajnish Sarna
Whole Time Director
Date: January 29, 2013
Place: Gurgaon
REGISTERED OFFICE OF THE COMPANY Udaisagar Road, Udaipur – 313001, Rajasthan (India)
CORPORATE OFFICE OF OUR COMPANY
5th Floor, Vipul Square, B Block, Sushant Lok, Phase-1, Gurgaon -122 009, Haryana (India)
SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING LEAD MANAGER
Edelweiss Financial Services Limited
Edelweiss House,
Off C S T Road, Kalina,
Mumbai - 400098
DOMESTIC LEGAL ADVISOR TO THE
ISSUE
J. Sagar Associates
Vakils House,
18, Sprott Road, Ballard Estate
Mumbai- 400 001
India
AUDITORS TO THE COMPANY
M/s S S Kothari Mehta & Co., Chartered Accountants
