uttam galva steels limited

Transcription

Placement Document
Not for Circulation
Serial Number: [●]
UTTAM GALVA STEELS LIMITED
(Incorporated in the Republic of India, as a company with limited liability under the Companies Act, 1956 with Registration No. 35806 of
1984-85 and Corporate Identification Number L27104MH1985PLC035806)
Uttam Galva Steels Limited (the "Company") is issuing up to 2,00,00,000 Equity Shares of face value `10 each (the "Equity Shares") at a
price of `80 per Equity Share, including a premium of `70 per Equity Share, aggregating up to `160 crore ("Placement").
PLACEMENT IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF
CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED.
THIS PLACEMENT AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING MADE IN RELIANCE UPON CHAPTER VIII OF
THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS
AMENDED ("SEBI REGULATIONS"). 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
INVESTORS WITHIN OR OUTSIDE INDIA OTHER THAN QUALIFIED INSTITUTIONAL BUYERS ("QIB"), AS DEFINED UNDER THE SEBI
REGULATIONS.
Invitations, offers and sales of Equity Shares shall only be made pursuant to this Placement Document, the Bid cum Application Form and the Confirmation of
Allocation Note. The distribution of this Placement Document or the disclosure of its contents without our Company’s prior consent to any person, other than QIBs
and persons retained by QIBs to advise them with respect to their purchase of our Equity Shares, is unauthorized and prohibited. Each prospective investor, by
accepting delivery of this Placement Document, agrees to observe the foregoing restrictions and to make no copies of this Placement Document or any documents
referred to in this Placement Document. Please see the section titled "Placement Procedure".
This Placement Document has not been reviewed by the Securities and Exchange Board of India, the Reserve Bank of India, the BSE Limited (the "BSE") and the
National Stock Exchange of India Limited (the "NSE" and together with BSE, "Stock Exchanges") or any other regulatory or listing authority and is intended only
for use by QIBs. This Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies 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.
Our Company, having made all reasonable enquiries, accepts responsibility for this Placement Document and confirms that this Placement Document contains all
information with regard to our Company and this Placement, as required by Chapter VIII read together with Schedule XVIII of the SEBI Regulations. Our
Company further confirms that the information contained in this Placement Document is true and correct in all material respects and is not misleading in any
material respect; that the opinions and intentions expressed herein are honestly held, and that there are no other facts the omission of which makes this document as
a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
Investments in equity and equity-related securities involve a degree of risk and prospective investors should not invest in this Placement unless they are
prepared to take the risk of losing all or part of their investment. Prospective investors are advised to carefully read the section titled "Risk Factors" of
this Placement Document before making an investment decision in this Placement. Each prospective investor is advised to consult its advisors about the
particular consequences to it of an investment in our Equity 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.
All of our Company’s outstanding Equity Shares are listed on BSE and NSE. Applications shall be made for listing of our Equity 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 our Equity Shares to trading on the Stock Exchanges should not be taken as an indication of the merits of our Company or
our Equity Shares.
YOU MAY NOT AND ARE NOT AUTHORIZED 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 UNAUTHORIZED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY RESULT IN A VIOLATION OF THE SEBI REGULATIONS
OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.
A copy of this Placement Document has been delivered to the Stock Exchanges. A copy of the Placement Document will be filed with the Stock Exchanges.
THIS PLACEMENT DOCUMENT HAS BEEN PREPARED BY OUR COMPANY SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH
THE PROPOSED PLACEMENT OF THE EQUITY SHARES DESCRIBED IN THIS PLACEMENT DOCUMENT.
Our Equity Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "US Securities Act"), and may not be
offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities
Act and in accordance with applicable US state securities laws. Our Equity Shares are only being offered and sold outside the United States in reliance on
Regulation S under the US Securities Act ("Regulation S"). For further details, please refer to the section titled "Distribution and Solicitation Restrictions" and the
section titled "Transfer Restrictions" of this Placement Document
This Placement Document is dated March 26, 2013.
Global Coordinator and Book Running Lead Manager
Anand Rathi Advisors Limited
10th Floor, " D" Wing, Trade Tower
Kamala Mills Compound, Senapati Bapat Marg,
Lower Parel, Mumbai - 400 013, India.
(T): +91 22 6626 6666 | (F): +91 22 6626 6700
Email: [email protected]
Contact Person: Akshay Bhandari / Jitendra Verma
TABLE OF CONTENTS
Page
NOTICE TO INVESTORS ......................................................................................................................................... 3 CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL DATA, MARKET AND INDUSTRY
DATA, CURRENCY OF PRESENTATION AND EXCHANGE RATES ........................................................... 11 FORWARD LOOKING STATEMENTS ................................................................................................................ 13 ENFORCEMENT OF CIVIL LIABILITIES ........................................................................................................... 14 DEFINITIONS AND ABBREVIATIONS............................................................................................................... 15 SUMMARY OF THE PLACEMENT ...................................................................................................................... 22 SUMMARY OF BUSINESS .................................................................................................................................... 24 SUMMARY FINANCIAL INFORMATION .......................................................................................................... 26 RISK FACTORS ....................................................................................................................................................... 34 MARKET PRICE INFORMATION ........................................................................................................................ 57 USE OF PROCEEDS ................................................................................................................................................ 60 CAPITALISATION .................................................................................................................................................. 61 DIVIDEND POLICY ................................................................................................................................................ 62 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS .......................................................................................................................................................... 63 INDUSTRY OVERVIEW ........................................................................................................................................ 79 BUSINESS OVERVIEW.......................................................................................................................................... 90 FINANCIAL INDEBTEDNESS ............................................................................................................................ 109 REGULATIONS AND POLICIES ........................................................................................................................ 130 BOARD OF DIRECTORS AND MANAGEMENT ............................................................................................. 135 PRINCIPAL SHAREHOLDERS ........................................................................................................................... 144 PLACEMENT PROCEDURE ................................................................................................................................ 146 PLACEMENT ......................................................................................................................................................... 158 DISTRIBUTION AND SOLICITATION RESTRICTIONS ................................................................................ 159 TRANSFER RESTRICTIONS ............................................................................................................................... 162 INDIAN SECURITIES MARKET ......................................................................................................................... 163 DESCRIPTION OF THE SHARES ....................................................................................................................... 166 TAXATION ............................................................................................................................................................ 172 LEGAL PROCEEDINGS ....................................................................................................................................... 178 GENERAL INFORMATION ................................................................................................................................. 182 INDEPENDENT ACCOUNTANTS ...................................................................................................................... 184 FINANCIAL STATEMENTS ................................................................................................................................ 185 DECLARATION .................................................................................................................................................... 191 Uttam Galva Steels Limited – Placement Document NOTICE TO INVESTORS
Our Company has furnished and accepts full responsibility for the information contained in this
Placement Document and confirms that, to its best knowledge and belief and after having made all
reasonable enquiries, this Placement Document contains all information with respect to our Company,
its material associates and the Equity Shares which is material in the context of the Placement. The
statements contained in this Placement Document relating to our Company, its material associates and
the Equity Shares are true and accurate and not misleading, the opinions and intentions expressed in
this Placement Document with regard to our Company, its material associates and the Equity 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, its material associates and the Equity Shares, the omission
of which would, in the context of the Placement, make any statement in this Placement Document
misleading in any material respect. Further, all reasonable enquiries have been made by our Company
to ascertain such facts and to verify the accuracy of all such information and statements. Anand Rathi
Advisors Limited, Global Coordinator and Book Running Lead Manager ("GC-BRLM") to this
Placement has not separately verified the information contained in this Placement Document
(financial, legal or otherwise). Accordingly, neither the GC-BRLM nor any of its shareholders,
directors, officers, employees, counsel, representatives, agents or affiliates makes any express or
implied representation, warranty or undertaking and they accept no responsibility or liability with
respect to the accuracy or completeness of the information contained in this Placement Document or
any other information supplied in connection with the Equity Shares. Each person receiving this
Placement Document acknowledges that such person has not relied on the GC-BRLM or any of its
shareholders, directors, officers, employees, counsel, representatives, agents or affiliates 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, its Subsidiaries and joint ventures and the
merits and risks involved in investing in the Equity Shares. Prospective investors should not construe
the contents of this Placement Document as legal, tax, accounting or investment advice.
No person has been authorized 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 authorized by or on behalf of our Company or the GC-BRLM. 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 the date of this Placement Document.
The Equity Shares have not been approved, disapproved or recommended by the U.S. Securities
and Exchange Commission, any state securities commission in the United States or the securities
commission of any non-U.S. jurisdiction or any other U.S. or non-U.S. regulatory authority.
None of these authorities has passed on or endorsed the merits of the Placement or the accuracy
or adequacy of this Placement Document. Any representation to the contrary is a criminal
offence in the United States and may be a criminal offence in other jurisdictions.
The distribution of this Placement Document and the Placement may be restricted by law in certain
jurisdictions. 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 authorized or to any person to whom it is unlawful to make such offer or
solicitation. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and
neither this Placement Document nor any offering material in connection with the Equity Shares may
be distributed or published in or from any country or jurisdiction, except under circumstances that will
result in compliance with any applicable rules and regulations of any such country or jurisdiction. No
action has been taken by our Company or the GC-BRLM which would permit an offering of the
Equity Shares or distribution of this Placement Document in any jurisdiction where action for that
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Uttam Galva Steels Limited – Placement Document purpose is required. For further details, please see "Distribution and Solicitation Restrictions" and
"Transfer Restrictions".
In making an investment decision, investors must rely on their own examination of our Company and
the terms of the Placement, 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 the Placement. In addition, neither our Company nor the GC-BRLM are making any
representation to any offeree or purchaser of the Equity Shares regarding the legality of an investment
in the Equity Shares by such offeree or purchaser under applicable legal, investment or similar laws or
regulations. Each purchaser of the Equity Shares in the Placement is deemed to have acknowledged,
represented and agreed that it is a Qualified Institutional Buyer (as defined under the SEBI
Regulations) and is eligible to invest in India and in the Equity Shares under Indian law, including
Chapter VIII of the SEBI Regulations and that it is not prohibited by the SEBI or any other statutory
authority from buying, selling or dealing in securities. Each purchaser of Equity Shares in the
Placement also acknowledges that it has been afforded an opportunity to request from our Company
and review information relating to our Company and the Equity Shares.
The information on our Company’s website www.uttamgalva.com, or on the website of GC-BRLM
does not constitute nor form a part of this Placement Document.
Representations by Investors
By purchasing any Equity Shares under the Placement, you are deemed to have represented,
warranted, acknowledged and agreed to us and the GC-BRLM as follows:
•
you are a qualified institutional buyer ("QIB") as defined under Regulation 2(1)(zd) of
SEBI Regulations, have a valid and existing registration under applicable laws of India
applicable), and undertake to acquire, hold, manage or dispose of any Equity Shares that
allocated to you for the purposes of your business in accordance with Chapter VIII of
SEBI Regulations;
•
that you are permitted by all applicable laws to acquire the Equity Shares;
•
if you are allotted Equity Shares pursuant to the Placement, you shall, for a period of one year
from allotment, sell the Equity Shares so acquired only on the Stock Exchanges; as per
current regulations, any sale by way of a "bulk deal" or "block deal" in accordance with the
procedures prescribed by SEBI and the relevant recognized stock exchange shall also be
treated as a sale on a recognized stock exchange;
•
you are aware that the Equity Shares have not been, and will not be, registered under
Companies Act, 1956, as amended (the "Companies Act"), the SEBI Regulations or under
any other law in force in India. This Placement Document has not been verified or affirmed
by the SEBI or the Stock Exchanges and will not be filed or registered with the Registrar of
Companies. This Placement Document has been filed with the Stock Exchanges and has been
displayed on the websites of our Company and the Stock Exchanges;
•
you are entitled to subscribe for the Equity Shares under the laws of all relevant jurisdictions
which apply to you and that you have fully observed such laws and obtained all such
governmental and other consents in each case which may be required thereunder and
complied with all necessary formalities;
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the
(as
are
the
Uttam Galva Steels Limited – Placement Document •
you are entitled to acquire the Equity Shares under the laws of all relevant jurisdictions and
that you have all necessary capacity and have obtained all necessary consents and authorities
to enable you to commit to this participation in the Placement 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;
•
neither our Company nor the GC-BRLM nor any of their respective shareholders, directors,
officers, employees, counsel, representatives, agents or affiliates is making any
recommendation to you, advising you regarding the suitability of any transactions it may
enter into in connection with the Placement; your participation in the Placement is on the
basis that you are not and will not be a client of either of the GC-BRLM and that the GCBRLM nor any of their respective shareholders, directors, officers, employees, counsel,
representatives, agents or affiliates has any duty or responsibilities to you for providing the
protection afforded to their clients or customers or for providing advice in relation to the
Placement and is in no way acting in a fiduciary capacity to you;
•
you confirm that in the event you have attended any presentation by our Company or its
authorised representatives ("Company Presentations") where the GC-BRLM or its
authorised representatives are not present,(a) you understand and acknowledge that the GCBRLM may not have knowledge of the statements that our Company or its authorised
representatives may have made at such Company Presentations and GC-BRLM is therefore
unable to determine whether the information provided to you at such Company Presentations
may have included any material mis-statements or omissions, and, accordingly you
acknowledge that the GC-BRLM have advised you not to rely in any way on any information
that was provided to you at such Company Presentations, and (b) confirm that, to the best of
your knowledge, you have not been provided any material information that was not publicly
available;
•
you are aware and understand that the Equity Shares are being placed only with QIBs and are
not being offered to the general public and the allotment of the Equity Shares shall be on a
discretionary basis;
•
you have made, or been deemed to have made, as applicable, the representations set forth in
the section "Transfer Restrictions";
•
you are purchasing the Equity Shares in reliance on Regulation S under the US Securities Act;
•
you have been provided a serially numbered copy of this Placement Document and have read
this Placement Document in its entirety;
•
that in making your investment decision (i) you have relied on your own examination of our
Company and the terms of the Placement, including the merits and risks involved, (ii) you
have made your own assessment of our Company, the Equity Shares and the terms of the
Placement, (iii) you have consulted your own independent advisors (including tax advisors) or
otherwise have satisfied yourself concerning, without limitation, the effects of local laws and
taxation matters, (iv) you have relied solely on the information contained in this Placement
Document and no other disclosure or representation by our Company or the GC-BRLM; 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 Equity Shares;
•
you have such knowledge and experience in financial and business matters as to be capable of
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Uttam Galva Steels Limited – Placement Document evaluating the merits and risks of the investment in the Equity Shares and you and any
accounts for which you are subscribing the Equity Shares (i) are each able to bear the
economic risk of the investment in the Equity Shares, (ii) will not look to our Company, the
GC-BRLM or their respective shareholders, directors, officers, employees, counsel,
representatives, agents or affiliates 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 Equity Shares, (iv)
have no need for liquidity with respect to the investment in the Equity Shares, and (v) have no
reason to anticipate any change in your or their circumstances, financial or otherwise, which
may cause or require any sale or distribution by you or them of all or any part of the Equity
Shares;
•
that where you are acquiring the Equity Shares for one or more managed accounts, you
represent and warrant that you are authorized in writing, by each such managed account to
acquire the Equity Shares for each managed account and to make (and you hereby make) the
representations, 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 the promoters or to group companies of
any of the promoters of our Company, either directly or indirectly and your bid does not
directly or indirectly represent the promoter or promoter group or persons related to the
promoters of our Company or to group companies of any of the promoters of our Company;
•
you have no rights under a shareholders’ agreement or voting agreement with the promoters
or persons related to the promoters or to group companies of any of the promoters of our
Company, no veto rights or right to appoint any nominee director on the Board of Directors of
our Company other than such rights acquired in the capacity of a lender not holding any
Equity Shares, the acquisition of which shall not deem you to be a promoter, a person related
to the promoter or to group companies of any of the Promoters of our Company;
•
you have no right to withdraw your bid after the Bid Closing Date;
•
you are eligible to bid and hold Equity Shares so allotted together with any Equity Shares
held by you prior to the Placement. You further confirm that your holding upon the issue of
the Equity Shares shall not exceed the level permissible as per any applicable regulation;
•
the bids submitted by you would not eventually result in triggering a tender offer under the
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011, as amended (the "Takeover Code");
•
to the best of your knowledge and belief together with other QIBs in the Placement that
belong to the same group or are under common control as you, the allotment under the present
Placement shall not exceed 50% of the Placement. For the purposes of this representation:
a)
the expression "belongs to the same group" shall be interpreted by applying 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 under Regulation 2 of the
Takeover Code;
•
you shall not undertake any trade in the Equity Shares credited to your Depository Participant
account until such time that the final listing and trading approval for the Equity Shares is
issued by the Stock Exchanges;
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you are aware that applications shall be made to the Stock Exchanges after the Allotment of
the Equity Shares in the Placement 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 GC-BRLM will have entered into a memorandum of
understanding with our Company whereby the GC-BRLM have, subject to the satisfaction of
certain conditions set out therein, undertaken to use its reasonable endeavors as an agent of
our Company to seek to procure subscriptions for the Equity Shares in the Placement;
•
that the contents of this Placement Document are exclusively the responsibility of our
Company and that neither the GC-BRLM 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 Placement based on any
information, representation or statement contained in this Placement Document or otherwise.
By accepting a participation in the Placement, you agree and confirm that you have neither
received nor relied on any other information, representation, warranty or statement made by
or on behalf of either of the GC-BRLM or our Company or any other person and neither the
GC-BRLM, nor our Company or any other person will be liable for your decision to
participate in the Placement based on any other information, representation, warranty or
statement that you may have obtained or received;
•
that you are eligible to invest in India under applicable laws, including the Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations,
2000, as amended, and have not been prohibited by the SEBI or any other regulatory authority
from buying, selling or dealing in securities;
•
that the only information you are entitled to rely on, and on which you have relied in
committing yourself to acquire the Equity Shares, is contained in this Placement Document,
such information being all that you deem necessary to make an investment decision in respect
of the Equity Shares and that you have neither received nor relied on any other information
given or representations, warranties or statements made by the GC-BRLM or our Company
and the GC-BRLM will not be liable for your decision to accept an invitation to participate in
the Placement based on any other information, representation, warranty or statement;
•
you understand that the GC-BRLM has no obligation to purchase or acquire all or any part of
the Equity Shares purchased by you in the Placement or to support any losses directly or
indirectly sustained or incurred by you for any reason whatsoever in connection with the
Placement, including non-performance by our Company of any of its respective obligations or
any breach of any representations or warranties by our Company, whether to you or
otherwise;
•
you agree to indemnify and hold our Company and the GC-BRLM 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, warranties, acknowledgements and
agreements in this paragraph. You agree that the indemnity set forth in this section shall
survive the resale of the Equity Shares by or on behalf of the managed accounts;
•
that each of the representations, warranties, acknowledgements and agreements set forth
above shall continue to be true and accurate at all times up to and including the Allotment and
listing and trading of the Equity Shares; and
7
that our Company, the GC-BRLM, their respective affiliates and others will rely on the truth
and accuracy of the foregoing representations, warranties, acknowledgements and agreements
which are given to the GC-BRLM on its own behalf and on behalf of our Company and are
irrevocable.
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Uttam Galva Steels Limited – Placement Document Off-Shore Derivative Instruments (P-Notes)
Subject to compliance with all applicable Indian laws, rules, regulations and approvals in terms of
Regulation 15A(1) of the Securities and Exchange Board of India (Foreign Institutional Investors)
Regulations, 1995, as amended, FIIs (as defined hereinafter), including FII affiliates of the GCBRLM may issue or otherwise deal in offshore derivative instruments such as participatory notes,
equity-linked notes or any other similar instruments against Equity Shares allocated in the Placement
(all such offshore derivative instruments are referred to herein as "P-Notes"), for which they may
receive compensation from the purchasers of such instruments. P-Notes may only be issued to entities
which are regulated by appropriate foreign regulatory authorities, subject to compliance with "know
your customer" requirements. In terms of the FII Regulations, on and from May 22, 2008, no sub
account of an FII is permitted to, directly or indirectly, issue P-Notes An FII shall also ensure that no
further issue or transfer of any instrument referred to above is made to any person other than such
entities regulated by appropriate foreign regulatory authorities. 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 any 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 our Company. Our Company and the GC-BRLM 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
GC-BRLM and do not constitute any obligations of, or claim on the GC-BRLM.
Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate
disclosure 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.
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Uttam Galva Steels Limited – Placement Document Disclaimer Clause of the Stock Exchanges
As required, a copy of this Placement Document has been 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 this
Placement Document;
2.
warrant that our Company’s Equity 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 this Company, its management
or any scheme or project of this Company,
and the filing of this Placement Document should not for any reason be deemed or construed to mean
that this Placement Document has been cleared or approved by the Stock Exchanges. Every person
who desires to apply for or otherwise acquires any Equity Shares may do so pursuant to an
independent inquiry, investigation and analysis and shall not have any claim against 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.
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Uttam Galva Steels Limited – Placement Document CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL DATA, MARKET AND
INDUSTRY DATA, CURRENCY OF PRESENTATION AND EXCHANGE RATES
Certain Conventions
In this Placement Document, unless the context otherwise indicates or implies, references to:
•
"you", "purchaser", "subscriber", "recipient", "investors" and "potential investor" are to the
prospective investors of the Equity Shares issued pursuant to this Placement.
•
"India" are to the Republic of India and the "Government" or the "Central Government" or the
"State Government" are to the Government of India ("GOI"), central or state, as applicable.
Financial Data
Our Company, its Subsidiaries and its Joint Ventures prepare their financial statements in accordance
with Indian Generally Accepted Accounting Principles ("Indian GAAP"). Indian GAAP differs in
certain respects from International Financial Reporting Standards ("IFRS") and US Generally
Accepted Accounting Principles ("US GAAP"). We do not provide a reconciliation of our financial
statements to IFRS or US GAAP. Also, see the chapter on "Risk Factors".
In this Placement Document, certain monetary thresholds have been subject to rounding adjustments;
accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the
figures which precede them.
Our Financial Year commences on April 1 of each year and ends on March 31 of the succeeding year,
so all references to a particular "fiscal year" or "Fiscal" are to the twelve-month period ended on
March 31 of that year. Our audited standalone and consolidated financial statements for the years
ended March 31, 2012 and 2011 (the "Audited Financial Statements") that appear in the Placement
Document were prepared in accordance with Indian GAAP. The unaudited standalone and
consolidated financial results (limited reviewed) for the nine period ended December 31, 2012 (the
"Reviewed Financial Statements") that appear in the Placement Document have been prepared by our
Company in accordance with Indian GAAP. The Audited Financial Statements and the Reviewed
Financial Statements are collectively referred to herein as the "Financial Statements").
Market and Industry Data
Market and industry data used in this Placement Document has been obtained from market research,
publicly available information and industry publications. Industry publications generally state that the
information that they contain has been obtained from sources believed to be reliable but that the
accuracy and completeness of that information is not guaranteed. Similarly, internal surveys, industry
forecasts and market research, while believed to be reliable, have not been independently verified and
neither our Company nor the GC-BRLM makes any representation as to the accuracy of that
information.
Currency of Presentation
All references in this Placement Document to "Rupees", "`", "Rs" and "Indian Rupees" are to Indian
Rupees, the official currency of India. All references to "US$", "US Dollar", "US Dollars", "USD" or
"$" are to United States Dollars, the official currency of the United States of America; Euro is to Euro,
the currency used in the European Union; and "AED" or "Dirhams" are to United Arab Emirates
Dirhams, the currency of the United Arab Emirates.
Exchange Rates
11
Uttam Galva Steels Limited – Placement Document Fluctuations in the exchange rate between the Rupee and the US Dollar will affect the US Dollar
equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will
also affect the conversion into US Dollars of any cash dividends paid in Rupees on the Equity Shares.
12
Uttam Galva Steels Limited – Placement Document FORWARD LOOKING STATEMENTS
All 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", "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 expected financial condition and results of operations, business plans,
including potential acquisition and prospects are forward-looking statements. These forward-looking
statements include statements as to our business strategy, our revenue and profitability and other
matters discussed in this Placement Document regarding matters that are not historical facts. These
forward-looking statements and any other projections contained in this Placement Document (whether
made by us or any third party) are predictions and involve known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or implied by such forwardlooking statements or other projections. Important factors that could cause our actual results,
performance or achievements to differ materially include, but are not limited, to those discussed under
the sections "Risk Factors", "Management’s Discussion and Analysis of Financial Condition and
Results of Operations", "Industry Overview" and "Business Overview".
Additional factors that could cause actual results, performance or achievements to differ materially
include, but are not limited to, those discussed under the sections "Risk Factors", "Management’s
Discussion and Analysis of Financial Condition and Results of Operations", "Industry Overview" and
"Business Overview".
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 we believe that the expectations reflected in such forward-looking statements
are reasonable at this time, we cannot assure 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 materialize, or if any of our underlying assumptions
prove to be incorrect, our actual results of operations or financial condition could differ materially
from that described herein as anticipated, believed, estimated or expected. All subsequent written and
oral forward-looking statements attributable to us are expressly qualified in their entirety by reference
to these cautionary statements.
13
Uttam Galva Steels Limited – Placement Document ENFORCEMENT OF CIVIL LIABILITIES
Our Company is a company incorporated with limited liability under the laws of India. All our
Subsidiaries are incorporated in India. Our Company’s Directors and key managerial personnel are
residents of India and all the assets of our Company are located in India. As a result, it may not be
possible for investors to effect 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"). Section 13 of the Civil Code
provides that foreign judgments shall be conclusive regarding any matter directly adjudicated upon,
except:
•
where the judgment has not been pronounced by a court of competent jurisdiction;
•
where the judgment has not been given on the merits of the case;
•
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 recognize the law of India in cases to which such law
is applicable;
•
where the proceedings in which the judgment was obtained were opposed to natural justice;
•
where the judgment has been obtained by fraud; or
•
where the judgment sustains a claim founded on a breach of any law then in force in India.
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 such section, in any country or territory outside
India which the Government has by notification declared to be a reciprocating territory, it may be
enforced in India by proceedings in execution as if the judgment had been rendered by a District court
in India. However, Section 44A of the Civil Code is applicable only to monetary decrees not being in
the nature of amounts payable in respect of taxes, other charges of a similar nature or of a fine or other
penalties and does not include arbitration awards.
The United Kingdom, Singapore and Hong Kong have been declared by the Government to be
reciprocating territories for the purposes of Section 44A of the Civil Code, but the United States has
not been so declared. A judgment of a court of a country which is not a reciprocating territory may be
enforced only by a suit upon the judgment and not by proceedings in execution. The suit has to 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 was 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. A party seeking to enforce a foreign judgment in India is required to obtain the approval of the
Reserve Bank of India to repatriate outside India any amount recovered pursuant to the execution of
such a judgment. In addition, any judgment denominated in a foreign currency would be converted
into Indian rupees on the date of the judgment and not on the date of payment.
14
Uttam Galva Steels Limited – Placement Document DEFINITIONS AND ABBREVIATIONS
Unless otherwise defined or the context otherwise indicates or requires, certain capitalized terms used
in this Placement Document have the meanings set forth below:
Company Related Terms
Term
"Company" or "Uttam Galva
Steels Limited" or "We" or "us"
or "our"
Description
Uttam Galva Steels Limited, a public limited company
incorporated under the Companies Act and having its registered
office at Uttam House, 69, P. D’Mello Road, Mumbai, 400009,
Maharashtra, India, unless the context otherwise requires, Uttam
Galva Steels Limited, its Subsidiaries, joint ventures and
associates on a consolidated basis.
Articles/Articles of Association
Articles of Association of our Company, as amended
Auditors / Statutory Auditors
The statutory auditors of our Company being, M/s Prakkash Muni
& Associates, Chartered Accountants
Board of Directors/Board
The board of directors of our Company or any committee
constituted thereof
Director(s)
The director(s) on the Board, as appointed from time to time
Equity Shares
Equity shares of our Company of face value `10 each
Memorandum/Memorandum of
Association
The memorandum of association of our Company, as amended
Registered Office
The registered office of our Company is located at Uttam House,
69, P. D’Mello Road, Mumbai, 400009
Registrar of Companies/RoC
The Registrar of Companies, Mumbai, Maharashtra
ArcelorMittal
ArcelorMittal Netherlands B.V. (an indirect 100% subsidiary of
ArcelorMittal Group)
Subsidiaries
The subsidiaries and step down subsidiaries of our Company,
namely,
(a) Uttam Galva Holdings Limited in Dubai,
(b) Atlantis International Services Limited in British Virgin
Islands,
(c) Uttam Galva Steels Netherlands BV, Netherland,
(d) Neelraj International Trade Limited, British Virgin Island, and
(e) Uttam Galva Steels FZE, UAE; and
(f) Ferro Zinc International FZE, UAE.
15
Uttam Galva Steels Limited – Placement Document Placement Related Terms
Term
Allocated or Allocation
Description
The allocation of Equity Shares following the determination of the
Placement Price to QIBs on the basis of Bid cum Application
Forms submitted by them, in consultation with the GC-BRLM and
in compliance with Chapter VIII of the SEBI Regulations
Allotment / Allotted
Unless the context otherwise requires, the issue and allotment of
Equity Shares pursuant to this Placement
Allottees
QIBs who are allotted Equity Shares of our Company pursuant to
this Offering
Bid
An offer, including all revisions and modifications thereto, from a
QIB on the terms set out in the Bid cum Application Form to our
Company, to subscribe for a specified number of Equity Shares in
the Placement
Bid Closing Date
March 26, 2013, the date on which our Company (or the GCBRLM on behalf of our Company) shall cease acceptance of Bid
cum Application Forms
Bid cum Application Form
The form pursuant to which a QIB submits a Bid
Bid Opening Date
The date on which our Company (or the GC-BRLM on behalf of
our Company) shall commence acceptance of Bid cum Application
Forms
Bidder
QIBs who have made a bid
Bidding Period
The period between the Bid Opening Date and Bid Closing Date
inclusive of both dates during which QIBs can submit their Bids
BSE
BSE Limited
CAN or Confirmation of
Allocation Note
The note, advice or intimation to not more than 49 QIBs
confirming the Allocation of Equity Shares to such QIBs after the
determination of the Placement Price and requiring such QIBs to
pay the entire Placement Price for all the Equity Shares allocated to
such QIBs
Closing Date
The date on which the Allotment is expected to be made
Companies Act
The Companies Act, 1956, as amended
Cut-off Price
The Placement Price of the Equity Shares which shall be
determined by our Company, in consultation with the GC-BRLM
Escrow Agent / Escrow Bank
Yes Bank Limited
16
Uttam Galva Steels Limited – Placement Document Term
Description
Escrow Agreement
The agreement among our Company, the Escrow Agent and the
GC-BRLM in relation to the Placement
Escrow Bank Account/ Escrow
Account
A bank account opened by our Company with Escrow Bank in
terms of the arrangement between our Company, the GC-BRLM
and the Escrow Bank, into which the application monies payable
by QIBs in connection with subscription to Equity Shares pursuant
to the Placement shall be deposited
FII
Foreign Institutional Investor (as defined under the Securities and
Exchange Board of India (Foreign Institutional Investors)
Regulations, 1995, as amended) registered with the SEBI under
applicable laws in India
FII Regulations
SEBI (Foreign Institutional Investor) Regulations, 1995
Floor Price
The floor price of `76.48 per Equity Share, calculated in
accordance with the Chapter VIII SEBI Regulations and below
which the Equity Shares shall not be Allotted in the Placement
GC-BRLM
The Global Coordinator and Book Running Lead Manager, in this
case being Anand Rathi Advisors Limited
NSE
National Stock Exchange of India Limited
Pay-in Date
The last date specified in the CAN sent to QIBs
Placement
The offer and sale of the Equity Shares, on a private placement
basis, to Qualified Institutional Buyers only, pursuant to Chapter
VIII of the SEBI Regulations
Placement Agreement
The agreement entered between our Company and the GC-BRLM
pursuant to which certain arrangements are agreed to in relation to
the Placement
Placement Document
The Placement Document dated March 26, 2013 issued in
accordance with Chapter VIII of the SEBI Regulations, containing,
interalia, the Placement Price, the size of the Placement and
certain other information
Placement Price
A price per Equity Share of `80, which shall be equal to or more
than the Floor Price
Placement Size
The placement of up to 2,00,00,000 Equity Shares aggregating to
`160 crore
Preliminary Placement
Document
The Preliminary Placement Document dated March 25, 2013
issued in accordance with Chapter VIII of the SEBI Regulations
QIB or QIBs or Qualified
A Qualified Institutional Buyer (as defined under Regulation
17
Institutional Buyers
Description
2(1)(zd) of the SEBI Regulations)
Regulation S
Regulation S, as defined under the US Securities Act
SEBI
Securities and Exchange Board of India
SEBI Act
Securities and Exchange Board of India Act, 1992, as amended
SEBI Regulations
The Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, as amended
including instructions and clarifications issued by SEBI from time
to time
Stock Exchanges
BSE and NSE
US Securities Act
The US Securities Act of 1933, as amended
Uttam Galva Steels QIP Escrow Account
A special bank account opened by our Company with the Escrow
Agent in accordance with the Escrow Agreement
Technical / Industry Related Terms
AHSS
Term
Description
Advanced High Strength Steel
AWC
Automatic Width Control
BAF
Batch Annealing Process
CR
Cold Rolled Steel
CRCA
Cold Rolled Closed Annealed
DEPB
Duty Entitlement Pass Book Scheme
DFIA
Duty Free Import Authorisation
DRI
Direct Reduced Iron
GA
Galvannealing
GP
Galvanized Plain
GC
Galvanised Corrugated
HEC
High Efficiency Combustion
HR
Hot Rolled Steel
18
Description
HSS
High Speed Steel
IEM
Industrial Enterprises Memo
NSP
National Steel Policy
PLTCM
Picking Line Tandem Cold Mill
R&D
Research and Development
TOC
Thin Organic Coating
General Terms/Abbreviations
Term
Description
AGM
Annual General Meeting
AS
Accounting Standards issued by the ICAI
CAGR
Compounded Annual Growth Rate
CDSL
Central Depository Services (India) Limited
Civil Code
The Code of Civil Procedure, 1908, as amended
Crore/Cr.
Ten million
Delisting Regulations
The Securities and Exchange Board of India (Delisting of Equity
Shares) Regulations, 2009, as amended
Depositories Act
The Depositories Act, 1996, as amended
Depository
A depository registered with SEBI under the Securities and
Exchange Board of India (Depositories and Participant)
Regulations, 1996, as amended
Depository Participant
A depository participant as defined under the Depositories Act
DIPP
Department of Industrial Policy and Promotion, Ministry of
Commerce and Industry, Government of India
EBITDA
Earnings Before Interest, Tax, Depreciation and Amortisation
EPA
The Environment (Protection) Act, 1986, as amended
EPS
Earnings Per Share, i.e., profit after tax for a fiscal year divided by
the weighted average outstanding number of Equity Shares during
that fiscal year
19
Description
FDI
Foreign Direct Investment
FEMA
The Foreign Exchange Management Act, 1999, as amended, and the
rules and regulations issued thereunder
FIPB
The Foreign Investment Promotion Board
FBWC
Fund Based Working Capital Limit
FVCI
Foreign Venture Capital Investors (as defined under the Securities
and Exchange Board of India (Foreign Venture Capital Investors)
Regulations, 2000, as amended) registered with the SEBI under
applicable laws in India
FY / Fiscal
Financial Year
GAAP
Generally Accepted Accounting Principles
GOI
Government of India
GDP
Gross Domestic Product
ICAI
The Institute of Chartered Accountants of India
IFRS
International Financial Reporting Standards
Indian GAAP
Generally accepted accounting principles followed in India
Insider Trading Regulations
The Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 1992, as amended
IT Act or the Income Tax Act
The Income Tax Act, 1961, as amended
JV
Joint Venture
LIBOR
London Inter Bank Offered Rate
MAT
Minimum alternative tax
Million / Mn
Million
Mutual Fund
A mutual fund registered with SEBI under the Securities and
Exchange Board of India (Mutual Funds) Regulations, 1996, as
amended
NIFTY
A basket of 50 constituent stocks traded on NSE representing a
sample of large, liquid and representative companies
NFBWC
Non Fund Based Working Capital
20
Description
NRI
Non Resident Indian
NSDL
The National Securities Depository Limited
p.a.
Per annum
PAN
Permanent Account Number
PAT
Profit After Tax
PBT
Profit Before Tax
PLR
Prime Lending Rate
RBI
The Reserve Bank of India
SCRA
The Securities Contracts (Regulation) Act, 1956, as amended
SCRR
The Securities Contracts (Regulation) Rules, 1957, as amended
SENSEX
A basket of 30 constituent stocks traded on BSE representing a
sample of large, liquid and representative companies
SICA
The Sick Industrial Companies (Special Provisions) Act, 1985, as
amended
STT
Securities transaction tax
Takeover Code
The Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011, as
amended
US GAAP
Generally accepted accounting principles in the United States of
America
21
Uttam Galva Steels Limited – Placement Document SUMMARY OF THE PLACEMENT
The following is a general summary of the terms of the Placement. This summary should be read in
conjunction with, and is qualified in its entirety by, the more detailed information appearing in this
Placement Document, including under the sections "Risk Factors", "Use of Proceeds", "Placement",
"Placement Procedure" and "Description of the Shares".
Our Company
Uttam Galva Steels Limited
Placement Price per Equity Share
`80
Placement Size
The placement of up to 2,00,00,000 Equity Shares aggregating
`160 crore
Equity Shares outstanding prior
to the Placement
Equity Shares outstanding after
the Placement
Eligible Investors
12,22,60,103 equity shares of `10 each
Listing
Our Company shall make applications to each of the Stock
Exchanges to obtain the listing and trading of the Equity
Shares offered through this Placement Document
Transferability Restrictions
The Equity Shares being allotted pursuant to this Placement
shall not be sold for a period of one year from the date of
Allotment other than on the recognized stock exchanges, on
which the Equity Shares are listed
Closing
The Allotment of the Equity Shares offered pursuant to this
Placement, which is expected to occur on or about March 28,
2013 (the "Closing Date")
Ranking
The Equity Shares being issued in the Placement are subject to
the provisions of the 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 Closing Date, in compliance with the Companies Act, the
listing agreements and other applicable laws and regulations.
Use of Proceeds
The gross proceeds of this Placement are expected to be
approximately `160 crore.
14,22,60,103 Equity Shares
QIBs as defined under Regulation 2(1)(zd) of the SEBI
Regulations
Subject to compliance with applicable laws and regulations, we
intend to use the proceeds of the Placement to augment our
long term resources for future expansion, to meet our long term
working capital requirement and to meet general corporate
business purposes of our Company. For further details, please
refer to the chapter on "Use of Proceeds"
22
Uttam Galva Steels Limited – Placement Document Risk Factors
For a discussion of certain risks in connection with investment
in the Equity Shares, please see the section "Risk Factors".
Security codes
ISIN: INE699A01011
BSE Code: 513216
NSE Code: UTTAMSTL
23
Uttam Galva Steels Limited – Placement Document SUMMARY OF BUSINESS
Our Company is a producer of Cold Rolled Closed Annealed ("CRCA") steel and Galvanized Plain
Steel ("GP"). Our Company is into the business of procuring hot rolled steel ("HR") and processing it
into CR and further into GP and Colour Coated Coils. In galvanized coils we specialize in making
ultra thin sheets. The excess capacity of CR which is not used for galvanizing is converted to value
added grades in CRCA coils, cut to length sheets and also sold as full hard CR in the overseas
markets. We have a annual installed production capacity of 7,50,000 MT, 90,000 MT and 9,60,000
MT of Galavinsed steel, Colour Coated steel and Cold Rolled steel respectively
We export our products to 147 countries in the world while our manufacturing operations are based in
India. In Fiscal 2012, 24.03% of our total sales were from exports while the remaining 75.97% was
from the domestic market. Our Company’s major customers are from the construction, automotive,
consumer goods, material handling and general engineering industries. We have a wide and
diversified customer base in various markets such as the USA, Australia, France, Germany, Greece
and UK, amongst others.
Our Company established the ‘Uttam Suraksha’ GC brand (Galvanised Corrugated Roofing Sheets)
for the construction segment which is well recognised in Maharashtra, Madhya Pradesh, Gujarat,
Andhra Pradesh, Karnataka and Chattisgarh.
Our Company's manufacturing facilities are located at Khopoli, in the state of Maharashtra, India,
which is close to JNPT and Mumbai port. This provides our Company with easy access to imports and
exports of raw materials and finished goods. A close proximity to these ports gives us an advantage of
lower transportation costs.
In Fiscal 2012 and 2011 and the nine month period ending December 31, 2012, our Company
recorded standalone net revenues of `5171.60 crores, `5040.81 crores and `4,957.32 crores,
respectively. Our Company recorded a standalone profit after tax in Fiscal 2012 and 2011 and the nine
month period ending December 31, 2012 of `77.96 crores, `76.77 crores and `33.36 crores,
respectively.
Our Company has received various EEPC Awards from the Ministry of Commerce and Industry,
Government of India under various categories.
Competitive Strengths
Our Company believes that it has the following competitive strengths that assist it in maintaining its
position in the export markets and will help to achieve its goal to become a leader in the industry:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Cost competitiveness;
Access to raw materials;
Wide product range and flexible production facilities;
Strong promoters and experienced management team;
Own Captive Power Plants;
Diversified customer base; and
Synergies pursuant to association with ArcelorMittal.
Divisions of the Company
The Company has broadly three divisions which can be described as follows:
24
Uttam Galva Steels Limited – Placement Document (a)
(b)
(c)
Cold Rolling Division
Galvanising Division
Colour Coating Division
Cold Rolling Division:
Cold rolling is the process of converting hot rolled steel coil into cold rolled coils/sheets. Cold rolled
products are sub divided into cold rolled full hard ("CRFH") and cold rolled closed annealed
("CRCA") coils/sheets. Our Company has cold rolling mills /lines, that is a 20HI, 6HI, 4HI and twin
stand 6HI (wider width) mill.
Galvanising Division:
Galvanisation is the process of applying a protective zinc coating to steel or iron, in order to
prevent rusting. Our Company has at present 3 galvanising lines, that is:
(a) CGL at Donvat
(b) CGL at Pali Road Complex (Dahivali) and
(c) Wet galvanising line ("WGL") at Pali Road Complex (Dahivali).
The raw material for this process is cold rolled strip in coil form. Our Company uses hot dip
galvanising technology. This is a continuous galvanising line producing galvanised strip steel in either
coil or sheet form. Galvanised products are primarily used in automobile, white goods (for example
A/C, refrigerators), construction and engineering applications. Rolled strip is heated in a non-ox
furnace followed by galvanising with molten zinc and other alloys.
Colour Coating Line Division
The colour coating line products paint coated strips in either coil or sheet form. The raw material for
this process is galvanised steel strip in coils.
In this process primer and paint is applied on one or both sides in the same or different colours as per
the customer’s specifications. After coating the coils are cured in an oven. Colour coated products
have much longer life than GP products, and have different applications ranging from construction to
engineering applications.
Our Subsidiaries
There are five wholly-owned Subsidiary Companies of the Company namely (a) Uttam Galva
Holdings Limited in Dubai, (b) Atlantis International Services Limited in British Virgin Islands, (c)
Uttam Galva Steels Netherlands BV in Netherland and (d) Neelraj International Trade Limited in
British Virgin Island. (e) Uttam Galva Steels FZE. Further, Uttam Galva Holdings Limited has
incorporated a downstream wholly owned subsidiary company namely Ferro Zinc International FZE
in Jebel Ali Free Zone in United Arab Emirates.
Uttam Galva Holdings Ltd, Dubai
Atlantis International Services Ltd, BVI*
Uttam Galva Steels, Netherlands
Ferro Zinc International FZE, Dubai
25
Neelraj
International Trade Ltd,BVI*
Uttam Galva Steels (FZE) UAE
Uttam Galva Steels Limited – Placement Document SUMMARY OF FINANCIAL INFORMATION
The selected audited standalone and consolidated financial information for Fiscal2012 and Fiscal
2011 and the standalone and consolidated reviewed financial statementsfor the nine month period
ended December 31, 2012 and December 31, 2012 included in the Placement Document.
The selected audited standalone and consolidated balance sheet data and profit and loss data for
Fiscal2012 and 2011 and the standalone and consolidated Reviewed Financial Statements data for
nine month period ended December 31, 2012 and December 31, 2012set forth below have been
derived from our Company’s audited financial statements and limited review reports for such years
and for such periods, which have been prepared in accordance with Indian GAAP and have been
audited by the statutory auditors of our Company, M/s Prakkash Muni & Associates, Chartered
Accountants.
Neither the information set forth below nor the format in which it is presented should be viewed as
comparable to information prepared in accordance with IAS/IFRS or other accounting principles.
Indian GAAP differs in certain material respects from IAS, IFRS and US GAAP.
The selected Financial Statements set forth below should be read in conjunction with "Management’s
Discussion and Analysis of Financial Condition and Results of Operations" and our financial
statements included in the Placement Document.
26
Uttam Galva Steels Limited – Placement Document STANDALONE BALANCE SHEET AS AT MARCH 31, 2012 and MARCH 31, 2011
Particulars
EQUITY AND LIABILITIES
Shareholders’ Funds
(a) Share Capital
(b) Reserves and Surplus
Non Current Liabilities
(a) Long Term Borrowings
(b) Deferred Tax Liabilities
(c) Other Long Term Liabilities
(d) Long Term Provisions
Current Liabilities
(a) Short Term Borrowings
(b) Trade Payables
(c) Other Current Liabilities
(d) Short Term Provisions
ASSETS
Non Current Assets
(a) Fixed Assets
(i) Tangible Assets
(ii) Capital Work-in-Progress
(b) Non Current Investments
(c) Long Term Loans and Advances
(d) Other Non Current Assets
Current Assets
(a) Inventories
(b) Trade Receivables
(c) Cash and Cash equivalents
(d) Short Term Loans and Advances
Total
27
March 31, 2012
(` in crores)
March 31, 2011
122.26
902.75
1,025.01
122.26
824.79
947.05
1,971.06
121.70
347.48
11.55
2,451.79
1,761.95
86.92
0.00
11.41
1,860.28
45.35
1,426.66
873.46
13.74
2,359.21
5,836.01
257.39
1,728.97
615.50
-7.38
2,594.48
5,401.81
2,898.74
378.69
3,277.43
12.02
87.16
23.89
3,400.50
1,819.34
967.49
2,786.83
8.89
68.04
22.00
2,885.76
1,085.14
557.84
131.26
661.27
2,435.51
1,365.98
723.60
67.59
358.88
2,516.05
5,836.01
5,401.81
Uttam Galva Steels Limited – Placement Document STANDALONE STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST
MARCH, 2012 AND MARCH 31, 2011
(` in crores)
Particulars
March 31, 2012
March 31, 2011
CONTINUING OPERATIONS
Revenue from Operations (Gross)
5475.38
5329.84
Less: Excise Duty
303.78
289.03
5171.60
5040.81
Revenue from Operations (Net)
Expenses
(a) Cost of Materials Consumed
(b) Purchase of Traded Goods
(c) Changes in Inventories of Finished
Goods, Work-in-Progress and Stock-in-Trade
(d) Employee Benefits Expense
(e) Other Expenses
Total
Earnings before Interest, Tax, Depreciation and
Amortisation (EBITDA)
Finance Costs
Depreciation and Amortisation Expense
Other Income
Profit Before Tax (PBT)
Tax Expense:
Current Tax
Wealth Tax
Net Current Tax
Deferred Tax
Total
Profit for the Year
Earnings Per Share (EPS)
Basic & Diluted
28
3177.22
620.80
312.82
3107.63
1,351.57
(342.35)
67.50
487.32
4665.66
505.94
61.80
420.90
4599.55
441.26
245.21
127.37
7.64
212.24
119.41
3.93
141.00
113.54
28.21
0.05
28.26
34.78
63.04
77.96
21.54
0.05
21.60
15.17
36.77
76.77
6.38
6.28
Uttam Galva Steels Limited – Placement Document STANDALONE CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2012
AND MARCH 31, 2011
(` in crores)
March 31,
March 31,
PARTICULARS
2012
2011
CASH FLOW FROM OPERATING ACTIVITIES
Net Profit/(Loss) Before Tax and Extraordinary Items
141.00
113.53
Provision for Doubtful Debts
(0.31)
(0.00)
Adjustments for Depreciation
127.37
119.41
(Profit) / Loss on Sale of Assets
0.19
0.07
Interest Income
(2.53)
(3.34)
Interest & Financial Charges
245.21
212.24
Operating Profit Before Working Capital Changes
510.93
441.91
Adjustments for :
(Increase)/Decrease in Trade and other Receivables
(148.90)
(338.21)
(Increase)/Decrease in Inventories
280.84
(716.61)
Increase/(Decrease) in Trade Payables and Other Liabilities
40.83
1,135.66
Cash Generated from Operations
683.69
522.75
Direct Taxes Paid (Net of Refunds)
(17.10)
(33.10)
Cash Flow from Operating Activities
666.59
489.66
CASH FLOW FROM INVESTING ACTIVITIES :
Purchase of Fixed Assets
Sale of Fixed Assets
Purchase of Investments / Investments in Subsidiaries
Interest/Dividend Received
Net Cash Used in Investing Activities
CASH FLOW FROM FINANCING ACTIVITIES :
Securities Premium received
Redemption / Conversion of FCCB
Proceeds from Long Term Borrowings
Repayments of Long Term Borrowings
Interest & Financial Charges Paid
Gain / (Loss) on Forward Contracts
Proceeds/(Repayments) of Deferred Sales Tax Loan/ICD/Unsecured
Loans
Net Cash Generated from Financing Activities
Net Increase in Cash & Cash Equivalents (A+B+C)
Cash & Cash Equivalents (Opening)
Cash & Cash Equivalents (Closing)
(618.55)
0.38
(3.12)
2.53
(618.75)
(401.51)
(0.87)
3.34
(399.04)
1,050.00
(788.36)
(236.68)
(8.53)
(21.39)
(68.37)
1,139.58
(816.23)
(173.62)
(38.62)
(0.60)
15.83
(200.60)
(179.25)
63.67
67.59
131.26
(88.64)
156.23
67.59
Notes:
1.
Cash Flow Statement has been prepared following the indirect method except in case of
interest paid / received, dividend paid / received, purchase and sale of Investments which have
been considered on the basis of actual movements of cash with necessary adjustments in the
corresponding assets and liabilities.
2.
Purchase of Fixed Assets includes movement of Capital Work in Progress between the
beginning and end of the year and net of Creditors for Capital Expenditure.
3.
Cash and Cash Equivalents represent Cash & Bank balances and bank deposits only.
29
Uttam Galva Steels Limited – Placement Document CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2012 and MARCH 31, 2011
Particulars
EQUITY AND LIABILITIES
(a) Share Capital
(b) Reserves and Surplus
(a) Long Term Borrowings
(b) Deferred Tax Liabilities
(c) Other Long Term Liabilities
(d) Long Term Provisions
Current Liabilities
(a) Short Term Borrowings
(b) Trade Payables
(c) Other Current Liabilities
(d) Short Term Provisions
ASSETS
Non Current Assets
(a) Fixed Assets
(i) Tangible Assets
(ii) Capital Work-in-Progress
(iii) Intangible assets under development
(b) Non Current Investments
(c) Long Term Loans and Advances
(d) Other Non Current Assets
Goodwill on Consolidation
Current Assets
(a) Inventories
(b) Trade Receivables
(c) Cash and Cash equivalents
(d) Short Term Loans and Advances
30
March 31, 2012
(` in crores)
March 31, 2011
122.26
884.45
1,006.71
122.26
829.42
951.68
2,229.12
122.28
97.96
11.55
2,460.91
1,901.43
87.20
0.00
11.41
2,000.04
397.58
1,206.61
874.85
16.44
2,495.48
5,963.10
257.39
1,588.10
615.97
-5.38
2,456.08
5,407.80
2,906.15
378.69
0.61
3,285.45
5.58
72.66
23.89
3,387.58
1.14
1,827.94
967.49
2,795.43
3.59
65.92
22.00
2,886.94
0.59
1,085.16
638.18
193.46
657.58
2,574.38
5,963.10
1,366.03
723.60
69.64
361.00
2,520.27
5,407.80
Uttam Galva Steels Limited – Placement Document CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED
MARCH 31, 2012 AND MARCH 31, 2011
(` in crores)
Particulars
March 31, 2012
March 31, 2011
5,951.16
5,329.84
Less: Excise Duty
303.78
289.03
5,647.38
5,040.81
Expenses
(c) Changes in Inventories of Finished Goods,
Work-in-Progress and Stock-in-Trade
(e) Other Expenses
Total
Earnings before Interest, Tax, Depreciation and
Finance Costs
Depreciation and Amortisation Expense
Other Income
Tax Expense:
Current Tax
MAT Credit
Wealth Tax
Net Current Tax
Deferred Tax
Total
Profit for the Year
Earnings Per Share (EPS)
Basic & Diluted
31
3,177.22
1,082.08
3,099.80
1,351.57
312.82
-342.35
67.50
488.34
5,127.96
62.00
420.71
4,591.73
519.42
449.08
261.93
128.57
7.62
136.54
218.26
120.78
3.81
113.85
28.42
(0.11)
0.05
28.36
35.08
63.44
73.10
21.70
0.05
21.75
15.46
37.21
76.64
5.98
6.27
Uttam Galva Steels Limited – Placement Document CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31,
2012 AND MARCH 31, 2011
March 31,
2012
PARTICULARS
CASH FLOW FROM OPERATING ACTIVITIES
Net Profit/(Loss) Before Tax and Extraordinary Items
Provision for Doubtful Debts
Adjustments for Depreciation
(Profit) / Loss on Sale of Assets
Interest Income
Interest &Fianacial Charges
Operating Profit Before Working Capital Changes
Adjustments for :
(Increase)/Decrease in Trade and other Receivables
(Increase)/Decrease in Inventories
Increase/(Decrease) in Trade Payables and Other Liabilities
March 31,
2011
136.54
(0.31)
128.57
0.19
(2.53)
261.93
524.39
113.85
0.00
120.78
0.07
(3.34)
218.26
449.62
(211.20)
280.88
46.97
(321.40)
(719.89)
1,161.04
641.03
(17.35)
0.00
623.68
569.37
(33.11)
3.25
539.52
CASH FLOW FROM INVESTING ACTIVITIES :
Purchase of Fixed Assets
Sale of Fixed Assets
Purchase of Investments / Investments in Subsidiaries
Sale of Investments
Interest/Dividend Received
(618.55)
0.38
(1.99)
0.00
2.53
(402.17)
0.26
(0.01)
0.00
3.34
Net Cash Used in Investing Activities
(617.62)
(398.58)
0.00
0.00
1,305.78
(789.21)
(253.40)
(8.53)
(20.79)
(68.37)
1,139.58
(817.09)
(179.64)
(38.62)
(136.88)
(248.27)
Net Cash Generated from Financing Activities
117.76
(233.21)
Net Increase in Cash & Cash Equivalents (A+B+C)
Cash & Cash Equivalents (Opening)
Cash & Cash Equivalents (Closing)
123.82
69.64
193.46
(92.27)
161.91
69.64
Cash Generated from Operations
Direct Taxes Paid (Net of Refunds)
Prior Period Expenses (Net)
Cash Flow from Operating Activities
CASH FLOW FROM FINANCING ACTIVITIES :
Securities Premium received
Redemption / Conversion of FCCB
Proceeds from Long Term Borrowings
Repayments of Long Term Borrowings
Interest & Financial Charges Paid
Gain / (Loss) on Forward Contracts
Proceeds/(Repayments) of Deferred Sales Tax Loan/ICD/Unsecured
Loans
32
Uttam Galva Steels Limited – Placement Document Notes:
1.
Cash Flow Statement has been prepared following the indirect method except in case of
interest paid / received, dividend paid / received, purchase and sale of Investments which have
been considered on the basis of actual movements of cash with necessary adjustments in the
corresponding assets and liabilities.
2.
Purchase of Fixed Assets includes movement of Capital Work in Progress between the
beginning and end of the year and net of Creditors for Capital Expenditure.
3.
Cash and Cash Equivalents represent Cash & Bank balances and bank deposits only.
33
Uttam Galva Steels Limited – Placement Document RISK FACTORS
An investment in equity shares involves significant risks. You should not invest in the Placement
unless you are prepared to accept the risk of losing all or part of your investment. You should consult
with your tax, financial, legal and other advisors about the particular consequences to you of an
investment in the Equity Shares.
You should carefully consider the risks described below before making an investment decision. If any
of the risks described below actually occur, our business, prospects, financial condition and results of
operation could be seriously harmed, the trading price of our Equity Shares could decline, and you
may lose all or part of your investment. Unless specified or quantified in the relevant risk factors
below, we are not in a position to quantify financial implications of any of the risks mentioned below.
Any prospective investor in, and purchaser of, our shares should pay particular attention to the fact
that we are governed in India by a legal and regulatory environment which in some material respects
may be different from that which prevails in other countries. Prior to making an investment decision,
prospective investors and purchasers should carefully consider all of the information contained in the
Placement Document (including the consolidated financial statements included in the Placement
Document)
Risks relating to our Company
1.
A slower than expected recovery of the global economy or a renewed global recession could
have a material adverse effect on the steel industry and our Company.
Our Company’s Business and operations are affected by international, national and regional
economic conditions. Starting in September 2008, a steep downturn in the global economy,
sparked by uncertainty in credit markets and deteriorating consumer confidence sharply
reduced global demand for steel products. This has had a negative effect on our Company’s
results of operations. Although the global economy has shown signs of recovery since the end
of 2009 and in 2010, with a certain degree of recovery and stabilisation of steel prices, should
the recovery falter, the outlook of companies in the steel industry could again worsen.
In particular, a renewed recession or period of lower growth or lower public spending on
infrastructure in Europe or in the United States, or significantly slower growth or the spread
of recessionary conditions to emerging economies that are substantial consumers of steel
(such as China, Brazil, Russia and India, as well as other emerging Asian markets, the Middle
East and the commonwealth of independent states regions could have a negative would have a
material adverse effect on the steel industry.
An uneven recovery, with positive growth limited to certain regions, or excluding key
markets of our Company would also have an adverse effect on our Company’s business,
results of operations, financial conditions and prospects. Continued financial weakness among
substantial consumers of steel products, such as the automotive industry and the construction
industry, or the bankruptcy of any large companies in such industries, would exacerbate the
negative trend in market conditions. Protracted declines in steel consumption caused by poor
economic conditions in one or more of our Company’s major markets or by the deterioration
of the financial condition of our key customers would have a material adverse effect on
demand for our products and hence on our Company’s business and results of operations.
34
Uttam Galva Steels Limited – Placement Document 2.
The steel industry is highly cyclical and a decrease in steel prices may have an adverse
effect on our Company’s results of operations.
Steel prices are volatile which reflects the highly cyclical nature of the global steel industry.
Steel prices fluctuate based on macroeconomic factors, including, amongst others, consumer
confidence, employment rates, interest rates and inflation rates, in the economies in which the
steel producers sell their products and are sensitive to the trends of particular industries, such
as the automotive, construction, packaging, appliance, machinery, equipment and
transportation industries, which are among the biggest consumers of steel products. When
downturns occur in these economies or sectors, our Company may experience decreased
demand for our products, which may lead to a decrease in steel prices.
Over the past few years, the demand for our products has fluctuated and may fluctuate in the
future due to a number of factors which are beyond the control of our Company. Our
production has varied from year to year, depending upon demand and consolidation in the
industry. Unfavorable changes in the demand due to changes in consumer preferences,
governmental policies, or other factors may adversely affect the steel industry and our
Company’s business and results of operations.
In the past, the depressed state of steel prices has adversely affected the businesses and results
of operations of steel producers and processors generally, including our Company, resulting
in lower revenues and margins and write downs of finished steel products and raw material
inventories. In addition, the volatility, length and nature of business cycles affecting the steel
industry have become increasingly unpredictable, and the recurrence of another major down
turn in the industry may have a material adverse impact on our Company’s business, results
of operations, financial condition and prospects.
Additionally, substantial decreases in steel prices during periods of economic weakness have
not always been balanced by commensurate price increases during periods of economic
strength. Even though here has been a recovery of steel prices, a sustained price recovery
most likely requires a broad economic recovery, in order to underpin an increase in real
demand for steel products by end users.
3.
Developments in the competitive environment in the steel industry could have an adverse
effect on our Company’s competitive position and hence our business, financial condition,
results or prospects.
Our Company believes that the key competitive factors affecting our business include product
quality, changes in manufacturing technology, workforce skill and productivity, cash
operating costs, pricing power with large buyers, access to outside funds, the degree of
regulation and access to low-cost raw materials. Although our Company believes that it is a
competitive manufacturer, it cannot assure prospective investors that it will be able to
compete effectively against our current or emerging competitors with respect to each
competitive factor.
Larger competitors may also use their resources, which may be greater than our Company, in
variety of ways, including by making additional acquisitions, investments in product
development and capacity expansion. If the trend towards consolidation continues, our
Company could be placed in a disadvantageous competitive position relative to other
companies in the industry and our business, results of operations, financial condition and
prospects could be materially and adversely affected.
35
Our business is greatly affected by price volatility, which is largely the result of high fixed
costs characteristic of the steel industry.
The production/processing of steel is capital intensive, with a high proportion of fixed costs to
total costs. As at March 31, 2012, the capacity utilisation for our Galvanised capacity, Colour
Coated and Cold rolled coils is 76.26%, 78.15% and 63.92% respectively. Steel
producers/processors generally seek to maintain high capacity utilization. If capacity exceeds
demand, there is a tendency for prices to fall sharply, if supply is largely maintained.
Conversely, expansion of capacity requires long lead times so that, if demand grows strongly,
prices increase rapidly, as unutilized capacity cannot be brought on line as quickly. The result
can be substantial price volatility. While we have taken steps to reduce operating costs, we
may be negatively affected by significant price volatility, particularly in the event of excess
production capacity in the global and domestic steel market, and incur operating losses as a
result of the same.
5.
Our Company has substantial indebtedness and will continue to have substantial
indebtedness, debt service obligations and restrictive covenants to comply with. Further
increase in interest rates could impact our profitability and cash flows. This could adversely
affect our business, growth and financial condition of our Company.
As at February 28, 2013, our Company had a total outstanding indebtedness of `4228.15
crore comprising of long term loans, working capital loans, corporate loans and other
indebtedness. Our Company has entered into various financing arrangements that grant our
lenders certain rights to determine how we operate our business, which, among other things,
restrict our ability to raise additional debt or equity, make investments, engage in transactions
with affiliates, sell assets or acquire other businesses etc. These debt obligations are secured
by a combination of security interests over our assets, hypothecation of movables and future
receivables. There can be no assurance that we will be able to comply with these financial or
other covenants in terms of the loan agreements in the future. Defaults under or violation of,
any of our financing arrangements could have adverse consequences to our business and
results of operations and consequently to our shareholders. These factors would adversely
affect our results of operations and financial condition. Also, we may have to dedicate a
substantial portion of our cash flow from operations to make payments under the financing
documents, thereby reducing the availability of our cash flow to fund capital expenditures,
meet working capital requirements and use for other general corporate purposes. Such
defaults may also result a decline in the trading price of the Equity Shares and you may lose
all or part of your investment. If the lenders of the outstanding loans declare an event of
default simultaneously, we may be unable to pay our debts as they fall due. For details of our
total outstanding loans, see "Financial Indebtedness".
Our financial obligations and contractual commitments may have other important
consequences for our business and results of operations, including:
(a)
(b)
(c)
(d)
(e)
making our Company more vulnerable to adverse changes in economic conditions,
government regulation or in the competitive environment;
limiting our Company’s ability to borrow additional amounts for working capital,
capital expenditure acquisitions, debt service requirements, execution of our business
strategy or other purposes;
requiring our Company to arrange for refinancing of debt as it matures, which may
not be available on terms favourable to our Company or be available at all;
materially impacting our Company’s ability to pay dividends in the future; and
exacerbating the impact of foreign currency movements on the profitability and cash
36
Uttam Galva Steels Limited – Placement Document flows of our Company.
6.
Some of our Company’s financing documents require our Company to obtain consents
from its lenders for undertaking this Placement, which have not been obtained as of the
date hereof.
Under the terms of some of its financing documents, our Company requires a written consent
from its lenders prior to undertaking, amongst other things, any action that would change the
capital structure of our Company and prior to implementation of expansion plans. As of the
date hereof, our Company has intimated the lenders of its intention to undertake the
Placement and our Company has applied for such consents from its lenders in regard to
respective facilities from them, as applicable. There can be no assurance that lenders will
grant our Company the required consents on time or at all. A failure to obtain such consents
may lead to the termination of credit facilities and the acceleration of all amounts due under
the relevant facilities.
Undertaking the Placement without lender consents constitutes a default by our Company
under the relevant financing documents and will entitle the respective lenders to call a default
against our Company, enforce remedies under the terms of the financing documents.
7.
Our Company has outstanding securities that are convertible into Equity Shares and it may
issue additional securities of our Company. Upon the issuance of any additional Equity
Shares or upon the exchange, exercise or conversion of securities exchangeable for,
exercisable for or convertible into Equity Shares, your shareholdings may be diluted.
Our Company has in the past issued, and may in the future issue, Equity Shares or securities,
exercisable for or convertible into Equity Shares in order to, among other reasons, fund
capital expenditures, acquisitions and working capital. ICICI had converted the balance
overdue interest of `9.55 crores up to September 30, 2000 into optionally fully convertible
loans ("OFCL") which are convertible into equity shares at par, anytime during the currency
of the facility. The OFCL is repayable in one installment on March 15, 2015 and is secured by
a first mortgage charge on all immovable and movable properties of our Company on a pari
passu basis. As at December 31, 2012, we have OFCLs outstanding amounting to `9.55 crore.
Upon the issuance of Equity Shares, whether directly or upon exchange, exercise or
conversion of securities exchangeable for, exercisable for or convertible into Equity Shares,
the shareholdings of our Company’s shareholders may be diluted and the prevailing market
price of our Equity Shares could be depressed. Any belief that our Company will issue Equity
Shares, equity-linked products or securities exchangeable for, exercisable for or convertible
into Equity Shares could depress the market price of our Company’s equity shares.
8.
Future issuances of Equity Shares would dilute your holdings. Further any future sales of
Equity Shares by us or any of our major shareholders may adversely affect the market price
of our Equity Shares.
Any future issuances of Equity Shares by us, including through, among other things, a followon public offering, preferential allotment or shares, warrants and other instruments
convertible into equity shares, issuances of stock options, or any perception by investors that
such issuances or sales might occur may lead to the dilution of investor shareholding in our
Company or affect the trading price of the Equity Shares and could affect our ability to raise
capital through an offering of our securities.
37
Uttam Galva Steels Limited – Placement Document The market price of our Equity Shares could decline as a result of future sales of a large
number of our Equity Shares by us or by any of our major shareholders. Additionally, the
perception that such sales may occur might make it more difficult for our shareholders to sell
their Equity Shares in the future at a time and at a price that they deem appropriate.
9.
Conflicts of interest may arise out of common business objects shared by our Company and
certain companies controlled/promoted by our Promoters.
Our Promoters have interests in, and have promoted, other companies and entities that may
compete with us and have operations similar to ours within the steel industry. There is no
undertaking or non-compete agreements made by our Promoters or any companies/entities
promoted by Promoters not to compete with our business. In addition, there is no requirement
or undertaking for our Promoters or any companies/entities promoted by Promoters to
conduct or direct any opportunities in the steel industry only to or through us.
As a result, conflicts of interest may arise in allocating or addressing business opportunities
and strategies amongst our Company, our Promoters and other any companies/entities
promoted by Promoters in circumstances where our interests differ from theirs. There can be
no assurance that our Promoters or any companies/entities promoted by Promoters will not
compete with our existing business or any future business that we may undertake.
10.
Our Company may experience difficulties in expanding our business into additional
geographic markets.
We currently export our products to 147 countries in the world. In respect of expanding our
exports in other geographies and to establish offices in such countries we may not have
adequate expertise in undertaking business activities in such jurisdictions. The culture,
regulatory practices, business practices and customs, cost structures and expected sale prices
in these jurisdictions where we plan to expand our operations may differ in material respects
from those jurisdictions in which we currently operate. In addition, as we enter new markets
and geographical areas, we are likely to compete with local players who have an established
local presence, are more familiar with local regulations, business practices and customs, and
have stronger relationships with local contractors and/or relevant government authorities, all
of which may give them a competitive advantage over us.
11.
Our success depends on our senior management and our ability to attract and retain our
key personnel and skilled manpower.
Our success depends on the continued services and performance of the members of our Board
of directors, management team and other key employees. If one or more members of our
senior management team were unable or unwilling to continue in their present positions, those
persons could be difficult to replace and our business could be adversely affected.
Competition for senior management in the steel industry in India is intense, and we may not
be able to retain our existing senior management and skilled manpower or attract and retain
new senior management and skilled manpower in the future. As such, any loss of our senior
management personnel or key employees could adversely affect our business, results of
operations and financial condition and would require us to devote substantial time, cost and
energy to find a suitable replacement.
38
Our Company had negative cash flows from operating, financing and investing activities in
certain years.
As per our standalone financial statements, our cash flows from operating, financing and
investing activities were negative in certain fiscals as mentioned below:
(` in crores)
Particulars
Fiscal 2011
Fiscal 2012
Net cash from / (used in) operating
489.66
666.59
activities
Net cash from / (used in) investing activities
(399.04)
(618.75)
Net cash from / (used in) financing
(179.25)
15.83
activities
Net increase in cash and cash equivalents
(88.64)
63.67
Any negative cash flow in future could affect adversely affect our operations and financial
conditions and the trading price of our Equity Shares. For further details, please refer to the
chapter titled "Financial Indebtedness".
13.
Our consolidated financial results may be materially and adversely affected by the
performance of our Subsidiaries.
Our subsidiaries are primarily in the businesses of trading of steel and metal products
including mild, high carbon spring, high speed tools alloys and stainless steel metals. We
cannot provide any assurance that our subsidiaries will be able to efficiently operate such
businesses and generate sufficient earnings and cash flow. In the event that our subsidiaries
are not being able to effectively operate and manage such businesses, our Company’s
consolidated financial results may be materially and adversely affected.
14.
Our business may be affected due to disputes with our contract labour
We employ contract labour for execution of our projects and the number of contract labourers
may vary from time to time depending on the nature and quantum of work involved. We enter
into contracts with independent contractors for completion of specified work. Any disputes
with the contract labourers may delay the execution of our projects and may affect our
business and results of operations.
15.
Litigation relating to our Company could adversely affect our business and financial
condition.
We are defendants in legal proceedings incidental to our business and operations. These legal
proceedings are pending at different levels of adjudication before various courts and tribunals
in India. The amounts claimed in these proceedings have been disclosed to the extent
ascertainable, excluding contingent liabilities and include amounts claimed jointly and
severally from us and other parties.
Should any new developments arise, such as a change in Indian law or rulings against our
Company by appellate courts or tribunals, we may need to make provisions in our financial
statements that could increase our expenses and current liabilities.
For details of outstanding legal proceedings and litigations against us please refer to the
chapter titled "Legal proceedings"
39
Our Company may not be able to successfully manage the growth of our operations and
consequently our financial conditions and results of operations may be adversely affected.
Our Company has been rapidly expanding our operations in recent years. As we grow, we
must continue to improve our managerial, technical and operational knowledge and allocation
of resources. A principal component of our strategy is to continue to grow by expanding the
size and geographical scope of our existing businesses. This growth strategy will place
significant demands on our management, financial and other resources. It will require us to
continuously develop and improve our operational, financial and internal controls.
Continuous expansion increases the challenges involved in financial management,
recruitment, training and retaining high quality human resources, preserving our culture,
values and entrepreneurial environment and developing and improving our internal
administrative infrastructure. An inability to manage such growth could disrupt our business
prospects, impact our financial condition and adversely affect our results of operations.
There can be no assurance that we will be able to implement or manage any of these growth
plans successfully. In order to fund our ongoing operations and future growth, we need to
have sufficient internal sources of liquidity or access to additional financing from external
sources. Further, we will be required to manage relationships with a greater number of
suppliers, service providers, lenders and other third parties and any failure to do so would
affect our results of operations.
17.
Our business is operating under various laws which require us to obtain approvals from the
concerned statutory/regulatory authorities in the ordinary course of business, and if we are
unable to obtain these approvals and the renewals, our business could be adversely
affected.
Certain statutory and regulatory permits and approvals are required for our business. Laws or
regulations in India and other countries in which we operate may require us to obtain licenses,
consents or permits in order to conduct our operations. Additionally, in the future, we may be
required to renew such permits and approvals and obtain new permits and approvals for our
operations. There can be no assurance that the relevant authorities will issue any of such
permits or approvals in the time-frame anticipated by us or at all. Failure by us to renew,
maintain or obtain the required permits or approvals may result in the interruption of our
operations and may have a material adverse effect on our business, financial condition and
results of operations.
18.
Compliance with, and changes in, safety, health and environmental and labor laws and
regulations may adversely affect our business, financial condition and results of
operations.
Our Company’s businesses are subject to numerous laws, regulations and contractual
commitments relating to the environment as our operations generate a large quantity of
pollutants and wastes, some of which are hazardous. Our Company is governed by laws and
regulations concerning air emissions, waste-water discharges, solid and hazardous waste
material handling and disposal, and the investigation and remediation of contamination or
other environmental restoration. The risk of substantial costs and liabilities related to
compliance with these laws and regulations is an inherent part of our business. Facilities
currently operated by our Company, or where wastes have been disposed or materials
extracted, are all subject to risk of environmental cost and liabilities, which includes the costs
or liabilities relating to the investigation and remediation of past or present contamination or
other environmental restoration. In addition, future conditions and contamination may
40
Uttam Galva Steels Limited – Placement Document develop, arise or be discovered that create substantial environmental compliance, remediation
or restoration liabilities and costs. Despite our Company’s efforts to comply with
environmental laws and regulations, violations of such laws or regulations can result in civil
and/or criminal penalties being imposed, the suspension of permits, requirements to curtail or
suspend operations, lawsuits by third parties and negative reputational effects. There can be
no assurance that substantial costs and liabilities will not be incurred in the future.
An increase in the requirements of environmental laws and regulations, increasingly strict
enforcement thereof by governmental authorities, or claims for damages to property or injury
to persons resulting from the environmental impacts of our Company’s operation could
prevent or restrict our operations, as it requires the expenditure of significant funds to bring
our Company into compliance, involve the imposition of clean-up requirements and reporting
obligations, and give rise to civil and/or criminal liability.
There can be no assurance that any such legislation, regulation or private claim will not have
a material adverse effect on our business, financial condition or results of operations. In the
event that production at any of our facilities is partially or wholly disrupted due to any
sanction, our Company’s business could suffer significantly and our results of operations and
financial conditions could be adversely affected.
19.
Changes in technology may render our current technologies obsolete or require us to make
substantial capital investments.
Although we attempt to maintain the latest international technology standards, the technology
requirements for businesses in the industries that we operate are subject to continuing change
and development. Some of our existing technologies and processes may become obsolete,
performing less efficiently compared to newer and better technologies and processes in the
future. The cost of upgrading or implementing new technologies, upgrading our existing
equipment or expanding our capacity could be significant and could adversely affect our
results of operations.
20.
Our Company has contingent liabilities as at March 31, 2012. If any of these contingent
liabilities actually occur, they may adversely impact our profitability and may have a
material adverse effect on our results of operations and financial condition.
Our Company has contingent liabilities as at March 31, 2012 and the details of the contingent
liabilities in our consolidated financials are provided in the table below.
Particulars
Letters of Credit outstanding
Bank Guarantees
Estimated amount of contracts remaining to be
executed on capital account and not provided for
(` in crores)
As at
March 31, 2012
March 31, 2011
698.58
591.93
130.25
92.54
126.02
60.04
If any of these contingent liabilities materialise, they may adversely impact our profitability
and may have a material adverse effect on our results of operations and financial condition.
41
Our Company has issued a corporate guarantee to banks and government authorities on
behalf of others, which if invoked would materially adversely affect our financial.
As at March 31, 2012, we have given corporate guarantee aggregating to `442.64 crores to
various banks and government authorities. The aforementioned guarantees relate to supply of
goods to government authorities. If such guarantees are invoked, and if the parties are unable
to repay the principal amount or the interest thereon, we may be compelled to pay the entire
or part of the amount secured thereby. Any such invocation of the aforesaid guarantee would
adversely affect our financial conditions and results of operations.
22.
Our Promoter and Promoter Group will continue to retain majority shareholding in our
Company after this Placement, which will allow them to exercise significant influence over
our Company. Our Company cannot assure you that our Promoter will always act in our or
your best interest.
As of December 31, 2012, 70.83% of our issued and outstanding Equity Shares are currently
beneficially owned by our Promoters and Promoter Group (including the ArcelorMittal, our
Co-Promoters). Upon completion of this Placement, our Promoter and Promoter Group will
own 70.83% of our post-Placement Equity Share capital, assuming full subscription of this
Placement. Accordingly, our Promoter will continue to exercise significant influence over our
Company’s business policies and affairs and all matters requiring shareholders’ approval,
including the composition of our Board of Directors, the adoption of amendments to our
memorandum and articles of association, the approval of mergers, strategic acquisitions or
joint ventures or the sales of substantially all of our assets, and the policies for dividends,
lending, investments and capital expenditures. This concentration of ownership also may
delay, defer or even prevent a change in the control of our Company and may make some
transactions more difficult or impossible without the support of these shareholders. The
interests of the Promoter as our controlling shareholders could conflict with our interests or
the interests of our other shareholders. We cannot assure you that our Promoters will act to
resolve any conflicts of interest in our or your favor.
23.
The ArcelorMittal, our Co-Promoters, have certain special rights under the Co-promotion
Agreementt dated September 4, 2009 which the other shareholders of our Company do not
have. Such rights give them an ability to exert significant control over us.
Pursuant to a Co-Promotion Agreement September 4, 2009 (the "Co-Promotion Agreement"),
the ArcelorMittal have become the co-promoters of our Company ("Co-promoters") and have
been given some special rights including but not limited to right to appoint one-half of the
non-independent directors, special quorum in the meeting of the Board of directors being a
minimum of one nominee director of the Co-promoters. The Co-promoters have also been
given a tag along right and right of first refusal.
Further, affirmative voting rights on the business plan, dissolution, amendment of charter
documents, corporate restructuring (entering into partnership and joint ventures), employee
and director compensation, related party transactions, capital expenditures or investments in
excess of identified thresholds, issuance or buy-back of securities and loans in excess of an
identified threshold have been given to the Co-promoters pursuant to which decisions on such
matters shall be taken only with the consent of representatives/ nominee directors of the
Indian Promoters and Co-promoters.
Currently, as required under the Co-Promotion Agreement, our Company has not amended
the Articles of Association. However, our Company has received an approval from our
42
Uttam Galva Steels Limited – Placement Document shareholders for incorporating any such changes. In the event that ArcelorMittal exercises
such rights, it would have an ability to exert significant control over our Company. The
interests of the Co-promoters as controlling shareholders could conflict with our interests or
the interests of our other promoters and shareholders.
24.
Our Company may not have sufficient insurance coverage for all possible economic losses.
Our Company’s operations are subject to inherent risks such as fire, strikes, loss-in-transit of
our products, cash-in transit, accidents and natural disasters to our factories, offices, stock and
our captive power plant. In addition, many of these operating and other risks may cause
personal injury, damage to or destruction of our properties and may result in suspension of
operations and the imposition of civil or criminal penalties. Whilst we believe that we
maintain adequate insurance coverage amounts for our business and operations, our insurance
policies do not cover all risks and are subject to exclusions and deductibles. If any or all of
our factories, offices, and captive power plant are damaged in whole or in part, our
operations, totally or partially, may get interrupted for a temporary period. There can be no
assurance that our insurance policies will be adequate to cover the losses that may be incurred
as a result of such interruption or the costs of repairing or replacing the damaged facilities.
Our Company’s inability to procure and/or maintain adequate insurance cover in connection
with our business could adversely affect our operations and profitability. Should an uninsured
loss or a loss in excess of insured limits occur, we would lose the capital invested in and the
anticipated revenue from the affected property. Losses suffered due to inadequate coverage
may have a material adverse impact on our Company’s business, results of operations and
financial condition.
Further, our Company does not maintain key-man insurance for any of its key personnel and
loss of services of such key personnel may have an adverse effect on our business, financial
condition and results of operations.
25.
Our Company has e entered into certain related-party transactions and continue to rely on
our Associate companies for certain activities.
Our Company has entered and may continue to enter into a number of related-party
transactions with our Associate Companies. While we believe that all our related-party
transactions have been conducted on an arm’s length basis, we cannot assure you that we
could not have achieved more favorable terms had such transactions been entered into with
unrelated parties. Such transactions or any future transactions with related parties may
potentially involve conflicts of interest and may impose certain liabilities on our Company.
There can be no assurance that such transactions, individually or in the aggregate, will not
have an adverse effect on our business, prospects, results of operations and financial
condition, including because of potential conflicts of interest or otherwise.
26.
Any downgrading of India’s sovereign rating by a domestic or international rating agency
could adversely affect our business.
Any adverse revisions to India’s sovereign ratings for domestic and international debt by
domestic or international rating agencies may adversely affect our Company’s ability to raise
additional financing, and the interest rates and other commercial terms at which such
additional financing is available. This could harm our business and financial performance,
ability to obtain financing for capital expenditures and the price of our Equity Shares.
43
Our offices and other premises from which we operate are not owned by us.
Our Company does not own the premises on which our registered office and other offices are
located. Our Company operates from rented and leased premises. Apart from the properties
owned by our Company, various premises are leased in relation to our operations. If any of
the owners of these premises do not renew the agreements pursuant to which our Company
has occupied the premises or such renewal of agreements are on terms and conditions
unfavorable to our Company then, we may suffer a disruption in our operations and incur
costs related to moving offices, which could adversely affect our Company’s business,
prospects, financial condition and results of operations.
28.
Some of our Company’s lease agreements have certain irregularities.
Some of our Company’s offices are on lease or on rent from various parties. Some of our
lease/ rent agreements have certain irregularities such as inadequate stamping and/or non
registration of deeds and agreements and improper execution of lease deeds. The effect of
inadequate stamping and non-registration is that the document is not admissible as evidence
in legal proceedings, and parties to that agreement may not be able to legally enforce the
same, except after paying a penalty for inadequate stamping and non-registration. In the event
of any dispute arising out of such unstamped or inadequately stamped and/or unregistered
lease agreements, we may not be able to effectively enforce our leasehold rights arising out of
such agreements which may have a material and adverse impact on the business of our
Company.
29.
An unexpected loss, shutdown or slowdown of operations at any of our Company’s
facilities could have a material adverse effect on our Company’s results of operations and
financial conditions.
Our Company is subject to operating risks such as the breakdown or failure of equipment,
power supply interruptions, facility obsolescence or disrepair, labour disputes, natural
disasters and industrial accidents. The occurrence of these risks could affect our Company’s
results of operations by causing production at one or more facilities to shutdown or
slowdown. No assurance can be given that one or more of the factors mentioned above will
not occur, which could have a material adverse on our Company’s results of operations and
financial conditions.
Additionally, our manufacturing processes depend on certain critical equipment including but
not limited to operations equipment may, on occasion, be out of service as a result of
unanticipated failures, which could require our Company to close part or all of the relevant
manufacturing facility. Any interruption in production capability may require our Company to
make significant and unanticipated capital expenditures to affect repairs which could have a
negative effect on the profitability and cash flows. Any sustained disruptions to our
Company’s business could also result in a loss of customers. Any or all of these occurrences
could adversely affect our Company’s Business, results of operations, financial conditions
and prospects.
30.
Our Company has applied for registration of certain trademarks in its name. Until such
registrations are granted, we may not be able to prevent un-authorised use of such
trademarks by third parties, which may lead to the dilution of our goodwill.
Our Company has filed applications for registration of 126 trademarks, under the Trademarks
Act, 1999 ("Trademarks Act"), some of which are currently pending approval from the
44
Uttam Galva Steels Limited – Placement Document Registrar of Trademarks. Some of the various trademarks registered by our Company
including but not limited to "Uttam Chatra Chaya", "Uttam Suraksha Kavach" and "Uttam
Suraksha" have recently expired and our Company is in the process of renewing the same.
There can be no assurance that our trademark applications will be registered or renewed.
Pending the registration of these trademarks we may have a lesser recourse to initiate legal
proceedings to protect our intellectual property. Further, our applications for the registration
of certain trademarks may be opposed by third parties, and we may have to incur significant
cost in relation to these oppositions. In the event the Company is unable to obtain
registrations due to opposition by third parties or if any injunctive or other adverse order is
issued against our Company in respect of any of our trademarks for which we have applied
for registration, we may not be able to avail the legal protection or prevent unauthorised use
of such trademarks by third parties, which may adversely affect our goodwill and business.
31.
Competition from other materials, or changes in the products or manufacturing processes
of customers that our Company’s products, could reduce market prices and demand for
steel products that we manufacture and thereby reduce our Company’s cashflow and
profitability.
In various applications, steel competes with other material that may be used as substitutes,
such as aluminum (particularly in the automobile industry), cement, composites, glass, plastic
and wood. Government regulatory initiatives mandating or incentivising the use of such
materials in lieu of steel, whether for environmental or other reasons, as well as the
development of other new substitutes for steel products, could significantly reduce market
prices and demand for steel products and thereby reduce our Company’s cashflow and
profitability.
Additionally, the industry that we operate in i.e the steel industry is characterised by evolving
technology standards that require improved quality, changing customer specifications and
wide fluctuations in product supply and demand. The products or manufacturing processes of
customers who use our products change from time to time due to improved technologies or
product enhancements. These changes may require us to develop new products and
enhancements for our product line to keep pace with the evolving standards, our customers
specifications and quality standards in a timely and cost effective manner. If we cannot keep
pace with the market changes and produce steel products then, it may reduce our cash flow
and profitability.
32.
Our Company may undertake in the future, strategic acquisitions, which may be difficult to
integrate, and may end up being unsuccessful.
Our Company may from time to time pursue in the future, acquisitions. Our ability to achieve
the benefits it anticipates from future acquisitions will depend in part upon whether it is able
to integrate the acquired businesses with the rest of our Company in an efficient and effective
manner. The integration and the achievement of synergies requires, among other things,
coordination of business development and procurement efforts, manufacturing improvements
and employee retention, hiring and training policies, as well as the alignment of products,
sales and marketing operations, compliance and control procedures, research and
development activities and information and software systems. Any difficulties encountered in
combining operations could result in higher integration costs and lower savings than
expected. Integration of certain operations also requires the dedication of significant
management resources, and time and costs devoted to the integration process may divert
management’s attention from day to day business.
45
Uttam Galva Steels Limited – Placement Document Additionally, future acquisitions may require our Company to incur or assume substantial
new debt, expose it to future funding obligations and expose it to integration risks, and our
Company cannot assure prospective investors that such acquisitions will contribute to our
profitability. The failure to successfully integrate an acquired business or the inability to
realise the anticipated benefits of such acquisitions could materially and adversely affect our
Company’s business, results of operations, financial conditions and prospects.
33.
Our Company faces risks relating to our joint ventures.
Our Company also has entered into, and may from time to time in the future enter into, joint
venture agreements. Our Company may have limited control of these companies and therefore
may be unable to require that these joint ventures sell assets or return invested capital, make
additional capital contributions or take any other action. If there is a disagreement between
our Company and our partners in a joint venture regarding the business and operations of the
project, we cannot assure you that we will be able to resolve such disagreement in a manner
that will be in the best interest of our Company. These limitations may adversely affect our
ability to obtain the economic and other benefits it seeks from participating in these products.
Our Company’s joint venture partners may have economic or business interests or goals that
are inconsistent with our Company; or may take actions contrary to our Company’s
instructions, requests, policies or objectives; or may be unable or unwilling to fulfill their
obligations; have financial difficulties; our have disputes with our Company as to their rights,
responsibilities and obligations. Any of these and other factors may have an adverse affect our
Company’s business, results of operations, financial condition and operation.
Risks Related to Investment in Indian Companies
34.
Significant differences exist between Indian GAAP and other accounting principles such as
IFRS, which may be material to investors’ assessment of our financial condition.
Our financial statements, including the financial statements provided in this Placement
Document are prepared in accordance with Indian GAAP, which differs in certain respects
from IFRS and US GAAP. As a result, our consolidated financial statements and reported
earnings could be different from those which would be reported under IFRS or US GAAP.
Such differences may be material. We have not attempted to quantify the impact of US GAAP
or IFRS on the financial data included in this Placement Document, nor do we provide a
reconciliation of our financial statements to US GAAP or IFRS. Each of US GAAP and IFRS
differs in significant respects from Indian GAAP. In addition, this Placement document does
not include any information in relation to the differences between Indian GAAP and IFRS or
US GAAP. 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. Had the financial statements
and other financial information been prepared in accordance with IFRS or US GAAP, the
results of operations and financial position may be materially different. Because differences
exist between Indian GAAP and IFRS or US GAAP, the financial information in respect of
our Company contained in this Placement Document may not be comparable with the
financial information of other companies that prepare their financial information in
accordance with IFRS or US GAAP. Any reliance by persons not familiar with Indian
accounting practices on the financial disclosures presented in this Placement Document
should accordingly be limited. Potential investors should consult their own professional
advisors for an understanding of these differences between Indian GAAP and IFRS or US
GAAP, and how such differences might affect the financial information contained herein.
46
Our failure to successfully adopt IFRS or a variation thereof, Indian Accounting Standards
("IND AS") namely could have a material adverse effect on the price of our Equity Shares.
Public companies in India, including our Company, may be required to prepare annual and
interim financial statements under IFRS or a variation thereof. The ICAI has released a nearfinal version of IND AS titled First Time Adoption of Indian Accounting Standards and the
Ministry of Corporate Affairs of the Indian Government on February 25, 2011, has notified
that IND AS will be implemented in a phased manner and the date of such implementation
will be notified at a later date. As of the date of this Placement Document, the MCA has not
notified the date of implementation of IND AS. There is not yet a significant body of
established practice for forming judgments regarding our implementation and application.
Additionally, IND AS has fundamental differences with IFRS and therefore financial
statements prepared under IND AS may be substantially different from financial statements
prepared under IFRS. Our Company cannot assure you that our financial condition, results of
operations, cash flow or changes in shareholders’ equity will not appear materially different
under IND AS from that under Indian GAAP or IFRS. As our Company adopts IND AS
reporting, it may encounter difficulties in the on-going process of implementing and
enhancing our management information systems. Our Company cannot assure you that our
adoption of IND AS will not adversely affect our Company’s reported results of operations or
financial condition and any failure to successfully adopt IND AS in accordance with the
prescribed timelines may materially and adversely affect our Company’s financial position
and results of operations.
36.
Our Company’s business and activities may be further regulated by the Competition Act,
2002 ("Competition Act") and any adverse application or interpretation of the Competition
Act could materially and adversely affect our Company’s business, financial condition and
results of operation.
The Competition Act seeks to prevent business practices that have or are likely to have an
appreciable adverse effect on competition in India and has established the Competition
Commission of India (the "CCI"). Under the Competition Act, any arrangement,
understanding or action, whether formal or informal, which has or is likely to have an
appreciable adverse effect on competition is void and attracts substantial penalties. Any
agreement which, directly or indirectly determines purchase or sale prices, limits or controls
the production, supply or distribution of goods and services, or shares a market by way of
geographical area or number of customers is presumed to have an appreciable adverse effect
on competition. The provisions of the Competition Act relating to the regulation of certain
acquisitions, mergers or amalgamations, which have a material adverse effect on competition
and regulations with respect to notification requirements for such combinations, came into
force on June 1, 2011. Therefore, it is difficult to predict the impact of the Competition Act on
our Company’s growth and expansion strategies. If our Company is affected, directly or
indirectly, by the application or interpretation of any provision of the Competition Act or any
enforcement proceedings initiated by the CCI or any adverse publicity that may be generated
due to scrutiny or prosecution by the CCI, it may adversely affect our Company’s business,
results of operations, financial condition, prospects and the trading price of our Equity Shares.
37.
Any disruption of India’s infrastructure could have a material adverse effect on our results
of operations.
India’s physical infrastructure is less developed than that of many developed nations. Any
congestion or disruption in its port, rail and road networks, electricity grid, communication
systems or any other public facility could disrupt normal business activity. Any deterioration
47
Uttam Galva Steels Limited – Placement Document of India’s physical infrastructure would harm the national economy, disrupt the transportation
of goods and supplies, and add costs to doing business in India. These problems could
interrupt our business operations, which could have an adverse effect on our results of
operations and financial condition.
38.
Political, economic and social developments in India could adversely affect our business
operations.
The market price and liquidity of our Equity Shares may be affected by foreign exchange
rates and controls, interest rates, political instability, changes in Government policy, taxation,
social and civil unrest and other political, economic or other developments in or affecting
India. Since 1991, successive Indian Government has pursued policies of economic
liberalization, including significantly relaxing restrictions on the private sector. Nevertheless,
the role of the Government and state governments in the Indian economy in relation to
producers, consumers and regulators has remained significant. The current Central
Government, which came to power in May 2009, is headed by the Indian National Congress
and is a coalition of several political parties. The current Government is expected to announce
policies and take initiatives that support economic liberalization and deregulation. However,
there can be no assurance that the present Government, or any Government elected in the
future, will continue the policies of previous Governments and it cannot be assured that
liberalization policies will continue in the future. The Government may also pursue other
policies which could have a material adverse effect on our business. A significant change in
the Government’s or state government’s economic liberalization and deregulation policies
could materially adversely affect business and economic conditions in India generally and our
business and financial condition and prospects in particular.
39.
It may not be possible for you to enforce any judgment obtained outside India against our
Company, our management or any of our respective affiliates in India, except by way of a
suit in India on such judgment.
Our Company is incorporated under the laws of India and all the directors and executive
officers of our Company reside in India. Nearly all our Company’s assets, and the assets of
our directors and officers, are located in India. As a result, you may be unable to (a) effect
service of process outside India upon our Company and such other persons or entities; or
enforce in courts outside of India judgments obtained in such courts against our Company and
such other persons or entities. Section 44A of the Indian Code of Civil Procedure, 1908, as
amended, provides that where a foreign judgment has been rendered by a court in any country
or territory outside India, which the Government has by notification declared to be 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. The United Kingdom has been
declared by the Government to be a reciprocating territory for the purposes of Section 44A of
the Indian Code of Civil Procedure, 1908. However, the United States has not been declared
by the Government to be a reciprocating territory for the purposes of Section 44A. A
judgment of a court in the United States may be enforced in India only by a suit upon the
judgment, subject to Section 13 of the Indian Code of Civil Procedure, 1908, and not by
proceedings in execution. The suit must be brought 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.
Generally, there are considerable delays in the disposal of suits by Indian courts. 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 is of the view that the amount of damages awarded is excessive or inconsistent
with the Indian practice. A party seeking to enforce a foreign judgment in India is required to
48
Uttam Galva Steels Limited – Placement Document obtain prior approval from the RBI under FEMA to repatriate any amount recovered. See
"Enforcement of Civil Liabilities."
40.
You may be restricted in your ability to exercise pre-emptive rights under Indian law and
may be adversely affected by future dilution of your ownership position.
Under the Companies Act, a company incorporated in India must offer its holders of equity
shares pre-emptive rights to subscribe and pay for a proportionate number of shares to
maintain their existing ownership percentages before the issuance of any new equity shares,
unless the pre-emptive rights have been waived by adoption of a special resolution by holders
of three-fourths of the shares which are voted on the resolution or if we have obtained
Government approval to issue without such rights. However, if the law of the jurisdiction you
are in does not permit you to exercise your pre-emptive rights without our Company filing an
offering document or registration statement with the applicable authority in the jurisdiction
you are in, you will be unable to exercise your pre-emptive rights unless we make such a
filing. If we elect not to make such a filing, the new securities may be issued to a custodian,
who may sell the securities for your benefit. The value such custodian would receive upon the
sale of such securities, if any, and the related transaction costs cannot be predicted. To the
extent that you are unable to exercise pre-emptive rights granted in respect of the Equity
Shares held by you, your proportional interest in our Company would be reduced.
41.
The Indian economy has sustained varying levels of inflation in the recent past.
The majority of our Company’s direct costs are incurred in India. India has experienced very
high levels of inflation during certain periods in the recent past. In the event of a high rate of
inflation, our costs, such as salaries, materials costs, travel costs and related allowances,
which are typically linked to general price level, may increase. However, we may not be able
to increase the tariffs that we charge from the users of the toll roads that we operate to
preserve operating margins. Accordingly, high rates of inflation in India could increase our
operating costs and decrease our operating margins, which could have an adverse effect on
our results of operations.
42.
A third party could be prevented from acquiring control of our Company because of the
anti-takeover provisions under Indian law.
There are provisions in Indian law that may discourage a third party from attempting to take
control over us, even if a change in control would result in the purchase of your Equity Shares
at a premium to the market price or would otherwise be beneficial to you. Under the Indian
takeover regulations, an acquirer has been defined as any person who, directly or indirectly,
acquires or agrees to acquire shares or voting rights or control over a company, whether
individually or acting in concert with others. These provisions may discourage or prevent
certain types of transactions involving an actual or threatened change in control of our
Company. For more information, see the section on "The Securities Market of India –
Takeover Code" in this placement document.
43.
Force majeure events, terrorist attacks or war or conflicts involving India or other
countries could adversely affect the financial markets and adversely affect our business.
Any major hostilities involving India, or other acts of violence including civil unrest or
terrorist attacks, or events that are beyond our control, could have an adverse effect on the
operations of services provided in India. The terrorist attacks will negatively affect business
sentiments as well, as trade between countries could adversely affect our business and
49
Uttam Galva Steels Limited – Placement Document profitability. Also, India may enter into armed conflict or war with other countries. The
consequences of any armed conflicts are unpredictable, and we may not be able to foresee
events that could have an adverse effect on our business. From time to time, South Asia has
experienced instances of civil unrest and hostilities among neighbouring countries. Military
activity or terrorist attacks could adversely affect the Indian economy by disrupting
communications and making travel more difficult. Such events could also create a perception
that investments in Indian companies involve a higher degree of risk. This, in turn, could have
an adverse effect on the market for securities of Indian companies, including the Equity
Shares, and on the market for our services.
44.
Natural calamities could have a negative effect on the Indian economy and adversely affect
our business and the price of our Equity Shares.
India has experienced natural calamities such as earthquakes, tsunami, floods and drought in
the past few years. The extent and severity of these natural disasters determines their effect on
the Indian economy. For example, as a result of drought conditions in the country during
Fiscal 2003, the agricultural sector recorded negative growth for that period. The erratic
progress of the monsoon in Fiscal 2004 affected sowing operations for certain crops. Further
prolonged spells of scanty rainfall or other natural calamities could have a negative effect on
the Indian economy, adversely affecting our business and the price of our Equity Shares.
45.
An outbreak of an infectious disease or any other serious public health concerns in Asia or
elsewhere could adversely affect our business.
The outbreak of an infectious disease in Asia or elsewhere or any other serious public health
concern, such as swine influenza or the NDM-1 superbug, could have a negative impact on
the global economy, financial markets and business activities worldwide, which could
adversely affect our business. Although, we have not been adversely affected by such
outbreaks in the past, we can give you no assurance that a future outbreak of an infectious
disease or any other serious public health concern will not have a material adverse effect on
our Company’s business.
46.
Our Company’s ability to raise foreign capital may be constrained by Indian law.
As an Indian company, we are subject to exchange controls that regulate borrowing in foreign
currencies. Such regulatory restrictions limit our financing sources for our Company
including for projects under development or acquisitions and other strategic transactions. This
could constrain our ability to obtain financing on competitive terms and refinance existing
indebtedness. In addition, there can be no assurance that our Company will be granted the
required approvals without onerous conditions, or at all. Any limitations on our ability to raise
foreign debt may have a material adverse impact on our business, financial condition, results
of operations and prospects.
47.
The prices and trading volumes of our equity shares on the Indian Stock Exchanges may
fluctuate after this Placement.
The prices and trading volumes of our equity shares on the Indian Stock Exchanges may
fluctuate after this Placement as a result of several factors, including volatility in the Indian
and global securities market; our operations and performance; the performance of our
competitors, the infrastructure and the steel industry and the perception in the market about
investments in the industries in which we operate; changes in the estimates of our
performance or recommendations by financial analysts; significant developments in India’s
50
Uttam Galva Steels Limited – Placement Document economic liberalization and deregulation policies; and significant developments in India’s
fiscal regulations. There can be no assurance that the prices at which the Equity Shares are
initially traded will correspond to the prices at which the Equity Shares will trade in the
market subsequent to this Placement.
48.
The price of our equity shares may experience significant fluctuations on the Indian Stock
Exchanges.
The price of our Equity Shares may experience significant fluctuation on the Indian Stock
Exchanges. In recent years, price and volume fluctuations on the Indian Stock Exchanges
have been significant and such fluctuations have often been unrelated or disproportionate to
the operating performance of companies whose securities are traded on the Indian Stock
Exchanges. The trading price of the Equity Shares could also be subject to significant
volatility in response to, among other factors:
•
our Company’s results of operations and performance; delays in the schedule for the
development projects and any resultant cost and time overruns caused by such delays;
•
supply and demand of steel, manufacturing, technology and financial services in India
and in the international markets generally;
•
our ability to successfully implement our strategy, and growth and expansion plans;
•
changes in laws and regulations, or any interpretation thereof, that apply to our
business;
•
changes in the value of the Rupee against major global currencies and other currency
changes;
•
changes in the Indian and international interest rates;
•
any adverse outcome in the legal or regulatory proceedings in which we are involved;
•
changes in any global conditions and situations affecting India and the industries in
which we operate; and
•
changes in political and economic conditions in India.
•
volatility in the Indian and global securities market;
•
changes in the estimates of our performance or recommendations by financial
analysts;
•
adverse media reports on our Company or the Indian steel industry;
Risks related to our Equity Shares and the trading market
49.
The Indian securities market may be more volatile and provide less information on listed
companies than securities markets in developed countries.
The Indian securities markets are more volatile than the securities markets in certain countries
which are members of the OECD. The Indian Stock Exchanges have, in the past, experienced
substantial fluctuations in the prices of listed securities. On May 18, 2009, trading on the
Indian Stock Exchanges was halted for the day after excessive volatility in the Indian
securities market. The Indian Stock Exchanges (including the BSE) have experienced
problems which, if such or similar problems were to continue or recur, could affect the market
price and liquidity of the securities of Indian companies, including the Equity Shares. These
problems have included temporary exchange closures, broker defaults, settlement delays and
strikes by brokers. In addition, the governing bodies of the Indian Stock Exchanges have from
time to time imposed restrictions on trading in certain securities, limitations on price
movements and margin requirements. Furthermore, from time to time disputes have occurred
between listed companies, and stock exchanges and other regulatory bodies, which in some
cases may have had a negative effect on market sentiment. There is a lower level of regulation
and monitoring of the Indian securities markets and the activities of investors, brokers and
51
Uttam Galva Steels Limited – Placement Document other participants than in certain OECD countries. In 1992, the SEBI received statutory
powers to assist in carrying out its responsibility for improving disclosure and other
regulatory standards for the Indian securities markets. Subsequently, the SEBI has prescribed
certain regulations and guidelines in relation to disclosure requirements, insider dealing and
other matters relevant to the Indian securities markets. There may, however, be less publiclyavailable information about Indian companies than is regularly made available by public
companies in certain OECD countries. As a result, investors may have access to less
information about our business, financial condition and results of operation and those of our
competitors that are listed on Indian Stock Exchanges, on an ongoing basis, than an investor
may have access to in the case of companies subject to reporting requirements of other
countries.
50.
An active market for our equity shares may not be sustained, which may cause the price of
our Equity Shares to fall.
While our equity shares have been traded on the BSE and the NSE, there can be no assurance
regarding the continuity of the existing active or liquid market for our equity shares, the
ability of the investors to sell their Equity Shares or the prices at which investors may be able
to sell their Equity Shares. In addition, the market for equity securities in emerging markets
has been subject to disruptions that have caused volatility in the prices of securities similar to
our equity shares. There can be no assurance that the market for our equity shares will not be
subject to similar disruption. Any disruption in these markets may have an adverse effect on
the market price of the Equity Shares.
51.
There is no guarantee that our Equity Shares will remain listed on the BSE and the NSE in
a timely manner or at all, and any trading closures at the BSE and the NSE may adversely
affect the trading price of our equity shares.
In accordance with Indian law and practice, permission for listing of the Equity Shares will
not be granted until after the Equity Shares have been issued and allotted. The approval will
require all other relevant documents authorizing the issuing of the Equity Shares to be
submitted. There could be a failure or delay in listing the Equity Shares on the BSE and the
NSE. Any failure or delay in obtaining the approval would restrict your ability to dispose of
your Equity 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 US Historical trading prices, therefore, may not be indicative of the
prices at which the Equity Shares will trade in the future.
52.
You will not be able to sell immediately on an Indian stock exchange any of the Equity
Shares you purchase in the Placement.
An in -principle approval has been received for the Equity Shares to be sold pursuant to this
Placement to be listed on NSE and BSE. Pursuant to Indian regulations, certain actions must
be completed before the Equity Shares can be listed and trading may commence. Investors’
book entry, or "demat" accounts with depository participants in India are expected to be
credited within two working days of the date on which the allotment is made. Thereafter,
upon receipt of final approval of the Stock Exchanges (if granted), trading in the Equity
Shares is expected to commence within seven working days. There can be no assurance that
the Equity Shares allocated earlier to investors will be credited to such investor’s demat
account, or that trading will commence, within the time periods specified above.
52
An investor will not be able to sell any of our Equity Shares purchased in the Placement
other than on a recognized Indian stock exchange for a period of 12 months from the date
of issue of such Equity Shares.
Pursuant to the SEBI Regulations, for a period of 12 months from the date of the issue of our
Equity Shares in the Placement, investors purchasing our Equity Shares in the Placement may
only sell their shares on the BSE or the NSE and may not enter into any off-market trading in
respect of our Equity Shares. We cannot be certain that these restrictions will not have an
impact on the price of our Equity Shares.
54.
There may be less information available about companies listed on Indian securities
markets than companies listed on securities markets in other countries.
There may be less publicly available information about Indian public companies, including
our Company, than regularly disclosed by public companies in other countries with more
mature securities markets. There is a difference between the level of regulation and
monitoring of the Indian securities markets and the activities of investors, brokers and other
participants in those markets, and that of markets in other more developed economies. SEBI is
responsible for setting standards for disclosure and other regulatory standards for the Indian
securities markets. While SEBI has issued regulations and guidelines on disclosure
requirements, insider trading and other matters, there may be less publicly available
information about Indian companies than is regularly made available by public companies in
many developed economies. As a result, you may have access to less information about our
Company’s business, results of operations and financial condition, and those of our
competitors that are listed on Indian stock exchanges, on an ongoing basis, than you may in
the case of companies subject to the reporting requirements of other more developed
countries.
55.
Conditions in the Indian securities market may affect the price or liquidity of our Equity
Shares.
The Indian securities markets are smaller and more volatile than securities markets in more
developed economies. Indian stock exchanges have in the past experienced substantial
fluctuations in the prices of listed securities. Indian stock exchanges have also experienced
problems that have affected the market price and liquidity of the securities of Indian
companies. These problems have included temporary exchange closures, broker defaults,
settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock
exchanges have from time to time restricted securities from trading, limited price movements
and restricted margin requirements. Further, from time to time, disputes have occurred
between listed companies and the Indian stock exchanges and other regulatory bodies that, in
some cases, have had a negative effect on market sentiment. Similar problems could occur in
the future and, if they do, they could harm the market price and liquidity of our Equity Shares.
56.
Economic developments and volatility in securities markets in other countries may cause
the price of our equity shares to decline.
The Indian economy and its securities markets are influenced by economic developments and
volatility in securities markets in other countries. Investors’ reactions to developments in one
country may have adverse effects on the market price of securities of companies located in
other countries, including India. For instance, the economic downturn globally has adversely
affected market prices in the world’s securities markets, including the Indian securities
53
Uttam Galva Steels Limited – Placement Document markets. Negative economic developments, such as rising fiscal or trade deficits, or a default
on sovereign debt, in other emerging market countries may affect investor confidence and
cause increased volatility in Indian securities markets and indirectly affect the Indian
economy in general.
57.
You may be liable for capital gains tax.
Under current Indian tax laws and regulations, capital gains arising from the sale of shares in
an Indian company are generally taxable in India. Any gain realized on the sale of listed
equity shares on a stock exchange held for more than 12 months will not be subject to capital
gains tax in India if securities transaction tax ("STT") has been paid on the transaction. STT
will be levied on and collected by a domestic stock exchange on which the Equity Shares are
sold. Any gain realized on the sale of equity shares held for more than 12 months to an Indian
resident, which are sold other than on a recognized stock exchange and on which no STT has
been paid, will be subject to long-term capital gains tax in India. Further, any gain realized on
the sale of listed equity shares held for a period of 12 months or less will be subject to short
term capital gains tax in India. Capital gains arising from the sale of the Equity Shares will be
exempt from taxation in India in cases where the exemption from taxation in India is provided
under a treaty between India and the country of which the seller is resident. Generally, Indian
tax treaties do not limit India’s ability to impose tax on capital gains. As a result, residents of
other countries may be liable for tax in India as well as in their own jurisdiction on a gain
upon the sale of Equity Shares. See "Taxation".
58.
You may be subject to certain foreign exchange regulations of India.
Under the foreign exchange regulations currently in force in India, transfer of equity shares
between non residents and residents are freely permitted only if they comply with the pricing
guidelines specified by the RBI. If the Equity Shares sought to be transferred are not in
compliance with such pricing guidelines then the prior approval of the RBI shall be required.
Additionally, shareholders who seek to convert the Rupee proceeds from a sale of Equity
Shares in India into foreign currency and repatriate that foreign currency from India will have
to comply with the guidelines issued in this regard. Further, prior to such repatriation (of sale
proceeds), a no objection/tax clearance certificate from the income tax authority would be
required. Our Company cannot assure investors that any required approval from the RBI or
any other Government agency can be obtained on any particular terms or at all.
59.
Government regulation of foreign ownership of Indian securities may have an adverse
effect on the price of the Equity Shares.
Foreign ownership of Indian securities is subject to regulation by the Government of India.
Under foreign exchange regulations currently in effect in India, the RBI must approve the sale
of the Equity Shares from a non-resident of India to a resident of India if the sale does not
meet the requirements of the circular of the RBI dated October 4, 2004. The RBI must
approve the conversion of the Rupee proceeds from any such sale into foreign currency and
repatriation of that foreign currency from India unless the sale is made on a recognized stock
exchange in India through a stock broker at the market price. As provided in the foreign
exchange controls currently in effect in India, the RBI will approve the price at which the
Equity Shares are transferred based on a specified formula, and a higher price per share may
not be permitted. The approval from the RBI or any other government agency may not be
obtained on terms favorable to a non-resident investor in a timely manner or at all. Because of
possible delays in obtaining requisite approvals, investors in the Equity Shares may be
prevented from realizing gains during periods of price increases or limiting losses during
54
Uttam Galva Steels Limited – Placement Document periods of price declines.
60.
There are restrictions on daily movements in the price of the Equity Shares, which may
adversely affect a shareholder’s ability to sell, or the price at which it can sell, Equity
Shares at a particular point in time.
Subsequent to listing, our Company will be subject to a daily circuit breaker imposed on
listed companies by all stock exchanges in India which does not allow transactions beyond
certain volatility in the price of the Equity Shares. This circuit breaker operates independently
of the index-based market-wide circuit breakers generally imposed by SEBI on Indian stock
exchanges. The percentage limit on our Company’s circuit breaker is set by the stock
exchanges based on the historical volatility in the price and trading volume of the Equity
Shares. The Stock Exchanges are not required to inform our Company of the percentage limit
of the circuit breaker from time to time, and may change it without our knowledge. This
circuit breaker would effectively limit the upward and downward movements in the price of
the Equity Shares. As a result of this circuit breaker, there can be no assurance regarding the
ability of shareholders to sell the Equity Shares or the price at which shareholders may be able
to sell their Equity Shares.
61.
Currency exchange rate fluctuations may affect the value of the Equity Shares.
The exchange rate between the Rupee and other foreign currencies, including the United
States Dollar, British Pound, the Euro, the Hong Kong dollar and the Singapore dollar, has
changed in recent years and may fluctuate substantially in the future. If you purchase Rupees
to purchase our Equity Shares, fluctuations in the exchange rate between the Rupee and the
foreign currency with which you purchased the Rupees may affect the value of your
investment in our Equity Shares. Specifically, if there is a change in relative value of the
Rupee to a foreign currency, each of the following values may also be affected:
•
the foreign currency equivalent of the Rupee trading price of our Equity Shares in
India;
•
the foreign currency equivalent of the proceeds that you would receive upon the sale
in India of any of our Equity Shares; and
•
the foreign currency equivalent of cash dividends, if any, on our Equity Shares, which
will be paid only in Rupees.
You may be unable to convert Rupee proceeds into a foreign currency of your choice. In
addition, the rate at which any such conversion could occur may fluctuate. In addition, our
market valuation could be affected by the devaluation of the Rupee if investors in
jurisdictions outside India analyze our value based on the Rupee equivalent of some other
currency.
62.
Our Company cannot guarantee the accuracy of facts and other statistics with respect to
India, the Indian economy, and the Indian steel industry contained in this Placement
Document.
Facts and other statistics in this Placement Document relating to India, the Indian economy
and the Indian infrastructure industry have been derived from various government
publications and obtained in communications with various Indian government agencies that
our Company believes to be reliable. However, our Company cannot guarantee the quality or
reliability of such source of materials. While our Company’s directors have taken reasonable
care in the reproduction of the information, they have not been prepared or independently
55
Uttam Galva Steels Limited – Placement Document verified by our Company, the GC-BRLM or any of our Company’s or their respective
affiliates or advisers and, therefore, our Company makes no representation as to the accuracy
of such facts and statistics, which may not be consistent with other information compiled
within or outside India. Due to possibly flawed or ineffective collection methods or
discrepancies between published information and market practice and other problems, the
statistics herein may be inaccurate or may not be comparable to statistics produced for other
economies and should not be unduly relied upon. Further, there is no assurance that they are
stated or compiled on the same basis or with the same degree of accuracy as may be the case
elsewhere. In all cases, investors should give consideration as to how much weight or
importance they should attach to or place on such facts or statistics.
56
Uttam Galva Steels Limited – Placement Document MARKET PRICE INFORMATION
The equity shares of our Company are currently listed on BSE and NSE. The stock market data given
below is for periods subsequent to such date.
As on the date of the Placement Document our Company has 12,22,60,103 Equity Shares of face
value `10 each issued, subscribed and paid up.
The table set forth below is for the periods that indicate the high and low prices of our Equity Shares
and also the volume of trading activity.
1)
The high, low and average market prices of our Equity Shares during the preceding
three years.
Year
Ending
March 31
BSE
Date
High (`)
Volume
on date
of High
(No. of
shares)
Date
Low
(`)
April 1, 2012 January
to March 22 , 30, 2013
2013
2012
April 20,
2011
121.75
2982241
November
30, 2012
58.00
72338
68.97
25130139
127.35
220199
December
20, 2011
48.30
11802
84.25
6890614
2011
165.20
187340
100.50
33685
125.00
32876611
137.85
5263019
February
10, 2011
April 01,
2009
28.70
36251
88.60
101742535
2010
October 21,
2010
September
09, 2009
Volume Average
on date
Price
of Low
for the
(No. of
Year /
shares) Period
(`) *
Total
Volume
for the
Year /
Period
(No. of
Equity
Shares)
* Average of daily closing prices
Source: www.bseindia.com
Year
Ending
March 31
Date
High
(`)
Volume
on date
of High
(No. of
shares)
January 30, 2013
121.70
5767173
April 20, 2011
127.15
399101
2011
October 21, 2010
165.35
341423
2010
September 09, 2009
138.25
2131017
April 1, 2012
to March 22 ,
2013
2012
NSE
Date
Low
(`)
Volume Average Total
on date
Price
Volume
of Low for the
for the
(No. of
Year /
Year /
shares) Period
Period
(`) *
(No. of
Equity
Shares)
November
30, 2012
57.05
261706
68.98
December 20,
2011
February 10,
2011
April 01, 2009
48.45
10143
84.24
100.55
65869
125.09
28.80
78236
88.62
*- Average of daily closing prices
57
57446309
14866800
64447816
158802626
Uttam Galva Steels Limited – Placement Document Source: www.nseindia.com
2)
Monthly high and low prices on the Stock Exchanges for the six months preceding the
date of filing of the Placement Document.
Month
Date
March 01, 2013
to March 22,
2013
February 2013
March 21, 2013
High
(`)
BSE
Volume on
Date
date of High
(No. of
shares)
Low
(`)
Volume Average
on date
Price
of Low for the
(No. of Month /
shares) Period
(`) *
80.05
40732
March 4, 2013
65.60
21329
74.78
February 01, 2013
107.50
760193
69.95
31270
85.64
January 2013
January 30, 2013
121.75
2982241
63.90
47976
78.02
December 2012
December 20, 2012
69.60
894676
February 28,
2013
January 11,
2013
December 03,
2012
58.20
23748
62.55
November,
2012
October, 2012
November 07, 2012
63.00
63392
58.00
72338
60.56
October 08, 2012
67.35
115990
59.35
4566
63.92
September,
2012
September 28, 2012
64.00
42612
November 30,
2012
October 30,
2012
September 03,
2012
58.05
37814
60.41
Source: www.bseindia.com
Month
Date
March 01, 2013
to March 22,
2013
February 2013
March 21, 2013
High
(`)
NSE
Volume on
Date
date of High
(No. of shares)
80.05
133483
February 01, 2013
107.35
1466353
January 2013
January 30, 2013
121.70
5767173
December 2012
December 20, 2012
70.20
2013361
November,
2012
October, 2012
November 07, 2012
63.30
199841
October 08, 2012
67.45
315374
September,
2012
September 28, 2012
63.95
68637
Source: www.nseindia.com
Notes
58
Low
(`)
Volume Average
on date
Price
of Low for the
(No. of Month /
shares) Period
(`) *
March 4,
2013
65.85
39067
74.92
February 28,
2013
January 11,
2013
December 03,
2012
November
30, 2012
October 30,
2012
September
03, 2012
70.30
87912
85.68
63.95
98341
78.02
58.15
67950
62.60
57.05
261706
60.44
59.55
14708
63.93
57.95
73645
60.40
•
In the above data provided, High, Low and Average prices are of the daily closing prices.
In case of two days with same closing price, the date with higher volume has been considered.
3)
Market Price on the first working day following the Board Meeting approving the
Qualified Institution Placement i.e. on February 27, 2013:
Date
Ope
n
Februar
y 27,
2013
Hig
h
(`)
77.10 77.10
Lo
w
(`)
70.25
BSE
NSE
Clo Traded Turnove Ope
se Volume
r
n
(`) (No. of
(`
(`)
Shares) in Cr.)
72.40
48664
0.35
73.75
Hig
h
(`)
Lo
w
(`)
74.85 70.25
Clos
e
(`)
72.50
Trade
d
Volum
e (No.
of
Shares
)
111395
Turnove
r
(` in
Cr.)
0.81
Source: www.bseindia.com , www.nseindia.com
4)
Volume of business transacted during the last six months on the Stock Exchanges.
Month
BSE
Total Volume of
Total Value of
Securities Traded
Securities
(No. of shares)
Transacted
NSE
Total Volume of
Total Value of
Securities Traded
Securities
(No. of shares)
Transacted
(` In Cr.)
March 01, 2013 to
March 22, 2013
(` In Cr.)
504388
3.84
1409102
10.77
February, 2013
4995854
48.18
10827026
103.74
January, 2013
10747050
110.04
25135594
254.66
December, 2012
2884563
19.03
6879742
45.37
November ,2012
378945
2.31
1321595
8.00
October 2012
508740
3.36
1319875
8.72
September, 2012
358703
2.19
819908
5.01
20378243
188.95
46303740
425.5
Total
Source: www.bseindia.com , www.nseindia.com
59
Uttam Galva Steels Limited – Placement Document USE OF PROCEEDS
The total gross proceeds of the Placement will be `160 crore.
Subject to compliance with applicable laws and regulations, we intend to use the proceeds of the
Placement to augment the long term resources for future expansion, to meet long term working capital
requirement and to meet general corporate business purposes of the Company.
In accordance with the policies set up by the Board of Directors of our Company and as permissible
under applicable laws and government policies, the management of our Company will have the
flexibility in deploying the proceeds received from this Placement. Pending utilization for the
purposes described above, our Company intends to use the proceeds to temporarily invest in credit
worthy instruments, including money market mutual funds and deposits with banks and corporate or
park the proceeds in our cash credit accounts and, overdraft accounts. Such investments would be in
accordance with the investment policies approved by the Board of Directors from time to time.
60
Uttam Galva Steels Limited – Placement Document CAPITALISATION
The following table shows our Company’s standalone capitalisation as at March 31, 2012.
This table should be read in conjunction with our Company’s standalone financial statements as of
March 31, 2012 and the related notes, the section "Management’s Discussion and Analysis of
Financial Condition and Results of Operations" and other financial statements and information
contained in this Placement Document.
Standalone Capitalisation Statement
(` in crores)
As at March 31, 2012
Pre Placement Post Placement
SHAREHOLDERS’ FUNDS
Equity Share Capital
Fresh issue for QIP
Reserves and Surplus
Additional Share Premium on fresh issue for QIP
Total Shareholders’ Funds (A)
122.26
902.75
1025.01
122.26
20.00
902.75
140.00
1185.01
LOAN FUNDS
Long Term Debt (B)
Short Term Debt
Any other Debt
Total Debt (C)
Total Capitalisation
Total Debt / Equity Ratio (C/A)
Total Long Term Debt / Equity Ratio (B/A)
1971.06
214.57
2185.63
3210.64
2.13
1.923
1971.06
214.57
2185.63
3370.64
1.84
1.66
61
Uttam Galva Steels Limited – Placement Document DIVIDEND POLICY
Under the Companies Act, an Indian company pays dividends upon a recommendation by its board of
directors and approval by a majority of the shareholders at the annual general meeting. The
declaration and payment of dividends, as recommended by the board of directors, will depend on a
number of factors, including but not limited to the results of operations, capital requirements, general
financial condition, contractual restrictions, applicable Indian legal restrictions and other factors
considered relevant by the board of directors. 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 previous financial years or out of both. The Board may also from time to time pay interim
dividend.
Our Company has not declared any dividends for the past three years.
The amounts paid or not paid as dividends in the past are not necessarily indicative of the dividend
policy of our Company or dividend amounts, if any, in the future. The form, frequency and amount of
future dividends will depend on our revenues, cash flows, financial condition (including capital
position) and other factors and shall be at the discretion of our board of directors and subject to the
approval of our shareholders.
For a summary of certain Indian and United States federal tax consequences of dividend distributions
to shareholders, see the section "Taxation". For a description of our regulation of dividends, see the
section "Description of the Shares".
62
Uttam Galva Steels Limited – Placement Document MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Our financial statements are prepared in conformity with Indian GAAP. Indian GAAP differs in
certain significant respects from IFRS, US GAAP and other accounting principles and auditing
standards in other countries with which prospective investors may be familiar. The degrees to which
the financial statements included in the Placement Document will provide meaningful information, is
dependent on the reader’s level of familiarity with Indian accounting practices, Indian GAAP, the
Companies Act and the SEBI Regulations. Any reliance on the financial disclosures presented in the
Placement Document by persons not familiar with these Indian practices, law and rules should be
limited. We have not attempted to explain these differences or quantify their impact on the financial
data included herein, and we urge you to consult your own advisors regarding such differences and
their impact on the financial data herein.
Our actual results and the timing of selected events could differ materially from those anticipated in
forward-looking statements contained in this discussion as a result of various factors, including those
set forth under "Risk Factors" and elsewhere in this Placement Document. See the section entitled
"Forward Looking Statements".
Our Financial Year ends on March 31 of each year, so all references to a particular "Financial Year"
or "Fiscal" are to the 12-month period ended March 31 of that year.
Overview
markets. We have a annual installed production capacity of 7,50,000 MT, 90,000MT and 9,60,000
63
Uttam Galva Steels Limited – Placement Document month period ending December 31, 2012 of `77.96 crores, `76.77 crores and `33.36 crores,
respectively.
KEY FACTORS AFFECTING OUR FINANCIAL CONDITION AND OUR RESULTS OF
OPERATIONS
•
•
•
•
•
•
•
•
•
•
•
•
Our results of operations and performance; delays in the schedule for the development
projects and any resultant cost and time overruns caused by such delays;
supply and demand of steel, manufacturing, technology and financial services in India and in
the international markets generally;
our ability to successfully implement our strategy, growth and expansion plans;
changes in laws and regulations, or any interpretation thereof, that apply to our business;
changes in the value of the Rupee against major global currencies and other currency
fluctuation;
changes in the Indian and international interest rates;
any adverse outcome in the legal or regulatory proceedings in which we are involved;
changes in any global conditions and situations affecting India and the industries in which we
operate;
changes in political and economic conditions in India;
Volatility in the Indian and global securities market;
Changes in the estimates of our performance or recommendations by financial analysts; and
Adverse media reports on our Company or the Indian steel industry.
SIGNIFICANT ACCOUNTING POLICIES
A.
On a Standalone Basis as on March 31, 2012
1.
(a)
Basis of Accounting:
The financial statements are prepared under the historical cost convention on accrual
basis of accounting in accordance with the generally accepted accounting principles,
on a going concern basis, and in line with accounting standards issued by the Institute
of Chartered Accountants of India, as applicable, and the provisions of the Companies
Act, 1956.
(b)
Use of Estimates:
The Preparation of financial statements in conformity GAAP requires that the
Management of the Company makes estimates and assumptions that affect the
reported amounts of income and expenses of the period, the reported balances of
assets and liabilities and the assumptions relating to contingent liabilities as on the
date of the financial statements. Examples of such estimates include the useful life of
tangible and intangible fixed assets, provision for doubtful debts/advances, future
obligation in respect of retirement benefit plans, etc. Difference, if any, between the
actual results and estimates is recognized in the period in which the results are
known.
64
Uttam Galva Steels Limited – Placement Document (c)
Revenue Recognition:
The Company recognizes revenue on the sale of products when the products are
dispatched to the customer or when delivered to the ocean carrier for export sales,
which is when risks and rewards of ownership are passed to the customer.
2.
Foreign Currency Loans / Transactions:
(a)
(b)
Import Transactions:
(i)
Material imports are accounted at the custom exchange rates prevailing at the
time of receipts. In case foreign exchange is covered, the exchange rate
contracted is recognized as a part of purchase cost. Exchange Fluctuations, if
any, at the time of retirement, are appropriately accounted as a part of
material (purchase) cost. Similarly Bills Payable (balances) at year end are
accounted at exchange rate prevailing at year end (As per Revised AS - 11).
(ii)
Import contracts covered by ‘foreign exchange cover’ with banks are booked
at contracted rates. Income / Expenditure incurred in cancellation of forward
cover contracts, mainly due to variation in the bank involved / date of
execution are treated as part of purchase cost.
Export Transactions:
(i)
(ii)
(iii)
(c)
(d)
3.
Export transactions are accounted at the custom exchange rates prevailing at
the time of shipments. Exchange fluctuations, if any, at the time of realisation
are appropriately accounted.
Exports, contracts covered by foreign exchange cover with banks, are booked
at contracted rates. Income / expenditure incurred in case of cancellation of
forward cover contracts, mainly due to variation in bank involved / date of
execution are treated as export realisation.
In case receipt of Export Advances, exchange rates prevailing on date of
receipts of advances are treated as relevant exchange rate for exports.
(i)
Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps
are booked at contracted rates.
(ii)
Other Foreign Currency Term Loans balances are accounted at Exchange
Rate prevailing at the year end, and such gain / loss is considered as finance
cost.
Such gain / loss in transactions referred in para (c) above, and other foreign currency
contracts and / or derivative contracts and relevant exchange gain / loss thereto, are
considered as finance cost.
Interest on Term Loans, Premium on redemption of Debentures / Debts:
(i)
Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009
financial years is lower than the average interest rate during 2000-2014 financial
years. The company is treating interest payable (yearly rate) as interest accrued.
(ii)
On reschedulement and realignment of term debts, financial cost incurred is treated as
65
Uttam Galva Steels Limited – Placement Document accrued on date of realignment of realigned term debts and provided in the relevant
financial year.
4.
Employee Benefits:
(a)
Short Term Employee Benefits
All employee benefits payable / available within 12 months of rendering the services
are classified as short term employee benefits. Benefits such as salaries, wages, bonus
etc, are recognized in the P&L account in the period in which the employee renders
the related services.
(b)
Long Term Employee Benefits
(i)
The Company has taken Group Gratuity Policy with the Life Insurance
Corporation of India (LIC) for future payment of Gratuities. Any deficit in
Plan Assets managed by LIC and as compared to the Actuarial Liability is
recognized as a liability immediately.
(ii)
Leave Encashment benefit shall be accrued at the year end.
5.
The Treatment of Expenditure during Construction Period:
(a)
Expenditure directly related to particular fixed assets is capitalized to those fixed
assets. All indirect expenses are apportioned to various fixed assets on a reasonable
basis. This is done once the construction and erection work is completed, pending
which the accumulated amount is disclosed as Capital Work-in-progress Pending
capitalization under fixed asset.
(b)
Interest on Loans is capitalized up to the date on which the asset is 'put to use’.
Interest includes exchange fluctuation on Foreign Currency Term Loans. It is in line
with Accounting Standards on Borrowing Cost and long term foreign currency debts
and Accounting Standards on Fluctuation on Foreign Exchange currency.
(c)
The Income and Expenditure during trial runs is included in the Profit & Loss
Account. Excess of expenditure over income is capitalised.
(d)
Temporary surplus in short term i.e. liabilities over assets are used for Capital Work
In Progress. Interest and consequential cost is appropriately accounted /
reimbursements.
(e)
Upfront Expenses incurred on mobilisation of term debts is treated as a part of Capital
Cost of relevant project.
6.
Fixed Assets and Depreciation:
(a)
Fixed assets are carried at cost less accumulated depreciation.
(b)
Cost excludes Cenvat credit, sales tax and service tax credit and such other levies /
taxes. Depreciation on such assets is claimed on ‘reduced’ cost.
(c)
Depreciation on fixed assets has been provided on straight line method at the rates
specified, in the Schedule XIV of the Companies Act, 1956, in Line with Notification
No. GSR/756(E) dated, 16th December 1993.
(d)
Depreciation on assets acquired during the year has been provided on pro-rata basis;
from the date on which it is 'Put to Use’.
1.06A Impairment of Assets:
Fixed Assets are reviewed for impairment whenever events or changes in circumstances
warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets
66
Uttam Galva Steels Limited – Placement Document to be held and used is measured by a comparison of the carrying amount of an asset to future
net discounted cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognised is measured by the amount by which the
carrying amount of the asset exceeds the fair value of the asset.
7.
Investment:
The company does not provide for temporary diminution in value of long term investments, if
any. Exchange Gain / (Loss) on Investments in Foreign Currency has been provided at the
year end.
8.
Inventories:
(a)
Inventories are valued as under after providing for obsolescence:
(i)
Raw Materials At Cost (Moving Weighted Average Method)
(ii)
Work-in-ProcessAt Material Cost plus labour and other appropriate
portion of production and administrative overheads
and depreciation.
(iii)
Finished GoodsAt lower of cost or realisable value.
Cost is inclusive of any taxes and duties incurred.
(iv)
Stores Spares etc.At Cost
(v)
Arising’sAt realisable value
(b)
(i)
(ii)
(iii)
9.
Raw-materials include stock-in-transit and goods lying in Bonded
Warehouses.
Finished goods include stock-in-transit at Docks awaiting Shipment and
stocks with consignees.
Inventory includes goods lying with third party / job workers / consignees.
Provision for Taxation
Income tax expense is the aggregate amount of Current tax, Wealth Tax and Deferred Tax.
Current year taxes are determined in accordance with the provisions of Income Tax Act, 1961
and Wealth Tax Act.
Deferred tax charged or credit reflects the tax effect of timing differences between accounting
income and taxable income for the period. The deferred tax charged or credit and the
corresponding deferred tax liability or assets are recognized using the tax rates that have been
enacted or substantively enacted by the balance sheet dates.
10.
Earning per Share:
The Company reports basic and diluted earning per share in accordance with AS-20 ‘Earning
per Share’ issued by the ICAI. Basic earning per share is computed by dividing the net profit
after tax by the weighted average number of shares outstanding for the year.
11.
Accounting for Provisions, Contingent liabilities and Contingent Assets
(a)
In conformity with AS-29, ‘Provisions, Contingent Liabilities and Contingent
Assets’, issued by the Institute of Chartered Accountants of India. The Company
recognizes provisions only when it has a present obligation as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be
67
Uttam Galva Steels Limited – Placement Document required to settle the obligation, and when a reliable estimate of the amount of the
obligation can be made.
(b)
No provision is recognised for:
(i)
Any possible obligation that arises from past events and the existence of
which will be confirmed only by the occurrence or non-occurrence of one or
more uncertain future events not wholly within the control of the Company;
or
(ii)
Any present obligation that arises from past events but is not recognised
because:
1)
It is not probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; or
2)
A reliable estimate of the amount of obligation cannot be made.
Such obligations are recorded as Contingent Liabilities. These are assessed at
regular intervals and only that part of the obligation for which an outflow of
resources embodying economic benefits is probable, is provided for, except in
the extremely rare circumstances where no reliable estimate can be made.
(iii)
12.
13.
Export entitlements / obligations:
(a)
Duty free import of raw materials under Advance Authorisation (DEEC) for imports
as per import and export policy are matched with exports made / produced. Benefit /
Obligation are accounted by making suitable adjustments in raw material
consumption.
(b)
The benefits accrued under the Duty Entitlement Pass Book Scheme (DEPB) and
Duty Free Import Authorisation (DFIA) as per the relevant import and export policies
during the year are included under the head:
(i)
Sales: Export incentives
(ii)
Raw material consumed
(iii)
Stores and Rolls consumed
(c)
Export incentives receivable on export performance are recognised in pursuance to
‘Accounting Standard 9 on Revenue Recognition’, (AS-9) with reference to certainty
of collectability of such export incentives.
(a)
Sales are recognised at the time of despatch to customers / endorsement of documents
and includes Central Excise Duty; as may be applicable.
Finished goods captively consumed as packing materials are excluded from sales.
Transfer Price, as taken in Central Excise Duty records, is treated as the packing
material cost.
(b)
14.
Contingent Assets are not recognised in the financial statements as this may
result in the recognition of income that may never be realised.
Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax
(MVAT) is recognised as sales in case Net present value (NPV) is duly paid to the designated
authority before the approval of annual accounts.
68
Cold Rolled (C.R.) Coils Production excludes C.R. baby coils produced.
16.
Customs Duty:
The Company has been accounting for custom duty liability, as may be applicable, in respect
of imported raw material lying in bonded warehouse as and when they are ex-bonded.
17.
Central Excise Duty and Service Tax:
(a)
The Company is accounting liability for excise duty on finished goods as and when
goods are cleared as per consistent practice, in pursuance to the accepted practice of
the Excise authorities.
(i)
Inventory valuation
1.
Finished goods in the plant at the close of the year are valued
inclusive of excise duty.
2.
Raw materials and work in process are valued exclusive of Cenvat
claimed.
(ii)
(b)
18.
Profit / Loss for the year remain unaffected by inclusion / exclusion of Excise
Duty in inventory valuation referred in clauses (1) and (2) above.
The Company is accounting liability for Service Tax for services purchased, at the
time of payment. The credit for Input Services Tax is claimed as per appropriate laws,
rules and regulations.
Commodity Hedging Transactions:
In respect of commodity hedging transactions, the gain / loss on settlement and provisions for
gain / losses at year end are appropriately accounted along with material cost in Profit and
Loss Account.
19.
Inter Unit transactions are eliminated to the extent possible.
B.
On a Consolidated Basis as on March 31, 2012
1.
Accounting Policies:
Most of the accounting policies of the holding Company and that of the subsidiary’s are
similar.
2.
Principal for Consolidation:
The consolidated financial statements relate to Uttam Galva Steels Limited and its
subsidiary companies. The consolidated financial statements have been prepared on
following basic:
(a)
The financial statement of the company and its subsidiary companies have been
consolidated on a line-by-line basis by adding together the book value of like items of
assets, liabilities, income and expenses, after fully eliminating intra-group balances
and intra-group transaction resulting in unrealized profit and losses as per accounting
standard 21-"consolidated financial statement" notified by companies (accounting
standard) rules, 2006.
(b)
In case of foreign subsidiaries, being non integral operation, revenue items are
consolidated at the average rate prevailing during the year. All assets and liabilities
are converted at the rates prevailing at the end of the year. Any exchange difference
69
Uttam Galva Steels Limited – Placement Document (c)
(d)
(e)
arising on consolidation is recognised in the foreign currency translation reserve.
The difference between the cost of investments in the subsidiaries and joint ventures,
and the company's share of net assets at the time of acquisition of shares in
subsidiaries and joint ventures is recognised in financial statement as Goodwill or
Capital Reserve as the case may be.
Interest in joint venture have been accounted by using the proportionate consolidation
method as per accounting standard 27 –"financial reporting of interest in joint venture
" notified by companies(accounting standards) Rules 2006.
The financial statement of the subsidiaries, associates and joint ventures consolidated
are drawn up to the same reporting date as that of the company i.e.31st March, 2012.
3.
The list of Subsidiary Companies & Joint Venture, which forms part of Consolidation and the
company’s holdings therein are as under:
Sr.
No.
A.
1.
2.
3.
4
5
B.
1.
2
Name of the Company
3.1.
All companies under consolidation, depreciation is charged on Straight Line Method (SLM),
where as in case of TTPL depreciation of `1.19 Crore is charged on Written Down Value
Method (WDV), which is 0.93 % of total depreciation.
4.
The audited financial statements of foreign subsidiaries have been prepared in accordance
with the Generally Accepted Accounting Principle of its Country of Incorporation or
International Financial Reporting Standards.
5.
Previous Year's figures are regrouped and rearranged wherever necessary.
SUBSIDIARIES
Uttam Galva Holdings Limited
Ferro Zinc International FZE.
Atlantis International Services Limited
Uttam Galva Steels , Netherlands BV
Neelraj International Trade Limited
JOINT VENTURE
Texturing Technology Private Limited (TTPL)
Moira Madhujore Coal Limited
70
Country of
Incorporation
% of Holding
Dubai
Dubai
B.V.I
Netherland
B.V.I
100 %
100 %
100 %
100%
100%
India
India
50 %
28.74%
Uttam Galva Steels Limited – Placement Document SUMMARY OF OUR CONSOLIDATED RESULTS OF OPERATIONS
The table below sets forth our Company’s consolidated profit and loss information for the Financial
Year ended March 31, 2012 and 2011:
(` in crores)
% of
Growth
% of
March 31,
Revenue
in 2012
March
Revenue
Particulars
2012
from
from
31, 2011
from
Operation
2011
Operation
CONTINUING
OPERATIONS
Revenue from Operations
5,951.16
105.38%
11.66%
5,329.84
105.73%
(Gross)
Less: Excise Duty
303.78
5.38%
5.10%
289.03
5.73%
Revenue from Operations
5,647.38
100.00%
12.03%
5,040.81
100.00%
(Net)
Expenses
(a) Cost of Goods Sold
(b) Employee Benefits
Expense
(c) Other Expenses
Total
Earnings before Interest,
Tax, Depreciation and
Finance Costs
Depreciation and
Amortisation Expense
Other Income
Tax Expense:
Current Tax
MAT Credit
Wealth Tax
Net Current Tax
Deferred Tax
Total
Profit for the Year
4,572.12
67.50
80.96%
1.20%
11.27%
8.87%
4,109.02
62.00
81.51%
1.23%
488.34
5,127.96
519.42
8.65%
90.80%
9.20%
16.07%
11.68%
15.66%
420.71
4,591.73
449.08
8.35%
91.09%
8.91%
261.93
128.57
4.64%
2.28%
20.01%
6.45%
218.26
120.78
4.33%
2.40%
7.62
136.54
0.13%
2.42%
100.06%
19.93%
3.81
113.85
0.08%
2.26%
28.42
(0.11)
0.05
28.36
35.08
63.44
73.10
0.50%
0.00%
0.00%
0.50%
0.62%
1.12%
1.29%
30.96%
--4.73%
30.38%
127.00%
70.49%
-4.62%
21.70
0.05
21.75
15.46
37.21
76.64
0.43%
0.00%
0.00%
0.43%
0.31%
0.74%
1.52%
Description of Income and Expenditure
Income
Our total income consists of revenue from operations
Income from Operations: Income from operations comprises income from activities that are directly
related to our main business and share of income from subsidiaries and jointly controlled entities.
Revenues are from the sale of the following products: a) Galvanised Coils / Sheets / Slit Coils; ii)
Colour Coated Coils / Sheets / Slit Coils and iii) Cold Rolled Coils / Sheets / Slit Coils.
71
Uttam Galva Steels Limited – Placement Document Expenditure
Our total expenditure consists of the following items:
•
Cost of Goods Sold;
•
Employee Benefit Expenses
•
Other Expenses
•
Financial Cost; and
•
Depreciation & Amortisation Expenses
Cost of Goods sold
Cost of goods sold includes cost of raw material consumed, purchase of finished goods and direct
expenses.
Employee Benefit Expense
Employee benefit expense includes expenses such as directors remuneration, salary to employees,
bonus, gratuity and staff welfare expenses.
Other Expenses
Other expenses incurred by our Company primarily includes expenses such as rent, power and fuel,
advertisement and sales promotion, packing material, repair maintenance, security expenses,
travelling and conveyance, legal and professional fees and printing and stationery amongst others.
Finance Cost
Finance charges include interest on term loans, working capital loan, vehicle loans, interest on
unsecured loan and bank charges.
Depreciation and Amortisation
Depreciation costs are the depreciation charges on our capital expenditure. Our fixed assets primarily
includes plant and machinery, building, housing complex, such as vehicles, leasehold improvements,
electrical installations, furniture and fixtures, office equipment, computer software.
Results of Operations
Fiscal 2012 compared with Fiscal 2011
Total Income
Income from operations for Fiscal 2012 was `5,647.38 crores in comparison to `5,040.81crores for
Fiscal 2011 which is an increase of 12.03%. This increase can be primarily attributed to an increase in
the volume of finished steel products sold during Fiscal 2012 to 571953 MT which was an increase of
2.8% of total volume of finished steel products sold in Fiscal 2011.
Additionally, our Company has successfully commissioned a power plant of 60 Megawatt (2 x 30
MW) capacity for its captive use. It commenced commercial production of the power plant from
March 1, 2012. The power plant is currently running at full capacity and the steam and power
generated is consumed by our Company to the extent required and the balance power is sold. For
Fiscal 2012 we had revenues of 66.92 crores from sale of power.
72
Uttam Galva Steels Limited – Placement Document Cost of Goods Sold
The cost of goods sold expenses increased in Fiscal 2012 to `4,572.12 crores from `4,109.02 crores in
Fiscal 2011, an increase of 11.27%. This increase is primarily attributable to corresponding increase
in operations.
Further, as a percentage of income from operations the cost of goods sold stood at 80.96% in Fiscal
2012 which was a marginal decrease from 81.51% in Fiscal 2011. This decrease was due to various
cost efficiency measures taken by the company including commencement of power plant.
Personnel Expenses
Employment cost was `67.50 crores in Fiscal 2012 compared to `62.00 crores in Fiscal 2011 an
increase of 8.87%. The increase in cost reflects a general increase in salaries and wages.
Other Expenses
Other expenses are `488.34 crores in Fiscal 2012 as against `420.71 crores in Fiscal 2011, an increase
of 16.07%. The breakdown of the other expenses is set forth below:
Particulars
Manufacturing Expenses
Selling & Distribution
Expenses
Administration Expenses
Total Others Expenses
March 31,
2012
292.85
% of Revenue from
Operation
5.19%
March 31,
2011
221.65
(` in crores)
% of Revenue from
Operation
4.40%
150.10
2.66%
155.32
3.08%
45.39
488.34
0.80%
8.65%
43.74
420.71
0.87%
8.35%
EBITDA
EBITDA increased by 15.66%, i.e. `519.42 crores in Fiscal 2012 from `440.08 crores in Fiscal 2011.
The EBITDA margin increased to 9.20% of our revenue from operation in Fiscal 2012 as against
8.91% in Fiscal 2011 primarily due to a decrease in cost of goods sold.
Finance Expenses
Interest and finance expenses for Fiscal 2012 was `261.93 crores as compared to `218.26 crores in
Fiscal 2011, an absolute increase of 20.01%. The increase was primarily due to bank charges and
commission, Bank commission, Factoring charges and increase in working capital limits.
Depreciation
Depreciation for Fiscal 2012 was `128.57 crores as compared to `120.78 crores in the previous year.
The increase in depreciation in Fiscal 2012 of 6.45% over Fiscal 2011 is due to the purchase of new
plant and machinery, factory building and office premises and also from the commencement of the
power plant. As a percentage to revenue from operations it has reduced from 2.40% to 2.28% since
the last fiscal.
Profit Before Tax and Profit After Tax
Our profit before tax increased by `22.69 crores, an increase of 19.93% from `113.85 crores, in Fiscal
2011 to `136.54 crores in Fiscal 2012. The profit before tax margins have marginally increased from
73
Uttam Galva Steels Limited – Placement Document 2.26% in Financial Year 2011 to 2.42% in Fiscal 2012.
Our profit after tax decreased by `3.54 crores or 4.62% from `76.64 crores in Fiscal 2011 to `73.10
crores in Fiscal 2012.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
The table below summarizes our Company’s cash flow statements on a consolidated basis:
(` in crores)
Particulars
Financial Year 2012
Financial Year
2011
Net cash generated from / (used in) operating activities
623.68
539.52
Net cash (used in) investing activities
(617.62)
(398.58)
Net cash generated from financing activity
117.76
(233.21)
Net Increase / (decrease) in cash and cash equivalents
123.82
(92.27)
at the end of the year
Operating Activities
Net cash generated from operating activities was `623.68 crores for Fiscal 2012. Net cash generated
from operating activities consisted mainly of cash generated on account of net profit before tax and
extraordinary items of `136.54 crores and an outflow of `116.65 crores on account of working capital
changes. Further, we have had a significant decrease in inventories from `(719.89) crores in Fiscal
2011 to `280.88 crores in Fiscal 2012 and a significant increase in loans and advances given from
`(321.40) crores in Fiscal 2011 to `(211.20) crores as of Fiscal 2012.
In Fiscal 2011, net cash generated in operating activities was `539.52 crores. Net cash used in
operating activities consisted mainly of net profit before tax of `113.85 crores and an inflow of
`119.76 crores on account of working capital changes.
Investing Activities
Net cash used in investing activities was `(617.62) crores for Fiscal 2012, which primarily included
`618.55 crores towards additions to fixed assets including capital work in progress.
Net cash used in investing activities was `(398.58) crores for the Fiscal 2011, which primarily
included `402.17 crores towards purchase of fixed assets.
Financing Activities
Net cash generated from financing activities for Fiscal 2012 was `117.76 crores which primarily
includes proceeds from long term borrowings of `516.57 crores. There was an outflow towards
finance charges amounting to `253.40 crores.
Net cash generated from financing activities for the Fiscal 2011 was `(233.21) crores which primarily
includes proceeds from long term borrowings of `322.49 crores and repayment of deferred sales tax
loan/inter corporate deposits/unsecured loans of `248.27 crores and an outflow of `179.64 crores
towards finance charges.
74
Uttam Galva Steels Limited – Placement Document Select Balance Sheet items on a consolidated basis:
The below is the table showing selected items of our balance sheet as on dates indicated
Particulars
Non Current Assets
Current Assets
Current Liabilities
3,387.58
2,574.38
2,460.91
2,495.48
1,006.71
(` in crores)
2,886.94
2,520.27
2,000.04
2,456.08
951.68
Non Current Assets
Non current assets includes fixed assets, non current investments, long term loans and advances and
other not currents assets.
Further our fixed assets include tangible assets, capital work-in process and intangible assets. Our
total fixed assets were `3,285.45 crores and `2,795.43 crores as at Fiscal 2012 and Fiscal 2011
respectively. The increase in fixed assets is due to the purchase of new fixed assets and capitalization
of captive power plant. The breakdown of the fixed asset is set forth below:
Particulars
Tangible Assets
Capital Work-in-Progress
Intangible assets under development
Total
As at March 31,
2012
2,906.15
378.69
0.61
3,285.45
(` in crores)
1,827.94
967.49
-2,795.43
Our non current investments, long term loans and advances and other not currents assets were `5.58
crores, `72.66 crores and `23.89 crores in Fiscal 2012 and `3.59 crores, `65.92 crores, `22.00 crores
in Fiscal 2011 respectively.
Current assets
Current assets include inventories, trade receivable, cash and cash equivalents and short term loans
and advances and were `2,574.38 crores and `2,520.27 crores in Fiscal 2012 and Fiscal 2011
respectively. The breakdown of the current assets is set forth below:
(` in crores)
Particulars
Inventories
1,085.16
1,366.03
Trade Receivables
638.18
723.60
Cash and Cash equivalents
193.46
69.64
Short Term Loans and
657.58
361.00
Advances
Total
2,574.38
2,520.27
Our non current liabilities were `2,460.91 crores and `2,000.04 crores in Fiscal 2012 and Fiscal 2011
respectively. Our non current liabilities include long term borrowing, deffered tax liabilities, other
75
Uttam Galva Steels Limited – Placement Document long term liabilities, long term provisions. The breakdown of the non current liabilities is set forth
below:
(` in crores)
Particulars
Long Term Borrowings
2,229.12
1,901.43
Deferred Tax Liabilities
122.28
87.20
Other Long Term Liabilities
97.96
0.00
Long Term Provisions
11.55
11.41
Total
2,460.91
2,000.04
Current Liabilities
Our non current liabilities were `2,495.48 crores and `2,456.08 crores in Fiscal 2012 and Fiscal 2011
respectively. Our current liabilities include short term borrowing, trade payable, other current
liabilities and short term provision. The breakdown of the current liabilities is set forth below:
(` in crores)
Particulars
Short Term Borrowings
397.58
257.39
Trade Payables
1,206.61
1,588.10
Other Current Liabilities
874.85
615.97
Short Term Provisions
16.44
(5.38)
Total
2,495.48
2,456.08
Shareholders Funds
Our shareholders funds were `1,006.71 crores and `951.68 for Fiscal 2012 and Fiscal 2011
respectively. The breakdown of the shareholders funds is set forth below:
(` in crores)
Particulars
Share Capital
122.26
122.26
Reserves and Surplus
884.45
829.42
Total
1,006.71
951.68
Indebtedness
Our total borrowings have increased from `2797.06 crores in Fiscal 2012 from `2,273.59 crores in
Fiscal 2011 due to increases in secured long term borrowing from banks and financial institutions of
`1942.03 crores in Fiscal 2012 from `1677.65 crores as of previous year and increased in other
unsecured long term borrowing `257.45 crores in Fiscal 2012 from `138.55 crores in Fiscal 2011 and
increases in short term borrowing of `397.58 crores in Fiscal 2012 from `257.39 crores in Fiscal
2011.
Pursuant to certain of our financing agreements, we have some restrictive covenants which require us
to obtain consent of our lenders, for further details please refer the section entitled ‘Risk Factors’.
76
Uttam Galva Steels Limited – Placement Document OFF-BALANCE SHEET LIABILITIES
The following table sets forth contingent liabilities of our Company on a consolidated basis, not
provided for, as at March 31, 2012 and March 31, 2011:
(` in crores)
Sr.
Particulars
As at March
As at March
No.
31, 2012
31, 2011
(a)
Letter for Credit Outstanding
698.58
591.93
(b)
Bank Guarantees
130.25
92.54
Estimated amount of contract remaining to be execute on
(c)
126.02
60.04
capital account and not provided for
77
Uttam Galva Steels Limited – Placement Document QUARTERLY RESULTS
The table below sets forth our Company’s unaudited financial results (limited reviewed) for the nine
month ended December 31, 2012 and December 31, 2011 on a standalone basis:
(` in crores)
Nine
Nine
% of
Growth
% of
Month
Month
Revenue in Dec-12
Revenue
Particulars
Period
Period
from
from
from
December
December
Operation
Dec-11
Operation
31, 2012
31, 2011
5,235.26 105.61%
25.96%
4,156.24 105.75%
Less: Excise Duty
277.94
5.61%
22.92%
226.11
5.75%
4,957.32 100.00%
26.14%
3,930.12 100.00%
Expenses
2,747.30
55.42%
14.62%
2,396.90
60.99%
1,424.06
28.73%
150.85%
567.70
14.44%
(c) Changes in Inventories of
Finished Goods, Work-in(152.49)
-3.08%
-156.01%
272.24
6.93%
Progress and Stock-in-Trade
57.44
1.16%
18.41%
48.51
1.23%
(e) Other Expenses
438.40
8.84%
42.88%
306.84
7.81%
Total
4,514.71
91.07%
25.68%
3,592.19
91.40%
Earnings before Interest, Tax,
442.61
8.93%
30.97%
337.93
8.60%
(EBITDA)
Finance Costs
237.77
4.80%
25.31%
189.75
4.83%
137.21
2.77%
46.79%
93.47
2.38%
Expense
Other Income
4.78
0.10%
227.51%
1.46
0.04%
72.41
1.46%
28.90%
56.17
1.43%
Tax Expense:
Current Tax
14.54
0.29%
117.95%
6.67
0.17%
Deferred Tax
24.51
0.49%
112.05%
11.56
0.29%
Total
39.05
0.79%
114.21%
18.23
0.46%
Profit for the Year
33.36
0.67%
-12.09%
37.94
0.97%
78
Uttam Galva Steels Limited – Placement Document INDUSTRY OVERVIEW
The information set forth in this section is based on publicly available information, which has not
been independently verified by our Company or the GC-BRLM to the Placement, or any of their
respective affiliates and advisors. None of us, the GC-BRLM or any other person connected with the
Placement has verified this information. Industry sources and publications generally state that the
report has been published for general information purposes and 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. Several reports also
expressly disclaim legal responsibility and liability of the person/ organisation preparing the report
for any loss or damage resulting from the contents of such reports. Accordingly, we and the GCBRLM do not take any responsibility for the data, projections, forecasts, conclusions or any other
information contained in this section. Certain information contained herein pertaining to prior years
is presented in the form of estimates as they appear in the respective reports/ source documents. The
actual data for those years may vary significantly and materially from the estimates so contained.
Overview of the Indian Economy
India’s population is approximately 1.2 billion, second only to china. India had an estimated gross
domestic product (the "GDP") of approximately US$4.4 trillion 2011 (based on purchasing power
parity) which made it the fourth largest national economy in the world after the United States, China
and Japan (excluding the European Union). The Indian economy has averaged a growth rate of over
8.0% during the five year period between Fiscal 2007 and Fiscal 2011. In Fiscal 2010, the Indian
economy rebounded robustly from the global financial crisis in large part because of strong domestic
demand and growth exceeded 8.0% year-on-year in real terms. (Source: The World Factbook 2012.
Washington D.C.: Central Intelligence Agency 2012)
The Indian economy has been adversely affected by some spill-over effects of the global economic
slowdown coupled with domestic pressures. In Fiscal 2012, the Indian economy registered a growth
rate of 6.5% (GDP at factor cost), down from 8.4% in Fiscal 2011. The loss of growth momentum that
started in Fiscal 2012 has extended into Fiscal 2013, though the pace of deceleration slowed in the
first quarter. GDP at Factor Cost had decreased from 8.0% in the first quarter of Fiscal 2012 to 5.3%
in the second quarter of Fiscal 2013. This was mainly driven by the growth in construction,
community social and personal services and Mining and quarrying.
During 2012-13 (April-November) industrial growth slowed to 1.0 per cent. Barring a spike in
October 2012 due to a favorable base effect and festival-related pick-up in production, growth was
disappointing across sectors. Growth in eight core infrastructure industries decelerated to 3.5 per cent
during April-November 2012 compared to 4.8 per cent during the corresponding period of the
previous year. According to the RBI, the expected GDP growth rate for Fiscal 2013 is approximately
5.8%. (Source: RBI, Macroeconomic and Monetary Developments: third Quarter Review 2012-13
(the RBI Q3 2013 Macroeconomic and Monetary Review).
The Reserve Bank’s 60th round of the Industrial Outlook Survey (http://www.rbi.org.in/IOS60)
conducted during third quarter of 2012-13 showed marginal improvement in the business sentiments
of the manufacturing sector. Financing from external commercial borrowings (ECB) and foreign
currency convertible bonds (FCCB) also showed a small increase in the total cost of projects
sanctioned in second quarter of 2012-13. However, the amount of sanctioned assistance was much
lower than during the corresponding quarter of the previous year. The rupee had recovered in
September 2012 due to the announcement of various measures of reform by the government and
increasing global risk appetite. However, challenged by concerns relating to high current account
79
Uttam Galva Steels Limited – Placement Document deficit and uncertainty regarding domestic growth, the rupee again showed a downtrend during
October and November 2012 and subsequently remained range bound (`54.2–55.1 per US dollar) in
December 2012. (Source: RBI, Macroeconomic and Monetary Developments: third Quarter Review
2012-13 (the RBI Q3 2013 Macroeconomic and Monetary Review)´
The Global Steel Industry
Steel will probably remain the world’s one of the most important engineering materials for a long
time to come. With strong backward and forward linkages, the steel industry is an engine of economic
growth and a symbol of economic prosperity. Moreover, steel is vital to the nation’s economic
security as it is extensively used in strategic areas such as defence, power, atomic energy, and in
creation of social and economic infrastructure of the country.
Steel is a cornerstone and also one of the key drivers for the world’s economy. Steel is at the core of
the green economy, in which economic growth and environmental responsibility work hand in hand.
World crude steel production reached 1,548 megatonnes (MT) for Fiscal 2012, up by 1.2% compared
to 2011. The growth came mainly from Asia and North America while crude steel production in the
EU (27) and South America decreased in 2012 compared to 2011. n December 2012, world crude
steel production for the 62 countries reporting to the World Steel Association (Worldsteel) was 121.3
MT, an increase of 2.4% compared to December 2011. The crude steel capacity utilisation ratio of the
62 countries in December 2012 declined to 73.2% compared to 76.1% in November 2012. The
average capacity utilization ratio in 2012 was 78.8% compared to 80.7% in 2011. (source:
www.worldsteel.org)
In December 2012, world crude steel production for the 62 countries reporting to the World Steel
Association was 121.3 million tonnes, an increase of 2.4% compared to December 2011. The crude
steel capacity utilisation ratio of the 62 countries in December 2012 declined to 73.2% compared to
76.1% in November 2012. The average capacity utilization ratio in 2012 was 78.8% compared to
80.7% in 2011.
The details of the top ten steel producers of the world are provided in the table below:
Rank
Country
1
2
3
4
5
6
7
8
9
10
China
Japan
United States
India
Russia
South Korea
Germany
Turkey
Brazil
Ukraine
2012
(Million tonnes)
716.5
107.2
88.6
76.7
70.6
69.3
42.7
35.9
34.7
32.9
2011
(Million tonnes)
694.8
107.6
86.4
73.6
68.9
68.5
44.3
34.1
35.2
35.3
2012/2011(%)
3.1
-0.3
2.5
4.3
2.5
1.2
-3.7
5.2
-1.5
-6.9
Indian Steel Industry Overview
Even though steel is a freely traded commodity, large scale dependence of a growing economy like
India on imported steel may make the economy vulnerable to uncertainty in global supply, export
policies of different countries and volatility in international prices. For India, the case for domestic
80
Uttam Galva Steels Limited – Placement Document production of steel is even stronger due to indigenous availability of resources and a need to minimize
strain on its current account balance. In fact, the revealed comparative advantages of labour and raw
material have the potential of making India a leading exporter of steel in the world. (Source: Draft
report for the National Steel Policy 2012)
Besides achieving the rank of the 4th largest global crude steel producer in 2011 (provisional), India
has also made a mark globally in the production of sponge iron/direct reduced iron (DRI). Courtesy a
mushrooming growth of coal-based sponge iron units in key mineral-rich pockets of the country,
domestic production of sponge iron increased rapidly, enabling the country to achieve and maintain
the number one position in the global market. (Source: Annual Report, Ministry of Steel, 2011-12)
The production of finished steel (Including alloy and non alloy) in India remained increased from
56.08 Million Tonnes in Fiscal 2008 to 66.01 Million Tonnes in Fiscal 2011. For the period up to
December 31, 2011 the production of finished steel in India was 52.06 Million Tonnes. From Fiscal
2008 to Fiscal 2011, production of finished steel in India grew at a CAGR of 5.59%.
Production of Total Finished Steel in India
66.01
70.00
60.00
56.08
57.16
Fiscal 2008
Fiscal 2009
60.62
52.06
50.00
40.00
30.00
20.00
10.00
0.00
Fiscal 2010
Fiscal 2011
Upto Dec‐11
Figures in Million Tonnes
(Source: Ministry of Steel (Annual Report 2011-2012))
The real consumption of total finished steel in India remained increased from 52.13 Million Tonnes in
Fiscal 2008 to 65.61 Million Tonnes in Fiscal 2011. For the period up to December 31, 2011 the real
consumption of total finished steel in India was 50.87 Million Tonnes. From Fiscal 2008 to Fiscal
2011, real consumption of total finished steel in India grew at a CAGR of 7.97%.
Real Consumption of Total Finished Steel
65.61
70.00
60.00
59.34
52.13
52.35
Fiscal 2008
Fiscal 2009
50.87
50.00
40.00
30.00
20.00
10.00
0.00
Fiscal 2010
81
Fiscal 2011
Upto Dec‐11
Uttam Galva Steels Limited – Placement Document (Source: Ministry of Steel (Annual Report 2011-2012))
The production of CR Coils/Sheets/Strips in India increased from 4.44 Million Tonnes in Fiscal 2008
to 5.76 Million Tonnes in Fiscal 2011. For the period up to December 31, 2011 the production of CR
Coils/Sheets/Strips in India was 4.29 Million Tonnes. From Fiscal 2008 to Fiscal 2011, production of
CR Coils/Sheets/Strips steel in India grew at a CAGR of 9.08%.
Production of CR Coils/Sheets/Strips
7.00
5.91
6.00
5.00
4.44
4.62
Fiscal 2008
Fiscal 2009
5.76
4.29
4.00
3.00
2.00
1.00
0.00
Fiscal 2010
Fiscal 2011
Upto Dec‐11
Import and Export CR Coils/Sheets/Strips in India
1,400
1,126
1,200
1,000
892
821
710
800
600
1,155
510
345
341
400
283
210
200
0
Fiscal 2008
Fiscal 2009
Fiscal 2010
Import
Fiscal 2011
Upto Dec‐11
Export
Figures in ‘000 Tonnes
The production of GP/GC sheets in India remained increased from 4.38 Million Tonnes in Fiscal 2008
to 5.60 Million Tonnes in Fiscal 2011. For the period up to December 31, 2011 the production of
GP/GC Sheets in India was 4.43 Million Tonnes. From Fiscal 2008 to Fiscal 2011, production of
GP/GC Sheets in India grew at a CAGR of 8.50%.
82
Uttam Galva Steels Limited – Placement Document Production of GP/GC Sheets in India
6.00
5.00
5.62
4.38
5.60
4.55
4.43
4.00
3.00
2.00
1.00
0.00
Fiscal 2008
Fiscal 2009
Fiscal 2010
Fiscal 2011
Upto Dec‐11
Figures in Million.Tonnes
Import and Export of GP/GC Sheets in India
2,500
2,026
1,849
2,000
1,500
1,287
1,250
939
1,000
500
268
294
292
331
264
0
Fiscal 2008
Fiscal 2009
Fiscal 2010
Export
Fiscal 2011
Upto Dec‐11
Import
Figures in ‘000.Tonnes
In 2010 India’s per capita consumption of steel was only 51.7 Kgs as against the world average of
202.7 kgs. A massive investment to the tune of $ 1 trillion dollars has been envisaged during the
Twelfth five year plan in the infrastructure sector. Besides, there is a greater emphasis on the growth
of the manufacturing sector in India. This augurs well for expansion of the base of steel consumption
in the economy. A rough estimate of incremental demand for steel in the country works out
approximately to 40 million tonnes in infrastructure alone. (Source: Report of the working group on
steel industry for the Twelfth Five Year Plan)
83
Uttam Galva Steels Limited – Placement Document Recent Growth Rates of Production of Selected Steel Consuming Industry Groups:
(Source: Report of the Working Group on Steel Industry for the Twelfth Five Year Plan (2012 –
2017), Ministry of Steel)
The National Steel Policy had set a production target 110 million tonnes to be achieved by 2019-20.
The Indian steel industry may achieve double digit growth in consumption and surpass this production
target by 2016-17 well ahead of the target date. An assessment of assessment of finished steel of
production has been worked out at 115.3 million tonnes in 2016-17. (Source: Report of the working
group on steel industry for the Twelfth Five Year Plan)
Domestic Scenario
In spite of being one of the largest producers of steel in the world, India has been lagging behind other
major steel producing countries in terms of intensity of steel usage in overall economic activities (i.e.,
per unit of GDP) or per capita consumption of steel. There is a tremendous potential for improvement
in the domestic steel consumption given the economy‘s large untapped markets especially in rural
areas. This is reflected in the steady rise in consumption levels over the last few years at a rate faster
than the world average growth rate. (Source: Annual Report, Ministry of Steel, 2011-12)
For the domestic steel industry, the 10th five year Plan (2002-07) was a period of fast-paced growth
with significant increases in both steel production and consumption. Therefore, business expectations
at the time of formulation of the 11th plan (2007-12) were largely optimistic and this was justified in
the performance of the industry in the initial years of the plan period. In fact, the first year of the plan
i.e. 2007-08 had been a year of high growth for the industry. However, with onset of the global
economic downturn the same pace could not be maintained in the second year i.e. 2008-09. Like all
other manufacturing industries, steel making is also largely market driven and therefore was affected
directly by the adverse global market conditions. Fortunately, the sector was able to contain the rate of
deceleration thanks to the timely policy interventions and counter-cyclical stimulus of fiscal and
monetary packages announced by the government and more importantly by the inherent stability of
the Indian economy itself. As a result, by the beginning of the third year i.e. 2009-10 there were signs
of recovery with stable and strong growth rates in both steel production and consumption. The growth
rates have, since then, remained steady and over the last two years i.e. since 2009-10, have matched
the pre-crisis levels in both production and consumption with simultaneous acceleration in capacity
additions.
84
Uttam Galva Steels Limited – Placement Document As per the report of the Working Group on Steel for the 12th Five Year Plan, there exist many factors
which carry the potential of raising the per capita steel consumption in the country, currently
estimated at 55 kg (provisional). These include among others, an estimated infrastructure investment
of nearly a trillion dollars, a projected growth of manufacturing from current 8% to 11-12%, increase
in urban population to 600 million by 2030 from the current level of 400 million, emergence of the
rural market for steel currently consuming around 10 kg per annum buoyed by projects like Bharat
Nirman, Pradhan Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among others.
The World Steel Association, which has been monitoring production, consumption, etc of steel
industry in each country since the 1980‘s, also projects short-range outlook for steel at regular
intervals. These projections are inclusive of demand for alloys and stainless steel and take into
account contemporary developments affecting steel demand. A look at the data provided by JPC
shows that the consumption of alloys and stainless steel has been hovering between 3 and 3.5MT over
the past few years. For projecting total demand by the end of the 12th Five Year Plan, the Working
Group decided to add 5 Million Tonnes of alloy and stainless steel (phased progressively year-wise
over the entire period) to the demand for finished carbon steel projected for the terminal year 2016-17.
Products
Steel is an iron based mixture containing two or more metallic and/or non metallic elements usually
dissolving into each other when molten. Since it is an iron based alloy as per its end use requirement
other than iron it may contain one or more other elements such as carbon, manganese, silicon, nickel,
lead, copper, chromium, etc. For example, stainless steel (a type of steel) mainly contains chromium
that is normally more than 10.5 percent with/without nickel or other alloying elements. Steel is
produced using Steel Melting Shop that includes converter, open hearth furnace, electric arc furnace
and electric induction furnace.
There are broadly two types of steel according to its composition: alloy steel and non-alloy steel.
Alloying steel is produced using alloying elements like manganese, silicon, nickel, chromium, etc.
Non-alloy steel has no alloying component in it except that are normally present such as carbon. Nonalloy steel is mainly of three types viz. mild steel (contains up to 0.3% carbon), medium steel
(contains between 0.3-0.6% carbon) and high steel (contains more than 0.6% carbon). All types of
steel other than mild steel are called special steel. It is mainly because a special care is taken in order
to maintain particular level of chemical composition in such steel. This process gives different
properties to the steel according to its composition. In India, non-alloying steel constitutes about 95
percent of total finished steel production, and mild steel has large share in it. (Source: Based on the
"Glossary of Terms/ Definitions commonly used in Iron & Steel Industry" by Ministry of Steel,
Government of India. http://steel.nic.in/Glossary-I.pdf)
HR and CR Steel Industry
85
Uttam Galva Steels Limited – Placement Document Plate, HR Coils, Pipes
Plate consumption went up by 22% and 24% in 2006-07 and 2007-08, respectively. Subsequently, the
growth rates came down steeply due to tardy growth in ship building activity and delayed
commencement of power projects - both Thermal and Hydel. However, oil and gas sector is poised
for high growth because of which demand for API plates is increasing. Also pre-fabricated structural
segment is exhibiting good growth potential. Taking into account all these factors, an annual average
growth rate of 7.5% has been adopted for projecting future consumption of plates (against 6%
observed in the past).
Consumption of HR coils has grown by 7.5% annually in the past 6 years driven primarily by a 9.7%
growth in Manufacturing IIP. The Government has come out with a new Manufacturing Policy aimed
at creating conditions necessary to enable India‘s manufacturing sector to enhance its share in GDP
from the current 16% to 25% and to achieve a growth of 11 – 12% in the coming years. Keeping these
initiatives in view, a marginally higher growth rate of 9% has been assumed as against the observed
growth rate of 7.5% in the past 5 years. Consumption of pipes went up by 32% in 2010-11. Prior to
this quantum increase in the course of a single year, consumption of pipes declined by 15% in 200910 after growing by 15% and 14% in the two preceding years of 2007-08 and 2008-09, respectively.
Oil and Gas sector is the major user of pipes which is growing at an average rate of 15 – 18 %.
Keeping in view the massive potential in oil & gas sector, an annual average growth rate of 12% has
been adopted for projecting the demand for pipes over the 12th Plan period. (Source: Report of the
working group on steel industry for the Twelfth Five Year Plan)
Hot Rolling Technology
Hot strip rolling
Several state-of-the-art rolling mills have been set up by the Indian steel plants and others are in the
process of acquiring such mills. Some plants are practicing latest techniques like Hot Charging of
Slabs, though partially Compact Strip Processing etc in hot rolling areas and reaping benefits in terms
of productivity and energy conservation. Schedule-free rolling, high pressure descalers, AWC
(Automatic Width Control), Use of HSS rolls, Hydraulically controlled AGC for gauge accuracy,
Finishing stands with level-2 automation, Roll cross pair, Edge pre-heaters, Ultra Fast Cooling in
ROT and edge masking system are other developments designed to improve the productivity, quality
and rolling efficiency. Improvement in heating efficiency and reduction in fuel consumption in reheat
furnaces can be achieved by installation of HEC regenerative burner, which also has a favourable
effect on CO2 emission.
Hot Finishing Facility
The hot rolled steel requirements of automotive customers are shifting to high strength steels with
wider and thinner sections. Flatness and surface quality becomes extremely important when thin
gauge hot rolled sheets replace cold rolled steels. Thin gauges (2 mm) and soft grades are prone to
coil breaks and edge waviness. Hot finishing facility such as skin pass mill is required to correct these
problems and also provide the following benefits:
•
•
•
Opportunity for inspection and removal / rectification of defective portions.
Parting of coil as when required.
Improving the coil winding, when it is telescopic.
86
Uttam Galva Steels Limited – Placement Document Hot Rolled Steel Industry
Steel Service Centre
Finished Sector
Retail
Construction
Cold Rolled Steel
Infrastructure & Transport
Engineering
LPG Cylinders
* Ship Building, Pressure Vessels, Offshore
Structures, Packaging& Fabrication
Others*
Cold rolling and finishing
Tandem Mill
To improve the gauge consistency and shape, work roll bending, CVC crown, intermediate roll
shifting, Feedback & Feed forward gauge control, Hydraulically operated AGC, sophisticated X Ray
gauges and Level-2 automation system have been introduced. Most of the above have been adopted
by the Steel Producers, who supply steel for high-end applications. To improve the overall yield and
reduce scrap, PLTCM (pickling line tandem cold mill) has been installed. Producers supplying steel
for surface critical automotive and appliance applications may adopt the PLTCM concept to derive
the benefits of improved yield.
Though some of the older plants are still operating with sulphuric acid pickling, most of the newer
plants have adopted more efficient hydrochloric acid pickling. Other developments in the Pickling
area are Tension Levelers (to loosen the scale for faster pickling), shallow / fully granite blocks, turbo
pickling, acid less pickling, Acid Regeneration System, Auto Inspection etc. These processes facilitate
quality and improved productivity
Continuous annealing
Batch annealing process (BAF) presently employed in Indian mills has limitation in terms of
productivity, yield and production of high strength steel grades. Besides, the batch annealing process
introduces certain defects, which reduce the overall yield. To address these limitations of BAF,
Japanese mills developed the continuous annealing process in the 70‘s. The Continuous Annealing
Technology has spread worldwide because of its inherent advantages vis-à-vis the BAF in terms of
higher yield, productivity and ability to produce high strength grades. These benefits are the main
drivers to switch from BAF to Continuous Annealing Lines.
Cold Rolled Steel Industry
End – Users Segments
Finished Sector
Automotive
Galvanized Steel
Construction
Electrical & Electronics
Furniture
Packaging
* Agriculture, Engineering, Ship Building,
Pressure Vessels, Offshore Structures&
Fabrication
White Goods
Others*
Galvanized Flat Steel
87
Uttam Galva Steels Limited – Placement Document Galvanized coils and sheets are used extensively in various applications. Some of the common uses in
various industries are:
Galvanized Flat Steel Market Segmentation
Galvanized Flat Steel
End – Users Segments
Finished Sector
Automotive
Coated Steel
Construction
Infrastructure & Transport
Furniture
Packaging
* Agriculture, Engineering &
Fabrication
White Goods
Others*
Galvanising
Research is in progress to improve the corrosion performance, aesthetic look and above all achieve
considerable reduction in the production cost and reduce environmental impact through a host of
innovative primary and secondary coatings. Primary coatings generally are metallic coatings and few
examples in this category are, ZnMgAl, Al-Si (also called Alusi), Zn-Ni and flash coats. Secondary
coatings are organic or inorganic coating, primarily applied to improve the formability, weldability
and paintability e.g. Ni-Mn phosphate coating (also called L coat), thin organic coating (TOC), Nanohybrid silica sol-gel etc.
Adverse environmental impact of Cr6+ led to the development of new secondary coatings i.e. Cr3+
and Cr-free passivation on the galvanized sheet/strip. Fretting corrosion is a serious problem in
galvanized steels and it occurs due to interwrap vibrations, which take place during surface
transportation through long distances. Secondary coatings help reduce fretting corrosion problem as
well.
Galvannealing
Galvannealing (GA) is a proven technology for the production of coated steel for automotive panels.
GA sheets are considered better than GI on account of their superior weldability and hence most of
the Korean and Japanese auto producers prefer GA to GI, in spite of the cost advantage of GI steel.
Production of low strength grades by Galvannealing process is well established. However, the
production of high strength steel (HSS / AHSS) needs careful selection of chemistry and good
understanding of the oxidation characteristics of the alloying elements. Any error due to wrong
selection of alloying elements leads to the occurrence of bare spots in the zinc coating and after GA
treatment; the surface reveals the uncoated regions clearly, thereby making the product unsuitable for
the auto application. Research in the area of zinc coating without bare spots will trigger the
development of HSS for high end application of automotive.
Zn-Mg alloy coatings are found to be superior to the current GI and the corrosion resistance of newly
developed coating is reported to be more than two times that of ordinary GI. Zn-Mg coating is
currently used for the construction application in Europe. Due to the superiority of the new coating
with respect to powdering characteristics, it is likely to replace GA in near future. Zn-Mg coating also
88
Uttam Galva Steels Limited – Placement Document has a good potential to replace the conventional Zn-Al (galvalume) coatings. ((Source: Report of the
Working Group on Steel Industry for the Twelfth Five Year Plan (2012 – 2017), Ministry of Steel)
Human Resources
Steel industry requires technical manpower from different engineering disciplines and varying
knowledge levels. Technical personnel are required for various activities such as operation, project,
engineering (design), maintenance, technology and R&D. Depth of knowledge and expertise required
to perform the assigned job depend upon the hierarchical level and the department in which the
employee is placed. The persons in the supervisory cadre are required to have, at least, a diploma in
engineering and they pick up their required professional skills over a period of time from shop floor
training and various other training opportunities provided.
They operate the machinery and supervise the shift level operations. For senior positions the industry
requires engineering graduates who should possess (a) Good understanding of technology in the
respective engineering discipline; (b) Ability to adapt to the rigours of manufacturing sector (job
rotation) and (c) Ability to manage resources optimally. (Source: Report of the Working Group on
Steel Industry for the Twelfth Five Year Plan (2012 – 2017), Ministry of Steel)
Government Initiatives
Some initiatives taken by the Government in the past concerning the steel industry include the
following:
•
100% foreign direct investment (FDI) through the automatic route is allowed in the sector
•
Large infrastructure projects in Public-Private Partnership (PPP) mode are being formed
•
The Government is encouraging research and development (R&D) activities in the steel sector
•
Reduced custom duty and other favourable measures
•
The Government of India has framed the National Steel Policy (NSP) to encourage the steel
industry to reach global benchmarks in terms of quality, cost and efficiency
The Union Budget of 2013-2014
•
•
•
•
•
The 12th Plan projects an investments of USD 1 trillion or `55,00,000 crore in infrastructure.
The Government will encourage Infrastructure Debt Fund (IDF) and allow some institutions
to raise tax free bonds upto `50,000 crore which is 100 percent more than the current year.
Some of the provisions included in the Union Budget 2013-14 for the steel industry were as
follows
Reduction of basic customs duty (from 5% to 2%) and countervailing duty (CVD) (from 6%
to 2%) on imported bituminous coal.
Flat rolled products of iron or non alloy steel, plated or coated with zinc to be exempted from
export duty retrospectively from March 1, 2011.
(Source:http://indiabudget.nic.in/ub2013-14/cen/dojstru1.pdf;
http://pib.nic.in/archieve/others/2013/feb/benglish.pdf)
89
Uttam Galva Steels Limited – Placement Document BUSINESS OVERVIEW
In this section, unless the context otherwise requires, any reference to "our Company" is to Uttam
Galva Steels Limited on a standalone basis and any reference to "we, us and our" is to Uttam Galva
Steels Limited, its Subsidiaries, joint ventures and associates on a consolidated basis. Unless
otherwise stated, all financial and other data regarding our Company’s business and operations
presented in this section is on a consolidated basis.
markets. We have a annual installed production capacity of 7,50,000 MT, 90,000 MT and 9,60,000
month period ending December 31, 2012 of `77.96 crores, `76.77 crores and `33.36 crores,
respectively.
Competitive Strengths
Our Company believes that it has the following competitive strengths that assists it in maintaining its
position in the export markets and will help to achieve its goal to become a leader in the industry:
Cost competitiveness
Our Company believes that our integrated production facilities, high capacity utilization and
productivity and low employee costs help to make us a cost competitive producer of CR and GP/GC
products. In Fiscal 2012 , it achieved capacity utilization of CR and GP facilities at Khopoli of
63.92% and 76.26%, respectively. We have placed, and continue to place emphasis on reduction of
90
Uttam Galva Steels Limited – Placement Document costs by cycle time reduction, optimizing inventories and improving logistics at its production
facilities. In addition, our relatively low employee costs add to our cost competitiveness.
Access to raw materials:
Our Company has access to a stable supply of HR coils, the key raw material we require in our
production processes. Currently, our Company sources HR from the international as well as the local
market depending on the price. Import of coils is also a viable option due to proximity to both JNPT
and Mumbai port. ArcelorMittal is a co-promoter of our Company due to which our Company may
have their support in enabling an assured supply of raw materials at competitive prices
Wide product range and flexible production facilities
Our Company’s manufacturing facilities have the flexibility to produce various grades of GP/GC
sheets with different specifications relating to width, thickness, finish and weight of a product, which
enhances our ability to be competitive. We produce value-added products such as wide-width thin
gauge coils, ultra thin coils, which help us to improve the realization of our products. We manufacture
customised products for niche applications like white goods, auto components, engineering products,
and have also been able to smoothly shift production lines towards such product categories. Further, a
significant portion of our Company's GP/GC coils/sheets are in the higher value added thin gauge
segment. This process line provides flexibility to allow it to be used for other coats lamination in
addition to regular modified products thereby giving us further flexibility.
Strong promoters and experienced management team
We have a strong set of promoters in the Miglani Family and ArcelorMittal. Rajinder Miglani has
over 40 years of experience in dealing in steel and related products and more than two decades of
experience in manufacturing CR and GP/GC products.
ArcelorMittal, the co-promoters of our Company, is a part of the ArcelorMittal Group which is a
leading steel maker spread over different geographies of the world. Apart from extensive R&D and
cutting edge technology in our industry, it has sizeable captive supplies of raw materials and a global
distribution network.
Our Company’s senior management team comprises of members with extensive experience and
professional qualifications in the steel industry. Our management team also has extensive knowledge
of the Indian Steel industry and regulatory environment. We invest substantial resources in employee
training and development. Their rich experience and understanding of our Company have been
instrumental in the growth of our Company.
Own Captive Power Plants
Our Company has established coal-based thermal power plants for captive consumption at our
facilities at Khopoli with a total installed capacity of 60 MW, which are currently operational. In
addition to reducing expenses pertaining to power, reduction of reliance on electricity from the state
and assisting in synergies with the production process, it has provided additional revenues from sale
of surplus power thereby resulting in increased profitability for our Company.
Diversified customer base
Our ability to provide customised products at competitive prices and with relatively short delivery
times has enabled us to earn customer loyalty. We have a large customer base within India and across
91
Uttam Galva Steels Limited – Placement Document the world in various segments. We export our wide range of products to over 147 countries including
USA, Europe, Africa, Russia, CIS countries and have a wide and loyal customer base. We also share a
strong relationship with our customers. We have been supplying our products to some customers for
more than 10 years. These customers are balanced over various product categories thereby de-risking
our Company from dependence on any single category of products. We have customers in the original
equipment manufacturer, appliances and general engineering markets. Our Company has set-up a
service centre at its plant that helps cater to specific needs of the customers resulting in customer
loyalty.
Synergies pursuant to association with ArcelorMittal
ArcelorMittal is a co-promoter of our Company pursuant to the Co-Promotion Agreement dated
September 4, 2009. We have benefits from our strong linkage with ArcelorMittal and other entities of
the ArcelorMittal group (collectively the "ArcelorMittal Group") on raw material sourcing,
management support, marketing network and technical collaboration in product initiatives.
a. Sourcing of Raw Materials
The strong global network of ArcelorMittal Group and their manufacturing facilities which is
spread across the world, manufactures various grades of raw material required by us. They
provideus with a consistent supply of various grades of steel on a consignment basis. Obtaining
the correct raw material is of utmost importance in maintaining the quality of value-added
products manufactured by us. Our Company has been able to expand our product range with the
availability of wide range / grades of raw material.
b. Marketing Collaboration
We sell our products in domestic as well as overseas market. Apart from our sales, our Company
uses ArcelorMittal Group’s marketing network to sell its products across the globe. With the
assistance of ArcelorMittal Group, our Company has been able to secure contracts from various
overseas customers, helping our Company to widen our customer base in the global market.
c. Technological Assistance
ArcelorMittal Group is one of the world’s leading steel and mining company. It is the leading
supplier of quality steel products in all major markets including automotive, construction,
household appliances and packaging industry. It has a dedicated research & development team.
The research and development team of the ArcelorMittal Group has helped our Company in
improving our productivity in our existing units. Due to this, our Company has been able to
expand our product range and produce high grades and better value added product thereby
catering to a wider customer base across the world.
Divisions of the Company
The Company has broadly three divisions which can be described as follows:
(d)
(e)
(f)
Cold Rolling Division
Galvanising Division
Colour Coating Division
92
Uttam Galva Steels Limited – Placement Document Uttam Galva Steels Limited
Cold Rolled Coil
Galvanized Plain/ Galvanized Corrugated
(GP/ GC)
Pre‐ Painted
Products Cold Rolled Full Hard
Cold Rolled Close Annealed Products (CRCA)
Cold Rolling Division:
Cold rolling is the process of converting hot rolled steel coil into cold rolled coils/sheets. Cold rolled
products are sub divided into cold rolled full hard ("CRFH") and cold rolled closed annealed
("CRCA") coils/sheets. Our Company has cold rolling mills /lines, that is a 20HI, 6HI, 4HI and twin
stand 6HI (wider width) mill.
Galvanising Division:
Galvanisation is the process of applying a protective zinc coating to steel or iron, in order to
prevent rusting. Our Company has at present 3 galvanising lines, that is:
(a) CGL at Donvat
(b) CGL at Pali Road Complex (Dahivali) and
(c) Wet galvanising line ("WGL") at Pali Road Complex (Dahivali).
The raw material for this process is cold rolled strip in coil form. Our Company uses hot dip
galvanising technology. This is a continuous galvanising line producing galvanised strip steel in either
coil or sheet form. Galvanised products are primarily used in automobile, white goods (for example
A/C, refrigerators), construction and engineering applications. Rolled strip is heated in a non-ox
furnace followed by galvanising with molten zinc and other alloys.
Colour Coating Line Division
The colour coating line products paint coated strips in either coil or sheet form. The raw material for
this process is galvanised steel strip in coils.
In this process primer and paint is applied on one or both sides in the same or different colours as per
the customer’s specifications. After coating the coils are cured in an oven. Colour coated products
have much longer life than GP products, and have different applications ranging from construction to
engineering applications.
Application of Products
Our Company has an entire range of cold rolling mills i.e. 20-Hi, 6-Hi, 4-Hi and twin stand reversible
6-Hi mill. It can process HR coils of different grades, thicknesses and widths and can also meet the
93
Uttam Gaalva Steels Limitedd – Placement Doccument varied requirementss of customerrs for thickness/width rang
ge of CR/GP//GC coils. A significant
s
poortion
C coils and GP/GC,
G
coils//sheets are in the higher vaalue added thiin gauge segm
ment.
of our Company's CR
Our Company
C
beliieves that thee wide rangee of productss and an enhhancement inn the value aadded
produccts will furtheer strengthenn our positionn as one of thhe major com
mpanies in th
he CR and GP
P/GC
markett. With a signnificant amouunt of the CR
R production being
b
transferrred to the GP
P/GC, the levvel of
value addition
a
is sig
gnificantly ennhanced. Our Company haas always focuused and intennds to continuue its
focus on high valuue-added prodducts. For exxample our colour
c
coatingg line caters to a niche set
s of
consum
mers.
As parrt of our moddernization program,
p
we hhave also invvested in impproving produuction and ovverall
qualityy of our manuufacturing proocesses and fiinished produucts. We intennd to increasee the production of
higherr value-added products.
Our Subsidiaries
There are five whholly-owned Subsidiary C
Companies of
o the Compaany namely (a) Uttam Galva
G
Holdinngs Limited in
i Dubai, (b) Atlantis Inteernational Serrvices Limited in British Virgin
V
Islandds, (c)
Uttam Galva Steels Netherlandds BV in Nettherland and (d) Neelraj International
I
Trade Limited in
Britishh Virgin Islaand. (e) Uttam
m Galva Steeels FZE. Fu
urther, Uttam Galva Holddings Limitedd has
incorporated a dow
wnstream whoolly owned suubsidiary com
mpany namelyy Ferro Zinc International FZE
in Jebeel Ali Free Zo
one in Unitedd Arab Emirattes.
Uttam Galva Steels LLimited
Uttam Galva Holdings Lttd, Dubai
Ferro Zincc International FZE, Dubai
Atlantiis Internatio
onal Services Ltd
d, BVI*
Uttam Galva G
Stee
els, Netherrlands
Ne
eelraj
Intern
national Trade Ltd,BVI*
Utttam Galva Ste
eels (FZE) UAE
Uttam Galva Steels Limited – Placement Document Our Joint Ventures
We have two joint ventures namely, Texturing Technology Private Limited, Moira Madhujore Coal
Limited. We have also entered into a joint venture agreement with Liberty Commodities Limited to
form a joint venture in Srilanka.
History
Our Company is the flagship company of the Uttam Group and has significant interests in the areas of
various metals including steel. Our Company was incorporated in March 1985 as a public limited
company. The name of our Company was changed from Uttam Galva Steels Limited to Uttam Steel
Limited on May 18, 1993 and thereafter changed it again to Uttam Galva Steels Limited on January
23, 2002. Currently, the shares of the Company are listed on the BSE and NSE. Our Company’s
Secured, Redeemable, Non-Convertible Debentures are listed on the Wholesale Debt Market (WDM)
segment of BSE.
Our Company was originally promoted by the Miglani Family led by Rajinder Miglani. The
promoters of our Company along with our Company entered into a Co-Promotion Agreement dated
September 4, 2009 with ArcelorMittal Netherlands B.V. (an indirect 100% subsidiary of
ArcelorMittal) and acquired 33.80% stake in our Company in February 2010 to become CoPromoters of our Company.
The major events in the history of our Company are as set out herein below:
FY
1985
1988
1999
2004
2005
2006
2007
2008
2009
2010
2012
Event
• Our Company was incorporated as a public limited company
• Initial Public issue of Equity Shares
• Increase in capacity of Galvanized by 1,50,000 TPA and Cold Rolling by 100,000 TPA
• Increase in capacity of Galvanized by 20,000 TPA and Cold Rolling by 150,000 TPA
• Increase in capacity of Galvanized by 1,30,000 TPA and Cold Rolling by 50,000 TPA
• Increase in capacity of Galvanized by 50,000 TPA and Cold Rolling by 1,50,000 TPA
• Addition of new division Colour Coating with capacity of by 60,000 TPA
• Issue of FCCB for ~ $ 44 Million.
• Increase in capacity of Colour Coating by 24,000 TPA and Cold Rolling by 1,50,000
TPA
• Issue of GDR for ~ $ 20 Million.
• Increase in capacity of Galvanized by 3,50,000 TPA, Colour Coating by 6,000 TPA and
Cold Rolling by 1,50,000 TPA
• Increase in capacity of Cold Rolling by 60,000 TPA
• Scheme of Arrangement of Amalgamation between Uttam Steel and Power Limited and
our Company
• Arcelor Mittal joined as Co-Promoter.
• Commencement of Captive Power Plant for 60 MW.
• Our Company has received of 17 EEPC Awards from the Ministry of Commerce and
Industry, Government of India under various categories for for its exports outstanding
exports performance. Export Promotion Council – Government of India.
Awards and Certificates
Our Company has received various awards, a few notable ones are mentioned below:
95
Uttam Galva Steels Limited – Placement Document Sr.
No.
Authority
Particulars of the Award
1.
Det Norske Veritas
Certification B.V.
2.
EEPC, India
3.
EEPC, India
4.
EEPC, India
5.
EEPC, India
6.
EEPC, India
7.
EEPC, India
8.
EEPC, India
9.
EEPC, India
Our Company received a certificate for conforming to the ISO
9001: 2008 Quality Management System Standard on September
7, 2010. The certificate is valid up to September 7, 2013.
Our Company received a Special Trophy for excellence in EPO
Services for the year 2011 – 2012
Our Company received an award for Export Excellence (Western
Region) for the year 2008 - 2009
Our Company received the Star Performer Award for Outstanding
Contribution to Engineering Exports in the Product Group for the
year 2008 – 2009
Region) for the year 2006- 2007
Our Company received the Star Performer Award for Outstanding
Contribution to Engineering Exports in the Product Group for the
year 2007 – 2008
Our Company received an award for Star Performer as Large
Enterprise for the year 2006 - 2007
Our Company received an award for Star Performer as Large
Enterprise for the year 2005 – 2006
Region) for the year 2004- 2005
Our Company received an award for Export Excellence as well as
the All India Trophy for Highest Exporters for the year 2003 –
2004
Our Company received the Top Exporters Trophy for the year
2003 – 2004
2001 – 2002
Our Company received the All India Trophy for Highest Exporters
for the year 2000 - 2001
2000 – 2001
Our Company received the Highest Exporter’s Trophy for the year
1999 – 2000
Our Company received the Highest Exporter’s Trophy for the year
1998 - 1999
Region) for the year 1997 – 1998
10. EEPC, India
11. EEPC, India
12. EEPC, India
13. EEPC, India
14. EEPC, India
15. EEPC, India
16. EEPC, India
17. EEPC, India
Strategy
Our Company’s long term strategy is to be a leading producer of CR and GP and it aims to become a
"One Stop Shop" for all steel flat products, customised as per the customer’s requirements.
Continued focus on consistently meeting quality standards so and ensuring product acceptance by
customers
Our Company shares a strong relationship with several of its customers and has been supplying our
products to them for over a decade. Our Company’s reputation in the industry and our long standing
96
Uttam Galva Steels Limited – Placement Document product quality ensures customer loyalty and continued loyalty from our customers. We intend to
continue to focus on the quality standards of our products in order to retain our current customers and
target new customers.
Attract, train and retain qualified personnel
Our Company believes that maintaining quality, minimising costs, ensuring timely delivery and
completion of proposed projects depend largely upon the technical skill and workmanship of our
employees and adoption of latest technology. As competition for qualified personnel increases, our
Company intends to focus on training our staff and honing their skills.
Our Company continuously strives to train its workforce to enhance the knowledge of its employees
and equip them with the latest skill sets. The Company has also undertaken certain motivational
programs for our employees, such as, the reward-recognition-respect program.
To use our Company and ArcelorMittal Groups’s synergies for mutual benefit.
ArcelorMittal is a co-promoter of our Company. Our Company benefits from its strong linkage with
ArcelorMittal for raw material sourcing, management support, marketing network and technical
collaboration in its product initiatives. This may be further leveraged for mutual benefits of both the
companies. This would aid our Company in deepening its global footprint. We intend to continue to
use the combined experience, track record, commercial relationships and brand recognition of both
companies to expand our operations into more products in the value chain.
Maintain market position in the Indian steel sector
Our Company intends to maintain our market position in the Indian steel sector by continuing to focus
on maintenance and improvement of its current operations. Our Company intends to leverage its
experience, market position and experience across various markets.
Focus on Research & Development
Product and process development is a continuous on-going exercise along with experimenting in the
development of new processes and new products. Our Company will focus on research and
development, which it believes would add value to existing products and processes thereby allowing
us to focus on higher value added products and also to attain manufacturing excellence.
Manufacturing Process
Details of our Company’s manufacturing process are set below:
Cold Rolling Mill Process
An HR coil is slit to the required width in a HR slitter. After this operation the material is processed in
a pickling line to remove all the iron oxide scales. The pickling line is provided with a water seal and
gas scrubber to ensure that no noxious vapours enter the environment. All effluents are treated in an
acid regeneration plant.
The pickled coils are then sent to a 20HI, 6HI or 4HI cold rolling mill for cold reduction. The mills
are capable of reducing the original thickness in a number of stages. When the required thickness is
achieved, the coil is taken out of the mill.
97
Uttam Galva Steels Limited – Placement Document The surface of the strip is cleaned and is suitable for further processing in the strip cleaning line. In
order to reduce the hardness, the material is sent to an annealing furnace for heat treatment in a
protective nitrogen atmosphere.
After annealing, the coils are then taken to a 4HI skin pass mill to correct the shape and improve its
metallurgical properties. The shape of the coil is further corrected in a tension leveling line and then
cut to sheets of the required length.
The CR coils are then cut as per the requirements of the customer or as per the standards of our
Company on a CR slitter machine. After slitting the CR coils are packed and dispatched. The
abovementioned cold rolling mill process can also be explained with the help of a flow chart set out
below:
Continuous Galvanizing Line ("CGL") Process
Our Company has a continuous galvanizing line producing galvanized strip steel in either coil or sheet
form. The raw material for the process is cold rolled strip in coils. These coils are cleaned of the
protective oil film or grease by an alkaline spray degreasing system.
The strip surface is subsequently pre-heated by passing it through a non-ox type furnace. After the
surface activation is completed, the strip passes through the galvanizing bath predominantly
consisting of molten zinc and other alloying elements.
The accuracy of coating is measured after the strip emerges from the galvanising bath. After
galvanizing, the coating is solidified in a cooling tower using air and then using cold water in a
quench tank. Thereafter, the product is either skin-passed or tension leveled and subsequently
passivated. The end product after this process is steel which is galvanised with a uniform coating
having an uniform spangle finish.
The end product can be either in coil form or cut to length in sheet form. The product is then packed
and is ready for dispatch.
98
Uttam Galva Steels Limited – Placement Document Colour Coating Line Process
Colour coating line produces coated strip in either coil or sheet form. The raw material for the process
is galvanized steel strip in coils. The base metal is unwound, cleaned, treated and rinsed.
The first coat is usually of a primer, which is applied over the strip surface. A topcoat is tailored to
meet a customer’s specifications. The metal can be coated on one or both sides in same or different
colours. After each coating the coil is cured in an oven, which has an incinerator and an oxidizer. The
coating is measured and the accuracy of the coating is verified after which the string is recoiled and
ready for dispatch. The end product can either be in the form of a coil, sheets or slit coil.
A profiling line is capable of supplying profile sheets of various shapes and lengths. Coated coils are
fed to the roll former from an un-coiler and cut to the required length by a profile cutter and thereafter
stacked in bundles. Coated coils are fed on an un-coiler mandrel and slitted into different widths by a
slitting head and re-wound in slit coil form as per the customer’s requirement. The colour coating line
process can also be explained with the help of a flow chart set below:
Acid Regeneration Process ("ARP")
The waste pickle liquor ("WPL") generated during the processing of HR in the pickling line, is fed to
the flushed bed reactor after achieving the required density by pumping it through a venturi. As the
temperature in the reactor is very high the WPL is split into iron oxide and HCl gas and iron oxide is
produced.
The HCl gas, generated in the flush bed reactor, passes through a cyclone separator. Fine iron dust is
dropped in the cyclone separator and the HCl gas moves to an absorber via a venturi. In the absorber,
HCl gas moves upward and water is introduced thereby absorbing the HCl gas and producing
hydrochloric acid. The concentrated acid is collected, stored and reused for pickling.
Marketing of our Products
a)
Exports:
While our Company exports its products to 147 countries in the world, its manufacturing operations
are based in India. In Fiscal 2012, 24.03% of our total sales were from exports to various countries.
Our Company exports to customers from the construction, automotive, consumer goods, material
99
Uttam Galva Steels Limited – Placement Document handling and general engineering industries. As at March 31, 2012, our Company has serviced 240
export customers internationally in 62 countries. Our Company sells a majority of our products to
customers in USA and in the Indian markets. Our Company’s largest export clients in USA are in the
automotive and packaging industries. In Fiscal 2012, gross sales to customers in USA and India
accounted for approximately `447.16 crores and `4159 crore respectively. The details of the same
have been provided in the table below:
(` in crores)
Financial Year ending
March 31, 2012 % of Gross Sales
March 31, 2011 % of Gross Sales
USA
India
Others
447.16
4159.00
868.54
8.17
75.96
15.87
344.47
3731.00
1254.53
6.46
70.00
23.54
The details of the countries our Company exports to is provided in the map below:
b)
Domestic sales:
Our Company also focuses on the domestic market in India and opportunities are to are Company due
to rapid urbanization, improved and growing per capita income level, increased availability of bank
finance and need for improvement of public transport in semi-urban and rural areas.
Continuous efforts have been made by our Company in establishing the ‘Uttam Suraksha’ GC
(Galvanised Corrugated Roofing Sheets) brand in the construction segment and also in increase its
penetration in rural and urban areas. These brands is recognised in its segment in markets like
Maharashtra, Madhya Pradesh, Gujarat, Andhra Pradesh, Karnataka and Chattisgarh.
In the original equipment manufacturer (OEM) market, our Company has been focusing on high
growth and profitable segments such as automotives and appliances and has thus moved up the value
chain in these markets. While in the Automotive segment, our Company has established itself in the
two and four wheeler (Passenger and Commercial) market in western India.
100
Uttam Gaalva Steels Limitedd – Placement Doccument Facilitties
Our Company's
C
maanufacturing facilities are located at Khopoli,
K
in thhe state of Maharashtra,
M
I
India.
This prrovides us wiith easy accesss to ports andd results in lower transporttation costs.
The deetails of installled capacity and productioon (in MT) arre provided inn the table bellow:
Particulars
Galvan
nised Coils/ Sheets/
S
Slit Cooil
Colourr coated Coilss/ Sheets/ Slitt
Coil
Cold rolled coils/ Sheets/ Slit Cooil
Installled Capacity
y (MT)
20111
2012
7,50,000
7,50,000
Producction (MT)
2011
2012
5,61,448
5,711,953
90,000
90,000
77617
700,332
9,60,000
9,60,000
6,93,713
6,133,649
Captiv
ve Power Plaant
Our Company has successfully commissioneed a power pllant of 60 Meegawatt (2 x 30 MW) cappacity
for its captive use. It
I commencedd commerciall production of
o the power plant from March
M
1, 2012. The
power plant is currrently runningg at full capaccity and the steam
s
and poower generateed is consumeed by
our Coompany to thee extent requiired while thee balance pow
wer is sold. Foor Fiscal 20122, we had reveenues
of `666.92 crore from
m the sale of power.
p
Properrty
Our Co
ompany operates from the following prroperties
Locatiion of Properrty / Plant
Registtered
office
Factorries
Khopooli
and
Nature off right in
n Address
Immovablee Property
corporate Lease
Uttam Houuse, 69, P.D’M
Mello Road
Mumbai – 400 009
Ownership
Khopoli-P
Pen Road
Village - Donvat
D
Taluka-Khhalapur
Dist. – Raaigad
Maharashttra
Uttam Galva Steels Limited – Placement Document Khopoli
Ownership
Khopoli-Pali Road
Village - Dahivali
Taluka-Khalapur
Dist. – Raigad
Maharashtra
Our Company’s existing plants and related facilities including worker accommodation are at Khopoli,
Raigad, Maharashtra and is spread over 200 acres of land all of which is owned by our Company on a
freehold basis. Apart from the registered office at Mumbai, we have marketing and sales offices
offices in Keonjhar, Orissa, Pune, Hyderabad, New Delhi Bangalore, Chennai, Hyderabad,
Ahmedabad and Indore which are on lease or rent.
Quality control
Quality control tests are carried out at various stages in the production cycle from the testing of raw
materials to the finished product. Our Company has been awarded quality systems certification. Our
Company also has in place an integrated quality management plan which comprises control standards,
safety standards and environmental standards.
Information Technology
Our Company believes that the Information Technology department ("IT Department") performs a
crucial function in creating and maintaining scalable, cost effective and sustainable operating models
for our various business groups and segments. Our Company has built, and continues to enhance, our
IT systems in order to create competitive advantages for our Company, and thereby enables us to
achieve and maintain optimum levels of operational efficiency. Our Company has recently adopted
SAP, a enterprise resource planning software in order to ensure, smooth running of day-to-day
operations, address evolving regulatory standards and mitigate industry specific risks. Our Company
is in the process of implementing the same and has undertaken training program to enable the IT
department to effectively use the SAP software.
Research and Development
Our Company’s research and development program is focused on analytical and experimental work to
enhance the quality of our existing products and also to develop new products. A well-established
research and development team helps our Company in the development of different steel grades at
regular intervals. It gets involved in customer re-engineering projects and helps customers in saving
costs and in improving product performance. With the availability of facilities, the research and
development department seeks to be proactive in meeting customer requirements by improving
processes and by new product development.
Intellectual Property
Our Company has made applications for the registration of 126 trademarks including but not limited
to its name and logo in various classes, some of which are pending registration. Some of the various
trademarks registered by our Company are "Uttam Chatra Chaya", "Uttam Suraksha Kavach" and
"Uttam Suraksha" among others.
We understand the importance of intellectual property and constantly strive to create new intellectual
property and also protect our existing intellectual property.
102
Uttam Galva Steels Limited – Placement Document Business Environment
Our Company is committed towards controlling the environmental impact of steel making, in
accordance with both international and domestic standards that govern air emissions, waste water
discharges and solid waste handling and disposal. The steel industry in India is subject to numerous
laws and regulations regarding pollution control. In the last three years, our Company has not been
subject to any material legal proceedings or disputes with any environmental protection authorities in
India. Our Company has obtained all relevant environmental and pollution-related clearances for its
plants and operates our facilities in line with the statutory norms and the limits laid down by the
Maharashtra Pollution Control Board.
During the last three years, there have been no material incidents or accidents relating to our
Company in which hazardous substances have leaked into the surrounding land, groundwater, rivers
or air.
Employees
As of December 31, 2012, our Company had approximately 1500 employees on their payrolls and
contract labour of approximately 1200 workers per day depending on the requirement.
Function
CMD Department
Finance & Accounts
Marketing
Production – Plant
Purchase Department
Company Secretary & Legal Department
Human Resource and Administration
Projects
IT
Total
No of Employees
13
59
96
1243
18
24
17
24
6
1500
Insurance
Our Company believes that it maintains adequate insurance schemes, covering its business operations
and its employees from various risks. Our Company maintains such protection through a combination
of insurance policies purchased from external insurers. Our Company, including its plants and
facilities, is insured against a range of risks, including material damage, Fire and Special Perils etc.
Corporate Social Responsibility
As our operations have expanded, our Company has retained a collective focus on various areas of
corporate sustainability that impact people, environment and the society at large. Founded on the
philosophy that society is not just another stakeholder in its business, but the prime purpose of it, our
Company, across its various operations is committed to making a positive contribution to the society.
As a policy, our Company promotes and encourages economic, social and educational development
within its communities while providing active support to local initiatives for the upliftment of society
in general.
103
Uttam Galva Steels Limited – Placement Document Subsidiaries of Our Company
Set forth below is a brief description of our subsidiaries.
Uttam Galva Holdings Limited ("UGHL")
UGHL is a wholly owned subsidiary of our Company. It was incorporated as an offshore company
with limited liability in Dubai. UGHL has its registered office at LOB 15- 514, PO Box 17870, Jebel
Ali Free Zone Dubai, U.A.E.
UGHL is engaged in the business of trading of steel and metal products including mild, high carbon
spring, high speed tools alloys, stainless steel metals.
The authorized and paid up share capital of UGHL is USD 2,72,480. The company has allotted
10,000 equity shares to our Company.
The financial information pertaining to UGHL for the Fiscal 2012 is provided below:
Amount (in `)
1,39,39,123
(22,95,597)
1,40,08,747
23,65,221
(70,829)
(70,829)
Particulars
Capital
Reserves
Total Assets
Total Liabilities
Turnover
Profit before taxation
Profit after taxation
The following are the name of the directors of UGHL:
No.
1
2
3
Name of Directors
Rajinder Miglani
Anuj R Miglani
Ankit Miglani
Position
Director
Director
Director
Neelraj International Trade Limited ("NITL")
NITL is a wholly owned subsidiary of our Company. It was incorporated in British Virgin Islands and
has its registered office at Kingston chambers, P.O box 173. Road town Tortola British Virgin Islands.
NITL is engaged in the business of trading of steel and metal products including mild, high carbon
The authorized and paid up share capital of NITL is USD 50,000. The company has allotted one
equity share to our Company.
The financial information pertaining to NITL for Fiscal 2012 is provided below:
Amount (in `)
25,57,825
33,09,467
2,62,00,41,075
2,61,41,73,783
Particulars
Capital
Reserves
Total assets
Total liabilities
104
Uttam Galva Steels Limited – Placement Document Turnover
31,89,504
31,14,968
31,14,968
The following are the name of the directors of NITL:
No.
1
2
Name of Directors
Rajinder Miglani
Ankit Miglani
Position
Director
Director
Atlantis International Services Company Limited ("AISL")
AISL is a wholly owned subsidiary of our Company.AISL was incorporated in the British Virgin
Islands and has its registered office at Kingston chambers, P.O box 173. Road Town, Tortola British
Virgin Islands with company number 1534673.
AISL is engaged in the business of trading of steel and metal products including mild, high carbon
spring, high speed tools alloys and stainless steel metals.
The authorized and paid up share capital of UGHL is USD 50,000. The company has allotted 5,000
equity shares to our Company.
The financial information pertaining to AISL for Fiscal 2012 is provided below:
Amount (in `)
25,57,825
(3,29,16,292)
1,81,53,73,169
1,84,57,31,636
3,67,74,06,848
(88,93,835)
(88,93,835)
Particulars
Capital
Reserves
Total assets
Total liabilities
Turnover
The following are the name of the Directors of AISL:
No.
1
2
Name of Directors
Ankit Miglani
Trevor Campbell Smith
Position
Director
Director
Uttam Galva Steels Netherlands BV ("UGSN")
UGSN is a wholly owned subsidiary of our Company. UGSN was incorporated in the Netherlands
with its registered office at oudegracht 202,1811CR Alkammar,Netherlands BV.
UGSN is engaged in the business of trading of steel and metal products including mild, high carbon
UGSN has an authorised share capital of USD1,19,520 and the paid up capital of the company is
USD23,906. The company has allotted 18,000 equity shares to our Company.
The financial information pertaining to UGSN for the Fiscal 2012 is provided below:
105
Uttam Galva Steels Limited – Placement Document Particulars
Capital
Reserves
Total assets
Total liabilities
Turnover
Amount
12,22,947
(3,67,30,586)
2,15,71,36,547
2,19,26,44,186
1,95,08,21,325
(3,42,43,736)
(3,42,43,736)
The following are the name of the Directors of UGSN:
No.
1
2
Name of Directors
Ankit Miglani
Anuj R Miglani
Position
Director
Director
Ferro Zinc International FZE ("Ferro")
Ferro is a step down subsidiary of UGHL. It was formed as free zone establishment with limited
liability on October 23, 2008 with the main objective of trading in various segments in the metal
industry including building metal products, pre-fabricated houses, pipes and fittings, insulation and
protection materials, workshop equipment, machinery and spare parts, metal alloys, basic steel
products, basic non ferrous metal products, metal drums and barrels, metal cans and containers, cargo
containers, metal ores. Raghavendra Kumar Aggarwal is the manager of Ferro which is based out of
Dubai and has its registered office at Office No. LB 03016, Jebel Ali, Dubai.
It has an authorised and issued capital of USD 272480. Our company has been alloted one share.
The financial information pertaining to Ferro for Fiscal 2012 is provided below:
Amount (in `)
1,39,39,123
4,22,36,597
1,93,71,75,363
18,80,99,643
4,06,46,45,327
(1,46,32,255)
(1,46,32,255)
Particulars
Capital
Reserves
Total Assets
Total Liabilities
Turnover
The following are the name of the Directors of Ferro:
No
.
1
2
3
Name of Director
Position
Rajinder Uttamchand Miglani
Anuj R Miglani
Ankit Miglani
Director
Director
Director
The company is controlled and managed by Raghvendra Kumar Agarwal
106
Uttam Galva Steels Limited – Placement Document Uttam Galva Steels Limited FZE ("UGSL")
UGSL is a wholly owned subsidiary of our Company. It was incorporated in Ras Al Khaimah, United
Arab Emirates and was registered with the Government of Ras Al Khaimah, United Arab Emirates on
November 21, 2012 as a Free Zone Establishment with limited liability with its registered office at :
PO Box- 16111, Ras Al Khaimah, United Arab Emirates.
Our Company is the registered holder of one share of the value AED100,000. Brij Bhushan Handa is
the Manager of UGSL.
Joint Venture Companies
Set forth below is a brief description of our joint venture companies, which we believe is significant
to our business.
Moira Madhujore Coal Limited
Moira Madhujore Coal Ltd. ("MMCL") is a joint venture between our Company, Ramsarup Industries
Limited, Adhunik Corporation Limited, Howrah Gases Limited, Vikash Metal and Power Limited and
ACC Limited. MMCL was incorporated in India and has its registered office at 16/S, Block A, New
Alipore, Kolkata, West Bengal.
MMCl was established for bidding of coal blocks and for distributing the output amongst the Joint
Venture Partners.
As at March 31, 2012, MMCL had an authorised share capital of `1,00,00,000.
The financial information pertaining to MMCL for the Fiscal 2012 is provided below:
Amount (in `)
56,19,660
403,80,858
4,89,40,560
9,99,092
15,01,879
11,61,858
7,44,858
Particulars
Capital
Reserves
Total assets
Total liabilities
Turnover
Following are Directors of MMCL:
No.
1
2
3.
4.
5.
6.
7.
8.
9.
10.
Name of Directors
Rajendra Kumar Mittal
Saket Agrawal
Jugal Agarwal
Aashish Jhunjhunwala
Ankit Miglani
Mahesh Kumar Agarwal
Akkash Patni
Vikash Patni
Rajiv Prasad
Vivek Chawla
Position
Director
Director
Director
Director
Director
Director
Director
Director
Director
Alternate director
107
Sunil Dodani
Director
The following table contains brief details of the shareholding percentage of MMCL:
Sr. No.
1.
2.
3.
4.
5.
6.
Name of our Company
Uttam Galva Steel Limited
Ramsarup Industries Limited
Adhunik Corporation Limited
Howrah Gases Limited
Vikash Metal and Power Limited
ACC Limited
Total
Percentage of voting rights
28.75
4.79
19.17
9.58
23.32
14.38
100.00
Texturing Technology Private Limited
Texturing Technology Private Limited ("TTPL") is our joint venture with Court Holdings (Europe)
Limited a Canadian company. TTPL was incorporated in India and has its registered office at Uttam
Galva Steels Ltd., Ground Floor, Administrative Block, Khopoli, Pen Road, Donwat, Khalapur,
Raigad – 410202, Maharashtra.
TTPL is authorised to carry on the process of electro chrome deposition, electro discharge texturing,
grinding, chock bearing, galvanising, powder coating, impregnating with any material and lamination
of steel and steel products and also setting up plant and machinery for the aforementioned purpose.
As at March 31, 2012, TTPL had an authorised share capital of `10,00,00,000.
The financial information pertaining to TTPL for the Fiscal 2012 is provided below:
Amount (in `)
60,400,000
2,21,97,403
17,23,97,168
8,25,97,403
6,84,13,432
1,94,61,340
1,19,32,s075
Particulars
Capital
Reserves
Total assets
Total liabilities
Turnover
Following are the Directors of TTPL:
Amount (in `)
Director
Director
Director
Additional director
Particulars
Suzanne Weir Court
Jeffrey Parry Thomas
Mangilal Agrawal
Sunil Prakash
Following is the shareholding pattern of TTPL:
Sr. No.
1.
2.
Percentage of voting rights
50%
50%
Court Holdings (Europe) Limited
108
Uttam Galva Steels Limited – Placement Document FINANCIAL INDEBTEDNESS
The following is a summary of our Company’s indebtedness as on February 28, 2013:
Sr.
No.
1.
2.
Nature of Borrowing
Sanctioned
amount
Secured Borrowings
a. Working Capital Facilities (FBWC + NFBWC)
b. Term Loans
Unsecured Borrowings
Total
2505.40
2478.01
451.96
5435.37
(` in crores)
Amount
outstanding
1969.34
2157.51
101.30
4228.15
1. Secured Borrowings
As on February 28, 2013 the aggregate outstanding secured borrowing of our Company is `4,126.85
crores. Our Company has availed secured loans from various lenders collectively referred to as
("Lenders").
a)
Working Capital Arrangements by our Company
Working Capital Consortium Facility aggregating to `2505.40 crores
(` in crores)
Lender
State Bank of
India
Canara Bank
Amount
Sanctioned
FBWC of
156.00 and
NFBWC of
873.50
FBWC Limit
of 86.00 and
NFBWC of
490.50
Date(s) of financing
documents
Facility sanctioned vide
Master Facility
Agreement ("MFA")
dated July 16, 2011 and
renewed vide sanction
letter dated February
13, 2013.
MFA dated July 16,
2011 and renewed vide
sanction letter dated
March 21, 2012.
Amount
outstanding as
on February 28,
2013 (FBWC +
NFBWC)
774.31
Repayment
Schedule and
Interest
12 (twelve)
months
Interest
Interest Rate for
FBWC at 2.75%
above Base Rate.
464.32
12 (twelve)
months
Interest
Our Company
shall pay interest
at the rate of base
rate plus 3%.
ICICI Bank
FBWC Limit
of 16.75 and
NFBWC of
MFA dated July 16,
109
18.28
12 (twelve)
months
Uttam Galva Steels Limited – Placement Document Lender
Amount
Sanctioned
23.25
documents
Amount
outstanding as
on February 28,
2013 (FBWC +
NFBWC)
May 31, 2012.
Repayment
Schedule and
Interest
Interest
Our Company
shall pay interest
at the rate of base
rate plus 2.75%.
Punjab and
Maharashtra
Co-operative
Bank
FBWC Limit
of 1.75 and
NFBWC of
8.35
MFA dated July 16,
March 26, 2012.
(5.43)
12 (twelve)
months
Interest
Our Company
shall pay interest
at the rate of
12.20.
Punjab National
Bank
FBWC Limit
of 60.00 and
NFBWC of
303.00
MFA dated July 16,
October 15, 2012.
274.25
12 (twelve)
months
Interest
Our Company
shall pay interest
at the rate of base
rate plus 2%.
Bank of Baroda
FBWC Limit
of 30.00 and
NFBWC of
91.10
MFA dated July 16,
June 1, 2012.
91.66
12 (twelve)
months
Interest
Our Company
shall pay interest
at the rate of base
rate plus 2.50%.
Indian Overseas
Bank
FBWC Limit
of 7.00 and
NFBWC of
40.80
MFA dated July 16,
August 25, 2012.
31.41
12 (twelve)
months
Interest
Our Company
shall pay interest
at the rate of base
rate plus 2%.
110
Union Bank of
India
Amount
Sanctioned
FBWC Limit
of 25.00 and
NFBWC of
166.00
documents
MFA dated July 16,
September 25, 2012.
Amount
outstanding as
on February 28,
2013 (FBWC +
NFBWC)
135.34
Repayment
Schedule and
Interest
12 (twelve)
months
Interest
Our Company
shall pay interest
at the rate of base
rate plus 2%.
IDBI Bank
FBWC Limit
of 17.50 and
NFBWC of
108.90
MFA dated July 16,
July 4, 2012.
185.20
12 (twelve)
months
Interest
Our Company
shall pay interest
at the rate of base
rate plus 2.50%.
*Note: Out of the above outstanding amount, `129.31 crores pertain to outstanding bank guarantees
issued in favour of third parties.
Description of Security and terms under the Master Facility Agreement:
The facilities are secured by:
(i)
(ii)
Primary Security: a first charge, by way of hypothecation, on the whole of the current assets
of our Company.
Guarantees: Personal guarantee of Rajinder Miglani and Praveen Miglani.
The following is the summary of key terms under the Master Facility Agreement:
Negative Covenants
(i)
Our Company can only utilize the credit facilities sanctioned by the Lenders for meeting its
working capital requirements and for no other purpose.
(ii)
Our Company shall not without the consent of the Lenders:
a)
change our Company’s capital structure.
b)
avail of any credit facility or accommodation for our Company’s working capital
requirement from any other bank or financial institution or any person, firm or
company in any manner;
c)
formulate any scheme of amalgamation or reconstruction;
d)
undertake any new project, implement any scheme of expansion, or acquire any fixed
assets, other than incurring routine capital expenditure;
e)
invest by way of share capital in or lend or advance funds to or place deposits, with
111
Uttam Galva Steels Limited – Placement Document any other concerns (including group companies); normal trade credit or security
deposits in the normal course of business or advances to employees can however be
extended;
undertake any guarantee obligations on behalf on any company or other company
(including group company);
declare any dividend on our Company’s share capital, if our Company fails to meet
its obligations to pay the interest and/or commission and/or installment(s) and/or
other moneys payable to the Lenders, so long as our Company is in such default.
f)
g)
b)
Term Loan Facilities availed by our Company
i) Term Loan under Consortium aggregating to `1400 crores.
Lender
Axis
Limited
Amount
Sanctioned
Date(s) of financing Amount
documents
outstanding as
on
February
28, 2013
91.25
sanctioned
Bank Rupee Term Facility
Loan
of vide Master Facility
`100.00
Agreement ("MFA")
dated July 19, 2011
and sanction letter
dated July 6, 2011.
sanctioned
of Rupee Term Facility
Loan
of vide MFA dated July
`50.00
19, 2011 and last
modified by sanction
letter dated June 1,
2012.
45.63
Rupee Term Facility
sanctioned
Loan
`50.00
19, 2011 and sanction
letter dated March 24,
2011.
45.63
sanctioned
Export
- Rupee Term Facility
Import Bank of Loan
`50.00
India
letter dated July 6,
2011.
45.63
Bank
Baroda
Dena Bank
112
(` in crores)
Repayment
Schedule
and
Interest
36
(thirty
six)
structured quarterly
instalments
Interest
Our Company shall
pay interest at the
rate of base rate plus
2.75%.
36
(thirty
six)
instalments
Interest
Our Company shall
pay interest at the
2.75%.
36
(thirty
six)
instalments
Interest
Our Company shall
pay interest at the
2.75%.
36
(thirty
six)
instalments
Interest
Our Company shall
pay interest at the
Amount
Sanctioned
Oriental Bank Rupee Term
Loan
of
of Commerce
`50.00
Punjab
National Bank
Rupee Term
Loan
of
`400.00
Syndicate Bank
Rupee Term
Loan
of
`225.00
State Bank of Rupee Term
Hyderabad
Loan
of
`275.00
State Bank of Rupee Term
Loan
of
India
`200.00
Date(s) of financing Amount
Repayment
documents
outstanding as Schedule
and
on
February Interest
28, 2013
2.75%.
45.63
36
(thirty
six)
Facility
sanctioned
vide MFA dated July
instalments
letter dated May 23,
2011.
Interest
Our Company shall
pay interest at the
2.75%.
365.00
36
(thirty
six)
Facility
sanctioned
vide MFA dated July
instalments
19, 2011 and last
letter dated October
Interest
Our Company shall
15, 2012.
pay interest at the
1.75%.
205.31
36
(thirty
six)
Facility
sanctioned
vide MFA dated July
instalments
letter dated April 1,
2011.
Interest
Our Company shall
pay interest at the
2.75%.
250.94
36
(thirty
six)
Facility
sanctioned
vide MFA dated July
instalments
letter dated March 14,
2011.
Interest
Our Company shall
pay interest at the
2%.
182.50
36
(thirty
six)
Facility
sanctioned
vide MFA dated July
instalments
19, 2011 and last
letter dated February
Interest
Our Company shall
13, 2013.
pay interest at the
2.50%.
113
Uttam Galva Steels Limited – Placement Document Description of Security and terms under the Master Facility Agreement:
(i)
Primary Security:
(a)
(b)
(ii)
a first charge, by way of an equitable mortgage, on all, present and future,
immoveable properties of our Company except packing machine supplied by
PESMEL, Finland and assets pertaining to Satarda Project of our Company;
a first charge, by way of hypothecation, on all, present and future, moveable assets of
our Company, including but not limited to plant and machinery, machinery spares,
tools and accessories except packing machine supplied by PESMEL, Finland and
assets pertaining to Satarda Project of our Company
Guarantees: Personal guarantee of Rajinder Miglani
The following is the summary of key terms under the Master Facility Agreement:
Negative Covenants
Our Company shall not without the prior written consent of the Lenders do the following:
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
create, incur, assume or suffer to exist any security interest upon or with respect to any
property, revenues or assets of our Company;
effect any change in the capital structure of our Company, including proposed equity and debt
patterns or issue equity or preference capital, any securities convertible into or exchangeable
for our Company’s equity or preference capital and any rights to subscribe for or to purchase,
or any option for the purchase of, or any agreements, arrangements or understandings
providing for the issuance of, or any calls, commitments or claims of any character relating to,
our Company’s equity or preference capital;
undertake any indebtedness or repay any unsecured indebtedness;
all unsecured indebtedness shall at all times be subordinated to this facility;
lend money or credit or make deposits with or advances to any entity, or purchase or acquire
any stock, share obligations or securities of, or any other interest in, or make any capital
contribution to, or acquire all or substantially all of the assets of, any other entity or purchase
or otherwise acquire (in one or a series of related transactions) any part of the property or
assets of any entity;
convey, sell, lease, let or otherwise dispose of in any other manner (or agree to do any of the
foregoing) all or any part of our Company’s property or assets charged to the Lenders;
wind up, liquidate or dissolve our Company’s affairs or enter into any transaction or
formulate any scheme for merger, compromise, consolidation, amalgamation, reconstruction
or reorganization;
undertake, expressly or by implication, including through provision of indemnities, support
letters, letter of comfort or otherwise, any guarantee obligations;
make any restricted payments;
permit or cause or recognize or take any action with respect to the transfer of equity shares by
the promoters if as a result of transfer of the equity shares the promoters jointly and together
cease to control our Company or take any action which results in a change in the management
structure of our Company;
enter into or agree to enter into any long term contracts or partnerships, profit-sharing
arrangements, royalty agreements or any other agreements or arrangements whereby our
Company's income or profits or the financial condition of our Company is, or might be,
114
Uttam Galva Steels Limited – Placement Document l)
m)
n)
o)
p)
q)
r)
s)
t)
adversely affected;
enter into any transaction, nor have any commitment with any entity, other than on an arm’s
length basis;
change our Company’s accounting system other than to IFRS as and when required under
applicable law;
undertake any new project other than the business our Company presently conducts or
substantially change the general nature or scope of the business our Company presently
conducts or undertake any expansion of our Company’s current operations or adversely
change our Company’s financial condition from that which existed on the date of this
Agreement;
utilise the proceeds of this facility for any other purpose;
use, maintain, operate, occupy or grant any rights in respect of the use, maintenance,
operation or occupancy of any of our Company’s assets and property which (a) may be in
contravention of applicable law including environment, health and social security laws and
regulations, (b) violates any legal requirements in any respect or which may constitute a
public or private nuisance, and (c) make voidable or cancelable, or increase the premium of,
any insurance then in force with respect to our Company’s assets;
agree, authorise or otherwise consent to any proposed settlement, resolution or compromise of
any litigation, arbitration or other dispute with any person;
pay commission, fees or any other charges to the promoters, directors, managers or other
affiliates of our Company in connection with any such person furnishing any guarantee,
counter-guarantee or indemnity or any other instrument or security on behalf of our Company
or for any liability relating to or for purposes of this Agreement;
cease, or threaten to cease, to carry on our Company’s business or all or any part of the assets
required or essential for our Company’s business or operations;
amend or modify our Company’s memorandum of association and articles of association
ii) State Bank of India
Lender
State Bank
India
(` in crores)
financing Amount
Repayment
and
on February 28, Interest
2013
Facility
Agreement
100.00
5 (five) years
of Corporate
Loan
of dated 23 March 2012
from the date of
`100.00
between State Bank of
first disbursement
India and our Company
Interest
Our
Company
shall pay interest
at the rate of base
rate plus 2.75%.
Amount
Sanctioned
Date(s) of
documents
Description of Security and terms under the Facility Agreement:
The facility is secured by:
(i)
Primary Security
First pari passu charge on our Company’s movable and immovable assets, except packing
machine supplied by PESMEL, Finland and assets pertaining to Satarda Project of our
115
Uttam Galva Steels Limited – Placement Document Company.
(ii)
Guarantee: Personal Guarantee of Rajinder Miglani
The following is the summary of key terms under the facility agreement with State Bank of
India:
Negative Covenants
Our Company shall not without the prior written consent of the lender do the following:
(i)
(ii)
(iii)
(iv)
or reorganization;
agreement;
declare or pay any dividend or authorise or make any distribution to our Company’s
shareholders;
permit or cause or recognize or take any action with respect to any withdrawal of funds
brought into our Company by the promoters of our Company.
iii) Vijaya Bank
Lender
Vijaya Bank
(` in crores)
financing Amount
Repayment
and
2013 (`in cr.)
150.00
24 (twenty four)
Rupee Term Facility
Agreement
equal
quarterly
Loan
of dated May 30, 2012
installments
`150.00
between Vijaya Bank
commencing after
and our Company
a moratorium of
12
(twelve)
months
Amount
Sanctioned
(` in cr.)
Date(s) of
documents
Interest
Our
Company
shall pay interest
at the rate of base
rate plus 2.75%.
(i)
Primary Security
First pari passu charge on all fixed assets of our Company.
116
Uttam Galva Steels Limited – Placement Document The following is the summary of key terms under the facility agreement with Vijaya Bank:
Negative Covenants
a)
b)
c)
d)
e)
f)
g)
h)
i)
entering into any borrowing arrangements with any other lenders;
creating any further charge over assets secured in favour of Vijaya Bank;
making repayments of any loans;
effecting any change in our Company’s capital structure or management;
formulating any scheme of amalgamation or reconstitution;
implementing any scheme of expansion or acquire any fixed assets;
investing, lending or place deposits with any other concerns including any associates or
subsidiaries of our Company;
undertaking any guarantee obligations;
declaring any dividends.
iv) ICICI Bank Limited
Lender
ICICI
Limited
(` in crores)
financing Amount
Repayment
and
2013
225.00
28 (twenty eight)
Facility
Agreement
Bank Rupee
equal
quarterly
Term Loan dated November 25,
installments
2011 between ICICI
of `225.00
Bank and our Company
Interest
Our
Company
shall pay interest
at the rate of base
rate plus 2%.
Amount
Sanctioned
Date(s) of
documents
(i)
Primary Security
First pari passu charge on all movable and immovable fixed assets of our Company
The following is the summary of key terms under the facility agreement with ICICI Bank:
Negative Covenants
a)
create, incur, assume or suffer to exist any security interest upon or with respect to any
property, revenues or assets of our Company;
b)
create, contract, incur or undertake any indebtedness in any manner whatsoever;
c)
117
Uttam Galva Steels Limited – Placement Document d)
e)
shareholders;
foregoing) all or any part of our Company’s property or assets charged to ICICI;
or reorganization.
v) ICICI Bank Limited
Lender
ICICI
Limited
Amount
Sanctioned
(` in cr.)
Date(s) of
documents
financing Amount
outstanding as
on February 28,
2013 (` in cr.)*
37.50
Facility
Agreement
Bank Rupee
Term Loan dated February 18, 2011
between ICICI Bank and
of `50.00
our Company
Repayment
Schedule
and
Interest
8 (eight) equal
half
yearly
installments
starting from June
30, 2012
Interest
Our
Company
shall pay interest
at the rate of base
rate plus 2.85%.
(i)
Primary Security
First pari passu charge by way of mortgage on all the movable and fixed assets of our
Company.
The following is the summary of key terms under the facility agreement with ICICI Bank:
Negative Covenants
a)
shareholders;
b)
or reorganization.
vi) ICICI Bank Limited
Lender
Amount
Sanctioned
(` in cr.)
ICICI
Limited
Bank Optionally
Fully
Convertible
Date(s) of
documents
financing Amount
outstanding as
on February 28,
2013 (` in cr.)*
Facility restructured and
9.55
modified by letter dated
April 26, 2001.
118
Repayment
Schedule
and
Interest
Repayable in one
installment
on
March 15, 2015
Uttam Galva Steels Limited – Placement Document Loan
(OFCL) of
`9.55
Interest
Our
Company
shall pay interest
at the rate of
0.0001%
Description of Security:
(i)
Primary Security
(a)
First pari passu charge by way of mortgage on all immovable and movable properties of our
Company; and
Pledge of shares by the Promoters of our Company.
(b)
vii) Syndicated Term Loan Credit Facility of US$50 million
Lender
State Bank
India
Amount
Sanctioned
(US$
in
mn.)
of Term Loan
of US$8.50
Bank of Baroda
ICICI
Limited
Date(s) of
documents
financing
Facility sanctioned by
Master
Facility
Agreement
("MFA")
dated December 27,
2006
Term Loan Facility sanctioned by
of US$7.50 MFA dated December
27, 2006
Bank Term Loan Facility sanctioned by
27, 2006
119
(` in crores)
Amount
Repayment
and
2013
14.04
11
(eleven)
unequal
consecutive half
yearly
installments
12.39
12.39
Interest
Our
Company
shall pay interest
at the rate of
LIBOR
plus
2.4%.
11
(eleven)
unequal
consecutive half
yearly
installments
Interest
Our
Company
shall pay interest
at the rate of
LIBOR
plus
2.4%.
11
(eleven)
unequal
consecutive half
*UCO Bank
Canara Bank
SBI
International
(Mauritius)
Limited
Amount
Date(s) of
Sanctioned documents
(US$
in
mn.)
financing Amount
Repayment
and
2013
yearly
installments
27, 2006
27, 2006
27, 2006
Hua
Nan Term Loan Facility sanctioned by
Commercial
27, 2006
Bank
Limited
120
8.25
9.91
9.91
4.95
Interest
Our
Company
shall pay interest
at the rate of
LIBOR
plus
2.4%.
11
(eleven)
unequal
consecutive half
yearly
installments
Interest
Our
Company
shall pay interest
at the rate of
LIBOR
plus
2.4%.
11
(eleven)
unequal
consecutive half
yearly
installments
Interest
Our
Company
shall pay interest
at the rate of
LIBOR
plus
2.4%.
11
(eleven)
unequal
consecutive half
yearly
installments
Interest
Our
Company
shall pay interest
at the rate of
LIBOR
plus
2.4%.
11
(eleven)
unequal
consecutive half
Amount
Date(s) of
Sanctioned documents
(US$
in
mn.)
(Singapore)
financing Amount
Repayment
and
2013
yearly
installments
Indian
Bank Term Loan Facility sanctioned by
(Singapore)
27, 2006
PT Bank Madiri Term Loan Facility sanctioned by
(Persero) TBK of US$2.00 MFA dated December
27, 2006
(Hong Kong)
7.43
3.30
Interest
Our
Company
shall pay interest
at the rate of
LIBOR
plus
2.4%.
11
(eleven)
unequal
consecutive half
yearly
installments
Interest
Our
Company
shall pay interest
at the rate of
LIBOR
plus
2.4%.
11
(eleven)
unequal
consecutive half
yearly
installments
Interest
Our
Company
shall pay interest
at the rate of
LIBOR
plus
2.4%.
*Note: Pursuant to the Master Facility Agreement dated December 27, 2006 the original party for
this sanction was ABN Amro Bank N.V.
Description of Security and terms under the Master Facility Agreement:
(i)
Primary Security
First charge over movable and immovable assets of our Company.
The following is the summary of key terms under the MFA:
121
Uttam Galva Steels Limited – Placement Document Negative Covenants
Our Company shall not without the prior written consent of the Lenders do the following:
a)
b)
c)
d)
e)
sell, transfer or otherwise dispose of our Company’s assets;
change the general nature of our Company’s business;
enter into any amalgamation, demerger, merger or reconstruction;
engage in investments over and above US$10,000,000 (United States Dollars ten million);
declare any dividends.
viii) Nordea Bank AB
Lender
Nordea Bank AB
Amount
Sanctioned
(US$
in
mn.)
Term Loan
of
US$10.006
(` in crores)
financing Amount
Repayment
and
2013
6.89
16 half yearly
Facility
Agreement
installments
dated October 29, 2007
ending
on
between Nordea Bank
November, 2015.
AB and our Company as
mentioned
in
the
Security
Trustee
Interest
Our
Company
Agreement
dated
shall pay interest
October 29, 2007.
at the rate of
0.8765%
per
annum.
Date(s) of
documents
Description of Security
(i)
Primary Security
Exclusive charge on our Company’s Full Coil Packing Line situated at Khopoli, Mumbai.
(ii)
Guarantees: Personal guarantees of Rajinder Miglani and Praveen Miglani respectively.
ix) IFCI Limited
Lender
IFCI Limited
Amount
Sanctioned
(` in cr.)
Date(s) of
documents
financing Amount
outstanding as
on February 28,
2013 (` in cr.)
4.44
Zero
last modified by letter
Coupon
Bonds
of dated April 19, 2006.
`11.10
122
(` in crores)
Repayment
Schedule
and
Interest
5
annual
installments
ending in July,
2014
Uttam Galva Steels Limited – Placement Document Yield to maturity
Our
Company
shall pay interest
at the rate of
12.5% per annum.
(i)
Primary Security
First charge on all movable and immovable assets of our Company, except packing machine
supplied by PESMEL Finland.
Negative Covenants
Our Company shall not without the prior written consent of IFCI do the following:
(i)
(ii)
(iii)
(iv)
shareholders;
prepay any of our Company’s loans to any other lenders;
dispose of any movable or immovable assets of our Company;
extend any advances or unsecured loans to any subsidiaries or make any inter corporate
deposits.
x) Life Insurance Corporation of India
Lender
Amount
Sanctioned
(`in cr.)
Date(s) of
documents
financing Amount
outstanding as
on February 28,
2013 (` in cr.)
3.09
Life Insurance Zero
Corporation of Coupon
Bonds of dated March 4, 2004.
India (LIC)
`7.73
Repayment
Schedule
and
Interest
5
annual
installments
ending in July,
2014
Yield
to
maturity:
Our
Company
shall pay interest
at the rate of 9%
per annum.
(ii)
Primary Security
123
Uttam Galva Steels Limited – Placement Document (iii)
Collateral Security
Pledge of sponsor shareholding
(iv)
Negative Covenants
Our Company shall not without the prior written consent of LIC do the following:
(i)
(ii)
(iii)
(iv)
(v)
diversify our Company’s business;
undertake any new projects;
transfer funds to group companies or any other associate entities;
undertake any new long term debts;
enter into any new contracts or agreements with any third parties.
xi) United India Insurance Company Limited
(` in crores)
financing Amount
Repayment
and
2013
0.12
3 (three) equal
United
India Zero
annual
Coupon
Insurance
installments
Term Loan dated February 2, 2005.
Company
commencing from
of `0.30
Limited
March 15, 2010
Lender
Amount
Sanctioned
Date(s) of
documents
Yield
to
maturity:
Our
Company
shall pay interest
at the rate of 9%
per annum.
(i)
Primary Security
xii) General Insurance Corporation of India
Lender
Amount
Sanctioned
Date(s) of
documents
financing Amount
Repayment
and
2013
124
Uttam Galva Steels Limited – Placement Document General
Insurance
Corporation
India (GIC)
Zero
Coupon
of Term Loan dated January 6, 2003.
of `0.225
0.09
5 (five) annual
installments
commencing from
June 15, 2000 and
ending on June
15, 2014
Yield
to
maturity:
Our
Company
shall pay interest
at the rate of 15%
per annum
(i)
Primary Security
(ii)
Collateral Security
Pledge of sponsor shareholding
(iii)
xii) Infrastructure Development Finance Company Limited (IDFC)
Lender
IDFC
Amount
Sanctioned
Date(s) of
documents
financing Amount
Repayment
and
2013 *
60.75
28 (twenty eight)
Facility
Agreement
Rupee
equal
quarterly
Term Loan dated September 2, 2008
installments
between Infrastructure
of `81.00
starting from July
Development Finance
1, 2011
Company Limited and
our Company
Interest
Our
Company
shall pay interest
at the rate of base
rate plus 2.37%.
125
Uttam Galva Steels Limited – Placement Document (i)
Primary Security
•
First pari passu charge on all immovable properties of our Company pertaining to the
Khopoli Project;
First pari passu charge on all movable assets of our Company pertaining to the Khopoli
Project;
First pari passu charge on all intangible assets of our Company pertaining to the Khopoli
Project.
•
•
(ii)
Guarantees: Personal guarantees of Rajinder Miglani.
The following is the summary of key terms under the facility agreement with IDFC:
Negative Covenants
Our Company shall not without the prior written consent of IDFC do the following:
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
effect any change in the capital structure of our Company;
prepay any subordinated facilities;
redeem any preference shares issued by our Company;
engage in any acts or things which may constitute public nuisance;
lend money or credit or make deposits with or advances to any entity,;
foregoing) all or any part of our Company’s property or assets charged to IDFC;
or reorganization;
undertake any guarantee obligations;
Agreement;
pay commission, fees or any other charges to the promoters, directors, managers or other
affiliates of our Company in connection with any such person furnishing any guarantee,
counter-guarantee or indemnity or any other instrument or security on behalf of our Company
or for any liability relating to or for purposes of this Agreement;
amend or modify our Company’s memorandum of association and articles of association.
Note: Our Company has created 2 (two) separate charges in favour of IDFC with respect to
this facility. Our Company is in the process of making the requisite filing for satisfaction of
the charge created by our Company on September 2, 2008.
a)
Non-Convertible Debentures (NCDs)
Our Company issued 2,000 11.25% Coupon Rate Secured Redeemable NCDs of face value of
`10,00,000 each and of the aggregate nominal value of `200.00 crores out of which `100.00
crores was through green shoe option on privately placed basis. A Debenture Trustee Deed cum
Mortgage Deed ("Debenture Deed") was entered into by our Company and Axis Trustee
Services Limited ("Debenture Trustee") on June 21, 2010. The NCDs were allotted as
following:
126
Canara Bank
Amount
Sanctioned
(` in cr.)
Date(s) of
documents
financing Amount
outstanding as
on February 28,
2013 (` in cr.)
50.00
500 NCDs Debenture Deed dated
aggregating June 21, 2010.
to `50.00
500 NCDs
aggregating
to `50.00
50.00
Punjab National 250 NCDs
aggregating
Bank
to `25.00
25.00
200 NCDs
aggregating
to `20.00
20.00
United Bank of 150 NCDs
aggregating
India
to `15.00
15.00
Vijaya Bank
100 NCDs
aggregating
to `10.00
10.00
Corporation
Bank
100 NCDs
aggregating
to `10.00
10.00
Oriental Bank of 100 NCDs
aggregating
Commerce
to `10.00
10.00
Bank
of 100 NCDs
aggregating
Maharashtra
to `10.00
10.00
Allahabad Bank
Syndicate Bank
Repayment
Schedule
and
Interest
Redeemable in 4
(four) equal half
yearly instalments
commencing from
September
25,
2013
Interest
Our
Company
shall pay interest
at the rate of
11.25%.
Description of Security and terms under the Debenture Deed:
(i)
Primary Security
•
First pari passu charge on all fixed assets of our Company, except assets pertaining to the
Captive Power Plant and Packing Line
The following is the summary of key terms under the Debenture Deed:
127
Uttam Galva Steels Limited – Placement Document Negative Covenants
Our Company shall not without the prior consent of the Debenture Trustee:
a)
b)
c)
remove any fixed assets or pull down any building or other structures forming a part of the
secured land;
declare any dividends;
sell or dispose of the secured land or create any charge or lien on the same.
Note: Our Company created a charge for an amount of `120,000,000 in favour of Unit Trust
of India on April 27, 1995 with the Charge ID 80064743. This charge has been satisfied and
our Company is in the process of making the requisite filing for satisfaction of the said
charge.
2. Unsecured Borrowings
As on February 28, 2013 the aggregate outstanding unsecured borrowing of our Company is `101.30
crores. The details of our unsecured borrowings are as follows:
(i)
Unsecured working capital facilities of `250.00 crores availed from Yes Bank
Our Company pursuant to a sanction letter ("Yes Bank Sanction Letter") dated January 29,
2013 availed fund based and non fund based facilities of `250.00 crores from Yes Bank ("Yes
Bank Facility") for import of raw materials, spare parts, components, capital goods and for
other working capital requirements of our Company. The following are the key terms set out
in the Sanction Letter:
(a)
The Yes Bank Facility shall be repayable within 6 months of the sanction.
(b)
Our Company has given an undated cheque for the facility amount to Yes Bank.
(c)
Rajinder Miglani has given a personal guarantee for the Yes Bank Facility.
As on February 28, 2013, `100.00 crores of the said facility remains outstanding.
(ii)
Unsecured working capital facilities of `94.00 crores availed from IDBI Bank ("IDBI")
Our Company pursuant to a sanction letter ("IDBI Sanction Letter") dated July 4, 2012
availed non fund based facilities of `94.00 crores from IDBI ("IDBI Facility") for working
capital requirements of our Company. The IDBI Facility shall be repayable before May 29,
2013.
As on February 28, 2013, there are no amounts outstanding for this facility.
(iii)
Unsecured working capital facilities of `100.00 crores availed from ICICI Bank Limited
("ICICI")
Our Company pursuant to a sanction letter ("ICICI Sanction Letter") dated May 31, 2012
availed non fund based facilities of `100.00 crores from ICICI ("ICICI Facility") for
procurement of raw materials, consumable stores, spares and tools and normal capital
expenditure of our Company. The ICICI Facility shall be repayable with 1 (one) year.
As on February 28, 2013, there are no amounts outstanding for this facility.
128
Uttam Galva Steels Limited – Placement Document (iv)
Unsecured interest free loan of `7.86 crores from SICOM Limited sanction letter March
31, 1999
Our Company pursuant to a sanction letter dated March 31, 1999 was sanctioned an
unsecured interest free loan of `7.86 crores by SICOM Limited.
As on February 28, 2013, `1.20 crores of the said loan remains outstanding.
(v)
Unsecured loan of `0.10 crores from Balaji Infra Projects Limited
Our Company is paying interest at the rate of 12% per annum and the loan is repayable by our
Company on demand. As on February 28, 2013, `0.10 crores of the said loan remains
outstanding.
129
Uttam Galva Steels Limited – Placement Document REGULATIONS AND POLICIES
The following is a summary of certain relevant regulations and policies that are currently applicable
to the business carried on by us. The regulations and policies set out below are not exhaustive and are
only intended to give general information to investors and are neither designed nor intended to be a
substitute for professional advice.
Our Company is governed by various legislations as applicable to us and our units at Khopoli, in
Maharashtra. Some of the key regulations applicable to us are summarised hereunder.
Environmental Regulations
A company has to comply with the provisions of the Environmental Protection Act, 1986, relevant
Forest Conservation Acts, Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention
and Control of Pollution) Act, 1981 and the Hazardous Waste (Management and Handling) Rules,
1989. A company is required to obtain and maintain statutory clearances relating to pollution control
and environment in relation to its power projects.
The Environment Impact Assessment Notification S.O. 1533, issued on September 14, 2006 (the
"EIA Notification") under the provisions Environment (Protection) Act 1986, prescribes that new
construction projects require prior environmental clearance of the Ministry of Environment and
Forests, GoI. The environmental clearance must be obtained from the Ministry of Environment and
Forests, GoI according to the procedure specified in the EIA Notification. No construction work,
preliminary or other, relating to the setting up of a project can be undertaken until such clearance is
obtained.
The Public Liability Insurance Act, 1991, imposes liability on the owner or controller of hazardous
substances for any damage arising out of any accident involving such hazardous substances. A list of
"hazardous substances" covered by the legislation has been enumerated by the GOI by way of a
notification. The owner or handler is also required to take out an insurance policy insuring against
liability under the legislation.
Industries Legislation
Factories Act, 1948 (the "Factories Act")
The Factories Act provides for a healthy working environment for the workers/ labourers. It not only
regulates the health, safety, welfare and other working conditions of workers in the factory, but also
the working hours of the workers and labourers.
Industries (Development and Regulation) Act, 1951
Under the New Industrial Policy dated July 24, 1991, all industrial undertakings are exempt from
licensing except for certain industries such as distillation and brewing of alcoholic drinks, cigars and
cigarettes of tobacco and manufactured tobacco substitutes, all types of electronic aerospace and
defence equipment, industrial explosives including detonating fuses, safety fuses, gun powder,
nitrocellulose and matches and hazardous chemicals and those reserved for the small scale sector. An
industrial undertaking, which is exempt from licensing, is required to file an Industrial Entrepreneurs
Memorandum ("IEM") with the Secretariat for Industrial Assistance, Department of Industrial Policy
and Promotion, Ministry of Commerce and Industry, Government of India, and no further approvals
are required.
130
Uttam Galva Steels Limited – Placement Document The Indian Boilers Act, 1923 and the Indian Boiler Regulations, 1950
The Indian Boilers Act, 1923 provides for mainly for the safety of life and Property of persons from
the danger of explosions of steam boilers and for achieving uniformity in registration and inspection
during operation and maintenance of boilers in India.
Labour and Employees Related Statutes
Industrial Disputes Act, 1947 (the "Industrial Dispute Act") and Industrial Dispute (Central) Rules,
1957 (the "Industrial Dispute Rules")
Industrial Dispute Act provides for the investigation and settlement of industrial disputes. It also
contains various provisions to prohibit strikes and lock-outs, declaration of strikes and lock-outs as
illegal and provisions relating to lay-off and retrenchment and closure, Conciliation and adjudication
of industrial disputes by; Conciliation Officers, a Board of Conciliation, Courts of Inquiry, Labour
Courts, Industrial Tribunals and a National Industrial Tribunal.
The Contract Labour (Regulation and Abolition Act), 1970 (the "Contract Labour Act")
The Contract Labour Act has been enacted to regulate the employment of contract labour in certain
establishments and for matters connected therewith. The Contract Labour Act provides for the
constitution of central and state advisory Boards to advise the concerned governments on matters
arising out of the administration of the Labour Act.
Employees Provident Fund and Miscellaneous Provisions Act, 1952 (the "EPF act")
Under the EPF Act, compulsory provident fund, family pension fund and deposit linked insurance are
payable to employees in factories and other establishments. The EPF Act provides that an
establishment employing more than 20 persons, either directly or indirectly, in any capacity
whatsoever, is either required to constitute its own provident fund or subscribe to the statutory
employee’s provident fund. The employer of such establishment is required to make a monthly
contribution to the provident fund equivalent to the amount of the employee’s contribution to the
provident fund. It is also required that a company maintains prescribed records and registers and filing
of forms with the concerned authorities. The EPF Act also prescribes penalties if payments are
avoided. Employees covered under the act include contract labour but exclude apprentices, trainees,
directors, working partners, domestic servants and contractors. Establishments can seek exemption
from any or all the provisions of the EPF Act.
Employees State Insurance Act, 1948 (the "ESI Act")
The ESI Act provides for the provision of benefits to employees in case of sickness, maternity and
employment injury. Under the act, employees receive medical relief, cash benefits, maternity benefits,
pension to dependents of deceased workers and compensation for fatal or other injuries and diseases.
Payments are made through a contributory fund. It applies to all factories including Government
factories (excluding seasonal factories), which employ 10 or more employees and carry on a
manufacturing process with the aid of power (20 employees where manufacturing process is carried
out without the aid of power). The ESI Act can also be extended to shops and establishments.
Generally, shops and establishments employing more than 20 employees as defined by the ESI Act,
are covered by the ESI Act.
131
Uttam Galva Steels Limited – Placement Document Minimum Wages Act, 1948 (the "Minimum Wages Act")
The Minimum Wages Act as amended, provides a framework for state governments in India to
stipulate a minimum wage applicable for a particular industry. The minimum wage may consist of a
basic rate of wages and a special allowance; or a basic rate of wages and the cash value of the
concessions in respect of supplies of essential commodities; or an all-inclusive rate allowing for the
basic rate, the cost of living allowance and the cash value of the concessions, if any. The Minimum
Wages Act specifically provides that workmen must be paid for overtime at overtime rates stipulated
by the Government. Contravention of the provisions of the Minimum Wages Act may result in
imprisonment for a term up to 6 (six) months or a fine up to `500, or both.
Payment of Bonus Act, 1965 (the "Payment of Bonus Act")
The object of the Bonus Act is to provide for the payment of bonus (linked with profit or productivity)
to persons employed in certain establishments and matters connected therewith. The Bonus Act
extends to the whole of India and is applicable to every factory and to every establishment wherein 20
or more workers are employed on any day during an accounting year. Under the Payment of Bonus
Act, an employee who has worked for a period of at least 30 (thirty) working days in a year is eligible
for bonus. The employees must be paid a minimum bonus which must be paid irrespective of the
existence of any allocable surplus. In case the allocable surplus exceeds the minimum bonus payable,
then the employer must pay bonus proportionate to the salary or wage earned during that period,
subject to a maximum of 20% of such salary or wage. The maximum bonus must not exceed `3,500.
Contravention of the provisions of the Payment of Bonus Act may result in imprisonment for a term
up to 6 (six) months or a fine up to `1,000, or both.
Payment of Gratuity Act, 1972 (the "Gratuity Act")
The Gratuity Act provides for a scheme for the payment of gratuity to employees engaged in factories,
mines, oilfields, plantations, ports, railway companies, shops or other establishments. The Gratuity
Act enforces the payment of 'gratuity', a reward for long service, as a statutory retiral benefit. The
Gratuity Act prescribes that employees employed in factories, shops and other establishments who
have put in continuous service of 5 (five) years, in the event of their superannuation, retirement,
resignation, death or disablement due to accidents or diseases. The rule of ‘five year continuous
service’ is relaxed in case of death or disablement of an employee. An employee is deemed to be in
‘continuous service’ for a period of at least 240 (two hundred and forty) days in a period of 12
(twelve) months or 120 (one hundred and twenty) days in a period of 6 (six) months immediately
preceding the date of reckoning, whether or not such service has been interrupted during such period
by sickness, accident, leave, absence without leave, lay-off, strike, lock-out or cessation of work not
due to the fault of the employee. Gratuity is calculated at the rate of 15 days’ wages for every
completed year of service with the employer. Presently, an employer must make a maximum gratuity
payout of `1,000,000 for an employee.
The Payment of Wages Act (the "Payment of Wages Act")
The Payment of Wages Act aims at regulating the payment of wages to certain classes of employed
persons. It provides for the imposition of fines and deductions and lays down wage periods and time
and mode of payment of wages. Thus, the Payment of Wages Act ensures payment of wages in a
particular form at regular intervals without unauthorized deductions.
132
Uttam Galva Steels Limited – Placement Document Maternity Benefit Act, 1961
The purpose of the Maternity Benefit Act, 1961 is to regulate the employment of pregnant women in
certain establishments for certain periods and to ensure that they get paid leave for a specified period
before and after childbirth, or miscarriage or medical termination of pregnancy. It provides, inter alia,
for payment of maternity benefits, medical bonus and prohibits the dismissal of and reduction of
wages paid to pregnant women. Contravention of the Maternity Benefit Act may result in
imprisonment for a term for not less than three months and up to one year and/or a fine not less than
`2,000 and up to `5000.
Intellectual Property Rights Regulations
Trade Marks Act, 1999 (the "Trademarks Act")
The Trade Marks Act governs the statutory protection of trademarks in India. In India, trademarks
enjoy protection under both statutory and common law. Indian trademark law permits registration of
trademarks for goods and services so as to indicate a connection in the course of trade between the
goods and some person having the right as proprietor to use the mark. A ‘mark’ may consist of a word
or invented word, signature, device, letter, numeral, brand, heading, label, name written in a particular
style and so forth. The Trademarks Act governs the registration, acquisition, transfer and infringement
of trademarks and remedies available to a registered proprietor or user of a trademark. The registration
of a trademark is valid for a period of 10 (ten) years and may be renewed in accordance with the
specified procedure.
Currently, a person desirous of obtaining registration of his trademark in other countries must make
separate applications in different languages and disburse different fees in the respective countries. The
Madrid Protocol, administered by the International Bureau of the World Intellectual Property
Organization ("WIPO"), of which India is a member, aims to facilitate global registration of
trademarks by enabling nationals of member countries to secure protection of trademarks by filing a
single application with one fee and in one language in their country of origin. This in turn is
transmitted to the other designated countries through the WIPO.
Tax related Legislation
Central Excise Act, 1944 (the "Central Excise Act")
The Central Excise Act seeks to impose an excise duty on excisable goods which are produced or
manufactured in India. The rate at which such a duty is imposed is contained in the Central Excise
Tariff Act, 1985. However, the Indian Government has the power to exempt certain specified goods
from excise duty by notification.
Value Added Tax, 2005 (the "VAT Act")
The levy of Sales Tax within the state is governed by the VAT Act and Rules of the respective states.
VAT has resolved the problem of Cascading effect (double taxation) that were being levied under the
hitherto system of sales tax. Under the current regime of VAT the trader of goods has to pay the tax
(VAT) only on the Value added on the goods sold. Hence VAT is a multi-point levy on each of the
entities in the supply chain with the facility of set-off of input tax- that is the tax paid at the stage of
purchase of goods by a trader and on purchase of raw materials by a manufacturer. Only the value
addition in the hands of each of the entities is subject to tax.
133
Uttam Galva Steels Limited – Placement Document Income Tax Act, 1961 (the "Income Tax Act")
Income Tax Act, 1961 is applicable to every Domestic / Foreign Company whose income is taxable
under the provisions of this Act or Rules made thereto depending upon its "Residential Status" and
"Type of Income" involved. U/s 139(1) every Company is required to file its Income tax Return for
the Previous Year by October of the Assessment Year .Other compliances like those relating to Tax
Deduction at Source, Fringe Benefit Tax, Advance Tax, Minimum Alternative Tax and like are also
required to be complied by every Company.
Customs Act, 1962 (the "Customs Act")
The provisions of the Customs Act and rules made there under are applicable at the time of import of
goods into India or at the time of export of goods. Any Company requiring to import or export any
goods is first required to get itself registered and obtain an IEC (Importer Exporter Code).
Central Sales Tax Act, 1956 (the "Central Sales Act")
In accordance with the Central Sales Tax Act, every dealer registered under the Central Sales Act
shall be required to furnish a return in Form I (Monthly/ Quarterly/ Annually), as required by the sales
tax laws of the state in which the assessee resides, together with treasury challan or bank receipt in
token of the payment of taxes due.
Miscellaneous
Shops and Establishments Act, 1948 (the "Shops and Establishment Act")
The Shops and Establishments Act was enacted to regulate the conditions of work and employment in
shops, commercial establishments, and residential hotels, restaurants, eating houses, theatres, other
places of public amusement or entertainment and other establishments. The Shops and Establishments
Act regulates the working hours, intervals, leaves for the shops and commercial establishments. It also
seeks to protect the health and safety of employees in shops and commercial establishments by setting
down standards of cleanliness, ventilation, lighting, precautions against fire and first aid.
Professional Tax
Professional tax is applicable to those citizens of India who are either involved in any profession, or
trade, calling or employment. Every person liable to pay such tax (other than a person earning salary
or wages, in respect of whom the tax is payable by the employer), shall obtain a certificate of
enrolment from the department of sales tax. The Each State Government of each state is responsible
empowered with the responsibility of for structuring as well as formulating the respective professional
tax criteria and is also required to collect funds through professional tax.
134
Uttam Galva Steels Limited – Placement Document BOARD OF DIRECTORS AND MANAGEMENT
The composition of the Board of Directors is governed by the provisions of the Companies Act and
the Listing Agreements. The Articles of Association provide that the number of directors shall not be
less than three or more than 12 unless otherwise approved in a general meeting.
Pursuant to the Companies Act, not less than two-thirds of the total number 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 following is the details of the Board of Directors as at the date of this Placement Document:
Name
Rajinder Miglani
Satya Pal Talwar
Pandurang Kakodkar
Shirish Parikh
Om Parkash Gahrotra
Swarna Prabha
Sukumar
Anuj R Miglani
Ankit Miglani
Ashok Kumar
Mahendru
Sharad Tudekar
Age
67
73
76
74
66
62
Nature of directorship
Chairman
Independent Director
Director (Nominee – LIC)
DIN
00286788
00059681
00027669
00941756
00936696
01327918
Director since
December 30, 1988
May 09, 2009
September 10, 1999
September 12, 1987
January 21, 2012
September 22, 2009
39
34
67
Managing Director
Deputy Managing Director
Whole Time Director
(Commercial)
Whole Time Director (Works)
00287097
00444956
00286892
November 10, 2001
July 29, 2005
October 28, 2005
00138678
October 28, 2005
75
Brief Biographies of our Directors:
Rajinder Miglani
Rajinder Miglani, aged 67, is the Chairman of our Company. He holds a Bachelors degree in Science
and has over than 46 years of experience in the Steel Industry. He is an Industrialist and joined the
Board as the Promoter Director. He has been associated with our Company since its incorporation in
1985.
Satya Pal Talwar
Satya Pal Talwar, aged 73, is the Director of our Company. He holds a Bachelor’s degree in Arts and
a Bachelor’s degree in Law. He is also a Certified Associate of the Indian Institute of Bankers. He has
an experience of more than 43 years in operational and policy formulation in Commercial & Central
Banking. He has served as the 'Chairman and Managing Director' of renowned Banks such as Bank of
Baroda, Union Bank of India and Oriental Bank of Commerce. He has also held the coveted position
of deputy Governor of the RBI from 1994 to 2001. He joined the Board of our Company in May
2009.
Pandurang Kakodkar
Pandurang Kakodkar, aged 76, is the Director of our Company. He holds a Masters degree in Arts
(Economics). He has more than 50 years of experience in Banking Sector. He is a retired Chairman of
SBI. He joined the Board of our Company in September 1999.
Shirish Parikh
135
Uttam Galva Steels Limited – Placement Document Shirish Parikh, aged 74 years, is a Director of our Company. He holds a Bachelor’s degree in Civil
Engineering. He has professional experience of more than 54 years in the Steel Industry. He joined
the Board of our Company in September 1987.
Om Parkash Gahrotra
Om Parkash Gahrotra, aged 66 years, is a Director of our Company. He is a member of the Indian
Administrative Service (IAS). He belongs to the 1969 batch of Maharashtra Cadre of the IAS. He
retired as an Additional Chief Secretary to the Government of Maharashtra. He has worked as Senior
Executive Director of the Securities and Exchange Board of India (SEBI) and was a SEBI Nominee
on the Board of Directors of the NSE. He has a professional experience of more than 40 years. He
joined the Board of our Company in January 2012.
Swarna Prabha Sukumar
Swarna Prabha Sukumar, aged 62 years, is a nominee Director of LIC on our Board. She holds a
Bachelor’s degree in Science. She has an experience of more than 33 years in LIC. She retired as
Executive Director, U&R Department, LIC. She joined the Board of our Company in September
2009.
Anuj R Miglani
Anuj R Miglani, aged 39 years, is the Managing Director of our Company. He holds a Bachelor’s
degree in Mechanical Engineering from Imperial College of Science and Technology, London. He
manages the overall operations at the works and also plays a significant role in overall management of
our Company. He joined the Board of our Company in November 2001.
Ankit Miglani
Ankit Miglani, aged 34 years, is the Deputy Managing Director of our Company. He holds a
Bachelor’s degree in Economics with specialization in Finance from Wharton School, University of
Pennsylvania, Philadelphia, U.S.A. He currently looks after all major commercial functions such as
finance and accounts, international marketing and purchase of critical raw materials. He joined the
Board of our Company in July, 2005.
Ashok Kumar Mahendru
Ashok Kumar Mahendru, aged 67, is the Director (Commercial) of our Company. He holds a
Bachelor’s degree in Technology and FIE & MIMA. He joined our Company in 1995 and was
appointed as the Executive Director of our Company from April 1, 1999. He looks after the
commercial aspects of the company. He has over 46 years of experience in Steel Industry. He joined
the Board of our Company in October, 2005.
Sharad Tudekar
Sharad Tudekar, aged 75, is the Director (Works) of our Company. He is a graduate engineer in
Metallurgy from Pune University. He has an experience of over 51 years in the steel industry. He
joined our Company in 1998 as President (Works-Donvat and PRC) and was appointed as an
executive director with effect from April 1, 2000. He joined the Board of our Company in October,
2005.
Corporate Governance
136
Uttam Galva Steels Limited – Placement Document Our Company believes that it is in compliance with the requirements of applicable corporate
governance regulations, including the listing agreement between our Company and the Stock
Exchanges ("Listing Agreement") in respect of the constitution of the Board of Directors and the
various committees of the Board of Directors of our Company.
The corporate governance framework is based on an effective independent Board of Directors,
separation of the supervisory role of the Board of Directors from the executive management team and
constitution of the committees of the Board of Directors, as required under applicable law.
As a listed company, we are in compliance with the applicable provisions of the Listing Agreement
pertaining to corporate governance, including appointment of independent directors and constitution
of Committees. The Board of Directors functions either as a full Board or through various committees
constituted to oversee specific operational areas. Our Company’s management provides the Board of
Directors with detailed reports on a periodic basis.
Committees of the Board of Directors
There are 5 Board level committees of our Company, which have been constituted and function in
accordance with the relevant provisions of the Companies Act and the Listing Agreement. These are
(i) Audit Committee, (ii) Shareholders’/ Investors’ Grievance Committee, (iii) Remuneration
Committee (iv) Committee of Directors, and (v) QIP Issue Committee. A brief note on each
Committee, its scope and composition is given below:
Audit Committee
The audit committee was re-constituted at the meeting of the Board of Directors on January 21, 2012.
The committee consists of three independent directors.
Name
Shirish Parikh
Pandurang Kakodkar
Om Parkash Gahrotra
Designation in Committee
Chairman
Member
Member
Nature of Directorship
The terms of reference and powers of the audit committee are as mentioned in Clause 49 II (A) to (E)
of the Listing Agreement entered into with the Stock Exchanges and read with Section 292A of the
Companies Act. It includes overseeing our Company’s financial reporting process, reviewing with the
management, the financial statements and adequacy of the internal audit function, internal contract
and to discuss significant internal audit findings, statutory compliances and issues related to risk
management and compliances.
All members of the Audit Committee are Non-Executive Independent Directors. They are financially
literate and possess sound knowledge of accounts, audit, finance etc. The Executive Chairman,
Director (Finance) and CFO, the internal auditor and the representatives of statutory auditors are
invitees to the meetings of the audit committee. The cost auditors appointed by the Company u/s 233B
of the Companies Act, 1956 attends the audit committee meeting whenever the cost audit report is
discussed. The heads of various operations are invited to the meetings, as and when required.
R Agrawal, Senior Vice President & Company Secretary acts as the Secretary of the Audit
Committee.
Shareholders’/ Investors’ Grievance Committee
137
Uttam Galva Steels Limited – Placement Document The Committee was re-constituted at the meeting of the Board of Directors on May 30, 2011. The
Committee is looking after the Shareholders’ / Investors’ Grievance and redressal of investors’ /
shareholders’ complaints related to transfer of shares, non-receipt of balance sheets, non-receipt of
declared dividends etc. The committee consists of two directors, one of whom is an Independent
Director.
Name
Shirish Parikh
Chairman
Member
Whole Time Director
R Agrawal – Sr. Vice President & Company Secretary of our Company acts as the Secretary to the
Committee.
Our Company resolved seven complaints from the shareholders that were received during the three
month period ended December 31, 2012. There are no outstanding complaints as on December 31,
2012.
Remuneration / Compensation Committee
The Committee was re-constituted at the meeting of the Board of Directors on January 21, 2012. The
committee comprises of three Independent Directors.
Name
Shirish Parikh
Chairman
Member
Member
Pursuant to Clause 49 of the Listing Agreement and Schedule XIII to the Companies Act, 1956, the
terms of reference of the Remuneration Committee is to determine our Company’s policy on
remuneration payable to the Executive Directors including pension, and any compensation payments
and also to approve payment of remuneration to the Managing or Whole Time Directors.
Committee of Directors
The Committee was re-constituted at the meeting of our Board of Directors on May 30, 2011, wherein
the Board has delegated all powers conferred on the Board to this committee. The committee
comprises of three Directors of whom one is an Independent Director.
Name
Rajinder Miglani
Shirish Parikh
Chairman
Member
Member
Executive Chairman
Whole Time Director
QIP Issue Committee
The Committee was constituted at the meeting of our Board on February 26, 2013 wherein the Board
delegated all powers conferred on it for raising funds through this Placement. The committee
comprises of three Directors of whom one is an Independent Director while the quorum is two
directors.
Name
138
Uttam Galva Steels Limited – Placement Document Name
Rajinder Miglani
Shirish Parikh
Chairman
Member
Member
Executive Chairman
Whole Time Director
Policy on Disclosures and Internal Procedure for Prevention of Insider Trading
Pursuant to Regulation 12(1) of the SEBI (Prohibition of Insider Trading) Regulations, 1992, our
Company has implemented a code of internal procedures and conduct for prevention of insider
trading, to comply with such regulations.
Shareholding of the Directors
Our Company’s Articles of Association do not require our Directors to hold any qualification shares
in our Company. The table below sets forth the number of Equity Shares held by the Directors of our
Company, as at December 31, 2012:
Name and
Designation
Rajinder Miglani
Satya Pal Talwar
Pandurang Kakodkar
Shirish Parikh
Om Parkash Gahrotra
Swarna Prabha
Sukumar
Anuj R Miglani
Ankit Miglani
Ashok Kumar
Mahendru
Sharad Tudekar
Designation
Number of Equity
Shares
Chairman
Director
Director
Director
Director
Director (Nominee –
LIC)
Managing Director
Deputy Managing
Director
Director (Commercial)
Director (Works)
13,91,855
--53,300
---
Percentage of Total
Outstanding Equity
Shares
1.13
------
13,02,094
13,00,000
1.06
1.06
--
--
--
--
Compensation of Directors
The Remuneration Committee determines and recommends to the Board, the compensation of the
Directors and managers.
The table below sets forth the details of the sitting fees and commission paid to the Directors during
the year ended March 31, 2012:
(Amount in `)
Name
Salary
Sitting Fee
Total
Rajinder Miglani
1,11,00,000
-1,11,00,000
Satya Pal Talwar
-10,000
10,000
Pandurang Kakodkar
-40,000
40,000
Shirish Parikh
-1,04,000
1,04,000
Narayan Datar*
-51,000
51,000
-50,000
50,000
Anuj R Miglani
1,15,00,000
-1,15,00,000
Ankit Miglani
1,15,00,000
-1,15,00,000
139
Uttam Galva Steels Limited – Placement Document Name
Salary
Sitting Fee
Total
36,00,000
-36,00,000
SharadTudekar
36,00,000
-36,00,000
* Om Parkash Gahrotra was appointed on the Board of Directors after the demise of Narayan Datar.
Following are the current details of remuneration of the executive directors of our Company.
Rajinder Miglani
(a)
(b)
(c)
(d)
(e)
(f)
(g)
`10,00,000 per month by way of salary, perquisites and other allowances.
Contribution to Provident Fund and Superannuation Fund as per rules of our Company.
Gratuity payable at a rate not exceeding half a month’s salary for each completed year of
service.
Leave and encashment of leave as per the rules of our Company.
Free use of car with driver and free telephone facility at the residence of the director for the
business of our Company.
Such other benefits and amenities as may be provided by our Company to other senior
officers from time to time.
Our Company shall pay to or reimburse the Chairman all costs, charges and expenses that
may have been or may be incurred by him for the purpose of or on behalf of our Company.
In the event of the loss or inadequacy of profit in any financial year during his tenure as the Chairman,
the aforesaid remuneration will be treated as minimum Remuneration subject to approval of Central
Government, if any, as may be required.
Anuj R Miglani
(a)
(b)
(c)
(d)
(e)
(f)
(g)
service.
Free use of Car with driver and free telephone facility at the residence of the Director for the
business of our Company.
Our Company shall pay to or reimburse the Managing Director all costs, charges and
expenses that may have been or may be incurred by him for the purpose of or on behalf of our
Company.
In the event of the loss or inadequacy of profit in any financial year during his tenure as the Managing
Director, the aforesaid remuneration will be treated as minimum remuneration subject to approval of
Central Government, if any, as may be required.
Ankit Miglani
(a)
(b)
(c)
(d)
(e)
service.
Free use of car with driver for the business of our company and free telephone facility at the
140
Uttam Galva Steels Limited – Placement Document (f)
director’s residence.
In the event of the loss or inadequacy of profit in any financial year during his tenure as the Deputy
Managing Director, the aforesaid remuneration will be treated as minimum remuneration. Further, our
Company shall pay to or reimburse to the Deputy Managing Director all costs, charges and expenses
that may have been or may be incurred by him for the purpose of or on behalf of our Company.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
` 3, 00,000 per month by way of salary, perquisites and other allowances.
service.
Free use of car with driver for the business of our Company and free telephone facility at the
residence of the director.
Our Company shall pay to or reimburse the director all costs, charges and expenses that may
have been or may be incurred by him for the purpose of or in behalf of our Company.
In the event of the loss or inadequacy of profit in any financial year during his tenure as a Director
(Commercial), the aforesaid remuneration will be treated as minimum remuneration subject to
approval of Central Government. The variation and increase in the remuneration of all Whole-Time
Directors shall not exceed 10% of the net profits of the Company and the limits specified in the
Schedule XIII of the Companies Act, 1956.
The appointment of the director may be terminated at any time by giving 60 days notice.
Sharad Tudekar
(a)
(b)
(c)
(d)
(e)
(f)
(g)
`3, 00,000 per month by way of salary, perquisites and other allowance.
Contribution to provident fund and superannuation fund as per rules of our Company.
service.
Free use of car with driver for the business of our Company and free telephone facility at
Residence.
Our Company shall pay to or reimburse the Director all costs, charges and expenses that may
have been or may be incurred by him for the purpose of or on behalf of our Company.
In the event of the loss or inadequacy of profit in any financial year during his tenure as the Director
(Works), the aforesaid remuneration will be treated as minimum remuneration subject to approval of
Central Government.
The variation and increase in the remuneration of all Whole-Time Directors shall not exceed 10% of
the net profits of the Company and the limits specified in the Schedule XIII of the Companies Act.
The appointment of the director may be terminated at any time by giving 60 days notice.
141
Uttam Galva Steels Limited – Placement Document Interest of Directors
All Directors, including 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.
The Directors, including independent Directors, may also be regarded as interested in the Equity
Shares, if any, held by them and also to the extent of any dividend payable to them and other
distributions in respect of the shares of our Company. The Directors, including independent Directors,
may also be regarded as interested in Shares held by or that may be subscribed by and allotted to the
companies, firms and trust, in which they are interested as directors, members, partners and trustees.
All of the 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 capacity. Except as
otherwise stated in this Placement Document in "Notes to Accounts", our Company has not entered
into any contract, agreements, arrangements during the preceding two years from the date of this
Placement Document in which the Directors are interested directly or indirectly and no payments have
been made to them in respect of these contracts, agreements, arrangements which are proposed to be
made with them.
Our Directors have not taken any loans from our Company.
For details, please see "Financial Statements".
There are no other pecuniary relationships or transactions between the Directors and our Company.
Borrowing Powers of the Board of Directors
Pursuant to the approval of the shareholders of our Company dated July 26, 2008, the Board of
Directors is authorized to borrow up to an aggregate amount not exceeding `5000 Crores.
Senior Management Personnel of our Company
Following are our senior management personnel:
Sunil Prakash
Sunil Prakash, aged 58 years, is the Director and Chief Executive Officer of our Company. He has a
Bachelor’s degree in Metallurgical Engineering from IT, Banaras Hindu University, Varanasi. He has
completed a one year senior leadership management programme from INSEAD, France. He has about
37 years experience in the sales, marketing and operations verticals in the steel and automotive
industry. He has worked with various organizations like Tata Steel, JSW, Tata Motors, Ispat
Industries, Escorts and LML.
142
Uttam Galva Steels Limited – Placement Document Gursharn Sawhney
Gursharn Sawhney, aged 59 years, is the Director (Finance) and Group Chief Financial Officer of our
Company. He has a Bachelor’s degree in Science. He is a qualified Chartered Accountant from the
Institute of Chartered Accountants of India and a qualified Company Secretary from the Institute of
Company Secretaries of India. He also has a post graduate diploma in business management from
XLRI. He has over 36 years of experience in finance and accounts with Companies like Batliboi and
Company and Ispat Industries. He specializes in project financing.
R Agrawal
R Agrawal, aged 53 years, is a senior vice president and the company secretary of our Company. He
has a Masters degree in Commerce and is a qualified Company Secretary from the Institute of
Company Secretaries of India. He has over 30 years of experience in company secretarial and legal
functions of organisations like J.L Morison, Rasoi Group, Ashoka Cement (Steel Division) and K.
Raheja Group.
Shareholding of the Key Managerial Personnel
The table below sets forth the number of Equity Shares held by the key managerial personnel of our
Company, as at December 31, 2012:
Name and
Designation
Sunil Prakash
Gursharn Sawhney
R Agrawal
Designation
Director and Chief Executive Officer
Director (Finance) and Group Chief
Financial Officer
Senior Vice President and Company
Secretary
Organisational Structure
143
Number of
Equity
Shares
-14,234
Percentage of
Total Outstanding
Equity Shares
0.00
0.00
--
0.00
Uttam Galva Steels Limited – Placement Document PRINCIPAL SHAREHOLDERS
The following table presents information regarding the ownership of the Equity Shares as of
December 31, 2012.
Category of Shareholder
No. of
Shareholders
Total No.
of Shares
Total No. of
Shares held in
Dematerialized
Form
Total
Shareholding as a
% of total No. of
Shares
As a
As a %
% of
of
(A+B) (A+B+C)
Shares pledged
or
otherwise
encumbered
Number
As a
of
% of
shares
Total
No. of
Shares
8
5961700
5961700
4.88
4.88
0.00
0.00
5
13
39304520
45266220
39304520
45266220
32.15
37.02
32.15
37.02
2502500
2502500
6.37
5.53
1
41327931
41327931
33.80
33.80
0.00
0.00
1
14
41327931
86594151
41327931
86594151
33.80
70.83
33.80
70.83
0.00
2502500
0.00
2.89
17
11
17
37800
18595
18663253
0
7995
18648353
0.03
0.02
15.27
0.03
0.02
15.27
0.00
0.00
0.00
0.00
0.00
0.00
45
18719648
18656348
15.31
15.31
0.00
0.00
456
2139571
2087816
1.75
1.75
0.00
0.00
28504
7981221
6744029
6.53
6.53
0.00
0.00
72
3100447
2983947
2.54
2.54
0.00
0.00
Clearing Members
Trusts
NRI/OCBs
Sub-Total (B)(2)
131
2
408
29573
450880
800
3273385
16946304
450880
800
418828
12686300
0.37
0.00
2.68
13.86
0.37
0.00
2.68
13.86
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Total Public Shareholding
(B)= (B)(1)+(B)(2)
TOTAL (A)+(B)
29618
35665952
31342648
29.17
29.17
0.00
0.00
29632
122260103
117936799
100.00
100.00
Shareholding of Promoter
and Promoter Group
Indian
Individuals/
Undivided Family
Bodies Corporate
Sub Total(A)(1)
Hindu
Foreign
Bodies Corporate
Sub Total(A)(2)
Total
Shareholding
of
Promoter
and Promoter
Group (A)= (A)(1)+(A)(2)
Public shareholding
Institutions
Mutual Funds/ UTI
Financial Institutions / Banks
Foreign
Institutional
Investors
Sub-Total (B)(1)
Non-institutions
Bodies Corporate
Individuals
i. Individual shareholders
holding nominal share capital
up to Rs 1 lakh
ii. Individual shareholders
holding nominal
share
capital in excess of `1 lakh.
Any Other (specify)
144
2502500
2.05
Uttam Galva Steels Limited – Placement Document As of December 31, 2012, the shareholding of our Promoter and Promoter Group was as follows:
Name of the shareholder
Ankit Miglani
Anuj R Miglani
Archana Miglani
Neelam Rajinder Miglani
Priyanka Miglani
Rajinder
Uttamchand
Miglani
Sheetal Miglani
Sudiksha Miglani - Minor
(U/G Anuj R Miglani)
Archisha Investments Pvt.
Ltd.
Sainath Trading Company
Pvt. Ltd.
Kredence Multi Trading Ltd.
Uttam Exports Pvt. Ltd.
Shree Uttam Steel & Power
Ltd.
Arcelormittal
Netherlands
BV
Total
Details of Shares held
Encumbered shares (*)
Number of
shares held
No.
As a
% of
grand
total
(A)
+(B)
+( C )
As a
percent
age
Details of warrants
As a % of
grand total
(A)+(B)+(
C) of subclause (I)(a
)
Number
of
warrant
s
held
As a %
total
number
of
warrants
of the
same
class
Total shares
(including
underlying
shares
assuming full
conversion of
warrants and
convertible
securities) as a
% of diluted
share capital
1300000
1302094
307500
1127501
307500
1391855
1.06
1.07
0.25
0.92
0.25
1.14
0
0
0
0
0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0
0
0
0
0
0
0.00
0.00
0.00
0.00
0.00
0.00
1.06
1.07
0.25
0.92
0.25
1.14
203750
21500
0.17
0.02
0
0
0.00
0.00
0.00
0.00
0
0
0.00
0.00
0.17
0.02
5849878
4.78
0
0.00
0.00
0
0.00
4.78
3323600
2.72
0
0.00
0.00
0
0.00
2.72
14921063
7324379
7885600
12.20
5.99
6.45
0
2502500
0
0.00
0.00
0.00
0.00
0.00
0.00
0
0
0
0.00
0.00
0.00
12.20
5.99
6.45
41327931
33.80
0
0.00
0.00
0
0.00
33.80
86594151
70.83
2502500
2.89
2.05
0
0.00
70.83
Each person or entity known to our Company other than the Promoters and Promoter group entities
which beneficially own more than 1% of its outstanding Equity Shares as of December 31, 2012 is
listed below. Each shareholder identified below is both the holder on record and the beneficial owner
with sole power to vote and invest the Equity Shares listed next to its name below:
Name of the shareholder
Cresta Fund Limited
Prime India Investment
Fund Ltd.
Sanjeev Gupta
Number
shares held
of
Shares as
a
percentag
e of total
number
of shares
Details of warrants
Details
of
securities
Number of
warrants
held
Number of
convertibl
e
securities
held
As a %
total
number of
warrants of
the
same
class
convertible
% w.r.t total
number of
convertible
securities of
the
same
class
Total
shares
(including
underlying shares
assuming full
conversion of
warrants and
convertible
securities)
as a % of diluted
share
capital
12061801
9.87
0
0
9.87
5912833
2714700
4.84
2.22
0
0
0
0
4.84
2.22
As on December 31, 2012 there were no locked-in shares and outstanding depository receipts.
145
Uttam Galva Steels Limited – Placement Document PLACEMENT PROCEDURE
Below is a summary intended to present a general outline of the procedure relating to the bidding,
payment, allocation and allotment of the Equity Shares. The procedure followed in the Placement may
differ from the one mentioned below and prospective Investors are assumed to have apprised
themselves of the same from our Company or the GC-BRLM. Prospective Investors are advised to
inform themselves of any restrictions or limitations that may be applicable to them. For further
details, see the sections "Distribution of Shares", "Distribution and Solicitation Restrictions" and
"Transfer Restrictions".
Qualified Institutions Placements
The Placement is being made in reliance upon Chapter VIII of the SEBI Regulations mechanism of
Qualified Institutions Placement ("QIP"), whereunder an Indian listed company may issue and allot
equity shares/fully convertible debentures/partly convertible debentures/ non-convertible debt
instruments along with warrants or any other security (excluding warrants) which are convertible into
or exchangeable with equity shares at a later date in a QIP to QIBs as defined in Regulation 2(l) (zd)
of the SEBI Regulations, provided that:
•
A special resolution approving the QIP has been passed by its shareholders. Such special
resolution must specify that that the allotment of securities is proposed to be made pursuant to
the QIP;
•
equity shares of the same class of such company are listed on a stock exchange in India that
has nation-wide trading terminals for a period of at least one year as on the date of issuance of
notice to its shareholders for convening the general meeting to pass the special resolution; and
•
such company complies with the minimum public shareholding requirements set out in
Securities Contracts (Regulations) Rules, 1957.
The aggregate of the proposed Qualified Institutions Placement and all previous Qualified Institutions
Placements made in the same financial year shall not exceed five times the net worth of the issuer as
per the audited balance sheet of the previous financial year.
The relevant date for the determination of Floor Price for the issue of the Equity Shares means the
date of the meeting in which our Board or any Committee thereof decides to open the Placement.
Our Company has applied for and received in-principle approvals from BSE and NSE vide their
letters dated March 25, 2013 and March 25, 2013 under Clause 24(a) of the Listing Agreement for the
listing of the Equity Shares proposed to be issued pursuant to the Issue on the Stock Exchanges. We
have filed a copy of the Preliminary Placement Document and the Placement Document with the
Stock Exchanges.
There is a minimum pricing requirement calculated in accordance with Regulation 85 of the SEBI
Regulations. The Floor Price of the Equity Shares shall not be less than the average of the weekly
high and low of the closing prices of the related equity shares of such issuer quoted on the stock
exchange during the two weeks preceding the relevant date. Pursuant to an amendment to the SEBI
Regulations, an issuer may offer a discount of not more than 5% on the price calculated for the QIP
as above, subject to the approval of the shareholders by a special resolution pursuant to Regulation
82(a) of the SEBI Regulations. We are thus entitled to provide a discount on the price calculated for
the QIP.
146
Uttam Galva Steels Limited – Placement Document The ‘relevant date’ referred to above means the date of the meeting in which the board of our
Company or the committee of directors duly authorised by the board of our Company decides to open
the proposed Placement; and the "stock exchange" means any of the recognised stock exchanges in
which the equity shares of the Placement of the same class are listed and on which the highest trading
volume in such shares has been recorded during the two weeks immediately preceding the relevant
date.
At least 10% of the equity shares issued to QIBs must be allotted to mutual funds, provided that, if
this portion or any part thereof to be allotted to mutual funds remains unsubscribed, it may be allotted
to other QIBs.
QIBs are not allowed to withdraw their Bids after the closure of the Placement.
Equity shares must be allotted within twelve months from the date of the shareholders resolution
approving the QIP. The equity shares issued pursuant to the QIP must be issued on the basis of a
placement document that shall contain all material information including the information specified in
Schedule XVIII of the SEBI Regulations. The preliminary placement document and placement
document are private documents provided to select investors (not more than 49) through serially
numbered copies and is required to be placed on the website of the concerned stock exchange and of
the issuer 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.
Pursuant to the provisions of Section 67 of the Companies Act, for a transaction that is not a public
offering, an invitation or offer cannot be made to more than 49 persons.
The minimum number of allottees for each QIP shall not be less than:
•
two, where the issue size is less than or equal to `250 crore; and
•
five, where the issue size is greater than `250 crore.
No single allottee shall be allotted more than 50% of the issue size. QIBs that belong to the same
group or that are under common control shall be deemed to be a single allottee. The issuer shall
furnish a copy of the Preliminary Placement Document and this Placement Document to each stock
exchange on which its Equity Shares are listed. The aggregate of the proposed qualified institutions
placement shall be made in the same financial year and shall not exceed five times the networth of the
issuer in accordance with the audited balance sheet of the previous financial year.
Securities/ Equity Shares allotted to a QIB pursuant to a QIP shall not be sold/ transferred for a period
of one year from the date of allotment, except on a recognized stock exchange in India.
Placement Procedure
1.
Our Company and the GC-BRLM shall circulate the serially numbered Preliminary
Placement Document, the Placement Document, the Bid-cum Application Form and the
Placement Document either in electronic form or physical form to not more than 49 QIBs
identified by it in consultation with our GC-BRLM.
2.
The list of QIBs to whom the Bid cum Application Form is to be delivered shall be
determined by the GC-BRLM in consultation with our Company. The GC-BRLM shall
deliver to such QIBs Bid Cum Application Form. Unless a serially numbered Preliminary
Placement Document along with the Application Form is addressed to a particular QIB, no
invitation to subscribe shall be deemed to have been made to such QIB. Even if such
documentation were to come into the possession of any person other than the intended
147
Uttam Galva Steels Limited – Placement Document recipient, no offer or invitation to offer shall be deemed to have been made to such person.
3.
Our Company shall intimate the Bid Opening Date to the Stock Exchanges.
4.
QIBs may submit their Bids through Bid cum Application Form including any revision
thereof, during the bidding period to the GC-BRLM.
5.
QIBs may submit such Bid cum Application Forms to the GC-BRLM and would have to
indicate the following in the Bid Cum Application Form:
a)
Full Official name of the QIB to whom Equity Shares are to be Allotted;
b)
Number of Equity Shares Bid for;
c)
Price at which they are agreeable to subscribe for the Equity Shares, provided that
QIBs may also indicate that they are agreeable to submit Bid cum Application Form
at Cut-off Price (i.e. the Placement Price of the Equity Shares which shall be
determined by our Company in consultation with the GC-BRLM at or above the
Floor Price); and
d)
The details of the depository account(s) to which the Equity Shares should be
credited.
Note: Each sub-account of an FII, other than a sub-account which is a foreign
corporate or foreign individual, will be considered as an individual QIB and separate
Bid cum Application Forms would be required from each such sub-account for
submitting Bids. FIIs or sub-accounts of FIIs, are required to indicate the SEBI FII/
sub-account registration no. in the Bid cum Application Form
6.
Once a duly filled Bid cum Application Form is submitted by a QIB, such Bid cum
Application Form constitutes an irrevocable offer and cannot be withdrawn after the Bid
Closing Date. The Bid may be revised till Bid Closing Date, for which the QIB will have to
revise the Bid in a Revision Form available with GC-BRLM. Revision Forms received after
the closure of the Placement on Bid Closing Date by giving intimation to the Stock
Exchanges shall not be considered as valid and the original Bid will stand.
7.
Upon receipt of the duly completed Bid cum Application Forms received from the QIBs who
have received serially numbered Preliminary Placement Document, our Company shall, in
consultation with the GC-BRLM, after the Bid Closing Date, decide:
(i)
the price at which the Equity Shares will be offered ("Placement Price"), which shall
be at or above the Floor Price subject to the discount as mentioned earlier and;
(ii)
the number of Equity Shares to be issued, in each case, in consultation with the GCBRLM. Our Company shall notify the Stock Exchanges of the Placement Price. On
determination of the Placement Price, the GC-BRLM will send the Confirmation of
Allocation Note ("CAN") to the QIBs to whom an allocation shall be made. The
dispatch of the CAN shall be deemed a valid, binding and irrevocable contract for the
QIBs to pay the entire Placement Price for all the Equity Shares allocated to such
QIBs. The CAN shall contain details of the number of Equity Shares Allocated to the
QIB, the payment instructions, including details of the amount payable by the QIB for
the allotment of Equity Shares in its name, and the Pay-In Date as applicable to the
respective QIB. The decision of our Company and the GC-BRLM in this regard shall
be at their sole and absolute discretion, and may not be proportionate to the number of
Equity Shares applied for.
8.
The bid Closing Date shall be notified to the Stock Exchanges and the QIBs shall be deemed
to have been given notice of such date after the receipt of the Bid cum Application Form.
148
QIBs shall make payment of the entire application monies to the Escrow Account of our
Company 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, the Board of Directors or a duly
constituted committee of our Company will approve Allotment of the Equity Shares pursuant
to a Board resolution, as per the details provided in their respective CANs. Our Company
shall not allot Equity Shares to more than 49 QIBs to whom an invitation or offer has been
made. Our Company shall intimate to the Stock Exchanges of the details of the Allotment.
11.
After adopting the Allotment resolution and prior to crediting the Equity Shares into the
Depository Participant Accounts of the QIBs, our Company shall apply for listing approval of
the BSE and NSE for listing of the Equity Shares.
12.
After receipt of the listing approval of the BSE and NSE, our Company shall credit the Equity
Shares into the Depository Participant accounts of the QIBs in accordance with the details
submitted by the QIBs in the Bid cum Application Form.
13.
Our Company shall then apply for the final trading permissions from the Stock Exchanges.
14.
The Equity Shares that have been so allotted and credited to the Depository Participant
accounts of the QIBs shall be eligible for trading on the Stock Exchanges only upon the
receipt of final trading approval from the Stock Exchanges.
15.
As per the applicable laws, the Stock Exchanges shall notify the final trading permissions,
which are ordinarily available on their websites, and our Company shall communicate the
receipt of the final trading permissions from the Stock Exchanges to those QIBs to whom the
Equity Shares have been allotted. Our Company and the GC-BRLM shall not be responsible
for any delay or non-receipt of the communication of the final trading and listing 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(l) (zd) of the SEBI Regulations, and not otherwise excluded
pursuant to Regulation 86 of Chapter VIII of the SEBI Regulations, are eligible to invest.
(i)
mutual fund, venture capital fund and foreign venture capital investor registered with the
SEBI;
(ii)
a foreign institutional investor and sub-account (other than a sub-account which is a foreign
corporate or foreign individual), registered with the SEBI;
(iii)
a public financial institution as defined in section 4A of the Companies Act, 1956;
(iv)
a scheduled commercial bank;
(v)
a multilateral and bilateral development financial institution;
(vi)
a state industrial development corporation;
(vii)
an insurance company registered with the Insurance Regulatory and Development Authority;
(viii) a provident fund with minimum corpus of twenty five crore rupees;
(ix)
a pension fund with minimum corpus of twenty five crore rupees;
(x)
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;
(xi)
insurance funds set up and managed by army, navy or air force of the Union of India;
(xii)
Insurance funds set up and managed by the Department of Posts, India; and
(xiii) Alternative investment funds registered with SEBI.
149
Uttam Galva Steels Limited – Placement Document Please note that pursuant to amendments to the SEBI Regulations, a sub-account that is a
foreign corporate or foreign individual is no longer included under the definition of a QIB.
Under Regulation 86 of Chapter VIII of the SEBI Regulations, no allotment shall be made, either
directly or indirectly, to any QIB who is a promoter or any person related to the promoter(s) of our
Company. For this purpose, any QIB who has all or any of the following rights shall be deemed to
be a person related to the promoters:
•
rights under a shareholders’ agreement or voting agreement entered into with
promoters of our Company or persons related to the promoters of our Company;
•
veto rights; or
•
the right to appoint a nominee director on the Board of our Company,
unless a QIB has acquired any of these rights in its capacity as a lender to our Company and
such QIB does not hold any shares in our Company.
FIIs are permitted to participate through the portfolio investment scheme. FIIs are
permitted to participate in the Placement, subject to compliance with all applicable laws
and such that the shareholding of the FII does not exceed the specified limits as prescribed
under the applicable laws in this regard.
No single FII can hold more than 10% of the post Placement paid-up capital of our Company. In
respect of an FII investing in our Equity Shares on behalf of its sub accounts, the investment on
behalf of each sub account shall not exceed 10% of our Company’s total paid up capital or 5% of
the total paid up capital of our Company in case such sub account is a foreign corporate or an
individual.
Under the portfolio investment scheme, the overall holding of Equity Shares to FIIs on a repatriation
basis should not exceed 24% of post issue paid up capital of a company. However, the limit of 24%
can be raised up to the permitted sectoral cap for our Company after approval of the Board and
shareholders of our Company. As on the date of this Placement Document, our Company has raised
the limit upto 100% of post issue paid up capital of our Company, provided that the shareholding of
each FII, on its own account and on behalf of each of the SEBI approved sub-account, in our
Company, shall not exceed 10% of the total paid up capital of our Company.
Our Company and the GC-BRLM are not liable for the summary of legal provisions as
stated herein and any amendments or modification or changes in applicable laws or
regulations, which may occur after this Placement Document is filed with the Stock
Exchanges. QIBs are advised to make their independent investigations and satisfy
themselves that they are eligible to Bid. QIBs are advised to ensure that any single Bid
cum Application Form 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 Bids would not eventually result in triggering a tender offer under the
Takeover Code and the QIBs shall be solely responsible for the Takeover Code, SEBI
(Prohibitions of Insider Trading) Regulations, 1992, and other applicable laws, rules,
regulation, guidelines and circulars.
As per the SEBI Regulations, A minimum of 10% of the Equity Shares in the Placement
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 not so taken
up) may be Allotted to other QIBs.
150
Uttam Galva Steels Limited – Placement Document Note: Affiliates or associates of the GC-BRLM who are QIBs may participate in the Placement in
compliance with applicable laws.
Bid/Issue Programme
Bidding Period:
BID/ISSUE OPENS ON MARCH 25, 2013
BID/ISSUE CLOSES ON MARCH 26, 2013
Application and Bidding
Bid cum Application Form
QIBs shall only use the specified serially numbered Bid cum Application Form supplied by the GCBRLM in either electronic form or by physical delivery for the purpose of making a Bid (including
revision of a Bid) in accordance with the terms of the Preliminary Placement Document or the
Placement Document.
By making a Bid (including the revision thereof) for Equity Shares pursuant to the terms of the
Preliminary Placement Document and the Placement Document, each QIB will be deemed to have
made the following representations and warranties and the representations, warranties and agreements
made under the sections and paragraphs "Notice to Investors", "Distribution and Solicitation
Restrictions" and "Transfer Restrictions"
a.
the QIB confirms that it is a Qualified Institutional Buyer ("QIB") in terms of Regulation
2(1)(zd) of the SEBI Regulations, have a valid and existing registration under the applicable
laws in India (as applicable) and is eligible to participate in this Placement;
b.
the QIB confirms that it is not a promoter and is not a person related to the promoters, either
directly or indirectly, and its Bid does not directly or indirectly represent the promoter or
promoter group or persons related to the promoters of our Company;
c.
the QIB confirms that it has no rights under a shareholders agreement or voting agreement
with the promoters or persons related to the promoters, no veto rights or right to appoint any
nominee director on the Board of our Company other than that acquired in the capacity of a
lender not holding any Equity Shares which shall not be deemed to be a person related to the
promoters;
d.
the QIB has no right to withdraw its Bid after the Bid Closing Date;
e.
the QIB confirms that if allotted Equity Shares pursuant to this Placement Document, it shall,
for a period of one year from allotment, sell the Equity Shares so acquired only on the
recognised Stock Exchanges;
f.
the QIB confirms that the QIB is eligible to Bid and hold Equity Shares so allotted and
together with any Equity Shares held by the QIB prior to the Placement and the QIB further
confirms that the holdings of the QIB, do not and shall not, exceed the level permissible as
per any applicable regulations;
g.
the QIB confirms that the Bid would not eventually result in triggering an open offer under
151
Uttam Galva Steels Limited – Placement Document the Takeover Code;
h.
that to the best of its knowledge and belief together with other QIBs in the Placement that
belong to the same group or are under common control, the allotment to the QIB or such
group of QIBs shall not exceed 50% of the aggregate amount of the Placement. For the
purposes of this statement:
(i)
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, 1956; and
(ii)
Control" shall have the same meaning as is assigned to it under Clause (c) of subregulation (1) of Regulation 2 of the Takeover Code;
i.
The QIB shall not undertake any trade in the Equity Shares credited to its Depository
Participant account until such time that the final listing and trading approvals for the
Equity Shares are issued by the Stock Exchanges.
QIBS WOULD NEED TO PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, THEIR
DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION
NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID CUM APPLICATION
FORM. QIBS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM
APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE
DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, SUB-ACCOUNTS OF A FII
WOULD BE CONSIDERED AS AN INDEPENDENT QIB.
IF SO REQUIRED BY THE GC-BRLM, THE QIB SUBMITTING A BID, ALONG WITH
THE BID CUM APPLICATION FORM, WILL ALSO HAVE TO SUBMIT REQUISITE
DOCUMENT(S) TO THE GC-BRLM TO EVIDENCE THEIR STATUS AS A "QIB" AS
DEFINED HEREINABOVE.
IF SO REQUIRED BY THE GC-BRLM, COLLECTION BANK(S) OR ANY STATUTORY
OR REGULATORY AUTHORITY IN THIS REGARD, INCLUDING AFTER PLACEMENT
CLOSURE, THE QIB SUBMITTING A BID AND/OR BEING ALLOTTED EQUITY SHARES
IN THE PLACEMENT, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO
FULFILL THE KNOW YOUR CUSTOMER (KYC) NORMS.
Demographic details such as address and bank account will be obtained from the Depositories as
per the Depository Participant account details given above. The submission of an Application
Form by the QIBs shall be deemed a valid, binding and irrevocable offer for the QIB to pay the
entire Placement 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.
The QIBs may also be sent a serially numbered Preliminary Placement Document either in electronic
form or by physical delivery.
Bids by Mutual Funds
The Bids made by the asset management companies or custodian of MFs shall specifically state the
names of the concerned schemes for which the Bids are made. Each scheme/fund of a mutual fund
will have to submit separate Bid-cum-Application Form.
In case of a MF, a separate Bid can be made in respect of each scheme of the MF registered with
SEBI and such Bids in respect of more than one scheme of the MF will not be treated as multiple Bids
152
Uttam Galva Steels Limited – Placement Document provided that the Bids clearly indicate the scheme for which the Bid has been made. However, for the
purpose of calculating the number of allottees/applicants, various schemes of the same mutual fund
will be considered as a single allottee/applicant.
As per the current regulations, the following restrictions are applicable for investments by MFs:
No MF scheme shall invest more than 10% of its net asset value in Equity Shares or equity related
instruments of any company provided that the limit of 10% shall not be applicable for investments in
index funds or sector or industry specific funds. No MF under all its schemes should own more than
10% of any company’s paid-up capital carrying voting rights.
The above information is given for the benefit of the Bidders. Our Company and the GC-BRLM are
not liable for any amendments or modification or changes in applicable laws or regulations, which
may happen after the date of the Placement Document. Bidders are advised to make their independent
investigations and ensure that the number of Equity Shares Bid for do not exceed the applicable limits
under the applicable laws and regulations.
Submission of Bid cum Application Form
All Bid cum Application Forms shall be duly completed including price and the number of Equity
Shares Bid. All Bid cum Application Forms duly completed along with copy of the PAN card shall be
submitted to the GC-BRLM. The Bid cum Application Form shall be submitted within the bidding
Period to the GC-BRLM either in electronic form or through physical delivery at the following
address:
10th Floor, " D" Wing, Trade Tower,
Kamala Mills Compound,
Senapati Bapat Marg,
Lower Parel, Mumbai - 400013, India.
Tel: +91 22 6626 6666
Fax: +91 22 6626 6700
E-mail: [email protected]
Contact Person: Akshay Bhandari/ Jitendra Verma
The GC-BRLM shall not be required to provide any written acknowledgement of the same.
Pricing and Allocation
Build up of the Book
QIBs shall submit their Bids (including the revision of their bids) through the Bid cum Application
Form within the Bidding Period to the GC-BRLM who shall maintain the Book.
Price discovery and allocation
Our Company, in consultation with the GC-BRLM, shall finalise the Placement Price which shall
be at or above the Floor Price. The Issuer may offer a discount of not more than 5% on the
Floor Price in terms of Regulation 85 of the SEBI regulations. After finalisation of the
Placement price, our Company has updated the Preliminary Placement Document with the
Placement details and has filed the final Placement Document with the Stock Exchanges.
153
Uttam Galva Steels Limited – Placement Document Method of Allocation
Our Company shall determine the allocation in consultation with the GC-BRLM in compliance
with Chapter VIII of the SEBI Regulations.
Bids received from QIBs at or above the Floor Price shall be grouped together to determine the
total demand. Any allocation to all such QIBs will be made at the Placement Price. Allocation shall
be decided by our Company in consultation with the GC-BRLM on a discretionary basis for a
maximum of 49 Investors.
Allocation to Mutual Funds for up to a minimum of 10% of the aggregate amount of the
Placement shall be undertaken subject to valid Bids being received at or above the Placement
Price.
THE DECISION OF OUR COMPANY AND THE GC-BRLM IN RESPECT OF
ALLOCATION SHALL BE FINAL AND BINDING ON ALL QIBS. QIBS MAY NOTE
THAT ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE
DISCRETION OF OUR COMPANY AND QIBS MAY NOT RECEIVE ANY
ALLOCATION, EVEN IF THEY HAVE SUBMITTED VALID BIDS AT OR ABOVE THE
PLACEMENT PRICE. NEITHER OUR COMPANY NOR THE BOOK RUNNING LEAD
MANAGER ARE OBLIGED TO ASSIGN ANY REASONS FOR SUCH NON-ALLOCATION.
No single allottee shall be allotted more than 50% of the aggregate amount of the Placement 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 and Bidding - Bid cum Application Form".
The maximum number of Allottees of Equity Shares shall not be greater than 49 Allottees.
Further, the Equity Shares shall be allotted within 12 months from the date of the shareholders
resolution approving the Placement.
Confirmation of Allocation Notes (CAN)
Based on the Bid cum Application Forms received, our Company and the GC-BRLM will decide
the list of QIBs to whom the serially numbered CAN shall be sent, pursuant to which the
details of the Equity Shares allocated to them and the details of the amounts payable by them
for Allotment of the Equity Shares in their respective names shall be notified to such Investors.
Additionally, the CAN would include details of the bank account(s) for transfer of funds if done
electronically, address where the application money needs to be sent, Pay-In Date as well as the
probable designated date ("Designated Date"), being the date of credit of the Equity Shares to the
investor’s account, as applicable to the respective QIBs.
The eligible QIBs would also be sent a serially numbered Placement Document either in electronic
form or by physical delivery along with the serially numbered CAN.
The dispatch of the serially numbered Placement Document and the CAN by the QIB shall be
deemed a valid, binding and irrevocable contract for the QIB to furnish all details that may be
required by the GC-BRLM and to pay the entire Placement Price for all the Equity Shares
allocated to such QIB.
154
Uttam Galva Steels Limited – Placement Document QIBS WOULD NEED TO PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, THEIR
DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION
NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID CUM APPLICATION
FORM. QIBS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION
FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY
ACCOUNT IS HELD. FOR THIS PURPOSE, ELIGIBLE SUB-ACCOUNTS OF A FII
WOULD BE CONSIDERED AS AN INDEPENDENT QIB.
Each scheme or fund of a mutual fund will have to submit separate Bid cum Application
Forms. Demographic details like address, bank account etc. will be obtained from the Depositories
in accordance with the demat account details given above.
By submitting the Bid cum Application Form, the QIB will be deemed to have made the
representations and warranties as specified under the section, "Notice to Investors" and further
that such QIB shall not undertake any trade in the Equity Shares credited to its depository
participant account until such time that the final listing and trading approval for the Equity Shares
is issued by the Stock Exchanges.
QIBs are advised to instruct their Depository Participant to accept the Equity Shares that
may be allocated /allotted to them pursuant to this Placement.
Company Account for Payment of Application Money
Our Company has opened a Escrow bank account with Yes Bank Limited, acting as the Escrow
Agent (the "Uttam Galva Steels - QIP Escrow Account") in terms of the arrangement between our
Company, the GC-BRLM and the Escrow bank. The QIBs, to whom CAN is sent, will be
required to deposit the entire amount payable for the Equity Shares allocated to it by the Pay-In
Date as mentioned in the respective CANs.
If the payment is not made favoring the Escrow Cash 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, in consultation with the GC-BRLM
has the right to reallocate the Equity Shares at the Placement Price among existing or new QIBs at
its sole and absolute discretion, subject to 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 — "Uttam Galva
Steels - QIP Escrow Account" as per the payment instructions provided in the CAN. QIBs may
make payment through cheques or electronic fund transfer, or such as other mode as may be
required by GC-BRLM.
Note- Payment of the amounts through outstation cheques are liable to be rejected. Cheques shall
be only payable at Mumbai
Designated Date and Allotment of Equity Shares
1.
The Equity Shares will not be allotted unless the QIBs pay the amount payable as
mentioned in the CANs issued to them, into the Escrow Cash Account with the collection
bank as stated above.
155
Subject to the satisfaction of the terms and conditions of the Placement Agreement, our
Company will ensure that the Allotment of the Issue Shares (as such term is defined in
the Placement Agreement) is completed by the Designated Date provided in the CAN
for the QIBs who have paid the aggregate subscription amounts as provided in the
CANs.
3.
In accordance with the SEBI Regulations, Equity 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 Equity Shares, if they so desire, as per the provisions of the
Companies Act and the Depositories Act, 1996.
4.
The Company reserves the right to cancel the Placement at any time up to Allotment
without assigning any reasons whatsoever.
5.
Post Allotment and credit of Equity Shares into the QIBs Depository Participant account,
our Company will apply for final trading permission on the Stock Exchanges.
6.
In the unlikely event of any delay in the Allotment or credit of Equity Shares, or receipt
of trading or listing approvals or cancellation of the Placement, no interest or penalty
would be payable by our Company or the GC-BRLM. On cancellation of the Placement,
monies received from investors in the Placement shall be refunded within a reasonable time,
without interest or penalty as stated above.
Other Instructions
Permanent Account Number or PAN
Each QIB should mention its PAN allotted under the IT Act. The copy of the PAN card or PAN
allotment letter is required to be submitted with the Bid cum Application Form. Bid cum
Application Forms without PAN will be considered incomplete and are liable to be rejected. It is to
be specifically noted that applicants should not submit the GIR number instead of the PAN as the
Bid cum Application Form is liable to be rejected on this ground.
Right to Reject Applications
Our Company, in consultation with the GC-BRLM, may reject Bids, in part or in full, without
assigning any reasons whatsoever. The decision of our Company and GC-BRLM in relation to the
rejection of Applications shall be final and binding.
Equity Shares in dematerialised form with NSDL or CDSL
As per the provisions of Section 68B of the Companies Act, the allotment of Equity Shares
pursuant to the Placement shall be only in dematerialised form (i.e., not in the form of physical
certificates but to be fungible and to be represented by the statement issued through the
electronic mode).
a.
A QIB applying for Equity Shares must have at least one beneficiary account with
either of the Depository Participants of either NSDL or CDSL prior to making the Bid.
b.
Allotment to a successful QIB will be credited in electronic form directly to the
beneficiary account (with the Depository Participant) of the QIB.
156
Uttam Galva Steels Limited – Placement Document c.
Equity Shares in electronic form can be traded only on the stock exchanges having
electronic connectivity with NSDL and CDSL. All stock exchanges where our Equity
Shares are proposed to be listed have electronic connectivity with CDSL and NSDL.
d.
The trading of our Equity Shares would be in dematerialised form only for all QIBs in
the demat segment of the respective Stock Exchanges.
e.
Our Company shall not be responsible or liable for the delay in the credit of Equity
Shares due to errors in the Bid cum Application Form or on the part of the QIBs
Release of funds to our Company
The Escrow Bank shall not release the monies lying to the credit of the "Uttam Galva Steels - QIP
Escrow Account" till such time, that it receives an instruction in pursuance to the Escrow
Agreement, along with the Listing and trading approval of the Stock Exchanges for the Equity
Shares offered in the Placement.
157
Uttam Galva Steels Limited – Placement Document PLACEMENT
Placement Agreement
The GC-BRLM has entered into a Placement Agreement with our Company (the "Placement
Agreement"), pursuant to which the GC-BRLM has agreed to use reasonable efforts to procure QIBs
to subscribe for the Equity Shares to be issued pursuant to Chapter VIII of the SEBI Regulations, to
QIB's in reliance of Regulation S under the Securities Act.
The Placement Agreement contains customary representations and warranties, as well as indemnities
from our Company and is subject to certain conditions and termination provisions in accordance with
the terms contained therein.
Applications shall be made to list the Equity Shares and admit them to trading on the Stock
Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for the
Equity Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at
which holders of the Equity Shares will be able to sell their Equity Shares.
The Preliminary Placement Document and this Placement Document has not been, and will not be,
registered as a prospectus with the Registrar of Companies in India and no Equity 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.
In connection with the Placement, the GC-BRLM (or affiliates) may enter into, for own accounts,
asset swaps, credit derivatives or other derivative transactions relating to the Equity Shares at the
same time as the offer and sale of the Equity Shares, or in secondary market transactions. As a result
of such transactions, the GC-BRLM may hold long or short positions in such Equity Shares. These
transactions may comprise a substantial portion of the Placement and no specific disclosure will be
made of such positions. Affiliates of the GC-BRLM may purchase Equity Shares and be allocated
Equity Shares. See also the section "Notice to Investors".
From time to time, the GC-BRLM and their affiliates have provided, and continue to provide,
financial advisory, investment banking and other services to us, our shareholders and our affiliates in
the ordinary course of their business, for which they have received and may continue to receive fees
and commissions.
158
Uttam Galva Steels Limited – Placement Document DISTRIBUTION AND SOLICITATION RESTRICTIONS
The distribution of this Placement Document or any offering material and the offering, sale or
delivery of the Equity Shares is restricted by law in certain jurisdictions. Therefore, persons who may
come into possession of this Placement Document or any offering material are advised to consult with
their own legal advisors as to what restrictions may be applicable to them and to observe such
restrictions. This Placement Document may not be used for the purpose of an offer or invitation in
any circumstances in which such offer or invitation is not authorized or permitted.
General
No action has been taken or will be taken that would permit a public offering of the Equity Shares to
occur in any jurisdiction, or the possession, circulation or distribution of this Placement Document or
any other material relating to our Company or our Equity Shares in any jurisdiction where action for
such purpose is required. Accordingly, our Equity Shares may not be offered or sold, directly or
indirectly, and neither this Placement Document nor any offering materials or advertisements in
connection with our Equity Shares may be distributed or published in or from any country or
jurisdiction except under circumstances that will result in compliance with any applicable rules and
regulations of any such country or jurisdiction. The Issue will be made in compliance with the
applicable SEBI Regulations. Each purchaser of the Equity Shares in the Placement will be required
to make, or 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 to the public of any Equity Shares
which are the subject of the placement contemplated by this Placement Document may not be made in
that Relevant Member State except that an offer to the public in that Relevant Member State of any
Equity Shares may be made at any time under the following exemptions under the Prospectus
Directive, if they have been implemented in that Relevant Member State:
(a)
(b)
(c)
(d)
to legal entities which are authorised or regulated to operate in the financial markets or, if not
so authorised or regulated, whose corporate purpose is solely to invest in securities;
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 €43,000,000; and (3) an annual
net turnover of more than €50,000,000, as shown in its last (or, in Sweden, in its last two)
annual or consolidated accounts;
by the GC-BRLM to fewer than 100 natural or legal persons (other than qualified investors as
defined in the Prospectus Directive) subject to obtaining the prior consent of the GC-BRLM
for any such offer; or
in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Equity Shares shall result in a requirement for the publication by the
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 to the public" in relation to any Equity
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 any Equity Shares to be offered so as to enable an
investor to decide to purchase any Equity 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
159
Uttam Galva Steels Limited – Placement Document in each Relevant Member State. This offer is for the intended recipients only and may not in any way
be forwarded to the public in Sweden. Accordingly, the GC-BRLM represents, warrants and agrees
that it has not offered or sold and will not offer or sell Equity Shares in Sweden in a manner that
would require the registration of a prospectus by the Swedish Financial Supervisory Authority
according to the Financial Instruments Trading Act.
Hong Kong
No Equity Shares have been offered or sold, and no Equity Shares may be offered or sold, by means
of any document, other than to "professional investors" as defined in the Securities and Futures
Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance, or in other
circumstances which do not result in the document being a "prospectus" as defined in the Companies
Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the
meaning of the Companies Ordinance (Cap. 32) of Hong Kong. No document, invitation or
advertisement relating to the Equity Shares has been issued or may be issued, whether in Hong Kong
or otherwise, which is directed at, or the contents of which are likely to be accessed or read by, the
public of Hong Kong (except if permitted under the laws of Hong Kong) other than with respect to
Equity Shares which are intended to be disposed of only to persons outside Hong Kong or only to
"professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong
and any rules made under that Ordinance.
Japan
The Equity Shares have not been and will not be registered under the Financial Instruments and
Exchange Law (the "Financial Instruments and Exchange Law"). No Equity Shares have, directly or
indirectly, been offered or sold, and may not, directly or indirectly, be offered or sold in Japan or to,
or for the benefit of, any resident of Japan (which term as used herein means any person resident in
Japan, including any corporation or other entity organized under the laws of Japan) or to others for reoffering or re-sale, directly or indirectly in Japan or to, or for the benefit of, any resident of Japan
except pursuant to an exemption from the registration requirements of the Financial Instruments and
Exchange Law and in compliance with any Financial Instruments and Exchange Law other relevant
laws, regulations and governmental guidelines of Japan.
United Kingdom
The GC-BRLM has represented and agreed that:
•
•
it has only communicated or caused to be communicated and 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 Financial Services and Market Act 2000 (the "FSMA")) received by
it in connection with the issue or sale of the Equity Shares in circumstances in which Section
21(1) of the FSMA does not apply to it; and
it has complied and will comply with all applicable provisions of the FSMA with respect to
anything done by it in relation to the Equity Shares in, from or otherwise involving the United
Kingdom.
United States
The Equity Shares have not been and will not be registered under the US Securities Act and subject to
certain exceptions, may not be offered or sold within the United States. The Equity Shares are being
offered and sold outside of the United States in reliance on Regulation S to persons who are able to
make the representations and undertakings summarised under "Transfer Restrictions and Purchaser
160
Uttam Galva Steels Limited – Placement Document Representations". Terms used in this paragraph have the meanings given to them by Regulation S
under the US Securities Act.
In addition, until 40 days after the first date upon which the Equity Shares were bona fide offered to
the public, an offer of the Equity Shares within the United States by any dealer (whether or not
participating in the offering) may violate the registration requirements of the US Securities Act.
Singapore
The Book Running Lead Manager has acknowledged that this Placement Document has not been
registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the GC-BRLM has
represented and agreed that it has not offered or sold any Equity Shares or caused such Equity Shares
to be made the subject of an invitation for subscription or purchase and will not offer or sell such
Equity Shares or cause such Equity Shares to be made the subject of an invitation for subscription or
purchase, and has not circulated or distributed, nor will it circulate or distribute, this Placement
Document or any other document or material in connection with the offer or sale, or invitation for
subscription or purchase, of such Equity Shares, whether directly or indirectly, to persons in
Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures
Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any
person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275,
of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other
applicable provision of the SFA. This Placement Document has not been registered as a prospectus
with the Monetary Authority of Singapore. Accordingly, this Placement Document and any other
document or material in connection with the offer or sale, or invitation for subscription or purchase, of
any Shares may not be circulated or distributed, nor may any Equity Shares be offered or sold, or be
made the subject of an invitation for subscription or purchase, whether directly or indirectly, to
persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a
relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in
accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to,
and in accordance with the conditions of, any other applicable provision of the SFA. Where Equity
Shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(a)
(b)
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) 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
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold
investments and each beneficiary of the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries'
rights and interest (howsoever described) in that trust shall not be transferred within six
months after that corporation or that trust has acquired the Equity Shares pursuant to an offer
made under Section 275 of the SFA except:
(i)
to an institutional investor or to a relevant person defined in Section 275(2) of the
SFA, or to any person arising from an offer referred to in Section 275(1A) or Section
276(4)(i)(B) of the SFA;
(ii)
where no consideration is or will be given for the transfer;
(iii)
where the transfer is by operation of law; or
(iv)
as specified in Section 276(7) of the SFA.
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Uttam Galva Steels Limited – Placement Document TRANSFER RESTRICTIONS
Due to the following restrictions, investors are advised to consult legal counsel prior to making any
resale, pledge or transfer of the Equity Shares.
The Equity 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, US 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 Placement are not permitted to sell the Placement Shares
for a period of one year from the date of allotment except on recognized 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 Equity 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 Equity Shares have not been and
will not be registered under the US Securities Act.
•
It certifies that either (A) it is, or at the time the Equity Shares are purchased will be, the
beneficial owner of the Equity Shares 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 Equity Shares are
purchased will be, the beneficial owner of the Equity Shares, and (ii) such customer is located
outside the United States (within the meaning of Regulation S).
•
It agrees that it will not offer, sell, pledge or otherwise transfer such Equity 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 US Securities Act and in
accordance with all applicable securities laws of the States of the United States and any other
jurisdiction, including India.
•
It acknowledges that we, the GC-BRLM and its affiliates, and others will rely upon the truth
and accuracy of the foregoing acknowledgements, representations and agreements and agrees
that, if any of such acknowledgements, representations or agreements deemed to have been
made by virtue of its purchase of the Equity Shares are no longer accurate, it will promptly
notify us. Any resale or other transfer, or attempted resale or other transfer, made other than
in compliance with the above-stated restrictions will not be recognized by us.
162
Uttam Galva Steels Limited – Placement Document INDIAN SECURITIES MARKET
The information in this section has been extracted from publicly available documents from various
sources, including officially prepared materials from the SEBI, BSE and NSE, and has not been
prepared or independently verified by our Company or the GC-BRLM or any of their respective
affiliates or advisors.
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.
163
Uttam Galva Steels Limited – Placement Document Minimum Level of Public Shareholding
All listed companies are required to ensure that their minimum level of public shareholding remains at
or above 25%.
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 coordinated 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
Established in 1875, it is the oldest stock exchange in India. In 1956, it became the first stock
exchange in India to obtain permanent recognition from the Government under the SCRA.
NSE
The NSE was established by financial institutions and banks to serve as a national exchange and to
provide nationwide on-line satellite-linked screen-based trading facilities with electronic clearing and
settlement for securities including government securities, debentures, public sector bonds and units.
The NSE was recognised as a stock exchange under the SCRA in April 1993 and commenced
operations in the wholesale debt market segment in June 1994. NSE has a wide network in major
metropolitan cities, screen based trading and a central monitoring system.
Trading Hours
Currently, trading on both BSE and NSE normally occurs Monday through Friday, between 9:00 a.m.
and 3:30 p.m. BSE and NSE are closed on public holidays.
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.
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Uttam Galva Steels Limited – Placement Document 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 online 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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Uttam Galva Steels Limited – Placement Document DESCRIPTION OF THE SHARES
Set forth below is certain information relating to our share capital, including a brief summary of some
of the provisions of the Memorandum and Articles of Association, the Companies Act and certain
related legislation of India.
General
The authorized capital of our Company is `1,75,00,00,000 divided into 17,50,00,000 Equity Shares of
`10 each. As of the date of this Placement Document 12,22,60,103 Equity Shares of `10 each are
issued and outstanding.
Dividend
Under the Companies Act, unless the board recommends the payment of a dividend, the shareholders
at a general meeting have no power to declare any dividend. Subject to certain conditions specified in
the Companies Act, no dividend can be declared or paid by a company for any financial year except
out of the profits of the company determined in accordance with the provisions of the Companies Act
or out of the undistributed profits or reserves of previous fiscal years or out of both, arrived at in
accordance with the provisions of the Companies Act. Pursuant to a recent amendment to the Listing
Agreement, listed companies are required to declare and disclose their dividends on per share basis
only. The dividend recommended by the Board and approved by the shareholders at a general meeting
is distributed and paid to shareholders in proportion to the paid-up value of their shares as at the
record date for which such dividend is payable. In addition, the board may declare and pay interim
dividends. Under the Companies Act, dividends can only be paid in cash to shareholders listed on the
register of shareholders on the date which is specified as the "record date" or "book closure date". No
shareholder is entitled to a dividend while unpaid calls on any of his shares are outstanding.
Dividends must be paid within thirty days from the date of the declaration and any dividend that
remains unpaid or unclaimed after that period must be transferred within seven days to a special
unpaid dividend account held at a scheduled bank. Any money that remains unpaid or unclaimed for
seven years from the date of such transfer must be transferred by our Company to the Investor
Education and Protection Fund established by the Government and thereafter any claim with respect
thereto will lapse.
Under the Companies Act the Companies (Transfer of Profits to Reserves) Rules, 1975, as amended, a
company may pay a dividend in excess of 10% of its paid-up capital in respect of any fiscal, out of the
profits of that financial year only after it has transferred to its reserves a certain percentage of its
profits for that year ranging between 2.50% and 10% depending on the percentage of dividend
proposed to be declared in that year. The Companies Act and the Companies (Declaration of Dividend
out of Reserves) Rules, 1975, as amended, further provides that if the profit for a year is insufficient,
the dividend for that year may be declared out of accumulated profits from previous years which have
been transferred to reserves, subject to certain conditions prescribed under those legislations.
Capitalization of Profits
As provided in the Articles of Association of our Company, our Company in a general meeting (on
recommendation of the Board) may resolve that it is desirable to capitalize any part of the amount for
the time being standing to the credit of our standing to the credit of the company’s reserves; and that
such sum be accordingly set free for distribution in the specified manner amongst the shareholders
who would have been entitled thereto and distributed by way of dividend and in the same proportions.
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Uttam Galva Steels Limited – Placement Document Any issue of bonus shares by a listed company would be subject to the guidelines issued by the SEBI.
The relevant SEBI guidelines prescribe that no company shall, pending conversion of convertible
securities, issue any shares by way of bonus unless a similar benefit is extended to the holders of such
convertible securities, through a proportionate reservation of shares. Further, in order to issue bonus
shares a company should not have defaulted in the payment of interest or principal in respect of fixed
deposits and interest on existing debentures or principal on redemption thereof and should have
sufficient reason to believe that it has not defaulted in respect of any statutory dues of the employees.
The declaration of bonus shares in lieu of a dividend cannot be made. A bonus issue may be made out
of free reserves built out of genuine profits or share premium collected in cash and not from reserves
created by revaluation of fixed assets.
If a company is required to seek shareholders’ approval for capitalization of profits or reserves for
making bonus issues, then the bonus issue should be implemented within two months from the date of
the board meeting wherein the decision to issue bonus shares was taken subject to shareholders’
approval.
Alteration of Share Capital
Subject to the provisions of the Companies Act, our Company can increase its share capital by issuing
new shares. Such new shares must be offered to existing shareholders registered on the record date in
proportion to the amount paid-up on those shares at that date. The offer shall be made by notice
specifying the number of shares offered and the date (being not less than fifteen days from the date of
the offer) after which the offer, if not accepted, will be deemed to have been declined. After such date
our Board may dispose of the shares offered in respect of which no acceptance has been received, in
such manner as they think most beneficial to our Company. The offer is deemed to include a right
exercisable by the person concerned to renounce the shares in favor of any other person provided that
the person in whose favor such shares have been renounced is approved by the Board in their absolute
discretion.
However, under the provisions of the Companies Act, new shares may be offered to any persons,
whether or not those persons include existing shareholders, if a special resolution to that effect is
passed by the shareholders of the company in a general meeting. The issue of the Equity Shares
pursuant to this Placement has been approved by a special resolution of our Company’s shareholders
and such shareholders have waived their pre-emptive rights with respect to such Equity Shares.
Our Company’s issued share capital may, among other things, be increased by the exercise of
warrants attached to any of our Company’s securities entitling the holder to subscribe for shares.
The Articles of Association provide that our Company may consolidate and divide our Company’s
share capital or cancel shares which have not been taken up by any person. Our Company can also
alter its share capital by way of a reduction of capital, subject to, any incident authorised in
accordance with the Companies Act.
General Meetings of Shareholders
Our Company must hold its annual general meeting each year within 15 months of the previous
annual general meeting and within six months after the end of each accounting year. The Registrar of
Companies may extend this period in special circumstances at our Company’s request. The Board
may convene an extraordinary general meeting of shareholders when necessary and shall convene
such a meeting at the request of a shareholder or shareholders holding in the aggregate not less than
10%of our Company’s issued and paid-up capital.
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Uttam Galva Steels Limited – Placement Document Written notices convening a meeting setting out the date and place of the meeting and its agenda must
be given to members at least twenty one days prior to the date of the proposed meeting and where any
special business is to be transacted at the meeting an explanatory statement shall be annexed to the
notice as required under the Companies Act. A general meeting may be called after giving shorter
notice if consent is received from all shareholders, in the case of an annual general meeting, and from
shareholders holding not less than 95% of our Company’s paid-up capital, in the case of any other
general meeting.
A listed public company intending to pass a resolution relating to matters such as, but not limited to,
an amendment in the objects clause of the memorandum of association, a buy-back of shares under
the Companies Act, the giving of loans or extending a guarantee in excess of limits prescribed under
the Companies Act (and guidelines issued thereunder) is required to pass the resolution by means of a
postal ballot instead of transacting the business in the general meeting of the company. A notice to all
the shareholders must be sent along with a draft resolution explaining the reasons thereof and
requesting them to send their assent or dissent in writing on a postal ballot within a period of thirty
days from the date of such notice. Under the Companies Act, the quorum for our Company’s general
meetings is five members present in person or by proxy.
Voting Rights
At a general meeting upon a show of hands, every member holding shares and entitled to vote and
present in person has one vote subject to any restrictions for the time being attached to any class of
shares. Upon a poll, the voting rights of each shareholder entitled to vote and present in person or by
proxy is in the same proportion to such shareholder’s share of the paid-up equity capital of our
Company.
Ordinary resolutions may be passed by simple majority of those present and voting. Special
resolutions require that the votes cast in favor of the resolution must be at least three times the votes
cast against the resolution. The Companies Act provides that to amend the articles of association of a
company, a special resolution is required to be passed in a general meeting.
A shareholder may exercise his voting rights by proxy to be given in the form required by the Articles
of Association. The instrument appointing a proxy is required to be lodged with us at least 48 hours
before the time of the meeting. A shareholder may, by a single power of attorney, grant a general
power of representation regarding several general meetings of shareholders. Any shareholder may
appoint a proxy. A corporate shareholder is also entitled to nominate a representative to attend and
vote on its behalf at general meetings. A shareholder which is a legal entity may appoint an authorized
representative who can vote in all respects as if a member both on a show of hands and a poll.
The Companies Act allows our Company to issue shares with differential rights as to dividend, voting
or otherwise, subject to certain conditions. In this regard, the law requires that for a company to issue
shares with differential voting rights, the company must have, inter alia, had distributable profits in
terms of the Companies Act for a period of three financial years and the company must not have
defaulted in filing annual accounts and annual returns for the immediately preceding three years.
Register of Members and Record Dates
Our Company is obliged to maintain a register of members at its Registered Office or at some other
place in the same city. Our Company recognizes as shareholders only those persons whose names
appear on the register of members and cannot recognize any person holding any share or part of it
upon any express, implied or constructive trust, except as permitted by law. In the case of shares held
in physical form, transfers of shares are registered on the register of members upon lodgment of the
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Uttam Galva Steels Limited – Placement Document share transfer form duly complete in all respects accompanied by a share certificate or, if there is no
certificate, the letter of allotment in respect of shares transferred together with duly stamped transfer
forms. In respect of electronic transfers, the depository transfers shares by entering the name of the
purchaser in its books as the beneficial owner of the shares. In turn, the name of the depository is
entered into our Company’s records as the registered owner of the shares. The beneficial owner is
entitled to all the rights and benefits as well as the liabilities with respect to the shares held by a
depository.
For the purpose of determining the shareholders, the register may be closed for periods not exceeding
45 days in any one year or 30 days at any one time at such times, as the Board may deem expedient in
accordance with the provisions of the Companies Act. Under the listing agreements of the Stock
Exchanges on which our Company’s outstanding shares are listed, our Company may, upon at least
seven working 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 shares and the
delivery of certificates in respect thereof may continue while the register of shareholders is closed.
Under the Companies Act, our Company is also required to maintain a register of debenture holders.
Annual Report and Financial Results
The annual report must be presented at the annual general meeting. The report includes financial
information, a corporate governance section and management’s discussion and analysis and is sent to
the company’s shareholders.
Under the Companies Act, a company must file the annual report with the Registrar of Companies
within 30 days from the date of the annual general meeting. As required under the listing agreements
with the stock exchanges, copies are required to be simultaneously sent to the stock exchanges. The
Company must also file its financial results in at least one English language daily newspaper
circulating the whole or substantially the whole of India and also in a newspaper published in the
language of the region where the registered office of the Company is situated. The Company files
certain information on-line, including its Annual Report, financial statements and the shareholding
pattern statement, in accordance with the requirements of the listing agreements and as may be
specified by SEBI from time to time.
Transfer of Shares
Shares held through depositories are transferred in the form of book entries or in electronic form in
accordance with applicable SEBI regulations. These regulations provide the regime for the
functioning of the depositories and their participants and set out the manner in which the records are
to be kept and maintained and the safeguards to be followed in this system. Transfers of beneficial
ownerships of shares held through a depository are exempt from stamp duty.
The SEBI requires that for trading and settlement purposes shares should be in book-entry form for all
investors, except for transactions that are not made on a stock exchange and transactions that are not
required to be reported to the stock exchange.
The shares are freely transferable, subject only to the provisions of the Companies Act under which, if
a transfer of shares contravenes any provisions of the SEBI Act or the regulations made thereunder or
the SICA, or any other law, the Company Law Board may, on an application made by the company, a
depository incorporated in India, an investor, SEBI or a participant, direct any depository or company
to rectify the register or records. If a company without sufficient cause refuses to register a transfer of
shares within two months from the date of which the instrument of transfer or intimation of transfer,
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Uttam Galva Steels Limited – Placement Document as the case may be, is delivered to the company, the transferee may appeal to the Company Law
Board seeking to register the transfer. The Company Law Board may, in its discretion, issue an
interim order suspending the voting rights attached to the relevant shares before completing its
investigation of the alleged contravention. Under the Companies (Second Amendment) Act 2002, the
Company Law Board is proposed to be replaced with the National Company Law Tribunal with effect
from a date that is yet to be notified. Further, SICA is sought to be repealed and the Board of
Industrial and Financial Reconstruction, as constituted under the SICA, is to be replaced with the
National Company Law Tribunal, set up under the Companies Act.
Pursuant to the listing agreements, in the event that a transfer of shares is not effected within the
relevant time period, our Company is required to compensate the aggrieved party for the opportunity
loss caused by the delay.
The Companies Act provides that shares or debentures of a public listed company shall be freely
transferable. However, the Articles of Association provide for certain restrictions on the transfer of
shares, including granting power to the Board in certain circumstances to decline to register or
acknowledge the transfer of, or the transmission by operation of law of the right to, any shares or
other securities issued by our Company.
A transfer may also be by transmission. Subject to the provisions of our Company’s Articles, any
person becoming entitled to shares in consequence of the death or insolvency of any member may,
upon producing such evidence as may from time to time properly be required by the Board, be
registered as a member in respect of such shares, or may, subject to the regulations as to transfer
contained in the Articles, transfer such shares. The Articles of Association provide that our Company
shall charge no fee for registration of transfer, transmission, probate, succession certificate and letters
of administration, certificate of death or marriage, power of attorney or other similar document.
Acquisition by our Company of its own Shares
A company is prohibited from acquiring its own shares unless the consequent reduction of capital is
effected by an approval of at least 75% of its shareholders, voting on it in accordance with the
Companies Act and sanctioned by the High Court of competent jurisdiction. Subject to certain
conditions, a company is prohibited from giving, whether directly or indirectly and whether by means
of loan, guarantee, provision of security or otherwise, any financial assistance for the purpose of or in
connection with a purchase or subscription made or to be made by any person for any shares in the
company or its holding company. However, pursuant to certain amendments to the Companies Act, a
company has been empowered to purchase its own shares or other specified securities out of its free
reserves, the securities premium account or the proceeds of any fresh issue of shares or other specified
securities (other than the kind of shares or other specified securities proposed to be bought back)
subject to certain conditions, including:
•
•
•
•
•
the buy-back should be authorized by the Articles of Association of the company;
a special resolution has been passed in a general meeting authorizing the buy-back (in the
case of listed companies, by means of a postal ballot);
the buy-back is limited to 25% of the total paid-up capital and free reserves;
the debt owed by the company is not more than twice the capital and free reserves after such
buy-back; and
the buy-back is in accordance with the Securities and Exchange Board of India (Buy-Back of
Securities) Regulations 1998, as amended.
A board resolution will constitute sufficient corporate authorization for a buy-back. A company
buying back its securities is required to extinguish and physically destroy the securities so bought
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Uttam Galva Steels Limited – Placement Document back within seven days of the last date of completion of the buy-back. Further, a company buying
back its securities is not permitted to buy back any securities for a period of one year from the buyback or to issue the same kind of shares or specified securities for six months subject to certain
limited exceptions.
A company is also prohibited from purchasing its own shares or specified securities through any
subsidiary company including its own subsidiary companies or through any investment company.
Further a company is prohibited from purchasing its own shares or specified securities, if the
company is in default in the repayment of deposit or interest, in the redemption of debentures or
preference shares, in payment of dividend to a shareholder, in repayment of any term loan or interest
payable thereon to any financial institution or bank or in the event of non-compliance with certain
other provisions of the Companies Act.
Liquidation Rights
Subject to the provisions of the Companies Act, if our Company shall be wound up and the assets
available for distribution among the members as such shall be less than sufficient to repay the whole
of the paid up capital such assets shall be distributed so that, as nearly, as may be, the losses shall be
borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the
commencement of winding up, on the shares held by them respectively. And if in winding up, the
assets available for distribution among the members shall be more than sufficient to repay the whole
the Capital paid up at the commencement of the winding up the excess shall be distributed amongst
the members in proportion to the capital paid-up at the commencement of the winding up or which
ought to have been paid up on the shares held by them respectively.
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Uttam Galva Steels Limited – Placement Document TAXATION
To,
The Board of Directors,
Uttam Galva Steels Limited,
Uttam House, 69 P D’Mello Road,
Carnac Bunder,
Mumbai – 400 009
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 Uttam Galva Steels Limited 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 PRAKKASH MUNI & ASSOCIATES
CHARTERED ACCOUNTANTS
FIRM REGISTRATION NO: 111792W
PRAKKASH MUNI
PARTNER
MEMBERSHIP NO: 30544
Place: Mumbai
Date: 22nd March 2013
Certificate No. : 2013/03/03
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Uttam Galva Steels Limited – Placement Document Annexure: Statement of possible tax benefits available to Uttam Galva Steels 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 is eligible for deduction under section 80 I A of the Income-tax Act, 1961 as the
company has its own Captive Power Plant (CPP). Profits derived from CPP would be 100 %
exempt from tax for a period of 10 years out of 15 initial assessment years commencing from 1st
April, 2011.
(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.
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.
3.
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.
4.
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.
5.
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).
6.
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.
7.
Short-term capital gains arising from transfer of shares held in the Company not covered
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Uttam Galva Steels Limited – Placement Document under point (6) above will be chargeable to tax at the rate of 30% (plus applicable surcharge
and education cess.).
8.
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.
9.
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.
10.
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.
11.
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.
12.
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.
II. Benefits available to QIB shareholders of the Company
a) Shareholders being Foreign Institutional Investors (‘FIIs’)
1.
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 subject to provisions of Double Taxation Avoidance Agreement.
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
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Uttam Galva Steels Limited – Placement Document 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.
d) QIB resident shareholders other than those discussed above
1.
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.
175
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:
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 advisor with respect to specific tax consequences of his/her participation in the
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Uttam Galva Steels Limited – Placement Document 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.
177
Uttam Galva Steels Limited – Placement Document LEGAL PROCEEDINGS
Except as disclosed in the following paragraphs, our Company is not subject to, any pending legal
proceedings which our Company considers to be potentially material to its respective business. This
section contains details of material legal proceedings which have a monetary implication of over `10
lakhs.
Our Company is involved in legal proceedings and claims in India that are incidental to its business.
These legal proceedings are pending at different levels of adjudication before various courts and other
competent authorities and include Civil proceedings, Criminal proceedings under Negotiable
Instruments Act and revenue proceedings. While no assurance can be given, we believe that, none of
the litigation or legal proceedings in which we are currently involved, except as stated below could
reasonably be expected to have a material adverse effect on our business, financial condition or results
of operations.
Litigation Proceedings Pending Against our Company
Civil Proceedings
(a)
Akram Ali Sheikh, the proprietor of M/s Kaak Packaging has filed a civil suit before the
Court of Civil Judge (S.D.), Thane on November 3, 2011 against our Company for an amount
of `18,31,033.93 along with 18% interest thereon from the date of filing of this suit. The suit
has been filed by Akram Ali Sheikh for alleged non-payment by our Company for edge
boards valued at `18,31,033.93 supplied to our Company between June 12, 2009 and July 24,
2009. Our Company in its reply has contended that it has already paid in excess of what was
supplied and was entitled to a refund of the excess amount paid till date.
(b)
Central Warehousing Corporation ("CWC") has filed an Arbitration Petition against our
Company before the High Court of Bombay on August 18, 2010. Our Company, CWC and
MSTC Limited had entered into a tripartite agreement dated July 24, 2002 ("Agreement") for
supply of hot rolled coils or other items as agreed by the parties. Subsequently, the
management rates payable to CWC were revised and it has been alleged that our Company
had failed to pay the management fees since 2004 thereby aggregating to an amount of
`74,97,473. CWC filed an Arbitration Petition claiming the said amount and the arbitrator
passed an order on May 25, 2010 ("Award") disallowing the claim of CWC. Being aggrieved
by the Award, CWC filed an Arbitration petition before the High Court of Bombay to quash
and set aside the said Award.
(c)
Tong Mei Industrial ("Tong Mei") and AXA Belgium SA have jointly filed a civil suit
against our Company and 11 other parties on December 8, 2003 before the High Court of
Bombay claiming USD 277,833.00 along with 10% interest thereon from the date of filing of
suit to date of realisation. Our Company had entered into a contract with Compansid SA for
sale of 84 Steel Coils weighing 420.82 kilograms (the "Steel Coils"), Compansid SA further
sold the Steel Coils to M/s Tong Mei who in turn sold it to other parties. These Steel Coils
were loaded into 17 containers through CMA CGM Societe, a shipping and logistics
company. On receipt of the consignment of Steel Coils, Tong Mei found Steel Coils stored in
all containers had suffered extensive damage. Atlantis International Services, the claim
agents/surveyor issued report stating that the extent of damages at USD 266,016.15. The
report also stated that the damage was due to the negligence of CMA CGM Societe. However,
the petition contends that our Company being the supplier, is vicariously liable.
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Uttam Galva Steels Limited – Placement Document Litigation Proceedings Initiated by our Company
(a)
Our Company has filed a summary suit against S.D.L. Steels Private Limited ("SDL Steels")
on June 19, 2010 before the High Court of Bombay for a claim of `12,81,189.25 including
18% interest thereon. SDL Steels had placed an order with our Company for supply of HR
trimming unpickled materials for a value of `34,72,894.36. SDL Steels had made a payment
of `2,401,027.49 to our Company. However, a balance payment of `1,071,866.87is
outstanding. Our Company had issued a notice to SDL Steel on March 20, 2010 seeking
balance payments. However, SDL steels failed to make payments due to which the Company
has filed this suit.
(b)
Our Company has filed Company Petition for winding-up of Renuka Press Fab Private
Limited ("Renuka Press") before High Court of Bombay on December 17, 2004. Our
Company had been supplying/delivering C.R.C.A. sheets to Renuka Press from time to time.
Renuka Press had to make a payment of `58,58,928 to our Company for goods supplied and
failed to pay for the same in spite of repeated reminders. Our Company issued a winding upnotice on Renuka Press on March 7, 2003 seeking payment of `62,62,649.20 along with
interest thereon, failing which our Company would initiate winding-up proceedings against
Renuka Press. However, Renuka Press failed to make the payments and our Company was
constrained to file a winding-up petition in the Court. The High Court, vide order dated
February 7, 2007 allowed the petition and has passed a winding-up order against Renuka
Press.
(c)
Our Company has filed an appeal against the order of the Presiding Officer, Debt Recovery
Tribunal dated September 30, 2008 passed in favour of Bank of India and others. Our
Company had purchased Land bearing Survey no.48 Hissa No.2, Survey No.45 Hissa No.3,
Survey no.48 Hissa No 3, Survey No.48, Hissa no IB-1 and Survey no.45 Hissa No.4 situated
at Village Dahiwali Taluka Khalapur District Raigad (collectively referred to as "Properties")
from Shriram Pharmaceuticals and Chemicals Private Limited. These properties were duly
registered in the name of our Company and were also updated in the revenue records.
Consequently, it came to the knowledge of our Company that Bank of India had filed a case
against other respondents for recovery of their outstanding amount. The recovery officer vide
order dated July 12, 2004, allowed the attachment of these Properties in favour of Bank of
India. Thereafter our Company filed an application before Debt Recovery Tribunal II,
Mumbai and contended that they were a bonafide purchaser for value and hence had valid
title to the Properties. Though the Tribunal declared that our Company is a bonafide
purchaser, it rejected the application of the Company to set aside the attachment order. Hence,
our Company has filed this appeal.
(d)
Our Company has filed a Summary Suit against Anagram System ("Anagram") before the
City Civil Court of Bombay on June 19, 2010. As per purchase order dated October 25, 2007,
Anagram had purchased 53,460 MT of pre-painted galvanized alloy sheets of USD 77,743.80
from our Company under the duty free export to special economic zone scheme. Anagram
had made initial payment of USD 28,000 towards the said purchase of alloy sheets with USD
49,743.80 to be paid later. Since Anagram failed to pay the balance amount, our Company
issued a legal notice on May 29, 2010 thereby seeking payment of USD 71,174 as on May 31,
2010 along with further interest at the rate of 18%. Despite this notice, Anagram failed to pay
the outstanding amount due to which our Company filed this petition.
Outstanding Litigation pertaining to land
(a)
Dilip Pundalik and certain other people ("Dilip Pundalik Group") had filed a petition before
179
Uttam Galva Steels Limited – Placement Document the Court of Civil Judge Junior Division, Khalapur seeking injunction and declaration. Dilip
Pundlik Group claimed that the property owned by Suresh Pundalik was sold to our Company
by way of undue influence and hence the sale deed executed between the parties is not
binding on them while our Company has denied the claim and has contended that the sale
deed is enforceable. Thereafter, Dilip Pundalik and Group, filed an application for issuance of
summons to Meena Bam, who is also our Company’s counsel in this matter, as a witness, as
she was in a position to identify the parties on the question of enforceability of sale deed. Our
Company has, in its reply, stated that she cannot be summoned as an witness in this case. The
court allowed the said application by an order dated October 20, 2011. Pursuant thereto, our
Company has filed a writ petition before the High Court of Bombay against the order dated
October 20, 2011 passed by the Civil Judge, Junior Division, Khalapur. The High Court of
Bombay has granted ad-interim injunction in the issuance of summons to Beena Bam as a
witness.
(b)
Rajendra Ramchandra Gujar/ Gujarathi has filed a civil suit before the Court of Civil Judge,
Senior Division, Panvel against 41 parties including our Company with respect to sale of
property bearing survey no.34/1 and 34/2 admeasuring total area 8.35 acres and survey
no.35/1 admeasuring 7.61 acres ("Property"). On June 1, 2006, our Company had purchased
the Property from Tarabai Shah and 4 others (who are also co-defendants and are referred as
"Sellers") by way of a registered sale deed. Rajendra Gujjar claimed that he is the legal owner
of the Property and that the Sellers were not entitled to sell the Property to our Company. He
also claimed that the sale deed was not legal and that our Company is not a bonafide
purchaser. Our Company has filed its Written Statement contending that it had purchased the
Property from the Sellers with due care, caution and after diligence and that it is a bonafide
purchaser of the property and is currently pending before the court.
(c)
Ankit Miglani has filed a civil suit for specific performance and for injunction along with a
claim of `1,34,500 before the Civil Judge, Junior Division, Khalapur on December 12, 2012.
In 2007, Ankit Miglani had entered into a tenancy agreement with Vinu Deshmukh as the
property falls under the Bombay Tenancy Act. Ankit Miglani has stated that he had made full
payment with respect to property to Vinu Deshmukh on the faith that the sale deed in
accordance with their understanding would be executed soon. However, with a passage of
time, the land rates have increased and now Vinu Deshmukh has refused to execute the sale
deed claiming increased rates for the property.
(d)
In 2008, our Company had purchased property aggregating to 7 acre 4 Guntha in Survey no
40/1 and Survey no 39/5 Village Dahiwali, Taluka Khalapur, District Raigad ("Property")
from Dipali Patil. The Property had devolved upon Dipali Patil on the death of her husband,
Digamber Patil who was entitled to ½ share in the Property pursuant to a will from his
grandfather, Sayaji Patil. Dipali Patil sold her share in the Property to our Company. Namdev
Patil, Dipali Patil’s father in law and his family members claim a share in the Property and
have filed numerous suits in the courts at Khalapur in this regard.
Pending Tax Litigations:
(a)
The Office of Commissioner of Central Excise, Raigad has issued a show cause notice to our
Company on January 5, 2009 demanding payment of excise duty amounting to `64,84,307 for
the period from December 2007 to June 2008 on the ground that that zinc dross is dutiable as
the process amounts to manufacture. By an order dated February 4, 2010, the Commissioner
of Central Excise, Raigad confirmed the central excise duty of `64,84,307 and ordered the
recovery along with a equivalent penalty of `64,84,307 for contravention under Rule 25 of
Central Excise Rules. Our Company has filed an appeal on May 4, 2010 before the Central,
180
Uttam Galva Steels Limited – Placement Document Excise and Service Tax Appellate Tribunal, Western Zonal Branch challenging the order
which is presently pending.
(b)
The Office of Commissioner of Central Excise, Raigad Commissionerate had issued a show
cause notice on January 6, 2009 to the Company demanding payment of excise duty
amounting to `30,82,563 for the period from December 2007 to June 2008 on the ground that
that zinc dross is dutiable as the process amounts to manufacture. By an order dated May 5,
2010, the Additional Commissioner of Central Excise, Raigad confirmed a duty of
`30,82,563 and ordered for the recovery of the same along with an equivalent penalty of
`30,82,563. Our Company has now filed an appeal before the Commissioner of Customs and
Central Excise (Appeals)-II which is presently pending.
181
Uttam Galva Steels Limited – Placement Document GENERAL INFORMATION
1.
Our Company was incorporated under the laws of the Republic of India on March 29, 1985 as
Uttam Galva Steels Limited as a public company. Our Corporate Identity Number is
L27104MH1985PLC035806.
2.
As of the date of the Placement Document, the authorized capital of our Company is
`1,75,00,00,000 divided into 17,50,00,000 Equity Shares of face value of `10 each and paidup capital of `1,22,26,01,030 comprising of 12,22,60,103 Equity Shares of `10 each were
issued and are outstanding.
3.
Our Company’s registered office is situated at Uttam House, 69, P. D’Mello Road, Mumbai,
400009.
4.
The Placement was authorized and approved by our Company’s Board of Directors on
February 26, 2013 and by the shareholders of our Company in the Extra Ordinary General
Meeting held on March 23, 2013.
5.
Our Company has applied for and received in-principle approvals from BSE and NSE vide
their letters dated March 25, 2013 under Clause 24(a) of the Listing Agreement. We shall
apply for the final listing and trading permissions to list and trade the Equity Shares on BSE
and NSE after Allotment in the Placement.
6.
Copies of the Memorandum and Articles of Association will be available for inspection on
any weekday (except Saturdays, Sundays and public holidays) during the Bidding Period at
the Registered Office of our Company between 11.00 am and 04.00 pm.
7.
Other than as set forth in this Placement Document, we have obtained all approvals and
authorizations required in connection with the Placement.
8.
Other than as set forth in this Placement Document, there has been no significant change in
our Company’s financial position since December 31, 2012, the date of its last published
unaudited financial results.
9.
Except as disclosed in this Placement Document, our Company is not involved in any legal
proceeding and our Company is not aware of any threatened legal proceeding, which if
determined adversely, could result in a material adverse effect on the business, financial
condition or results of operations of our Company.
10.
M/s Prakkash Muni & Associates, Chartered Accountants, have audited the standalone and
consolidated financial statements of our Company as of and for the years ended March 31,
2012 and 2011 and have reviewed the standalone and consolidated financial statements of our
Company and have consented to the inclusion of their report in this Placement Document.
11.
Our Company and the GC-BRLM accept no responsibility for statements made otherwise
than in the Placement Document and anyone placing reliance on any other source of
information, including our website www.uttamgalva.com,would be doing so at his or her own
risk.
12.
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.
182
The Floor Price for the Placement is `76.48 per Equity Share of face value of `10 each. The
Floor Price is calculated in accordance with Regulation 85 of the SEBI Regulations.
183
Uttam Galva Steels Limited – Placement Document INDEPENDENT ACCOUNTANTS
Prakkash Muni & Associates, Chartered Accountants, have audited the standalone and consolidated
financial statements of our Company as of and for the years ended March 31, 2012 and 2011. The
audited standalone and consolidated financial statements as of and for the years ended March 31,
2012 and 2011 were prepared in accordance with the Indian GAAP. Further the unaudited financial
results (limited reviewed) for the third quarter ended December 31, 2012 that appears in the
Placement Document has been prepared by our Company pursuant to Clause 41 of the Listing
Agreement entered into with the Stock Exchanges in India and as disclosed to the Stock Exchanges
for the quarter ended December 31, 2012.
184
Uttam Galva Steels Limited – Placement Document
FINANCIAL STATEMENTS
Sr. No.
1.
2.
3.
4.
Particulars
Limited Review Results and the report thereon as on December 31, 2012
on Standalone financial statements.
Auditors’ report on the financial statements as appearing in the Placement
Document
Auditors’ Report and Standalone financial statements, thereon for the
Financial Year ended March 31, 2012
Auditors’ Report and Consolidated financial statements, thereon for the
Financial Year ended March 31, 2012
185
Page No.
186
188
F-1
F-26
AUDITORS’ REPORT ON THE LIMITED REVIEWED FINANCIAL STATEMENTS AS OF
DECEMBER 31, 2012
To,
The Secretary,
Mumbai Stock Exchange,
Mumbai.
Dear Sir,
We have reviewed the accompanying statement of unaudited financial results of M/s. Uttam Galva
Steels Limited for the period ended 31st December 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/
Committee of 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) 2400,
engagements to Review Financial Statements 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
inquiries of company personnel and an analytical procedure 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 unaudited financial results prepared in accordance with applicable
accounting standards and other recognised 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 PRAKKASH MUNI & ASSOCIATES
FIRM REGISTRATION NO. 111792W
Sd/PRAKKASH R. MUNI
PARTNER
MEMBERSHIP NO. 30544
Place: Mumbai
Date: 8th February, 2013
186
187
AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS
To,
The Board of Directors,
In terms of the appointment for the purpose of certification of the financial information of Uttam
Galva Steels Limited (the "Company") annexed to this report, which is required to be prepared in
accordance with Chapter VIII read with Schedule XVIII of the Securities and Exchange Board of
India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (the "SEBI Regulations"),
issued by Securities and Exchange Board of India (‘SEBI’) in pursuance of section 30 of the
Securities and Exchange Board of India Act, 1992, as amended from time to time, we state as follows:
1.
The financial statements referred to in this report are to be included in the Preliminary
Placement Document / Placement Document of the Company in connection with proposed
issue of shares to Qualified Institutional Buyers (‘QIBs’) pursuant to an Issue under Chapter
VIII – Qualified Institutions Placement of SEBI Regulations.
2.
We, Prakkash Muni & Associates, Chartered Accountants have audited the attached
Standalone Balance Sheet of Uttam Galva Steels Limited hereinafter as at March 31, 2012
and 2011, the Standalone Statement of Profit and Loss Account for the years ended on those
dates and the Standalone Cash Flow statement for the years ended March 31, 2012 and 2011,
the accompanying schedules, notes to accounts along with accounting policies for the years
ended March 31, 2012 and March 31, 2011 cumulatively referred to as "Standalone Financial
Statements"
3.
We, have audited the attached Consolidated Balance Sheet of Uttam Galva Steels Limited and
for its subsidiaries namely Uttam Galva Holdings Limited, Ferro Zinc International FZE,
Atlantis International Services Limited, Uttam Galva Steels, Netherlands BV, Neelraj
International Trade Limiteds’ Balance Sheets are audited by Zenith Certified, Chartered
Accountant and its joint ventures namely Texturing Technology Private Limited’s Balance
sheet is audited by K.S. Aiyer& Co. and Moira Madhujore Coal Limited’s Balance Sheet is
audited by G.P. Agrawal & Co. (hereinafter together referred to as the "UGSL Group") as at
March 31, 2012 and 2011, the Consolidated Statement of Profit and Loss Account for the
years ended on those dates and the Consolidated Cash Flow statement for the years ended
March 31, 2012 and 2011, the accompanying schedules, notes to accounts along with
accounting policies for the years ended March 31, 2012 and March 31, 2011 cumulatively
referred to as "Consolidated Financial Statements"
4.
The summary financial statements have been extracted from the Consolidated Financial
Statements for the years ended March 31, 2012 and March 31, 2011 and Standalone Financial
Statements for the year ended March 31, 2012 and 2011, which were audited by us.
5.
The Consolidated Financial Statements and Standalone Financial Statements are the
responsibility of the management of the Company and have been prepared by the
management on the basis of separate financial statements and other financial information
relating to the separate entities. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. The financial statements have been
prepared by the management of Uttam Galva Steels Limited in accordance with the
requirements of Accounting Standards issued by the Institute of Chartered Accountants of
India.
188
6.
We have performed such tests and procedures, which, in our opinion, were necessary for our
reporting to you. These procedures include comparison of the annexed financial information
with the Company’s audited financial statements. Based on such procedures carried out by us
and review of the records produced to us and the information and explanations given to us by
the Company’s management, and our comments in the foregoing paragraphs, we confirm that
nothing has come to our attention to show non-compliance with the SEBI Regulations.
7.
We have conducted our audit in accordance with the auditing standards generally accepted in
India. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are prepared, in all material respects, in
accordance with an identified financial reporting framework and are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
8.
We report that the Consolidated Financial Statements have been prepared by the Company in
accordance with the requirements of Accounting Standard (AS) 21, ‘Consolidated Financial
Statements’, Accounting Standard (AS) 23 ‘Accounting for Investments in Associates in
Consolidated Financial Statements’ and Accounting Standard (AS) 27, ‘Financial Reporting
of Interests in Joint Ventures’ and on the basis of separate audited financials statements of the
Company, its subsidiaries, and its joint ventures.
9.
Based on our audit and examining the following documents, and to the best of our
information and according to the explanations given to us, in our opinion, the following
statements give a true and fair view and are in conformity with the generally accepted
accounting principles in India:
a. the Consolidated Balance Sheets of Uttam Galva Steels Limited and its subsidiaries and
Joint Ventures as at March 31, 2012 and March 31, 2011.
b. the Consolidated Statement of Profit and Loss Accounts and Consolidated Cash Flow
Statements for years ended March 31, 2012 and March 31, 2011.
c. accompanying notes to accounts along with accounting policies for the Consolidated
Financial Statements for the years ended March 31, 2012 and March 31, 2011
d. the summary of Consolidated Financial Statements for the years ended March 31, 2012
and March 31, 2011
e. the Standalone Balance Sheets of Uttam Galva Steels Limited as at March 31, 2012 and
March 31, 2011.
f.
the Standalone Statement of Profit and Loss Accounts and Standalone Cash Flow
Statements for years ended March 31, 2012 and March 31, 2011.
g. accompanying notes to accounts along with accounting policies for the Standalone
Financial Statements for the years ended March 31, 2012 and March 31, 2011
h. the summary of Standalone Financial Statements for the years ended March 31, 2012 and
March 31, 2011
189
i.
Capitalization Statement on Standalone Financial Statements as at March 31, 2012
10.
This report should not in any way be construed as a reissuance or re-dating of any of the
previous audit reports issued by us.
11.
This report is intended solely for your information and for the Company to comply with the
provisions of Chapter VIII read with Schedule XVIII of the SEBI Regulations and may not be
suitable for any other purpose. The report is not to be used, referred to or distributed for any
other purpose.
12.
In the Consolidated Balance Sheet the following subsidiaries and Joint Ventures are included
Sr.
No.
1.
2.
3.
4.
5.
6.
7.
Name of the Subsidiaries
Uttam Galva Holdings Limited
Atlantis International Services Company Limited
Uttam Galva Steels Netherlands BV
Ferro Zinc International FZE*
Neelraj International Trade Limited BV
Texturing Technology Private limited
Moira Madhujore Coal limited
Consolidated
31-03-2011
31-03-2012
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
*Ferro Zinc International FZE is a 100% step down subsidiary of Uttam Galva Holdings
Limited.
For Prakkash Muni & Associates
Firm Registration No.: 111792W
Prakkash R. Muni
PARTNER
Membership No.: 30544
Place: Mumbai
Date: 8th March 2013
Certificate No. : 2013/03/01
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       

        

        
     
        

       
     

       


      




      
     

       


      
   

        


       





        
        

      
       
        








         














 
  
      







        







 



         





        
     
    
       



     
       




        
       

       
     




   




         



 








       
      


       



       
      



        
      
       
      




       
      




       



       

     
         

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        
        
     
    
      
      





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        
      
       
        
 

 
         

        




       
     
     
         
       
       


        
 


 


        



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
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
       
        

        

        

         

 
        





      
    

      

     
     

      




    
     

        



 
 
      

          

 

      

         
        

 


 





  



    


   




    


    


   





       

 
  
    
          

  

    


     

       














 
 









 
 
 
 


























































 
 
 
 






 


 

 

 
 
 
 




 
 
 
 























 
    







 












 



 



 













 

      

























































 
   


 































 















 

























 






















 
 

 

 
















 
   



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

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                 

                  






 

                

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 
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               
                


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 
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



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 
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
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 


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                
               



 
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
              

 
           



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 


 
             

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

 
 

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












            

   


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    

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 

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 
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 


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
 



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         

                  


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


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 






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 



           


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 


              
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  

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 

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 
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 


 




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                  




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


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               

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 



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 



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 
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




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 


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

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 
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 
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 

           

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 





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



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

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 
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 

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 


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






 

 
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
 


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













 





































 



















 




























































 
















 



         
      
    
   
       


    
         



    
   


   
   


    


    
         












   


































       


 







 



 

 
           































 
 

































 





















 


























 

 
 












 

 


 

 























 
 
 

 








 














 

































































































































          

 

 

 






























        


 

 
 

































 







































































 

















 


















 






















 









 


 





 



























 














 

































































 
























 


















 












































 





















 





























































































 



















































  

 

 























































 


 
 

























         







 

 

 

 

















 

 




 



 
 

         







 

                    
             
                 

                   
               

  

 

 



 
 

 


      
       
                  




 
                  





 











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              

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






































  

                 





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






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




 



 


























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
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


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

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
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

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
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

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
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

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
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


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

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

















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 



















































 









































 

















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

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



 



















































 

















 



































 































 
 

CONSOLIDATED FINANCIAL
STATEMENTS
OF
UTTAM GALVA STEELS
LIMITED
FOR THE FINANCIAL YEAR
ENDED MARCH 31, 2012
F-26








  












 














 
 








 

 
 
 
 








 
 
 
 
 














 
 
 
 
 
















































 
 
 
 
 
 
 
 
 



 
 
 
 
 
 























 
   













 







 



 



 













 











































 
















 
   









 




























 


















 















































                  
                 

 

 

















 


 



 









 
        





               






































 




























  



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 
 
 

                    

 
 












                









   
 


 
 









 
 

 




























 
 



 





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
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

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

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 
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           
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
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
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
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
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
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
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
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
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
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 






















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








  
  






 

 
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








 
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












































 


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
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
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
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







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
 
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
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
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





































 



















 









 


 




 

























 




















































                  
                

   


                  
            

 
 


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





 








 









 

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
 
 











 



















 

















 

























 
 
 
 

 
 



 
















 



 
 
 

 


 
















 








 
 






































































































 





































 



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

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


 

 
 























 



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
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





















 














































 

















 



























 















 






 
 
 






































 














 

































































 
























 


















 


















































 
















 





























































































 



















































  

 

 























































 


 
 




























 
 
 
 




 


















DECLARATION
Our Company certifies that all relevant provision of the Chapter VIII of the SEBI Regulations have
been complied with and no statement made in this Placement Document is contrary to the provisions
of the Chapter VIII and Schedule XVIII of the SEBI Regulations and that all approvals and
permissions required to carry on its 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.
Anuj R Miglani
Managing Director
Date: March 26, 2013
Place: Mumbai
191
THE ISSUER
UTTAM GALVA STEELSLIMITED
REGISTERED OFFICE OF OUR COMPANY
Uttam Galva Steels Limted
Uttam House,
69, P. D’Mello Road,
Mumbai, 400009
(T): + 91 22 6656 3500 | (F): +91 22 2348 5025
GLOBAL COORDINATOR AND BOOKRUNNING LEAD MANAGER
10th Floor, " D" Wing, Trade Tower
Kamala Mills Compound, Senapati Bapat Marg
Lower Parel, Mumbai - 400 013, India
(T): +91 22 6626 6666 | (F): +91 22 6626 6700
Contact Person: Akshay Bhandari / Jitendra Verma
DOMESTIC LEGAL COUNSEL TO THE PLACEMENT
Rajani Associates
204-207, Krishna Chambers
59, New Marine Lines
Mumbai 400020
Maharashtra, India
(T): +91 22 4096 1000 | (F): +91 22 4096 1010
STATUTORY AUDITORS
M/s Prakkash Muni & Associates
303, The Eagle’s Flight,
Suren Road Off Andheri Kurla Road
Andheri-East, Mumbai 400093
Maharashtra, India
(T): +91 22 6630 0900 | | (F): +91 22 6630 0990
192

uttam galva steels limited

Transcription

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