draft letter of offer (for equity shareholders of our
TRANSCRIPT
DRAFT LETTER OF OFFER (For Equity Shareholders of Our Company only)
August 11, 2011
RODIUM REALTY LIMITED
(Our Company was originally incorporated under the name of Vishal Cotspin Limited on May 17, 1993, under the Companies Act, 1956 with the Registrar of Companies, Karnataka, Bangalore and received the Certificate for Commencement of Business on May 24, 1993. Subsequently the name of Our Company was changed to Rodium Realty Limited and a fresh Certificate of Incorporation was issued by Registrar of Companies, Maharashtra, Mumbai) on August 24, 2010. For further details, please refer to “History and Corporate Structure” on page no. 102 of this Draft Letter of Offer.)
Registered Office: 501, X’ cube, Plot No. 636, Off New Link Road, Andheri (W), Mumbai- 400053, Maharashtra, India. Tel No. 022-4231 0800, Fax No. 022-2673 4144; E-mail: [email protected], Website: www.rodium.net
(For details of change in registered office of Our Company, kindly refer to section “History and Corporate Structure” beginning on page no. 102 of this Draft Letter of Offer.)
Company Secretary and Compliance Officer: Ms. Kalpita Keluskar, E-mail: [email protected],
THE PROMOTERS OF OUR COMPANY ARE MR. DEEPAK CHHEDA, MR. HARISH NISAR, MR. ROHIT
DEDHIA AND MR. SHAILESH SHAH
FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF OUR COMPANY ONLY
DRAFT LETTER OF OFFER
ISSUE OF 21,65,267 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PRICE OF RS. [*] PER SHARE (INCLUDING A
PREMIUM OF RS. [*]/- PER EQUITY SHARE) AMOUNTING TO RS. [*] LAKHS (RUPEES [*] LAKHS ONLY) BY RODIUM
REALTY LIMITED (THE “COMPANY” OR THE “ISSUER”) ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF OUR COMPANY IN THE RATIO OF 2 (TWO) EQUITY SHARES FOR EVERY 3 (THREE) EQUITY
SHARES HELD ON THE RECORD DATE, i.e. [*]. THE FACE VALUE OF THE EQUITY SHARE IS RS. 10/- EACH AND
ISSUE PRICE IS [*] TIME THE FACE VALUE. FOR FURTHER INFORMATION, PLEASE REFER TO CHAPTER “TERMS OF THE ISSUE” ON PAGE NO. 198 OF THIS DRAFT LETTER OF OFFER.
Amount payable per Rights Equity Share (Rs.) Face Value Premium Total
On Application 5.00 [*] [*]
On Final Call 5.00 [*] [*]
Total 10.00 [*] [*]
* For details on the payment method see “Issue Procedure” on page no. 203 of this Draft Letter of Offer.
GENERAL RISKS
Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this offer unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in this offer. For taking an investment decision, investors must rely on their own examination of the Issuer and the offer including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Investors are advised to refer to “Risk Factors” on page no. 14 of this Draft Letter of Offer before making an investment in this offer.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in this Draft Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Draft Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect.
LISTING
The existing Equity Shares of Our Company are listed on Bombay Stock Exchange Ltd. (BSE)-(the Designated Stock Exchange for this Issue). We have received in-principle approval from BSE vide its letter no [●] dated [●], for listing of our Equity Shares being issued in terms of this Draft Letter of Offer.
LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE
VIVRO FINANCIAL SERVICES PVT. LTD.
SEBI Regn. No.: INM000010122 “VIVRO” House, 11, Shashi Colony, Opp. Suvidha Shopping Center, Paldi, Ahmedabad - 380007 Tel.: +91-79-2665 0670; Fax: +91-79-2665 0570 Web-site: www.vivro.net; E-mail: [email protected]
Contact Person: Mr. Ketan Modi / Mr. Shyamal Trivedi
CAMEOCORPORATE SERVICES LTD.
SEBI Regn. No.: INR000003753 Subramanian Building, No. 1, Club House Road, Chennai–600 002 Tel: +91- 44 - 2846 0390; Fax: +91- 44 - 2846 0129 Web-site:www.cameoindia.com; E-mail: [email protected]; Contact Person: Ms. Sreepriya
ISSUE PROGRAMME
ISSUE OPENS ON
LAST DATE FOR RECEIVING REQUESTS
FOR SPLIT APPLICATION FORMS ISSUE CLOSES ON
[*], 2011 [*], 2011 [*], 2011
T A B L E O F C O N T E N T S
Section Contents Page No.
I DEFINITIONS AND ABBREVIATIONS 3
Company Related Terms 3
Issue Related Terms 4
Conventional and General Terms 6
Open Offer Related Terms 7
Industry Related Terms 8
Abbreviations 9
Certain conventions, Presentation of Financial, Industry and Market data, Forward Looking Statements
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II RISK FACTORS 14
III INTRODUCTION
(A) Summary 35
(I) Industry Summary 35
(II) Business Summary 37
(III) Issue Details in brief 39
(IV) Financial Summary 40
(B) General Information 42
(C) Capital Structure 47
IV PARTICULARS OF THE ISSUE
(A)Objects of the Issue 56
(B) Means of Finance 57
(C) Basic Terms of the Issue 61
(D) Basis for Issue Price 61
(E) Statement of Tax Benefits 63
V ABOUT OUR COMPANY
(A) Industry Overview 72
(B) Business Overview 82
(C) Key Industry Regulations 93
(D) History and Corporate Structure 102
(E) Our Management 108
(F) Our Promoters 126
(G) Financial Information of Group Concerns 127
(H) Presentation of Financial Information and use of Market Data 139
(I) Dividend Policy 139
VI FINANCIAL STATEMENTS
(A) Financial Statements of the Issuer 140
(B) Management Discussion and Analysis 167
(C) Financial Indebtedness of the Company 173
VII LEGAL AND OTHER INFORMATION
(A) Outstanding Litigations and Material Developments 174
(B) Government Approvals or Licensing Arrangements 186
VIII REGULATORY AND STATUTORY DISCLOSURES
Authority for the Present Issue 188
Disclaimer Clause, Filing and Stock Market data 189
IX OFFERING INFORMATION (A) Terms of the Issue 200
(B) Issue Procedure 205
(C) Description of Equity Shares and Terms of the Articles of Association 231
X OTHER INFORMATION
Material Contracts and Documents for inspection 239
Declaration 241
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SECTION – I - DEFINITIONS AND ABBREVIATIONS Unless the context otherwise indicates or requires, the following terms shall have the meanings given below in this Draft Letter of Offer.
Term Description
“Rodium Realty Limited”, “RRL”, “Our Company”, “the Company”, “the Issuer”, “we”, “us” and “our”
Unless the context otherwise requires, refers to Rodium Realty Limited, a public limited company incorporated under the provisions of the Companies Act, 1956 having its registered office at Plot No. 636, 501, X’cube, Off New Link Road, Andheri (W), Mumbai – 400 053, Maharashtra, India.
Promoters, “Our Promoters”, “Existing Promoters”, “Present Promoters”
The promoters of our Company, viz. Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah
Promoter Group / Rodium Group
Includes such persons and entities, constituting our promoter group pursuant to Regulation 2(1)(zb) of SEBI (ICDR) Regulations, 2009
Group Concerns / Entities
Private Limited Company 1) Sigma Fiscals Private Limited 2) S.D.S. Enterprise Private Limited
Partnership Firms 1) M/s. Silver Hosiery 2) M/s. Rodium Realty and Construction 3) M/s. C.N.A Architects 4) M/s. Rodium Designs 5) M/s. Amrut Dhara Enterprises 6) M/s. Amrut Dhara Construction Company 7) M/s. Balaji Petroleum
8) M/s. First Stone 9) M/s. Kamla Enterprise Proprietorship Concerns 1) M/s. Amrut Industries
2) M/s. D. C. Designs Hindu Undivided Family 1) M/s. Shailesh Damji Shah (HUF)
Erstwhile Promoters of Our Company
Mr. Ramnivas Boob, Mr. Balkishan Boob, Mr. Bhagwandas Boob, Mr. Ramanujdas Boob, Mr. Vikas Boob, Mr. Vishal Kumar Boob, Mr. Vinay Boob, Mr. Sandip Kumar Boob and others
Company Related Terms
Term Description
Articles/Articles of Association/ AOA
Articles of Association of Rodium Realty Limited, as amended.
Auditors / Statutory Auditors
M/s. M. M. Nissim and Co., Chartered Accountants, having its office at D-3, B-Wing, 3rd Floor, Barodawala Mansion, 81, Dr. Annie Basant Road, Worli, Mumbai-400018 (Appointed w.e.f. August 2, 2010)
Board/Board of Directors
Board of Directors of Rodium Realty Limited
Equity Shareholders/ Members/ Shareholders
Equity shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the shares held in the electronic form and on the Register of Members of the Company in respect of the shares held in physical form at the close of business hours on the Record Date i.e. [*] and to
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whom this issue is being made.
Equity Shares Equity Shares of Our Company of the Face Value Rs. 10/- each, unless otherwise specified in the context thereof
Face Value Nominal Value of Equity Capital per Equity Share, in this case being Rs. 10/- each
Independent Directors Independent Directors of Our Company
KMP Key Managerial Personnel means the officers vested with executive powers and the officers at the level immediately below the Board of Directors of the Issuer and includes any other person whom the Issuer may declare as key managerial personnel.
Memorandum /Memorandum of Association/ MOA
Memorandum of Association of Rodium Realty Limited, as amended
Ongoing Project A project in respect of which the necessary legal documents relating to the acquisition of land or development rights have been executed by us and/ or key land related approvals have been obtained and any one of the following activities are being undertaken (not necessarily in the sequence set out herein): (a) on-site construction of the project has commenced; (b) initial detailed design for civil and landscaping is being undertaken and work has commenced on detailed design; (c) project launch activity which includes the construction of a show residence, sales office and other supporting infrastructure at the project site has commenced; or (d) an architect has been appointed and a detailed concept design is being prepared.
Planned Project A project for which land or development rights have been acquired or a memorandum of understanding or an agreement to acquire or a joint development agreement has been executed, in each case, by us, either directly or indirectly, and preliminary management development plans are complete.
Registered Office /Registered Office of Our Company
501, X’cube, Plot No. 636, Off New Link Road, Andheri (W), Mumbai – 400 053, Maharashtra, India.
Issue Related Terms
Term Description
Allotment Allotment of Equity Shares pursuant to this Issue
Allottee(s) The successful applicants to whom the Equity Shares are being allotted.
Allocation Ratio A ratio of 2 (Two) Rights Equity Shares for every 3 (Three) Equity Shares held on the Record Date
Applicant Any prospective Investor who makes an application pursuant to terms of this Draft Letter of Offer.
Application Forms The Forms in terms of which the Investors shall apply for the Equity Shares of the Company
ASBA Investor(s) Equity Shareholders proposing to subscribe to the Issue through ASBA process and who: (a) hold the Equity Shares of the Issuer in dematerialized form as on the Record Date and has applied for Right Entitlements and / or additional Equity Shares in dematerialized form; (b) has not renounced his / her Right Entitlements in full or in part; (c) is not a Renouncee; and (d) is applying through a bank account maintained with a SCSB
Application Supported by Blocked Amount (ASBA)
Means an application for subscribing to an issue containing an authorization to block the application money in a bank account
Banker(s) to the Issue [*] BSE Bombay Stock Exchange Limited
Compliance Officer Ms. Kalpita Keluskar, Company Secretary
Composite Application Form / CAF
The form used by an investor to make an application of allotment of Equity Share(s).
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Consolidated Certificate In case of physical certificates, Our Company would issue one certificate for the Equity Shares allotted to one folio
Draft Letter of Offer The Draft Letter of Offer dated [*] filed with the SEBI on [*] for its comments.
Designated Stock Exchange
Bombay Stock Exchange Limited
Final Call The monies payable by the Applicant, aggregating to Rs.[*] per share towards Equity Shares
Issue/Offer/Rights Issue Issue of 21,65,267 Equity Shares of Rs. 10/- each for cash at a price of Rs. [*]/- per share (including a premium of Rs. [*]/- per Equity Share) amounting to Rs. [*] Lakhs (Rupees [*] Lakhs only) by Rodium Realty Limited (“The Company” or “The Issuer”) on rights basis to the existing shareholders of our company in the ratio of 2 (Two) Equity Shares for every 3 (Three) Equity Shares held by the existing shareholders on the Record Date, i.e. [*].
ISIN International Securities Identification Number
Investor(s) The Shareholders of Our Company on the Record Date i.e. [*] and the renouncees.
Issue Closing Date [*]
Issue Opening Date [*]
Issue Period The period between the Issue Opening Date and Issue Closing Date and includes both these dates
Issue Price Rs. [*] per Equity Share
Issue Proceeds The proceeds of the Issue that are available to Our Company
Lead Manager or Lead Manager to the Issue/ LM
Vivro Financial Services Private Limited
Letter of Offer Letter of Offer to be filed with the Stock Exchange in relation to the Issue after incorporating SEBI comments on the Draft Letter of Offer.
Listing Agreement Listing Agreement entered into with Stock Exchange
Net Proceeds The Issue Proceeds less the issue expenses. For further information about use of the Issue Proceeds and the issue expenses see “Objects of the Issue” on page 56 of this Draft Letter of Offer
Record Date [*]
Refund Account The account opened with Bankers to the Issue, from which refunds, if any, shall be made
Refund through electronic transfer of funds
Refund through electronic transfer of funds means Refunds through ECS, Direct Credit, NEFT or RTGS as applicable
Registrar to the Issue Cameo Corporate Services Limited Rights Issue Account
In accordance with Section 73 of the Companies Act, 1956, an account opened with the Banker(s) to the Issue to receive monies from the Bank Account for the Issue on the Designated Date
Renouncee(s) Any person(s) who has/have acquired Rights Entitlements from the Equity Shareholders of Our Company.
Rights Entitlement The number of Equity Shares that a Shareholder is entitled to in proportion to the number of Equity Shares held by the Shareholder on the Record Date.
Rights Issue The issue of Equity Shares on rights basis as per terms of this Letter of Offer
SAF(s) Split Application Form(s)
Self Certified Syndicate Bank (SCSB)
SCSB is a Banker to an Issue registered under SEBI (Bankers to an Issue) Regulations, 1994 and which offers the service of making an Applications Supported by Blocked Amount and recognized as such by the SEBI.
Stock Exchange BSE where the Equity Shares of Our Company are presently listed, and where the Equity Shares to be issued pursuant to the Issue are proposed to be listed.
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Conventional and General Terms
Term Description
AGM Annual General Meeting
ASBA Application Supported by Blocked Amount
CIN Corporate Identification Number
Companies Act The Companies Act, 1956, as amended.
Depository A Company formed and registered under the Companies Act, 1956 and which has been granted a certificate of registration under sub-section (1A) of Section 12 of the Securities and Exchange Board of India Act, 1992.
Depository Act The Depository Act, 1996, as amended
Depository Participant A Depository Participant registered as such under sub-section (1A) of Section 12 of the Securities and Exchange Board of India Act, 1992
ECS Electronic Clearing System EGM Extra Ordinary General Meeting
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999, as amended and the regulations framed there under.
Financial Year/Fiscal/FY
Period of twelve months ended on March 31 of that particular year.
FII Foreign Institutional Investor (as defined under SEBI (Foreign Institutional Investors) Regulations, 1995) registered with SEBI under applicable laws In India.
FVCI Foreign Venture Capital Investor registered under the Securities and Exchange Board of India (Foreign Venture Capital Investor) Regulations, 2000
Indian GAAP Generally Accepted Accounting Principles in India.
GoI/Government Government of India
HNI High Net Worth Individual
HUF Hindu Undivided Family
INR/ Rupees/ Rs. Indian Rupees, the legal currency of the Republic of India
I.T. Act The Income Tax Act, 1961, as amended
I.T. Rules The Income Tax Rules, 1962, as amended
LLA Leave and License Agreement
Non-Resident A person who is not an NRI or an FII and is not a person resident in India.
NBFC Non-Banking Financial Company
NOC No Objection Certificate
NR Non- Resident
NRI/Non-Resident Indian
A person resident outside India, as defined under FEMA and who is a citizen of India or a Person of Indian Origin under the FEMA (Deposit) Regulations, 2000.
NRE Account Non Resident External Account
NRO Account Non Resident Ordinary Account
p.a. Per annum
PAT Profit After Tax
PBT Profit Before Tax PLR Prime Lending Rate
RBI Reserve Bank of India constituted under the Reserve Bank of India Act, 1934
SCRA Securities Contracts (Regulation) Act, 1956, as amended
SCRR Securities Contracts (Regulation) Rules, 1957, as amended
SEBI Securities and Exchange Board of India constituted under the SEBI Act. SEBI Act Securities and Exchange Board of India Act, 1992, as amended
“SEBI (ICDR) Regulations” or “Regulations” or “SEBI Regulations”
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, including instructions and clarifications issued by SEBI from time to time.
SEBI (SAST) Securities and Exchange Board of India (Substantial Acquisition of Shares and
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Regulations / SAST / SEBI Takeover Code / Takeover Code
Takeovers) Regulations, 1997 read with amendments issued subsequent to that date
Securities Act United States Securities Act of 1933, as amended
SIA Secretariat for Industrial Assistance
SICA Sick Industrial Companies (Special Provisions) Act, 1985
Open Offer Related Terms
Term Description
Acquirers Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah
Open Offer Open Offer made by the Acquirers to acquire 6,49,580 Equity Shares from the public shareholders of Our Company.
SPA or Share Purchase Agreement
Share Purchase Agreement entered on August 7, 2009 between Mr. Balkishan Boob 187,320, (5.77%), and through duly constituted Power of Attorney on behalf of
other Sellers : Mr. Bhagwandas Boob 183,755, (5.66%), Mr. Ramanujdas Boob 174,255, (5.37%), Mr. Ramnivas Boob 197,505, (6.08%), Ms. Mamta Sachin Zanwar 27,500, (0.85%), Mr. Vinod Boob 71,750, (2.21%), Ms. Pushpa Boob 63,000, (1.94%), Ms. Kantabai Boob 58,000, (1.79%), Ms. Vandana Boob 10,550, (0.32%), Mr. Vinay Boob 31,250, (0.96%), Ms. Vijayalakshmi Boob 43,000, (1.32%), Ms. Shakuntala Boob 55,500, (1.71%), Mr. Vishal Kumar Boob 55,200, (1.70%), Ms. Aarti Boob 10,800, (0.33%), Mr. Vikas Boob 32,000, (0.99%), Balkishan Boob – HUF 23,000, (0.71%), Ramanujdas Boob – HUF 15,500, (0.48%), Bhagwandas Boob – HUF 15,500, (0.48%), Vinod Securities and Investments Pvt. Ltd. 107,300, (3.30%), Vinod Marketing Pvt. Ltd. 50,000, (1.54%), Mr. Sandeep Boob 29,500, (0.91%), Mr. Bipin Boob 25,000, (0.77%), Ms. Sapna Boob 20,500, (0.63%), Mr. Rohnak Boob 15,500, (0.48%), Ms. Kamala Bai Boob 15,000, (0.46%), Mr. Ritesh Boob 18,750, (0.58%), Mr. Jaikishan Boob 38,750, (1.19%), Ms. Sweta Boob 20,000, (0.62%), Shri Ram Dharmarth Trust 11,750, (0.36%), Sitaram Dharmarth Trust 12,500, (0.38%), Bipin Boob Family Trust 10,000, (0.31%), Sri Balaji Dharmarth Trust 13,000, (0.40%), Kanta Boob Family Welfare Trust 10,750, (0.33%), Laxmi Narayan Dharmath Trust 10,000, (0.31%), Pushpa Boob Family Welfare Trust 10,000, (0.31%), Vishal Boob Family Trust 11,500, (0.35%), Shakuntala Boob Family Welfare Trust 10,750, (0.33%), Radhakrishna Endowment 11,250, (0.35%), Ms. Triveni Boob 20,000, (0.62%), Ms. Madhuri Boob, 20,000, (0.62%), Ms. Mamta Boob 15,000, (0.46%), Ms. Sushma Boob 20,500, (0.63%), Total 17,82,685, (54.89%) and Mr. Deepak Chedda, Mr. Harish
Nisar, Mr.. Rohit Dedhia and Mr. Shailesh Shah for Definitive Shares.
Share Purchase Agreement entered on August 7, 2009 between Sandeep Boob Family Trust 10,000, (0.31%), Sitaram Endowment 10,000, (0.31%), Vijaylaxmi Boob Family Welfare Trust 10,000, (0.31%), Ramnivas Boob – HUF 10,000, (0.31%), Vinod Kumar Boob Family Trust 9,750, (0.30%), Ritesh Boob Family Trust 9,500, (0.29%), Vikaskumar Boob Family Trust 9,500, (0.29%), Laxmi Narayan Endowment 9,250, (0.28%), Shri Ram Endowment 9,250, (0.28%), Vinay Boob Family Trust 9,000, (0.28%), Radhakrishna Dharmarth Trust 8,750, (0.27%), Sri Balaji Endowment 7,250, (0.22%), Jaikishan Boob – HUF 2,500, (0.08%), Mr. Suresh Chunilal Talati 43,100, (1.33%), Ms. Meena Suresh Talati, 29,650, (0.91%), Ms. Prathima Viral Talati 28,400, (0.87%), Mr. Kantilal G. Vora 26,300, (0.81%), Mr. Mahaveerchand Ranka 17,500, (0.54%), Mr. Indarchand Ranka 5,000, (0.15%), Mr. Suresh Chunilal Talati 15,000, (0.46%), Mr. Viral Suresh Talati 15,000, (0.46%), Ms. Sangeeta Ranka 12,500, (0.38%), Mr. Goutamchand Ranka 10,000, (0.31%), Mr. Manmohandas Inani 5,350, (0.16%), Mr. Venugopal Inani 5,350, (0.16%), Mr. Indar Chand Ranka 15,005, (0.46%), Mr. Sanjeev Baldwa 3,600 (0.11%), Mr. Rajeev Baldwa 3,550, (0.11%), Mr. Anand Baldwa 1,700, (0.05%), Total 3,51,755, (10.83%) through duly constituted Power of Attorney in favour
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of Mr. Balkishan Boob. and Mr. Deepak Chedda, Mr. Harish Nisar, Mr.. Rohit Dedhia and Mr. Shailesh Shah for the Optional Shares
Takeover Code / Takeover Regulations /Takeover Formalities
Compliance to be made by Acquirer / s under Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 read with amendments issued subsequent to that date
Industry Related Terms
Term Description
Acre Equals 43,560 Sq. ft
BOCWA Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
BPLR Benchmark Prime Lending Rate
BSA The Bombay Stamp Act, 1958
Cess Act The Building and Other Construction Workers Welfare Cess Act, 1996
CBD Central Business District
CLRA The Contract Labour (Regulation and Abolition) Act, 1970
CMIE Centre for Monitoring Indian Economy
DCR Development Control Regulations for Greater Bombay, 1991
DIPP Department of Industrial Policy and Promotion
EPFA Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
ESIA Employee State Insurance Act, 1948
FAR Floor Area Ratio
FSI Floor Space Index
GoM The Government of Maharashtra
IBEF Indian Brand Equity Foundation
IMF International Monetary Fund
JDA Joint Development Agreement
MCGM Municipal Corporation of Greater Mumbai (Formerly known as Bombay Municipal Corporation)
MHADA Maharashtra Housing and Development Authority
MIDC Maharashtra Industrial Development Corporation
MMR Mumbai Metropolitan Region 1999
MOF Act The Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963
MRC Act The Maharashtra Rent Control Act, 1999
MRTPA Maharashtra Regional and Town Planning Act, 1966
MSA Act The Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971
MWA Minimum Wages Act, 1948
NCR National Capital Region
PBA Payment of Bonus Act, 1965
PCB Pollution Control Board
PF Provident Fund
PGA Payment of Gratuity Act, 1972
PWA Payment of Wages Act, 1936
RBI Reserve Bank of India
REDC Real Estate Development Company
REMF Real Estate Mutual Fund
SCB Scheduled Commercial Banks
SEZ Special Economic Zone
SRA Scheme The Slum Rehabilitation Scheme
Stamp Act The Indian Stamp Act, 1899
Standing Orders Act Industrial Employment (Standing Orders) Act, 1946
TCPD Town and Country Planning Department
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TDR Transfer of Development Rights
TP Act Transfer of Property Act, 1882
WCA Workmen’s Compensation Act, 1923
Abbreviations
Term Description
AS Accounting Standards as issued by the Institute of Chartered Accountants of India
ASBA Application Supported by Blocked Amount
BG/LC Bank Guarantee / Letter of Credit BgSE Bangalore Stock Exchange Limited
BIFR Board for Industrial and Financial Reconstruction
BM Meeting of Board of Directors
BSE Bombay Stock Exchange Limited
CDSL Central Depository Services (India) Limited CMIE Center for Monitoring of Indian Economy
DP Depository Participants
ECS Electronic Clearing System
EGM Extra Ordinary General Meeting
EPS Earnings Per Equity Share FCNR Foreign Currency Non Resident Account
FDI Foreign Direct Investment
FI Financial Institution
FIPB Foreign Investment Promotion Board
FY / Fiscal Period of twelve months ending on March 31
GDP Gross Domestic Product
GIR General Index Registry Number
GOI/Government Government of India
Hon’ble Honorable
HSE Hyderabad Stock Exchange Limited
HUF Hindu Undivided Family
ICD Inter Corporate Deposit
INR Indian Rupees, the legal currency of the Republic of India
LC Letter of Credit
Ltd. Limited
MICR Magnetic Ink Character Recognition
MOU Memorandum of Understanding
NA Not Applicable NAV Net Asset Value
NRE Account Non Resident External Account
NRO Account Non Resident Ordinary Account
NSDL National Securities Depository Limited
OCB Overseas Corporate Bodies PA Per Annum
PAN Permanent Account Number
PAT Profit After Tax PBDT Profit Before Depreciation and Tax
PBIDT Profit Before Interest, Depreciation and Tax PBT Profit Before Tax
PE, P/E Ratio Price/Earnings Ratio
RBI Reserve Bank of India
ROC Registrar of Companies, Maharashtra at Mumbai
ROI Return on Investment RONW Return on Net Worth
Rs./Rupees Indian Rupees, the legal currency of the Republic of India
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SCRR Securities Contracts (Regulations) Rules, 1957 as amended
SE/ Stock Exchange Stock Exchanges i.e. BSE
SEBI(SAST) Regulations
SEBI ( Substantial Acquisition of shares and Takeovers) Regulations, 1997
Security/ ies Equity Shares
USD/ $/ US$ United States Dollar, being the legal currency of the United States of America
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OVERSEAS SHAREHOLDERS
NO OFFER IN THE UNITED STATES
The rights and the securities of the Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the United States of America or the territories or possessions thereof (the “United States” or “U.S.”) or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the Securities Act (“Regulation S”)), except in a transaction exempt from the registration requirements of the Securities Act. The rights referred to in this Draft Letter of Offer are being offered in India, but not in the United States. The offering to which this Draft Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or rights for sale in the United States or as a solicitation therein of an offer to buy any of the said Equity Shares or rights. Accordingly, the Draft Letter of Offer and the enclosed CAF should not be forwarded to or transmitted in or into the United States at any time. Neither the Company nor any person acting on behalf of the Company will accept subscriptions or renunciation from any person, or the agent of any person, who appears to be, or who the Company or any person acting on behalf of the Company has reason to believe is, either a “U.S. person” (as defined in Regulation S) or otherwise in the United States when the buy order is made. Envelopes containing a CAF should not be postmarked in the United States or otherwise dispatched from the United States or any other jurisdiction where it would be illegal to make an offer under the Draft Letter of Offer, and all persons subscribing for the Equity Shares and wishing to hold such Equity Shares in registered form must provide an address for registration of the Equity Shares in India. The Company is making this issue of Equity Shares on a rights basis to Equity Shareholders of the Company and the Draft Letter of Offer and CAF will be dispatched to Equity Shareholders who have an Indian address. Any person who acquires rights and the Equity Shares will be deemed to have declared, represented, warranted and agreed, (i) that it is not and that at the time of subscribing for the Equity Shares or the Rights Entitlements, it will not be, in the United States when the buy order is made, (ii) it is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States, and (iii) is authorised to acquire the rights and the Equity Shares in compliance with all applicable laws and regulations.
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CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY, MARKET DATA AND FORWARD LOOKING STATEMENTS
Certain Conventions
In this Draft Letter of Offer, the terms “we”, “us”, “Our Company”, “the Company”, “Issuer”, “RRL” unless the context otherwise implies, refer to RODIUM REALTY LIMITED.
For additional definitions used in this Draft Letter of Offer, see the sections ‘Definitions and Abbreviations’ on page no. 3 of this Draft Letter of Offer. In the section entitled “Description of Equity Shares and Terms of Articles of Association, defined terms have the meaning given to such terms in the Articles of Association of Our Company.
Presentation of Financial Information Unless stated otherwise, the financial and operating data in the Draft Letter of Offer is derived from our restated financial statements as of the fiscal 2011, 2010, 2009, 2008 and 2007 prepared in accordance with Indian GAAP and the Companies Act, 1956 and restated in accordance with applicable SEBI Regulations, as stated in the report of our Statutory Auditors. The financial and operational data in the Draft Letter of Offer is presented on stand-alone basis. Our fiscal year commences on April 1 and ends on March 31 of each year, so all references to a particular fiscal year are to the twelve-month period ended March 31 of that year. In the Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. Unless stated otherwise, throughout this Draft Letter of Offer, all figures have been expressed in "Lakhs" or “Lacs” except where certain figures have been expressed in absolute numbers. The word “Lakh” or “Lac” means “one hundred thousand” and the word “million” means “ten lakh” and the word “Crore” means “ten million”. All references to “India” contained in this Draft Letter of Offer are to the Republic of India. All references to “Rupees” and “Rs.” or “INR” in this Draft Letter of Offer are to the legal and official currency of India. Throughout this document references to the singular also refer to the plural and one gender also refers to any other gender wherever applicable. Industry and Market Data
Market data used throughout in this Draft Letter of Offer were obtained from internal Company reports, data and industry publications. Industry publication data generally state that the information contained in those publications has been obtained from sources believed to be reliable, but that their accuracy and completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Although, Our Company believes market data used in this Draft Letter of Offer is reliable, it has not been independently verified. Similarly, internal Company reports and data, while believed to be reliable, have not been verified by any independent source. For further discussion of factors that could cause our actual results to differ, refer to the section entitled “Risk Factors” beginning on page no. 14 of this Draft Letter of Offer By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither Our Company, our Directors, the Lead Manager, nor any of their affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date thereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition.
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Forward Looking Statements All statements contained in this Draft Letter of Offer that are not statements of historical fact constitute “forward-looking statements.” All statements regarding our expected financial condition and results of operations, business, plans and prospects are forward-looking statements. These forward-looking statements include statements as to our business strategy, our revenue and profitability, planned projects and other matters discussed in this Draft Letter of Offer regarding matters that are not historical facts. These forward-looking statements and any other projections contained in this Draft Letter of Offer (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 forward-looking statements or other projections. These forward-looking statements generally can be identified by words or phrases like “aim”, anticipate”, “believe”, “contemplate”, “estimate”, “expect”, “future”, “goal”, “intend”, “objective”, “plan”, “project”, “seek to”, “should”, “will”, “will continue”, “will likely result”, “will pursue” and similar expressions or variations of such expressions, that are “forward looking statements”. Similarly, the statements that describe our objectives, plans or goals are also forward-looking statements.
All forward looking statements are subject to risks, uncertainties and assumptions about us, that could cause actual results to differ materially from those contemplated by the relevant forward looking statements.
Important factors that could affect our results to differ materially from our expectations includes, inter-alia,
• Our ability to successfully implement our strategy,
• Our growth and expansion, technological changes,
• If we experience insufficient cash flows or are unable to obtain the necessary funds to allow us to make required payments on our debt or fund working capital requirements;
• Our exposure to market risks,
• General economic and political conditions in India which have an impact on our business activities or investments,
• The monetary and interest policies of India, (fiscal, economic or political conditions in India)
• Inflation,
• Deflation,
• Unanticipated turbulence in interest rates,
• Foreign exchange rates,
• Equity prices or other rates or prices,
• The performance of the financial markets in India and globally,
• Changes in domestic and foreign laws, regulations and rules including those affecting the Real Estate industry,
• Changes in the foreign exchange control regulations, interest rates and tax laws in India;,
• Changes in competition in the said industry and force majeure conditions,
• Ability to retain management team and skilled personnel;
• Changes in the value of the Indian Rupee and other currencies;
• Social or civil unrest or hostilities with neighboring countries or acts of international terrorism; For further discussion of factors that could cause our actual results to differ, refer to the section entitled “Risk factors” beginning on page no. 14 of this Draft Letter of Offer. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither we nor our Directors, nor the Lead Manager, nor any of their affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date thereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, Our Company and the Lead Manager will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchange.
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SECTION II – RISK FACTORS Any investment in Equity Shares involves a high degree of risk and so you should carefully consider all of the
information in this Draft Letter of Offer including the risks and uncertainties described below before you make
an investment decision. Risks have been quantified, wherever possible. If any of the following risks actually
occur, our business, financial condition and results of operations could suffer, the trading price of our Equity
Shares could decline and you may lose all or part of your investment.
The financial and other implications of material impact of risks concerned, wherever quantifiable, have
been disclosed in the risk factors mentioned below. However there are few risk factors where the impact is
not quantifiable and hence the same has not been disclosed in such risk factors. The numbering of risk factors
has been done to facilitate ease of reading and reference and does not in any manner indicate importance
of one risk factor over another. Market data used throughout this Draft Letter of Offer was obtained primarily from internal company reports,
data and industry publications. The information contained in the Draft Letter of Offer has been obtained from
sources believed to be reliable, but their accuracy and completeness and underlying assumptions are not
guaranteed and their reliability cannot be assured. Although, the Company believes that the market
data used in this Draft Letter of Offer is reliable, it has not been independently verified. Similarly,
internal Company reports and data, while believed to be reliable, have not been verified by any independent
source. Materiality The Risk factors have been determined on the basis of their materiality. The following factors have been considered for determining the materiality:- a) Some events may not be material individually but may be found material collectively. b) Some events may have material impact qualitatively instead of quantitatively. c) Some events may not be material at present but may be having material impact in future. Note: - Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial or other implications of any of the risks described in this section. A. INTERNAL RISK FACTORS
I. RISKS RELATED TO OUR BUSINESS
1. Our Promoters/Directors and Promoter Group companies/concerns are party to certain legal proceedings that, if decided against us / them, could have an adverse effect on our reputation, business prospects and
results of operations. Our Promoters/Directors and Promoter Group companies/concerns are involved in certain legal proceedings and claims. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. We can give no assurance that these legal proceedings will be decided in our favour. Further, we may also not be able to quantify all the claims in which we are involved. Any adverse decision may have a significant effect on our business, financial condition and results of operations. The details of the outstanding litigations are provided below:
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Sr. No. Particulars
No. of Cases
Approx. Amount involved
(Rs. In Lakhs) Against the the Company
1. CLB Matters 2 Not Ascertainable
By / Against the Directors of the Company
2. Criminal Cases 2 Not Ascertainable
3. Regulatory Enquiry Proceedings against India Infoline Ltd. in which one of the Independent Director of our Company viz. Mr. Nilesh Vikamsey is an Indepedent Director
2 Not Ascertainable
By / Against our Group Concerns
4. Civil Cases (Property Related) 2 61.00
5. Income Tax 1 Not Ascertainable
For more information regarding all of the above litigations and tax demands and claims, see the section titled “Outstanding Litigation and Material Developments” beginning on page no. 172 of this Draft Letter of Offer.
2. Our Company was declared as a Sick Company by the Board for Industrial and Financial
Reconstruction (BIFR) under SICA in the past and the paid up equity share capital of Our Company was
reduced by 50% as per the scheme sanctioned by BIFR.
Our Company was in the past engaged in the business of manufacturing of yarn, which was made in a sophisticated plant. Our Company incurred substantial losses for a long period of time on account of continued labour problems, higher cost of production and lower sale realizations. On account of continued losses, the entire net worth of Our Company was eroded and Our Company made a reference to BIFR to declare the Company as a Sick Industrial Undertaking under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 on September 19, 1999. A rehabilitation proposal envisaging One Time Settlement (OTS) submitted by Our Company was accepted by more than 85% of the secured creditors on January 22, 2004. After completing the necessary formalities by the Operating Agency, BIFR sanctioned the rehabilitation scheme on November 28, 2006 and the paid up equity share capital of Our Company was reduced by 50% i.e. 32,47,900 equity shares. The BIFR discharged Our Company vide its order dated September 15, 2008 from the purview of SICA/ BIFR.
3. The Trading in Equity Shares of Our Company was suspended by the Bombay Stock Exchange Limited
(BSE) due to penal reasons for non compliance of certain clauses of Listing Agreement.
The trading in Equity Shares of Our Company was suspended by the Bombay Stock Exchange Limited from May 13, 2002 for violation of clause 41 of the Listing Agreement regarding filing of Quarterly Results. Subsequently on complying with all the pending requirements, BSE vide its letter dated March 1, 2006 revoked the suspension on the trading of Equity Shares of Our Company with effect from March 3, 2006.
4. Our Company has limited operating history in the business of Real Estate Development and therefore investors may not be able to assess Our Company’s prospects based on past results.
Our Company was originally incorporated as Vishal Cotspin Limited in 1993 to carry on the business of manufacturing and trading of yarn, which has been completely discontinued in the financial year 2010-11. In the year 2009, the management of Our Company was taken over by Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah (“existing promoters”) after duly complying with the Takeover Code. After the change of management, Our Company has ventured into real estate development by becoming a partner in M/s. Rodium Properties, a Partnership Firm with a profit sharing ratio of 10% on January 1, 2010. Pursuant to entering into a deed of Retirement and Dissolution with the other partners of
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the partnership firm effective from April 1, 2010, Our Company has continued the entire business of M/s. Rodium Properties, on going concern basis. For further details on M/s. Rodium Properties, please refer to Section-“History and Corporate Structure” on Page No. 102. Our past performance should not be construed as an indication of our future performance. Companies in their initial stages of development present substantial business and financial risks and may suffer significant losses. The results of Our Company’s operations will depend on many factors, including but not limited to, the successful completion of construction of our real estate project developments including residential, commercial, retail and hospitality developments, the availability of further opportunities for the acquisition or development of real estate assets, the successful completion of the construction of various projects and the availability of financial and general economic conditions in India. However, our Existing Promoters namely Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah are experienced in the field of real estate development and related activities for the past 20 years and have set up various companies/ partnership firms to construct and develop residential cum commercial projects. Based on the past experience of our existing promoters, we believe that our Promoters would be in position to carry on the business of real estate development in Our Company.
5. Our Auditors have qualified their report on Financial Statements in the past. Our Auditors have qualified their report to our Financial Statements for past years for certain quantitative and qualitative aspects, the details of which are given under the Section “Financial Statements of the Issuer” beginning on page No. 140.
6. Our indebtedness and the conditions and restrictions imposed on us by our financing agreements could
adversely affect our ability to conduct our business. As on the date of filing of this Draft Letter of Offer, we have been sanctioned working capital facilities of Rs. 1860 lakhs by Indian Overseas Bank and Kotak Mahindara Bank and Term Loan of Rs. 1800 Lakhs by Indian Overseas Bank. As of March 31, 2011, we had outstanding secured working capital loans and vehicle loans of Rs. 1556.36 lakhs and total unsecured loans of Rs. 2,835.04 lakhs aggregating to total indebtedness of Rs. 4,391.40 lakhs from Promoters and Others. We have drawn term loan facility to the extent of Rs. 517 lakhs from Indian Overseas Bank towards the Project – X’czar during May 2011. We may incur additional indebtedness in the future. Our indebtedness could have several important consequences, including but not limited to the following:
• failure to meet debt obligations could put us in default under our financing arrangements, which
could lead to cross-defaults under other arrangements or cause the maturity of obligations to be accelerated;
• a portion of our cash flow will be used towards repayment of our existing debt, which will reduce the availability of cash to fund working capital needs, capital expenditures and other general corporate requirements;
• our ability to obtain additional financing in the future at reasonable terms may be restricted; • fluctuations in market interest rates may affect the cost of our borrowings, as some of our loans are at
variable interest rates; and
• we may be more vulnerable to economic downturns, may be limited in our ability to withstand competitive pressures and may have reduced flexibility in responding to changing business, regulatory and economic conditions.
Most of our secured finance arrangements are secured by our movable and immovable assets. For further details, please refer to the section titled “Financial Statements of Issuer” on page 140 of this Draft Letter of Offer. Our accounts receivable and inventories are subject to charges created in favour of specific secured lenders. Many of our financing agreements also include various conditions and covenants that require us to obtain lenders’ consents prior to carrying out certain activities and entering into certain transactions. For example, we may require lenders’ consent before we may:
• create any charge, encumbrance or otherwise dispose of or remove assets offered as security,
• declare any dividend on our share capital except out of profits relating to that year after making all due
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and necessary provisions and we should not have failed to meet our obligations to pay the interest and/or commission and/or installment or other money payable to the said lender,
• make any major change in the management involving transfer of ownership; and
• enter into any scheme of merger, amalgamation, reconstruction or consolidation or any scheme of arrangement or compromise for the benefit of our creditors.
• incur additional debt, change our capital structure, increase or modify our capital expenditure plans, create additional charges on or further encumber our assets
Failure to meet these conditions or obtain these consents could have significant consequences for our business. Specifically, we must seek, and may be unable to obtain, lenders’ consents to incur additional debt, change our capital structure, increase or modify our capital expenditure plans, create additional charges on or further encumber our assets or merge with or acquire other companies, whether or not there is any failure by us to comply with the other terms of such agreements.
Compliance with the various terms of our loans is, however, subject to interpretation and we cannot assure you that we have requested or received all consents from our lenders that would be advisable under our financing documents. As a result, it is possible that a lender could assert that we have not complied with all the terms under our financing documents. Any failure to service our indebtedness, comply with a requirement to obtain a consent or perform any condition or covenant could lead to a termination of one or more of our credit facilities, acceleration of amounts due under such facilities and cross-defaults under certain of our other financing agreements, any of which may adversely affect our ability to conduct our business and have a material adverse effect on our financial condition and results of operations.
7. Our Company has obtained unsecured debt aggregating to Rs. 2,835.04 lakhs from our Promoters and
others that are repayable on demand, which may adversely affect our business, financial condition and
results of operations
As on March 31, 2011, Our Company has obtained unsecured debt aggregating Rs. 2,835.04 lakhs from our Existing Promoters and others that are repayable on demand. In the event that Existing Promoters or any other lender, from whom we have availed, unsecured debt or which we may avail in the future, call in such loans/ debt, we would need to find alternative sources of financing, which may not be available on commercially reasonable terms or at all. For further details in this regard, see “Financial Statements of the Issuer” on page no. 140 of this Draft Letter of Offer.
8. We have entered into agreements for the acquisition of land. There is no assurance that we will be able
to acquire these lands. We also undertake projects on land owned by third parties pursuant to
development agreements, which entail certain risks.
Our Company has entered into development agreements with third parties in respect of Project X’enus and Project X’point. In these projects, the title to the land is owned by one or more of these third parties and we have acquired the sole development rights to the land. These development agreements confer to us the rights to construct, develop, market and sell the built-up area on the land to buyers. Such projects involve working together with several third parties and our relationships with these third parties are governed by the development agreements. Though Our Company is generally empowered to make all operating decisions for the development of these projects, we may be required to make certain decisions in consultation with such third parties. Further, these development agreements are terminable by either party upon the occurrence of a breach of the terms of the development agreements. If any sole development agreement that we enter into with third party in respect of a parcel of land is terminated upon the occurrence of a breach, we may not be able to carry on any developments on such land.
9. Our statements regarding saleable area, areas under development, developable land and expected
launch and completion dates are based on architects' certificates and management estimates.
The Developable Area, Saleable Area, the acreage and square footage and other land area data relating to our land developments and land reserves and presented in this Draft Letter of Offer is based on certificates prepared by architects and management estimates. However, the acreage and square footage actually developed and sold may differ from the numbers presented herein, based on various factors such as market
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conditions, title defects and any inability to obtain required regulatory approvals. Any significant variation between (i) the figures for developable land contained in the architects' certificate and our estimates of developable land and (ii) the area actually held or developed could adversely affect the revenues that we generate from our projects, which could adversely affect our business, prospects, financial condition and results of operations. Further, the expected launch and completion dates of our projects are based on management estimates and are subject to change for various reasons.
10. Our Company does not own its registered office. Our Company’s registered office and certain other premises from which we operate are not owned by us and these premises have been taken on lease / leave and license. If any agreement under which the Company occupies the premises is not renewed or is renewed on terms and conditions that are unacceptable to Our Company, Our Company may suffer a disruption in its operations, which could have material adverse affect on its business, financial condition and results of operations.
11. We have experienced negative cash flows from Operating Activities, Investing activities and Financing
activities in the past. Any negative cash flows in the future could adversely affect our results of
operations and financial condition. We have experienced negative cash flow from operating activities for the year ended March 31, 2008 and 2009. Further, we have experienced negative cash flow from Investing Activities for the year ended March 31, 2007 and 2010 and from Financing activities for the year ended on March 31, 2007, 2009 and 2011. Any negative cash flows in the future could adversely affect our results of operations and financial condition.
(Rs. In Lakhs) Particular 2010-11 2009-10 2008-09 2007-08 2006-07
Net Cash (Used In) / From Operating Activities
1,275.88 49.77 -160.96 -552.68 44.99
Net Cash used for Investing Activities 692.97 -195.16 846.62 139.16 -7.88
Net Cash Generated from Financing Activities
-1200.72 130.04 -678.38 403.85 -27.25
If we experience any negative cash flow in the future, this could adversely affect our results of operations and financial condition. For further details, please refer to the section titled “Financial Statements of Issuer” on page 140 of this Draft Letter of Offer.
12. The Equity Shares being issued on rights basis will be partly paid-up until the Final Call is received by
Our Company.
The Issue Price of our Rights Equity Shares is Rs. [*] per Rights Equity Share. The Investors will have to pay 50% of the Issue Price on application and the balance 50% of the Issue Price on the Final Call made by the Company. The Rights Equity Shares offered under the Issue will be traded under separate ISINs for the period as may be applicable prior to the record date for the Final Call. An active market for trading may not develop for the Rights Equity Shares and, therefore, the trading price of the partly paid-up Equity Shares may be subject to greater volatility than our fully-paid Equity Shares. Further, Investors in this Issue will be required to pay the money due on the Final Call even if, at that time, the market price of our Rights Equity Shares is less than the Issue Price. If the Investor fails to pay the balance amount due with any interest that may have accrued thereon after notice has been delivered by our Company, then any of our Rights Equity Shares in respect of which such notice has been given may, at any time thereafter, before payment of the call money and interest and expenses due in respect thereof, be forfeited by a resolution of our Board to that effect. Such forfeiture shall include all dividends declared in respect of such forfeited Rights Equity Shares and actually paid before such forfeiture. Investors are only entitled to dividend in proportion to the amount paid up and the voting rights exercisable on a poll by Investors shall also be proportional to such Investor's share of the paid-up equity capital of our Company. If certain Investors do not pay the full amount, we may not be able to raise the amount proposed under the Issue.
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13. Our Company had entered into certain contracts in contravention of Provisions of Section 297 of the
Companies Act, 1956.
On 31 December, 2008, our Company under the management of erstwhile promoters entered into a transaction of Rs. 32.76 lakhs for sale of machinery on closure of the cotton spinning unit to one of its associate concern viz. Vinod Marketing Private Limited in contravention of the provision of Section 297 of the Companies Act, 1956. In order to compound the offence under section 621A of the Companies Act, 1956, Our Company had made an application to Hon’ble Company Law Board, Mumbai Bench on December 30, 2010. The Hon’ble Company Law Board, Mumbai Bench decided the penalty of Rs. 12,000 which has been paid by Our Company. However, the final order is yet to be received. For further details, see section titled "Outstanding Litigation and Material Developments" beginning on page no. 172 of this Draft Letter of Offer.
14. Our Company had entered into certain contracts in contravention of Provisions of Section 295 of the
Companies Act, 1956.
During the year 2008-09, our Company under the management of erstwhile promoters had advanced an interest free loan of Rs. 126.69 lakhs to Vinod Marketing Private Ltd, a company under the same management. The said loan was advanced without obtaining the prior approval of the Central Government as required under Section 295 of the Companies Act, 1956 and thus violated the provisions of the Companies Act, 1956. In order to compound the offence under Section 621A of the Act, Our Company had made an application to Hon’ble Company Law Board, Mumbai Bench on December 30, 2010. We received a notice form The Hon’ble Company Law Board, Mumbai Bench for which the reply has been submitted by Our Company. The Hon’ble Company Law Board, Mumbai Bench is yet to decide the matter. Any adverse order or direction in the case by Hon’ble Company Law Board could have an adverse impact on the business of our Company. For further details, see section titled "Outstanding Litigation and Material Developments" beginning on page no. 172 of this Draft Letter of Offer.
15. We have certain contingent liabilities, and our financial condition may be adversely affected if such contingent liabilities materialize. As on March 31, 2011, Our Company has following outstanding contingent liabilities as disclosed in our restated financial statements:
(i) Income tax liabilities for interest and penalty that may arise on account of late/ non-payment of
TDS under the Income Tax Act, 1961 - Not ascertainable (ii) No provision has been made for any interest and/ or penalty on the provident fund arrears relating
to the period from September, 1997 to March, 2001 under the provisions of the EPF Scheme, 1952, Employees Pension Scheme 1995 and Employee Deposit Linked Insurance Scheme, 1976 in respect of trainees stipend. The quantum of interest and/or penalty is not ascertained.
(iii) Dividend on Cumulative Redeemable Preference Shares has not been paid for the Current Financial year due to unavailability of distributable profits for the current year. However the Company has proposed the dividend outstanding to be payable till the year ended 31st March, 2010. The dividend payable for the current year is Rs. 58,76,260/- (excluding the Dividend Distribution Tax payable)
(iv) The Company has made payment of Rs.26.91 Lacs to the Prothonotary, Senior Master, Honorable Bombay High Court towards amount collected towards service tax as per the amendment in the Financial Budget 2010. The said levy has been challenged by the Maharashtra Chamber of Housing Industry (MCHI) in the Bombay High Court and a Stay has been granted. As per the submission and court directives the amount collected towards service tax dues have been deposited. However no interest / penalty has been provided as the same is under litigation.
(v) Uncalled amount of Rs.62000/- each on 250 units of Kotak India Growth Fund - Rs.155 lakhs
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(vi) Other Contingent Liabilities: (Rs. in Lakhs)
As at 31st March,
Particulars
2011 2010 2009 2008 2007
Claims against the company not acknowledged as debts in respect of sales tax, excise duty, service tax and other matters - - - 3.00 3.00
Provident Fund Liabilities - 9.99 9.99 9.99 9.99
16. Certain of our Group Companies/ concerns have incurred losses during the last three years.
Certain of our Group Companies / concerns have incurred losses in the recent past. The details of profit or losses by our Promoter Group entities are set out below: (Rs. in Lakhs)
Profit / (Loss ) for the year ended March 31, Name of Entity
2010 2009 2008
Sigma Fiscals Private Limited* 394.17 (195.53) 16.77
S.D.S Enterprise Private Limited* (0.15) (0.16) (0.17)
M/s Amrut Dhara Enterprise (0.006) (0.05) 9.49 *Audited Financials
For details of our group concerns, please refer to page no. 127 containing Section “Financial Information of Group Concerns”.
17. We require certain regulatory approvals in the ordinary course of our business and the failure to obtain
them in a timely manner or at all may adversely affect our operations. We require statutory and regulatory approvals and permits for us to execute our ongoing and future projects, and applications need to be made at appropriate stages for such approvals. We would also be required to obtain sanctions from the local municipalities, local bodies, pollution control boards as well as clearance from other Authorities, once the project is undertaken. We cannot assure that we will receive such approvals on time. Further, there can be no assurance that the relevant authorities will issue any of such permits or approvals in the time frames anticipated by us or may not issue any permits or approvals at all. Any delay or failure to obtain such permits or approvals in accordance with our plans may impede the execution of our business plans and projects and our investment may get stuck in purchase of land or development of property which may ultimately affect our results of operations.
18. Our business is dependent on the availability of real estate financing in India and if we are unable to
obtain the necessary funds on acceptable terms, we may not be able to fund the real estate projects and our business may be adversely affected. Our operations typically require large amounts of financing to fund the capital and working capital expenditure relating to our projects. Thus, Our Company may approach various banks and lender institutions for financial commitments. These financial commitments are subject to fulfillment of a number of conditions which Our Company may or may not be able to fulfill or agree on commercial or other terms, in which case it will be difficult to avail the necessary financing. Our Company’s ability to finance the working requirement plans on acceptable terms or at all is also subject to a number of risks, contingencies and other factors, some of which are beyond the control of Our Company. In the past, changes in the global and Indian credit and financial markets have diminished the availability of credit and led to an increase in the cost of financing. In many cases, the markets have exerted downward pressure on the availability of liquidity and credit capacity. We may need liquidity for future growth and development of our business and may have difficulty accessing the financial markets, which could make it more difficult or expensive to obtain financing in the future. If Our Company fails to raise additional funds
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in such amounts and at such times as Our Company may need, Our Company may not be able to purchase additional land or develop additional projects, which would adversely affect our results of operations.
19. We are dependent on the performance of and the conditions affecting the real estate market in Mumbai
as most of our operations are concentrated in and around Mumbai.
Most of our current real estate development projects are located in and around the city of Mumbai. In the event of a regional slowdown in construction activity in Mumbai or the surrounding areas, or any developments that make projects in and around Mumbai less economically beneficial, we may experience more pronounced effects on our financial condition and results of operations. There can be no assurance that the demand for our properties in and around Mumbai will grow, or will not decrease, in the future. Consequently, our business, financial condition and results of operations have been and will continue to be largely dependent on the performance of and the prevailing conditions affecting, the real estate market in and around Mumbai. The real estate market in and around Mumbai may be affected by various factors beyond our control, including prevailing local economic, political and social conditions, changes in supply and demand for properties comparable to those we develop, natural calamities and changes in applicable governmental schemes. If property prices in Mumbai fall, our business, financial condition and results of operations could be adversely affected. Any adverse development affecting the Real Estate Sector will adversely affect the operations of Our Company.
20. Limited supply of land, increasing competition and applicable regulations are likely to result in land
price escalation and a further shortage of developable land.
We are in the business of real estate development. Due to increased demand for land for development of residential and commercial properties, we are experiencing increasing competition in acquiring land in various geographies where we operate or propose to operate. In addition, the unavailability or shortage of suitable parcels of land for development leads to an escalation in land prices. Any such escalation in the price of developable land could materially and adversely affect our business, prospects, financial condition and results of operations. Additionally, the availability of land, its use and development, is subject to regulations by various local authorities.
21. We recognize our revenue based on “Percentage Completion Method” of accounting on the basis of our
management‘s estimates of the project cost.
We recognize the revenue generated from our projects on the "Percentage Completion Method" of accounting in accordance with Indian GAAP. Revenue from the sale of incomplete properties is recognized on the basis of the percentage of completion method by reference to the physical proportion of the work completed, as certified by the Company’s technical personnel, in relation to a contract or a group of contracts within a project. Revenue will only be recognized under the percentage of completion method once the work in relation to a particular contract or group of contracts has progressed to the extent of 20% of the total work involved. This revenue recognition policy is applicable to developments that we intend to sell and for which we have entered into a sale agreement prior to completion of construction; it is not applicable to developments that we intend to lease. The effect of changes to projected costs is recognized in the financial statements of the period in which such changes are determined. Therefore, our revenue recognition is based on the number of projects that qualify for such revenue recognition that are under execution during a period. This may lead to significant fluctuations in our revenues in accounting periods. Amounts received from customers not recognized under the method described above, are accounted for as advances from customers as part of the current liabilities.
22. The business and future results of operations of Our Company may be adversely affected if we incur any
time or cost overruns.
Our Company’s business plans are subject to various risks including time and cost overruns and delays in obtaining regulatory approvals. The length of time required to complete a project usually ranges from 24 to 48 months, within which there can be changes in the economic environment, local real estate market, prospective customer’s perception, price escalation, etc. If the changes take place during the duration of the
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project, then our projections regarding the costs, revenues, return on the project, profitability as well as our operations will be adversely affected.
There could also be unexpected delays and cost overrun in relation to our projected / future projects and
thus, no assurance can be given to complete them on scheduled time and within the expected budget. 23. Increase in the cost of raw material will adversely affect Our Company’s operations.
Our Company’s business is affected by the availability, cost and quality of the raw materials it needs to construct and develop its properties. The principal raw materials include steel, cement and timber. The prices and supply of these and other raw materials depend on factors not under our control, including general economic conditions, competition, production levels, transportation costs and import duties. If, for any reason, the primary suppliers of raw materials should curtail or discontinue their delivery of such materials to Our Company in the quantities it needs and at prices that are competitive, Our Company’s ability to meet the material requirements for the projects could be impaired, construction schedules could be disrupted and Our Company’s business could suffer.
24. We compete in our business with a number of real estate developers.
We operate our business in an intensely competitive and highly fragmented industry with low entry barriers. We face significant competition in our business from a large number of Indian real estate development companies, who also operate in the same regional markets as us. The extent of the competition we face in a potential property market depends on a number of factors, such as the size and type of property development, contract value and potential margins, the complexity and location of the property development, the reputations of the customer and us and the risks relating to revenue generation. Given the fragmented nature of the real estate development industry, we often do not have adequate information about the property developments, our competitors are developing and accordingly, we run the risk of underestimating supply in the market.
25. Our Company may enter into MoUs, Agreements to sell and similar agreements with third parties to
acquire land or land development rights, which entails certain risks.
Our Company may enter into and proposes to enter into in future MoUs, agreements to sell and similar agreements with third parties to acquire title or land development rights with respect to certain land. Since we do not acquire ownership or land development rights with respect to such land upon the execution of such MoUs, a formal transfer of title or land development rights with respect to such land is completed after we have conducted satisfactory due diligence and/or requisite governmental consents and approvals have been obtained and/or we have paid all of the consideration for such land. As a result, Our Company is subject to the risk that pending such consents and approvals sellers may transfer the land to other purchasers or that Our Company may never acquire registration of title or land development rights with respect to such land. Our Company may also be required to make partial payments to third parties to acquire certain land or land development rights which Our Company may be unable to recover under certain circumstances. Our Company’s inability to acquire such land or land development rights, or if Our Company fails to recover the partial payment made by it with respect to such land, may adversely affect Our Company’s business, financial condition and results of operation.
26. Changes in interest rate will have a significant impact on Our Company and also on the demand for
residential real estate projects.
Our Company may opt to avail long term or short term debt, if required in order to meet its financial requirements in future. Interest rates in our economy are sensitive to factors which are usually beyond the control of Our Company. Thus, any change in the interest rates will impact our cost of borrowing and profitability. Customers may borrow funds to acquire the property. Thus, one of the factors on which the markets for residential and commercial developments are dependent is the affordability of such properties which in turn is dependent on the availability of credit to the prospective customers. Increase in interest rate will affect
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the customer’s ability to avail finance resulting in decline in the demand for residential or other real estate projects. This in turn will adversely affect Our Company’s business, financial condition and results of operation.
27. We have not paid dividends in the past and any material adverse effect on our future earnings, financial
condition, cash flows will affect our ability to pay dividends in the future.
Our Company has never paid dividends to preference shareholders and equity shareholders in the past. Our ability to pay dividends in the future will depend on the earnings, financial condition and capital requirements. Our business is capital intensive and we may plan to make additional capital expenditure to complete various real estate projects that we are developing. Our ability to pay dividends is also restricted under certain financing arrangements. We may be unable to pay dividends in the near or medium term, and our future dividend policy will depend on our capital requirements and financing arrangements in respect of our real estate projects, financial condition and results of operations.
28. Our success depends in large part upon our promoters, senior management, directors and key personnel
and our ability to retain them and attract new key personnel when necessary.
Our senior management and key personnel collectively have many years of experience and would be difficult to replace. We cannot assure you that we will continue to retain any or all of our senior management or the key members of our management or that we will continue to benefit from the experience of our Promoters. Any loss of our Promoters, senior managers or other key personnel or the inability to recruit further senior managers or other key personnel could impair our future by impairing our day-to-day operations, hindering our development of new projects and harming our ability to develop, maintain and expand client relationships.
29. Our Company has entered into and will continue to enter into, related party transactions.
Our Company has entered into transactions with related parties that include its Promoters, Directors and their relatives, key management personnel and companies forming part of its Promoter Group. While Our Company believes that all such transactions have been conducted on an arm’s length basis, there can be no assurance that Our Company could not have achieved more favorable terms had such transactions been entered into with unrelated parties. Furthermore, it is likely that Our Company may enter into related party transactions in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on Company’s financial condition and results of operations.
30. Our Company’s inability to manage growth could disrupt its business and reduce its profitability.
Our Company has embarked on a growth strategy, which involves a substantial expansion of Our Company’s current business lines, in terms of size and geographical scope. The growth strategy will place significant demands on Our Company’s management, financial and other resources. It will require Our Company to continuously develop and improve its operational, financial and internal controls. Continuous expansion increases the challenges involved in financial management, recruitment, training and retention of high quality human resources, preserving Our Company’s values and entrepreneurial environment and developing and improving its internal administrative infrastructure. If Our Company is unable to manage its growth effectively, its business and financial results could be adversely affected.
31. Environmental problems could adversely affect our Company’s projects.
An environmental assessment for any real estate project above a threshold limit is a must for the purpose of obtaining regulatory approval. The assessment is necessary as it would reveal material environmental problems which if discovered during or after the development of the project, substantial liabilities would have to be incurred. There would be reduction in the value of the relevant property which would eventually lead in delay of the project.
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32. Our insurance policies provide limited coverage, potentially leaving us uninsured against some business
risks.
The occurrence of an event that is uninsurable or not fully insured could have a material adverse effect on our business, financial condition, results of operations or prospects. We maintain insurance on property and equipment in amounts believed to be consistent with industry practices but we may not be fully insured against some business risks. Accordingly, we obtain comprehensive insurance coverage for each project during its construction phase. Our insurance coverage for each project includes insurance against fire and related risks and earthquakes. We also maintain workmen's compensation policies. However, we do not maintain directors' and officers' liability insurance, nor any insurance for loss of profit, if any, suffered by us or any of our customers. Our insurance coverage also does not include insurance against third party risks. Further, we do not maintain "key man" insurance for our Promoters, our senior managers or other key personnel.
33. We do not own the “Rodium” trademark but are dependent on it.
The trademark “Rodium” is owned by one of the Promoter of Our Company viz. Mr. Deepak Chheda. As on the date of filing this Draft Letter of Offer, we have not entered into any written agreement with Mr. Deepak Chheda for use of the “Rodium” trademark in our business. Our business depends on the “Rodium” trademark as we market all our real estate projects under the Rodium trademark. The right to trademark is a crucial factor in marketing our projects. In case, our Promoter viz. Mr. Deepak Chheda withdraws the NOC for use of Trademark or demands royalty from Our Company, we would not be able to use the “Rodium” Trademark and, if we are not able to create new trademarks or brands successfully, we could experience a material adverse effect on our business, financial condition and results of operations. In addition, if any third party uses the trade name in ways that adversely affect such trademark, our reputation could suffer damage, which in turn could have a material adverse effect on our business, financial condition and results of operations.
34. Labour unrest or shortage problems may significantly affect our business and if our employees unionise,
we may be subject to, slowdowns and increased wage costs.
India has stringent labour legislation that protects the interests of workers, including legislation that sets forth detailed procedures for the establishment of unions, dispute resolution and employee removal and legislation that imposes certain financial obligations on employers upon retrenchment. In addition, we may be unable to mobilize the required number of labourers to carry out the construction on our project sites. Although our employees are not currently unionized, there can be no assurance that they will not unionise in the future. If our employees unionise, it may become difficult for us to maintain flexible labour policies or we face labour shortages, and our business, financial condition and results of operations may be adversely affected.
35. We are dependent on our IT systems for the execution and management of our projects.
We use information and communication technologies extensively to manage and execute our projects and to improve our overall efficiency. Our design and architectural team use technologically advanced tools and processes like Macintosh based high end management, visual and designing software like Archi CAD, Artlantis, etc. In addition, our project management team uses software, such as Microsoft Project, to review the progress of each project and monitor cost and time overruns, if any. Any delay in implementation or any disruption in the functioning of our IT systems could have a material adverse effect on our business if it causes loss of data or affects our ability to track, record and analyze the progress of our projects, process financial information, manage our creditors and debtors, or engage in normal business activities.
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36. Conflicts of interest may arise out of common business objects shared by Our Company and certain of
our Promoter Group entities.
Our Promoters have interests in other companies and entities that may compete with us, including other entities in our Promoter Group that conduct businesses with operations that are similar to ours within the real estate development industry. There is no requirement or undertaking made by the Promoters or other entities in our Promoter Group not to compete with our business. In addition, there is no requirement or undertaking for our Promoters, Promoter Group or such similar entities to conduct or direct any opportunities in the real estate 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 entities in our Promoter Group in circumstances where our interests differ from theirs. There can be no assurance that our Promoters or other entities in our Promoter Group will not compete with our existing business or any future business that we may undertake, nor that their interests will not conflict with ours.
37. Our growth may require additional capital, which may not be available on terms acceptable to us.
We expect to finance our growth through equity issuances, including through the Net Proceeds of this Issue, as well as through debt financings. We may not be successful in obtaining additional funds in a timely manner, on favorable terms or at all. In addition, the availability of borrowed funds for our business may be greatly reduced, and the lenders may require us to invest increased amounts of equity in a project in connection with both new loans and the extension of facilities under existing loans. If we do not have access to additional capital, we may be required to delay, scale back or abandon some or all of our growth strategies or reduce capital expenditures and the size of our operations.
38. We depend on various sub-contractors or specialist agencies to construct and develop our projects.
We primarily rely on third parties for the implementation of our projects and generally enter into several arrangements with third parties. Accordingly, the timing and quality of construction of our properties depends on the availability and skill of those sub-contractors. Although we believe that our relationships with third party subcontractors are cordial, we cannot assure you that skilled subcontractors will continue to be available at reasonable rates and in the areas in which we conduct our operations.
39. We conduct due diligence and assessment exercises prior to undertaking a project, but may not be able to
assess or identify certain risks and liabilities.
Prior to undertaking a project, we conduct due diligence and assessment exercises in relation to land, and assess the financial viability of the project. Due to the nature of industry in which we operate, certain potential risks and liabilities may not come to our notice while conducting such exercises, such as title defects and suitability of the land for the proposed development. In addition, we may not correctly estimate the cost of the project when budgeting for the project. Consequently, we may face unexpected liabilities and such unexpected liabilities may materially and adversely affect our financial condition and results of operations.
40. Further equity offerings may lead to dilution of equity and impact its market price.
Our Company may require further infusion of funds to satisfy its capital needs and future growth plans, which it may not be able to procure. Any future equity offerings by Our Company may lead to dilution of equity and may affect the market price of its Equity Shares.
41. Our ompany’s stock price may be volatile, and you may be unable to sell your shares at or above the
Issue price or at all. The market price of our Company’s Equity Shares after the Rights Issue may be subject to significant fluctuations in response to various factors including variations in our operating results and the performance of our business; adverse media reports about us or the real estate industry; regulatory developments in our target markets affecting us, our clients or our competitors; market conditions and perceptions specific to the real estate industry and volatility in the Indian and global securities markets. In the recent times, there has
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been volatility in the Indian stock markets and our share price could fluctuate significantly as a result of such volatility in the future.
42. Our Company’s business and growth plan could be adversely affected by the incidence and rate of
property taxes, service taxes and stamp duties.
As a property owning and development company, Our Company is subject to the property tax regime in the states where its properties are located. These taxes could increase in the future, and new categories of property taxes may be established which would increase Our Company’s overall development and other costs. Our Company may also buy and sell properties and property conveyances are generally subject to stamp duty. If these duties increase, the cost of acquiring properties will rise and sale values could also be affected. Additionally, if stamp duties were to be levied on instruments evidencing transactions which the Company believes are currently not subject to such duties, such as the grant or TDRs, the Company’s acquisition costs and sale values would be adversely affected, resulting in a reduction of profitability. Any such changes in the incidence or rates of property taxes or stamp duties could have an adverse effect on the Company’s financial condition and results of operations. Additionally, the Finance Act 2010 has levied a service tax on sales and receipts on residential properties under construction for which we have entered into an agreement for sale after April 1, 2010. If these duties increase, the cost of acquiring properties will rise, and sale values could also be affected.
43. Our Company may not be successful in identifying suitable projects, which may hinder its growth.
Our Company’s ability to identify suitable projects is fundamental to its business and involves certain risks including identifying and acquiring appropriate land, meeting the demands of the residential customers for residential projects, understanding and responding to the expectations and demands. Our Company’s ability to identify residential and commercial projects also involves certain risks. Any failure to identify suitable projects, build or develop saleable properties or anticipate and respond to customer demand in a timely manner could have an adverse effect on Our Company’s business, financial condition and results of operations.
44. Our Company’s joint development / venture partners may not perform their obligations satisfactorily.
Our Company may in the future undertake development of certain projects through joint development / ventures with third parties. The success of these joint development / ventures depends significantly on the satisfactory performance by the joint development/ venture partners and the fulfillment of their obligations. If either party fails to perform its obligations satisfactorily, the joint development/ venture may be unable to perform adequately or deliver its contracted services. In such a case, Our Company may be required to make additional investments in the joint development/ venture or become liable for its obligations, which could result in reduced profits or in some cases, significant losses and delays in completion of development projects. The inability of a joint development / venture partner to continue with a project due to financial or legal difficulties may put Our Company in financial and legal difficulties to the extent of the share which may have impact on the results of operations.
II. Risk related to Objects of the Issue
45. The funding requirements of Our Company as described in "Objects of the Issue" are based on
management estimates and have not been appraised or evaluated by any bank or financial institution.
The funding requirements of Our Company as described in the section titled "Objects of the Issue" are based on management estimates and have not been appraised by any bank or financial institution. Our management will have discretion in the application of the Objects of the Issue and investors will not have the opportunity, as part of their investment decision, to assess whether we are using the proceeds in a manner that they believe enhances our market value. In view of the highly competitive nature of the industry and the dynamic nature of business in which we operate, we may have to revise our management
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estimates from time to time and consequently, our programs for deployment of the Objects of the Issue may be rescheduled.
46. We have not entered into any definitive agreements to use of the proceeds of the Issue.
Our use of the proceeds of the Issue is at the discretion of the management of Our Company and is not subject to monitoring by an independent agency. As described in the section entitled - Objects of the Issue on page no. 56 of this Draft Letter of Offer, we intend to use a portion of the proceeds from the Issue for the development and construction of our ongoing project – X’czar as well as part repayment of unsecured loans. However, we have not entered into any definitive agreements for utilization of the proceeds of this Issue. We may not be able to conclude such agreements or commitments on terms anticipated by us, or at all. As a result, our planned use of the proceeds of the Issue may change.
47. We propose to utilise part of the proceeds of the issue towards repayment of unsecured loans taken from
promoters and others.
The object of the Issue includes utilization of Rs. 1800 lakhs towards repayment of part of the existing unsecured loans availed from promoters and others and hence would not result in creation of tangible assets. As on March 31, 2011, the promoters and others have lent Rs 2,835.04 lacs as unsecured loans to our Company which has inturn been applied towards implementation of various projects of our Company. For more details please refer to Chapter “Objects of the Issue” on page no. 56 of this Draft Letter of Offer.
48. We have not obtained certain approvals or permits for some of our ongoing / planned projects and may
be unable to obtain or renew required approvals and permits in a timely manner or at all and existing
approvals or permits may be suspended or revoked.
To successfully execute projects and operate our business, we are required to obtain statutory and regulatory approvals, licenses, registration and permits and applications need to be made at appropriate stages of the projects. For example, we are required to obtain the approval of building plans, layout plans, environmental consents and fire safety clearances during various stages of the projects. Certain approvals that we have applied for are currently pending. We may need to apply for renewal of approvals which may expire from time to time, in the ordinary course of our business. For further details of the approvals obtained by us and pending approvals, please see the section entitled - Government Approvals on page 184 of this Draft Letter of Offer. We may encounter material difficulties in fulfilling any conditions precedent to the approvals described above or any approvals that we may require in the future, some of which are onerous and may require us to incur substantial expenditure that we may not have anticipated. We may also not be able to adapt to new laws, regulations or policies that may come into effect from time to time with respect to the real estate industry in general or the particular processes with respect to the granting of the approvals.
49. We have not identified any alternate source of financing the ‘Objects of the Issue’. If we fail to mobilize
resources as per our plans, our growth plans may be affected.
We have not identified any alternate source of funding and hence any failure or delay on our part to raise money from the Issue or any shortfall in the Issue Proceeds may delay the implementation schedule of our projects and could adversely affect our growth plans. For further details please refer to the chapter titled “Objects of the Issue” beginning on page 56 of the Draft Letter of Offer.
III. Real Estate Investment and Property Development related Risks
50. Land title in India is uncertain and there is no assurance of clean title to Our Company’s real estate
assets.
In India, property records do not constitute conclusive evidence and do not provide a guarantee of the title to the land. The method of documentation of land records has not been fully computerized and are generally maintained and updated manually. The land records are often in a poor condition, hand-written, in local
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languages and may not be legible, which make it difficult to ascertain the contents of the records and sometimes materially impedes the title investigation process. This could also result in investigations being inaccurate. As a result, the title of the real property that Our Company has invested and/or might invest in future may not be clear. More often than not, the title to land is fragmented and it is possible that land relating to one property may have come from multiple owners. Some land may have irregularities of title, such as non-execution or non-registration of conveyance deeds and inadequate stamping and may be subject to encumbrances of which Our Company may be unaware. It is also difficult to obtain title insurance in India due to the limited availability of such insurance coverage. A lack of title insurance, coupled with difficulties in verifying title to land, may increase Our Company’s exposure to third parties claiming title to the property or otherwise materially prejudice the development of the property which could in turn have an adverse effect on Our Company’s business, financial condition, results of operations and prospects.
51. Property litigation is common in India and time consuming.
Property litigation particularly litigation with respect to land ownership is common (including public interest litigation) and is generally time consuming and involves considerable costs. If any property in which Our Company has invested is subject to any litigation or is subjected to any litigation in future, it could delay a development project and/or have an adverse impact, financial or otherwise, on Our Company.
52. The real estate sector in India is subject to heavy regulation and legislation.
The real estate market in India is subject to numerous legal requirements mandated by central and state laws and regulations, including policies and procedures established by local authorities. Additionally, in order to develop and complete a real estate project, developers must obtain various approvals, permits and licenses from the relevant administrative authorities at various stages of project development. Any delay in applying or obtaining such approvals or licenses will have an impact on timing of project development and consequential returns to Our Company.
53. The real estate sector is subject to local and municipal laws which vary from region to region and
ensuring compliance with such laws could be time consuming and costly.
The real estate sector is subject to local and municipal laws and taxes, in addition to central and state level laws and taxes, which vary from region to region. Further, such laws and taxes are subject to changes or revisions from time to time. Municipal taxes and statutory expenses for compliance with such laws could lead to a reduction in the return on Our Company’s investments. The land held or acquired by Our Company may be adversely affected by such revisions thereby reducing the value of such investments and delay in project development.
54. The Government may exercise rights of compulsory purchase or eminent domain in respect of our lands
and compensation in lieu of such acquisition may be inadequate.
The Land Acquisition Act, 1894 allows the Central and State governments to exercise rights of compulsory purchase, or eminent domain, which, if used in respect of our land, could require us to relinquish land after receiving payment of compensation. However, the compensation received pursuant to such acquisition may not be adequate to compensate us for the loss of such property. The likelihood of such actions may increase as the central and State governments seek to acquire land for the development of infrastructure projects such as roads, airports and railways. Any such action in respect of one or more of our major current or proposed developments could adversely affect our business, prospects, financial condition and results of operations.
55. Building and other consents in relation to the real estate assets may not be granted.
There can be no assurance that any building permits, consents or other approvals required from third parties including central, state and local governmental bodies, in connection with the construction and letting of existing or new development projects will be issued or granted at all, or in a timely manner to Our Company. It is possible that some projects will be located in areas that will require significant infrastructure support, including roads, electrical power, telecommunications, water and waste treatment. Our Company
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may be dependent on third parties, including local authorities, to provide such services. Any delay or failure by any third party to provide such additional services or a failure to obtain any required consents and approvals on acceptable terms or in a timely fashion may affect Our Company’s ability to execute or complete existing and/or new development projects.
56. The operations and success of Our Company are subject to fluctuations in the market value of the real
estate market and economic conditions generally.
The real estate business is significantly affected by changes in government policies, economic conditions, such as economic slowdown or recession, rising interest rates, demographic trends, employment levels, availability of financing or declining demand for real estate, relatively illiquid market for both the land and developed properties or the public perception that any of these events may occur. These factors can negatively affect the demand for and pricing of the developed and undeveloped land and constructed inventories at the expected rental or sale price and as a result, could materially and adversely affect the return on investments of Our Company.
57. We may experience difficulties in expanding our business into additional geographical markets in India.
While Mumbai remains and is expected to remain our primary focus, we may evaluate growth opportunities in other parts of India on a case-by-case basis. However, we have limited experience in conducting business outside Mumbai and have not previously completed any real estate development projects outside Mumbai. We may not be able to leverage our experience in Mumbai to expand into other cities as a result of various features which may differ in other cities and with which we may be unfamiliar, such as:
• competition;
• regulatory and taxation regimes;
• business practices and customs;
• languages;
• customer tastes, preferences, behaviour and culture;
• construction methods because of different terrains; and
• land and related laws applicable in other states. If we enter new markets and geographical areas in India, we are likely to compete not only with national developers, but also local developers who may have an established local presence, are more familiar with local regulations, business practices and customs, have stronger relationships with local contractors, suppliers, relevant government authorities, and who have access to existing land reserves, all of which may give them a competitive advantage over us. Our inability to expand into and compete successfully in areas outside the Mumbai real estate market may adversely affect our business prospects.
58. It is difficult to predict our future performance, or compare our historical performance between periods,
as our revenue fluctuates significantly from period to period.
Under the percentage of completion method of revenue recognition, our revenue from sales depends upon the volume of bookings that we are able to obtain in relation to our projects as well as the rate of progress of construction. Our bookings depend on our ability to market and pre-sell our projects and the willingness of our customers to pay for developments or enter into sale agreements well in advance of receiving possession of properties, which can be affected by prevailing market sentiment. Construction progress depends on various factors, including the availability of labour and raw materials, the timely receipt of regulatory clearances and the absence of contingencies such as litigation and adverse weather conditions. The occurrence of any such contingencies could cause our revenues to fluctuate significantly, which could in turn adversely affect our margins. We also cannot predict when and at what prices we may acquire the TDRs we require for a given project. In addition, we complete differing numbers of projects in each period, and cannot predict with certainty the rate of progress of construction or time of the completion of our real estate developments due to lags in development timetables occasionally caused by unforeseen circumstances.
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Our results of operations may also fluctuate from period to period due to a combination of other factors beyond our control, including the timing during each year of the sale of properties that we have developed, and any volatility in expenses such as land and development right acquisition and construction costs. Depending on our operating results in one or more periods, we may experience cash flow problems, thereby resulting in our business, financial condition and results of operations being adversely affected. Such fluctuations may also adversely affect our ability to fund ongoing and future projects. As a result of one or more of these factors, we may record significant turnover or profits during one accounting period and significantly lower turnover or profits during prior or subsequent accounting periods. Therefore, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indicative of our future performance.
59. Our Company may suffer uninsured losses.
Our Company’s real estate projects could suffer physical damage from fire or other causes, resulting in losses, including loss of rent, which may not be fully compensated by insurance. In addition, Our Company could suffer damage due to earthquakes, floods, hurricanes, terrorism or acts of war, which may be uninsurable or are not insurable at a reasonable premium. The proceeds of any insurance claim may be insufficient to cover rebuilding costs as a result of inflation, changes in building regulations, environmental issues as well as other factors. Our Company would also remain liable for any debt or other financial obligation related to that property. Our Company cannot be certain that material losses in excess of insurance proceeds will not occur in the future.
60. Our Company may face risks associated with the uncompleted property developments such as the
undertaking of development activities within the projects.
Property developments typically require substantial capital outlay during the construction period and it may take an extended period of time to complete and to occupy before a potential return can be generated. The time and costs required to complete a property development may be subject to substantial extensions and increases due to many factors, including shortages of, or price increases with respect to, construction materials (which may prove defective), equipment, technical skills and labour, adverse weather conditions, third party performance risks, environmental risks, changes in market conditions, changes in government or regulatory policies, delays in obtaining the requisite approvals, permits, licenses or certifications from the relevant authorities and other unforeseeable problems and circumstances. Any of these factors may lead to delays in, or prevent the completion of, a property development project and result in costs substantially exceeding those originally budgeted for which Our Company may not be adequately compensated by insurance proceeds (if any) and/or contractual indemnities. This could have a material adverse affect on Our Company’s business, financial condition and results of operation.
61. Our Company’s operations and its work force are exposed to various hazards and Our Company is
exposed to risks arising from construction related activities that could result in material liabilities,
increased expenses and diminished revenues.
There are certain unanticipated or unforeseen risks that may arise in the course of property development due to adverse weather and geological conditions such as such as storm, hurricane, lightning, flood, landslide and earthquake. Additionally, Our Company’s operations are subject to hazards inherent in providing architectural and construction services, such as risk of equipment failure, impact from falling objects, collision, work accidents, fire or explosion, including hazards that may cause injury and loss of life, severe damage to and destruction of property and equipment, and environmental damage.
62. Inadequate health and safety precautions may affect Our Company.
In developing countries, such as India, the health and safety standards on construction sites may not be applied as stringently as in industrialized countries. Construction companies in India are however still subject to various health and safety laws and regulations as well as laws and regulations governing its relationship with its employees in areas such as minimum wages, maximum working hours, overtime, working conditions, hiring and terminating employees, contract labour and work permits. Accidents and, in
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particular, fatalities may have an adverse impact on Our Company’s reputation and may result in fines and/or investigations by public authorities as well as litigation from injured workers or their dependants.
63. The success of Our Company’s residential and commercial development business is dependent on its
ability to anticipate and respond to consumer requirements.
The changing lifestyle and growing disposable income has resulted in a substantial change in the nature of demands in this sector. Increasingly, consumers are seeking better amenities in new residential and commercial developments. Our Company’s focus on the development of high quality luxury residential accommodation and commercial premises requires Our Company to satisfy demanding consumer expectations including 24-hour electricity and running water and amenities such as parking, gardens, fitness centre, etc. If Our Company fails to anticipate and respond to consumer requirements, it could lose potential clients to competitors, which in turn could adversely affect Our Company’s business and prospects.
B. EXTERNAL RISKS 64. Our Company’s growth is dependent on the Indian economy.
Our Company’s performance and the growth of our business are dependent on the performance of the Indian economy. India’s economy could be adversely affected by a general rise in interest rates, currency exchange rates, adverse conditions affecting food and agriculture, commodity and electricity prices or various other factors. A slowdown in the Indian economy could adversely affect its business, including its ability to implement its strategy. The Indian economy is currently in a state of transition and it is difficult to predict the impact of certain fundamental economic changes upon Our Company’s business. Conditions outside India, such as slowdowns in the economic growth of other countries or increases in the price of oil, have an impact on the growth of the Indian economy and government policy may change in response to such conditions. While recent governments have been keen on encouraging private participation in the industrial sector, any adverse change in policy could result in a slowdown of the Indian economy. Additionally, these policies will need continued support from stable regulatory regimes that stimulate and encourage the investment of private capital into industrial development. Any downturn in the macroeconomic environment in India could adversely affect the price of Our Company’s Equity Shares, its business and results of operations.
65. The extent and reliability of Indian infrastructure could adversely affect Our Company’s results of
operations and financial condition.
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 Our Company’s normal business activity. Any deterioration 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 Company’s business operations, which could have an adverse effect on its results of operations and financial condition.
66. Instability in financial markets could materially and adversely affect Our Company’s results of
operations and financial condition. The Indian economy and financial markets are significantly influenced by worldwide economic, financial and market conditions. Any financial turmoil, especially in the United States of America, Europe, Japan or China, may have a negative impact on the Indian economy. Although economic conditions differ in each country, investors’ reactions to any significant developments in one country can have adverse effects on the financial and market conditions in other countries. A loss in investor confidence in the financial systems, particularly in other emerging markets, may cause increased volatility in Indian financial markets. Any prolonged financial crisis may have an adverse impact on the Indian economy, thereby resulting in a material and adverse effect on Our Company’s business, operations, financial condition, profitability and price of its Equity Shares.
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67. Terrorist attacks, civil disturbances, regional conflicts and other acts of violence in India and abroad
may disrupt or otherwise adversely affect Our Company’s business and its profitability.
Certain events that are beyond the control of Our Company, such as terrorist attacks and other acts of violence or war, including those involving India, the United Kingdom, the United States or other countries, may adversely affect worldwide financial markets and could potentially lead to a severe economic recession, which could adversely affect Our Company’s business, results of operations, financial condition and cash flows, and more generally, any of these events could lower confidence in India’s economy. Southern Asia has, from time to time, experienced instances of civil unrest and political tensions and hostilities among neighboring countries, including India, Pakistan and China. Political tensions could create a perception that there is a risk of disruption of services provided by India based companies, which could have an adverse effect on Our Company’s business, future financial performance and price of the Equity Shares. Furthermore, if India were to become engaged in armed hostilities, particularly hostilities that are protracted or involve the threat or use of nuclear weapons, the Company's operations might be significantly affected. India has from time to time experienced social and civil unrest and hostilities, including riots, regional conflicts and other acts of violence. Events of this nature in the future could have a material adverse effect on Our Company’s ability to develop its business. As a result, Our Company’s business, results of operations and financial condition may be adversely affected.
68. Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares.
The Indian securities markets are smaller than securities markets in more developed economies. Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed securities. These exchanges have also experienced problems that have affected the market price and liquidity of the securities of Indian companies, such as 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, disputes have occurred on occasion between listed companies and the Indian stock exchanges and other regulatory bodies that, in some cases, have had a negative effect on market sentiment. If similar problems occur in the future, the market price and liquidity of the Equity Shares could be adversely affected.
69. Political instability or a change in economic liberalization and deregulation policies could seriously
harm business and economic conditions in India generally and business of Our Company in particular.
The Government has traditionally exercised and continues to exercise influence over many aspects of the economy. Our Company’s business and the market price and liquidity of its Equity Shares may be affected by interest rates, changes in Government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India. The Government of India has in recent years sought to implement economic reforms and the current government has implemented policies and undertaken initiatives that continue the economic liberalization policies pursued by previous governments. There can be no assurance that liberalization policies will continue in the future. The rate of economic liberalization could change, and specific laws and policies affecting power or real estate sector, foreign investment and other matters affecting investment in Our Company’s securities could change as well. A change in the Government pursuant to ongoing elections may result in significant change in the Government policies in the future. Any significant change in such liberalization and deregulation policies could adversely affect business and economic conditions in India, generally, and Our Company’s results of operations and financial condition, in particular.
70. Natural calamities could have a negative impact on the Indian economy which may have an adverse
affect on Our Company’s business and results of operations.
India has experienced floods, earthquakes, tsunamis, cyclones and droughts in recent years. Such natural catastrophes could disrupt Our Company’s operations. For example in December 2004, Southeast Asia, including the eastern coast of India, experienced a tsunami and in October 2005, the State of Jammu and Kashmir experienced an earthquake, both of which caused significant loss of life and property damage. Our Company cannot assure the prospective investors that such events will not occur in the future or that its results of operations and financial condition will not be adversely affected.
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71. Any downgrading of India’s debt rating by an independent agency may harm our ability to raise debt
financing. Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may adversely affect our ability to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. This could have an adverse effect on our capital expenditure plans, business and financial performance.
72. Restrictions on foreign direct investment (“FDI”) in the real estate sector may hamper our ability to raise
additional capital.
FDI Regulations impose certain conditions on investment in real estate sector in India. Government policy in respect of FDI in the real estate sector in India is regulated by the Government of India, Ministry of Commerce and Industry, which permits foreign direct investment of up to 100% subject to the project fulfilling certain specified conditions. Our Company’s inability to raise additional capital as a result of these and other restrictions could adversely affect the business and prospects of Our Company. Under the foreign exchange regulations currently in force in India, transfers of shares between non residents and residents are freely permitted (subject to certain restrictions) if they comply with the pricing guidelines and reporting requirements specified by the RBI. If the transfer of shares is not in compliance with such pricing guidelines or reporting requirements or fall under any of the exceptions referred to above, then the prior approval of the RBI will be required. Additionally, shareholders who seek to convert the rupee proceeds from a sale of shares in India into foreign currency and repatriate that foreign currency from India will require a no objection/ tax clearance certificate from the income tax authority. We cannot assure you for any of our projects requiring FDI approval in future, any required approval from the RBI or any other Government agency can be obtained on any particular terms or at all.
PROMINENT NOTES 1) Investors may contact Compliance Officer or the Lead Manager for any complaints pertaining to the Issue.
For further details on the Compliance Officer or the Lead Manager refer to Section – “Introduction - General Information” on page no. 42 of this Draft Letter of Offer.
2) Our net worth was Rs. 1,185.96 Lakhs, as per the restated audited financial statements of Our Company as at March 31, 2011 as disclosed in the section titled “Financial Statements of Issuer” beginning on page no. 140 of this Draft Letter of Offer. The present issue is of 21,65,267 equity shares of face value of Rs. 10 each aggregating to Rs. [*] lakhs.
3) The book value per Equity Share of Our Company is Rs. 36.51 as per the restated audited financial
statements of Our Company as at March 31, 2011 as disclosed in the section titled “Financial Statements of Issuer” beginning on page 140 of this Draft Letter of Offer.
4) The average cost of acquisition of equity shares by the promoters of Our Company are as under:
Sr. No. Name of Promoter No. of Equity Shares held Avg. Cost of Acquisition
1 Mr. Deepak Chheda 9,21,359 3.00
2 Mr. Harish Nisar 3,09,784 3.00
3 Mr. Rohit Dedhia 3,09,784 3.00 4 Mr. Shailesh Shah 5,87,521 3.00
5) For details of transactions between Our Company and our Group Entities in the last one year preceding the
date of filing this Draft Letter of Offer with SEBI, please refer to Section - Capital Structure on Page no. 47 and Financial Statements of the Issuer - Annexure-XV – Related Party Transactions on page 162.
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6) With a view to commence the business of real estate and carry on business as developers, builders,
contractors, architects, engineers, supervisors, decorators, designers, values, surveyors, consulting engineers and offer consultancy services of all kinds pertaining to real estate, an addition was made to the main object clause of MOA of Our Company by passing a Special Resolution by Postal Ballot on January 27, 2010. In order to reflect the nature of business activities, the name of Our Company was changed from Vishal Cotspin Limited to Rodium Realty Limited on August 2, 2010.
7) There are no financing arrangements whereby our Promoter Group, the Directors of companies forming a part of our Promoters, our Directors and their relatives, (“Financer”), have financed the purchase by any other person of securities of Our Company other than in the normal course of the business of the Financier during the period of six months immediately preceding the date of filing this Draft Letter of Offer with SEBI.
8) All information shall be made available by the Lead Manager and Our Company to the existing
shareholders of Our Company and no selective or additional information would be available to a section of the investors in any manner whatsoever.
9) The lead manager and Our Company shall update this Draft Letter of Offer and keep the shareholders and
the public informed of any material changes till the listing and trading commencement and Our Company shall continue to make all material disclosures as per the terms of the Listing Agreement.
10) The promoters, Directors and Group companies have not purchased or sold any Equity shares in the six
months preceding the date of filing of this Draft Letter of Offer with SEBI. 11) Our Company had earlier filed a Draft Letter of Offer with SEBI and BSE on Novenber 3, 2010 with Vivro
Financial Services Private Limited as the Lead Manager for a Rights Issue. Our Company received the In Principle approval from BSE vide their letter dated December 7, 2010. However, due to changes in the business plans, we withdrew the Draft Letter of Offer vide our letter dated May 10, 2011.
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SECTION III – INTRODUCTION
The Industry information presented in this section has been extracted from Company sources, publicly
available documents from various sources, including officially prepared materials and has not been
prepared or independently verified by the Issuer or the Lead Manager.
(A) SUMMARY
(I) Industry Summary The Indian Economy
India is the world’s largest democracy by population size of 1,145 million as on June 12, 2009 according to India’s National Commission. (Source: - http://populationcommission.nic.in/). India had an estimated Gross Domestic Product (“GDP”) on a purchasing power parity basis of approximately US$ 3.57 trillion in 2009, making it the fifth largest economy in the world after the European Union, United States of America, China and Japan. (Source: CIA World Fact book) However, despite the global economic decline in the fiscal year 2008, India is showing positive signs of recovery following the global economic downturn. Based on the Economic Outlook for fiscal 2010 by the Economic Advisory Council to the Prime Minister, the Indian Economy may grow by about 7.2% in the fiscal year 2010, is expected to grow at 8.5 per cent y-o-y for the year ended March 2011 and return to a 9% growth rate in the next two years. The world GDP growth rate for 2010 is estimated at 4.0% according to the World Economic Outlook, January 2010 published by IMF. Fiscal 2010-11 started off on a good note for Corporate India. Industrial production grew by an impressive 17.6 per cent in April 2010. It is projected to grow by 9.2 per cent in 2010-11. This growth is expected to be broad-based, with food products, beverages, tobacco, non-metallic minerals, machinery and the transport equipments sector likely to report over 10 per cent rise in production. (Source: CMIE). Growth during the remainder of 2009-2010 is expected to benefit from the impact of the government policy stimulus, a recovery in industrial production and the core infrastructure sector, an upturn in business confidence, a recovery in the stock market, the return of capital inflows and the improving outlook for the global economy in general, which could boost consumer and investor confidence in India. At the same time, growth may be impeded by the unexpectedly large deceleration in private consumption demand and some decline in corporate sales during the first quarter of 2009-2010, the sustained deceleration in credit growth and a decline in exports (Source: RBI, Macroeconomic and Monetary Developments, Second Quarter Review, 2009-2010). Despite the deceleration in growth described above, according to the International Monetary Fund (the “IMF”), India continues to be one of the fastest growing countries in the world. (Source: - IMF, World Economic Outlook,
October 2009) Indian Real Estate Sector
Indian real estate sector plays a significant role in the country’s economy. This sector is second only to agriculture in terms of employment generation and contributes heavily towards the GDP. The size is estimated at US$ 16 billion, growing at the rate of 30% per annum. Total size of the industry in terms of economic value of development activity is estimated at US$ 40-45 billion representing about 5% of India’s GDP. In the next five years, this contribution to the GDP is expected to rise to 6 per cent. The real estate sector is expected to reach a size of US$ 180 billion by 2020. India’s lack of dependence on foreign demand from consumers has been the key advantage for this country as it has managed to avoid the severe recession that has hit most other Asian countries. According to the report of the Technical Group on Estimation of Housing Shortage, an estimated shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12) provides a big investment opportunity. Growing penetration of mortgage finance into the urban housing finance market is now evident. The real estate
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sector is one of the highest foreign direct investment (FDI) attracting sectors in India, having recorded FDI inflows worth more than 2.8 billion between 2000 and 2009. FDI in the real estate sector is expected to witness an increase of US$ 21 billion from the current values over the next 10 years. Net sales of the real estate industry shot up by 78.3% in the June 2010 quarter. The PBDIT of the industry grew by a robust 72.3%. The growth in PAT was even better at 119%. Almost 80% of real estate developed in India is residential space, the rest comprising of offices, shopping malls, hotels and hospitals. (Source: www.ibef.org). Real Estate Sector in Mumbai Mumbai City Mumbai is the capital city of Maharashtra and has a population of 18.9 million (per the 2001 census) and is projected to increase to 22.4 million by 2011. Mumbai is the capital city of the state and is also the commercial, entertainment and fashion capital of India. Mumbai is made up of seven connected small islands and the suburban area of Salsette Island. It is well-connected by air, road and rail to other major cities in India. The Mumbai Metropolitan Region covering the city, the surrounding suburbs and municipal councils, has a population of 18.9 million. Mumbai has witnessed an increase in its population in the island city as well as the surrounding municipal corporations of Thane, Navi Mumbai and Bhiwandi-Nizampur that form part of the larger agglomeration, the Mumbai Metropolitan Region. The rapid growth in population has led to a shortage of housing and informal and poor quality housing. (Source: Official website of Mumbai Metropolitan Region
Development Authority- http://www.mmrdamumbai.orgf)
The Island City Mumbai’s micro-market can be divided into two sub-markets i.e. South Mumbai which includes locations like Malabar Hill, Carmichael Road, Napeansea Road, Cuffe Parade, Colaba and Altamount Road and Central Mumbai locations like Lower Parel, Worli, Prabhadevi and Mahalaxmi. South Mumbai locations are considered to be the prime markets. There is virtually no space for large scale developments in South Mumbai. Infrastructure Planned and ongoing infrastructure development is also growing in the Mumbai Metropolitan Region along with the population and industrial growth. Some examples of ongoing infrastructure development are outlined below: � Metro Rail project: The proposed 146.5 km long corridor is expected to provide proper interchange
facilities for neighboring areas like Thane, Navi Mumbai, Vasai as well and east to west connectivity for the city. (Source: Mumbai Metropolitan Region Development Authority)
� Chhatrapati Shivaji International Airport modernization: The modernization of Mumbai’s largest airport is underway.
� Monorail: A 20 km long monorail is intended to support public transportation in areas with low road and rail connectivity. (Source: Mumbai Metropolitan Region Development Authority)
� Skywalks: The current plan is to construct 50 skywalks throughout the city to alleviate pedestrian congestion on the roads. (Source: Mumbai Metropolitan Region Development Authority)
The Indian real estate sector promises to be a lucrative destination for foreign investors into the country. The Indian realty sector, if channelized properly, could catapult the growth of several other sectors in India through its backward and forward linkages. However, there are potential constraints for domestic as well as foreign investments in India. Absence of a single regulator to monitor business practices prevailing in Indian real estate market is perceived to be a risk factor by investors. The SEZ guidelines which are issued by the Ministry of Commerce are constantly modified, creating uncertainty. Since the liberalization of FDI norms, significant foreign investments have flown into real estate; but availability of suitable exit options for such investments is still constrained. Maturity of the real estate markets will lead to infusion of foreign investment and adoption of international best practices by real estate players. Developers will get more organized, and become more transparent to avail
37
opportunities emerging in the market. With the Indian securities market regulator SEBI allowing real estate mutual funds (REMFs) in India, equity investors will have an exit option available to them. All these factors will contribute in making the Indian real estate market more organized and structured, thus providing better investment opportunities.
(II) Business Summary We are a real estate development and project management company, focused on premium residential and commercial developments concentrated majorly in and around Mumbai. We are engaged in the development and construction of residential, office space, retail and mixed use projects by integrating various requirements and specific demands of customers, we seek to create “build to suit” developments, which we believe will not only enhance the desirability of our projects but will also provide our customers efficient space, which will cater to their current and future needs. While our focus is on residential and commercial projects, we have a diversified portfolio of projects covering key segments of the real estate market, which target the upper end of the respective income or market segment. We undertake real estate development projects on property development basis and project management basis. Our Property Development includes activities starting from the conceptualization stage to completion stage. Project Management includes understanding the need of customer, project planning and feasibility, Project Assessment studies, Geological and Soil Investigation, Architectural / Engineering / Interior Designs, Construction management, Build to Suit Solutions, etc. We believe that our in-house design and architectural team has an in-depth understanding of “Global” building parameters and quality standards and “Local” necessities and thereby offering “GLOCAL” architectural designs that combine local values with global quality standards. We believe that we have the scalability required to undertake large developments. Rodium Group: After the Change of Management, Our Company, forms part of Rodium Group based in Mumbai, promoted by Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah. Our Promoters have a track record of developing innovative projects through emphasis on contemporary architecture, strong project execution and quality construction in the real estate industry. Our Promoters have been developing real estate projects since 1990, through various proprietorship firms, partnership firms and various project-specific entities. From 2006, the business of prime real estate development was carried on under a partnership firm viz. M/s. Rodium Properties. We continued the business of M/s. Rodium Properties, Partnership firm on going concern basis with effect from April 1, 2010. One of the key competitive strengths of our Group is a one-stop-build-to-suit solution provider i.e. to deliver a project from its conceptualization stage to completion stage. This ensures that we are dependent only to a limited extent on third party suppliers for key products and services required in the development and construction of our projects. Further, it ensures that products and services required for development and construction of a project meet our quality standards and are delivered in a timely manner. Our total income as restated were Rs. 2,548.20 Lakhs and Rs. 317.16 lakhs for the year ended March 31, 2011 and March 31, 2010 respectively. Our net profit as restated were Rs. 386.85 Lakhs and Rs. 246.84 lakhs for the year ended March 31, 2011 and March 31, 2010 respectively.
Competitive Strengths:
• Experience of Our Promoters
• Strong In-house Design and Architectural Capabilities
• Emphasis on Quality Construction
• Land Identification at Attractive Pricing and Strategic Locations
• Good Relationships with Key Intermediaries
• Strong and stable management team with proven ability
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Business Strategy:
• Maintain High Standards of Quality and Increase Scale of Operations
• Expand into new geographical areas
• Continue our Focus on a Diversified Business Model
• Flexible approach to project development
• Marketing Strategy
For further details on the business of the Company, please refer to Section – V “About Our Company – Business Overveiw” of this Draft Letter of Offer on Page no. 82.
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(III) Issue Details in brief
Issue of 21,65,267 Equity Shares of Rs.10/- each for cash at a premium of Rs [*]/- per Equity Share to the existing Equity Shareholders of our Company on Rights basis, aggregating to Rs. [*] lakhs.
Equity Shares proposed to be issued by Our Company
21,65,267 Equity Shares on Rights basis
Rights Entitlement 2 (Two) Equity Shares for every 3 (Three) Equity Share held
Record Date [*]
Issue Opening Date [*]
Issue Closing Date [*]
Issue Price per Equity Share Rs.[*]/- per Equity Share
Equity Shares outstanding prior to the Issue
32,47,900 Equity Shares
Equity Shares outstanding after the Issue
54,13,167 Equity Shares
Use of Issue proceeds Please see section entitled “Objects of the Issue” on Page No. 56 under section Particulars of the Issue of this Draft Letter of Offer for information.
Terms of the Issue For more information, see “Terms of Issue” on Page No. 198 under section Offering Information of the Draft Letter of Offer
Terms of Payment
Amount payable per Rights Equity Share (Rs.)
Face Value Premium Total
On Application 5.00 [*] [*]
On Final Call 5.00 [*] [*]
Total 10.00 [*] [*]
* For details on the payment method see “Issue Procedure” on page no. 293 of this Draft Letter of Offer.
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IV) Financial Summary
The following summary of financial data has been prepared in accordance with the Companies Act and the SEBI (ICDR) Regulations and restated as described in the Auditors’ Report of M/s. M. M. Nissim and Co., Chartered Accountants, Mumbai dated August 11, 2011 in the section titled "Financial Information of Issuer Company" beginning on page no. 140 of this Draft Letter of Offer. You should read this financial data in conjunction with Our Company’s financial statements for each of fiscal 2007 to 2011, including the Notes thereto and the Reports thereon, which appears on page 140 under sub-heading "Financial Statements of Issuer Company" in this Draft Letter of Offer, and "Management’s Discussion and Analysis of Financial Condition as reflected in the Financial Statements" on page 165 of this Draft Letter of Offer.
Restated Statement of Profits and Loss Account (Rs. in Lakhs)
For the Year ending March, 31st Period / Year Ended
2011 2010 2009 2008 2007
INCOME
Domestic Sales / Income 2,422.31 - - 232.39 1,289.80
Income from Services - 62.24 5.88 145.48 -
Share of profit from partnership Firm - 248.73 - - -
Other Income 125.89 6.19 44.33 78.26 11.44
Increase / (decrease) in Stocks 4,611.36 - - (95.51) (26.60)
Total Income 7,159.57 317.16 50.21 360.62 1,274.63
EXPENDITURE
Cost of Construction & Development 5,938.06 - - - -
Material Cost - - - 144.74 834.96
Manufacturing & Other Expenses 427.66 26.42 63.02 356.51 518.69
Loss on Sale / Redemption of Investments 8.40 - - - -
Total Expenses 6,374.13 26.42 63.02 501.25 1,353.65
Net Operating Profit before Interest, Depreciation, Prior
Period Items, Non Cash Expenses and Tax 785.44 290.74 (12.81) (140.63) (79.02)
Interest & Finance Charges 216.44 9.20 2.87 47.11 36.77
Depreciation and Amortization 10.62 - 29.10 84.10 90.14
Net Profit before Tax & Adjustments 558.38 281.54 (44.78) (271.84) (205.93)
Provision for Taxation 0.30 - - - -
Provision for FBT - - 0.09 0.63 1.60
Deferred Taxation 171.32 44.79
Net Profit after tax but before Adjustments 386.75 236.75 (44.87) (272.47) (207.53)
Excess/ (Short) Provision for Tax (0.10) - 0.25 - -
Net Profit after tax and before extra ordinary items 386.85 236.75 (45.12) (272.47) (207.53)
Extraordinary items - - 31.69 - 64.10
Net Profit after tax and extra ordinary items 386.85 236.75 (13.43) (272.47) (143.43)
Adjustments on Account of Restatement - Annex V - 10.09 (40.22) 12.02 (60.08)
Net Profit after Tax, as Restated 386.85 246.84 (53.65) (260.44) (203.51)
Proposed Dividend on preference shares for past years 88.32 - - - -
Corporate Dividend Tax 14.33 - - - -
Net Profit after tax after appropriations 284.20 246.84 (53.65) (260.44) (203.51)
Capital Reduction - - - - 324.79
Net Profit after Tax, as Restated 284.20 246.84 (53.65) (260.44) 121.28
Add: Balance Brought Forward (564.17) (811.01) (757.36) (496.92) (618.20)
Balance Carried Forward, as Restated (279.96) (564.17) (811.01) (757.36) (496.92)
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Note: The above statement should be read with the significant accounting policies and notes to the accounts for “Restated Financial Statements” as appearing in Annexure to the report.
Restated Statement of Assets and Liabilities (Rs. in Lakhs)
As at March 31
Particulars 2011 2010 2009 2,008 2007
A. Fixed Assets:
Gross Block 126.60 - - 1,756.18 1,864.08
Less: Accumulated Depreciation 10.62 - - 915.81 860.85
Net Block 115.98 - - 840.37 1,003.23
Less: Revaluation Reserve - - - - -
Capital Work in Progress - - - - -
Net Block after adjustment for Revaluation
Reserve 115.98 - - 840.37 1,003.23
B. Investments 264.01 448.83 0.11 0.11 0.11
C. Deferred Tax Asset 177.30 348.62 393.41 393.41 393.41
D. Current Assets, Loans and Advances:
Interest Accrued not due 21.30 0.32 - - -
Inventories including Property under Development) 4,611.36 - - 34.29 217.02
Sundry Debtors 177.22 94.55 32.76 177.51 163.53
Cash and Bank Balances 775.95 7.82 23.17 15.89 25.57
Loans and Advances 157.17 18.15 136.29 44.42 48.80
Total 5,743.00 120.84 192.22 272.11 454.92
E. Liabilities and Provisions:
Secured Loans 1,556.36 - - 32.41 567.07
Unsecured Loans 2,835.04 200.25 37.20 986.01 513.71
Current Liabilities and Provisions 722.93 26.30 69.37 300.23 801.07
Effect on account of Restatement of Accounts - - 10.09 (30.14) (18.11)
Total 5,114.33 226.56 116.66 1,288.51 1,863.74
Net Worth 1,185.96 691.74 469.08 217.49 (12.08)
Represented by
Equity Share Capital 324.79 324.79 324.79 324.79 324.79
Preference Share Capital 700.00 490.00 490.00 490.00 -
Forfeited Shares Account 19.71 19.71 19.71 19.71 19.71
Share Application Money - - 24.17 115.34 115.34
Capital Subsidy 25.00 25.00 25.00 25.00 25.00
Capital Reserve 396.41 396.41 396.41 - -
Balance in Profit & Loss Account (279.95) (564.17) (811.00) (757.36) (496.92)
Net Worth 1,185.96 691.74 469.08 217.49 (12.08)
Note: The above statement should be read with the significant accounting policies and notes to the accounts for “Restated Financial Statements” as appearing in Annexure to the report.
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(B) GENERAL INFORMATION
Dear Shareholder(s), Pursuant to the resolution passed at the meeting of the Board of Directors of the Company held on October 22 2010, it has been decided to make the following Offer to the Equity Shareholders, with a right to renounce. ISSUE OF 21,65,267 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PRICE OF RS. [*] PER
SHARE (INCLUDING A PREMIUM OF RS. [*]/- PER EQUITY SHARE) AMOUNTING TO RS. [*] LAKHS (RUPEES [*] LAKHS ONLY) BY RODIUM REALTY LIMITED (“THE COMPANY” OR
“THE ISSUER”) ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF OUR COMPANY IN THE RATIO OF 2 (TWO) EQUITY SHARES FOR EVERY 3 (THREE) EQUITY SHARES HELD ON THE RECORD DATE, I.E. [*].
For details about the payment method, kindly refer to “Issue Procedure” on page 203 of this Draft Letter of Offer. IMPORTANT: 1. This Issue is applicable to such Equity Shareholders whose names appear as beneficial owners as per the list
to be furnished by the depositories in respect of the Equity Shares held in the electronic form and on the Register of Members of Our Company at the close of business hours on [*] (the Record Date).
2. The Equity Shares are presently listed and traded on the Bombay Stock Exchange Limited. 3. Your attention is drawn to the section “Risk Factors” starting from Page No. 14 of this Draft Letter of
Offer. 4. Please ensure that you have received the Composite Application Form (‘CAF’) along with this Draft Letter
of Offer. In case the original CAF is not received, lost or misplaced by the shareholder, the Registrar to the Issue will issue a duplicate CAF on the request of the Equity shareholder who should furnish the registered folio number/DP ID number/client ID number and his/her full name and address to the Registrar to the Issue. Please note that those applicants who are making the application in the duplicate CAF should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. In case the original and the duplicate CAFs are lodged for subscription, allotment will be made on the basis of the duplicate CAF and the original CAF will be ignored.
5. Please read the Draft Letter of Offer and the instructions contained herein and in the CAF carefully before filling in the CAF. The instructions contained in the CAF are an integral part of this Draft Letter of Offer and must be carefully followed. An application is liable to be rejected for any non-compliance of the Draft Letter of Offer or the CAF.
6. All enquiries in connection with this Rights Issue or CAF should be addressed to the Registrar to the Issue i.e. Cameo Corporate Services Limited quoting the Registered Folio number/DP and Client ID number and the CAF number as mentioned in the CAF.
7. The Issue will be kept open for a minimum period of 15 (Fifteen) days. If extended, with the approval of the Board, will be kept open for a maximum period of 30 (Thirty) days.
8. The Lead Manager and Our Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including any presentation, research note or sales reports etc. after filing of the Draft Letter of Offer with SEBI.
9. All the legal requirements as applicable till the filing of the Draft Letter of Offer with the Designated Stock Exchange have been complied with.
10. The Lead Manager and Our Company shall update this Draft Letter of Offer and keep the public informed of any material changes till the listing and trading commences for Equity Shares offered through this Issue.
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Our Company was originally incorporated under the name of Vishal Cotspin Limited on May 17, 1993 under the Companies Act, 1956 as a Public Limited Company with the Registrar of Companies Karnataka, Bangalore and received the Certificate for Commencement of Business on May 24, 1993. Subsequently, the name of Our Company was changed to “Rodium Realty Limited” and Fresh Certificate of Incorporation was issued by Registrar of Companies, Maharashtra, Mumbai on August 24, 2010. Our Corporate Identification Number (CIN) is L85110KA1993PLC014326 (For further details, please refer to the chapter titled “History and Corporate Structure” on page 102 of this Draft Letter of Offer) REGISTERED OFFICE OF OUR COMPANY
Rodium Realty Limited 501, X’ cube, Plot No. 636, Off New Link Road, Andheri (W), Mumbai – 400 053, Maharashtra, India. Tel No: 91 22 4231 0800 Fax No: 91 22 2673 4144 Email: [email protected] Website: www.rodium.net
CORPORATE OFFICE OF OUR COMPANY
Rodium Realty Limited 401-402, X’cube, Plot No. 636, Off New Link Road, Andheri (W), Mumbai – 400 053, Maharashtra, India. Tel No: 91 22 4231 0800 Fax No: 91 22 2673 4144 Email: [email protected] Website: www.rodium.net
ADDRESS OF THE REGISTRAR OF COMPANIES Registrar of Companies, Maharashtra at Mumbai, 100, Everest, Marine Drive, Mumbai – 400 002 BOARD OF DIRECTORS OF OUR COMPANY
Sl.
No.
Name of the Director Designation Nature of
Directorship
DIN
1 Mr. Deepak Chheda Chairman and Managing Director Promoter Director 00419447
2 Mr. Harish Nisar Executive Director Promoter Director 02716666
3 Mr. Rohit Dedhia Executive Director Promoter Director 02716686
4 Mr. Shailesh Shah Executive Director Promoter Director 01230174
5 Mr. Nilesh Vikamsey Non-Executive Director Independent 00031213
6 Mr. Yogesh Shah Non-Executive Director Independent 02774568
7 Mr. Vatsal Shah Non-Executive Director Independent 01839985
8 Mr. Sudhir Mehta Non-Executive Director Independent 03187758
For further details of the Management of the company, please refer to the section titled “OUR
MANAGEMENT” on Page No. 108 of this Draft Letter of Offer.
44
COMPANY SECRETARY AND COMPLIANCE OFFICER
Ms. Kalpita Keluskar
Company Secretary and Compliance Officer 501, X’ cube, Plot No. 636, Off New Link Road, Andheri (W), Mumbai – 400 053, Maharashtra, India. Tel No: 91 22 4231 0800; Fax No: 91 22 2673 4144; Email: [email protected] Note: Investors may contact the Registrar to the Issue or the Company Secretary and Compliance Officer for
any pre-Issue /post-Issue related matter. All grievances relating to the ASBA process may be addressed to the
Registrar to the Issue, with a copy to the SCSB, giving full details such as name, address of the applicant,
number of Equity Shares applied for, Amount blocked, ASBA Account number and the Designated Branch
of the SCSB where the CAF was submitted by the ASBA Investors.
LEAD MANAGER TO THE ISSUE
VIVRO FINANCIAL SERVICES PRIVATE LIMITED Vivro House, 11, Shashi Colony, Opp. Suvidha Shopping Center, Paldi, Ahmedabad - 380007 Tel.: +91-79-2665 0670; Fax: +91-79-2665 0570 Contact Person: Mr. Ketan Modi / Mr. Shyamal Trivedi E-mail: [email protected] Website: www.vivro.net SEBI Registration No.: INM000010122
REGISTRAR TO THE ISSUE
CAMEO CORPORATE SERVICES LIMITED Subramanian Building, No.1 Club House Road, Chennai – 600 002 Tel: 91 44 2846 0390; Fax: 91 44 2846 0129; Contact Person: Ms. Sreepriya E-mail: [email protected] Website: www.cameoindia.com SEBI Registration No.: INR000003753
LEGAL ADVISOR TO THE ISSUE Corporate Law Chambers India Advocates 8th Floor, Chander Mukhi, Nariman Point, Mumbai – 400 021 Tel No: +91-22-6632 1528 / 29, Fax No: +91-22-6632 1531, Email: [email protected]
Contact Person: Mr. A. Y. Srinivasan
BANKERS TO THE ISSUE [*]
45
SELF CERTIFIED SYNDICATE BANKS The list of banks that have been notified by SEBI to act as SCSBs for the ASBA process and details relating to the Designated Branches of SCSBs collecting the ASBA CAF is available at http://www.sebi.gov.in.
STATUTORY AUDITORS OF OUR COMPANY
M/s. M. M. NISSIM and Co. Chartered Accountants Reg. No.: 107122W D-3, B-Wing, 3rd Floor, Barodawala Mansion, 81, Dr. Annie Basant Road, Worli, Mumbai-400018 Tel: 022-2494 9991 Fax: 022-2494 9995 E-mail ID: [email protected] Contact Person: Mr. N Kashinath BANKERS TO OUR COMPANY
INDIAN OVERSEAS BANK 28 Ashok Nagar Society, Narsee Monjee Road, Juhu Scheme, Vile Parle West, Mumbai-400049 Tel:022-26142758 Fax:022-26194775 Website: www.iob.in E-mail: [email protected] Contact Person: Mr. Balraj
KOTAK MAHINDRA BANK LIMITED Building No. 1, Unit No. 002 and 102, Raheja Classique Complex, Link Road, Andheri (W), Mumbai-400053 Tel: 022- 6721 2002, 3, 5 Fax: Website: www.kotak.com E-mail: [email protected] Contact Person: Mr. Premal Saraiya / Mr. Amit Dabrai DEUTSCHE BANK Plot No. 391, Linking Road, Glacis, Khar West, Mumbai-400052 Tel: 022-6600 9622, 9696 Fax: 022-6600 9666 Website: www.deutschebank.co.in E-mail: [email protected] Contact Person: Mr. Ankur Khare INTER SE ALLOCATION OF RESPONSIBILITIES AMONGST THE LEAD MANAGERS Vivro Financial Services Private Limited is the sole Lead Manager to the Issue and all the responsibilities relating to the co-ordination and other activities in relation to the Issue shall be performed by them.
46
PROJECT APPRISAL There is no project being appraised. CREDIT RATING
This being Rights Issue of Equity Shares, no Credit Rating is required. GRADING OF ISSUE This being Rights Issue of Equity Shares, no grading is required. DEBENTURE TRUSTEES As the Issue consists of the Equity Shares, the appointment of trustees is not required. MONITORING AGENCY In terms of Regulation 16(1) of the SEBI (ICDR) Regulations, we are not required to appoint a monitoring agency for the purposes of this Issue. As required under the listing agreements with the BSE, the Audit Committee appointed by our Board of Directors will monitor the utilization of the Issue proceeds. We will disclose the utilization of the proceeds of the Issue, including interim use, under a separate head in our quarterly financial disclosures and annual audited financial statements until the Issue proceeds remain unutilized, to the extent required under the applicable law and regulation.
APRAISING AUTHORITY
None of the purposes for which the Net Proceeds are proposed to be utilized have been financially appraised by any bank or financial institution. MINIMUM SUBSCRIPTION If our Company does not receive the minimum subscription of 90% of the Issue, our Company shall forthwith refund the entire subscription amount received within 15 days from Issue Closing Date. If there is a delay in the refund of subscription by more than eight (8) days after the date from which our Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date or the date of refusal by the Stock Exchanges, whichever is earlier) our Company shall pay interest for the delayed period at the rates prescribed under Sections 73 of the Companies Act. IMPERSONATION
Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies Act, 1956 which is reproduced below: "Any person who- a. Makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares
therein, or b. Otherwise induces a Company to allot or register any transfer of shares therein to him, or any other person in
a fictitious name, shall be punishable with imprisonment for a term which may extend to five years." UNDERWRITING OF THE ISSUE
The present Issue is not underwritten. DECLARATION BY BOARD ON CREATION OF SEPARATE ACCOUNT The Board of Directors declares that funds received against this Issue will be transferred in terms of the SEBI (ICDR) Regulations to a separate bank account maintained by the Company as per the provisions of sub-section (3) of Section 73 of the Companies Act. ISSUE DETAILS The subscription will open upon the commencement of the banking hours on the Issue Opening Date and will close upon the close of banking hours on the Issue Closing date mentioned below:
Issue Opening Date [*]
Last date for receiving requests for Split Forms [*]
Issue Closing Date [*]
47
(C) CAPITAL STRUCTURE
The Capital Structure of Our Company as on date of filing of this Draft Letter of Offer with SEBI and Stock Exchange is as follows. (Rs. In Lakhs)
Particulars Nominal Value (Rs.)
Aggregate Value (Rs.)
A. Authorized Share Capital
60,00,000 Equity Shares of Rs.10/- each 70,00,000 9% Cumulative Redeemable Preference Shares of Rs. 10/- each.
600.00
700.00
600.00
700.00
B. Issued, Subscribed and Paid up Capital before the Issue
32,47,900 Equity Shares of Rs. 10/- each 324.79 324.79
70,00,000 9% Cumulative Redeemable Preference Shares of Rs. 10/- each, fully paid up
700.00 700.00
C. Present Issue of Equity Shares being offered to Existing Equity Share holders through this Offer
21,65,267 Equity Shares of Rs. 10/- each at price of Rs. [*] each on a Right basis to the existing shareholders of the Company in the ratio 2 (Two) Rights Equity Shares for every 3 (Three) Equity Shares held as on Record Date.
216.53
[*]
D. Paid-up Share Capital after the Issue (assuming full Subscription)
54,13,167 Equity Shares of Rs. 10/- each fully paid up 70,00,000 9% Cumulative Redeemable Preference Shares of Rs. 10/- each, fully paid up
541.32
700.00
[*]
700.00
E. Share Premium Account
- Before the Rights Issue Nil Nil
- After the Rights Issue [*] [*] Note:
� The present Issue of Equity Shares has been authorized by the Board of Directors of Our Company under Section 81(1) of the Companies Act, 1956 vide a resolution passed at their meeting held on October 22, 2010.
� The above Capital Structure Statement is prepared on the assumption that proposed Rights Issue of 21,65,267 Equity Shares at the price of Rs.[*]/- per share will be fully subscribed (and all the subscribed shares shall be made fully paid by the subscribers)
Details of Increase in Authorized Share Capital:
Sr.
No.
Particulars of increase/modification
in Authorised Share Capital
Cumulative
No. of
Equity
Shares
Cumulative
No. of
Preference
Shares
Cumulative
Authorized
Capital (Rs.
In Lakhs)
Date of change AGM/
EGM
1 Incorporation 90,00,000 - 900 Incorporation -
2 Increase from Rs. 900 Lakhs to Rs. 1,100 Lakhs and Re-classification
35,00,000 75,00,000 1,100 March 24, 2008 EGM
3 Re-classification of Authorized Share Capital of the Company of Rs. 1100 lakhs
40,00,000 70,00,000 1,100 August 2, 2010 AGM
4 Increase from Rs. 1,100 Lakhs to Rs. 1,300 Lakhs and Re-classification
60,00,000 70,00,000 1,300 August 2, 2010 AGM
For details of changes in the Authorized Share Capital of the Company, please see “History and Corporate Structure” on page 102 of this Draft Letter of Offer.
48
Notes to Capital Structure:
Classes of Shares The Company has presently 32,47,900 Equity Shares of Rs. 10 each and 70,00,000 9% Cumulative Redeemable Preference Shares of Rs. 10 each in its share capital.
1. Details of Equity Share Capital of Our Company Date on which
Equity shares
were allotted and
made fully paid up
No. of
Equity
Shares
Face
Value
(Rs.)
Issue
Price (Rs.)
Consi
derati
on
Nature of Allotment Cumulativ
e No. of
Equity
Shares
Cumulative
paid up
Equity
Capital
(Rs. In
Lakhs)
May 12, 1993 70 10 10 Cash Subscribers to MOA 70 0.007
March 24, 1994 8,04,000 10 10 Cash Further Allotment to Erstwhile Promoters,
Friends, Relatives and Associates
8,04,070 80.41
November 15, 1994 6,92,000 10 10 Cash Further Allotment to Erstwhile Promoters,
Friends, Relatives and Associates
14,96,070 149.607
January 17, 1995 2,14,500 10 10 Cash Further Allotment to Erstwhile Promoters,
Friends, Relatives and Associates
17,10,570 171.057
March 30, 1995 4,80,630 10 10 Cash Further Allotment to Erstwhile Promoters,
Friends, Relatives and Associates
21,91,200 219.12
August 31, 1995 9,24,700 10 10 Cash Further Allotment to Erstwhile Promoters,
Friends, Relatives and Associates
31,15,900 315.19
May 29, 1996 38,65,300 10 10 Cash Allotment under IPO to Public and Promoters
69,81,200 698.12
January 31, 2004 (4,85,400) 10 10 Cash Shares Forfeited 64,95,800 649.58
December 20, 2006 (32,47,900) 10 10 Cash 50% Reduction in Equity Shares*
32,47,900 324.79
*As per the Rehabilitation Scheme approved by the BIFR vide its order dated November 28, 2006, the paid up equity share capital was reduced by adjusting 50% paid up Equity Share capital towards accumulated losses and accordingly, the equity shareholders were issued 1 (One) fully paid up Equity share of Rs. 10/- each for every 2 (Two) Equity Shares held by them.
2. 9% Cumulative Redeemable Preference Share Capital of Our Company
Date of
Allotment
No. of
Preference
Shares allotted
Face value
(Rs.)
Nature of
Allotment
Cumulative No. of
Preference Shares
Cumulative paid up
Preference Share Capital
(Rs. In Lakhs)
March 31, 2008 70,00,000 10 Cash 70,00,000 700.00
The Preference Shares of Our Company are not listed on any of the Stock Exchange. The Preference Shares of Our Company were made fully paid up on June 4, 2010.
3) Our Company has not issued any Equity Shares at a premium since Inception. 4) Our Company has not issued any Equity Shares for consideration other than cash or out of revaluation
reserve.
49
5) Our Company has not issued or allotted any Equity Shares in terms of Scheme of Arrangement under Section 391-394 of the Companies Act, 1956.
6) Our Company has not issued any bonus shares out of revaluation reserve at any point of time.
7) Our Company has not issued any Equity Shares under Employees Stock Option Scheme or Employees
Stock Option Plan at any point of time.
8) There are no outstanding warrants convertible into Equity Shares as on the date of this Draft Letter of Offer.
9) The Equity Shares of Our Company are fully paid up and there are no partly paid up Equity Shares as on the date of this Draft Letter of Offer.
10) The Equity Shares to be issued by Our Company through this Issue would be Partly Paid up at the time of
the Issue and balance to be paid at the time of final call.
11) If the Investor fails to pay the money at the time of final call after notice has been sent by Our Company, then any of our Rights Equity Shares in respect of which such notice has been given may, at any time thereafter, before payment of the final call money and interest and expenses due in respect thereof, be forfeited by a resolution of our Board to that effect. Such forfeiture shall include all dividends declared in respect of such forfeited Rights Equity Shares and actually paid before such forfeiture.
12) Our Company has not issued any Equity Shares at a price lower than the Issue price during the preceding
one year from the date of this Draft Letter of Offer.
13) Our Company presently does not have any intention or proposal to alter its Capital Structure within a period of six months from the date of opening of the issue, by way of split/consolidation of the denominations of Equity Shares or further Issue of Equity Shares whether preferential or otherwise, except reissue of forfeited shares. We have not issued any shares during last one year.
14) The present Issue being a Rights Issue, as per regulation 34(c) of the SEBI (ICDR) Regulations, the
requirement of promoters contribution and lock-in are not applicable.
15) Build-up of Promoter Shareholding Name of
Promoter
Date on
Which
Equity
Shares were
allotted / acquired
and made
fully paid
up.
No. of
Equity
shares
Acquired
Total No.
of Equity
Shares
Face
Value
(Rs.)
Issue
Price /
Acqui-
sition
Price (Rs.)
Nature of
Payment of
Consideration
(Bonus, Rights
etc.)
% Pre-
Issue
Equity
Paid Up
Share Capital
(%)
Post
Issue No.
of Equity
Shares
% of Post
Issue
Equity
Paid Up
Share Capital (Note-1)
November 14, 2009 (By SPA-Definitive Basis)
7,09,780
November 14, 2009 (By SPA- Optional Basis)
2,18,775
Mr.
Deepak Chheda
November 14, 2009 (By Open Offer)
796
9,29,351 10 3.00 Cash 28.61 15,48,918 28.61
Mr.
Harish November 14, 2009 (By
2,64,550
3,09,784 10 3.00 Cash 9.54 5,16,307 9.54
50
Name of
Promoter
Date on
Which
Equity Shares were
allotted /
acquired
and made
fully paid
up.
No. of
Equity
shares Acquired
Total No.
of Equity
Shares
Face
Value
(Rs.)
Issue
Price /
Acqui-sition
Price
(Rs.)
Nature of
Payment of
Consideration (Bonus, Rights
etc.)
% Pre-
Issue
Equity Paid Up
Share
Capital
(%)
Post
Issue No.
of Equity Shares
% of Post
Issue
Equity Paid Up
Share
Capital (Note-1)
SPA-Definitive Basis)
November 14, 2009 (By SPA-Optional Basis)
44,937
Nisar
November 14, 2009 (By Open Offer)
297
November 14, 2009 (By SPA- Definitive Basis)
2,64,005
November 14, 2009 (By SPA-Optional Basis)
45,483
Mr.
Rohit Dedhia
November 14, 2009 (By Open Offer)
296
3,09,784 10 3.00 Cash 9.54 5,16,307 9.54
November 14, 2009 (By SPA-Definitive Basis)
5,44,350
November 14, 2009 (By SPA-Optional Basis)
42,560
Mr.
Shailesh
Shah
November 14, 2009 (By Open Offer)
611
5,87,521 10 3.00 Cash 18.09 9,79,202 18.09
Total 21,36,440 65.78% 35,60,734 65.78%
Equity Shares Acquired by our Promoters on Definitive and Optional basis under Share Purchase Agreement dated August 7, 2009
� On August 7, 2009, Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah (hereinafter referred to as “the Promoters”) entered into a Share Purchase Agreement with the Erstwhile Promoters to acquire on a definitive basis 17,82,685 fully paid up equity shares of Rs. 10/- each representing, 54.89% of total paid up equity share capital and of voting capital of the Company at a price of Rs. 3/- (Rupees three only) per fully paid equity share payable in cash from the existing shareholders of the promoters group. Depending upon the response received in the Open Offer, the Acquirers have also agreed to acquire on a proportionate basis such number of the Optional Shares or entire 3,51,755, equity shares of Rs. 10/- each (hereinafter referred to as “Optional Shares”) representing 10.83% of total paid up equity share capital at a price of Rs. 3/- (Rupees three Only) held
51
by certain promoters, that the total acquisition of shares by the Acquirers will not exceed 74.90% of the total equity share capital of the Company, in any circumstance.
� Pursuant to the said SPA, on October 12, 2009, the Promoters made an open offer to acquire 6,49,580
equity shares (representing 20% of the total issued, subscribed and paid up equity share capital) of Rs. 10 each at a price of Rs. 3 per equity share in terms of Regulation 10 and 12 of SEBI Takeover Regulations and listing agreement with the Stock Exchange and other applicable laws and regulations in force. The open offer closed on October 31, 2009.
� Under the Open Offer, the Promoters acquired 2,000 Equity Shares from the public shareholders at a
price of Rs. 3/- per equity share.
Note: 1. Post Issue shareholding % is calculated assuming full subscription. 2. For further details as to the promoter and erstwhile promoters, please refer to Section- “History and
Corporate Structure” on page no. 102 of this Draft Letter of Offer.
16) None of the Equity Shares of Our Company is under lock-in.
17) Present Rights Issue:
Type of Instrument
Ratio Face Value (Rs.)
No. of Equity Shares
Issue Price (Rs.)
Consideration (Rs. in Lakhs)
Equity Shares
2 (Two) Equity Shares for every 3 (Three) Equity Shares held.
10/- 21,65,267 Rs. [*]/- per share
[*]
18) Our Promoters have disclosed under the provisions of Regulation 57(2)(b) and under Clause 5 (VI)(C)(6)(a)
of Part E of the SEBI (ICDR) Regulations that they intend to subscribe to their part of the rights entitlement. In case of under subscription, even after considering the additional Shares applied by non-promoter shareholders, the Promoter, in order to ensure the minimum subscription in the Rights Issue, may contribute towards the unsubscribed portion of the Rights Issue along with their associates and persons falling within the promoter group (hereinafter referred to as “Promoter Group”).
Our Promoters have confirmed that they along with the persons falling under the Promoter Group intend to subscribe to the full extent of their entitlement in the Issue. Promoter Group as defined under Regulation 2 (1) (zb) of SEBI (ICDR) Regulations, 2009, also intends to apply for additional Equity Shares in the Issue such that at least 90% of the Issue Size is subscribed. The Promoter Group reserves their right to subscribe to their entitlement in the Issue either by themselves, relatives, associates or a combination of entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made within the Promoter Group to another person forming part of the Promoter Group.
Our Promoters have provided an undertaking that they shall apply for additional Equity Shares in the Issue, directly or through persons falling within the Promoter Group, to the extent of the unsubscribed portion of the Issue, if any. As a result of this subscription and consequent allotment, the Promoter Group may acquire Equity Shares over and above their entitlement in the Issue, which may result in an increase of their shareholding being above the current shareholding.
This subscription and acquisition of additional Equity Shares by the Promoters Group through this Issue, if any, will not result in change of control of the management of Our Company and shall be exempt in terms of provision under Regulation 3(1)(b)(ii) of the SEBI (SAST) Regulations. As such, other than meeting the requirements indicated in the section on “Objects of the Issue” on page 56, there is no other intention / purpose for this Issue, including any intention to delist Our Company, even if, as a result of allotment to the Promoters, in this Issue, the Promoter’s shareholding in Our Company exceeds their current shareholding.
52
The Promoter Group shall subscribe to such unsubscribed portion as per the relevant provisions of the law. Allotment to the Promoter Group of any unsubscribed portion, over and above their entitlement shall be done in compliance with clause 40A of the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements. Our Promoters have given an undertaking that in case the subscription by them to the unsubscribed portion results in the public shareholding falling below the permissible minimum level as specified in the listing condition agreement, they will undertake necessary steps to maintain the minimum public shareholding in such manner and within such period as specified in Clause 40A of the Listing Agreement.
19) Pre and Post Issue shareholding pattern of Our Company assuming full subscription in the rights Issue as on
June 30, 2011, is given below.
Pre Issue Post Issue
Particulars Number of shareholders
Total number of
shares
% of Share
holding
Total number of
shares
% of Share
holding
Shareholding of Promoter and Promoter Group
Individuals/ Hindu Undivided Family
0 0 0 0 0
Bodies Corporate 0 0 0 0 0
Financial Institutions/Banks 0 0 0 0 0
Directors and their Relatives 4 2,136,440 65.78% 3,560,733 65.78%
4 2,136,440 65.78% 3,560,733 65.78%
Public shareholding
Institutions 0 - 0.00% - 0.00%
Central Government/State Government
0 - 0.00% - 0.00%
Bodies Corporate 39 97,168 2.99% 161,947 2.99%
Individuals (Upto 1 Lakh Nominal value)
599 423,729 13.05% 706,215 13.05%
Individuals (Above 1 Lakh Nominal value)
13 483,298 14.88% 805,497 14.88%
Clearing Member 1 2 0.00% 3 0.00%
Hindu Undivided Family 13 5,568 0.17% 9,280 0.17%
Non Resident Indians 15 101,695 3.13% 169,492 3.13%
Total 684 3,247,900 100.00% 5,413,167 100.00%
Note:- i) Post Issue shareholding is computed assuming that all shareholders subscribe to their rights entitlements in
full. ii) In case of under-subscription, even after considering the additional shares applied by Non promoter
shareholders, if any, the Promoter Group shareholders, in order to ensure the minimum subscription in the rights issue, the promoters, may contribute towards the unsubscribed portion of the Rights Issue through their associates such that at least 90% of the Issue is subscribed and only to that extent the post-Rights Issue holdings of the Promoter Group may go up.
53
20) Top Ten Equity Shareholders:
i. Top Ten Equity Shareholders as on date of filing of the Draft Letter of Offer with Stock Exchange
Sr. No. Name of the Equity Shareholder No. of Equity
Shares
% of the Pre-Issue Equity Share
Capital
1 Deepak Dungarshi Chheda 9,29,351 28.61%
2 Shailesh Damji Shah 5,87,521 18.09%
3 Harish Damji Nisar 3,09,784 9.54%
4 Rohit Keshavji Dedhia 3,09,784 9.54%
5 Hiral Manish Shah 1,32,000 4.06%
6 Varsha Sudhir Gala 44,950 1.38%
7 Premlal Madanlal shah 38,895 1.19%
8 Gautambhai Vasantlal Shah 38,748 1.19%
9 Meghmalhar Consulting Pvt. Ltd. 38,404 1.18%
10 Divyesh Gautambhai Shah 37,175 1.14%
Total 24,66,612 75.94%
ii. Two Years prior to filling the draft letter of offer with the Stock Exchange
Sr. No.
Name of Equity Shareholder No. of Equity
Shares % of the Equity Share Capital
1 Ramnivas Boob 1,97,505 6.08%
2 Balkishan Boob 1,87,320 5.77%
3 Bhagwandas Boob 1,83,755 5.66%
4 Ramanujdas Boob 1,74,255 5.37%
5 Karnataka State Industrial Inv. Corp. Ltd. 1,25,000 3.85%
6 Vinod Securities and Investments Pvt. Ltd. 1,07,300 3.30%
7 Vinod Boob 71,750 2.21%
8 Pushpa Boob 63,000 1.94%
9 Kantabai Boob 58,000 1.79%
10 Shakuntala Boob 55,500 1.71%
Total 12,23,385 37.68%
iii. 10 days prior to filling the Draft Letter Of Offer with the Stock Exchange
Sr. No. Name of the Equity Shareholder No. of Equity
Shares
% of the Pre-Issue
Equity Share Capital
1 Deepak Dungarshi Chheda 9,29,351 28.61%
2 Shailesh Damji Shah 5,87,521 18.09%
3 Harish Damji Nisar 3,09,784 9.54%
4 Rohit Keshavji Dedhia 3,09,784 9.54%
5 Hiral Manish Shah 1,32,000 4.06%
6 Varsha Sudhir Gala 44,950 1.38%
54
7 Premlal Madanlal shah 38,895 1.19%
8 Gautambhai Vasantlal Shah 38,748 1.19%
9 Meghmalhar Consulting Pvt. Ltd. 38,654 1.19%
10 Divyesh Gautambhai Shah 37,175 1.14%
Total 24,66,862 75.95%
21) Our Promoter and Promoter group, directors and their immediate relatives have not purchased /sold any
Equity Shares during the last one year. 22) Shareholding of Persons belonging to the category Public and holding more than 1% of the total number of
shares as on June 30, 2011.
Sr.
No.
Name of shareholder No. of shares % of total no. of
shares
1. Hiral Manish Shah 1,32,000 4.06%
2. Varsha Sudhir Gala 44,950 1.38%
3. Premlal Madanlal shah 38,895 1.20%
4. Gautambhai Vasantlal Shah 38,748 1.19%
5. Divyesh Gautambhai Shah 37,175 1.14%
6. Indiraben Gautambhai Shah 36050 1.11%
7. Alpa Divyesh Shah 34850 1.07%
8. Meghmalhar Consulting Pvt. Ltd. 38,654 1.19%
9. Kusum Shntilal Chheda 35,000 1.08%
Total 4,36,322 13.43%
23) Promoters’ Contribution and Lock in
The present Issue being a Rights Issue, provisions of the promoters’ contribution and lock in are not applicable.
24) Our Company, Promoters, Directors and Lead Manager have not entered into any buyback or standby arrangements for any of the securities being issued through this Draft Letter of Offer.
25) The Equity Shares offered through this Issue shall be made fully paid up or may be forfeited for non-
payment of calls within twelve months from the date of allotment of shares. 26) Our Lead Manager and their Associates do not hold any Equity Shares in Our Company. 27) No further Issue of capital whether by way of issue of bonus shares, preferential allotment, rights issue or in
any other manner will be made by Our Company during the period commencing from the date of submission of the Draft Letter of Offer with SEBI till the Securities referred to in this Draft Letter of Offer have been listed, or application money is refunded on account of failure of the issue.
28) Our promoter group, the directors of Our Company who are promoters, our other directors and their
relatives have not financed the purchase by any other person of the securities of Our Company other than in the normal course of the business of any financing entity during the period of six months immediately preceding the date of filing of this Draft Letter of Offer with the Board.
29) Our Company has not raised any bridge loan against the proceeds of this issue. 30) Our Company has 684 Equity Shareholders as on June 30, 2011. 31) For Equity Shares being offered on Rights Basis under this Issue, shareholders are entitled to the allotment
of 2 (Two) Equity Shares for every 3 (Three) Equity Share held.
32) The Average cost of promoters’ shareholding is Rs. 3/- per Equity Share.
55
33) The terms of Issue to Non-Resident Equity Shareholders / Applicants have been presented under the
“Terms of the Issue” Section of this Draft Letter of offer. 34) The Issue will remain open for 15 days. However, Our Board of Directors will have the right to extend
the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date.
35) The Equity Shares of Our Company are of face value of Rs.10 /- and the marketable lot is 1 (one) Equity
Share. At any given time, there shall be only one denomination of the Equity Shares. 36) The Shareholders of Our Company do not hold any warrant, options, convertible loan or any debenture,
which would entitle them to acquire further Shares of Our Company. 37) Our Company has not re-valued its assets since inception. 38) No Equity Shares have been allotted / transferred on firm basis or through private placement in the last
three years nor has Our Company bought back its Equity Shares in the last six months.
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IV. PARTICULARS OF THE ISSUE
OBJECTS OF THE ISSUE The proceeds of the Issue, after deducting the Issue related expenses (“the Net Proceeds of the Issue”), are estimated to be approximately Rs. [*] lakhs. The Net Proceeds of the Issue are proposed to be utilized for financing the following objects: 1. To meet the Expenses of Development and Construction of Ongoing Project - X’czar; 2. Part Repayment of Unsecured Loans; 3. General Corporate Purposes.
The Main Objects and the Objects incidental or ancillary to the Main Object as set out in the Memorandum of Association of Our Company permits to undertake the existing activities and the activities for which the funds are being raised through the present issue. Further, we confirm that the activities we have been carrying on until now are in accordance with the Objects Clause of our Memorandum of Association of Our Company. The details of proceeds of the Issue are summarized below:
Description Rs. In Lakhs
Gross Proceeds of the Issue [●]
Issue related Expenses* [●]
Net Proceeds of the Issue* [●] * To be finalized upon determination of Issue Price
Requirement of Funds The fund requirement described below is based on the estimates by our management.
Sr.
No.
Description Rs. In Lakhs
1 To meet the expenses of development and construction of the Ongoing Project “X’czar”
738.81
2 Part repayment of unsecured loans 1800.00
3 General corporate purposes [●]
Total [●] * To be finalized upon determination of Issue Price
In view of the dynamic nature of the Real Estate industry, our Company may have to revise our capital expenditure requirements due to variations in the cost structure, changes in estimates and/or external factors, which may not be within the control of our management. This may entail rescheduling or revising the planned capital expenditure at the discretion of our management. In case of variations in the actual utilization of funds earmarked for the purposes set forth above, increased fund requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other purposes for which funds are being raised in this Issue. If surplus funds are unavailable, the required financing will be through our internal accruals through cash flow from our operations, advances/ sales proceeds received from customers and/or debt, as required. In addition, the fund requirements mentioned above are based on the current internal management estimates of the Company and have not been appraised by any bank or financial institution. These are based on current conditions and are subject to change in light of changes in external circumstances or costs, or other financial condition, business or strategy. The Company operates in a highly competitive and dynamic market, and may have to revise its estimates from time to time on account of new projects that it may pursue including any industry consolidation initiatives, such as potential acquisition opportunities.
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The Company may also reallocate expenditure to newer projects or those with earlier completion dates in the case of delays in the Ongoing project of the Company or completion of Ongoing projects from customer advances or internal accruals. Consequently, the fund requirements may also change. Any such change in the plans may require rescheduling of the expenditure programs, discontinuing projects currently planned and an increase or decrease in the expenditure for a particular project at the discretion of the management of the Company. In the event the estimated utilization of the proceeds of the Issue in a Fiscal is not completely met, the same shall be utilized in the next Fiscal Year. Means of Finance We propose to fund the objects of the Issue as under:
Particulars Rs. In Lakhs
Net Proceeds of the Issue [*]
Total [*]
Our Company has made firm arrangements of finance through verifiable means towards 75 % of the stated means of finance for part funding of Project X’czar. In respect of the other objects of this Issue, there is no requirement for our Company to make firm arrangements of finance through verifiable means towards 75 % of the stated means of finance, excluding the amount to be raised through the Issue.
Utilization of Funds We intend to utilize the Net Proceeds of the Issue of Rs. [*] lakhs for financing the Objects of the Issue as set forth below: (Rs. In Lakhs)
Estimated Net
Proceeds Utilization
as on March 31,
Sr.
No.
Particulars Total
Estimated
Cost
Amount
Deployed/
utilized as
on June 30,
2011
Debt funding
pending
disbursement
**
Amount to be
financed from
the Net
Proceeds of the
Issue 2012 2013
1. To meet the Expenses of Development and Construction of Ongoing Project - X’czar
4454.70 2432.89 1,283.00 738.81 400.00 338.81
2. Part repayment of unsecured loans
1800.00 - - 1800.00 1800.00 -
3. General Corporate Purposes
[*] - - [*] [*] [*]
Total Utilization [*] 2432.89 1,283.00 [*] [*] [*]
* To be finalized upon determination of Issue Price
** The Indian Overseas Bank vide its letter dated January 1, 2011 have sanctioned a Term Loan of Rs. 1800.00 lakhs
towards funding for the Ongoing Project X’czar out of which Rs. 517 lakhs has already been disbursed and utilized for
the said project and the balance funds of Rs. 1,283.00 lakhs is expected to be disbursed as per the project
implementation schedule.
Details of Objects of the Issue: 1. To meet the Expenses of Development and Construction of Ongoing Project – X’czar
Our Company proposes to deploy a part of the proceeds of the Issue towards Development and Construction of our Ongoing Project i.e. X’czar – Juhu-Vile Parle, Mumbai- Residential Project. We have already acquired land for this project. We have either obtained or are in the process of obtaining the relevant regulatory clearances/approvals required to commence the construction and development work for the project. Further details in respect to the said project, please refer to the section titled “Our Business” and
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“Govt. Approvals or Licensing Arrangements” on page 82 and page 184 respectively of this Draft Letter of Offer. The details of the projects, including the utilization of the proceeds of the Issue, are as follows:
(Rs. In Lakhs)
Name of
Ongoing Project & Location
Type
of Project
Land
Size (Sq. ft.)
Saleable
Area (Sq. ft.)
Project
Commencement
Date
Estimated
Completion Date*
Total
Estimated
Project
Cost*
Costs
Incurred Up to
June 30,
2011**
Balance
Costs to be incurred
X'czar - Juhu -
Vile Parle
Residential
8,109.59 37,532 December 2009
3rd Quarter 2012-13
4454.70 2432.89 2021.81
* Management Estimates
** As per the certificate issued by M/s. M. M. Nissim and Co., Chartered Accountants dated August 11, 2011
Break-up of Project Costs, Source of financing of funds already deployed and Deployment of balance funds:
A. Break-up of Estimated Project Cost and Costs Incurred till June 30, 2011
(Rs. In Lakhs)
Estimated Funds
Deployed in FY
Sr.
No.
Break-up of Project Cost Total
Estimated Cost
Amount
deployed as at June
30, 2011
Balance
Funds to be Deployed 2011-12 2012-13
1 Land / TDR Cost 2672.10 1722.20 949.90 900.00 49.90
2 Construction Cost 1272.20 427.76 844.44 150.00 694.44
3 Selling, Marketing, Brokerage, Administration and other Miscellaneous Costs
510.40 282.93 227.47 75.00 152.47
Total Estimated Costs 4454.70 2432.89 2021.81 1125.00 896.81
As on June 30, 2011, we have incurred total costs of Rs. 2432.89 lakhs towards acquisition of land, stamp duty, legal, construction and various other costs towards Project X’czar, which was funded through advances received from customers of Rs. 1732.09 lakhs, Unsecured Loans of Rs. 183.80 lakhs and Term Loan disbursement by Indian Overseas Bank of Rs. 517 lakhs. The same has been certified by the Statutory Auditor viz. M/s. M. M. Nissim and Co., Chartered Accountants vide their certificate dated August 11, 2011. B. Source of financing of funds already deployed
(Rs. In Lakhs)
Sr. No.
Source of Funds already deployed Amount Deployed as at June 30, 2011
1 Advances received from Customers 1732.09 2 Unsecured Loans 183.80
3 Term Loan – part disbursement received from Indian Overseas Bank
517.00
Total 2432.89 * As per the certificate issued by M/s. M. M. Nissim and Co., Chartered Accountants dated August 11, 2011
C. Deployment of the balance funds: (Rs. In Lakhs)
Sr. No. Particulars Amount to be Deployed
1 Term Loan part disbursement to be received from Indian Overseas Bank
1283.00
2 Net Proceeds of the Issue 738.81
Total 2021.81
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Our Company proposes to deploy the balance funds of Rs. 2,021.81 lakhs by December 31, 2013, which is proposed to be met partly from the balance Term Loan disbursement of Rs. 1,283 lakhs from Indian Overseas bank and Rs. 738.81 lakhs from the Net Proceeds of the Issue.
Schedule of Implementation
Sr. No.
Schedule of Activities for Ongoing Project – X’czar
Actual/Expected Date of Commencement
Actual/Expected Date of Completion
1 Land Acquisition December 2009 February 2010
2 Obtaining Legal / Regulatory Approvals April 2010 August 2010
3 Construction 1st Quarter FY 2010-11 3rd Quarter of FY 2012-13*
* As per Management Estimates
Any expenditure incurred towards the Objects would be recouped from the Net Proceeds of the Issue. In the event, the estimated utilization out of the Net Proceeds of the Issue in any given financial year is not completely met, the same shall be utilized in the next financial year.
2. Part Repayment of Unsecured Loans The balance of Unsecured Loans outstanding and payable as on March 31, 2011 by Our Company from our promoters and others is Rs. 2,835.04 lakhs, which were utilized for various project execution expenses, purchase of land and other rights. We propose to utilize Rs. 1800 lakhs out of the proceeds of this Issue for part repayment of unsecured loans availed from promoters and others..
3. General Corporate Purposes The Net Proceeds from the Issue will be first utilized towards the aforesaid items and the balance of the Net Proceeds of the Issue aggregating to Rs. [*] lakhs would be utilized towards general corporate purposes, including but not restricted to meeting capital expenditure, strategic initiatives, brand building exercises, strengthening of our marketing capabilities and/or any other purposes as approved by our Board of Directors. Our management, in response to the competitive and dynamic nature of the industry, will have the discretion to revise its business plan from time to time and consequently our funding requirement and deployment of funds may also change. This may also include rescheduling the proposed utilization of Net Proceeds and increasing or decreasing expenditure for a particular object vis-à-vis the utilization of Net Proceeds. Our management, in accordance with the policies of our Board, will have flexibility in utilizing the proceeds earmarked for general corporate purposes. Expenses related to the Issue The Issue related expenses consist of fees payable to Lead Manager to the Issue, Legal Counsel, Bankers to the Issue, Registrars to the Issue, Printing and Distribution expenses, Advertising, Depository fees and all other incidental and miscellaneous expenses for listing the Equity Shares on the Stock Exchange. We intend to use about Rs. [*] lakhs towards these expenses for the Issue. All expenses with respect to the Issue will be borne out of Issue proceeds.
Sr. No. Particulars Rs. In Lakhs % of the Issue
Size 1. Lead Manager, Legal Advisor and Other Fees [*] [*]
2. Statutory Fees payable to SEBI and Stock Exchanges, Registrar and Depository Charges
[*] [*]
3. Advertising, Printing, Stationery, Stamp Duty and Postage expenses (including transportation costs)
[*] [*]
4. Misc. Expenses [*] [*]
TOTAL [*] [*]
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MONITORING OF FUNDS There is no requirement for a monitoring agency in terms of Regulation 16 of the SEBI (ICDR) Regulations. The Audit Committee appointed by the Board of Directors will monitor the utilization of the net proceeds of the Issue. We will disclose the utilization of net proceeds of the Issue under a separate head in our audited financial statements, clearly specifying the purpose for which such proceeds have been utilized and also indicating investments, if any, of such utilized proceeds of the Issue. No part of the proceeds from the Issue will be utilized by our Company for payment to our Promoters, Promoter group, our Directors, group companies or key managerial employees, except as disclosed above.
APPRAISAL The objects for which the funds are proposed to be raised through this Issue have not been appraised by any bank or financial institution. SHORTFALL OF FUNDS: In case of a shortfall in the Net Proceeds, Our Company shall utilize internal accruals or seek debt from present/ future lenders or from advances/ sales proceeds from customers. Our management expects that such alternate arrangements would be available to fund any such shortfall. Our management, in accordance with the policies of our Board, will have flexibility in utilizing the Net Proceeds earmarked for general corporate purposes.
INTERIM USE OF ISSUE PROCEEDS We, in accordance with the policies established by our Board, will have flexibility in deploying the Net Proceeds received by us from the Issue. The particular composition, timing and schedule of deployment of the Net Proceeds will be determined by us based upon the development of the projects. Pending utilization for the purposes described above, we intend to temporarily invest the funds from the Issue in high quality interest bearing liquid instruments including deposits with banks and investments in mutual funds and other financial products, including but not restricted to principal protected funds, derivative linked debt instruments, other fixed and variable return instruments, listed debt instruments and rated debentures.
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(C) BASIC TERMS OF THE ISSUE The Equity Shares, now being issued, are subject to the terms and conditions of this Draft Letter of Offer, the enclosed Composite Application Form (“CAF”), the Memorandum and Articles of Association of Our Company, the approvals from the GOI, FIPB and RBI, if applicable, the provisions of the Companies Act, 1956, guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/ or other statutory authorities and bodies from time to time, terms and conditions as stipulated in the allotment advice or letter of allotment or Security Certificate and rules as may be applicable and introduced from time to time. (D) BASIS FOR ISSUE PRICE
Qualitative Factors:- Please see the section titled "Business Overview" beginning on Page 82 of this Draft Letter of Offer for a discussion of Our Company's strengths and strategy and the section titled "Risk Factors" beginning on Page 14 of this Draft Letter of Offer for a discussion of internal and external risks associated with Our Company's business and industry. - Quantitative Factors:-
Financial Performance: Information presented in this section is derived from our restated financial statements prepared in accordance with Indian GAAP. 1. Adjusted Earnings Per Share (EPS)
Sr. No. Financial Year Amount in Rs. Weights
A 2008-09 (3.24) 1
B 2009-10 6.02 2
C 2010-11 9.80 3
D Weighted Average 6.37
2. Price Earning Ratio (P/E) in relation to the Issue Price of Rs. [*]
Particulars of Period Price Earning Ratio
Based on March 31, 2011 EPS of Rs. 9.80 [*]
3. Industry PE
Sr. No. Particulars Price Earning Ratio
A Highest - 167.40
B Lowest - 2.4
C Industry Composite 15.1
(Source: Dalal Street-July 17, 2011, Segment-Constructions)
4. Return on Net worth
Sr. No. Financial Year
% Return on Net worth Weights
A 2008-09 - 1
B 2009-10 28.25 2
C 2010-11 26.84 3
D Weighted Average 22.84 5. Minimum Return on Total Net Worth after Issue needed to maintain EPS of Rs. [*] is [*]%.
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6. Net Asset Value
Sr. No. Net Asset Value Per Share
A As at March 31, 2011 36.51
B After Issue [*]
C Issue Price [*]
Notes:
a. The Earnings per Share and the Return on Net Worth have been computed on the basis of the adjusted profits and losses of the respective years drawn after considering the impact of accounting policy changes and material adjustments/prior period items pertaining to the earlier years if any.
b. The denominator considered for the purpose of calculating Earnings per Share is the average number of Equity Shares outstanding during the year.
c. Net Asset Value Per Share represents Shareholder’s Equity as per restated financial statements less miscellaneous expenditure as divided by number of shares outstanding at the end of the period.
Comparison with Financial ratios of the Peer Group
Name of the Company Period Ended
Parameters
Sales PAT
(Rs. In Lakhs)
Book Value
RONW % EPS
P/E Ratio
Price as on
5/08/2011
Rodium Realty Limited Mar-11 2422.31 284 36.51 26.84 9.80 17.86 175.00
Kolte Patil Developers Ltd. Mar-11 13900 5260 88 7.9 6.9 4.70 41.00
Tirupati Sarjan Ltd. Mar-11 7606 470 9.3 21.04 1.96 11.47 20.10
Ganesh Housing Corporation Ltd. Mar-11 16200 5710 171 10.2 17.50 7.10 134.00
Ashiana Housing Limited Mar-11 14300 4890 91 28.6 26.10 4.90 150.00 Ansal Properties and Infrastructure Limited Mar-11 107700 7620 83 5.8 4.8 8.20 33.95
DS Kulkarni Developers Ltd. Mar-11 18100 1670 180 3.6 6.50 9.2 57.25
(Source: Dalal Street Magazine – July 17, 2011 Segment-Construction and Official Web-site of BSE i.e.
www.bseindia.com)
The Face value per share is Rs. 10/- and the Issue Price of Rs. [*]/- is [*] times the Face Value. The Lead Manager believes that the Issue Price of Rs. [*]/- is justified in view of the above qualitative and quantitative parameters. The investors may want to peruse the risk factors and the financials of Our Company including important profitability and return ratios, as set out in the Auditors’ report on page no. 156 of the Draft Letter of Offer to have a more informed view of the investment proposition. Market Price The closing price of the Equity Share of our Company was Rs. [*] on the BSE, one day before the date when Rights Issue Committee decided Issue Price. On the basis of the above mentioned qualitative and quantitative parameters, the Lead Manager and our Company are of the opinion that the Issue Price of Rs. [*] per share is justified.
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(E) STATEMENT ON TAX BENEFITS To
Rodium Realty Limited 501, X’ cube, Plot No. 636, Off New Link Road, Andheri (W), Mumbai- 400053
Sub: Rights Issue of Your Company Dear Sirs, We hereby report that the enclosed statement states the possible direct tax benefits available to Rodium Realty
Limited (‘the company’) and to the shareholders of the company under the Income-tax Act, 1961 and Wealth Tax Act, 1957. Several of these benefits are dependent on the Company or the shareholders fulfilling the conditions prescribed under the relevant provisions of the statute. Hence, the ability of the Company and shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which is based on business imperatives the Company may face in the future and accordingly, the Company may or may not choose to fulfill. The benefits discussed in the enclosed statement are not exhaustive. This statement is only intended to provide general information to the investors and 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 Company or its shareholders will continue to obtain these benefits in future; or ii. the conditions prescribed for availing the benefits have been / would be met with.
The contents of the enclosed statement 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. Our views expressed herein are based on the facts and assumptions indicated to us. No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its interpretation, which are subject to change from time to time. We do not assume responsibility to update the views consequent to such changes. The views are exclusively for the use of the company. We shall not be liable to the company for any claims, liabilities or expenses relating to this assignment except to the extent of fees relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or intentional misconduct. We will not be liable to any other person in respect of this statement. For M. M. NISSIM AND CO. Chartered Accountants (ICAI Reg. No.107122W) (N. Kashinath) Partner Mem. No.36490
Date: August 11, 2011 Place: Mumbai
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TAX BENEFITS STATEMENT OF POSSIBLE DIRECT TAX BENEFITS AVAILABLE TO RODIUM REALTY LIMITED AND ITS SHAREHOLDERS
A. Benefits to the Company under the Income-Tax Act, 1961 (the “Income Tax Act”):
General Tax Benefits 1. Under section 10(34) of the Income Tax Act, any income by way of dividends referred to in section 115-O
(i.e. dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) received on the shares of any company is exempt from tax.
2. Under section 10(35) of the Income Tax Act, any income received from units of a Mutual Fund specified
under section 10(23D) of the Income Tax Act, is exempt from tax. 3. Under section 10(38) of the Income Tax Act, any long-term capital gains arising to a shareholder from
transfer of long-term capital asset, being equity shares in a company or a unit of an equity oriented fund (i.e. if the shares or units are held for more than twelve months) would not be liable to tax in the hands of the shareholder, if the following conditions are satisfied: a. The transaction of sale of such equity share or unit is entered into on or after October 1, 2004; b. The transaction is chargeable to securities transaction tax.
However, the expenditure and income relating to the provisions of section 10(38) of the Income Tax Act would not be adjusted for the purpose of computing book profits under section 115JB of the Income Tax Act.
4. Section 14A of the Income Tax Act restricts claim for deduction of expenses incurred in relation to income
which does not form part of the total income under the Income Tax Act viz income received under sections 10(34), 10(35), etc. Thus, any expenditure incurred to earn the said income is not a tax-deductible expenditure.
5. Under Section 32 of the Income Tax Act, the Company can claim depreciation allowance at the prescribed
rates on tangible assets such as building, plant and machinery, furniture and fixtures, etc. and intangible assets such as patent, trademark, copyright, know-how, licenses, etc. if acquired after 31 March 1998. In terms of Clause (iia) of subsection (1) of section 32 of the Income Tax Act, the Company is entitled to further depreciation of 20% as additional depreciation on new plants and machinery acquired and installed after 31 March 2005, subject to conditions specified therein.
6. As per the provisions of section 32(2) of the Income Tax Act, where full allowance cannot be given to the
depreciation allowance in any year, the same can be carried forward and claimed in the subsequent years. Further, as per the provisions of section 72 of the Income Tax Act, unabsorbed business losses which are not set off in any previous year can be carried forward and set off against the business profits of the subsequent assessment years, subject to a maximum of eight assessment years. However, the carry forward and set off of business losses is subject to provisions of section 79 of the Income Tax Act dealing with carry forward and set off of losses in case of companies in which a change in shareholding has taken place and section 80 of the Income Tax Act dealing with submission of returns for losses.
7. Under section 35D of the Income Tax Act, the Company will be entitled to a deduction equal to one-fifth of
the expenditure incurred of the nature specified in the said section, including expenditure incurred on present issue, such as under writing commission, brokerage and other charges, as specified in the provision, for a period of five successive years subject to the limits provided and conditions specified therein.
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8. Under section 48 of the Income Tax Act, if the investments in shares are sold after being held for not less than twelve months, the gains, if any (in case not covered under section 10(38) of the Income Tax Act), will be treated as long-term capital gains and the gains will be calculated by deducting from the gross consideration, the indexed cost of acquisition. The indexed cost of acquisition/ improvement means an amount which bears to the cost of acquisition/improvement the same proportion as cost inflation index for the year in which the asset is transferred bears to the cost inflation index for the first year in which the asset was held/ for the year in which the improvement to the asset took place.
9. Under Section 54EC of the Income Tax Act, capital gain arising from transfer of long-term capital assets
(other than those exempt under section 10(38) of the Income Tax Act) is exempt from tax, if the capital gains are invested in certain notified bonds within a period of six months from the date of transfer, up to a maximum limit of Rs. 5 million during any financial year for a period of three years. For investments made on or after 1 April 2007, the notified bonds are:
National Highways Authority of India (“NHAI”) constituted under section 3 of National Highways Authority of India Act, 1988 and notified by the Central Government in the Official Gazette for the purpose of this section;
or
Rural Electrification Corporation Limited (“RECL”), a company formed and registered under the
Companies Act and notified by the Central Government in the Official Gazette for the purpose of this section; If only part of the capital gain is invested, the exemption will be proportionately reduced. However, if the new bonds are transferred or converted into money within three years from the date of their acquisition, the amount so exempted will be chargeable to tax.
10. The Company is entitled to a deduction under section 80G of the Income Tax Act in respect of amounts contributed as donations to various charitable institutions and funds covered under that section, subject to fulfilment of conditions therein.
11. The Company is eligible for deduction under section 80-IB (10) of the Income Tax Act, in case of certain
projects. The deduction is equivalent to 100% of profits derived from developing and building housing projects approved before 31 March 2007 by a local authority, subject to fulfilment of specified conditions.
12. Under section 111A of the Income Tax Act, short-term capital gains (i.e., if the shares are held for a period
not exceeding twelve months), arising on sale of listed equity shares are taxed at the rate of 15% (plus applicable surcharge and cess) in cases where securities transaction tax has been levied. Further, if the gross total income of the Company 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.
13. Under section 112 of the Income Tax Act, long-term capital gains are subject to tax at a rate of 20% (plus
applicable surcharge and cess) after indexation, as provided in the second proviso to section 48 of the Income Tax Act. However, in case of listed securities or units, the amount of such tax could be limited to 10% (plus applicable surcharge and cess), without indexation benefit, at the option of the Company in cases where securities transaction tax is not levied.
14. Under section 115JAA(1A) of the Income Tax Act, credit is allowed in respect of any Minimum Alternate
Tax (“MAT”) paid under section 115JB of the Income Tax Act for any assessment year commencing on or after 1 April 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 Income Tax Act for that assessment year. Such MAT credit is allowed to be carried forward for set off purposes for up to 7 years succeeding the year in which the MAT credit is first allowed.
66
Special Tax Benefits There are no special tax benefits available under the Income Tax Act, 1961 to the Company.
B. Benefits to the Company under the Wealth Tax Act, 1957:
General Tax Benefits
1. As per the provisions of section 2(m) of the Wealth tax Act, 1957, the Company is entitled to reduce debts
owed in relation to the assets which are chargeable to wealth tax in computing the net taxable wealth
Special Tax Benefits
There are no special tax benefits available under the Wealth Tax Act to the Company.
C. Benefits to the Shareholders of the Company under the Income-Tax Act, 1961:
General Tax Benefits 1. Under section 10(32) of the Income Tax Act, any income of minor children clubbed in the total income of
the parent under section 64(1A) of the Income Tax Act, will be exempt from tax to the extent of Rs 1,500 per minor child.
2. Under section 10(34) of the Income Tax Act, any income by way of dividends referred to in Section 115-O
(i.e. dividends declared, distributed or paid on or after 1 April 2003) received on the shares of the Company, is exempt from tax.
3. Under section 10(38) of the Income Tax Act, any long term capital gains arising to a shareholder from
transfer of long term capital asset being an equity share in a company will not be liable to tax in the hands of the shareholder if the following conditions are satisfied: The transaction of sale of such equity share is entered into on or after October 1, 2004; and The transaction is chargeable to securities transaction tax.
4. Section 14A of the Income Tax Act restricts claim for deduction of expenses incurred in relation to income which does not form part of the total income under the Income Tax Act viz income received under sections 10(34), 10(35), etc. Thus, any expenditure incurred to earn the said income is not a tax-deductible expenditure.
5. Under section 36(1) (xv) of the Income Tax Act, securities transaction tax paid by a shareholder in respect
of the taxable securities transactions entered into in the course of his business, would be allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head “Profit and gains of business or profession”. Where such deduction is claimed, no further deduction in respect of the said amount will be allowed in computing the income chargeable to tax as capital gains.
6. Under section 48 of the Income Tax Act, if the Company’s shares are sold after being held for not less than
twelve months, the gains (in case not covered under section 10(38) of the Income Tax Act), if any, will be treated as long term capital gains and the gains shall be calculated by deducting from the gross consideration, the indexed cost of acquisition. The indexed cost of acquisition/ improvement means an amount which bears to the cost of acquisition/improvement the same proportion as cost inflation index for the year in which the asset is transferred bears to the cost inflation index for the first year in which the asset was held/ for the year in which the improvement to the asset took place.
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7. Under Section 54EC of the Income Tax Act, capital gain arising from transfer of long-term capital assets
(other than those exempt under section 10(38) of the Income Tax Act) is exempt from tax, if the capital gains are invested in certain notified bonds within a period of six months from the date of transfer, up to a maximum limit of Rs. 5 million during any financial year for a period of three years. For investments made on or after 1 April 2007, the notified bonds are
a) NHAI, constituted under section 3 of National Highways Authority of India Act, 1988 and notified by
the Central Government in the Official Gazette for the purpose of this section; or b) RECL, a company formed and registered under the Companies Act and notified by the Central
Government in the Official Gazette for the purpose of this section; If only part of the capital gain is invested, the exemption will be proportionately reduced. However, if the new bonds are transferred or converted into money within three years from the date of their acquisition the amount so exempted will be chargeable to tax.
8. Under section 54F of the Income Tax Act, long-term capital gains (in case not covered under section 10(38) of the Income Tax Act), arising to an individual or Hindu Undivided Family (“HUF”) on transfer of shares of the Company will be exempt from tax, if the net consideration from such shares are used for purchase of residential house property within a period of one year before or two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer. If only a part of the net consideration is so reinvested, the exemption shall be proportionately reduced.
9. Under section 111A of the Income Tax Act, short-term capital gains (i.e. if shares are held for a period not exceeding twelve months), arising on transfer of an equity share, are taxed at the rate of 15% (plus applicable surcharge & cess) in cases where securities transaction tax has been levied. Further, if the gross total income of the shareholder 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.
10. Under section 112 of the Income Tax Act, long-term capital gains are subject to tax at a rate of 20% (plus
applicable surcharge and cess) after indexation as provided in the second proviso to section 48. However, in case of listed securities or units the amount of such tax could be limited to 10% (plus applicable surcharge and cess) without indexation benefit, at the option of the shareholder, in cases where securities transaction tax is not levied.
Special Tax Benefits 11. There are no special tax benefits available to the resident shareholders.
D. Benefits to Non-Resident Indians / Non Residents Shareholders (Other than FIIs)
General Tax Benefits 1. Under section 10(34) of the Income Tax Act, any income by way of dividends referred to in section 115-O
(i.e. dividends declared, distributed or paid on or after 1 April 2003) received by a non-resident Indian shareholder (i.e. an individual being a citizen of India or Person of Indian origin who is not a ‘resident’) on the shares of the Company, is exempt from tax.
2. Under section 10(38) of the Income Tax Act, any long term capital gains arising to a shareholder from
transfer of long term capital asset being an equity share in a Company or a unit of an equity oriented fund would not be liable to tax in the hands of the shareholder if the following conditions are satisfied:
a) The transaction of sale of such equity share is entered into on or after October 1, 2004; and b) The transaction is chargeable to securities transaction tax.
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3. Section 14A of the Income Tax Act restricts claim for deduction of expenses incurred in relation to income which does not form part of the total income under the Income Tax Act viz income received under sections 10(34), 10(35), etc. Thus, any expenditure incurred to earn the said income is not a tax-deductible expenditure.
4. Under section 36(1) (xv) of the Income Tax Act, securities transaction tax paid by a shareholder in respect
of the taxable securities transactions entered into in the course of his business, would be allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head “Profit and gains of business or profession”. As such, no deduction in respect of amount paid on account of securities transaction tax will be allowed in computing the income chargeable to tax as capital gains.
5. Section 48 of the Income Tax Act contains special provisions in relation to computation of long term
capital gain on transfer of an Indian company’s shares by non-residents. The Computed long term capital gain arising on transfer of shares in case of non residents has to be done in the original foreign currency, which was used to acquire the shares. The capital gain computed in original foreign currency is then converted into Indian rupees at the prevailing rate of exchange.
6. Under Section 54EC of the Income Tax Act, capital gain arising from transfer of long-term capital assets
(other than those exempt under section 10(38) of the Income Tax Act) is exempt from tax, if the capital gains are invested in certain notified bonds within a period of six months from the date of transfer, up to a maximum limit of Rs. 5 million during any financial year for a period of three years. For investments made on or after 1 April 2007, the notified bonds are
a. NHAI, constituted under section 3 of National Highways Authority of India Act, 1988 and notified by
the Central Government in the Official Gazette for the purpose of this section; or b. RECL, a company formed and registered under the Companies Act and notified by the Central
Government in the Official Gazette for the purpose of this section; If only part of the capital gain is invested, the exemption will be proportionately reduced. However, if the new bonds are transferred or converted into money within three years from the date of their acquisition the amount so exempted will be chargeable to tax.
7. Under section 54F of the Income Tax Act, long-term capital gains (in case not covered under section 10(38) of the Income Tax Act), arising to an individual or HUF on transfer of shares of the Company will be exempt from tax, if the net consideration from such shares is used for purchase of residential house property within a period of one year before and two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer. If only a part of the net consideration is so reinvested, the exemption shall be proportionately reduced.
8. Under section 111A of the Income Tax Act, short-term capital gains (i.e. if the shares are held for a period
not exceeding twelve months), arising on sale of listed equity shares are taxed at the rate of 15% (plus applicable surcharge & cess) in cases where securities transaction tax has been levied. Further, if the gross total income of the shareholder 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.
9. Under section 112 of the Income Tax Act, long-term capital gains (i.e. if shares are held for a period
exceeding twelve months), arising on transfer of shares in the Company, shall be taxed at a rate of 20% (plus applicable surcharge and cess). However, in case of listed securities or units, the amount of such tax could be limited to 10% (plus applicable surcharge and cess), without indexation benefit, at the option of the shareholder, in cases where securities transaction tax is not levied.
10. Under section 115-I of the Income Tax Act, a non-resident Indian shareholder (as defined therein) has an
option to be governed by the provisions of Chapter XII-A of the Income Tax Act, viz. “Special Provisions Relating to Certain Incomes of Non-Residents” which are as follows: -
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a. Under section 115E of the Income Tax Act, where shares in the Company are acquired or subscribed to
in convertible Foreign Exchange by a Non-Resident Indian, capital gains arising to the non-resident on transfer of shares held for a period exceeding twelve months, shall be concessionally taxed at the flat rate of 10% (plus applicable surcharge and cess), without indexation benefit.
b. Under section 115F of the Income Tax Act, long-term capital gains arising to a Non- Resident Indian from the transfer of shares of the Company subscribed to in convertible Foreign Exchange shall be exempt from Income-tax, if the net consideration is reinvested in specified asset or in any savings certificate as defined by section 10(4B) of the Income Tax Act, within six months of the date of transfer. If only part of the net consideration is so reinvested, the exemption shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted into money within three years from the date of their acquisition.
c. Under section 115G of the Income Tax Act, Non-Resident Indians are not required to file a return of income under Section 139(1) of the Income Tax Act, if their only income is income from foreign exchange asset investments or long-term capital gains in respect of those assets or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Income Tax Act.
d. Under Section 115H of the Income Tax Act, where the Non-Resident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under Section 139 of the Income Tax Act to the effect that the provisions of the Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money.
11. Under section 90(2) of the Income Tax Act, the provisions of the Income Tax Act would prevail over the
provisions of the double tax avoidance agreement (“tax treaty”) entered between India and the country of fiscal domicile of the non-resident, if any, to the extent they are more beneficial to the non-resident. Thus, a non-resident (including NRIs) can opt to be governed by the provisions of the Income Tax Act or the applicable tax treaty, whichever is more beneficial.
Special Tax Benefits
There are no special tax benefits available to the non-resident shareholders.
E. Benefits to Foreign Institutional Investors (FIIs) General Tax Benefits
1. In terms of section 10(34) of the Income Tax Act, any income by way of dividends referred to in section
115-O (i.e. dividends declared, distributed or paid on or after 1 April 2003) received on the shares of the Company is exempt from tax.
2. In terms of section 10(38) of the Income Tax Act, any long-term capital gains arising to an investor from
transfer of long-term capital asset being an equity share in a company or a unit of an equity oriented fund would not be liable to tax in the hands of the investor if the following conditions are satisfied:
a) The transaction of sale of such equity share is entered into on or after October 1,2004; b) The transaction is chargeable to securities transaction tax as explained below.
3. Section 14A of the Income Tax Act restricts claim for deduction of expenses incurred in relation to income which does not form part of the total income under the Income Tax Act viz income received under sections 10(34), 10(35), etc. Thus, any expenditure incurred to earn the said income is not a tax-deductible expenditure.
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4. Under section 36(1) (xv) of the Income Tax Act, securities transaction tax paid by a shareholder in respect of the taxable securities transactions entered into in the course of his business, would be allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head “Profit and gains of business or profession”. As such, no deduction in respect of amount paid on account of securities transaction tax will be allowed in computing the income chargeable to tax as capital gains.
5. The income by way of short-term capital gains/ long-term capital gains realized by FIIs on sale of shares in
the Company would be taxed at 30%/ 10% respectively, as per section 115AD of the Income Tax Act. However, in respect of short term capital gains referred to in section 111A the tax rate applicable will be 15% (plus applicable surcharge and cess). The benefit of indexation and foreign currency fluctuation protection as provided by section 48 of the Income Tax Act are not applicable to FIIs. Further, if the gross total income of the FII 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.
6. Under Section 54EC of the Income Tax Act, capital gain arising from transfer of long-term capital assets
(other than those exempt under section 10(38) of the Income Tax Act) is exempt from tax, if the capital gains are invested in certain notified bonds within a period of six months from the date of transfer, up to a maximum limit of Rs. 5 million during any financial year for a period of three years. For investments made on or after 1 April 2007, the notified bonds are
a) NHAI, constituted under section 3 of National Highways Authority of India Act, 1988 and notified by
the Central Government in the Official Gazette for the purpose of this section; or b) RECL, a company formed and registered under the Companies Act and notified by the Central
Government in the Official Gazette for the purpose of this section; If only part of the capital gain is invested, the exemption will be proportionately reduced. However, if the new bonds are transferred or converted into money within three years from the date of their acquisition the amount so exempted will be chargeable to tax.
7. Under section 196D (2) of the Act, no deduction of tax at source will be made in respect of income by way of capital gain arising from the transfer of securities referred to in section 115AD.
8. Under section 90(2) of the Income Tax Act, the provisions of the Income Tax Act would prevail over the
provisions of the tax treaty to the extent they are more beneficial to the non-resident. Thus, a non-resident can opt to be governed by the provisions of the Income Tax Act or the applicable tax treaty, whichever is more beneficial.
Special Tax Benefits There are no special tax benefits available to the FIIs.
F. Benefits to the Mutual funds
General Tax Benefits Under section 10(23D) of the Income Tax Act, any income of Mutual Funds set up by Public Sector Banks or Public Financial Institutions or Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or regulations made thereunder or Mutual Funds authorised by the Reserve Bank of India, subject to the conditions specified, would be exempt from income tax.
Special Tax Benefits There are no special tax benefits available to the mutual funds.
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G. Benefits to shareholders of the Company under the Wealth Tax Act, 1957 Shares of the Company held by the shareholder will not be treated as an asset within the meaning of section 2(ea) of Wealth Tax Act, 1957. Hence, shares are not liable to wealth tax. NOTES:
1. In the above statement only basic tax rates have been enumerated and the same is subject to surcharge and
education cess, wherever applicable. 2. The above Statement of Possible Direct Tax Benefits sets 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.
3. All the above benefits are as per the current tax laws. Legislation, its judicial interpretation and the policies
of the regulatory authorities are subject to change from time to time, and these may have a bearing on the benefits listed above. Accordingly, any change or amendment in the law or relevant regulations would necessitate a review of the above.
4. Several of these benefits are dependent on the company and its shareholders fulfilling the conditions
prescribed under the provisions of the relevant sections under the relevant tax laws. 5. This statement is only extended to provide general information to the investors and is neither designed nor
intended to be a substitute for Professional Tax Advice. In view of the individual nature of tax consequences, being based on all the facts, in totality, of the investors, each investor is advised to consult his/her/its own tax advisor with respect to specific tax consequences of his/her/its investments in the shares of the Company.
6. The provisions of The Finance Bill of 2011 have been considered as the same have been enacted into law as
on the date of this statement. However benefits proposed by Direct Taxes Code Bill, 2009 (which becomes law, only if passed in the Parliament) have not been considered.
7. No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our
views are based on the existing provisions of law and its interpretation, which are subject to change from time to time. We do not assume responsibility to update the views consequent to such changes. We shall not be liable to any claims, liabilities or expenses relating to this assignment except to the extent of fees relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or intentional misconduct. We will not be liable to any other person in respect of this statement.
M. M. Nissim and Co.
Chartered Accountants N Kashinath (Partner) Membership No.: 36490 Date: August 11, 2011 Place: Mumbai
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(A) INDUSTRY OVERVIEW
The information in this section is derived from various government publications and other industry sources.
Neither we nor any other person connected with the Issue has verified this information. Industry sources and
publications generally state that the information contained therein has been obtained from sources generally
believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and
their reliability cannot be assured, and, accordingly, investment decisions should not be based on such
information. Industry sources and publications are also prepared based on information and estimates as of
specific dates and May no longer be current. The data may have been re-classified by us for the purpose of
presentation.
The Indian Economy
India had an estimated GDP on a purchasing power parity basis of approximately US$ 4.05 trillion in 2010, making it the fifth largest economy in the world after the European Union, United States of America, China and Japan. (Source: 2011 CIA World Fact book)
The overall growth of Gross Domestic Product (GDP) at factor cost at constant prices, as per Advance Estimates, was 8.6 per cent in 2010-11 representing an increase from the revised growth of 8.0 per cent during 2009-10, according to the Advance Estimate (AE) of Central Statistics Office (CSO). At disaggregated level, this (AE 2010-11) comprises an increase of 5.4 per cent in agriculture and allied activities, a growth of 8.1 per cent in industry and 9.6 per cent in services as compared to a growth of 0.4 per cent, 8.0 per cent and 10.1 per cent respectively during 2009-10. Real GDP grew by 8.2 per cent in the 3rd quarter of 2010-11 following identical growth of 8.9 per cent in the first two. (Source: www.ibef.org, Indian Economy Overview) In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms. Merchandise exports, which account for about 15% of GDP, returned to pre-financial crisis levels. An industrial expansion and high food prices, resulting from the combined effects of the weak 2009 monsoon and inefficiencies in the government's food distribution system, fueled inflation which peaked at about 11% in the first half of 2010, but has gradually decreased to single digits following a series of central bank interest rate hikes. New Delhi in 2010 reduced subsidies in fuel and fertilizers sold a small percentage of its shares in some state-owned enterprises and auctioned off rights to radio bandwidth for 3G telecommunications in part to lower the government's deficit. The Indian Government seeks to reduce its deficit to 5.5% of GDP in FY 2010-11, down from 6.8% in the previous fiscal year. India's long term challenges include widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, insufficient access to quality basic and higher education, and accommodating rural-to-urban migration. (Source: 2011 CIA World Factbook)
Indian Real Estate Sector
Indian real estate sector plays a significant role in the country’s economy. This sector is second only to agriculture in terms of employment generation and contributes heavily towards the gross domestic product (GDP). The size is estimated at US$ 16 billion, growing at the rate of 30% per annum. Total size of the industry in terms of economic value of development activity is estimated at US$ 40-45 billion representing about 5% of India’s GDP. In the next five years, this contribution to the GDP is expected to rise to 6 per cent. It is expected to reach a size of US$ 180 billion by 2020. India’s lack of dependence on foreign demand from consumers has been the key advantage for this country as it has managed to avoid the severe recession that has hit most other Asian countries. According to the report of the Technical Group on Estimation of Housing Shortage, an estimated shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12) provides a big investment opportunity. Growing penetration of mortgage finance into the urban housing finance market is now evident. According to the data released by the Department of Industrial Policy and Promotion (DIPP), housing and real estate sector
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including Cineplex, Multiplex, Integrated Townships and Commercial Complexes etc, attracted a cumulative foreign direct investment (FDI) worth US$ 8.4 billion from April 2000 to April 2010 wherein the sector witnessed FDI amounting US$ 2.8 billion in the fiscal year 2009-10. During 2010-11, the Indian real estate and housing sectors received US$ 1.12 billion in foreign direct investment (FDI), according to the Department of Industrial Policy and Promotion India (DIPP). FDI in the real estate sector is expected to witness an increase of US$ 21 billion from the current values over the next 10 years. (Source: Indian Brand Equity Foundation,
www.ibef.org).
Net sales of the real estate industry shot up by 78.3% in the June 2010 quarter. The PBDIT of the industry grew by a robust 72.3%. The growth in PAT was even better at 119%. Almost 80% of real estate developed in India is residential space, the rest comprising of offices, shopping malls, hotels and hospitals. According to the Tenth
Five Year Plan of India, there is a shortage of 22.4 million dwelling units. (Source: CMIE-September 2010).
Government Initiatives The Government of India has introduced many progressive reform measures to unlock the potential of the sector and also meet increasing demand levels.
• 100 per cent FDI allowed in Townships, Housing, Built-up Infrastructure and Construction Development projects through the Automatic route, subject to guidelines as prescribed by DIPP.
• 100 per cent FDI is allowed under the Automatic route in development of Special Economic Zones (SEZ), subject to the provisions of Special Economic Zones Act 2005 and the SEZ Policy of the Department of Commerce.
• Raising the limit on housing loans eligible for a 1 per cent subsidy in interest rates.
• Widening the scope for housing under "priority-sector lending" for banks, making interest rates cheaper on them. (Source: www.ibef.org )
Key Characteristics of Indian Real Estate Sector
The Indian real estate sector has traditionally been dominated by a number of small regional players with relatively low levels of expertise and/or financial resources. This has changed with the recent growth in the sector and reflects consumer's expectations of increased quality as India becomes more closely integrated with the global economy.
(Source: - The Real Estate Sector, India story, ABN Amro Bank)
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Key Segments of Indian Real Estate Sector
Residential Development The residential segment consists of the development of apartments, houses and plotted developments in urban and rural areas. According to Cushman and Wakefield Research, demand for residential space is estimated to grow to over 7.5 million units by 2013 across all categories. At present approximately 307 million Indians live in nearly 3,700 towns and cities spread across the country. This represents 30.5% of its population, in contrast to only 15% (60 million) who lived in urban areas in 1947 when the country achieved independence. Over the past 50 years, the population of India has grown two and half times, while urban India has grown by nearly five times. The residential demand for India’s seven major cities (these being Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, the NCR and Pune) is estimated to be 4.5 million units by 2013. Of the total expected demand across India, 43% is likely to be generated in Tier I cities, such as Bengaluru, Mumbai and the NCR. Mumbai is expected to witness the highest cumulative demand of 1.6 million units by 2013. The affordable and mid segment category is likely to constitute 85% of the total residential demand and will be the primary focus for the majority of developers. (Source: Cushman and Wakefield, Survival to Revival, 2009). The growth in the residential real estate market in India has been largely driven by rising disposable incomes, rapidly growing middle class, youth population, low interest rates, and fiscal incentives on both interest and principal payments for housing loans, heightened customer expectations, and increased urbanization. Demand in the Indian residential segment has consistently outpaced supply as a result of India’s Favourable Demographics, which has led to a housing shortage. The graph below illustrates the projected housing shortage in India over the coming years as a result of this demand-supply mismatch. Immediate housing shortage is caused by oversupply in the premium segment and a substantial shortage in affordable housing for mid-income and low income households, meaning that supply does not cater to where the potential demand lies.
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(Source: Cushman and Wakefield, Survival to Revival, 2009).
The key demand drivers in the residential segment are summarized below:
a. Rising Disposable Incomes and Trend towards ownership – India’s Economic growth has led to increase in Disposable Income, which in turn has enhanced the aspirations to own homes.
b. Rapid urbanization - Urban population expected to touch 590 million by 2030. India has witnessed increasing urbanization, with the urban population increasing from 18% of total population in 1961 to approximately 28% of total population by 2001. (Source: India Census)
c. Shrinking household size - Average increase in number of nuclear families estimated to be over 300 million (middle class population)
d. Number of rich household growing at a compound annual growth rate ("CAGR") of 21%
e. Increasing working age population (almost 64% in 16-64 age group)
f. Fiscal Incentives and Easy availability of Housing finance.
g. Shortage of Affordable housing.
Commercial/Office Space Development Commercial development comprises of construction of office space, hotels, hospitals, schools, stadiums and other similar structures. In India, most of the investment in this segment is driven by office space construction, and the key demand drivers for this construction include economic sectors such as business services (particularly IT/ITES), banking and financial services, FMCG and telecom. Downturn in the commercial real estate market in India, which had commenced during the second half of 2008, continued during the second half of 2009. The sustained decline was largely the result of postponement of expansion plans by corporate, which adversely impacted demand for office space. IT/ITeS, which had been a major demand driver for the sector in the last 2 years, increased utilization rates of existing commercial space by increasing the number of shifts. The resultant drop in demand for commercial office space led to correction of lease rentals in the range of 25-50% since the peaks touched during the first half of 2008. The commercial market is showing signs of recovery since the second half of 2009. This growth can be attributed to favorable demographics, increasing purchasing power, existence of customer friendly banks and housing finance companies, professionalism in real estate and favorable reforms initiated by the government to attract global investors. The leasing activity has gained momentum and there is a rise in the buy-out of office space too. However, occupancy levels have still not seen a full-fledged recovery as seen in 2007-08. The commercial space is facing excess supply and even if the revival in demand sustains, it will take at least a year for the supply-demand gap to narrow. (Source: CMIE-September 2010). Cushman and Wakefield's research estimates that demand for commercial office space will be 196 million sq. ft. by 2013, with seven major cities, including Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, NCR and Pune accounting for approximately 80% of the demand. Established commercial centres are expected to remain slower in growth than their tier 2 counterparts. Cumulative demand among the tier 1 cities of Mumbai, NCR and Bangalore will account for 42% of total demand, with Mumbai and NCR accounting for 24 and 25 million
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sq. ft. of office space demand through 2009-2013, respectively. (Source: Cushman and Wakefield: Survival to
Revival, 2009)
The key growth drivers in the commercial real estate sector are:-
(i) Growth in the IT/ITES sectors: Primary growth driver of commercial real estate is the IT/ITES sector. According to NASSCOM estimates, IT/ITES industry is expected to grow to US$ 148 billion by 2012.
(ii) Growth in knowledge and technology intensive sectors: Several other sectors such as financial services, biotechnology, telecom, pharma, insurance, and consulting businesses are witnessing growth and have added to the demand
(iii) Significant growth in FDI: - Progressive liberalization and easing of FDI norms in India across various sectors have paved the way for growth in FDI. This has further led to burgeoning demand for office space from multinational companies and other foreign investors.
The Retail Segment The organized retail sector accounts for approximately 4% of India’s overall retail real estate sector. The retail industry in India has witnessed a slowdown in the past year after growing at a CAGR of 28% between 2005 and 2008. The industry is expected to grow at a CAGR of 14% in the short term and 19% over the next 5 years. Organized retail penetration has increased to about 5.6% in 2009-10, which is further expected to increase to about 7.3% by 2012-13. In the past few years, India’s organized retail industry has posted high growth given improvement in key driving factors namely lavish lifestyles, high disposable incomes and a propensity to spend. Cushman and Wakefield's research estimates that cumulative demand for retail space across India will reach 43 million sq. ft. by 2013, of which the top seven cities in India are likely to account for nearly 34.6 million sq. ft. This demand is expected to be concentrated in Bangalore, Mumbai and NCR which will constitute approximately 46% of the total estimated pan-Indian demand between 2009 and 2013. According to the Investment Commission of India, as cited by Cushman and Wakefield's research, organized retail is expected to grow from 5% to 15.5% by 2016, which highlights the potential for pan India expansion amongst retailers. (Source: Cushman and Wakefield: Survival to Revival, 2009) Accordingly, retail rentals almost doubled between 2006 and 2008 in certain major cities, particularly with respect to high street space. This rise in rental rates was witnessed notwithstanding the fact that a great deal of retail supply is in the pipeline in many of these cities. The drivers for this increase in rental rates have been the dearth of quality retail space and the ambitious expansion plans of certain retailers. Some of the growth in retail rates has been tempered by the global financial crisis and general liquidity crunch. (Knight Frank, India Retail
Market Review – Q3 2008)
The key growth drivers in the retail segment are: (Source: www.ibef.org)
(i) Rising Consumerism: With growth in India’s economy over the past two decades, the spending power of Indians has also increased manifold. Household disposable income has roughly doubled since 1985. The combination of rapidly rising household incomes and a growing middle-income population has led to a significant increase in overall consumer spending. Organized retail sector owes much of its growth to the increased rate of urbanization, the young population, youth culture, and rising consumer credit usage.
(ii) A large part of the expected growth in the retail industry in India can be attributed to growth in the Indian middle class. India's vast middle class and its virtually untapped retail industry are key attractions for global retail giants wanting to enter newer markets.
(iii) Foreign Direct Investment- In 2006, the Government allowed 51% foreign direct investment in single brand retailing in order to attract foreign investment in production and marketing, improve the availability of retail goods and increase the competitiveness of Indian enterprises through access to global designs, technologies and management policies.
(iv) Growth in organized retailing: Retailing in India is witnessing a huge makeover
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(v) Entry of international retailers into India: India is attracting large international retailers to its doorstep. Many international retailers are already present in the country primarily through the franchisee route and are actively considering expansion. Besides several other large retailers are planning to enter the country
(vi) Entry of Indian corporate in retail industry: Several Indian corporate including Reliance, Bharti, Tata amongst others have diversified into the retail segment
(vii) Concept of specialized malls gaining popularity: The concept of specialized malls is gaining popularity with auto malls, jewellery malls, furniture malls and electronics malls also anticipated to be part of the sector in the future. Many developers are further setting up mixed-use projects offering hotels, amusement facilities and commercial space.
The Hospitality Segment
The success of the hospitality industry highly depends on the economic growth of the country. Hotel industry contributed 6.10% during 2008-09 to the country’s GDP. According to the Ministry of Tourism, there were 491,000 foreign tourist arrivals in January 2010 as compared to last year’s 422,000 indicating 16% growth. The demand is such high that Indian hotel industry is adding over 90,000 rooms across the country in the next five years. The hospitality industry is incredibly vast and providing ample amount of services to customers. The growth for hotels is also likely to come from proliferation of Special Economic Zones. (Source: - Mott
MacDonald Report) A structure of the Indian hospitality industry has given in Figure below:-
The hotel industry consists of five star, four star, three star, two star, one star, Heritage, Budget hotels, etc. In resorts there are mainly clubs, four/five star resorts, beach resorts, heritage resorts, ecological resorts and many more. In the restaurant sector there are cafes, foods and beverages etc.
� The Indian hospitality industry is projected to grow at a rate of 8.8% between 2007 and 2016, placing India as the second-fastest country in the sector of tourism in the world.
� Friendly Government policies and massive investment in hotel infrastructure are the most important growth drivers of the hospitality industry.
� Biggest employment generator in the country.
� India is ranked 11th in the Asia Pacific region and 62nd overall, moving up three places on the list of the world's most attractive destinations, as per the Travel and Tourism Competitiveness Report 2009 by the World Economic Forum.
� It is ranked the 14th best tourist destination for its natural resources and 24th for its cultural resources, with many World Heritage sites, both natural and cultural, rich fauna, and strong creative industries in the country.
� The India travel and tourism industry ranked 5th in the long-term (10-year) growth and is expected to be the second largest employer in the world by 2019.
(Source: - Mott MacDonald Report)
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Foreign Tourist Arrival (Mn)
Real Estate Sector in Mumbai Mumbai City Mumbai is the capital city of Maharashtra and has a population of 18.9 million (per the 2001 census) and has increased to 20 million by 2011. Mumbai is the capital city of the state and is also the commercial, entertainment and fashion capital of India. Mumbai is made up of seven connected small islands and the suburban area of Salsette Island. It is well-connected by air, road and rail to other major cities in India. The Mumbai Metropolitan Region covering the city, the surrounding suburbs and municipal councils, has a population of 18.9 million. Mumbai has witnessed an increase in its population in the island city as well as the surrounding municipal corporations of Thane, Navi Mumbai and Bhiwandi-Nizampur that form part of the larger agglomeration, the Mumbai Metropolitan Region. The rapid growth in population has led to a shortage of housing and informal and poor quality housing. (Source: Official website of Mumbai Metropolitan Region
Development Authority- http://www.mmrdamumbai.orgf)
The Island City Mumbai’s micro-market can be divided into two sub-markets i.e. South Mumbai which includes locations like Malabar Hill, Carmichael Road, Napeansea Road, Cuffe Parade, Colaba and Altamount Road and Central
Mumbai locations like Lower Parel, Worli, Prabhadevi and Mahalaxmi. South Mumbai locations are considered to be the prime markets. There is virtually no space for large scale developments in South Mumbai. Infrastructure Planned and ongoing infrastructure development is also growing in the Mumbai Metropolitan Region along with the population and industrial growth. Some examples of ongoing infrastructure development are outlined below: � Metro Rail project: The proposed 146.5 km long corridor is expected to provide proper interchange
facilities for neighboring areas like Thane, Navi Mumbai, Vasai as well and east to west connectivity for the city. (Source: Mumbai Metropolitan Region Development Authority)
� Chhatrapati Shivaji International Airport modernization: The modernization of Mumbai’s largest airport is underway.
� Monorail: A 20 km long monorail is intended to support public transportation in areas with low road and rail connectivity. (Source: Mumbai Metropolitan Region Development Authority)
� Skywalks: The current plan is to construct 36 skywalks throughout the city to alleviate pedestrian congestion on the roads. (Source: Mumbai Metropolitan Region Development Authority)
Residential Segment The Mumbai residential market has witnessed a transition in the profile of residential developments over the past two years. This can be attributed to the fluctuations and uncertainty caused by the impact of the global slowdown on the financial capital of the country.
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Home to the Reserve Bank of India, the National Stock Exchange and the Bombay Stock Exchange in addition to numerous multinational companies entering the Indian market, this city has seen a change in demographic profiles and thus a shift in residential trends. In the past few years, factors such as double income families, higher disposable income and easy availability of home loans have encouraged buyers to aspire for a higher level of luxury, be it in the heart of Mumbai or the outskirts. Cushman and Wakefield research indicates that Maharashtra continues to be the most favoured location for investment amongst the institutional investors followed by the NCR and Karnataka, which have also attracted substantial investments. (Source: Cushman and Wakefield: Survival to Revival, 2009). The improvement in overall economic sentiment and increasing liquidity is due to the recent rebound in the stock markets, which has marginally renewed confidence in the residential market. After witnessing a slump from January to September 2009, Mumbai witnessed some increase in demand in the residential sector. Additionally, an increasing focus has been on producing affordable housing for low and middle income groups resulted in the launch of several affordable housing projects, most of which are concentrated in far peripheral locations of Mumbai. The residential demand for India’s seven major cities (these being Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, the NCR and Pune) is estimated to be 4.5 million units by 2013. Of the total expected demand across India, 43% is likely to be generated in Tier I cities, such as Bengaluru, Mumbai and the NCR. Mumbai is expected to witness the highest cumulative demand of 1.6 million units by 2013. The affordable and mid segment category is likely to constitute 85% of the total residential demand and will be the primary focus for the majority of developers (Source: Cushman and Wakefield, Survival to Revival, 2009). Currently, the Mumbai residential market can be divided into 6 micro-markets, namely the Island city, the Western Suburbs, the Central Suburbs, the Extended Suburbs, Thane and Navi Mumbai. All these markets will witness an infusion of approximately 80.61 mn.sq.ft, comprising around 72,906 units of new residential space by the end of 2011. Out of the total upcoming supply, 46% will be available in 2010. This can be attributed to the delay caused to most projects that were estimated to be completed in 2008 and 2009.
Commercial/Office Space Segment The main commercial areas in Mumbai are in the island city such as Nariman Point, Ballard Estate, Lower Parel, Worli; the western suburbs of Bandra Kurla, Andheri and Malad; the central suburbs such as Powai; and outlying cities such as Thane and Navi Mumbai. The concentration of corporate offices in these areas has led to an increase in the demand for residential property (both high-end and affordable) in and around these areas. As a result of its status as a commercial, industrial and economic hub coupled with its relatively small total land area and natural geographic boundaries as an island city, Mumbai has a greater population density than most other major cities across the world and as such, land is very scarce and demand for available land is very high. Furthermore, there is nearly no undeveloped land remaining in Mumbai except for government controlled set
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aside areas. As a result, demand for property has been far greater than supply resulting in high barriers to entry in the real estate market due to the necessity of large amounts of capital to become an established developer. The transaction rate in the commercial real estate segment remained low during 2009 despite the improving economic environment and business sentiments since uncertainty over the medium term still prevailed and corporate held back expansion plans and switched to a cost cutting mode. The cost cutting initiative saw several corporate relocating from locations with high rentals to ones with cheaper rentals. The Mumbai Office market witnessed a strengthening of demand during 2010. In the prime micro-markets of the city rents stabilized while leasing activity and enquiries for office space increased. In Q2 2010, Mumbai witnessed two major land transactions at prices that were even higher than those recorded during 2007. These events reflect the improved confidence of developers on the city that arose from improved economic conditions and rising demand for real estate. Mumbai’s prime micro-markets recorded a total net absorption of about 1 million sq. ft. (92,264 sqm), the majority of which was generated by the Banking, Financial Services, and Insurance (BFSI) industry and other front office occupiers. Rental Values in the prime micro-markets of Mumbai are expected to remain stable over the next 12 months. With the improving economic scenario and strengthening demand for commercial space, the number of leases and sales is expected to increase in the coming quarters. The increasing demand will provide some relief to developers, but a substantial supply pipeline will keep rents under pressure in the short term. (Source: - Jones lang sale, Second Quarter, 2010)
Retail Segment The retail sector in Mumbai is segregated into high street and retail malls, which are concentrated in and around areas such as Lower Parel, Bandra, Andheri, Malad, Mulund, Thane and Vashi. Organized retail penetration is set to rise from 22.0% in 2007-2008 to 40% in 2012-2013. Despite improved business sentiment and strengthening domestic consumption, net absorption in Mumbai’s retail real estate market remained very low. This was primarily due to lack of new malls and low leasing activity in operational malls in Q2 2010. The city witnessed net absorption of approx. 28,000 sq. ft. (2,615 sqm) in operational malls in Q2 2010 compared to 573,761 sq. ft. (53,304 sqm) during the previous quarter. The bulk of absorption in the current quarter occurred within Mumbai’s Suburban market, which has a high concentration of malls that are newly operational or under-construction. The city’s prime retail micro-markets are at saturation, with no new supply in the pipeline and limited space available for lease in operational malls. No mall completions were recorded in Mumbai during Q2 2010. The city has a total of 12.66 million sq. ft. (1.17 million sqm) of operational retail space with a vacancy of 22.8% which dropped marginally by 20 basis point from Q1 2010 levels. Some of the malls that are presently under construction are likely to get delayed due to decreasing demand and the potential slowdown in lease rentals. (Source: - CMIE)
Future Outlook in Retail Sector
Demand for retail space in the city is expected to improve as we move further into 2010. Strengthening consumer confidence, improving economic conditions will result in higher consumption and are expected to drive the retail estate market in the city. Approximately 2.7 million sq. ft. (249,445 square meters) of additional mall space is expected to become operational by end of 2010.This significant future supply in Mumbai’s retail market is expected to keep rents under pressure throughout the year. (Source: - Jones lang sale, Second
Quarter, 2010). Conclusion
The Indian real estate sector promises to be a lucrative destination for foreign investors into the country. The Indian realty sector, if channelized properly, could catapult the growth of several other sectors in India through its backward and forward linkages. However, there are potential constraints for domestic as well as foreign investments in India. Absence of a single regulator to monitor business practices prevailing in Indian real estate market is perceived to be a risk factor by investors. The SEZ guidelines which are issued by the Ministry of
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Commerce are constantly modified, creating uncertainty. Since the liberalization of FDI norms, significant foreign investments have flown into real estate; but availability of suitable exit options for such investments is still constrained. Maturity of the real estate markets will lead to infusion of foreign investment and adoption of international best practices by real estate players. Developers will get more organized, and become more transparent to avail opportunities emerging in the market. With the Indian securities market regulator SEBI allowing real estate mutual funds (REMFs) in India, equity investors will have an exit option available to them. All these factors will contribute in making the Indian real estate market more organized and structured, thus providing better investment opportunities.
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(B) BUSINESS OVERVIEW Overview of the Business of Our Company We are a real estate development and project management company, focused on premium residential and commercial developments concentrated majorly in and around Mumbai. We are engaged in the development and construction of residential, office space, retail and mixed use projects by integrating various requirements and specific demands of customers, we seek to create “build to suit” developments, which we believe will not only enhance the desirability of our projects but will also provide our customers efficient space, which will cater to their current and future needs. While our focus is on residential and commercial projects, we have a diversified portfolio of projects covering key segments of the real estate market, which target the upper end of the respective income or market segment. We undertake real estate development projects on property development basis and project management basis. Property Development includes activities starting from conceptualization stage to completion stage. Project Management includes understanding the need of customer, project planning and feasibility, Project Assessment studies, Geological and Soil Investigation, Architectural / Engineering / Interior Designs, Construction management, Build to Suit Solutions, etc. We believe that our in-house design and architectural team has in-depth understanding of “Global” building parameters and quality standards and “Local” necessities and thereby offering “GLOCAL” architectural designs that combines local values with global quality standards. Based on the rich experience of our management, we believe that we have the scalability required to undertake large developments. We currently follow a sale model for our real estate development projects. We currently have 1 Ongoing project and 2 Planned Projects in Mumbai through which we expect to provide a total Saleable area of approximately 1,41,882 square feet. The estimated Saleable Area of our ongoing and upcoming projects as of July 31, 2011 is summarized in the table below:
Sr. No.
Project Location Project Type Estimated Saleable Area (in Square Feet)
Ongoing Project
1 X'czar Juhu - Vile Parle Residential 37,532
Planned Projects
2 X'enus Matunga Residential and Commercial #24,123
3 X’point Kandivali Residential and Commercial #80,227
Total 1,41,882 # Based on Management Estimates
Our Company was initially engaged in manufacturing of Yarn. The Promoters of Our Company took over the management control of Our Company from erstwhile promoters in the year 2009 after complying with the Open Offer formalities under SEBI (SAST) Regulations. (For further details on history of Our Company, please refer to Section - “History and Corporate Structure” on page 102 of this Draft Letter of Offer).
Rodium Group: After the Change of Management, Our Company, forms part of Rodium Group based in Mumbai, promoted by Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah. Our Promoters have a track record of developing innovative projects through emphasis on contemporary architecture, strong project execution and quality construction in the real estate industry. Our Promoters have been developing real estate projects since 1990, through various proprietorship firms, partnership firms and various project-specific entities. From 2006, the business of prime real estate development was carried on under a partnership firm viz. M/s. Rodium Properties. We continued the business of M/s. Rodium Properties, Partnership firm on going concern basis with effect from April 1, 2010. Some of the projects executed by our Promoters are given below:
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Name of
Entity
Year of
Construction
Name of the
Project
Location Built up Area
( in Square Feet)
Type of Construction
(Residential/ Commercial)
Rodium Properties
2006-2010 X’trium Andheri (East)
17,193 Commercial
Rodium Realty & Construction
2005-2006
X’cube Andheri (West)
29,000 Commercial
Amrut Dhara Enterprise
2002-2004
Amrut Dhara Heights
Matunga 27,000 Residential and Commercial
Sigma Fiscal Pvt. Ltd.
2001-2003
Trade Avenue Andheri (East)
39,000 Commercial
Amrut Construction Company
1996-1997
Amrut Tower Matunga 14,000 Residential
One of the key competitive strengths of Rodium group is that it is a one stop build to suit solution provider i.e. to deliver a project from its conceptualization stage to completion stage. We are dependent on third party suppliers for products and services required in the development and construction of our projects. Further, it ensures that products and services required for development and construction of a project meet our quality standards and are delivered in a timely manner. In our business, our focus is on developing boutique architectural projects, which provide the customers opportunities to optimize the usage of space. We look forward to create efficient, futuristic and built-to-suit habitats targeted towards a range of customers, from individual users and small companies, to large corporate groups in various sectors.
Our total income as restated were Rs. 2,548.20 Lakhs and Rs. 317.16 lakhs for the year ended March 31, 2011 and March 31, 2010 respectively. Our net profit as restated were Rs. 386.85 Lakhs and Rs. 246.84 lakhs for the year ended March 31, 2011 and March 31, 2010 respectively.
Competitive Strengths: The competitive Strengths of Our Company are described herein below: Experience of Our Promoters Our Company has commenced real estate development activities after taking over the controlling interest in the Company by our Promoters. However, our Promoters Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah have considerable experience in the real estate industry which has enabled us to successfully complete projects in the real estate sector. Mr. Deepak Chheda, our Chairman and Managing Director, has more than 20 years of experience in the real estate and construction industry. One of the key factors of our business proposition is to deliver the customized building solutions in a timely manner using innovative architectural solutions. We believe that the experience of our management team and its in-depth understanding of the real estate industry in India, particularly in Mumbai, will enable us to continue to take advantage of both current and future market opportunities. Strong In-house Design and Architectural Capabilities
We have strong in-house design and architectural team led by Mr. Deepak Chheda, Chairman and Managing Director of Our Company, who is a Master in Architecture from California Polytechnic State University, San Luis, Obispo CA, USA. The team consists of members having experience and expertise in design, layout and architecture of various real estate projects. We rely on our internal design and architectural team for design, architecture, layout and development of all our real estate projects. The ready availability of our in-house team enables us to develop and create customized building solutions for our clients. Our design and architectural
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team is equipped with technologically advanced tools and processes like Macintosh based high end management, visual and designing software like Archi CAD, Artlantis, M.S. Project, etc. Emphasis on Quality Construction We believe that the quality of our construction is in line with the best construction practices adopted in the real estate industry. We place a special emphasis on ensuring that our quality standards are adhered to at every stage of a project and for every product delivered to the client. Our internal processes and methodologies ensure that various departments and employees of Our Company are aware of their respective roles and obligations, and various activities of construction and development are consistent with the standards of quality that we have set for ourselves. This also ensures uniformity in all our processes.
Land Identification at Attractive Pricing and Strategic Locations One of our key strengths is our ability to identify suitable tracts of land in and around Mumbai. Land identification at attractive pricing and strategic locations is a key factor for the success of our business. Our land reserves enable us to maintain a consistent and significant portfolio of projects under development and therefore form an important asset for our business.
Good Relationship with Key Intermediaries
We believe that the transparency and efficiency in our operations have helped us in developing good relationships with our customers as well as Key Intermediaries viz. architects, project management consultants, contractors, etc. in the real estate industry. We have the key competencies to deliver a project from its conceptualization stage to completion stage. Our Company is associated with various agencies for outsourcing the work in respect of structural engineering firms, wood works agencies, mechanical and electrical equipment providing companies, electrical installation agencies, plumbing agencies, graphic agencies, etc. The above arrangement enhances Our Company’s ability to ensure that products and services required for development and construction of a project meet our quality standards and are delivered in a timely manner.
Strong and stable management team with proven ability We have a strong and experienced management team with established and structured corporate processes. A majority of our team members have been with Rodium group for more than 5 years. We believe our management team has a long-term vision and has proven its ability to identify suitable land parcels. We also believe that their understanding of the market and flexibility in managing our operating and financial leverage has enabled us to adapt to the changing market conditions in a focused and constructive manner. We believe that the strength of our management team and their understanding of the real estate market will enable us to continue to take advantage of current and future market opportunities.
Business Strategy: The following are the key elements of our business strategy:
Maintain High Standards of Quality and Increase Scale of Operations We believe that we have developed, through our Promoter Group, a reputation for consistently developing projects known for innovativeness, quality and delivery in a timely manner. We intend to continue to focus on innovation and quality project execution in order to maximize client satisfaction. We also intend to continue to use technologically advanced tools and processes to ensure quality construction. We also intend to expand the scale of our operations while ensuring quality and efficiency in our operations. By outsourcing construction activities such as design, architecture etc., we believe it would enable us to undertake more development activities while optimally utilising our resources. We intend to continue to outsource
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activities such as design, architecture and construction to well known and reputed firms and intend to enhance and leverage our existing relationships with various service providers. Expand into new geographical areas Although we have focused our residential and commercial development activities in and around Mumbai, we are planning to foray into Gujarat and other emerging markets. We intend to develop and construct residential and commercial projects and also undertake plotted development in other cities also. Continue our Focus on a Diversified Business Model
We are currently focused on the development of residential and commercial real estate projects. We develop projects catering to customers in all income groups. We intend to maintain a spread of the different types of projects we are involved in as this provides us with a strategy for growth as well as mitigating the risk of focusing on only a few types of projects. Expanding our business portfolio would enable us to further diversify our revenue streams and also enhance the value and position of our brand.
Flexible approach to project development Our strategy is to be flexible in our approach to project development and to constantly monitor market conditions with the intention of aligning our product offerings with current market demand. We are presently focusing our product offerings in the residential and commercial segment as we believe that there are greater growth opportunities at present in these segments. We plan to selectively develop commercial, retail and hospitality projects only once we have obtained financial closure for each project. Marketing Strategy We believe that in the present economic scenario, Our Company has been able to maintain a good sales portfolio, due to our pre-eminent strengths in quality construction, project execution capabilities and above all, a strong and an aggressive marketing strategy. We intend to continue targeting increased sales by innovative means of marketing to our existing customers.
Our Operations Our operation mainly consists of construction, development and marketing of our real estate projects in and around Mumbai in Maharashtra. Ongoing and Planned Projects The table below contains details for our ongoinging and planned projects:
Sr. No.
Project Location Project Type Estimated Saleable Area (in Square Feet)
Ongoing Project
1 X'czar Juhu - Vile Parle Residential 37,532 Planned Projects
2 X'enus Matunga Residential and Commercial #24,123
3 X’point Kandivali Residential and Commercial #80,227
Total 1,41,882 # Based on Management Estimates
1. X’czar X’czar is a residential project offering premium residential apartments. The plot area of the project measures 8,109 sq. ft. and is located at Juhu, Mumbai. Our Company has acquired the said plot of land from Mr. Jethanand Lalwani, Jethanand Lalwani (HUF), Mr. Dilip Lalwani, Mr. Haresh Lalwani, Mrs. Ganga Lalwani, Ms. Padu Lalwani, Mrs. Juhi Motwani and Mrs. Jyoti Godhwani by entering into purchase agreement dated December 9, 2009.
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The project has total developable area of 50,649 sq. ft. and 37,532 sq. ft. is the total saleable area. The estimated cost of the project is Rs. 4,454.70 lakhs. The project is a 12 storeys domicile with one private apartment on each floor. It also offers terrace apartment on the third level and pent house and duplex apartment with decks on the top floor. The project is based on the concept of green building. Hence, it offers double glazed French windows to optimize lighting, save energy and create a sense of serene airiness. Each residence has Variable Refrigerant Volume system (VRV System) for air conditioning, video door phones, private in-unit alarm systems that allows residents to view entry door and Wi-fi and direct to home satellite system for all the residents. It also provides amenities like servant toilets, utility areas, drying areas and personal planter areas with decks, multi-security with gated entry and swipe card lobby access. Our Company commenced the construction of the project in March, 2010 and expect to complete it by the third quarter of 2012-13. 2. X’enus X’enus is a commercial as well as a residential project. The plot area of the project measures approx. 9,294.72 sq. ft. and is located at Matunga, Mumbai. Our Company has acquired the development rights of CTS No. 545 of Matunga division admeasuring 3,412.19 sq. ft. by entering into a Joint Development agreement with Mr. Ramniklal Joshi and Mrs. Bharati Joshi on May 15, 2009 and has acquired the adjoining property bearing CTS No. 2/545 of Matunga division 5,882.53 sq. ft. from Mr. Govind Dhamanmal Gajaria and others. The project shall have total developable area of 62,511 sq. ft. and total net saleable area of 24,123 sq. ft. after re-housing of existing tenants by giving the fully constructed area of 12,539 sq. ft. (carpet area). The estimated cost of the project is Rs. 2,972.80 lakhs. This project shall be an ideal space for shops, commercial offices, banquets, exhibition hall, conference room and business centre. It shall apt for professional small office setups. The project shall also offer residential area with each apartment to provide maximum usable area. 3. X’point X’point is a commercial and residential project. The plot area of the project is 47,491 sq. ft. and is located at Kandivali, Mumbai. Our Company has acquired the development rights of the aforesaid plot of land by entering into a Joint Development agreement with the Prem Bhavna Co-operative Housing Society Limited on May 7, 2010. The project shall have total net saleable area of 80,227 sq. ft. after re-housing of existing members of the Society by giving fully constructed area of 49,400 sq. ft. (carpet area). The estimated cost of the project is Rs. 8,509.40 lakhs. This project shall be situated at the prime location of Kandivali and be surrounded by commercial space, shopping space and a hospital. Our project is suitable for shops, commercial offices, conference and exhibition centers.
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Property Development and Execution Methodology The following is a summary of the key aspects of our property development project and execution methodology.
Land Identification, Market Research and Analysis We believe that site selection is one of the key factors in determining the success of a new project. Accordingly, we place a strong emphasis on selecting what we believe are the best locations for our projects. We commence project conceptualization after site selection is completed. Our site selection process is led by our senior managers, supported by external consultants and brokers. We conduct market research and analysis and apply the experience and knowledge of our management team in selecting real estate for development. We select sites for our projects based on a variety of factors including: � Demographic and marketing studies conducted by the Company or by third parties; � Suitability for development within one to six years from the date of commencement of the development
process; � Suitability of the site for the project conceptualized by us; � Financial review as to the feasibility of the proposed project, including profit margins and return on capital
employed; � Our ability to secure statutory permissions, approvals and entitlements; � Environmental and legal due diligence; � Competition in the area; � Proximity to local traffic corridors and amenities; � Profile of the inhabitants in the location and infrastructure facilities; and � Management's judgment as to the real estate market and economic trends and our experience in a particular
market. Land Acquisition We generally purchase/ acquire land for our projects through direct negotiations with the vendor. In case of redevelopment project, we acquire land through negotiation with society, landlord, tenant, etc. as the case may be. Once we have identified the land for acquisition and we have ascertained the feasibility of developing the property, our acquisition team starts the process of acquisition. A broker often works as the intermediary for setting up the initial communication between the parties. Legal and Regulatory Once the project land is identified, the property is referred to our legal counsel for preliminary due diligence. Our legal counsel reviews the property documents to determine if the property is free from disputes and encumbrances, to ensure that the vendor or the Society/Landlord has a clear and marketable title to the property and to determine which regulations, consents and approvals will be required for the proposed development. The legal counsel then submits a due diligence finding to our management who decide whether the project should be pursued.
Target Land
Identification,
Market Research
and Analysis
Project
Conceptualization
Land Acquisition
Planning and
Design
Construction Work
Completion /
Handover, Sales
After Sales
Services Property
Maintenance and
Management
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Financing The financing structure for our development projects is typically determined as part of our overall project feasibility exercise. Our project financing is arranged from a mix of internal resources, secured and unsecured debt, dilution of equity shares and proceeds from pre-sales. Acquisition of Title or Development Rights We generally enter into a memorandum of understanding with the owner/vendor to signify our interest in the real estate. We may at the same time make a part payment to confirm our intent to purchase or develop the property. The memorandum of understanding sets forth, amongst other things, the conditions subject to which a final agreement between the parties can be signed. We may also obtain a limited power of attorney from the landowner, which enables us to initiate the process of applying for and obtaining the required approvals from the relevant regulatory authorities. Upon completion of the negotiations, we enter into a final agreement with the owner/vendor. Occasionally this may be in the nature of a development agreement whereby we obtain the rights to develop the property without obtaining its ownership, but generally will be in the form of a deed of conveyance, when we acquire the freehold of the property, or a deed of assignment in cases where the property is a leasehold land. This agreement is signed subject to fulfillment of the conditions stated in the memorandum of understanding. We also acquire the right to develop properties through collaboration with other entities, which own the land. The other party is typically given the option, as consideration, to either share the sale proceeds in a pre-determined proportion, depending upon the nature of the project and the location of the land, or to receive a pre-determined percentage of the developed area which such party may market at its expense. The practice of entering into development agreements eliminates the upfront costs of acquiring such land and, as such, also reduces our financing costs, though it requires us to share revenues generated or developable area developed from such developments with the land owners. In such developments, we obtain the right to construct and develop the property from the owner of such land in exchange for the land-owner either sharing a pre-determined portion of developed property, revenues or profits generated from such development. For such developments, we generally incur all of the construction and development costs. Design and Planning The design and planning of our projects is developed by our in-house planning department in association with our Design and Architectural Team. The design and architectural team provide us with the structural design of the property as well as estimates of the requirements for manpower, materials, and machinery. Once the design and the estimates for the property have been finalized, the commercial department makes arrangements to purchase the material required for the proposed construction while the project execution team led by senior personnel executes the project. Currently, a substantial majority of our aggregate Developable Area is subcontracted for construction. Construction Work We rely primarily on external contractors for the construction of our properties. We generally select our contractors through one-to-one negotiations. Our selection of a contractor is based on the contractors' reputation, track record, the experience of relevant project team members, ability to complete the project in a timely manner and cost competitiveness. We conduct regular site visits and have developed a system of internal reporting for monitoring the status and stage of all the projects. The external and in-house project management teams ensure that the construction of our properties progress in a timely manner and that construction are to a high standard. Construction work is constantly monitored through regular on-site inspections and progress reports. For each project, we use a central coordinating person and a separate monitoring team to be focused on the particular project. All of the project coordinators are in turn centrally coordinated by our directors.
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We procure major raw materials such as steel, cement, wood and aluminum for our projects from our established network of local and national vendors and ensure that they meet our required standards. We are not dependent on any single contractor, builder or supplier for our construction activities.
Marketing and Sales We believe that effective marketing is critical to the success of our projects and so place a significant emphasis on the marketing of our projects. The promoters of Our Company are well versed with Real Estate Industry. We utilize domestic sales agents and international property consultants to market our properties. These agents and consultants are generally active in Mumbai and receive a standard commission for the sales they achieve. We also have relationships with various banks and housing finance institutions which provide credit facilities to our customers. We use a mix of strategies to market and sell our projects depending on whether the project is a residential or retail or commercial project. Our marketing and sales initiatives include, but are not limited to, advertisements in newspapers, magazines and outdoor advertising boards. In addition, we participate in real estate exhibitions, local and international road shows and also set up show units and on-site sales centers. To achieve our objectives, our management team works closely with advertising agencies, design houses, print media companies and event coordinators. Completion and Handover Once a property is completed, we will transfer the title or leasehold rights as the case may be. In case of residential projects, we will transfer the title or leasehold rights to a society formed by flat-owners of the relevant project. Generally, we receive a proportion of the purchase price for property sold at the time of booking, and the rest through installments over the construction period until possession. We ensure that the entire consideration is paid to us prior to the transfer of title or possession is handed over. Pre-Sales, Sales and After-Sales Services In line with market practice, we generally conduct pre-sales (i.e. selling property in advance of our construction completion) of our developments, in accordance with applicable laws. We set sale prices for our properties after taking into account local market trends, the costs of development, expected investment returns and prevailing supply and demand conditions. We sell our homes to higher income group customers. We adopt a standard contract to be entered into between us and the purchaser in each of our developments. This will specify, amongst other terms, the built-up area of the property sold, purchase price, method and manner of payment and the date and manner of delivery of the completed property. Delivery of our completed properties is generally subject to the following requirements related basic facilities, including water and electricity, are available for delivery and use; common areas and basic facilities like electricity, water and other internal amenities to make it habitable are available for use; developed units have been completed, inspected and accepted; and we have received a certificate of completion and compliance from the local authorities as appropriate. Property Management and Maintenance We intend to provide property management and maintenance services in relation to our completed projects, typically for a period of two years from the date of completion of construction. Examples of such maintenance and management services include power distribution, back-up power generation for common area and utilities, central air conditioning, water supply, drainage, pumping, security services, parking management, pest control, fire detection and solid waste disposal. We outsource most of these operations to qualified and experienced suppliers.
Our Competitors The real estate market is highly competitive and fragmented, and we face competition from various domestic real estate developers. Some of our competitors have greater financial, marketing, sales and other resources than
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we do. The principal competitive factors affecting our developments generally include the product type, product mix, design structuring of the projects, the location of the properties, the marketing strategies, pricing scheme adopted by the developers, and the timing of the launch of the property projects. Moreover, as we seek to diversify into new geographies, we face the risk that some of our competitors who have a pan-India presence while our other competitors have a strong presence in the regional markets. Competitive overbuilding in certain markets may have a material adverse effect on our operations in that market. Health, Safety and Environment We are committed to complying with applicable health, safety and environmental regulations and other requirements in our operations. To help ensure effective implementation of our safety polices and practices, at the beginning of every property development, we identify potential material hazards, evaluate material risks and institute, implement and monitor appropriate risk mitigation measures. We believe that accidents and occupational health hazards can be significantly reduced through the systematic analysis and control of risks and by providing appropriate training to management, employees and sub-contractors. We seek to work proactively towards minimizing or eliminating the impact of hazards to people and the environment. Information Technology We seek to use the latest and/or updated IT systems to maintain our data integrity and reliability. We see information technology as an important component of our execution and delivery model. We rely upon our process and system for various administrative functions such as preparation of estimates, raising of purchase requisitions, sales and customer relation management (CRM), invoice billing, procurement of material through purchase orders and receipt of goods across our various departments and project facilitates, human resource management, finance and accounting and generation of reports and information for our management.
Our Employees Our employees contribute significantly to our business operations. As on July 31, 2011, we had 14 Employees. Apart from above, Our Company also avail the services of Electrical Consultants, Plumbing Consultants, Landscaping Designers, etc. on contract basis. Our permanent employees include personnel engaged in our Management, Administration, Project Planning, Design, Execution and Monitoring, Legal, Accounts and Finance. The breakup of our employees in terms of department is set forth below:
Department No. of Employees
Project Execution and Monitoring 6
Accounts, Finance and Legal 4 Administration 4
Total 14
Intellectual Property We do not own any intellectual property as on the date of filing of Draft Letter of Offer. However, Our Company uses the registered Trademark “Rodium” owned by one of the promoter of Our Company i.e. Mr. Deepak Chheda, who has given his NOC for use of the said Trademark. Insurance Our operations are subject to risks inherent in the real estate development industry, such as risk of equipment failure, work accidents, fire, earthquake, flood and other force majeure events, acts of terrorism and explosions including hazards that may cause injury and loss of life, severe damage to and the destruction of property and equipment and environmental damage. We obtain standard fire and special perils policies for the construction of buildings to cover construction risks and third party liabilities for the duration of the property development. We generally maintain insurance covering our assets and operations at levels that we believe to be appropriate. We also maintain a workmen’s
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compensation policy which covers our employees for any injury or disease in suffered in the course of their employment.
Properties Details of Properties owned / leased by Our Company As on the date of filing this Draft Letter of Offer, we own land of varying size at Juhu- Vile Parle and Matunga in Mumbai, Maharashtra for the purpose of setting up our X’czar and X’enus project respectively, the further details of which are given in this section under the heading “Land Reserve” on page no. 91. In addition, we have taken on lease the following properties:
Sr. No.
Type of Interest in Property
Description of Property Duration of Lease
Remarks
1 Leave and License Agreement
Plot No. 636, 501, X’cube, Off New Link Road, Andheri (W), Mumbai-400053
60 months commencing from August 10, 2010.
Registered Office Premises admeasuring 850 square feet
2 Leave and License Agreement
Plot No. 636, 401, X’cube, Off New Link Road, Andheri (W), Mumbai-400053
60 months commencing from August 20, 2010.
Office Premises of our Company admeasuring 1625 square feet with an open terrace admeasuring 1022 square feet adjoining the said premises
3 Leave and License Agreement
Plot No. 636, 402, X’cube, Off New Link Road, Andheri (W), Mumbai-400053
60 months commencing from August 20, 2010.
Office Premises of our Company admeasuring 1087square feet with an open terrace admeasuring 1022 square feet adjoining the said premises
Land Reserve Our total land area comprises the land area allocated to our Ongoing and Planned Projects. It consists of lands (a) in relation to which the Company has title, either directly or indirectly; (b) in relation to which we have entered into memorandum of understanding/agreements to acquire/letters of acceptance; and (c) for which development agreements have been entered into by the Company. Sr.
No.
Land Category Wise Land
Area (In
Sq. Ft.)
% of
Total
Estimated
Developable
Area (Sq. Feet)
% of
Developable
Area
Estimated
Saleable Area
(Sq. Feet)
% of
Saleable
Area
1 Land Owned by the Company
13991.53 21.56% 92,323 29.01% 53,614 37.78%
(i) By Itself
X'czar 1 8,109 12.50% 50,649 15.92% 37,532 26.45%
X'enus 2 5882.53 9.06% 41,674 13.09% 16,082 11.33%
(ii) Through Other Entities
0 0.00% 0 0.00%
2 Land over which the
Company has sole
development rights
50,903.19 78.44% 225892 70.99% 88,268 62.22%
(i) By Itself
X'enus 3412.19 5.26% 20,837 6.55% 8,041 5.67%
X'point 3 47,491 73.18% 2,05,055 64.44% 80,227 56.55%
(ii) Through Other Entities
0 0.00% 0 0.00%
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Sr.
No.
Land Category Wise Land
Area (In
Sq. Ft.)
% of
Total
Estimated
Developable
Area (Sq. Feet)
% of
Developable
Area
Estimated
Saleable Area
(Sq. Feet)
% of
Saleable
Area
3 Memorandum of Understanding /
Agreements to acquire /
letters of acceptance
and / or group
companies are parties
0 0.00% 0 0.00%
(i) By Itself 0 0.00% 0 0.00%
(ii) Through Other Entities
0 0.00% 0 0.00%
4 Joint Development
Agreement with
partners
0 0.00% 0 0.00%
(i) By Itself 0 0.00% 0 0.00%
(ii) Through Other Entities
0 0.00% 0 0.00%
Total 64,894.72 100.00% 3,18,215 100.00% 1,41,882 100.00%
1 X’czar –Project- Our Company has acquired the said plot of land from Mr. Jethanand Lalwani, Jethanand Lalwani (HUF), Mr. Dilip Lalwani, Mr. Haresh Lalwani, Mrs. Ganga Lalwani, Ms. Padu Lalwani, Mrs. Juhi Motwani and Mrs. Jyoti Godhwani by entering into purchase agreement through Rodium Properties on December 9, 2009 at an aggregate cost of Rs. 1,600 Lakhs. The seller of the Land does not have relationship with our Company / Director / Promoter of our Company. The land acquired by our Company for the project has a clear title and registered in the name of our Company. The said land has been mortgaged to Indian Overseas Bank as a prime security for the project term loan sanctioned by the Bank vide its letter dated January 1, 2011. 2 X’enus – Project - Our Company through Rodium Properties acquired the development rights of CTS No. 545 of Matunga division admeasuring 3,412.19 sq. ft. by entering into a Development agreement with Mr. Ramniklal Joshi and Mrs. Bharati Joshi on May 15, 2009 at an aggregate cost of Rs. 40.33 Lakhs along with three self contained flats admeasuring 1500 sq. ft. On June 8, 2009, our Company through Rodium Properties also acquired an adjoining property bearing CTS No. 2/545 of Matunga division 5,882.53 sq. ft. from Mr. Govind Dhamanmal Gajaria, Mr. Kaku Alias Gokaldas Dhamanlal Gajaria and Mrs. Ekta Vijay Thakur at an aggregate cost of Rs. 263 Lakhs. The sellers of the Land do not have relationship with our Company / Director / Promoter of our Company. The land acquired by our Company for the project i.e. CTS No. 2/545 of Matunga division is free from all encumbrances and has a clear title and registered in the name of our Company. 3X’point - Project, Our Company through Rodium Properties acquired the development rights of the aforesaid plot of land by entering into a Development agreement with the Prem Bhavna Co-operative Housing Society Limited on May 7, 2010 at an aggregate cost of Rs. 1267.51 lakhs. The seller of the Land does not have relationship with our Company / Director / Promoter of our Company. No approvals are required to be taken by our Company in respect to acquisition of the said land.
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(C) KEY INDUSTRY REGULATIONS AND POLICIES
The following description is a summary of the relevant regulations and policies as prescribed by the
Government. The information detailed in this chapter has been obtained from the various legislations that are
available in the public domain. The regulations set out below are not exhaustive, and are only intended to
provide general information to the investors and are neither designed nor intended to be a substitute for
professional legal advice. In this section, unless the context requires otherwise, any reference to Our Company
refers to Rodium Realty Limited. No action or omission should be taken or contemplated based on the contents
below without independent verification with each prospective investors’ legal advisors, and any prospective
investor who does without such independent verification and based on the contents herein below would do so at
his/her/its sole risk and without recourse to Our Company, Directors of Our Company or the Lead Manager or
any other person or entity whatsoever.
We are primarily engaged in the business of real estate development. Since our business involves the acquisition of land and land development rights, we are governed by a number of Central and State legislation regulating substantive and procedural aspects of the acquisition of, and transfer of land. For the purposes of executing our projects, we may be required to obtain licenses and approvals depending upon the prevailing laws and regulations applicable in the relevant State and/or local governing bodies such as the MHADA, Municipal Corporation of Greater Mumbai, the Fire Department, Airport Authority of India, Maharashtra Pollution Control Board, the Environmental Department, the City Survey Department and the Collector for the projects in State of Maharashtra. Additionally, our projects require, at various stages, the sanction of the concerned authorities under the relevant Central and State legislations and local bye-laws. While the real estate development industry remains largely unregulated, we are subject to land acquisition, town planning and social security laws. The following is an overview of the major important laws and regulations, which are relevant to our business as a real estate developer. (A) Central Laws (B) Laws Specific to Maharashtra (C) Laws relating to Employment
(D) Regulations regarding Domestic Borrowings by Real Estate Companies (E) Laws relating to Environment
The same are discussed in detail hereunder:
(A) Central Laws Transfer of Property Act, 1882 (“T.P. Act”) The T.P. Act establishes the general principles relating to the transfer of property, including among other things, identifying the categories of property that are capable of being transferred, the persons competent to transfer property, the validity of restrictions and conditions imposed on the transfer and the creation of contingent and vested interest in the property. The T.P. Act recognizes, among others, the following forms in which an interest in an immovable property may be transferred:
• Sale: the transfer of ownership in property for a price paid or promised to be paid.
• Mortgage: the transfer of an interest in property for the purpose of securing the payment of a loan, existing or future debt, or performance of an engagement which gives rise to a pecuniary liability. The T.P. Act recognizes several forms of mortgages over a property.
• Charges: transactions including the creation of security over property for payment of money to another which are not classifiable as a mortgage. Charges can be created either by operation of law, e.g. decree of the court attaching to specified immovable property, or by an act of the parties.
• Leases: the transfer of a right to enjoy property for consideration paid or rendered periodically or on specified occasions.
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The Indian Easements Act, 1882 (“Easement Act”)
The law relating to easements and licenses in property is governed by the Easements Act. The right of easement has been defined under the Easements Act to mean a right which the owner or occupier of land possesses over the land of another for beneficial enjoyment of his land. Such right may allow the owner of the land to do and continue to do something or to prevent and continue to prevent something being done, in or upon land which is not his own. Easementary rights may be acquired or created in the manner specified under the Easements Act. Registration Act, 1908 The Registration Act, 1908 (the Registration Act) was enacted with the object of providing public notice of the execution of documents affecting transfer of interest in property. It details the formalities for registering an instrument. Section 17 of the Registration Act identifies documents for which registration is compulsory and includes, among other things, any non-testamentary instrument which purports or operates to create, declare, assign, limit or extinguish, whether at present or in the future, any right, title or interest, whether vested or contingent, in immovable property of the value of Rs.100 or more, and a lease of immovable property for any term exceeding one year or reserving a yearly rent. A document will not affect the property comprised in it, nor be treated as evidence of any transaction affecting such property (except as evidence of a contract in a suit for specific performance or as evidence of part performance under the T.P. Act or as collateral), unless it has been registered. The Indian Stamp Act, 1899 (“Stamp Act”) There is a direct link between the Registration Act and the Indian Stamp Act, 1899. Stamp duty is payable on all instruments/ documents evidencing a transfer or creation or extinguishment of any right, title or interest in immoveable property as specified in the schedules to the Stamp Act . The rate of stamp duty varies from State to State. The applicable rates for stamp duty on these instruments, including those relating to conveyance, are prescribed by State legislation. Instruments chargeable to duty under the Stamp Act which are not duly stamped are incapable of being admitted in court as evidence of the transaction contained therein. The Stamp Act also provides for impounding of instruments which are not sufficiently stamped or not stamped at all. The Land Acquisition Act, 1894 The Land Acquisition Act, 1894 provides for the compulsory acquisition of land by the Central Government or appropriate State Government for public purposes, including planned development and town and rural planning. However, any person having an interest in such land has the right to object to such compulsory acquisition and has the right to compensation. Some States have their own land acquisition statutes and the Company has to abide by State legislations in those States in which it conducts its business. Laws for Classification of Land User
Usually, land is broadly classified by the government authority under one or more categories, such as agricultural or non – agricultural (residential, commercial and industrial). Land classified under a specified category is permitted to be used only for such specified purpose. Where the land is originally classified as agricultural land, in order to use the land for any other purpose, the classification of the land it is required to be converted into residential, commercial or industrial purpose, by making an application to the relevant municipal or land revenue authorities. Development of Agricultural Land The acquisition of land is regulated by State land reform laws which prescribe limits up to which an entity may acquire agricultural land. Any transfer of land which results in the aggregate land holdings of the acquirer in the State to exceed this ceiling is void, and the surplus land is deemed, from the date of the transfer, to have been vested in the State Government free of all encumbrances.
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While granting licenses for development of townships, the authorities generally levy proportional development charges for the provision of services such as laying down of main lines, drainage, sewerage, water supply and electricity, where the authority is carrying out the same. Such licenses require approvals of layout plans for development and building plans for construction activities. Land Use Planning Land use planning and its regulation, including the formulation of regulations for building construction, form a vital part of the urban planning process. There are several authorities having jurisdiction to regulate land use planning and real estate development activities in each Indian State. Various enactments, rules and regulations have been made by the Government, concerned State governments and other authorized agencies and bodies such as the Ministry of Urban Development, State Land Development and/or Planning Boards, local municipal or village authorities, which deal with the acquisition, ownership, possession, development, zoning, planning of land and real estate. All relevant applicable laws, rules and regulations have to be taken into consideration by any person or entity proposing to enter into any real estate development or construction activity in this sector in India. Building Consents
Each State and city has its own set of laws which govern planned development and rules for construction (such as floor area ratio "FAR" or floor space index "FSI" limits). The various authorities that govern building activities in States are the Town and Country Planning Department ("TCPD"), municipal corporations and the Urban Arts Commission. Any application for undertaking any construction or development activity has to be made to the such authorities, which is a State level department engaged in the physical planning of urban centres and rural areas in the State. Authorities such as the ‘Town and Country Planning Department’ prepare the schemes and projects of various different agencies so as to improve living and working environments and to provide planned and developed sites for residential, commercial and industrial purposes. The municipal authorities regulate building development and construction norms. For example, building plans are required to be approved by the relevant municipal authority. The Urban Arts Commission advises the Government in the matter of preserving, developing and maintaining the aesthetic quality of urban and environmental design in some States and also provides advice and guidance to any local body with respect to building or engineering operations or any development proposal which affects or is likely to affect the skyline or the aesthetic quality of the surroundings or any public amenity provided therein. Under certain State laws, the local body, before it accords its approval for building operations, engineering operations or development proposals, is obliged to refer all such operations to the Urban Arts Commission and seek its approval for the project. Besides the above, certain approvals and consents may also be required from various other departments, such as the Fire Department, the Airport Authority of India and the Archaeological Survey of India. Obtaining all these approvals can be time consuming. Sometimes, there can be intervention by third parties through court action against land use change. Urban Development Laws State legislations provide for the planned development of urban areas and the establishment of regional and local development authorities charged with the responsibility of planning and development of urban areas within their jurisdiction. Real estate projects have to be planned and developed in conformity with the norms established in these laws and regulations made there under and require sanctions from the Government departments and developmental authorities at various stages. Where projects are undertaken on lands that form part of the approved layout plans and/or fall within municipal limits of a town, generally the building plans of the projects have to be approved by the concerned municipal or developmental authority. Building plans are required to be approved for each building within the project area. Clearances with respect to other aspects of development such as fire, civil aviation and pollution control are required from appropriate authorities, depending on the nature, size and height of the projects. The regulations provide for obtaining a completion/occupancy certificate upon completion of the project.
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(B) Laws Specific to the State of Maharashtra
The Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 The Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 ("MOFA") applies throughout the State of Maharashtra. The provisions of MOFA apply to promoters/ developers who intend to construct a block or building of flats on ownership basis. MOFA prescribes general liabilities of promoters and developers. Under the rules framed under the MOFA, a model form of agreement to be entered into between promoters / developers and purchasers of flats has been prescribed. Under MOFA , the promoter / developer is required to enter into a written agreement for sale of flat with each purchaser and the agreement contains prescribed particulars with relevant copies of documents and these agreements are compulsorily required to be registered. Pursuant to an amendment dated May 12, 2008 to MOFA, the flats are eligible to be sold on the basis of carpet area only. The said carpet area includes the area of balcony of such flat. However, the promoters are allowed to separately charge for the common areas and facilities in proportion to the carpet area of the flat. Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 The Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 ("MSA Act") provides for and governs the making of better provisions for improvement and clearance of slum areas in the State, their redevelopment and protection of occupiers from eviction and distress warrants. Maharashtra Rent Control Act, 1999 The Maharashtra Rent Control Act, 1999 ("MRC Act") has been enacted to unify, consolidate and amend the law relating to control of rent and repairs of certain premises and eviction of defaulting tenants or licensees. The MRC Act seeks to control the amount charged as rent, lay down the rights and obligations of landlords and tenants, and list out the reasons for which a landlord can ask a tenant to leave, i.e. the grounds of eviction. Maharashtra Tax on Buildings (with Larger Residential Premises) Act, 1979 The object of the Maharashtra Tax on Buildings (with Larger Residential Premises) Act, 1979 is to levy a tax on buildings in corporation areas in the State of Maharashtra, so that there is a check on extravagant use of available living space, particularly residential accommodation. This tax is a source of revenue for the State
Government. The Bombay Stamp Act, 1958 As stated above, the applicable rates for stamp duty on various instruments, including those relating to conveyance, are prescribed by State legislation. The stamp duty rates as applicable in Maharashtra have been prescribed by the Bombay Stamp Act, 1958 ("BSA"). The BSA levies stamp duty at the rate provided in Schedule I on any instrument executed in the State. In case an instrument is so drafted that it is covered within the ambit of more than one article under Schedule I, then it shall be taxed by that article which levies the highest amount of stamp duty. The Company’s business operations involve payment of the applicable stamp duty on development agreements, power-of-attorney, agreement with flat owners and such other transactional documents that may be required in the course of business activities. The Maharashtra Value Added Tax Act, 2002 The Maharashtra Value Added Tax Act, 2002 prescribes certain requirements in relation to the payment of value added tax in Maharashtra.
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The Maharashtra Cooperative Societies Act, 1960
In Maharashtra the co-operatives are governed by the Maharashtra Co-operative Societies Act 1960 and supported by Maharashtra Co-operative Societies Rules, 1961. The legal system in the co-operatives registered in Maharashtra State is elaborate. Moreover each co-operative should have its own Bye-Laws which are the guiding principles of the co-operative. These Bye-laws have to be approved through a resolution of the Society. The only condition on the bye-laws is that they should not be contrary to the Maharashtra Co-operative Societies Act, and have to be approved by the Registrar.
Mumbai Municipal Corporation Act, 1888
The Bombay Municipal Corporation Act, 1888 has been enacted to regulate the civic infrastructure, municipal administration of the city of Bombay (now Mumbai) and to secure the due administration of municipal funds. The Maharashtra Housing and Area Development Act, 1976 The Maharashtra Housing and Area Development Act, 1976 (“MHADA Act”) has been instrumental in the formation of MHADA- Maharashtra Housing & Area Development Authority. The MHADA Act 1976 primarily was the result of the housing issues that had began to resurface in an urban situation as in Mumbai that was quintessentially gripped with migration, commercial activities and scant housing resources. The Maharashtra Apartment Ownership Act, 1970 The Maharashtra Apartment Ownership Act, 1970 has been enacted to provide for ownership of an individual apartment in a building and to make such apartment heritable and transferable property. The Building and other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (“BOCWA”) The Building and other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 has been enacted to regulate the employment and conditions of service of building and other construction workers and to provide for their safety, health and welfare measures and for other matters connected therewith or incidental thereto. Slum Rehabilitation Scheme of the Government of Maharashtra The Government of Maharashtra ("GoM") launched the Slum Rehabilitation Scheme in 1995 ("Scheme") by introducing amendments to the Development Control Regulations for Greater Bombay, 1991 ("DCR"). The Scheme was made effective from December 25, 1995. The provisions of the Scheme are contained in Regulation 33(10) and Appendix IV of the DCR. Under the Maharashtra Regional and Town Planning Act, 1966 ("MRTPA") the SRA, appointed under section 3A of the Maharashtra Slum Areas (Improvement and Redevelopment) Act, 1971, serves as a planning authority for all slum areas in Greater Mumbai except those located in the Maharashtra Industrial Development Corporation ("MIDC") area and to facilitate the slum rehabilitation scheme. The powers, duties and functions of the SRA are to survey and formulate schemes of rehabilitation of slum areas and to ensure their implementation. Slum Protection Programme The Government of Maharashtra has formulated the housing policy for the State of Maharashtra with the objective of providing affordable houses for poor on rental basis. Under the said Slum Protection Programme, the Government of Maharashtra appointed MMRDA as a project implementing agency to implement the projects with the objective of increasing the housing stock by constructing or procuring maximum rental housing units in Mumbai Metropolitan Region, and to make available housing units of 160 sq. ft. carpet area at a reasonable rent.
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Consequently, pursuant to an amendment dated August 6, 2008, regulation 33(23A) and regulation 33(23B) were inserted in the DCR, wherein directions in relation to construction of rental houses on unencumbered land were issued. In terms of the said regulations, for construction of rental houses on unencumbered land by land owner or any other agency approved by MMRDA within the limits of suburbs and extended suburbs of greater Mumbai, the FSI shall be 3.00. Additionally, for construction of rental houses on unencumbered lands by MMRDA on land vested with them within the limits of suburbs and extended suburbs of the FSI shall be 4.0 and out of 4.0 FSI, 25% of 4.0 FSI shall be allowed for commercial use which can be sold in open market to subsidize the component of rental housing. The regulations also provide for eligibility for allotting rental houses, building details and other requirements. Development Control Regulations for Greater Mumbai, 1991 (Development Control Regulations) The Development Control Regulations were formulated under the Maharashtra Regional Town Planning Act, 1966. The Development Control Regulations apply to building activity and development work in areas under the entire jurisdiction of the Municipal Corporation of Greater Mumbai. The Development Control Regulations provides for an alternative to acquisition under the Land Acquisition Act by way of Transfer of Development Rights (TDRs). The permissible floor space index (FSI) defines the development rights of every parcel of land in Mumbai. If a particular parcel of land is designated for a public purpose, the land owner has an option of accepting monetary compensation under the Land Acquisition Act, 1894 or accept TDRs which can be sold in the market for use elsewhere in Mumbai. Regulation 34 the Development Control Regulations states that in certain circumstances, the development potential of a plot of land may be separated from the land itself and may be made available to the owner of the land in the form of TDRs. Regulation 33 (10) of the Development Regulations provides that additional floor space index will be allowed to owners/developers of land on which slums are located where such owners/developers are prepared to provide 269 square feet dwelling units free of cost to the slum dwellers. The remainder of total development rights can be used as TDR. The Development Control Regulations also set out standards for building design and construction, provision of services like water supply, sewerage site drainage, access roads, elevators, fire fighting etc. Development Control Regulations for Mumbai Metropolitan Region, 1999
The Development Control Regulations for Mumbai Metropolitan Region, 1999 ("Development Control Regulations for MMR") apply to the development of any land situated within the Mumbai Metropolitan Region as defined in the Mumbai Metropolitan Region Development Authority Act, 1974. Regulation 15.3.1 states that no person can carry out any development (except those stated in proviso to section 43 of the Maharashtra Regional Town Planning Act, 1966) without obtaining permission from the Planning Authority and other relevant authorities including Zilla Parishads and the Pollution Control Board. The Development Control Regulations for MMR have demarcated the region into various zones for development purposes including urbanisable zones, industrial zone, recreation and tourism development zone, green zones and forest zone. Regulation 15.3.5 states that development of land in these zones (other land in specified urbanisable zone and industrial zone) shall not be permitted unless the owner undertakes to provide at his own cost physical and social infrastructural facilities including roads, water supply, sewage waste disposal systems, electricity, play grounds etc. as well as any other facilities that the Planning Authority will determine. Regulation 15.3.7 provides that all developments which are existing prior to the Development Control Regulations for MMR, which are authorised under the Maharashtra Regional Town Planning Act, 1966 and Maharashtra Land Revenue Code, 1966 but which are not in conformity with the use provisions of the Regional Plan or these Regulation will continue as though they are in the conforming zone and will be allowed reasonable expansion within existing land area and within FSI limits prescribed by these Regulations.
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(C) Laws Relating to Employment
The Contract Labour (Regulation and Abolition) Act, 1970 The Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA”) has been enacted to regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances. The CLRA applies to every establishment in which 20 or more workmen are employed or were employed on any day of the preceding 12 months as contract labour. The CLRA vests the responsibility on the principal employer of an establishment to make an application to the registered officer in the prescribed manner for registration of the establishment. Likewise, every contractor to whom the CLRA applies is required to obtain a license and is not permitted to undertake or execute any work through contract labour except under and in accordance with the license issued. To ensure the welfare and health of the contract labour, the CLRA imposes certain obligations on the contractor in relation to establishment of canteens, rest rooms, drinking water, washing facilities, first aid, other facilities and payment of wages. However, in the event the contractor fails to provide these amenities, the principal employer is under an obligation to provide these facilities within a prescribed time period. The Building and Other Construction Workers’ Welfare Cess Act, 1996 The Building and Other Construction Workers Welfare Cess Act, 1996 (“Cess Act”) came into force with effect from August 19, 1996 to provide for the levy and collection of cess on the cost of construction incurred by the employer with a view to augmenting the resources of the building and Other Construction Workers Welfare Board constituted under the BOCWA. Under the Cess Act, the cess amount is levied and collected from the employer within 30 days of completion of construction project, at a rate not exceeding two per cent but not less than one per cent of the cost of the construction. The Payment of Wages Act, 1936 The object of the Payment of Wages Act, 1936 (“PWA”) is to regulate the payment of wages to certain classes of employed persons. The PWA makes every employer responsible for the payment of wages to person employed by it. No deductions can be made from the wages nor can any fine be levied on the wages earned by a person employed except as provided under the PWA. The Minimum Wages Act, 1948
The Minimum Wages Act, 1948 (“MWA”) came into force with the objective to provide for the fixation of a minimum wage payable by the employer to the employee. Under the MWA, every employer is mandated to pay not less than the minimum wages to all employees engaged to do any work whether skilled, unskilled, manual or clerical (including out-workers) in any employment listed in the schedule to the MWA, in respect of which minimum rates of wages have been fixed or revised under the MWA. The Payment of Gratuity Act, 1972 Under the Payment of Gratuity Act, 1972 (the “Gratuity Act”), an employee in a factory is deemed to be in ‘continuous service’ for a period of at least 240 days in a period of 12 months or 120 days in a period of 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. An employee who has been in continuous service for a period of five years will be eligible for gratuity upon his retirement, superannuation, death or disablement. The maximum amount of gratuity payable shall not exceed Rs. 10,00,000/-
The Payment of Bonus Act, 1965 The Payment of Bonus Act, 1965 (“PBA”) was enacted with the objective of providing of payment of bonus to employees on the basis of profit or on the basis of productivity. The provisions of the PBA ensure that a minimum annual bonus is payable to every employee regardless of whether the employer has made a profit or a loss in the accounting year in which the bonus is payable. Under the PBA every employer is bound to pay to
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every employee, in respect of the accounting year, a minimum bonus which is 8.33% of the salary or wage earned by the employee during the accounting year or Rs.100, whichever is higher. The Employee State Insurance Act, 1948
The Employee State Insurance Act, 1948 (“ESIA”) aims to provide benefits for employees or their beneficiaries in the event of sickness, maternity, disablement and employment injury and to make provisions for the same. Every factory or establishment to which the ESIA applies is required to be registered in the manner prescribed under the ESIA. Under the ESIA every employee (including casual and temporary employees), whether employed directly or through a contractor, who is in receipt of wages upto Rs.7,500 per month is entitled to be insured. The ESIA contemplates a contribution payable by the principal employer in the first instance and a contribution payable by the employee to the Employee State Insurance Corporation. The ESIA further states that a principal employer, who has paid a contribution in respect of an employee employed by or through an immediate employer, shall be entitled to recover the amount of the contribution so paid from the immediate employer, either by deduction from any amount payable to him by the principal employer under any contract, or as a debt payable by the immediate employer. The Industrial Employment (Standing Orders) Act, 1946 The Industrial Employment (Standing Orders) Act, 1946 (“Standing Orders Act”) requires employers in industrial establishments, which employ 100 or more workmen to define with sufficient precision the conditions of employment of workmen employed and to make them known to such workmen. The Standing Orders Act requires every employer to which the Standing Orders Act applies to certify and register the draft standing order proposed by him in the prescribed manner. However until the draft standing orders are certified, the prescribed standing orders given in the Standing Orders Act must be followed.
The Workmen’s Compensation Act, 1923 The Workmen’s Compensation Act, 1923 (“WCA”) has been enacted with the objective to provide for the payment of compensation by certain classes of employers to their workmen or their survivors for industrial accidents and occupational diseases resulting in the death or disablement of such workmen. The WCA makes every employer liable to pay compensation in accordance with the WCA if a personal injury/disablement/loss of life is caused to a workman (including those employed through a contractor) by an accident arising out of and in the course of his employment. In case the employer fails to pay compensation due under the WCA within one month from the date it falls due, the Commissioner may direct the employer to pay the compensation amount along with interest and may also impose a penalty. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 The Employees Provident Fund and Miscellaneous Provisions Act, 1952 (“EPFA”) provides for the institution of compulsory provident fund, pension fund and deposit linked insurance funds for the benefit of employees in factories and other establishments. EPFA was introduced with the object to institute a provident fund for the benefit of employees in factories and other establishments. The EPFA empowers the Central Government to frame the “Employee’s Provident Fund Scheme”, “Employee’s Deposit-linked Insurance Scheme” and the “Employees’ Family Pension Scheme” for the establishment of provident funds under the EPFA for the employees. The EPFA also prescribes that contributions to the provident fund are to be made by both the employer and the employee. (D) Regulations Regarding Domestic Borrowings By Real Estate Companies Domestic borrowing by property developers Although there are no restrictions on a real estate company’s ability to undertake debt obligations from domestic institutions, the RBI has, in its circular dated March 1, 2006 (RBI/2005-06/310 DBOD.BP.BC. 65/08.12.01/2005-06) and the Master Circular on Housing Finance dated July 1, 2010 (RBI/2010-11/63 DBOD. No. DIR.(HSG). BC.07/08.12.01/2010-11) cautioned all Scheduled Commercial Banks in India (“SCBs”) to curb excessively risky lending by exercising selectivity and strengthening the loan approval process. In view of
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the above, the RBI has advised the SCBs that while appraising loan proposals involving real estate, the SCBs should ensure that the borrowers have obtained prior permission from the concerned Government or other statutory authorities for the relevant project, wherever required. (E) Laws Relating to Environment The three major statutes in India which seek to regulate and protect the environment against pollution and related activities in India are the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981 and the Environment Protection Act, 1986. The basic purpose of these statutes is to control, abate and prevent pollution. In order to achieve these objectives, Pollution Control Boards (“PCB”) which are vested with diverse powers to deal with water and air pollution, have been set up in each state. The PCBs are responsible for setting the standards for maintenance of clean air and water, directing the installation of pollution control devices in industries and undertaking investigations to ensure that industries are functioning in compliance with the standards prescribed. These authorities also have the power of search, seizure, and investigation if the authorities are aware of or suspect pollution. In addition, the Ministry of Environment and Forests looks into Environment Impact Assessment. The Ministry receives proposals for expansion, modernization and setting up of projects and the impact which such projects would have on the environment is assessed by the Ministry before granting clearances for the Proposed Projects.
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(D) HISTORY AND CORPORATE STRUCTURE
Our Company was originally incorporated as Vishal Cotspin Limited on May 17, 1993 under the Companies Act, 1956. Mr. Balkishan Boob, Mr. Bhagwandas Boob, Mr. Ramanujdas Boob, Mr. Ramnivas Boob, Mr. Narayandas Boob, Mr. Indarchand Ranka and Mr. S. Venkatakrishnan were the subscribers to Memorandum of Association of Our Company. Furthermore, Mr. Balkishan Boob, Mr. Bhagawandas Boob, Mr. Ramanujdas Boob and Mr. Ramnivas Boob were appointed as the first directors of Our Company at the time of incorporation of Our Company.
Our Company came out with a maiden public issue in May 1996 and the equity shares of Our Company were listed on Bombay Stock Exchange Limited, Bangalore Stock Exchange Limited and Hyderabad Stock Exchange Limited. The equity shares of Our Company were voluntarily de-listed from Bangalore Stock Exchange Limited w.e.f. November 3, 2006. Hyderabad Stock Exchange has been derecognized by SEBI w.e.f. August 29, 2007. The equity shares are presently listed only on Bombay Stock Exchange Limited. Our Company was engaged in the business of manufacturing of yarn, which was made in a sophisticated plant, equipped with the state of the art machinery, advanced electronic control and monitoring systems with an installed capacity of 15,204 spindles. Our Company incurred substantial losses for a long period of time on account of continued labour problems, higher cost of production and lower sale realizations.
On account of continued losses, the entire net worth of Our Company was eroded and Our Company made a reference to BIFR to declare the Company as a Sick Industrial Company under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) on September 19, 1999. The major causes for sickness of Our Company were marketing difficulties, financial problems, shortage of raw material, government policies, etc. A rehabilitation proposal envisaging a One Time Settlement (OTS) submitted by Our Company was accepted by more than 85% of the secured creditors on January 22, 2004. After completion of necessary formalities by the operating agency, BIFR sanctioned the duly modified rehabilitation scheme on November 28, 2006. Subsequently, the BIFR vide its order dated September 15, 2008 discharged Our Company from the purview of SICA/ BIFR. In August 2009, Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah (hereinafter referred to as “Acquirers” or “Promoters”) entered into a Share Purchase Agreement with the Erstwhile Promoters to acquire 21,34,440 Equity Shares of Rs. 10 each for cash consideration at a price of Rs. 3/- per equity share. Pursuant to the SPA, in October 2009, the Acquirers made an open offer to acquire 6,49,580 equity shares (representing 20% of the total issued, subscribed and paid up equity share capital) of Rs. 10 each at a price of Rs. 3 per equity share in terms of Regulation 10 and 12 of SEBI Takeover Regulations and listing agreement with the Stock Exchange and other applicable laws and regulations in force. Under the Open Offer, our Promoters acquired 2,000 Equity Shares from the public shareholders at a price of Rs. 3/- per equity share.
With a view to commence the business of real estate and carry on business as developers, builders, contractors, architects, engineers, supervisors, decorators, designers, valuers, surveyors, consulting engineers and offer consultancy services of all kinds pertaining to real estate, an addition was made to the main object clause of MOA of Our Company by passing a Special Resolution by way of Postal Ballot on January 29, 2010.
Pursuant to the addition to the main Object clause of MOA, Our Company forayed into real estate development/ consultancy. Our Company became a partner in Rodium Properties, a Partnership Firm registered under the Indian Partnership Act, 1932. All the partners of M/s Rodium Properties (except, Our Company) retired, leading to dissolution of the partnership and M/s Rodium Properties (with all its existing assets and liabilities) becoming the division of Our Company on going concern w.e.f. April 1, 2010. In order to reflect the nature of business activities, the name of Our Company was changed from Vishal Cotspin Limited to Rodium Realty Limited w.e.f August 2, 2010. Changes in the Registered Office The Registered Office of Our Company is situated at 501, X’ cube, Plot No. 636, Off New Link Road, Andheri (West), Mumbai – 400 053, Maharashtra. Since incorporation, following changes have taken place in the registered office of Our Company:
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From To Date of passing of Resolution
3rd Floor, Kantha Court, 132, Lalbagh Road, Bangalore-560027
S-916, Manipal Centre, South Block 47, Dickenson Road, Bangalore – 560 042, Karnataka
BM dated January 31, 2000
S-916, Manipal Centre, South Block 47, Dickenson Road, Bangalore – 560 042, Karnataka
No. 17, 1st Floor, 1st Cross, 5th 'A' Block, Koramangola, Bangalore – 560 095, Karnataka
BM dated April 29, 2009
No. 17, 1st Floor, 1st Cross, 5th 'A' Block, Koramangola, Bangalore – 560 095, Karnataka
104,1st Floor, 2nd Main, 4th Cross, Gavipuram Extn., Basavanagudi, Bangalore – 560 019, Karnataka
BM dated November 14, 2009
104, 1st Floor, 2nd Main, 4th Cross, Gavipuram Extn., Basavanagudi, Bangalore – 560 019, Karnataka
501, X' cube, Plot No. 636, Off New Link Road, Andheri (West), Mumbai – 400 053, Maharashtra
EGM dated January 27, 2010
a) Major Corporate Events
Year Important Events
Incorporated as a Public Limited Company on May 17, 1993 1993
Received Certificate of Commencement of Business on May 24, 1993
1996 Initial Public Offer of 38,65,300 Equity Shares of Rs. 10 each at par
1999 Made reference to BIFR under the provisions of SICA on September 19, 2009
2000 Filed Rehabilitation Scheme with BIFR during the month of July
2004 Forfeiture of 4,85,400 Equity Shares for which calls were in arrears on January 31, 2004. BIFR sanctioned the duly modified Rehabilitation Scheme on November 28, 2006.
The Equity Shares were voluntarily delisted from Bangalore Stock Exchange Limited w.e.f. November 3, 2006 vide notice no: 03/2006/443.
2006
50% Reduction in equity share capital vide BIFR order dated November 28, 2006.
2008 BIFR discharged Our Company from the purview of SICA/BIFR vide its order dated September 15, 2008
2009 Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah entered into Share Purchase Agreement to acquire 21,34,440 equity shares of Rs. 10 each from the Erstwhile Promoters and simultaneously made an Open Offer to acquire 6,49,580 Equity Shares from Public Shareholders. After completion of Open Offer Formalities, the Acquirers viz. Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah took over the control of management of Our Company. Our Company forays into real estate development / consultancy.
Change of name of Our Company from Vishal Cotspin Limited to Rodium Realty Limited w.e.f. August 2, 2010.
2010
� Commenced Residential Project – X’czar at Juhu – Vile Parle � Commenced Residential & Commercial Project – X’point at Kandivali
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2) MAIN OBJECTS OF OUR COMPANY
The main object clauses of the Memorandum of Association of Our Company enable us to undertake the activities for which the funds are being raised in the present issue. Furthermore, the activities that Our Company has been carrying out until now are in accordance with the main objects contained in the Memorandum. Presently, the main objects of Our Company are: 1. To carry on the business of spinners, doublers, weavers, bleachers, dyers, printers, mercers and hosiers
in cotton, wool, jute, silk, tereline, terricotton, linen and all other synthetic and other fibrous materials and
to purchase, comb, prepare, spin, weave, bleach, dye, print, mercerise or otherwise manufacture and deal
in wool, cotton, silk and all other goods and fabrics, whether trebled, knotted or looped, kapas, hamp, jute,
rags, yarns, necessary or useful in processes for treatment of any or all of the above purposes.
2. To purchase or acquire comb, prepare, spin, dye, print, knit, finish and process and deal in flex, hamp, jute,
woollen, cotton and silk and other synthetic and fibrous substances and to weave or knit or otherwise
manufacture or get manufactured, buy and sell and deal in linen, cloth, yarn, manufacture fibrous products
and other goods and fabrics, whether textile, felted, netted or looped.
3. To carry on the business of manufacturing, bleaching, dyeing, printing and selling cotton yarn and/or
staple fibre, cloth and other fabrics made from raw cotton, jute, wool, synthetic and other suitable
materials and generally to carry on the business of spinning and weaving mill proprietors in all their
branches.
4. To carry on or to be interested in all or any of the business of cotton spinners and doublers, flex, hemp,
jute and wool merchants, wool combers, worsted spinners, woolen spinners, yarn merchants, worsted stuff
manufacturers, bleachers and dyers and makers of vitriol bleaching and dyeing materials and to purchase
comb, prepare spin, dye and deal in flex, hemp, jute, wool, cotton, silk and other fibrous substances and to
weave or otherwise manufacture, buy and sell linen, cloth and other goods and fabrics, whether textile,
trebled, knitted or looped or otherwise.
5. To carry on the business of real estate and to purchase, develop, construct, build, erect, demolish, re-
erect, alter, repair, re-model, take in exchange or on lease, hire or otherwise acquire, whether for
investment or sale, or working the same, sell, rent out, lease, license, let, transfer or otherwise deal in or
dispose off any movable and immovable properties, any real or personal estate including lands
(agricultural and non-agricultural), mines, buildings, factories, mills, houses, flats, apartments, residential
premises, suites, cottages, bungalows, shops, offices, showrooms, hyper markets, departmental stores,
super markets, shopping malls, discount stores, specialty stores, shopping outlets, convenience stores,
townships, clubs, industrial sheds, commercial complex, multiplex entertainment complexes including
cinemas, theatres, family entertainment and amusement centres, food courts, restaurants, hotels and
tourism related industries, cold storage, sports health units, holiday resorts and other buildings and works
of public utility and to otherwise carry on the business as developers, builders, contractors, architects,
engineers, supervisors, decorators, designers, values, surveyors, consulting engineers and offer
consultancy services of all kinds pertaining to real estate.
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Changes in the Memorandum of Association of Our Company
The following changes have been made in the Memorandum of Association of the Company since inception:
No. Particulars Date of Meeting Nature of Meeting
1. Change in Name
Change in Name of the Company from Vishal Cotspin Limited to Rodium Realty Limited
August 2, 2010 Annual General Meeting
2. Change in Registered Office
Change in Registered Address from State of Karnataka to State of Maharashtra
January 27, 2010 Extra Ordinary General Meeting
3. Alteration of the Objects
Alteration to the main object clause. January 29, 2010 Postal Ballot
4. Change in Authorized Share Capital
i Increase in Authorized Share Capital of the Company from Rs. 900 lakhs to Rs. 1100 lakhs
March 24, 2008 Extra Ordinary General Meeting
ii Re-classification of Authorized Share Capital of the Company of Rs. 1100 lakhs divided into 40 lakhs Equity Shares of Rs. 10 each and 70 lakhs Cumulative Redeemable Preference Shares of Rs. 10 each.
August 2, 2010 Annual General Meeting
iii Authorized Share Capital of the Company increased from Rs. 1100 lakhs to Rs. 1300 lakhs divided into 60 lakhs Equity Shares of Rs. 10 each and 70 lakhs Cumulative Redeemable Preference Shares of Rs. 10 each.
August 2, 2010 Annual General Meeting
b) Listing The Equity Shares of Our Company is listed on Bombay Stock Exchange Limited. Our listing details on BSE
are: Scrip Code : 531822 Scrip ID on BOLT System : RODIUM ISIN No. : INE513E01024 Group/ Index : B Industry : Realty Our Company has complied with the requirements under the listing agreement of BSE. Our Company has also paid the requisite annual listing fee to the BSE for the period 2011-12. No disciplinary action has been initiated by the exchange against Our Company or its Directors. c) Corporate Profile For details regarding corporate profile, refer to the section titled ‘Business Overview’ beginning on page 82 of this Draft Letter of Offer.
d) Time/Cost Over run There has been no Time / Cost Overrun. e) Defaults or rescheduling of borrowings from FIs/Banks
There has been no rescheduling of borrowings from either Banks or FIs. f) Injunction / Restraining Order Our Company is not operating under any injunction or restraining order.
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g) Details of acquisition of business / undertakings, mergers, amalgamation, revaluation of assets
etc. M/s. Rodium Properties, a partnership firm was formed on April 6, 2006 having its principal place of business at 143, Andheri Industrial Estate, Off Veera Desai Road, Andheri (W), Mumbai-400053. The firm was engaged in the business of building and development of real estate properties. On January 1, 2010, Our Company became a partner in M/s. Rodium Properties with a profit sharing ratio of 10%. Our Company became the sole owner of the firm M/s Rodium Properties on retirement of all other partners from April 1, 2010. Accordingly on April 1, 2010, M/s Rodium Properties became a division of the Company with all its assets, rights, benefits, obligations and liabilities on a going concern basis. Financial Performance: (Rs. in Lakhs)
For the year ended March 31,
Particulars 2008 2009 2010
Partners Capital Account 1,843.49 1,544.02 3,654.44
Total Income 959.56 434.87 8,013.38
Net Profit/ (Loss) 169.24 321.79 2,441.56
h) Number of Members
Our Company has 684 Equity Shareholders as on June 30, 2011. 3) Our Subsidiary Companies There are no subsidiaries as of the date of filing of this Draft Letter of Offer. 4) Shareholders’ Agreements, if any Our Company has not entered into any kind of Shareholders’ Agreement as of the date of filing of this Draft Letter of Offer. 5) Other Agreements entered into by the Company
a. Leave and License Agreement dated 20th Day of August 2010 for the use of office premises No.501 situated on the 5th Floor, X’cube, Plot No. C-16, Off New Link Road, Andheri (W), Mumbai – 400 053 between Sigma Fiscals Pvt. Ltd. and Mr. Deepak Chheda , Mr. Harish Nisar, Mr. Mehul Nisar, Mr. Rohit K. Dedhia, Mr. Keshavji G. Dedhia and Vishal Cotspin Limited (Now, Rodium Realty Limited) for a period of 60 months commencing from April 1, 2010.
b. Leave and License Agreement dated 20th Day of August 2010 for the use of office premises No.401 situated on the 4th Floor, X’cube, Plot No. C-16, Off New Link Road, Andheri (W), Mumbai – 400 053 between Sigma Fiscals Pvt. Ltd., Mr. Deepak Chheda and Rodium Properties, Division of Vishal Cotspin Ltd. (Now, Rodium Realty Limited) for a period of 60 months commencing from April 1, 2010.
c. Leave and License Agreement dated 20th Day of August 2010 for the use of office premises No.402 situated on the 4th Floor, X’cube, Plot No. C-16, Off New Link Road, Andheri (W), Mumbai – 400 053 between Mr. Harish Nisar, Mr. Mehul Nisar, Mr. Rohit K. Dedhia, Mr. Keshavji G. Dedhia and Rodium Properties, Division of Vishal Cotspin Ltd. (Now, Rodium Realty Limited) for a period of 60 months commencing from April 1, 2010.
d. Deed of Retirement cum Dissolution executed on April 1, 2010 between Vishal Cotspin Limited (Now, Rodium Realty Limited), Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Mehul Nisar, Mr. Rohit Dedhia, Mr. Keshavji Dedhia, Mr. Shailesh Shah, Mr. Dinesh Shah, Mr. Anil Shah, Mr. Tejas Shah and Sigma Fiscals Private Limited wherein all the partners except Our Company retired. As per the
107
terms of the said agreement the business of the Partnership firm was taken over by Our Company as a going concern and would be continued as its division. .
e. Purchase Agreement dated December 9, 2009 for X’czar Project for acquiring property bearing CTS No. 345/21 of Village Vile Parle and Plot No. 7, of larger Plot No. 10 of Azad Nagar Cooperative Housing Society Limited forming part of Survey No. 287 of Village Vile Parle, Taluka Andheri. The said plot of land was acquired from Mr. Jethanand Lalwani, Jethanand Lalwani (HUF), Mr. Dilip Lalwani, Mr. Haresh Lalwani, Mrs. Ganga Lalwani, Ms. Padu Lalwani, Mrs. Juhi Motwani and Mrs. Jyoti Godhwani at an aggregate cost of Rs. 1,600 Lakhs.
f. Development Agreement dated May 15, 2009 entered into between Our Company through M/s
Rodium Properties and Mr. Ramniklal Joshi and Mrs. Bharati Joshi for acquiring the development rights of CTS No. 545 of Matunga division admeasuring 4113 sq. ft. for X’enus Project at an aggregate cost of Rs. 40.33 Lakhs along with three self contained flats admeasuring 1500 sq. ft..
g. Purchase Agreement dated June 8, 2009 for acquiring property bearing CTS No. 2/545 of Matunga
division 6,417 sq. ft. between Our Company through M/s Rodium Properties and Mr. Govind Dhamanmal Gajaria, Mr. Kaku Alias Gokaldas Dhamanlal Gajaria and Mrs. Ekta Vijay Thakur at an aggregate cost of Rs. 263 Lakhs. The seller of the Land does not have relationship with our Company / Director / Promoter of our Company.
h. Development Agreement dated May 7, 2010 for acquiring the development rights of property bearing
CTS No, 379/A-1 to 379/A-4 of Village Polsar, Taluka-Borivali, Dist. Mumbai situated at S. V. Road Kandivali (West), Mumbai -400067 between Our Company through M/s Rodium Properties and Prem Bhavna Co-operative Housing Society Limited on May 7, 2010 at an aggregate cost of Rs. 1267.51 lakhs.
6) Strategic Partners / Financial Partner The Company does not have any strategic / financial partner as on date of filing of this Draft Letter of Offer.
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(E) OUR MANAGEMENT
Board of Directors As per the Articles of Association, Our Company cannot have less than 3 directors and not more than 15 directors including all kinds of directors as stipulated in the Act for the time being in force. We currently have 8 Directors of which 4 (Four) are Executive Directors and 4 (Four) are Independent Non-Executive Directors. The following table sets forth details regarding the Board of Directors as on the date of this Draft Letter of Offer:
Name, Qualification, Designation, Address, DoB, DIN, PAN, Occupation
Age (years)
Total Experience
(years)
Date of Appointment
Date of Expiration of Current
Term of office
Directorships in other companies
Mr. Deepak Chheda M. Arch
Chairman and Managing Director 1/19, Mayank, Nutan Laxmi Society, N. S. Road, 9 J.V.P.D Scheme, Vile Parle (W), Mumbai 400049 DoB: July 2, 1964 DIN: 00419447 PAN: AABPC6317M Occupation: Business
46 Years
24 Years November 14, 2009
Appointed as Chairman
and Managing
Director for a period of three years
i.e. till November 13, 2012
� Sigma Fiscals Private Limited
Mr. Harish Nisar B. Sc., Executive Director 591, Amrut Dhara Heights, Jamejamshed Road, Behind Kapol Niwas, Matunga Central, Mumbai – 400 019 DoB: September 23, 1954 DIN: 02716666 PAN: AABPN0570F Occupation: Business
55 Years
37 Years November 14, 2009
Appointed as an
Executive Director for a period of three years i.e. till 13th November,
2012
Nil
Mr. Rohit Dedhia
B. Com., Chief Operating Officer Executive Director 209/B/6, Devi Sadan, Dr. Ambedkar Road, Matunga, Mumbai - 400 019 DoB: May 13, 1965 DIN: 02716686 PAN: AABPD4602J Occupation: Business
45 Years
16 Years November 14, 2009
Appointed as an
Executive Director for a period of three years i.e. till 13th November,
2012
Nil
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Name, Qualification, Designation, Address, DoB,
DIN, PAN, Occupation
Age (years)
Total Experience
(years)
Date of Appointment
Date of Expiration
of Current Term of
office
Directorships in other companies
Mr. Shailesh Shah Chartered Accountant Executive Director A-403, Utpal Park, Shahaji Raje Marg, Mahim, Mumbai-400016 DoB: February 10, 1967 DIN: 01230174 PAN: AAFPS1603L Occupation: Business
43 Years
16 Years November 14, 2009
Appointed as an
Executive Director for a period of three years i.e. till 13th November,
2012
� S.D.S. Enterprise Private Limited
Mr. Nilesh Vikamsey GCD, B.Com, FCA, DICA (ICAI),
Non Executive Independent Director
Address: 184A, Kalpataru Habitat, Dr. S S Rao Road, Parel, Mumbai-400012
DOB: August 16, 1964 DIN: 00031213
PAN: AABPV3680Q
Occupation: Professional
46 Years
25 Years October 22, 2010
Retire by rotation
� India Infoline Ltd. � India Infoline
Investments Services Ltd.
� HLB Offices and Services Pvt. Ltd.
� TruNil Properties Pvt. Ltd.
� BarKat Properties Pvt. Ltd.
� The Federal Bank Limited
� ICAI Accounting Research Foundation
Mr. Yogesh Shah
Chartered Accountant Non Executive Independent Director 109 Indrapastha, I.C. Jitendra Road, Malad, Mumbai-400097 DoB: October 14, 1961 DIN: 02774568 PAN: AAEPS6378M Occupation: Professional
50 Years
26 Years August 4, 2009 Retire by rotation
Nil
Mr. Vatsal Shah B.Com., L.LB.,
Non-Executive Independent
Director B-601 Adinath Apts. Co-op Hsg. Soc. Ltd., Tardeo Road, Grant Road, Mumbai – 400 007
44 Years
23 Years August 4, 2009 Retire by rotation
� Mint Capital Market Private Limited
110
Name, Qualification, Designation, Address, DoB,
DIN, PAN, Occupation
Age (years)
Total Experience
(years)
Date of Appointment
Date of Expiration
of Current Term of
office
Directorships in other companies
DoB: September 16, 1965 DIN: 01839985 PAN: AAFPS3633L Occupation: Business
Mr. Sudhir Mehta LL.B,
Non Executive Independent
Director 703, Tareti, 7th Floor, 29-C Dongarsi Road, Malabar Hill, Mumbai – 400 006 DoB: July 21, 1936 DIN: 03187758 PAN: AADPM4636R Occupation: Professional
74 Years
50 Years August 12, 2010
Retire by rotation
Nil
Brief Profile of Directors: Mr. Deepak Chheda He is aged 46 and is the Executive Chairman and Managing Director of Our Company. He is Master of Architecture from California Polytechnic State University, U.S.A. He is Main Strategist and motivator of the Rodium Group. He has over 24 years of experience in the field of architecture, engineering and construction. He has computer expertise in CAAD systems, environmental control systems and project management. In 1984-85, he has won award at National Level Low Income Urban Housing Design. He has been a visiting lecturer at L.S. Raheja School of Architecture, and K.R.V.I. School of Architecture, Mumbai. He holds membership in Council of Architecture India, Indian Institute of Architects, Registered Architect of Practicing Engineers, Architects and Town Planner Association and American Society of Civil Engineers. His scope of work includes overview of day to day affairs of Our Company in consultation with other directors and making strategic management decisions. Mr. Harish Nisar He is aged 55 years and is an Executive Director of Our Company. He is a science graduate from Mumbai University. He is the promoter director of the Company and has more than 21 years of experience in manufacturing and business for industrial safety products and over 16 years of experience in redevelopment of properties. He has past experience of working with First Stone Construction, Amrut Constructions, Amrut Industries etc. He is looking after day to day operations of the Company. Mr. Rohit Dedhia He is aged 44 years and is an Executive Director of Our Company. He is a commerce graduate from Mumbai University. He is the Chief Operating Officer of Our Company and is involved in the day to day affairs of project execution. He has over 16 years of experience in financial management services. He has, in past, worked with R. K. Textiles, J. K. Textiles, J. K. Fabrics etc. He is looking after project execution and other operational aspects in Our Company. He is in charge of Business Development and Strategic Management of the Company and its marketing efforts.
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Mr. Shailesh Shah He is 43 years and is an Executive Director of Our Company. He is a Commerce Graduate from Mumbai University and an associate member of Institute of Chartered Accountants of India. He is the promoter director of the Company, and has more than 16 years of experience in the garment industry. He has also diversified into real estate projects. He is a member of the Clothing Manufacturers Association of India. He is looking after and overall in charge of finance department in Our Company. He also plays an important role in policy implementation and liaisoning with banks and financial institutions for obtaining funds. Mr. Nilesh Vikamsey He is aged 46 years and is a Non-Executive and Independent Director of Our Company. He is fellow member of Institute of Chartered Accountants of India (ICAI) and is practicing in the field of Accounts, Finance, Income Tax, etc. He is a Senior Partner of M/s. Khimji Kunverji and Co., Chartered Accountants and is a member of Central Council of Institute of Chartered Accountants of India. He has experience of more than 25 years in the field of statutory and regulatory audit, statutory and concurrent audit of banks, conducting assignments like inspections / special audits / Investigations / Due Diligence, Corporate management services, etc. He is also member of several committees of ICAI. Mr. Yogesh Shah He is aged 50 years and is a Non-Executive and Independent Director of Our Company. He is a fellow member of Institute of Chartered Accountants of India and is practicing in the field of Accounts, Finance, Income Tax, etc. He has experience of more than 26 years in the field of statutory and regulatory audit, treasury services, environmental audits, accounting and regulatory advice new authorizations. Mr. Vatsal Shah He is aged 44 years and is a Non-Executive and Independent Director of Our Company. He is a commerce graduate and Bachelor of Law from Mumbai University. He is practicing as lawyer since 1988 and has an experience of around 23 years in the field of Civil and Company Law matters. His areas of practice include specializing in commercial and Company Law matters. He has vast experience in handling commercial, Company law matters and attending matters of Civil cases in High Court and Supreme Court. Mr. Sudhir Mehta He is aged 74 years and is a Non-Executive and Independent Director of Our Company. He is a practicing lawyer on the original side of the High Court at Mumbai. He is having rich experience of more than 50 years. He has written several articles and papers on various tax related matters. He is a member of the Bombay Bar Association, Chamber of Income Tax Consultants, All India Federation of Tax Practitioners, Past secretary of Income Tax Appellate Tribunal. RELATIONSHIP AMONG DIRECTORS None of the present directors are having family relationship with each other. ARRANGEMENTS WITH MAJOR SHAREHOLDERS, CUSTOMERS, SUPPLIERS OR OTHERS There is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which of any Director was appointed as a Director or member of senior management of Our Company. DETAILS OF BORROWING POWER OF DIRECTORS The Board may from time to time at its discretion, subject to the provisions of the Companies Act, raise or borrow from and secure payments of any sum or sums of money for the purposes of the Company. The borrowing powers of the Directors are regulated by Article 17 of the Articles of Association of the Company. For further details, kindly refer section titled "Description of Equity Shares and Terms of the Articles of Association" beginning on page no. 229 of this Draft Letter of Offer. Presently, as per the Postal Ballot resolution passed by the members of Our Company on January 29, 2010, the Board of Directors of Our Company is authorized under section 293(1)(d) of the Companies Act, 1956 to borrow to an extent of Rs. 200 Crores.
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EMPLOYMENT SERVICE AGREEMENTS ENTERED INTO BETWEEN OUR COMPANY AND
OUR DIRECTORS: The employment service contracts entered into with our Whole Time Directors do not provide for any benefit upon termination of employment except the retirement benefits payable to them as Provident Fund, Superannuation and Gratuity as per the rules of Our Company, except as provided herein below Our Company has not entered into any other service agreement (s) with any Director: Compensation to Directors a) Compensation to Non- Executive Directors:
Non-Executive Directors are presently paid sitting fees of Rs.10,000/- for every meeting of the Board of Directors or committee thereof attended by them.
b) Compensation to the Whole-time Director
i. Mr. Deepak Chheda – Chairman and Managing Directors
Mr. Deepak Chheda was inducted as Additional Director on November 14, 2009 and subsequently appointed as Chairman and Managing Director on the Board of Our Company by resolution of Extra Ordinary General Meeting on January 27, 2010 for a period of 3(three) years with effect from November 14, 2009 and a service agreement for the same was entered into on February 1, 2010. The present terms of his appointment are as follows:
Salary Rs.2,00,000/- per month with effect from April 1, 2010 and may be given annual increment as the Board or Remuneration Committee as applicable decides from time to time subject to a maximum salary of Rs. 5,00,000 per month provided that such increase shall not exceed Schedule XIII of the Companies Act, 1956.
Incentive Performance bonus or other incentive as approved by the Board of Directors of the Company from time to time based on business plan achievement subject to a maximum limit of Rs. 10,00,000 per financial year.
Commission Not exceeding 5% (Five) of the Net Profits of the Company for each financial year, as may be decided by the Board of Directors and subject to the overall limits as stipulated under Sections 198, 309, 310, 311 read with Schedule XIII of the Companies Act, 1956 and computed in the manner prescribed under Section 349 and 350 of the Companies Act, 1956.
Perquisites and Allowance
In addition to the salary, the Whole Time Director shall also be entitled to perquisites like Furnished Accommodation, Electricity, Water, Furnishings, Gratuity (subject to ceiling in Gratuity Act), Medical Reimbursement for Self and family, Leave Travel Concession, Club Fees (subject to maximum of one Club but excluding life membership and admission fees), Personal Accident Insurance, Leave, Long Services Award, Free use of company’s car and driver, Telephone at residence in accordance with the rules of the Company. Perquisites shall be valued as per the Income Tax Rules, wherever applicable and in the absence of any such rules, shall be valued at actual costs. Use of Car for official purpose and telephone at residence (including payment of local calls and long distance official calls) shall not be included in Perquisites.
Other terms and conditions: a. No sitting fees shall be paid to the Managing Director for attending the meetings of the Board or of any
Committee thereof.
b. In the event of loss or inadequacy of profits in any financial year during the tenure of Mr. Deepak Chheda, the Company will pay to Mr. Deepak Chheda remuneration by way of consolidated salary,
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Incentives, perquisites and all other allowances, as stated above, subject however to overall limit specified in Para 1 of Section II of part II of Schedule XII to the Companies Act, 1956 or any amendments thereto, as may be applicable at the relevant time.
c. The Managing Director shall not be liable to retire by rotation.
d. The terms and conditions of the said re-appointment may be varied /amended/ enhanced from time to
time by the Board of Directors as it may in its discretion deem fit within the maximum amounts payable to Managing Director as per Schedule XIII to the Companies Act, 1956, or any amendments made hereafter in this regards by the Central Government.
ii. Mr. Harish Nisar – Executive Director
Mr. Harish Nisar was inducted as Additional Director on November 14, 2009 and subsequently appointed as Executive Director on the Board of Our Company by resolution of Extra Ordinary General Meeting on January 27, 2010 for a period of 3(three) years with effect from November 14, 2009 and a service agreement for the same was entered into on February 1, 2010. The present terms of his appointment are as follows:
Basic Salary Rs.62,500/- per month and may be given annual increment as the Board or Remuneration Committee as applicable decides from time to time subject to a maximum salary of Rs. 2,00,000.
Incentive Performance Bonus or other incentive as approved by the Board of Directors based on business plan achievement subject to a maximum limit upto Rs. 10,00,000 per financial year.
Perquisites
In addition to the salary, the Whole Time Director shall also be entitled to perquisites like Furnished Accommodation, Electricity, Water, Furnishings, Gratuity (subject to ceiling in Gratuity Act), Medical Reimbursement for Self and family, Leave Travel Concession, Club Fees (subject to maximum of one Club but excluding life membership and admission fees), Personal Accident Insurance, Leave, Long Services Award, Free use of company’s car and driver, Telephone at residence in accordance with the rules of the Company. Perquisites shall be valued as per the Income Tax Rules, wherever applicable and in the absence of any such rules, shall be valued at actual costs. Use of Car for official purpose and telephone at residence (including payment of local calls and long distance official calls) shall not be included in Perquisites.
Other terms and conditions
a. No sitting fees shall be paid to the appointee for attending the meetings of the Board or of any Committee thereof.
b. In the event of loss or inadequacy of profits in any financial year during the tenure of Mr. Harish Nisar,
the Company shall pay to Mr. Harish Nisar remuneration by way of consolidated salary, perquisites and all other allowances, as stated above, as minimum remuneration subject however to overall limit specified in Para 1 of Section II of part II of Schedule XII to the Companies Act, 1956 or any amendments thereto, as may be applicable at the relevant time.
c. The appointee shall act in accordance with the instructions, supervision and directions given by the
Board of Directors from time to time.
d. The designation of appointee is subject to review and upgrade or promotion as may be determined by the Board of Directors from time to time.
e. The terms and conditions of the said appointment may be varied / enhanced from time to time by the
Board of Directors as it may in its discretion deem fit within the maximum amounts payable to Managing Director as per Schedule XIII to the Companies Act, 1956, or any amendments made hereafter in this regards by the Central Government.
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iii. Mr. Rohit Dedhia – Executive Director
Mr. Rohit Dedhia was inducted as Additional Director on November 14, 2009 and subsequently appointed as Executive Director on the Board of Our Company by resolution of Extra Ordinary General Meeting on January 27, 2010 for a period of 3(three) years with effect from November 14, 2009 and a service agreement for the same was entered into on February 1, 2010. The present terms of his appointment are as follows:
Basic Salary Rs.62,500/- per month and may be given annual increment as the Board or Remuneration Committee as applicable decides from time to time subject to a maximum salary of Rs. 2,00,000.
Incentive Performance Bonus or other incentive as approved by the Board of Directors based on business plan achievement subject to a maximum limit upto Rs. 10,00,000 per financial year.
Perquisites
In addition to the salary, the Whole Time Director shall also be entitled to perquisites like Furnished Accommodation, Electricity, Water, Furnishings, Gratuity (subject to ceiling in Gratuity Act), Medical Reimbursement for Self and family, Leave Travel Concession, Club Fees (subject to maximum of one Club but excluding life membership and admission fees), Personal Accident Insurance, Leave, Long Services Award, Free use of company’s car and driver, Telephone at residence in accordance with the rules of the Company. Perquisites shall be valued as per the Income Tax Rules, wherever applicable and in the absence of any such rules, shall be valued at actual costs. Use of Car for official purpose and telephone at residence (including payment of local calls and long distance official calls) shall not be included in Perquisites.
Other terms and conditions
a. No sitting fees shall be paid to the appointee for attending the meetings of the Board or of any Committee thereof.
b. In the event of loss or inadequacy of profits in any financial year during the tenure of Mr. Rohit Dedhia,
the Company shall pay to Mr. Rohit Dedhia remuneration by way of consolidated salary, perquisites and all other allowances, as stated above, as minimum remuneration subject however to overall limit specified in Para 1 of Section II of part II of Schedule XII to the Companies Act, 1956 or any amendments thereto, as may be applicable at the relevant time.
c. The appointee shall act in accordance with the instructions, supervision and directions given by the
Board of Directors from time to time d. The designation of appointee is subject to review and upgrade or promotion as may be determined by
the Board of Directors from time to time. e. The terms and conditions of the said appointment may be varied / enhanced from time to time by the
Board of Directors as it may in its discretion deem fit within the maximum amounts payable to Managing Director as per Schedule XIII to the Companies Act, 1956, or any amendments made hereafter in this regards by the Central Government.
iv. Mr. Shailesh Shah – Executive Director
Mr. Shailesh Shah was inducted as Additional Director on November 14, 2009 and subsequently appointed as Executive Director on the Board of Our Company by resolution of Extra Ordinary General Meeting on January 27, 2010 for a period of 3(three) years with effect from November 14, 2009 and a service agreement for the same was entered into on February 1, 2010. The present terms of his appointment are as follows:
Basic Salary Rs.25,000/- per month and may be given annual increment as the Board or Remuneration Committee as applicable decides from time to time subject to a maximum salary of Rs. 1,00,000.
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Incentive Performance Bonus or other incentive as approved by the Board of Directors based on business plan achievement subject to a maximum limit upto Rs. 10,00,000 per financial year.
Perquisites:
In addition to the salary, the Whole Time Director shall also be entitled to perquisites like Furnished Accommodation, Electricity, Water, Furnishings, Gratuity (subject to ceiling in Gratuity Act), Medical Reimbursement for Self and family, Leave Travel Concession, Club Fees (subject to maximum of one Club but excluding life membership and admission fees), Personal Accident Insurance, Leave, Long Services Award, Free use of company’s car and driver, Telephone at residence in accordance with the rules of the Company. Perquisites shall be valued as per the Income Tax Rules, wherever applicable and in the absence of any such rules, shall be valued at actual costs. Use of Car for official purpose and telephone at residence (including payment of local calls and long distance official calls) shall not be included in Perquisites.
Other terms and conditions: a. No sitting fees shall be paid to the appointee for attending the meetings of the Board or of any
Committee thereof.
b. In the event of loss or inadequacy of profits in any financial year during the tenure of Mr. Shailesh Shah, the Company shall pay to Mr. Shailesh Shah remuneration by way of consolidated salary, Bonus, Ex-gratia, perquisites and all other allowances, as stated above, as minimum remuneration subject however to overall limit specified in Para 1 of Section II of part II of Schedule XII to the Companies Act, 1956 or any amendments thereto, as may be applicable at the relevant time.
c. The appointee shall act in accordance with the instructions, supervision and directions given by the
Board of Directors from time to time. d. The designation of appointee is subject to review and upgrade or promotion as may be determined by
the Board of Directors from time to time.
e. The terms and conditions of the said appointment may be varied / enhanced from time to time by the Board of Directors as it may in its discretion deem fit within the maximum amounts payable to Director as per Schedule XIII to the Companies Act, 1956, or any amendments made hereafter in this regards by the Central Government.
SHAREHOLDING OF DIRECTORS IN OUR COMPANY The following table details the shareholding of the Directors of the Company in their personal capacity and either as sole or first holder as on filing of this Draft Letter of Offer.
Sr. No.
Name of the Director Number of Equity
Shares (Pre-Issue) % of the Pre Issue share
capital
1 Mr. Deepak Chheda 9,29,351 28.61%
2 Mr. Harish Nisar 3,09,784 9.54%
3 Mr. Rohit Dedhia 3,09,784 9.54%
4 Mr. Shailesh Shah 5,87,521 18.09%
The Articles of Association do not provide for any qualification shares to be held by the Directors.
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INTEREST OF DIRECTORS All the Directors of the Company may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or Committee thereof as well as to the extent of other remuneration and/or
reimbursement of expenses payable to them for services rendered by them as officers of the Company in accordance with the applicable laws. All the Directors may also be deemed to be interested to the extent
of equity shares, if any, already held by them and /or by their friends /relatives in the Company that may be subscribed for or allotted to them in the present offer and also to the extent of any dividend payable to
them and other distributions in respect of the said equity shares. All the Directors may also be deemed to be interested to the extent of normal transactions, if any, with the Company. The Directors may also be regarded as interested in the equity shares, if any, held or that may be allotted to the companies, firms and trust in which they are interested as directors, members, partners and/ or trustees. Further, our Directors may be deemed to be interested in contracts, agreements or arrangements entered into or to be entered into with any company in which they hold directorships or any partnership firm or trust in which they are partners / trustees. As on the date of this Draft Letter of Offer there are no contracts, agreements or arrangements entered into by Our Company in which Directors may be deemed to be interested. CHANGE IN BOARD OF DIRECTORS DURING THE LAST THREE YEARS The changes, which took place in the Board of Directors, are as follows:
Sr. No.
Name Designation Date of Appointment
Date of Resignation
Reason
1 Mr. S. Venkatakrishna
Director October 14, 2004
August 4, 2009
Resignation
2 Mr. Rajagopal Iyer Pra Shanthakumar
Director July 31, 2004 August 4, 2009
Resignation
3 Mr. Ramanujdas Boob
Director Since incorporation
November 14, 2009
Resignation
4 Mr. Deepak Chheda Director November 14, 2009
NA Change in Management of the Company *
5 Mr. Harish Nisar Executive Director November 14, 2009
NA Change in Management of the Company *
6 Mr. Rohit Dedhia Executive Director November 14, 2009
NA Change in Management of the Company *
7 Mr. Shailesh Shah Executive Director November 14, 2009
NA Change in Management of the Company *
8 Mr. Shyam Lilani Non-Executive Independent
Director
December 24, 2009
August 12, 2010
Resignation
9 Mr. Kiran Mankodi Non-Executive Independent
Director
January 27, 2010
October 22, 2010
Appointment / Resignation
10 Mr. Yogesh Shah Non-Executive Independent
Director
January 27, 2010
NA Reappointment
11 Mr. Vatsal Shah Non-Executive Independent
Director
January 27, 2010
NA Reappointment
12 Mr. Balkishan Boob Director Since incorporation
March 26, 2010
Resignation
13 Mr. Sudhir Mehta Non-Executive Independent
Director
August 12, 2010
NA Appointment
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14 Mr. Nilesh Vikamsey Non-Executive Independent
Director
October 22, 2010
NA Appointment
*Pursuant to the takeover of our Company by the Present Promoters under the Regulation 10 and 12 of the
SEBI (Takeover) Regulations and the subsequent change in Management of the Company, , the present
promoters were appointed as the Directors.
CORPORATE GOVERNANCE Corporate Governance is administered through our Board and the Committees of the Board. In compliance with Clause 49 of the Listing Agreement with the Stock Exchanges, we have formed the Audit Committee, Shareholders’ / Investors Grievance Committee and Remuneration Committee. However, the primary responsibility for upholding Corporate Governance and providing necessary disclosures within the framework of legal provisions and institutional conventions with commitment to enhance shareholders’ value vests with our Board. Our Company being listed company, we are in compliance with the applicable provisions of the Listing Agreements pertaining to Corporate Governance, including composition of Board of Directors, appointment of Independent Directors and constitution of Committees such as Audit Committee, Shareholders’ / Investor Grievance Committee and Remuneration Committee. COMPOSITION OF THE BOARD OF DIRECTORS AND BOARD COMMITTEES Our Company’s Board consists of 8 Directors and the composition of the Board of the Directors, as on date of filing this Draft Letter of Offer, is given below:
Sr. No.
Name Representing Type of Directorship*
1. Mr. Deepak Chheda Chairman and Managing Director
Executive and Non- Independent Director
2. Mr. Harish Nisar Director Executive and Non- Independent Director
3. Mr. Rohit Dedhia Director Executive Director and Chief Operating Officer
4. Mr. Shailesh Shah Director Executive and Non- Independent Director
5. Mr. Nilesh Vikamsey Director Non Executive and Independent Director
6. Mr. Yogesh Shah Director Non Executive and Independent Director 7. Mr. Vatsal Shah Director Non Executive and Independent Director
8. Mr. Sudhir Mehta Director Non Executive and Independent Director
* As per Clause 49 of the Listing Agreement BOARD COMMITTEES
I. Audit Committee
The Audit Committee of Our Company comprises of three directors and two third of the members are the
independent directors of the company. The Board of Directors at its meeting held on October 22, 2010,
reconstituted the Audit Committee; pursuant to the reconstitution the Audit Committee comprises the
following Directors-:
Sr.
No.
Name of the Director Designation Status
1 Mr. Yogesh Shah Chairman Non-Executive and Independent Director
2 Mr. Nilesh Vikamsey Member Non-Executive and Independent Director
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3 Mr. Sudhir Mehta Member Non-Executive and Independent Director
The constitution of the Audit Committee also meets with the requirement of Section 292A of the Companies Act, 1956. 6 meetings of the Audit Committee of the Company were held till date. The meetings were held on May 13, 2010, July 7, 2010, August 12, 2010, November 1, 2010, February 11, 2011 and May 10, 2011.
The number of meetings attended by the Committee members was as follows:
Name of the Member No. of Meetings held No. of Meetings attended
Mr. Yogesh Shah
6 6
Mr. Sudhir Mehta*(1)
6 4
Mr. Kiran Mankodi **(2) 6 2
Mr. Deepak Chheda (upto August 12, 2010)
6 3
Mr. Nilesh Vkamsey***(3)
6 2
* (1) Appointed as Member of the committee w.e.f October 22, 2010
** (2) Resigned as Director w.e.f October 22, 2010
*** (3) Appointed as Member of the Committee w. e. f October 22, 2010
The broad terms of reference stipulated by the Board to the Audit Committee are as contained in Clause 49 of the Listing Agreement and include the following:
Broad Terms of Reference 1. Overseeing Our Company’s financial reporting process and the disclosure of its financial information to
ensure that the financial statement is correct, sufficient and credible; 2. Recommending to our Board, the appointment, re-appointment and, if required, the replacement or removal
of our Statutory Auditors, Internal Auditors, fixation of the audit fees; 3. Approval of payment to our Statutory Auditors for any other services rendered 4. Reviewing, with the management, the annual financial statements before submission to the Board for
approval, with particular reference to: a) Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s
report in terms of clause (2AA) of section 217 of the Companies Act b) Changes, if any, in accounting policies and practices and reasons for the same c) Major accounting entries involving estimates based on the exercise of judgment by management d) Significant adjustments made in the financial statements arising out of audit findings e) Compliance with listing and other legal requirements relating to financial statements f) Disclosure of any related party transactions g) Qualifications in the draft audit report
5. Reviewing, with the management, the quarterly, half year, nine months and annual financial statements, stand alone as well as consolidated before submission to our Board for approval.
6. Reviewing, with the management, performance of Statutory and Internal Auditors, and adequacy of the internal control systems.
7. Reviewing the adequacy of internal audit system and internal audit department, staffing and seniority of reporting structure coverage and frequency of internal audit.
8. Discussion with our Internal Auditors about any significant findings and follow up thereon 9. Reviewing the findings of any internal investigations by the Internal Auditors into matters where there is
suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.
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10. Discussion with our Statutory Auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.
11. Reviewing Our Company’s risk management policies. 12. Look into the reasons for substantial defaults in the payment to the depositors, debenture holders,
shareholders (in case of non payment of declared dividends) and creditors. 13. Reviewing reports furnished by the Internal Auditors and Statutory Auditors and ensuring suitable follow up
thereon. 14. Reviewing the appointment and the terms of remuneration of Chief Internal Auditor of the Company. 15. Reviewing the Company’s financials and risk management policies 16. Reviewing with the management and the Statutory Auditors anticipated changes in the accounting standards 17. Reviewing the functioning of Whistle Blower mechanism, in case if same exists 18. Reviewing any changes in the accounting policies or practices as compared to the last completed financial
year and commenting on any deviation from the Accounting Standards 19. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee Our Audit Committee is empowered, pursuant to its terms of reference, to: 1. Investigate any activity within its terms of reference and to seek any information it requires from any
employee. 2. Obtain legal or other independent professional advice and to secure the attendance of outsiders with
relevant experience and expertise, when considered necessary Our Company has systems and procedures in place to ensure that our Audit Committee mandatorily reviews:
• Management discussion and analysis of financial condition and results of operations.
• Statement of significant related party transactions (as defined by the Audit Committee), submitted by the management.
• Management letters / letters of internal control weaknesses issued by the statutory auditors.
• Internal audit reports relating to internal control weaknesses.
• The appointment, removal and terms of remuneration of the chief internal auditor.
• Whenever applicable, the uses/applications of funds raised through public issues, rights issues, preferential issues by major category (capital expenditure, sales and marketing, working capital, etc), as part of the quarterly declaration of financial results.
II. Shareholder’s/ Investor grievance Committee: Our Company’s Board has constituted the Shareholder’s/ Investors’ Grievance Committee. The Committee approves issue of duplicate share certificates and oversees and reviews all matters connected with transfer of shares, non-receipt of balance sheet, non-receipt of declared dividend, etc. The Committee oversees performance of the Registrar and Transfer Agents of the Company and recommends measures for overall improvement in the quality in investor services. The Committee monitors implementation and compliance of the Company’s Code of Conduct for prohibition of insider trading in pursuance of SEBI (Prohibition of Insider Trading) Regulations, 1992. The Board of Directors at its meeting held on October 22, 2010, reconstituted the Shareholders’/ Investor Grievance Committee. Pursuant to the reconstitution, the Shareholders’/ Investor Grievance Committee comprise the following Directors:
Sr. No. Name of the Director Designation Status
1 Mr. Yogesh Shah Chairman Non-Executive and Independent Director
2 Mr. Vatsal Shah Member Non-Executive and Independent Director
3 Mr. Harish Nisar Member Executive Director
Recently the meetings were held on April 6, 2010, April 29, 2010, May 20, 2010, June 8, 2010, June 15, 2010, July 2, 2010, August 3, 2010, August 30, 2010, December 15, 2010, January 24, 2011, February 19, 2011, March 8, 2011, March 22, 2011, April 13, 2011 and June 03, 2011.
The attendance of the Committee members at the meetings was as follows:
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Name of the Member No. of Meetings held No. of Meetings attended
Mr. Yogesh Shah 15 15
Mr. Vatsal Shah* (1) 15 7
Mr. Harish Nisar**(2) 15 7
Mr. Kiran Mnakodi***(3) 15 7
Mr. Deepak Chheda (upto August 30, 2010) 15 7
*(1) Appointed as Member of the committee w.e.f October 22, 2010 ** (2) Appointed as Member of the committee w.e.f October 22, 2010 *** (3) Resigned as Director w.e.f October 22, 2010 III. Remuneration Committee Our Company has a duly constituted “Remuneration Committee”. The Committee consists of 3 (three) directors. All matters relating to finalization of remuneration of Directors are being taken to the committee for their consideration and approval. The Committee also provides its recommendations on Company’s Remuneration Policy as and when referred to it by the Chairman or the Board of Directors of the Company. The Board of Directors at its meeting held on October 22, 2010, reconstituted the Remuneration Committee. Pursuant to the reconstitution, the remuneration Committee comprises the following Directors:
Sr.
No.
Name of the Director Designation Status
1 Mr. Sudhir Mehta Chairman Non-Executive and Independent Director
2 Mr. Yogesh Shah Member Non-Executive and Independent Director
3 Mr. Vatsal Shah Member Non-Executive and Independent Director
Recently the meeting was held on July 7, 2010.
The attendance of the Committee members at the meetings was as follows:
Name of the Member No. of Meetings held No. of Meetings attended
Mr. Sudhir Mehta*(1) 1
-
Mr. Yogesh Shah 1 1 Mr. Vatsal Shah 1 1 Mr. Kiran Mankodi **(2) 1 1
* (1) Appointed as Member of the committee w.e.f October 22, 2010 ** (2) Resigned as Director w.e.f October 22, 2010
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IV. RIGHTS ISSUE COMMITTEE Our Company’s Board has constituted the Right Issue Committee. The Committee consists of 5 (Five) directors. The Committee has been constituted to consider necessary formalities and act for proposed right issue within prescribed time. The Board of Directors at its meeting held on October 22, 2010, constituted the Right Issue Committee. The following Directors are the members of the Right Issue Committee:
Sr.
No.
Name of the Director Designation Status
1 Mr. Vatsal Shah Chairman Non-Executive and Independent Director
2 Mr. Deepak Chheda Member Chairman and Managing Director
3 Mr. Harish Nisar Member Executive Director
4 Mr. Rohit Dedhia Member Executive Director
5 Mr. Shailesh Shah Member Executive Director
BOARD PROCEDURE The Board of Directors meets at least once in a quarter and there will be not less than 4 meetings in a year.
The agenda for the meeting together with the relevant notes are circulated in accordance with the provisions of the Companies Act, 1956. DECLARATION OF OPERATING RESULTS We declare the Quarterly operating results which are reported to the Stock Exchange in compliance with the provisions of the Listing Agreement. The un-audited/audited quarterly results are declared and published in the newspapers as per Clause 41 of the Listing Agreement. REPORT ON CORPORATE GOVERNANCE Our Company is compliant with the provisions of the clause 49 of the Listing Agreement of the Stock Exchange. COMPLIANCE CERTIFICATE ON CORPORATE GOVERNANCE Certificates from our Statutory Auditors confirming compliance with all the conditions of the Corporate Governance, as stipulated in clause 49 of the Listing Agreement of the Stock Exchange are in place. COMPLIANCE WITH LISTING AGREEMENT Our Company is listed on BSE and has complied with the requirements under the Listing Agreement of BSE. The requisite annual listing fee to the BSE for the year 2011-12 has been paid. No disciplinary action has been initiated by the Stock Exchange against Our Company or its Directors.
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MANAGEMENT ORGANIZATIONAL STRUCTURE
Board of Directors
Accounts and Finance Legal and
Secretarial
Project Execution and Monitoring
Kalpita Keluskar Company Secretary and Compliance
Officer
Namrata Govalkar Sr. Architect
Kalpita Choradia Sr. Interior
Riddhi Mehta-
Manager (Fin.)
Mehul Nisar
CFO
Jayanti Mendon (Accounts In-
charge)
Chairman and Managing Director and Executive Directors
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KEY MANAGERIAL PERSONNEL
The Key Managerial Personnel excluding the Directors of Our Company as on the date of filing this Draft Letter of Offer are follows:
Sr. No.
Name Qualification
Designation Date of Joining
Experience in years
Last Employment
1. Mr. Mehul Nisar
MBA (Finance)
Chief Financial Officer
December 24, 2009
9 Years Partner in Rodium Properties
2. Ms. Kalpita Keluskar
LLB & CS Company Secretary
April 1, 2011 1.5 Years D.A. Kamat & Co., Practicing Company Secretary
3. Ms. Riddhi Mehta
CFA Manager-Finance
*April 1, 2010
9 years Indian Venture Capital Ltd.
4. Ms. Jayanti Mendon
B.Com, Diploma in software
Accounts In-charge
*April 1, 2010
22 years Martin Ltd.
5. Ms. Kalpita Choradia
Diploma in Interior Designing
Senior Interior Designer
*April 1, 2010
12 years M/s. C.N.A Architects
6. Ms. Namrata Govalkar
B. Arch Senior Architect
*April 1, 2010
18 years M/s. C.N.A Architects
* Ms. Riddhi Mehta, Ms. Jayanti Mendon, Ms. Kalpita Choradia, Ms. Namrata Govalkar were employed with
M/s Rodium Properties till March 31, 2010 and their services are being continued in Our Company w.e.f. April
1, 2010 on account of acquisition of M/s Rodium Properties, on an ongoing basis.
Brief profile of the Key Managerial Personnel Mr. Mehul Nisar, is the Chief Financial Officer of Our Company. He is a Gold medalist in MBA from Indian Institute of Planning and Management in 2005. He also holds Honors Degree from IMI Belgium. He has more than 9 years of experience in managing finance and administration. He joined Our Company on December 24, 2009. Prior to joining Our Company, he was a partner in Rodium Properties and was taking care of all finance and administration functions of the firm. He has also worked with IBM as Financial and Marketing Analyst in R and D Department. He was also associated with Reliance Telecom and Compaq India Pvt. Ltd. The gross remuneration paid to him for the Financial Year 2010-11 was Rs. 5.40 lakhs. Ms. Kalpita Keluskar, is the Company Secretary of Our Company. She holds a Bachelor degree in law from New law College, Mumbai University and is a member of Institute of Company Secretaries of India. She joined Our Company on April 1, 2011. Prior to joining Our Company, she was working with D.A. Kamat & Co., Practicing Company Secretary. She has also worked with Tainwala Chemicals and Plastics (India) Ltd and Virendra Bhat, Practicing Company Secretary. Since she joined our Company on April 1, 2011, no remuneration was paid to her for the Financial Year 2010-11. Ms. Riddhi Mehta, is the Legal and Marketing Head in Our Company. She holds the degree of Certified Financial Analyst (CFA) from ICFAI University. She joined Our Company on April 1, 2010. Prior to joining Our Company, she was working with Indian Venture Capital Ltd. as a Research Analyst. She was also employed with Motilal Oswal Securities Ltd. The gross remuneration paid to her for the Financial Year 2010-11 was Rs. 2.92 lakhs. Ms. Jayanti Mendon, is the Accounts In-charge in Our Company. She holds the degree of B.Com from the Mumbai University. She joined Our Company on April 1, 2010. Prior to joining Our Company, she was working with Martin Ltd. as an Accountant. She has a total experience of about 22 years in the field of Accounts and Administration. She was also associated with Trident Polychem Ltd. and Govindsons Pvt. Ltd. The gross remuneration paid to her for the Financial Year 2010-11 was Rs. 3.02 lakhs.
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Ms. Kalpita Choradia, is the Senior Interior Designer in Our Company. She is a Diploma in Interior Designing and joined Our Company April 1, 2010. Prior to joining Our Company, she was working with C.N.A Architects and has a total experience of 12 years as an interior designer. The gross remuneration paid to her for the Financial Year 2010-11 was Rs. 4.76 lakhs. Ms. Namrata Govalkar, is the Senior Architect in Our Company. She holds the degree of Bachelor of Architecture. She joined Our Company on April 1, 2010. Prior to joining Our Company, she was working with C.N.A Architects as a consulting architect. She has a total experience of 18 years in the field of Architecture. The gross remuneration paid to her for the Financial Year 2010-11 was Rs. 3.18 lakhs. NOTES: 1. There is no Family Relationship between any of our Key Managerial Personnel. However, one of the Key
Managerial Personnel i.e. Mr. Mehul Nisar is the son of Mr. Harish Nisar, one of the promoters of Our Company.
2. There is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any of the Key Managerial Personnel was selected as a director or member of senior management.
3. Our Company has no fixed bonus or profit sharing plan for the Key Managerial Personnel. 4. All Key Managerial Personnel are permanent employees of Our Company. Changes in the Key Managerial Personnel in the last Three Years Other than the following, there has been no change in the Key Managerial Personnel of Our Company during the last three years:
Sr. No.
Name Designation Appointment/ Resignation
Date of Appointment / Resignation
1. Mr. Mehul Nisar Chief Financial Officer Appointment December 24, 2009
Appointment November 14, 2009 2. Ms. Sarita Magar Company Secretary
Resignation March 31, 2011
3. Ms. Riddhi Mehta Executive-Finance and Marketing
Appointment April 1, 2010
4. Ms. Jayanti Mendon Accounts In-charge Appointment April 1, 2010
5. Ms. Kalpita Choradia Senior Interior Designer Appointment April 1, 2010
6. Ms. Namrata Govalkar Senior Architect Appointment April 1, 2010
7. Ms. Kalpita Keluskar Company Secretary Appointment April 1, 2011
Shareholding of Key Managerial Personnel: Our Key Managerial Personnel do not hold any shares in Our Company as on the date of this Draft Letter of Offer.
Interest of Key Managerial Personnel The Key Managerial Personnel of Our Company do not have any interest in Our Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business. All our Key Managerial Personnel may also be deemed to be interested to the extent of Equity Shares, if any, already held by them or their relatives in Our Company, or that may be subscribed for and allotted to them, out of the present Issue in terms of the Draft Letter of Offer and also to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. Employee Stock Options Our Company has not provided for Employee Stock Option Scheme for its employees.
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Payment or Benefits No amount or benefit (other than salary ) has been paid or given by Our Company within two preceding years or intended to be given to any officer of Our Company Loan taken by Directors/ Key Management Personnel
Our Company has not provided any loan to Directors / Key Managerial Personnel.
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(F) OUR PROMOTERS
The Promoters of Our Company are:
Mr. Deepak Chheda
G.D. Arch and M. Arch Chairman and Managing Director Address: 1/19, Mayank, Nutan Laxmi Soc., N.S. Road No. 9, J.V.P.D. Scheme, Vile Parle (W), Mumbai – 400 049. DoB: July 2, 1964 Age: 46 Years DIN: 00419447 PAN: AABPC6317M Voter ID No.: MT/08/038/282300 Driving License: MH02/97/71604 Passport No.: Z1895863 Occupation: Business
Mr. Harish Nisar B. Sc., Executive Director Address: 591, Amrut Dhara Heights, Jamejamshed Road, Behind Kapol Niwas, Matunga Central, Mumbai-400019 DoB: September 23, 1954 Age: 55 Years
DIN: 02716666 PAN: AABPN0570F Voter ID No.: ZHS1637537 Driving License: MH0120090013380 Passport No.: G2616323 Occupation: Business
Mr. Rohit Dedhia B. Com.,
Executive Director Address: 209/B/6, Devi Sadan, Dr. Amedkar Road, Matunga, Mumbai-400019 DoB: May 13, 1965 Age: 45 Years DIN: 02716686 PAN No: AABPD4602J Voter ID No.: BRM0196352 Driving License: 86/6/8118
Passport No.: B1367801 Occupation: Business
Mr. Shailesh Shah Chartered Accountant
Executive Director Address: A-403, Utpal Park, Shahaji Raje Marg, Mahim, Mumbai-400016 DoB: February 10, 1967 Age: 43 Years DIN: 01230174 PAN: AAFPS1603L Voter ID No. Not Available Driving License: MH01/94/21965 Passport No: H0582611 Occupation: Business
For detailed profile of our Promoters, please refer to Section- “Our Management” on page 108 of this Draft Letter of Offer.
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DECLARATION
We confirm that the Permanent Account Number, Bank Account Numbers, Passport Number have been submitted to the Stock Exchange at the time of filing of this Draft Letter of Offer with it. Further, the Promoters / their relatives (as per Companies Act, 1956) have not been identified as willful defaulters by the Reserve Bank of India or any other Government authority and there are no violations of securities laws committed by the Promoters in the past or any such proceedings are pending against the Promoters. (G) FINANCIAL INFORMATION OF GROUP CONCERNS
Our Promoters have direct ownership control of all the group entities described herein below:
a) Company in which 10% or more of the share capital is held by our Promoters or their immediate relatives;
b) Company in which a company specified above holds 10% or more, of the share capital;
c) Company promoted by our Promoters.
The Companies that form part of our Promoter Group are as follows -
1) Sigma Fiscals Private Ltd.
2) S.D.S. Enterprise Private Ltd.
The Partnership Firms that form part of our Promoter Group are as follows:
1) M/s Silver Hosiery
2) M/s Rodium Realty and Construction
3) M/s Amrut Dhara Enterprise
4) M/s Amrut Construction Company
5) M/s Rodium Designs
6) M/s C.N.A Architects
7) M/s First Stone
8) M/s Balaji Petroleum
9) M/s Kamla Enterprise
The Proprietorship Concerns that form part of our Promoter Group are as follows:
1) M/s. Amrut Industries (Proprietorship Concern)
2) M/s. D. C. Designs (Proprietorship Concern)
The HUF that form part of our Promoter Group are as follows:
1) M/s. Shah Shailesh Damji (HUF)
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DETAILS OF GROUP CONCERNS WITHIN OUR GROUP
Private Companies forming part of Group Companies:-
1. SIGMA Fiscals Private Limited.
SIGMA Fiscals Private Limited was incorporated on August 3, 1995. The main object of the Company is (i) to carry on and execute all kinds of financial and business operations as carried by financing houses, shroffs, credit corporations, bankers and general financers, (ii) to carry on the business of advancing loans, deposits (iii) to give guarantee or provide security in connection with loans (iv) to act as agents for the collection, receipt or payment of money. The registered address of the Company is located at 143, Andheri Industrial Estate, Off. Veera Desai Road, Andheri (W), Mumbai-400053. The Board of Directors of the Company are Mr. Deepak Chheda and Mrs. Krupa Chheda. Mr. Dungarshi Chheda.
The Authorized Share Capital of the Company is Rs. 1,00,00,000/- (Rs. One Crore only) divided into 9,00,000 (Nine Lakhs) Equity Shares of Rs.10/- (Rs. Ten only) each and 1,00,000 (One Lakh) unclassified shares of Rs. 10 (Rupees Ten only) each. The Issued, Subscribed and Paid up Equity Share capital of the Company is Rs. 5,250,000/- (Rs. Fifty Two Lakhs Fifty Thousands only) divided into 5,25,000 (Five Lakhs Twenty Five Thousands ) Equity Shares of Rs.10/- (Rs. Ten only) each.
Shareholding Pattern of the Company as on March 31, 2011 is as under:
Name of Shareholder No. of Shares % holding
Deepak Chheda 2,43,500 46.38
Krupa Chheda 19,000 3.62
Dungarshi Chheda 62,500 11.90
Jayantilal Gala 2,00,000 38.10
Total 5,25,000 100
Financial Highlights The Audited financial highlights for the last 3 years are as follows:
(Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Share Capital 52.50 52.50 52.50
Reserves (Excluding Revaluation Reserve)
507.57 311.74 705.90
Sales 174.26 (71.07) 524.19
Other Income - - -
PAT/(Loss) 16.77 (195.83) 394.17
EPS 3.19 - 75.08
NAV 106.68 69.38 144.46
a. The Company has not made any public issue or rights issue in the preceeding three years to the date of filing of this Draft Letter of Offer.
b. The Company is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor under winding up.
c. There are no defaults in meeting any statutory/bank/institutional dues.
d. The Company is not identified as a willful defaulter by the Reserve Bank of India.
e. No proceedings have been initiated for economic offences against the Company.
f. There are no litigations pending by or against the company except as mentioned in the Section titled as “Outstanding Litigations and Material Developments” beginning on page No. 172 of this Draft Letter of Offer.
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g. The Company has not entered into any related party transaction with our Company except those mentioned in Annexure – XV – “Statement of Related Party Transactions” as given in Section – “Financial Statements of Issuer” on page no. 162.
2. S.D.S Enterprises Private Limited
S.D.S. Enterprises Private Limited was incorporated on March 16, 2007. The Company is engaged (i) to carry on the business of trading including retail (ii) to acquire, develop and construct property (iii) to carry on the business as manufacturers, buyers, sellers, dealers, importers, exports, commission agents, representatives, brokers for dealing in goods and services. The registered address of the Company is located at Neelvarsha Society, R. No.-11, Sonawala Agyari Lane, Mahim, Mumbai-400016.
The Board of Directors of the Company are Mr. Shailesh Shah and Mr. Dinesh Shah.
The Authorized Share Capital of the Company is Rs. 10,00,000/- (Rs. Ten Lakhs only) divided into 1,00,000 (One Lakhs) Equity Shares of Rs.10/- (Rs. Ten only) each. The Issued, Subscribed and Paid up Equity Share Capital of the Company is Rs. 1,35,000/- (Rs. One Lakhs and Thirty Five Thousand only) divided into 13,500 (Thirteen Thousand and Five Hundred) Equity Shares of Rs.10/- (Rs. Ten only) each.
Shareholding Pattern of the Company as on March 31, 2011 is as under:
Name of Shareholder No. of Shares % holding
Shailesh Damji Shah 5,000 37.04 Dinesh Damji Shah 5,000 37.04
Others 3,500 25.92
Total 13,500 100
Financial Highlights
The Audited financial highlights for the last 3 years are as follows:
(Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Share Capital 1.00 1.00 1.35
Reserves (Excluding Revaluation Reserve)
NIL NIL NIL
Sales NIL NIL NIL Other Income NIL NIL NIL
PAT/(Loss) (0.17) (0.16) (0.15) EPS (1.67) (1.63) (1.14)
NAV 4.52 3.84 5.71
a. The Company has not made any public issue or rights issue in the preceeding three years to the date of filing of this Draft Letter of Offer.
b. The Company is neither a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 nor under winding up.
c. There are no defaults in meeting any statutory/bank/institutional dues.
d. The Company is not identified as a willful defaulter by the Reserve Bank of India.
e. No proceedings have been initiated for economic offences against the Company.
f. There are no litigations pending by or against the company except as mentioned in the Section titled as “Outstanding Litigations and Material Developments” beginning on page No. 172.
g. The Company has not entered into any related party transaction with our Company except those mentioned in Annexure – XV – “Statement of Related Party Transactions” as given in Section – “Financial Statements of Issuer” on page no. 162.
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Partnership Firm forming part of Group Companies:- 1. M/s. Silver Hosiery
M/s. Silver Hosiery is a partnership firm formed on December 1, 2001 amongst Mr. Harakhchand Dharod, Mr. Ashwinkumar Patel, Mr. Dinesh Shah, Mr. Shailesh Shah, Mr. Sagar Savla, Mr. Bharat Dharod as Partners. However, Mr. Ashwinkumar Patel and Mr. Dinesh Shah retired from the partnership w.e.f April 1, 2002.
It is engaged in the business of trading of hosiery garment and other readymade garments. The principal place of business of the firm is situated at Shop No.1, Gawaria House, 39 A Road, Old Khar (W), Mumbai-400052.
Partners -
Sr. No. Name of Partner Profit Sharing Ratio (In %)
1 Mr. Bharat R Dharod 25.00
2 Mr. Harakchand M Dharod 25.00
3 Mr. Shailesh D Shah 25.00
4 Mr. Sagar H Savla 25.00
TOTAL 100.00
Financial Performance – The Audited financial highlights for the last 3 years are as follows:
(Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Partners Capital Account 17.10 20.64 28.72
Total Income 461.18 579.55 859.25 Net Profit/ (Loss) 2.94 3.07 11.59
a. There are no defaults in meeting any statutory/bank/institutional dues.
b. No proceedings have been initiated for economic offences against the firm.
c. The firm is not identified as a willful defaulter by the Reserve Bank of India.
d. There are no litigations pending by or against the firm except as mentioned in the Section titled as “Outstanding Litigations and Material Developments” beginning on page No. 172.
e. The partnership firm has not entered into any related party transaction with our Company except those mentioned in Annexure – XV – “Statement of Related Party Transactions” as given in Section – “Financial Statements of Issuer” on page no. 162.
2. M/s Rodium Realty and Construction
M/s. Rodium Realty and Construction is a partnership firm formed on January 15, 2005 under the name of “Rodium Realty” amongst Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Mehul Nisar, Mr. Rohit Dedhia, Mr. Keshavji Dedhia and Sigma Fiscals Pvt. Ltd as Partners. Mr. Liladhar Shah and Shashank Shah HUF were admitted to the partnership w.e.f April 1, 2005, however they retired w.e.f December 31, 2007. Mr. Rohan Deepak Chheda, Mr. Anil Vasanji Shah and Mr. Jayant Lalji Shah have been admitted as partners with effect from September 15, 2010. The name of firm has been changed from “Rodium Realty” to “Rodium Realty and Construction” w.e.f. October 1, 2010.
It is engaged in the business of building, constructing and developing of properties. The principal place of business of the firm is situated at 143, Andheri Industrial Estate, Off Veera Desai Road, Andheri (W), Mumbai-400053.
Partners -
Sr. No. Name of Partner Profit Sharing Ratio (In %)
1 Mr. Deepak Chheda 18.00
2 Mr. Harish Nisar 8.00
3 Mr. Keshavji Dedhia 8.00
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4 Mr. Mehul Nisar 8.00
5 Mr. Rohit Dedhia 8.00
6 Sigma Fiscals Private Limited 10.00
7 Mr. Rohan Deepak Chheda 20.00 8 Mr. Anil Vasanji Shah 10.00
9 Mr. Jayant Lalji Shah 10.00 TOTAL 100.00
Financial Performance –
The Audited financial highlights for the last 3 years are as follows: (Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Partners Capital Account 19.39 32.51 66.07
Total Income 24.62 19.71 53.99
Net Profit/ (Loss) 9.46 6.44 18.36
a. There are no defaults in meeting any statutory/bank/institutional dues.
b. No proceedings have been initiated for economic offences against the firm.
c. The firm is not identified as a willful defaulter by the Reserve Bank of India.
d. There are no litigations pending by or against the firm except as mentioned in the Section titled as “Outstanding Litigations and Material Developments” beginning on page No. 172.
e. The partnership firm has not entered into any related party transaction with our Company except those mentioned in Annexure – XV – “Statement of Related Party Transactions” as given in Section – “Financial Statements of Issuer” on page no. 162.
3. M/s Amrut Dhara Enterprise
M/s. Amrut Dhara Enterprise is a partnership firm formed on July 26, 2001. It is engaged in the business of developers, builders and contractors. The principal place of business of the firm is situated at Amrut Towers, 7th Floor, 247, Telang Road, Matunga (C.RLY), Mumbai-400019.
Partners –
Sr. No. Name of Partner Profit Sharing Ratio (In %)
1 Mr. Harish Nisar 40.00
2 Mr. Mehul Nisar 30.00
3 Mrs. Hansa Nisar 30.00
TOTAL 100.00
Financial Performance – The Audited financial highlights for the last 3 years are as follows:
(Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Partners Capital Account (91.45) 50.07 35.20
Total Income 200.75 0.13 0.02 Net Profit/ (Loss) 9.49 (0.05) (0.006)
a. There are no defaults in meeting any statutory/bank/institutional dues.
b. No proceedings have been initiated for economic offences against the firm.
c. The firm is not identified as a willful defaulter by the Reserve Bank of India.
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d. There are no litigations pending by or against the firm except as mentioned in the Section titled as “Outstanding Litigations and Material Developments” beginning on page No. 172.
e. The partnership firm has not entered into any related party transaction with our Company except those mentioned in Annexure – XV – “Statement of Related Party Transactions” as given in Section – “Financial Statements of Issuer” on page no. 162.
4. M/s Amrut Construction Company
M/s. Amrut Construction Company is a partnership firm formed on March 9, 1992 with Mr. Damji Nisar, Mr. Dinesh Nisar, Mr. Damji Nisar HUF and Mr. Mukesh Nisar as Partners. However, the above mentioned Partners retired on March 31, 1998 and Mr. Harish Nisar, Mr. Harish Nisar HUF and Mrs. Hansa Nisar were admitted as Partners.
It is engaged in the business of real estate development and construction of buildings. The principal place of business of the firm is situated at Amrut Towers, 1st Floor, 247, Telang Road, Matunga (E), Mumbai-400019.
Partners -
Sr. No. Name of Partner Profit Sharing Ratio (In %)
1 Mr. Harish Nisar 33.33
2 Mr. Harish Nisar HUF 33.33
3 Mrs. Hansa Nisar 33.34
TOTAL 100.00
Financial Performance – The Audited financial highlights for the last 3 years are as follows: (Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Partners Capital Account 12.98 14.28 6.39
Total Income 5.52 6.67 2.65 Net Profit/ (Loss) 2.38 4.35 0.04
a. There are no defaults in meeting any statutory/bank/institutional dues.
b. No proceedings have been initiated for economic offences against the firm.
c. The firm is not identified as a willful defaulter by the Reserve Bank of India.
d. There are no litigations pending by or against the firm except as mentioned in the Section titled as “Outstanding Litigations and Material Developments” beginning on page No. 172.
e. The partnership firm has not entered into any related party transaction with our Company except those mentioned in Annexure – XV – “Statement of Related Party Transactions” as given in Section – “Financial Statements of Issuer” on page no. 162.
5. M/s Rodium Designs
M/s. Rodium Designs is a partnership firm formed on October 6, 2006 with Mr. Deepak Chheda and Mr. Mehul Nisar. On April 12, 2010 Mr. Rohan Chheda and Ms. Megha Nisar were added as partners.
It is engaged in the business of (i) any products related to architect, engineering, interior decoration and construction specially in painting, (ii) carry on profession of designers, consultants for land purchases, surveyors, valuers, interior designers, landscape architects and Project Management, (iii) Undertaking contracts for interior decoration, civil and construction activities and designing, (iv) indenting and commission agent and (v) project consultancy. The principal place of business of the firm is situated at A401, 4th Floor, X’cube, New Link Road, Andheri (W), Mumbai-400053.
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Partners -
Sr. No. Name of Partner Profit Sharing Ratio (In %)
1 Mr. Deepak Chheda 25.00 2 Mr. Mehul Nisar 25.00
3 Mr. Rohan Chheda 25.00
4 Ms. Megha Nisar 25.00 TOTAL 100.00
Financial Performance – The Audited financial highlights for the last 3 years are as follows: (Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Partners Capital Account 14.85 20.46 21.38
Total Income 6.85 3.74 13.34 Net Profit/ (Loss) 1.12 0.48 0.53
a. There are no defaults in meeting any statutory/bank/institutional dues.
b. No proceedings have been initiated for economic offences against the firm.
c. The firm is not identified as a willful defaulter by the Reserve Bank of India.
d. There are no litigations pending by or against the firm except as mentioned in the Section titled as “Outstanding Litigations and Material Developments” beginning on page No. 172.
e. The partnership firm has not entered into any related party transaction with our Company except those mentioned in Annexure – XV – “Statement of Related Party Transactions” as given in Section – “Financial Statements of Issuer” on page no. 162.
6. M/s C.N.A. Architects
M/s C.N.A Architects is a partnership firm formed on April 12, 1988 with Mr. Deepak Chheda, Mr. Rakesh Amin and Mr. Ajit Navani as Partners. However, Mr. Ajit Navani retired on January 1, 1997. Mr. Mayur Gala, admitted to the Partnership on April 1, 2001 retired w.e.f April 1, 2008. On April 6, 2010, Mr. Paarth Chheda was admitted as a Partner w.e.f April 1, 2010.
It is engaged in the business of architects, planning consultants, interior designing, consultants for land purchases, surveyors, landscape architects and undertaking contracts for interior decoration, civil and construction activities. The principal place of business of the firm is situated at 143, Andheri Industrial Estate, Plot No. 22, Veera Desai Road, Andheri (W), Mumbai-400053.
Partners –
Sr. No. Name of Partner Profit Sharing Ratio (In %)
1 Mr. Deepak Chheda 35.00
2 Mr. Rakesh Amin 50.00
3 Mr. Paarth Chheda 15.00
TOTAL 100.00
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Financial Performance – The Audited financial highlights for the last 3 years are as follows: (Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Partners Capital Account 226.69 255.01 321.89
Total Income 212.68 791.71 309.40
Net Profit/ (Loss) 52.68 272.17 66.07
a. There are no defaults in meeting any statutory/bank/institutional dues.
b. No proceedings have been initiated for economic offences against the firm.
c. The firm is not identified as a willful defaulter by the Reserve Bank of India.
d. There are no litigations pending by or against the firm except as mentioned in the Section titled as “Outstanding Litigations and Material Developments” beginning on page No. 172.
e. The partnership firm has not entered into any related party transaction with our Company except those mentioned in Annexure – XV – “Statement of Related Party Transactions” as given in Section – “Financial Statements of Issuer” on page no. 162.
7. M/s First Stone
M/s. First Stone is a partnership firm formed on July 11, 2007 with Mr. Harish Nisar, Mr Pradeep Furia, Mr. Dhvanit Gala, Mr. Shirish Chheda, Mr. Dilip Dedhia and Mr. Kiran Dedhia as Partners. The principal place of business of the firm is situated at Amrut Towers, 247, Telang Road, Matunga (East), Mumbai-400019. It is engaged in the business of Re-development of property situated at plot of land situated at Bhagwati Bhuvan, 323-A, Dr. Babasaheb Ambedkar Marg, Matunga, Mumbai-400019, Matunga Division admeasuring about 784.25 sq. yards.
Partners -
Sr. No. Name of Partner Profit Sharing Ratio (In %)
1 Mr. Harish Nisar 40.00
2 Mr. Pradeep Furia 10.00
3 Mr. Dhvanit Gala 10.00
4 Mr. Shirish Chheda 20.00
5 Mr. Dilip Dedhia 10.00
6 Mr. Kiran Dedhia 10.00
TOTAL 100.00
Financial Performance –
The Audited financial highlights for the last 1 year is as follows: (Rs. in Lakhs)
Particulars 2010
Partners Capital Account 102.43 Total Income 0.66
Net Profit/ (Loss) 0.45
Note: - The firm has not carried on any business during the financial year 2007-08 and 2008-09 and therefore the financial data is not available.
a. There are no defaults in meeting any statutory/bank/institutional dues.
b. No proceedings have been initiated for economic offences against the firm.
c. The firm is not identified as a willful defaulter by the Reserve Bank of India.
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d. There are no litigations pending by or against the firm except as mentioned in the Section titled as “Outstanding Litigations and Material Developments” beginning on page No. 172.
e. The partnership firm has not entered into any related party transaction with our Company except those mentioned in Annexure – XV – “Statement of Related Party Transactions” as given in Section – “Financial Statements of Issuer” on page no. 162.
8. M/s Balaji Petroleum
M/s Balaji Petroleum is a partnership firm formed on October 1, 1992 with Mr. Harish Nisar and Mr. Jayant Lonari as Partners. The principal place of business of the firm is situated at 48/3, Parag, Scheme No. 6, Road No. 5, Matunga, Mumbai - 400019. It is engaged to carry on the business of retail outlet dealer of IBP Co. Ltd and washers and servicers of automobiles and also dealing in petroleum products, stores and spares of automobiles. Partners -
Sr. No. Name of Partner Profit Sharing Ratio (In %)
1 Mr. Jayant Lonari 51.00
2 Mr. Harish Nisar 49.00
TOTAL 100.00
Financial Performance – The Audited financial highlights for the last 3 years are as follows:
(Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Partners Capital Account 7.93 11.06 13.32
Total Income 1596.63 1937.01 1946.28
Net Profit/ (Loss) 1.87 2.17 2.21
a. There are no defaults in meeting any statutory/bank/institutional dues.
b. No proceedings have been initiated for economic offences against the firm.
c. The firm is not identified as a willful defaulter by the Reserve Bank of India.
d. There are no litigations pending by or against the firm except as mentioned in the Section titled as “Outstanding Litigations and Material Developments” beginning on page No. 172.
e. The partnership firm has not entered into any related party transaction with our Company except those mentioned in Annexure – XV – “Statement of Related Party Transactions” as given in Section – “Financial Statements of Issuer” on page no. 162.
9. M/s. Kamla Enterprise
M/s. Kamla Enterprise is a partnership firm formed on October 16, 2000 with Mr. Harish Nisar and Mr. Sharad Rao as Partners. However, w.e.f April 1, 2001, Mr Mehul Nisar was admitted to the partnership and Mr. Sharad Rao retired. The principal place of business of the firm is situated at 20 Vardhaman Industrial Estate, 75 Village Road Bhandup (West), Mumbai-400078.
It is engaged to carry on the business of acquiring properties on ownership or rental basis or on lease and to sell on ownership, to give on sub tenancy or on sub lease to any person, Company or any Corporate body of the Government or any other business or business.
Partners -
Sr. No. Name of Partner Profit Sharing Ratio (In %)
1 Harish Nisar 60.00
2 Mehul Nisar 40.00
TOTAL 100.00
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Financial Performance –
The Audited financial highlights for the last 2 years are as follows: (Rs. in Lakhs)
Particulars For Financial Year Ended March 31,
2009 2010
Partners Capital Account 4.85 475.01
Total Income 1.43 5.70 Net Profit/ (Loss) 1.22 4.85
Note: - The firm has not carried on any business during the financial year 2007-08 and therefore the financial data is not available.
a. There are no defaults in meeting any statutory/bank/institutional dues.
b. No proceedings have been initiated for economic offences against the firm.
c. The firm is not identified as a willful defaulter by the Reserve Bank of India.
d. There are no litigations pending by or against the firm except as mentioned in the Section titled as “Outstanding Litigations and Material Developments” beginning on page No. 172.
e. The partnership firm has not entered into any related party transaction with our Company except those mentioned in Annexure – XV – “Statement of Related Party Transactions” as given in Section – “Financial Statements of Issuer” on page no. 162.
Sole Proprietorship forming part of Group Companies:-
1. M/s. Amrut Industries
M/s Amrut Industries is a proprietorship concern of Mr. Harish Nisar. It is engaged in the business of manufacture of hand gloves and safety items.
Financial Performance –
The Audited financial highlights for the last 3 years are as follows: (Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Capital Account 7.90 19.57 (13.78)
Total Income 79.29 72.23 68.07
Net Profit/ (Loss) 5.90 5.21 4.87
2. M/s. D. C. Designs (Proprietorship Concern)
M/s. D. C. Designs is a proprietorship concern of Mr. Deepak Chheda. It is engaged in the business of real estate project consultancy and trading in shares.
Financial Performance – The Audited financial highlights for the last 3 years are as follows: (Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Capital Account 98.47 80.22 117.65
Total Income 83.22 53.18 208.34
Net Profit/ (Loss) 63.72 34.85 143.87
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The HUF that form part of our Promoter Group are as follows:
1) M/s. Shah Shailesh Damji (HUF)
Name Status
Shailesh Damji Shah Karta
Pallavi Shah Coparcener
Shailvi Shah Coparcener
Financial Highlights The Financial Highlights for the last 3 years are as follows:
(Rs. in Lakhs)
For Financial Year Ended March 31, Particulars
2008 2009 2010
Capital 84.38 87.08 110.89
Total Income 4.99 7.05 5.30
Cash & Bank Balance 0.84 0.83 0.53
Acquisition of Control by the Promoters of our Company
On August 13, 2009, Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Rohit Dedhia and Mr. Shailesh Shah (“Acquirers” or “Promoters”) entered into a Share Purchase Agreement with the Erstwhile Promoters to acquire 21,34,440 equity shares of our Company of Rs. 10 each for a cash consideration at a price of Rs. 3/- per equity share. Pursuant to the SPA, during October 2009, the Promoters made an open offer to acquire 6,49,580 equity shares (representing 20% of the total issued, subscribed and paid up equity share capital) of Rs. 10 each at a price of Rs. 3 per equity share in terms of Regulation 10 and 12 of SEBI Takeover Regulations and listing agreement with the Stock Exchange and other applicable laws and regulations in force. Under the Open Offer, our Promoters acquired 2,000 Equity Shares from public shareholders at a price of Rs. 3/- per share. For details regarding acquisition of shares by our Promoters, please refer to Section- “Capital Structure” of this Draft Letter of Offer. COMMON PURSUITS Our Promoters have promoted entities engaged in the businesses of advancing loan, giving guarantee, developing properties, trading of garments, real estate, architecture, interior designing etc. which include Sigma Fiscals Pvt. Ltd., S.D.S Enterprise Pvt. Ltd. M/s. Rodium Realty and Construction, M/s. Rodium Designs, M/s. Amrut Construction Company, M/s. Amrut Dhara Enterprise, M/s. C.N.A Architects, M/s. First Stone, M/s. Kamla Enterprise, Amrut Industries and D. C. Designs and they are presently engaged in these activities. We do not have a non-compete agreement or understanding with any of those entities. All the aforesaid entities are authorised to carry on the said business activities by their respective constitutional documents and this may lead to conflict of interest situation in future. However, as of now, none of these entities are directly competing with Our Company in the business in which it operates. INTEREST OF PROMOTERS / PROMOTER GROUP / DIRECTORS All the Promoters who are on the Board of Our Company may be deemed to be interested to the extent of remuneration for the services rendered and the reimbursement of expenses, if any, payable to them. The Promoters may also be deemed to be interested to the extent of normal transactions, if any, with Our Company. The Promoters may also deemed to be interested to the extent of the shares, if any, held by them or their relatives or companies, firms and trusts in which they are interested as directors, members, partners and/ or trustees. Promoters are interested to the extent of their shareholding for which they are entitled to receive dividend declared, if any, by the company. The Promoters may also be regarded as interested in the Equity Shares/ Rights Entitlement, if any, held or that may be allotted to the Promoter Group under this rights issue.
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Our Promoters are further interested in the operations of our Company to the extent of the personal guarantees issued by them as security for certain of our borrowings. For details, see Section―Financial Statements of the Issuer on page 140. For more details on interest of promoters / directors, please refer to Section―Capital Structure on Page no. 47 and Financial Statements of the Issuer - Annexure-XV – Related Party Transactions on page 162. Payment or benefits to the Promoter / Promoter Group of Our Company No amount / benefit has been given to our Promoter / Promoter Group within the two years preceeding the date of this Draft Letter of Offer or that any payment or benefit is intended to be paid / given to any promoter / promoter group except as stated in the section - Financial Statements of the Issuer - Annexure-XV – Related Party Transactions on page 162. Defunct Promoter Group Companies / Entities There are no defunct Promoter Group Companies / Entities. Details of Companies / firms from which Promoters have disassociated in the last three years Our promoters have not disassociated themselves from any company / firm in the last three years. Related Party transactions with Group Companies Other than as disclosed in the “Statement of Restated Related Party Transactions” on page no 162 of the Draft Red Herring Prospectus, there have been no related party transactions with the Promoter Group. Sale or Purchase between our Company and Group Companies There have been no transactions of sale or purchase between our Company and the Group Companies amounting to 10% of the total turnover of our Company in the last three years except those transcation mentioned under Related Party Transactions. For further details on the related party transactions between our Company and the Group Companies, please refer to the “Annexure XV” in the chapter titled "Auditors’ Report and Financial Information of Issuer" beginning on page no 162 of the Draft Red Herring Prospectus. Changes in Accounting Period There has not been change in the accounting period of the company. Changes in Accounting Policies in the last three years Apart from the details mentioned in the paragraph titled “Changes in Accounting Policy” contained in chapter titled “Auditors Report and Financial Information of Issuer” beginning on page no 147 of the Draft Red Herring Prospectus, there have been no changes in the accounting policies of our Company in the last three years.
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(H) PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA Unless stated otherwise, the financial information used in this Draft Letter of Offer is derived from the Company’s financial statements for the year ended March 31, as of 2011, 2010, 2009, 2008 and 2007 prepared in accordance with Indian GAAP and the Companies Act, 1956 and restated in accordance with applicable SEBI Guidelines, as stated in the report of M/s. M. M. Nissim and Co., Chartered Accountants, included in this Draft Letter of Offer. In this Draft Letter of Offer, unless the context otherwise require, all references to one gender also refers to another gender and the word “Lakh” or “Lac” means “one hundred thousand” and the word “million” means ten lakhs and the word “Crore” means “ten million”. Unless stated otherwise, throughout this Draft Letter of Offer, all figures have been expressed in Lakhs of Rupees, except when stated otherwise.
All numbers presented in this Draft Letter of Offer have been rounded off to two decimal places. Any discrepancies in any table between total and sum of the amounts listed are due to rounding off. All references to “India” contained in this Draft Letter of Offer are to the Republic of India. Our fiscal year commences on April 1 and ends on March 31 of the next year. Unless stated otherwise, reference herein to a fiscal year (e.g. Fiscal 2010), is to the fiscal year ended March 31 of a particular year. All references to “Rupees” or “Rs.” or “INR” are to Indian Rupees, the official currency of the Republic of India and all references to “U.S. dollars”, and “US$”, are to the legal currency of the United States. Market and industry data used in this Draft Letter of Offer, has been obtained from industry publications and governmental sources. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable and that their accuracy and completeness is not guaranteed and their reliability cannot be assured. Although we believe that the industry and the market data used in this Draft Letter of Offer is reliable, it has not been independently verified by Independent source. (I) DIVIDEND POLICY Our Company has not paid any dividend in the past. The declaration and payment of dividends on Preference Shares and Equity Shares of Our Company will be recommended by the Board of Directors after considering a no. of factors, including but not limited to the profits earned by Our Company, Capital requirements and overall financial condition. Our Company has not paid or declared any dividends since inception in view of inadequacy of profits and non availability of any distributable surplus to our Preference Shareholders and Equity Shareholders. However, our Board has recommended payment of dividend on the Cumulative Redeemable Preference Shares at the fixed rate (9%) for the three financial years - 2007-08, 2008-09 and 2009-10 in its Board Meeting on August 11, 2011.
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SECTION – V FINANCIAL STATEMENTS OF ISSUER
(A) FINANCIAL STATEMENTS OF OUR COMPANY AS RESTATED August 11, 2011 To, The Board of Directors Rodium Realty Limited, Plot No. 636, 501, X’ cube, Off New Link Road, Andheri (W), Mumbai- 400053 Dear Sirs, 1. In connection with the proposed Rights Issue of Equity Shares of Rodium Realty Limited (‘the Company”),
we have examined the financial information (as defined in para 5 below) of the Company as at and for the years ended March 31, 2011, 2010, 2009, 2008 and 2007 annexed to this report and initialled by us for identification.
2. This Financial Information is the responsibility of the Company and has been prepared in accordance with the requirements of: a. paragraph B of Part II of Schedule II of the Companies Act, 1956, (the “Act”); and b. the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations
2009 (the “SEBI Regulations”), notified by Securities and Exchange Board of India (“SEBI”) on 26th August, 2009, in pursuance of Section 11A (1) (a) of the Securities and Exchange Board of India Act, 1992.
3. The Management has informed that the Company proposes to make a Rights Issue of 21,65,267 equity
shares having a face value of Rs 10 each at an issue price to be decided by the Board of Directors of the Company at a later date.
4. Our examination was conducted in accordance with the applicable generally accepted auditing standards
(“GAAS”) framework in India and the Revised Guidance Note on Reports in Company Prospectuses as prescribed by the Institute of Chartered Accountants of India (“ICAI”).
Financial Information as per Audited Financial Statements of the Company: 5. We have examined the following attached statements of the Company:
a. the “Restated Statement of Unconsolidated Assets and Liabilities” as at March 31, 2011, 2010, 2009, 2008 and 2007 (Annexure I); and
b. the “Restated Statement of Unconsolidated Profits and Losses” for each of the years ended March 31, 2011, 2010, 2009, 2008 and 2007 (Annexure II); and
c. the “Restated Statement of Unconsolidated Cash Flows” for each of the years ended March 31, 2011, 2010, 2009, 2008 and 2007 (Annexure III).
Together referred to as “Restated Summary Statements”
These Restated Summary Statements have been extracted by the Management of the Company from the audited unconsolidated financial statements for the years ended March 31, 2011, 2010, 2009, 2008 and 2007. The audit of the unconsolidated financial statements for the years ended March 31, 2007, 2008 and 2009 were conducted by M/s Dagliya & Co., Chartered Accountants and for the year ended March 31, 2010 was conducted by M/s Ashar & Co., Chartered Accountants, being the auditors of the company for the respective years. Accordingly, reliance has been placed on the financial statements audited and reported upon by them for the said years.
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6. Based on our examination of these Restated Summary Statements, we state that: a. The ‘Restated Summary Statements’ have to be read in conjunction with the “Significant
Accounting Policies and Notes to the Restated Summary Statements of the Company” (Annexure IV);
b. The ‘Restated Summary Statements’ reflect the retrospective effect of significant accounting policies adopted by the Company as at / for the year ended March 31, 2011;
c. The restated profits have been arrived at after charging all expenses including depreciation and after making such adjustments and regroupings, as in our opinion are appropriate, in the year to which they relate and are described in Annexure V;
d. Material amounts relating to previous years have been adjusted in the Restated Summary Statement in the years to which they relate.
e. There are no extraordinary items that need to be disclosed separately in the Restated Summary Statements, other than those disclosed under Annexure II; and
f. Qualifications in the Auditors’ Report which require an adjustment in the Restated Summary Statements have been carried out (Refer Note 3 (a) Annexure IV).
g. Qualifications in the Auditors’ Report for which no adjustment in the Restated Summary Statements have been carried out are listed in Annexure IV. (Refer Note 3 (b) Annexure IV).
h. Qualifications in the Auditors’ Report which do not warrant an adjustment in the Restated Summary Statements have been listed in Annexure IV. (Refer Note 3 (c) Annexure IV).
Other Financial Information of the Company:
7. We have also examined the following information (restated) of the Company for the years ended March 31,
2011, 2010, 2009, 2008 and 2007 which is proposed to be included in the draft letter of offer, as approved by the Board of Directors of the Company and annexed to this report:
a. Significant Accounting Policies adopted by the Company and Notes to the Restated Summary Statements as at / for the years ended March 31, 2011, 2010, 2009, 2008 and 2007 (Annexure IV);
b. Statement of Reconciliation of Unconsolidated Profits and Losses for the years ended March 31, 2011, 2010, 2009, 2008 and 2007 (Annexure V);
c. Details of Dividend paid by the Company for the years ended March 31, 2011, 2010, 2009, 2008 and 2007 (Annexure VI);
d. Details of Investments as at March 31, 2011, 2010, 2009, 2008 and 2007 (Annexure VII); e. Details of Dividend and Other Income for the years ended March 31, 2011, 2010, 2009, 2008 and
2007 (Annexure VIII); f. Details of Sundry Debtors as at March 31, 2011, 2010, 2009, 2008 and 2007 (Annexure IX); g. Details of Loans and Advances as at March 31, 2011, 2010, 2009, 2008 and 2007 (Annexure X); h. Statement of Accounting Ratios for the years ended March 31, 2011, 2010, 2009, 2008 and 2007
(Annexure XI); i. Capitalization Statement as at March 31, 2011 (Annexure XII); j. Statement of Tax Shelter for the years ended March 31, 2011, 2010, 2009, 2008 and 2007
(Annexure XIII); k. Details of Secured and Unsecured Loans as at March 31, 2011, 2010, 2009, 2008 and 2007
(Annexure XIV & XIV-A);and l. Details of related party transactions for the years ended March 31, 2011, 2010, 2009, 2008 and
2007 (Annexure XV); Others: 8. We have not audited any financial statements of the Company as of any date or for any period prior to
financial year ended as at March 31, 2011 in the ‘Restated Summary Statement’. Accordingly, we express no opinion on the financial position, results of operations or cash flows of the Company as of any date or for any period prior to financial year ended as at March 31, 2011.
9. This report should not be in any way construed as a re-issuance or re-dating of any of the previous audit reports issued by the respective earlier auditors, either any of them singly or issued jointly, nor should this report be construed as a new opinion on any of the financial statements referred to herein.
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10. We have no responsibility to update our report for events and circumstances occurring after the date of the report.
11. This report is intended solely for use of the management and for inclusion in the Draft Letter of Offer in connection with the proposed rights issue of equity shares of the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.
For M. M. NISSIM AND CO. Chartered Accountants (ICAI Reg. No.107122W)
(N. Kashinath) Partner Mumbai, Membership No.36490
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Annexure-I
Restated Statement of Profits and Loss Account (Rs. in Lakhs)
For the Year ending March, 31st Period / Year Ended
2011 2010 2009 2008 2007
INCOME
Domestic Sales / Income 2,422.31 - - 232.39 1,289.80
Income from Services - 62.24 5.88 145.48 -
Share of profit from partnership Firm - 248.73 - - -
Other Income 125.89 6.19 44.33 78.26 11.44
Increase / (decrease) in Stocks 4,611.36 - - (95.51) (26.60)
Total Income 7,159.57 317.16 50.21 360.62 1,274.63
EXPENDITURE
Cost of Construction & Development 5,938.06 - - - -
Material Cost - - - 144.74 834.96
Manufacturing & Other Expenses 427.66 26.42 63.02 356.51 518.69
Loss on Sale / Redemption of Investments 8.40 - - - -
Total Expenses 6,374.13 26.42 63.02 501.25 1,353.65
Net Operating Profit before Interest, Depreciation, Prior Period Items, Non Cash Expenses and Tax 785.44 290.74 (12.81) (140.63) (79.02)
Interest & Finance Charges 216.44 9.20 2.87 47.11 36.77
Depreciation and Amortization 10.62 - 29.10 84.10 90.14
Net Profit before Tax & Adjustments 558.38 281.54 (44.78) (271.84) (205.93)
Provision for Taxation 0.30 - - - -
Provision for FBT - - 0.09 0.63 1.60
Deferred Taxation 171.32 44.79
Net Profit after tax but before Adjustments 386.75 236.75 (44.87) (272.47) (207.53)
Excess/ (Short) Provision for Tax (0.10) - 0.25 - -
Net Profit after tax and before extra ordinary items 386.85 236.75 (45.12) (272.47) (207.53)
Extraordinary items - - 31.69 - 64.10
Net Profit after tax and extra ordinary items 386.85 236.75 (13.43) (272.47) (143.43)
Adjustments on Account of Restatement - Annex V - 10.09 (40.22) 12.02 (60.08)
Net Profit after Tax, as Restated 386.85 246.84 (53.65) (260.44) (203.51)
Proposed Dividend on preference shares for past years 88.32 - - - -
Corporate Dividend Tax 14.33 - - - -
Net Profit after tax after appropriations 284.20 246.84 (53.65) (260.44) (203.51)
Capital Reduction - - - - 324.79
Net Profit after Tax, as Restated 284.20 246.83 (53.65) (260.44) 121.28
Add: Balance Brought Forward (564.17) (811.01) (757.36) (496.92) (618.20)
Balance Carried Forward, as Restated (279.96) (564.17) (811.01) (757.36) (496.92)
Note: The above statement should be read with the significant accounting policies and notes to the accounts for restated financial statements as appearing in Annexure to the report
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Annexure-II Restated Statement of Assets and Liabilities
(Rs. in Lakhs)
As at March 31
Particulars 2011 2010 2009 2,008 2007
A. Fixed Assets:
Gross Block 126.60 - - 1,756.18 1,864.08
Less: Accumulated Depreciation 10.62 - - 915.81 860.85
Net Block 115.98 - - 840.37 1,003.23
Less: Revaluation Reserve - - - - -
Capital Work in Progress - - - - -
Net Block after adjustment for Revaluation
Reserve 115.98 - - 840.37 1,003.23
B. Investments 264.01 448.83 0.11 0.11 0.11
C. Deferred Tax Asset 177.30 348.62 393.41 393.41 393.41
D. Current Assets, Loans and Advances:
Interest Accrued not due 21.30 0.32 - - -
Inventories including Property under Development)
4,611.36 - - 34.29 217.02
Sundry Debtors 177.22 94.55 32.76 177.51 163.53
Cash and Bank Balances 775.95 7.82 23.17 15.89 25.57
Loans and Advances 157.17 18.15 136.29 44.42 48.80
Total 5,743.00 120.84 192.22 272.11 454.92
E. Liabilities and Provisions:
Secured Loans 1,556.36 - - 32.41 567.07
Unsecured Loans 2,835.04 200.25 37.20 986.01 513.71
Current Liabilities and Provisions 722.93 26.30 69.37 300.23 801.07
Effect on account of Restatement of Accounts - - 10.09 (30.14) (18.11)
Total 5,114.33 226.55 116.66 1,288.51 1,863.74
Net Worth 1,185.96 691.74 469.08 217.49 (12.08)
Represented by
Equity Share Capital 324.79 324.79 324.79 324.79 324.79
Preference Share Capital 700.00 490.00 490.00 490.00 -
Forfeited Shares Account 19.71 19.71 19.71 19.71 19.71
Share Application Money - - 24.17 115.34 115.34
Capital Subsidy 25.00 25.00 25.00 25.00 25.00
Capital Reserve 396.41 396.41 396.41 - -
Balance in Profit & Loss Account (279.95) (564.17) (811.00) (757.36) (496.92)
Net Worth 1,185.96 691.74 469.08 217.49 (12.08)
Note: The above statement should be read with the Significant Accounting Policies and Notes on adjustments to Restated Financial Information and other notes to the Accounts as appearing in Annexure IV.
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Annexure-III Restated Cash Flow Statement
(Rs. In Lakhs)
For the year ended March 31
Particulars 2011 2010 2009 2008 2007
Cash Flows from Operating Activities
Profit / (Loss) Before Tax after extra ordinary items 558.38 281.54 (44.78) (271.84) (141.83)
Add : Adjustments on account of Restatements affecting Profit Before Tax - 10.08 (40.48) 12.02 (59.83)
Profit before Tax, Restated 558.38 291.62 (85.25) (259.82) (201.65)
Add :
Depreciation and Amortisation 10.62 - 29.10 84.10 90.14
Share of Profit from Partnership Firm - (248.73) - - -
(Profit)/Loss on sale of Fixed Assets - - (1.88) (59.65) 0.40
(Profit)/Loss on sale of Invesments 8.40 - - - -
Interest and finance charges 424.18 8.84 2.40 45.80 35.34
Interest & Dividend Income (84.73) (5.16) (1.78) (0.74) (1.83)
Extraordinary Items : Sales Tax & Entry Tax Provision (94.14)
Operating Profit before Working Capital Changes 916.85 46.57 (57.41) (190.31) (171.74)
Adjustments for changes in Working Capital
(Increase)/Decrease in Current Assets 308.43 56.34 87.17 173.13 5.40
(Increase)/Decrease in Inventories 330.83 - - - -
Increase/(Decrease) in Current Liabilities (234.59) (53.12) (190.38) (534.87) 212.93
Cash Generated from Operations 1,321.52 49.80 (160.63) (552.05) 46.59
Direct Taxes Paid (45.64) (0.03) (0.34) (0.63) (1.60)
Net Cash Flow from Opertating Actitvities 1,275.88 49.77 (160.97) (552.68) 44.99
Cash Flow from Investing Actvities
Purchase of Fixed Assets (Including on acquisition of a partnership firm) (31.25) - (11.83) (7.46) (18.49)
Sale of Fixed Assets - - - 145.88 8.78
Adjustments on acquisition of Partnership Firm 437.89 - - - -
Investment in Partnership Firm - (448.73) - - -
Investments in Mutual Fund/ Private Equity fund (341.12) - - - -
Interest & Dividend Received 63.75 4.84 1.78 0.74 1.83
Sales of Investments 563.70
Share of Profit from Partnership Firm 248.73
Net Cash Flow from Investing Actvities before extra
ordinary item
692.97 (195.16) (10.05) 139.15 (7.88)
Extra ordinary Items - 856.67
Net Cash Flow from Investing Actvities after extra ordinary
item 692.97 (195.16) 846.62 139.15 (7.88)
Cash Flows from Financing Activities
Proceeds for Preference Share Capital 210.00 - - 490.00 -
Proceeds from Working Capital Loans (Net) 982.74
Hire Purchase Credits 31.10
Increase / (Decrease) in Share Application Money - (24.17) (45.50) - (26.00)
Increase/(Decrease)in Secured Loan - (32.41) (512.65) (105.22)
Increase/ (Decrease) in Unsecured Loan (Net) (2,070.42) 163.05 (598.07) 472.30 139.31
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Interest on Loan (354.14) (8.84) (2.40) (45.80) (35.34)
Net Cash Flow from Financing Actvities (1,200.72) 130.04 (678.38) 403.85 (27.25)
Net increase /(Decrease) in Cash and Cash Equiv. 768.13 (15.35) 7.28 (9.68) 9.86
Cash and cash equiv. at beginning of the period 7.82 23.17 15.89 25.57 15.71
Cash and cash equiv. at end of the period 775.95 7.82 23.17 15.89 25.57
Note: 1. The above statement should be read together with Significant Accounting Policies and Notes on
adjustments to Restated Financial Information and other notes to Accounts as appearing in Annexure IV. 2. The Cash Flow Statement has been prepared under the indirect method, as set out in Accounting Standard –
3 on Cash Flow Statements as prescribed by the ICAI.
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Annexure-IV Significant Accounting Policies for the Restated Accounts; 1. Significant Accounting Policies
1. Basis of Accounting The financial statements have been prepared to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules 2006, (as amended) and the relevant provisions of the Companies Act, 1956 ("the Act"). The financial statements have been prepared under the historical cost convention on an accrual basis in accordance with accounting principles generally accepted in India. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.
2. Use of Estimates
The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and reported amount of revenues and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known / materialised.
3. Revenue Recognition
a. The Company is following the “Percentage Completion Method” of accounting. As per this method, revenue from sale of properties is recognised in Profit and Loss Account in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company on transfer of significant risk and rewards to the buyer. If the actual project cost incurred is less than 20% of the total estimated project cost, no income is recognised in respect of that project in the relevant period.
b. Dividend income is recognised when the shareholders’ or unitholders’ right to receive payment is established.
c. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.
d. The Company’s share in profits from a firm where the Company is a partner is recognised on the basis of such firm’s audited accounts, as per terms of the partnership deed.
4. Inventories
a. Work-in-progress - Real estate projects (including land inventory): Represents cost incurred in respect of unsold area of the real estate development projects or cost incurred on projects where the revenue is yet to be recognised. Real estate work-in-progress is valued at lower of cost and net realisable value.
b. Direct expenditure relating to construction activity is inventorised. Indirect expenditure (including borrowing costs) during construction period is inventorised to the extent the expenditure is related to construction or is incidental thereto. Other indirect expenditure (including borrowing costs) incurred during the construction period which is neither related to the construction activity nor is incidental thereto is charged to the profit and loss account.
c. Finished goods - Flats: Valued at lower of cost and net realisable value. d. Finished goods - Plots: Valued at lower of cost and net realisable value.
5. Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation and provision for impairment, if any. The cost includes expenditure incurred in the acquisition and construction / installation and other related expenses in bringing the asset to working condition for its intended use.
6. Depreciation
Depreciation on Fixed Assets has been provided on Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 on prorata basis from the date of additions and/or disposal.
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7. Impairment In accordance with accounting standard 28 on ‘Impairment of assets’ issued by ICAI, where there is an indication of impairment of the company's assets the carrying amount of the company’s assets are reviewed at each balance sheet date to determine impairment, if any. The recoverable amount of the assets (or where applicable that of the cash generating unit to which the asset belongs) is estimated at the higher of its net selling price and its value in use. An impairment charge is recognised whenever the carrying amount of the asset or cash-generating unit exceeds its recoverable amount.
8. Investments
Long Term Investments are stated at cost. Provision for diminution in value is made if the decline in value is other than temporary. Current Investments are stated at lower of cost and fair value.
9. Retirement & other Employee Benefits
a. Short term employee benefits are accounted in the period during which the services have been rendered.
b. The Company contributes on a defined contribution basis to Employee’s Provident Fund towards post employment benefits, all of which are administered by the Regional Provident Fund authorities, and has no further obligation beyond making its contribution, which is expensed in the year to which it pertains.
c. The liability for the defined benefit plan of Gratuity is determined on the basis of the assumption that the employees are entitled to receive the benefit as at each year end. The same is charged to the Profit and Loss Account
10. Income Taxes
a. Tax expense comprises both current and deferred taxes. Current Tax is provided on the taxable income using the applicable tax rates and tax laws. Deferred tax assets and liabilities arising on account of timing difference and which are capable of reversal in subsequent periods are recognised using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If the company has carry forward unabsorbed depreciation and tax losses, deferred Tax assets are recognised only to the extent there is a virtual certainty supported by convincing evidence that sufficient taxable income will be available against which such deferred tax assets can be realised. Provision for Wealth Tax liability is estimated and provided for.
b. Minimum Alternative tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.
11. Borrowing Costs
Interest and other borrowing costs attributable to the acquisition of or construction of qualifying assets till the date of commercial use of the assets are capitalised. Borrowing costs incurred for the development of long term projects are transferred to Construction work in progress. All other borrowing costs are charged to revenue.
12. Operating Leases
Operating lease payments are recognised as an expense in the Profit and Loss account on a straight-line basis over the lease term.
13. Foreign Currency Transactions a. The Company is exposed to currency fluctuations on foreign currency transactions. Transactions
denominated in foreign currency are recorded at the exchange rate prevailing on the date of transactions.
149
b. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the profit and loss account of the year.
c. Transaction
Monetary assets and liabilities in foreign currency, which are outstanding as at the year-end, are translated at the year-end at the closing exchange rate and the resultant exchange differences are recognized in the profit and loss account. Non monetary items are stated in the balance sheet using the exchange rate at the date of the transaction.
d. Derivative instruments
The Company's exposure to foreign currency fluctuations relates to foreign currency assets, liabilities and forecasted cash flows. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into forward exchange contracts, where the counterparty is a bank.
e. As per Accounting Standard ('AS') 11 – 'The Effects of Changes in Foreign Exchange Rates', the
premium or the discount on forward exchange contracts not relating to firm commitments or highly probable forecast transactions and not intended for trading or speculation purpose is amortized as expense or income over the life of the contract. All other derivatives, which are not covered by AS 11, are measured using the mark-to-market principle and losses, if any, are recognised in the profit and loss account.
14. Provisions & Contingencies
The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
15. Accounting Policies, which are not specifically referred to, are consistent with generally accepted
accounting practices. 2. NOTES TO RESTATED UNCONSOLIDATED FINANCIAL INFORMATION
1. Appropriate adjustments have been made in the Restated Summary Statements of Assets and Liabilities, Profits and Losses and Cash Flows, wherever required, by reclassification of the corresponding items of income, expenses, assets and liabilities, in order to bring them in line with the groupings as per the audited financials of the Company for the year ended 31st March, 2011 and the requirements of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009.
2. The summary of results of restatement made in the audited accounts for the respective years and its
impact on the profit of the company is stated in Annexure V annexed hereto.
3. AUDITORS QUALIFICATIONS
a) Auditors Qualifications where adjustments have been made;
ii) Non Provision of Sales Tax liability amounting to Rs.87.15 Lacs (Year Ended March 31, 2006) iii) Non Provision of Provident Fund liability amounting to Rs.9.99 Lacs (Years Ended March 31,
2006, 2007, 2008 and 2009) b) Auditors Qualifications where no adjustments have been made;
150
i) The Company had recognised Deferred Tax Assets on account of unabsorbed business losses and depreciation amounting to Rs.393.41 lacs upto the year ended March 31, 2004. In view of ASI-9 issued by the Institute of Chartered Accountants of India, the Company has not recognised further Deferred Tax Assets; however, the assets recognised upto March 31, 2004 remained recognised as such.
However, in view of the virtual certainty of reliability of the Deferred Tax Assets during the year ended March 31, 2011, no restatement is considered necessary in respect of the Auditors Qualification in respect of the year ended March 31, 2006, 2007 2008 and 2009.
c) Other audit qualifications which do not require any corrective adjustment in the restated financial
statements are as under:-
i) Non Disclosure of Small Scale Industries (SSI) Information (Years Ended March 31, 2007, 2008 and 2009)
ii) Transactions made in pursuance of contracts or arrangements under section 301 of the Companies Act, 1956 without obtaining prior approval of the Central Government. Non Compliance u/s 297 of Companies Act (Years Ended March 31, 2007, 2008 and 2009)
iii) Delays in payment of dues to State Bank of Hyderabad (Rs.33.25 Lacs - 22 days) and Canara Bank (RS.24.75 Lacs - 28 Days). (Years Ended March 31, 2007)
iv) Non Compliance of AS-15 Employee Benefits (Year Ended March 31, 2008) v) Interest free loans granted in contravention of the provisions of Section 295 of Companies Act,
1956 (Rs.125.24 Lacs) to a private limited company, the terms thereof being prejudicial to the interest of the Company.(Year Ended March 31, 2009 and 2010)
151
4. DEVELOPMENTS HAPPENED DURING THE LAST 5 YEARS ABOUT CHANGE OF BUSINESS,
CHANGE OF MANAGEEMENT, ETC. There has been a change in management with effect from November 14, 2009 consequent to the erstwhile promoters selling their stake to the existing management. Consequent to the open offer as per the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, the existing management has taken over the company. Post acquisition, the Company also started the business of Realty Development and Services. It also entered into a partnership in a firm, Rodium Properties engaged in the business of Realty Development. The business of said firm has been taken over by the Company with effect from 1st day of April, 2010. Rodium Properties is currently continuing its business of Realty Development as the Division of the Company. 5. OTHER NOTES
a. Based on the information available with the Company, no creditors have been identified as micro, small or medium enterprises within the meaning of Micro, Small and Medium Enterprises Development Act, 2006. Necessary disclosures under the said act can only be considered once the relevant information to identify the suppliers who are covered under the said act is received from such parties/ suppliers. However, in the view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material.
b. Contingent Liabilities not provided for:
(i) Income tax liabilities for interest and penalty that may arise on account of late/ non-payment of
TDS under the Income Tax Act, 1961 - Not ascertainable (ii) No provision has been made for any interest and/ or penalty on the provident fund arrears relating
to the period from September, 1997 to March, 2001 under the provisions of the EPF Scheme, 1952, Employees Pension Scheme 1995 and Employee Deposit Linked Insurance Scheme, 1976 in respect of trainees stipend. The quantum of interest and/or penalty is not ascertained.
(iii) Dividend on Cumulative Redeemable Preference Shares has not been paid for the Current Financial year due to unavailability of distributable profits for the current year. However the Company has proposed the dividend outstanding to be payable till the year ended 31st March, 2010. The dividend payable for the current year is Rs. 58,76,260/- (excluding the Dividend Distribution Tax payable)
(iv) The Company has made payment of Rs.26.91 Lacs to the Prothonotary, Senior Master, Honorable Bombay High Court towards amount collected towards service tax as per the amendment in the Financial Budget 2010. The said levy has been challenged by the Maharashtra Chamber of Housing Industry (MCHI) in the Bombay High Court and a Stay has been granted. As per the submission and court directives the amount collected towards service tax dues have been deposited. However no interest / penalty has been provided as the same is under litigation.
(v) Uncalled amount of Rs.62000/- each on 250 units of Kotak India Growth Fund - Rs.1,55,00,000/-
(Rs. in Lakhs)
(iv) Other Contingent Liabilities As at 31st March,
2011 2010 2009 2008 2007
Claims against the company not acknowledged as debts in respect of sales tax, excise duty, service tax and other matters
-
-
-
3.00
3.00
Provident Fund Liabilities - 9.99 9.99 9.99 9.99
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c. Managerial Remuneration;
(Rs. in Lakhs)
For the year ended 31st March,
Particulars 2011 2010 2009 2008 2007
Remuneration to the Managing Director & Executive Directors
Salary and Allowances 42.00 - - 0.60 3.60
Contribution to Provident Fund & Gratuity - - - 0.04 0.35
Total 42.00 - - 0.64 3.95
d. Auditors Remuneration includes:
(Rs. in Lakhs)
For the year ended 31st March, S.No
Particulars 2011 2010 2009 2008 2007
1 Audit Fees 1.65 0.40 0.22 0.22 0.22
2 Tax Audit Fees 0.55 0.25 0.11 0.11 0.11
3 Other Fees 1.10 0.30 0.12 0.28 0.22
4 Reimbursement of Expenses - Nil 0.23 0.27 0.13
Total 3.31 0.95 0.68 0.88 0.68
e. The Company has during the year under review operated in the Real Estate Development and as the
operations are within the country, risks and returns do not differ significantly. The Company has not operated in the Textile Intermediary Products (Cotton Yarn), which was operated in the earlier years. In view of the above, separate segment wise disclosures, either primary or secondary, are not made.
f. Pursuant to the provisions of AS-22 "Accounting for Taxes on Income" issued by the Institute of
Chartered Accountants of India, the Company has recognized deferred tax asset/ liabilities as under: (Rs. in Lakhs)
For the year Ended 31st March, Particulars
2011 2010 2009 2008 2007
Carried Forward Losses / Depreciation 176.61 348.62 393.41 393.41 393.41
Accrued Expenses allowable on Actual Payments
0.70
-
-
-
-
Total 177.31 348.62 393.41 393.41 393.41
g. Details of investments made during the financial year 2009-10 in the Capital of Rodium Properties
(a Partnership Firm) as at March 31, 2010 are as under
Name of the Partner Profit Sharing Ratio %
2011 2010
Deepak Chheda - 26.10%
Sigma Fiscals Private Limited - 13.05%
Harish Nisar - 6.53%
Mehul Nisar - 6.52%
Rohit Dedhia - 6.53%
Keshavji Dedhia - 6.52%
Shailesh Shah - 9.90%
Dinesh Shah - 4.95%
Tejas Shah - 4.95%
Anil Shah - 4.95%
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Rodium Realty Limited, the Company - 10.00%
Total - 100.00%
The said firm has been dissolved and all the assets and liabilities of the firm on a going concern basis have been taken over by the Company effective April 1, 2010.
h. Related Party Disclosures;
For disclosures relating to the transaction with the related parties, refer Annexure XV.
i. Pursuant to the acquisition of the assets and liabilities of Rodium Properties, a partnership firm, in the current year, the figures of the current year are not strictly comparable to those of the previous year. Previous year’s figures have been regrouped / reclassified wherever necessary, to conform to current year’s classification.
j. Provision for gratuity is made based on the actuarial valuation report as below
A. Defined Benefit Plans
Gratuity (Unfunded) Particulars
2010-11 2009-10
Change in the present value of the defined benefit obligation
Opening defined benefit obligation at the beginning of the year 0 0
Closing defined benefit obligation at the end of the year 201131 0
Reconciliation of present value of the obligation and fair value of the
plan assets 201131 0
Present Value of Funded obligation at the end of the year 201131 0
Fair Value of Plan assets at the end of the year 0 0
Net Liability/(Asset ) 201131 0
Amount Recognised in the Balance Sheet
Liabilities 201131 0
Assets 0 0
Net Liability / (Asset) recognised in Balance Sheet 201131 0
Net Cost recognised in the profit and loss account
Current Service Cost 201131 0
Total costs of defined benefit plans included in Schedule 12 "Payments to and provisions for employees" 201131 0
Principal actuarial assumptions:
Discount Rate 8.00% 0
Salary Escalation 5.00% 0
Amounts for the current and previous periods are as follows: 2010-11 2009-10
Defined benefit obligation 201131 0
Plan Assets 0 0
Surplus / (Deficit) 201131 0
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k. Details of Invesments Purchased and Sold during the year
Particulars
No. of Shares/Units
Face Value
Investments in Mutual Fund
Birla Sunlife Frontline Equity Fund 24,510.00 10.00
DSP BLACK ROCK TOP 100 Equity 46,602.00 10.00
DSP BlackRock Technology.ComFund 22,664.00 10.00
FRANKLIN TEMPLETON INDIA Balance Fund 13,438.00 10.00
HDFC High Interest Fund 952,327.05 10.00
HDFC High Interest Fund Growth 79,537.82 10.00
HDFC TOP 200 FUND 20,594.00 10.00
ICICI PRU Dynamic Plan 30,939.00 10.00
IDFC Money Manager Fund 55,061.00 10.00
IL & FS Milestone Fund 435.00 1,000.00
Kotak Flexi Debt 1,235,543.00 10.00
Kotak Floater Plan 880,287.00 10.00
Kotak Floater Long Term -Daily Dividend 1,021,519.21 10.00
Reliance Banking Fund 8,721.00 10.00
Reliance Diversified Fund 9,869.00 10.00
Reliance Growth Fund 18,646.00 10.00
Reliance Infrastructure Fund 47,898.00 10.00
Investments in Shares
Axis Bank Limited 250.00 10.00
Educomp Solutions Limited 1,500.00 2.00
GVK Power & Infra Limited 8,000.00 1.00
Hindustan Zinc Limited 1,000.00 2.00
Jaiprakash Hydropower Limited 15,000.00 10.00
J.Kumar Infra Limited 1,500.00 10.00
Lic Housing Finance Limited 1,500.00 2.00
NMDC Limted 500.00 1.00
Onmobile Global Limited 500.00 10.00
Reliance Industries Limited 1,000.00 10.00
Reliance Infrastruture Limited 1,000.00 10.00
Steel Authority Of India 5,000.00 10.00
Suzlon Energy Limited 2,500.00 2.00
TATA Motors Limited 500.00 10.00
Tech Mahindra Limited 2,000.00 10.00
155
Annexure-V Statement of Reconciliation of Unconsolidated Restated Profit And Loss
(Rs. In Lakhs)
For the year ended March 31 Particulars 2011 2010 2009 2008 2007
Net Profit After Tax as per P & L A/c
386.85
236.75
(13.43)
(272.47)
(143.43)
Add / (Less): Prior Period Items
Sundry Balances written back - (1.03) (37.34) 6.03 4.61
Provident Fund dues of earlier years - 9.99 - - -
Liabilities no longer required written back - - (3.20) - (1.30)
Prior Period Expenses - 1.13 0.07 5.99 0.96
Interest Waiver - One Time Settlement - - - - (158.24)
Sales Tax - BIFR Scheme - - - - 87.15
Entry Tax - BIFR Scheme - - - - 6.99
Total - 10.09 (40.47) 12.02 (59.83)
Other Adjustments
Taxation Adjustments - Fringe Benefit Tax - - 0.25 - (0.25)
Net Impact of Adjustments to P & L A/c - 10.09 (40.22) 12.02 (60.08)
Profit After Tax, As Restated 386.85 246.84 (53.65) (260.45) (203.51)
The Profit and Loss Account of certain years include amounts paid / provided for or refunded / written back in respect of the Scheme of BIFR, Interest waiver under OTS, other statutory dues, Prior Period items and unspent liabilities written back, which have now been adjusted in the respective years. Accordingly, adjustment made as detailed above, and have been adjusted in the restated profit and loss for the years ended 31st March, 2010, 2009, 2008 and 2007 and the balance brought forward in the profit and Loss Account as at 1st April 2006. Annexure-VI DETAILS OF DIVIDEND PAID (Rs. In Lakhs)
For the year ended March 31 Particulars 2011 2010 2009 2008 2007
Face Value per Equity Share (Rs.) 10 10 10 10 10
Paid up Equity Share Capital (Rs. In Lakhs) 324.79 324.79 324.79 324.79 324.79
Preference Share Capital 700.00 490.00 490.00 490.00 -
Proposed Preference Dividend 88.32 - - - -
Dividend Distribution Tax 14.33 N.A. N.A. N.A. N.A.
Rate of Dividend Tax 16.22% N.A. N.A. N.A. N.A.
156
Annexure-VII STATEMENT OF INVESTMENTS
(Rs. In Lakhs)
As at March 31
Period / Year Ended 2011 2010 2009 2008 2007
Long-term Investments
A Book value of Quoted Investments - - - - -
Total….(1) - - - - -
B Book value of Unquoted Investments
Book Value of National Savings Certificate 0.11 0.11 0.11 0.11 0.11
Capital in Partnership Firm 448.72
Investments in Mutual Fund and Private Equity 263.90 - - - -
Total…..(2) 264.01 448.83 0.11 0.11 0.11
Total…(1+2) 264.01 448.83 0.11 0.11 0.11
Less : Prov. for diminution in value of invests - - - - -
Total Investments 264.01 448.83 0.11 0.11 0.11
Note:- The above statement should be read together with Significant Accounting Policies and Notes on adjustments to Restated Financial Information and other notes to Accounts as appearing in Annexure IV. Annexure-VIII STATEMENT OF OTHER INCOME
(Rs. In Lakhs)
For the Year ending March, 31st Period / Year Ended
2011 2010 2009 2008 2007
Recurring
Interest Income (Gross) 75.68 5.16 1.78 0.74 1.83
Dividend Received 9.05 - - - -
Non Recurring
Miscellaneous Income 18.28 - - 17.87 8.32
Profit on sale of Assets - - 1.88 59.65 -
Sundry balances written back 22.88 1.03 37.46 - 1.29
Liabilities no longer required, written back - - 3.21 - -
Total 125.89 6.19 44.33 78.26 11.44
Note:- 1) The above statement should be read together with Significant Accounting Policies and Notes on
adjustments to Restated Financial Information and other notes to Accounts as appearing in Annexure IV.
2) The classification of "Other Income" as "Recurring or Non-recurring" is based on the current operations and business activity of the Company as determined by the management.
157
Annexure-IX
STATEMENT OF SUNDRY DEBTORS (Rs. In Lakhs)
As at March 31 Period / Year Ended
2011 2010 2009 2008 2007
Sundry Debtors (Considered Good)
Outstanding for a period exceeding six months
32.76
32.76
-
31.64
11.60
Other Debts 144.46 61.79 32.76 145.87 151.93
Total debtors 177.22 94.55 32.76 177.51 163.53
Note:- 1) Details of related party transactions and balances are included in Annexure XV 2) The above statement should be read together with Significant Accounting Policies and Notes on
adjustments to Restated Financial Information and other notes to Accounts as appearing in Annexure IV. Annexure-X STATEMENT OF LOANS AND ADVANCES
(Rs. In Lakhs)
As at March 31 Period / Year Ended
2011 2010 2009 2008 2007
Advances to be recovered in cash or kind/ service or value to be received) including Advance tax, Tax Deducted at Source (after adjusting Provisions)
98.03
14.23
132.37
16.49
31.35
MAT Credit Entitlement 53.30
Excise recoverable account - - - - 0.18
Security Deposits 5.84 3.92 3.92 27.93 17.27
Total 157.17 18.15 136.29 44.42 48.80
Note:- 1) Details of related party transactions and balances are included in Annexure XV 2) The above statement should be read together with Significant Accounting Policies and Notes on
adjustments to Restated Financial Information and other notes to Accounts as appearing in Annexure IV.
158
Annexure-XI STATEMENT OF ACCOUNTING RATIOS – RESTATED
(Rs. In Lakhs)
Particulars 2011 2010 2009 2008 2007
Basic and Diluted Earning Per Share (Rs.)
Net Profit for the year, as restated (Rs. In Lacs)
386.85
246.84
(53.65)
(260.44) (203.51)
Less: Dividend on Redeemable Cumulative Preference Shares)
(58.76)
(44.10)
(44.10)
(88.20) 88.32
Less: Dividend distribution tax thereon * (9.76) (7.32) (7.32)
Net Profit for the year, as restated attributable to Equity Shareholders (Rs. In Lacs)
318.33
195.42
(105.07)
(348.64) (115.19)
Weighted Average Number of Shares
(Denominator)
Weighted Average Number of Shares of Rs. 10/- each used for calculation of Basic Earning Per Share
3,247,900
3,247,900
3,247,900 3,247,900 5,917,406
Basic Earning Per Share (EPS) (In Rs.)
Face Value per share (in Rs. 10) 9.80 6.02 (3.24) (10.73) (1.95)
(After providing for Dividend on Redeemable Cumulative Preference Shares)
Net Profit after tax, as restated (Rs. In Lacs) 318.33 195.42 (105.07) (348.64) (115.19)
Weighted Average Number of Shares
(Denominator)
3,247,900
3,247,900
3,247,900 3,247,900 5,917,406
Weighted Average Number of Shares used for calculation of Diluted Earning Per Share
Diluted Earning Per Share (EPS) (In Rs.) 9.80 6.02 (3.24) (10.73) (1.95)
Face Value per share (in Rs.) 10/- 10/- 10/- 10/- 10/-
Net Asset Value Per Equity Share (Rs.)
Net Assets, as restated (Rs. In Lacs) 1,185.96 691.74 469.08 217.49 (12.08)
Number of Equity shares outstanding at the end of the year 3,247,900 3,247,900 3,247,900 3,247,900 5,917,406
Net Asset Value Per Equity Share (Rs.) 36.51 21.30 14.44 6.70 (0.20)
Return on Networth
Net Profit after tax, as restated (Rs. In Lacs) 318.33 195.42 (105.07) (348.64) (115.19)
Networth, as restated (Rs. In Lacs) 1,185.96 691.74 469.08 217.49 (12.08)
Return on Networth 26.84% 28.25% -22.40% -160.30% -953.37%
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Note:- The ratios have been computed as per the following formulae:
a. Basic and Diluted Earnings per Share =
Net Profit after tax, as restated for the year, attributable to equity shareholders
Weighted average number of equity shares outstanding during the year
b. Net Assets Value (NAV) =
Net Assets, as restated, at the end of the year Number of equity shares outstanding at the end of the year
c. Return of Net Worth (%) =
Net Profit after tax, as restated for the year Net Worth, as restated, at the end of the year.
Annexure-XII CAPITALISATION STATEMENT
(Rs. In Lakhs)
Particulars Pre issue as at
March 31, 2011 Post Issue
Short Term Debts 1,556.36
Long Term Debts 2,835.04
Total Debts 4,391.40
Shareholders' Funds
Share Capital 1,044.50 Note-1
Reserves & Surplus 421.41 Note-1
Less: P & L Debit (279.95)
Total Shareholders' Fund 1,185.96
Long Term Debt / Equity 2.39
Note:- 1) Post Issue Capitalization will be determined after finalization of issue price. 2) Short term debts represent debts which are due within 12 months from 31.03.11. 3) Long term debts represent debts other than short term debts, as defined above.
160
Annexure-XIII STATEMENT OF UNCONSOLIDATED TAX SHELTER
(Rs. In Lakhs)
Particulars 2011 2010 2009 2008 2007
Profit / (Loss before tax) 558.35 281.54
(44.78)
(271.84)
(205.92)
Weighted Average Tax rate 33.22% 33.99% 33.99% 33.99% 33.66%
Notional Tax at above rate 185.48 95.69 (15.22) (92.40) (69.31)
Adjustments for:
Permanent differences on account of:
Prior Period Items 0.07 5.99 0.95
Disallowance under section 40a (ia) 1.29 0.34
Share of profit from Partnership Firm (248.73)
Penalties 5.28
Deemed income under section 41 19.50
Dividend Income (9.05)
(Profit) / Loss on Sale of Fixed Assets (1.88) (59.65) 0.39
Loss on Sale of Investments 8.40 Short Term Capital Gains - Sale of Depreciable Assets 588.81
Long Term Capital Gains - Sale of Land 14.80
Securities Transaction Tax 0.35
Disallowance under section 14A 0.66
Donations 2.07
Total 2.43 (243.45) 603.09 (53.66) 21.18
Timing differences on account of:
Disallowances under section 43-B (2.01) (30.03) (9.85) 4.22 26.92
Allowances under section 43-B (32.53)
Difference between Book Depreciation and Tax Depreciation 14.48 29.10 59.19 37.86
Total 12.47 (30.03) 19.25 30.88 64.78
Net Adjustments [(D) + (E)] 14.90 (273.48) 622.34 (22.78) 85.96
Tax saving thereon 4.95 (92.96) 211.54 (7.74) 28.93
Total Current Tax [(C) - (G)] 190.43 2.74 196.31 (100.14) (40.38)
Note:- 1) The aforesaid Statement of Tax Shelters has been prepared as per the Stand alone audited accounts of the
company and is not based on the profit as per the 'Restated Statement of Profit and Loss' 2) The permanent/timing differences have been computed considering the acknowledged copies of the
income-tax returns filed by the Company for each of the respective years presented in the above statement. Disallowances made by the tax authorities on account of assessments, proceedings etc. against which the company is in appeal, has not been given affect in the above statement as the company is confident of cases being decided in favour of the Company.
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Annexure-XIV
DETAILS OF SECURED LOAN (Rs. In Lakhs)
As at March 31 Period / Year Ended
2011 2010 2009 2008 2007
From Banks & Financial Institutions
Term Loans
State Bank of Hyderabad - - - - 464.05
Karnataka State Industrial Investment & Development Corporation Limited - - - 32.41 81.01
Total (A) - - - 32.41 545.06
Working Capial Facilities (Secured against Equitable/Registered Mortgage of Specific
Properties held as Stock
Indian Overseas Bank, Juhu Branch 685.26 - - - -
Kotak Mahindra Bank 840.00
Total (B) 1,525.26 - - - -
Vehicle Loans
HDFC Bank 31.10 - - - -
Total (C) 31.10 - - - -
Interest Accrued and Due (D) - - - - 22.01
Grand Total [(A) +(B) + (C) + (D) 1,556.36 - - 32.41 567.07
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PRINCIPAL TERMS OF SECURED LOANS (Rs. In Lakhs)
Particulars of Lenders 2011 Rate of Interest
Repayment Terms
Security
Term Loans
Working Capial Facilities (Secured
against Equitable/Registered Mortgage of Specific
Properties held as Stock
Indian Overseas Bank (Taken over w.e.f. 01/04/2010 from the partnership firm)
685.26 12.75% Cash Credit Limit hence no repayment time specified
Ground Floor, Exclusive 1 and Exclusive 2, Store and upper basement (Car parking) of the commercial building on Plot No. 291 at X-trium Sir Mathuradas Vasanji Road (Andheri Kurla Road), Andheri East, Mumbai
Kotak Mahindra Bank 840.00 17.50% WCDL 24 Months
First Floor and Eight Floor of Project X-trium located at Andheri Kurla Road, Andheri (East) admeasuring appox. 8,545 Sq. Ft. alongwith Personal guarantees of Directors
Vehicle Loans
(Rs. In Lakhs)
Particulars of Lenders 2011 Rate of Interest
Repayment Terms Security
Car Loan from HDFC Bank 14.40 10.59% Monthly EMI of Rs. 1,27,003 for 3 years ending on 05/03/2012
Motor Car
Car Loan from HDFC Bank 16.70 9.50% Monthly EMI of Rs. 89,982 for 3 years ending on 05/11/2012
Motor Car
Annexure-XIV A Details of Unsecured Loan
(Rs. In Lakhs)
As at March 31 Period / Year Ended
2011 2010 2009 2008 2007
Loans from
Banks - - - - -
Companies - - - 615.61 251.31
Directors & Shareholders 535.35 200.25 37.20 370.40 262.40
Others 2,299.69
Total 2,835.04 200.25 37.20 986.01 513.71
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Principal Terms of Unsecured Loans
Particulars of Lender Amount as at
March 31, 2011
Rate of
Interest Repayment Terms
Directors & Shareholders
Deepak D. Chheda 300.29 12% Repayable on Demand
Rohit K. Dedhia 112.22 12% Repayable on Demand
Harish Nisar 69.05 12% Repayable on Demand
Shailesh Shah 53.80 12% Repayable on Demand
Others
Sigma Fiscals Pvt. Ltd 203.76 9% Repayable on Demand
Mehul H. Nisar 209.79 9% Repayable on Demand
Keshvji Dedhia 224.25 9% Repayable on Demand
Anil Shah 228.57 9% Repayable on Demand
Dinesh D. Shah 234.57 9% Repayable on Demand
Tejas J. Shah 233.47 9% Repayable on Demand
Apian Finance and Investment Ltd. 500.00 9% Repayable on Demand
Keshavlal Govindji Soni 10.00 15% Repayable on Demand
Ajay Hasmukhlal Shah 25.00 15% Repayable on Demand
Girdharilal G. Khanna HUF 18.00 15% Repayable on Demand
Hundraj K. Nagpal HUF 10.00 15% Repayable on Demand
Manjula H. Vira 23.00 15% Repayable on Demand
Pankaj V. Sayar HUF 10.00 12% Repayable on Demand
Kirtikant P.Kantesaria 4.06 00% Repayable on Demand
Anil Shah HUF 68.89 12% Repayable on Demand
Dinesh Shah HUF 60.41 12% Repayable on Demand
Hiten Shah Huf 68.57 12% Repayable on Demand
Payal H. Shah 3.00 12% Repayable on Demand
Shailesh Damji Shah Huf 74.37 12% Repayable on Demand
Ekta Vijay Thakur 30.00 9% Repayable on Demand
Gokaldas Dhamamal Gajaria 30.00 9% Repayable on Demand
Govind Dhamamal Gajaria 30.00 9% Repayable on Demand
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Annexure-XV
STATEMENT OF RELATED PARTY TRANSACTIONS
Particulars of related parties and nature of relationship
Mr. Deepak Chheda
Mr. Harish Nisar
Mr. Rohit Dedhia
Mr. Shailesh Shah
A. Key Management Personnel :
Mr. Mehul Nisar - Chief Financial Officer
Rodium Properties
Rodium Realty & Construction
C.N.A Architects
Sigma Fiscals Pvt Ltd
Grima Dedhia
Krupa Chheda
Keshavji Dedhia
Dinesh Shah
Dinesh D Shah HUF
Shailesh Damji Shah HUF
Rodium Design
B. Other Related Parties, where common control exists:
Vinod Marketing Private Limited (upto 31/10/2009)
Details of transactions with related parties:
(Rs. In Lakhs) Key Management Personnel Other Related Parties
Nature of Transactions 2010-2011 2009-2010 2010-2011 2009-2010
1. Service Purchased - Professional / Construction Charges
C.N.A. Architects 74.06 -
Rodium Realty & Construction 320.94 -
Others 8.40 -
2. Expenses on Rent
Deepak Chheda - Rent 37.80 -
Harish Nisar 11.58 -
Rohit Dedhia 11.58 -
Mehul Nisar 11.58 -
Sigma Fiscals Pvt Ltd 37.80 -
Keshavji Dedhia 11.58 -
3. Remuneration
Deepak Chheda 24.00 -
Harish Nisar 7.50 -
Rohit Dedhia 7.50 -
Shailesh Shah 3.00 -
Mehul Nisar 5.40 -
4.Interest Paid / Payable
Deepak Chheda 5.57 2.02
Harish Nisar 3.43 1.19
Rohit Dedhia 3.40 1.23
Shailesh Shah 9.33 3.39
Keshavji Dedhia 19.69 -
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Mehul Nisar 18.51 -
Anil Shah 19.74 -
Dinesh Shah 20.23 -
Tejas Shah 20.14 -
Sigma Fiscals Pvt Ltd 28.65 0.01
Others 29.72
5. Loans given and repaid
Vinod Marketing Private Limited - 125.24
6. Loans Taken and Repaid (Net)
Deepak Chheda (382.45) 51.30
Harish Nisar (299.29) 31.60
Rohit Dedhia (199.20) 31.35
Shailesh Shah (175.55) 86.00
Others (21.05) -
Dinesh Shah (34.12)
Sigma Fiscals Pvt Ltd - (412.06)
(The Loans Repaid are including Loans taken over on Dissolution of Partnership Firm)
7. Investments
Rodium Properties - 200.00
8. Purchase of Fixed Assets
Rodium Designs 14.86 -
9. Income received from Partnership (Rodium Properties)
Interest on Investment - 4.14
Share of profit - 248.73
10. Balances Receivable
Vinod Marketing Private Limited - 32.76
11. Balances Payable
Deepak Chheda 305.85 53.32
Harish Nisar 72.48 32.79
Rohit Dedhia 115.62 32.58
Mehul Nisar 226.80 -
Shailesh Shah
Keshavji Dedhia 243.94 -
Dinesh Shah 234.57
Sigma Fiscals Pvt Ltd 232.42 -
Others 53.80 11.99 176.21
12. Assets & Liabilities taken over on Dissolution of Partnership Firm
Unsecured Loan (Incl. Partners Loan) 4,735.77 -
Secured Loans 542.53 -
Fixed Assets 95.35 -
Investments 1,185.62 -
Inventories 2,910.00 -
Inventories under Process 2,037.19 -
Cash and Bank Balances 3.82 -
Sundry Debtors 145.98 -
Loan and Advances 1,351.52 -
Deposits 1.62 -
Current Liabilities 2,004.09 -
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Notes: 1. Details of Related Party transactions in respect of the relevant related parties of erstwhile Vishal Cotspin
Limited for the years ended 2007, 2008 & 2009 have not been considered for the disclosures. 2. No amount has been provided as doubtful debts or advances / written off or written back in the year in
respect of debts due from / to above related party.
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(C) MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS REFLECTED IN THE FINANCIAL STATEMENTS You should read the following discussion of our financial condition and results of operations together with
restated financial statements of Our Company included in this Draft Letter of Offer, including the notes thereto
and reports thereon. This financial information has been prepared in accordance with Indian GAAP, the SEBI
ICDR Regulations and the Companies Act and restated in accordance with the SEBI ICDR Regulations. The
restated financial information has been prepared on a basis that differs in certain material respects from
generally accepted accounting principles in other jurisdictions. This discussion contains forward-looking
statements and reflects our current views with respect to future events and financial performance. Actual results
may differ materially from those anticipated in these forward-looking statements as a result of certain factors
and contingencies that could impact our financial condition and results of operations such as those set forth in
the section titled “Risk Factors” beginning on page 14.
Overview of the Business of the Company
We are a real estate development and project management company, focused on premium residential and commercial developments concentrated majorly in and around Mumbai. We are engaged in the development and construction of residential, office space, retail and mixed use projects by integrating various requirements and specific demands of customers, we seek to create build to suit developments, which we believe will not only enhance the desirability of our projects but will also provide our customers efficient space, which will cater to their current and future needs. While our focus is on residential and commercial projects, we have a diversified portfolio of projects covering key segments of the real estate market, which target the upper end of the respective income or market segment. We undertake real estate development projects on property development basis and project management basis. Property Development includes activities starting from conceptualization stage to completion stage. Project Management includes understanding the need of customer, project planning and feasibility, Project Assessment studies, Geological and Soil Investigation, Architectural / Engineering / Interior Designs, Construction management, Build to Suit Solutions, etc. We believe that our in-house design and architectural team has in-depth understanding of “Global” building parameters and quality standards and “Local” necessities and thereby offering “GLOCAL” architectural designs that combines local values with global quality standards. We believe that we have the scalability required to undertake large developments. We currently follow a sale model for our real estate development projects. We currently have 1 Ongoing project and 2 Planned Projects in Mumbai, which we expect to provide a total Saleable area of approximately 1,41,882 square feet. The estimated Saleable Area of our ongoing and upcoming projects as of June 30, 2011 is summarized in the table below:
Sr. No.
Project Location Project Type Estimated Saleable Area (in Square Feet)
Ongoing Project
1 X'czar Juhu - Vile Parle Residential 37,532
Planned Projects
2 X'enus Matunga Residential and Commercial 24,123
3 X’point Kandivali Residential and Commercial 80,277
Total 1,41,882
Significant Developments subsequent to the last financial year There has been no material development in relation to Our Company, its Promoters or our Group Companies subsequent to the Financial Year 2010-11.
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Significant Developments during the last financial year There has been no material development in relation to Our Company, its Promoters or our Group Companies since March 31, 2010, except as disclosed below:
• Our Company became sole owner of the firm M/s Rodium Properties on retirement of all other partners from April 1, 2010. Accordingly on April 1, 2010, M/s Rodium Properties became a division of the Company with all its assets, rights, benefits, obligations and liabilities on a going concern basis.
• Our Company has discontinued the yarn manufacturing and trading business Factors that may affect results of the Operations Our business is subject to various risks and uncertainties, including those discussed in the section titled “Risk Factors” beginning on page 14 of this Draft Prospectus. Among various other factors that affect our financial results and operations for a given financial year, some key factors are as follows: � General economic and business conditions; � Company’s inability to successfully implement its growth and expansion plans; � Increasing competition in the Real Estate industry; � Increase in labour costs, raw materials prices, prices of plant and machineries and insurance premiums; � Delay in recovery of debts from the clients; � Changes in laws and regulations that apply to Real Estate industry; � Any change in the tax laws granting incentives to Real Estate industry. Results of Operations: � The following is the discussion on the financial operations and performance of the Company for the year
ended 31st March 2011, 2010, 2009 and 2008 and the components :
(Rs. in Lakhs)
For the Year ending March, 31st Period / Year Ended
2011 2010 2009 2008 2007
INCOME
Domestic Sales / Income 2,422.31 - - 232.39 1,289.80
Income from Services - 62.24 5.88 145.48 -
Share of profit from partnership Firm - 248.73 - - -
Other Income 125.89 6.19 44.33 78.26 11.44
Increase / (decrease) in Stocks 4,611.36 - - (95.51) (26.60)
Total Income 7,159.57 317.16 50.21 360.62 1,274.63
EXPENDITURE
Cost of Construction & Development 5,938.06 - - - -
Material Cost - - - 144.74 834.96
Manufacturing & Other Expenses 427.66 26.42 63.02 356.51 518.69
Loss on Sale / Redemption of Investments 8.40 - - - -
Total Expenses 6,374.13 26.42 63.02 501.25 1,353.65
Net Operating Profit before Interest, Depreciation, Prior Period Items, Non Cash Expenses and Tax 785.44 290.74 (12.81) (140.63) (79.02)
Interest & Finance Charges 216.44 9.20 2.87 47.11 36.77
Depreciation and Amortization 10.62 29.10 84.10 90.14
Net Profit before Tax & Adjustments 558.38 281.54 (44.78) (271.84) (205.93)
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Provision for Taxation (Net of Mat Credit Entitlement) 0.30 - - - -
Provision for FBT - - 0.09 0.63 1.60
Deferred Taxation 171.32 44.79
Net Profit after tax but before Adjustments 386.75 236.75 (44.87) (272.47) (207.53)
Excess/ (Short) Provision for Tax (0.10) - 0.25 - -
Net Profit after tax and before extra ordinary items 386.85 236.75 (45.12) (272.47) (207.53)
Extraordinary items - - 31.69 - 64.10
Net Profit after tax and extra ordinary items 386.85 236.75 (13.43) (272.47) (143.43)
Adjustments on Account of Restatement - Annex V - 10.09 (40.22) 12.02 (60.08)
Net Profit after Tax, as Restated 386.85 246.84 (53.65) (260.44) (203.51)
Proposed Dividend on preference shares for past years 88.32 - - - -
Corporate Dividend Tax 14.33 - - - -
Net Profit after tax after appropriations 284.20 246.84 (53.65) (260.44) (203.51)
Capital Reduction - - - - 324.79
Net Profit after Tax, as Restated 284.20 246.84 (53.65) (260.44) 121.28
Add: Balance Brought Forward (564.17) (811.01) (757.36) (496.92) (618.20)
Balance Carried Forward, as Restated (279.96) (564.17) (811.01) (757.36) (496.92)
Financial Year Ended March 31, 2011 Compared to Financial Year Ended March 31, 2010 Sales and Other Income During the year ended March 31, 2011, the Company registered sales and other income of Rs. 2548.20 Lakhs as compared to Rs. 317.16 Lakhs for the year ended March 31, 2010. The Income from Domestic Sales consists of Rs. 2201.30 Lakhs from real estate development activity, Rs. 209 Lakhs from real estate consultancy fees and Rs. 12 Lakhs from other operational activities. Expenditure Our total expenditure increased by Rs. 6,347.71 Lakhs, from Rs. 26.42 Lakhs in fiscal 2010 to Rs. 6,374.13 Lakhs in fiscal 2011. This increase was mainly on account of acquisition of land for the project, construction and development expenses and other costs for Project – X’czar, X’point and X’enus.
Manufacturing and Other Expenses Our Manufacturing and Other Expenses increased by Rs. 401.24 Lakhs, from Rs. 26.42 Lakhs in fiscal 2010 to Rs. 427.66 Lakhs in fiscal 2011 due to increase in personnel, administrative and selling & distribution expenses during Fiscal 2011. Profit before interest, depreciation and taxes Our profit before interest, depreciation and taxes (“EBITDA”) was Rs. 290.74 Lakhs in fiscal 2010 compared to Rs. 785.44 Lakhs in fiscal 2011.
Interest Our net interest expense increased by Rs. 207.24 Lakhs, from Rs. 9.20 Lakhs in fiscal 2010 to Rs. 216.44 Lakhs in fiscal 2011, primarily attributable to secured and unsecured loans availed by the Company including loans due to partners of erstwhile partners of firm – Rodium Properties during the year 2010-11.
Depreciation and Amortization Our Company’s depreciation and amortization expense was Rs. 10.62 Lakhs in fiscal 2011 as compared to Nil in fiscal 2010. The depreciation and amortization is mainly attributed to acquisition of fixed assets during the year as well as addition of assets of Partnership Firm – Rodium Properties due to becoming our division. Profit before taxation and before exceptional items Our profit before taxation and before exceptional items was Rs. 281.54 Lakhs in fiscal 2010 compared to Rs. 558.38 Lakhs in fiscal 2011.
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Profit after taxes, as restated Principally due to the reasons mentioned above and due to restatement of account, our profit after taxes (PAT) was Rs. 386.85 Lakhs in fiscal 2011 as compared to Rs. 246.84 Lakhs in fiscal 2010.
Financial Year Ended March 31, 2010 Compared to Financial Year Ended March 31, 2009 During the year 2009-10, our Company did not pursue any activity except certain uncompleted work pursued by the company in the earlier years as there was change of management during 2009-10 when our existing Promoters took over the controlling interest of our company from erstwhile promoters. On taking over the controlling interest, our Promoters resolved to carry out real estate development activities. Currently we have 1 Ongoing Project and 2 Planned Projects through which Our Company expects to provide a total saleable area of approximately 1,41,882 square feet.
Sales and Other Income During the year ended March 31, 2010, the Company registered sales and other income of Rs. 317.16 Lakhs as compared to Rs. 50.21 Lakhs for the year ended March 31, 2009. The sales and other income was increased due to income from share of profit earned from M/s. Rodium Properties i.e. partnership firm. Expenditure Our total expenditure decreased by Rs. 36.60 Lakhs, or 58.08%, from Rs. 63.02 Lakhs in fiscal 2009 to Rs. 26.42 Lakhs in fiscal 2010. This decrease was mainly on account of decrease of Manufacturing and Other Expenses.
Manufacturing and Other Expenses Our Manufacturing and Other Expenses decreased by Rs. 36.60 Lakhs, or 58.08%, from Rs. 63.02 Lakhs in fiscal 2009 to Rs. 26.42 Lakhs in fiscal 2010 due to no manufacturing activity during Fiscal 2010. Profit before interest, depreciation and taxes Our profit before interest, depreciation and taxes (“EBITDA”) was Rs. (12.81) Lakhs in fiscal 2009 compared to Rs. 290.74 Lakhs in fiscal 2010.
Interest Our net interest expense increased by Rs. 6.33 Lakhs, from Rs. 2.87 Lakhs in fiscal 2009 to Rs. 9.20 Lakhs in fiscal 2010, primarily attributable to unsecured loans availed during the year.
Depreciation and Amortization Our Company’s depreciation and amortization expense was nil in fiscal 2010 as compared to Rs. 29.10 Lakhs in fiscal 2009. This is due to non-existence of fixed assets as at the end of Fiscal 2010. Profit before taxation and before exceptional items Our profit before taxation and before exceptional items was Rs. (44.78) Lakhs in fiscal 2009 compared to Rs. 281.54 Lakhs in fiscal 2010. Profit after taxes, as restated Principally due to the reasons mentioned above and due to restatement of account, our profit after taxes (PAT) was Rs. 246.84 Lakhs in fiscal 2010 as compared to losses of Rs. (53.65) Lakhs in fiscal 2009. Financial Year Ended March 31, 2009 Compared to Financial Year Ended March 31, 2008
Sales and Other Income During the year ended March 31, 2009, the company registered sales and other income of Rs. 50.21 Lakhs as compared to Rs. 360.62 Lakhs as on year ended March 31, 2008. Our sales and other income decreased by 86.08% due to reduced level of business operations. Expenditure Our total expenditure decreased by Rs. 438.23 Lakhs, or 87.43%, from Rs. 501.25 Lakhs in fiscal 2008 to Rs. 63.02 Lakhs in fiscal 2009. This decrease was mainly on account of reduced level of Manufacturing operations.
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Material Cost Our expenditure on material consumption was Rs. 144.74 Lakhs in fiscal 2008 compare to Nil in fiscal 2009. Manufacturing and Other Expenses Our Manufacturing and Other Expenses decreased by Rs. 293.49 Lakhs, or 82.32%, from Rs. 356.51 Lakhs in fiscal 2008 to Rs. 63.02 Lakhs in fiscal 2009. Profit before interest, depreciation and taxes Our profit before interest, depreciation and taxes (“EBITDA”) was Rs. (12.81) Lakhs in fiscal 2009 as compared to Rs. (140.63) Lakhs in fiscal 2008.
Interest Our net interest expense decreased by Rs. 44.23 Lakhs, or 93.90%, from Rs. 47.11 Lakhs in fiscal 2008 to Rs. 2.87 Lakhs in fiscal 2009.
Depreciation and Amortization Our Company’s Depreciation and Amortization decreased by Rs. 54.99 Lakhs, or 65.39%, from Rs. 84.10 Lakhs in fiscal 2008 to Rs. 29.10 Lakhs in fiscal 2009.
Profit before taxation and before exceptional items Our profit before taxation and before exceptional items was Rs. (271.84) Lakhs in fiscal 2008 compare to Rs. (44.78) Lakhs in fiscal 2009. Profit after taxes, as restated Principally due to the reasons mentioned above and due to restatement of account, our profit after taxes (PAT) was Rs. (53.65) Lakhs in fiscal 2009 as compared to Rs. (260.44) Lakhs in fiscal 2008.
Quantitative and Qualitative Disclosure about Market Risks
Unusual or infrequent events or transactions There have been no events, to our knowledge which may be called “unusual” or “infrequent.”
Significant economic changes that materially affected or are likely to affect income from continuing
operations Other than as mentioned under “Factors Affecting Our Results of Operations” on page 166 of this section, to our knowledge, there are no significant economic changes that materially affect or are likely to affect income from continuing operations.
Known trends or uncertainties that have material adverse impact on sales Our business has been impacted and we expect that it will continue to be impacted by the trends identified above in “Factors Affecting our Results of Operations” and the uncertainties described in “Risk Factors” on page 14 of this Draft Letter of Offer. To our knowledge, except as we have described in this Draft Letter of Offer, there are no known factors, which we expect to have a material adverse impact on our revenues or income from continuing operations.
Future changes in relationship between costs and revenues Except as described in “Risk Factors”, “Our Business”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 14, 82, and 165, respectively, of this Draft Letter of Offer, to the best of our knowledge, there is no future relationship between expenditure and income that will have a material adverse impact on the operations and finances of Our Company.
Extent to which material increases in net sales or revenue are due to increased sales volume,
introduction of new products or services or increased sales prices Changes in revenues during the last three years are as explained under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 165 of this section.
Status of any publicly announced new products or business segments Except as disclosed under the section titled “Our Business” on page 82 of this Draft Letter of Offer, the
172
Company has no publicly announced new products or business segments.
Seasonality of business The Company’s revenue and results of operations are not affected by seasonal factors.
Significant dependence on few suppliers or customers Our operations are not significantly dependent on a single or a few suppliers or customers. Competitive conditions For details of the competitive conditions, please refer to the discussions in the sections titled “Risk Factors” and “Our Business” beginning on pages 14 and 82 of this Draft Letter of Offer.
Significant regulatory changes Except as described in “Key Industry Regulations” on page 93 of this Draft Letter of Offer, there have been no significant regulatory changes that could affect our income from continuing operations.
Foreign exchange risk We are currently not affected by foreign exchange risk.
Interest rate risk We are exposed to market rate risk due to changes in interest rates on our credit facilities that we entered into. As at March 31, 2011, we had Rs. 4,391.41 Lakhs of outstanding indebtedness, which exposed us to market risk as a result of changes in interest rates. We undertake debt obligations to support our working capital needs and capital expenditure. Upward fluctuations in interest rates increase the cost of debt and interest cost of outstanding variable rate borrowings. We do not currently use any derivative instruments to modify the nature of our debt so as to manage our interest rate risk.
Inflation risk Although India has experienced double digit fluctuation in inflation rates in recent years, inflation has not had a material impact on our business or results of operations.
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(C) FINANCIAL INDEBTEDNESS OF THE COMPANY Principal Terms of Loans And Assets Charged As Security
(Rs. in Lakhs)
Sr.
No.
BANK
NAME
NATURE
OF LOAN
SANCTI
ONED LIMIT
BALANCE
AS ON March 31,
2011
DETAILS OF SECURITY
1 Indian Overseas Bank
Cash Credit 920.00 685.26 Primary Security: Mortgage of Immovable property viz. Ground Floor Exclusive-I and Exclusive II, store and upper basement of the commercial building on Plot No. 291 at X’trium, Andheri Kurla Road, Andheri (East), Mumbai. Collateral Security: - Personal Guarantee of 1) Mr. Deepak Chheda 2) Mr. Rohit Dedhia 3) Mr. Keshvji Dedhia 4) Mr. Mehul Nisar, 5) Mr. Harish Nisar, 6) Mr. Tejas Shah, 7) Mr. Anil Shah, 8) Mr. Shailesh Shah, 9) Mr. Dinesh Shah - Corporate Guarantee of Sigma Fiscals Private Limited
2 Kotak Mahindra Bank
Working Capital
Demand Loan
940.00 840.00 Primary Security: - Mortgage of First Floor and Eighth Floor of Project X’Trium located at Andheri Kurla Road, Andheri (East) Mumbai. - Cash Collateral on Existing properties already mortgaged property Collateral Security - Personal Guarantee of Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Keshavji Dedhia and Mr. Shailesh Shah - Corporate Guarantee of Sigma Fiscals Private Limited
3 Indian Overseas Bank
Project Term Loan
1800.00 *Nil Prime Security: All that piece or parcel of free hold land or ground admeasuring 901.06 sq. yards equivalent to 753.04 sq. meters bearing plot No. 7 of larger plot no. 10 of Azad Nagar Co-operative Society Ltd., forming part of Survey No. 287 of village Vile Parle in Registration District of Mumbai Suburban District at Road No. 1, Juhu, Vile Parle Development Scheme, Vile Parle (W), Mumbai – 400 056 where the upcoming project will be named as “X’czar”.
4 HDFC Bank
Vehicle Loan
68.21 31.10 Secured by hypothecation of Vehicles purchased by the Company
Grand Total
3728.21 1556.36
* Our Compnay has drawn Rs. 517 lakhs from the aforesaid Term Loan facility during May 2011 and the balance is yet to be drawn.
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SECTION VII: LEGAL AND OTHER INFORMATION
A. OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS
Except as described below, there are no outstanding litigations, suits or civil proceedings, or criminal proceedings, or prosecutions or tax liabilities, including prosecution under any enactment in respect of Schedule XIII to the Companies Act, 1956, against Our Company or the Directors, or the Promoters or group companies. There are no proceedings initiated for economic/ civil/ and other offences (including past cases where penalty may or may not have been awarded) that would have a material adverse effect on the business of the Company. None of the aforesaid persons/ companies is on RBI’s list of willful defaulters. No disciplinary action has been taken by the SEBI/ BSE against Our Company, Directors of Our Company and Promoters.
LEGAL PROCEEDINGS BY OR AGAINST THE COMPANY
(i) Proceedings of civil nature
(a) By the Company
NIL
(b) Against the Company NIL (ii) Proceedings of criminal nature
(a) By the Company
NIL
(b) Against the Company NIL (iii) Proceedings under tax laws
(a) By the Company
NIL
(b) Against the Company NIL (iv) Compounding applications by the Company under the Companies Act, 1956
(a) On 31st December 2008, the Company entered into a transaction of Rs. 32.76 lakhs with Vinod Marketing Private Limited, (“VMPL”) for the sale of machinery on the closure of the spinning unit. At the relevant time, one of the Directors of the Company was a Director of VMPL. Consequently, in terms of section 297 of the Companies Act, 1956, prior approval of the Central Government was required for entering into the above transaction. In the absence of
175
such prior approval, there had been a non compliance of the provisions of the section 297 of the Act. The Company had made an Application under the relevant provisions of the Act to the Registrar of Companies, Maharashtra (“ROC”) on December 30, 2010, for compounding of the offence. The Hon’ble Company Law Board, Mumbai Bench decided a penalty of Rs. 12,000 for which Our Company has made the payment. However, our Company is yet to receive final order.
(b) During the financial year 2008 – 2009, the Company, under the erstwhile promoters, advanced
to Vinod Marketing Private Ltd. (“VMPL”) an interest free loan of Rs. 126.69 lakhs. In terms of section 295 of the Companies Act, 1956. At the relevant time, one of the Directors of the Company was a Director of VMPL. Consequently, in terms of section 295 of the Companies Act, 1956, prior approval of the Central Government was required for granting of such a loan to VMPL. In the absence of such prior approval, there had been a non compliance of the provisions of section 295 of the Act. The Company had made an Application on December 30, 2010 under the relevant provisions of the Act for compounding of the offence to the Registrar of Companies, Maharashtra (“ROC”) and the ROC has forwarded the Application to the Hon’ble Company Law Board Bench (“CLB”) for compounding the offence.
On July 12, 2011, Our Company received a letter dated July 5, 2011 from CLB informing that since the Company did not have a Managing Director/Executive Director at the relevant time, all Directors are required to submit compounding applications and also to file compounding applications under section 283 (1) (h) of the Companies Act. The Company was requested to file its reply within seven days of the receipt of the letter, which has been filed with the CLB. Hon’ble CLB is yet to pass the order in the said matter.
(c) During the financial year 2004 – 2005 and 2005 – 2006, the Company had entered into certain
transactions with Vinod Securities and Investments Private Ltd., Bhagwan Cotton Ginners private Ltd., Bankatlal Boob Cotton Private Ltd. and Vinod Marketing Private Ltd. in which Director/s of the Company were Director/s at the relevant time. These transactions came within the purview of section 297 of the Companies Act, 1956 (“the Act”) and hence prior approval of the Central Government must have been obtained before entering into such transactions. No such approval was obtained and hence there had been a non compliance of the provisions of section 297 of the Act. The Company had made an Application under the relevant provisions of the Act to the Registrar of Companies, Karnataka for compounding of the offence. The Registrar of Companies has forwarded the Application to the Hon’ble Company Law Board, Southern Region Bench, Chennai. The Hon’ble Company Law Board, by its order dated 21st July 2009 ordered the compounding of the offence on payment of an aggregate amount of Rs.1.19 lakhs. The said amount had since been paid and the order of the Hon’ble Company Law Board was filed with Registrar of Companies, Karnataka.
(Though the preceding is not pending, the same is reflected by way of information)
LEGAL PROCEEDINGS BY OR AGAINST THE DIRECTORS OF THE COMPANY
(a) Proceedings of civil nature
(i) By the Directors - NIL
(ii) Against the Directors – NIL
(iii) Enquiry Proceedings
176
Status regarding proceedings under SEBI Regulations pertaining to India Infolline Ltd,, in which Mr. Nilesh
Vikamsey, an Independent Director of our Company, is a Director.
Sr. No.
Particulars Full Details Whether Mr. Nilesh
Vikamsey is/was a
director of the Company when the
default took place
Whether any action
taken/p
roceedings
initiated
against the
director
i Enquiry Notice dated March 03, 2010
Out of the debarred clients, 3 clients have dealt in the shares of Pyramid Saimira Theatre Ltd. There is an allegation on India Infoline Limited of violation of provisions of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 in the clients dealing in the shares of Pyramid Saimira Theatre Ltd. India Infoline Limited has filed an application for consent with SEBI on June 29, 2010 and the proceedings for the same are pending as on today.
Yes No
ii SEBI Enquiry Notice in 2001 in the matter of Cyberspace Infosys Limited
The notice was with regards to the dealings by the clients of India Infoline Limited in the scrip of Cyberspace Infosys Limited during the year 2000-01. India Infoline Limited was exonerated from all charges vide Enquiry Officer.
No No
iii Adjudication proceedings initiated in the case of Asian Star Company on July 21, 2010
As per the information received from India Infoline Limited, they are not aware of initiation of any adjudication proceedings in the matter of Asian Star Company as they have not received any show cause notice /intimation of adjudication proceedings from SEBI Adjudication proceedings notice dated January 03, 2011 in the said matter. IIFL had submitted its reply to SEBI vide its letter dated February 10, 2011 & March 10, 2011. Proceedings are still pending.
Yes No
iv SEBI Adjudication Notice dated November 28, 2008 in the case of trading in the scrip of GHCL Ltd.
The notice was with regard to alleged synchronized transactions in the scrip of GHCL Ltd. by India Infoline Securities Private Ltd. for two of its clients and consequential violation of the provisions of SEBI (Stock Brokers and Sub-Brokers) Regulation, 1992 (“the Regulation”). The Adjudicating Officer by his order dated 15th June, 2009 held that the alleged violation of the Regulations had not been established.
Yes No
177
However the Adjudicating Officer made a passing remark against the Noticee that its conduct during the adjudication proceedings were far from satisfactory.
v Administrative Warning vide SEBI letter dated June 18, 2008
SEBI vide letter dated June 18, 2008, advised India Infoline Limited to be careful and also to ensure that the shares are sold/purchased by the client or credited to the respective client’s account directly instead of through the Company’s Beneficiary Account. There were no Enquiry/ adjudication proceedings/show cause notice/ order were issued against India Infoline Limited for any violations in the matter of Osian LPG Bottling Limited.
Yes No
vi SEBI adjudication proceedings as on March 12, 2009
As per the information received from India Infoline Limited, they are not aware of adjudication proceedings initiated as on March 12, 2009 from SEBI. However, they had received an adjudication proceedings dated August 27, 2009 regarding violation of provisions of SEBI (Stock Broker & Sub Broker) Regulations, 1992. A Consent Order with respect to the same was passed by SEBI on May 18, 2010, dropping all the proceedings.
Yes No
vii SEBI Enquiry proceedings as on February 19, 2010
As per the information received from India Infoline Ltd., they are not aware any enquiry proceedings initiated as on February 19, 2010 from SEBI. However, they are in receipt of enquiry proceedings dated April 27, 2010 issued by SEBI regarding violation of provisions of SEBI (Stock Broker & Sub Broker) Regulations, 1992. The Company has already filed a reply with SEBI and the proceedings pertaining to the same are pending as on date.
Yes No
178
a) PAST AND COMPLETED - FULLY EXONERATED PROCEEDINGS DROPPED BY SEBI:
Sr. No. Particulars Full Details Whether Mr. Nilesh Vikamsey is/was a director of
the Company
when the default took place
Whether any action taken/proceedings initiated
against the director
1
Show Cause Notice dated September 08, 2008
The Notice pertains to alleged violation of certain provisions of Depositories Act, 1996 and certain provisions of SEBI (Depositories and Participants) Regulations, 1996 by India Info line Ltd. (Formerly known as India Info line Securities Private Ltd.). Pending the adjudication proceedings the Noticee filed a Consent Application. Vide order dated 5th June, 2009, the Adjudicating Officer passed the Consent Order disposing off the adjudication proceedings on payment of Rs.1,00,000/-
Yes
NO
2 Show Cause Notice dated August 27, 2009
The Notice pertains to alleged violation of provisions of SEBI (Stock Broker & Sub broker ) Regulations, 1992 by India Info line Ltd.. Pending the adjudication proceedings the Noticee filed a Conset Application. Vide order dated 18th May 2010, the Adjudicating Officer SEBI passed the Consent Order disposing off the adjudication proceedings on payment of Rs.25,00,000/-.
Yes
NO
179
b) SEBI ORDERS FOR COMPLIANCE – FULLY COMPLIED
Sr. No. Particulars Full Details Whether Mr. Nilesh Vikamsey is/was a
director of the
Company when the default
took place
Whether any action
taken/proceedings initiated against
the director
1
Order dated September 28, 2005 and Order dated June 16, 2006 passed by Whole time Member, SEBI in the matter of IFSL
The Whole time Member, SEBI by his interim order dated 28th September 2005 directed certain stock brokers named in the order which included India Infoline Securities Private Ltd. were directed not to buy, sell or deal in securities of IFSL Ltd. on behalf of the promoters, directors and clients mentioned in the order, directly or indirectly till further directions. This order was later confirmed by the order dated 16th June, 2006. India Infoline Ltd. had complied with the directions contained in the orders above referred to.
Yes
NO
2 Order dated October 5, 2005 and Order dated June 20, 2006 in the matter of M/s Ind Tra Deco Ltd
The Whole time Member, SEBI, while dealing with the trades of shares of Inda Tra Deco Ltd., passed directions under section 11B and 11 (4) of SEBI Act, directing broker entities mentioned therein which included India Infoline Securities Private Ltd. not to buy, sell or deal in securities of Inda Tra Deco Ltd., directly or indirectly till further directions. This order was later confirmed by the order dated 20th June, 2006. The directions contained the above orders have been complied with.
Yes
NO
3 Order dated March 21, 2006 in the matter of Shri. Lalit Dua.
Lalit Dua was an independent research analyst, whose reports were published in website of India Infoline Ltd.. (“IIFL”) The interim order dated 21st March 2006 was passed by Whole time Member, SEBI, giving certain directions to Mr. Lalit Dua and certain persons and entities mentioned therein. Since the recommendations of Mr. Lalit Dua were being published in the website of IIFL, the order cautioned IIFL to exercise due care and diligence to ensure that persons with proven credentials of giving fair and truthful information and analysis alone are allowed to give advice on the portal so that the portal is not misused by persons giving advice purely on consideration of personal gains.
Yes
NO
4 SEBI letter dated July 13, 2010
Parabolic Drugs Limited wherein SEBI advised us to gear up at our back office system and ensure efficient control to minimize PAN mismatches while making data entry in IPO . biddings in future. No Show Cause Notice received from SEBI. We ensured compliance to avoid
Yes
NO
180
recurrence of such mismatches and the same was confirmed to SEBI vide our replies dated July 30, 2010 and August 27, 2010.
5 SEBI letter dated February 09, 2011
Pertaining to non bidding of applications in Coal India Ltd. IPO, SEBI advised us not to act as syndicate member in IPO till resolution of such matters and further advise. Resolution status submitted to SEBI and SEBI had withdrawn their restrictions vide its letter dated March 11, 2011. As per SEBI advice, we had resolved the issues and confirmed to SEBI.
Yes
NO
C) SEBI PROCEEDINGS – PENDING
Sr. No.
Particulars Full Details Whether Mr. Nilesh
Vikamsey is/was a
director of
the Company when the
default took place
Whether any action
taken/proceedings initiated against
the director
1 SEBI adjudication Notice dated November 27, 2009
Clients dealing in GHCL Shares. Allegations of violation of provisions of SEBI (Prohibition of Fraudulent &Unfair Trade Practices relating to securities Market) Regulations, 2003. Reply submitted to SEBI. Proceedings pending. IIFL has stopped Trading with GHCL group of clients.
Yes
NO
(b) Proceedings of criminal nature
(i) Against the Directors
Reference to Case No.
Opposite Parties Brief facts of the case
Case No. 21/ SW/2007 In the Metropolitan Magistrate’s 51st Court at Kurla, Mumbai.
Mr. Shreenarayan N Agarwal Residing at Agrawal Nagar Dr. Ambedkar Road Matunga (E) Mumbai 400 19 (Complainant) Vs Mr Harish Damji Nisar Plot No, 247 7th Floor, Amrut Tower Talang Road
Mr. S N Agrawal is the complainant. A 1 is the partner of A 2, which is a partnership firm. A private complaint has been filed by the Complainant against the accused under section 420 of the Indian Penal Code. It has been alleged in the complaint that pursuant to an oral agreement reached between the Complainant and accused No.1 for the sale of flat No.14 on 7th Floor of Amrut Towers, Telang Road, Matunga (E), Mumbai, of an extent of 1950 sq.ft, with a terrace area of 1800 sq. ft together with two stilt parking spaces, a servant room of 250 sq. ft. for a consideration of Rs.301 lakhs. Pursuant to the agreement, the Complainant paid an advance of Rs.11 lakhs through cheque for which Accused No. 2 has alleged to have issued a receipt.
181
Matunga (East) Mumbai 400 019. (A-1) & Amrut Constructions 3/7, Dattraya Building 176, Sir Bhalchandra Road Dadar Mumbai 400 014. (A-2) (Accused)
The accused has provided certain documents for verification of title to the property but when additional documents were asked for, it is alleged that Accused No. 1 asked for additional advance money contrary to the earlier understanding. Further an MOU drafted by Accused No.1 contained clauses which were contrary to the oral understanding reached. It is also alleged in the complaint that carpet area of the flat as well as the servant’s quarters were less than the area intimated to the Complainant. The complainant also questioned the right of the accused to sell the terrace area. It has also been alleged that the flat in question has subsequently been sold to one Mr.Dipen Vinod Bhalani. The complaint has been resisted by A1 and A2. It has been denied that there was any agreement to sell the flat, servants’ room etc. In particular, the issue of receipt for Rs. 11 lakhs. The accused obtained an opinion of a Handwriting Expert to the effect that the signature contained in the receipt dated 20.10.2005 was forged. However, since the same was obtained by the accused on their own initiative and not through the court, the accused made an application to the court seeking the opinion of the State Examiner of Documents, Maharashtra State, as to the genuiness of the signature on the receipt. This application was rejected by the Hon’ble Magistrate by his order dated 4.3.2011. The complaint is pending before the court.
(ii) By the Directors -
Reference to Case No.
Opposite Parties Brief facts of the case
Criminal Revision Application No. of 2011 Before the Court of Sessions For Greater Bombay at Bombay
Mr. Harish Damji Nisar and Amrut Constructions (Applicants) Vs State of Manarashtra and Mr. Shreenarayan N. Agrawal (Respondents)
Mr. Harish Damji and Amrut Constructions are the applicants. The application has been filed under section 397 of the Criminal Procedure Code against the order dated 4.3.2011 passed by the Hon’ble Metropolitan Magistrate, 51st Court, Kurla, Mumbai, rejecting the application filed by the applicants seeking the opinion of the State Examiner of Documents, Maharashtra State, as to the genuiness of the signature on the receipt. The matter is pending.
182
LEGAL PROCEEDINGS BY / AGAINST THE GROUP ENTITIES
(a) Proceedings of civil nature
(i) By the promoters / Group Entities:
Sr.
No.
Reference to Case
No.
Parties Brief facts of the case
1. Suit No. 301 of 2004 Before the High Court of Judicature at Bombay
Amrut Dhara Enterprises, Mr.Harish Nisar and others (Plaintiffs) Vs Mr Deven Madhusudhan Doshi and others (Defendants)
The suit has been filed by the plaintiffs for a decree of specific performance of the Agreement dated 10th December 2003 entered into between the plaintiffs and the defendants for the sale of plot of land bearing CS No. 695/10 of Matunga Division situate on Jame Jamshed Road, Matunga, Mumbai and and Plot no. 592 of Dadar Matunga Estate admeasuring 1,006.68 mts or thereabouts with the building thereon and for other reliefs as prayed in the plaint. In the suit, the Plaintiffs took out a Notice of Motion No. 318 of 2004 seeking interim reliefs for appointment of a receiver and for an injunction restraining the defendants from disposing off, alienating or transferring or entering into any arrangement or agreement with any third party in respect of the suit property. By an order dated 25th August 2005, the Plaintiffs were ordered to deposit a sum of Rs.50 lakhs. The plaintiffs deposited the sum on 22nd September 2005. Against the order dated 25th August 2005, the Respondents filed Appeal No. 1023 of 2005 in the Hon’ble High Court. By an order dated 14th December 2006 passed in this Appeal, the Hon’ble High Court ordered that the Notice of Motion No. 318 of 2004 be heard after the Respondents filed their affidavit in reply to the Notice of Motion. By order dated 1st March 2007 passed in Notice of Motion No. 318 of 2004 in the suit. The Hon’ble High Court dismissed the Notice of Motion with liberty to the Plaintiffs to withdraw the amount of Rs. 50 lakhs deposited by the Plaintiffs. At the request of the Plaintiffs, the operation of the ad interim order pursuant to which the Plaintiffs had deposited the sum of Rs. 50 lakhs, was to continue for a period of four weeks from 1st March 2007. Against the order dated 1st March 2007 aforesaid, passed in Notice of Motion No. 318 of 2004, an appeal bearing Lodgment No. 384 of 2007 was filed in the Hon’ble High Court. The Hon’ble High Court directed to expediously hear and dispose of the suit. The suit is pending.
183
(ii) Against the Promoters / Group Entities:
Sr.
No.
Reference to Case
No.
Parties Brief facts of the case
1. Suit No. 872 of 2007 High Court of Judicature at Bombay
Mr. Shreenarayan N. Agarwal (Plaintiff) Vs Amrut Construction Mr Harish Nissar Ms. Sudhaben N Jain & Mr Dipen Vinod Bhalani (Defendants)
Mr. Shreenarayan N Agarwal is the plaintiff in the suit. The suit has been filed by the plaintiff against the defendants for a decree for specific performance of the Agreement dated 18th October 2005 entered into between the Plaintiff and Defendants No. 1 and 2. in respect of flat No. 14, on the 7th floor of the building “Amrut Towers” situate at 247, Telang Road, Matunga, Mumbai - 400 019 and for other reliefs as prayed for in the plaint. The suit is contested by the Defendants. By an order dated 16th September 2009 passed in Notice of Motion No. 1207 of 2007, taken out in the suit, the Hon’ble High Court while dismissing the Notice of Motion, ordered that ad-interim order dated 12.4.2007 shall continue upto a date including 9.11.2009. An appeal bearing No. 500 of 2009 was filed by Mr Shreenarayan Agarwal, the Original Plaintiff, challenging the order dated 16th September 2009 and the same has been admitted. In the said appeal, Notice of Motion No. 3907 of 2009 was taken out by the Appellant seeking interim reliefs. By its order dated 30th November, 2009, passed in Appeal No. 500 of 2009, the Hon’ble High Court, passed an order restraining Respondent No. 4 from creating any third party interest in respect of the suit property. The Notice of Motion was disposed of. The suit is pending.
(b) Proceedings of a criminal nature
(i) By the promoters/ group entities:
NIL
184
(ii) Against the promoters/ group entities:
Reference to Case No.
Parties Brief facts of the case
Criminal Complaint No. 21/SW/2007 51st Court Metropolitan Magistrate’s Court Kurla Mumbai
Mr. Shreenarayan N Agarwal (Complainant) Vs Amrut Construction Company
Please see the details given in the pending cases of proceedings of criminal nature against the Directors.
(c) Cases under Income Tax Act against the Group Entities:
(i) By the Group Entities:
NIL
(ii) Against the Group Entities:
Income tax appeal filed against Sigma Fiscals Private Ltd.
Sr. No.
Reference to Case No.
Parties Brief facts of the case
1. Income-tax appeal bearing Lodging No. 2268 of 2008 High Court of Judicature at Bombay
The Commissioner of Income tax -4, Mumbai 400 020 (Appellant) Vs Sigma Fiscals Private Ltd. (Respondent)
Commissioner of Income-tax -4 is the appellant in the appeal. The appeal has been filed against the order dated 4 -3-2008 passed by the Incometax Appellate Tribunal, Mumbai dismissing the appeal filed by the revenue. Facts of the case: Sigma Fiscals Private Ltd. (“the Assessee”) filed a return of income for the Assessment Year 2001 – 2002 declaring a loss of Rs.2,02,78,080/- for the financial year ended 31.3.2001. The case was selected for scrutiny assessment and notices u/s 143 (2) and 142 (1) were issued to the Assessee. After the hearings, the Deputy Commissioner of Income-tax, Circle -4 (1), Mumbai, by his order dated 30.1.2004 determined the income of the assessee at Rs. 24,01,310/- treating the share trading loss of Rs.4,40,69,353/- as speculative loss and has also allocated Rs.20,46,030/- as interest cost attributable to share trading and also Rs.1,00,000/- as other expenses towards share trading activity. Against the order dated 30.1.2004, the Assessee filed an appeal before the Commissioner of Income tax (Appeals), Mumbai. The CIT
185
(Appeals), by his order dated 16.8.2004 dismissed the appeal. Against the above order of dismissal of the appeal, the Assessee an appeal being ITA No. 7547/Mum/2004 before the Income Tax Appellate Tribunal, Mumbai. The Tribunal, by its order dated 4.8.2008 partly allowed the appeal by setting aside the order of Assessing Officer allocating Rs.20,46,030/ by way of cost of financing and Rs.1,00,000/- as other expenses towards speculation activities. Against the order dated 4.8.2008, the revenue has filed the appeal before the High Court. The appeal is pending.
C. Statutory liability/ dues against our Group Company NIL
III. Amounts Owed to Small Scale Undertakings There are no sums exceeding Rs. One lakh due to any persons selling goods and materials and/or rendering services as claimed to be small-scale undertaking which is outstanding for more than thirty days.
IV. Defaults There are no defaults outstanding in meeting statutory dues, institutional dues and towards instrument holders like debentures, fixed deposits etc. except there has been outstanding dividend on Preference Shares for last 2 years. V. Material Developments There have been no material developments, since the date of the last balance sheet otherwise than as disclosed in the section 'Management's Discussion and Analysis of Financial Condition And Results of Operations' on page 165 of this Draft Letter of Offer. VI. Contingent Liabilities There are no other contingent liabilities other than as mentioned in Annexure- IV of “Financial Statements of Issuer” on Page no. 150 of this Draft Letter of Offer.
186
(B) Government Approvals or licensing Arrangements We have received the necessary consents, licenses, permissions and approvals from the Government of India and various government agencies required for our present business and except as mentioned below, no further approvals are required for carrying on our present business activities. It must be distinctly understood that, in granting these approvals, the Government of India does not take any responsibility for our financial soundness or for the correctness of any of the statements or commitments made or opinions expressed in this behalf. In view of the approvals already obtained, we can undertake this Issue and our current and proposed business activities and no further major approvals from any government or regulatory authority or any other entity are required to continue our business activities. Unless otherwise stated, these approvals are all valid as of the date of this Draft Letter of Offer. The below mentioned licenses, permits and approvals are granted to the Company by various authorities for conducting its business activities. Approval for this Issue: The present Issue of Equity Shares has been authorized by the Board of Directors of Our Company under Section 81(1) of the Companies Act, 1956 vide a resolution passed at their meeting held on October 22, 2010. Government Approvals obtained by Our Company for Business and Projects
No Issuing Authority Nature of License / Approval Registration/
License No.
Date of
granting /
renewing
License/
Approval
Validity
1. Registrar of Companies, Karnataka
Certificate of Incorporation CIN-L85110KA1993PLC014326
May 17, 1993 --
2. Registrar of Companies, Karnataka
Certificate for Commencement of Business
CIN- L85110KA1993PLC014326
May 24, 1993 --
3. Registrar of Companies, Karnataka
Certificate of registration of Special Resolution confirming alteration of Object Clause
CIN- L85110KA1993PLC014326
March 2, 2010 --
4. Registrar of Companies, Maharashtra
Fresh Certificate of incorporation consequent upon change of name
CIN- L85110MH1993PLC206012
August 24, 2010
--
General Approvals
5. Superintendent (Service Tax) Customs and Central Excise)
Certificate of Registration under section 69 of the Finance Act, 1994 (32 of 1994)
Service Tax Code: AAACV6748DSD003
- One Time Registration
6. Income Tax Officer, Income Tax Department
Allotment of Permanent Account Number under the provisions of Income Tax Act, 1961)
PAN: AAACV6748D - One Time Registration
7. Income Tax Department
Allotment of Tax Deduction Account Number as per the Income Tax Act, 1961
TAN: MUMV17742E
- One Time Registration
8. VAT / Sales Tax (of Rodium Properties- Division of Rodium Realty Ltd.)
Registration No. allotted under Maharashtra VAT Act and Central Sales Tax Act
VAT: 27940774364V CAT: 27940774364C
- One Time Registration
9. Employee Provident Fund
Registration No. allotted under Employee Provident Fund
KN/RCR/21204 One Time Registration
10. Registration under Bombay Shops and Establishments Act, 1948
Shop and Establishment 760156546/Commercial II
September 16, 2010
One Time Registration
187
No Issuing Authority Nature of License / Approval Registration/
License No.
Date of
granting /
renewing License/
Approval
Validity
Project Related Approvals
X’czar Project
11. Intimation of Disapproval (IOD)
Ex. Engineer Building, Proposal (WS), H and K Wards, Municipal Office, R.K.Patkai Marg, Bandra (West)
No. CE/6077/BSII/AK
July 12, 2010 One Time approval unless revoked
12. Commencement Certificate (CC)
Ex. Engineer Building, Proposal (WS), H and K Wards, Municipal Office, R.K.Patkai Marg, Bandra (West)
August 2, 2010 One Time approval unless revoked
We are in the process of preparing / making application for our other ongoing and planned projects. The Company requires various approvals for it to dematerialization of Equity Shares. The approvals that the Company requires include the following: 1. Tripartite Agreement between the Issuer, Registrar and the National Securities Depository Limited entered
into on January 15, 2010 2. Tripartite Agreement between Central Depository Services (India ) Limited and Vishal Cotspin Limited
(Issuer) and Cameo Corporate Services Limited entered into on October 22, 2001
188
SECTION VIII- REGULATORY AND STATUTORY DISCLOSURES Authority for the Present Issue
The present Issue of Equity Shares has been authorized by the Board of Directors of Our Company under Section 81(1) of the Companies Act, 1956 vide a resolution passed at their meeting held on October 22, 2010. The meeting of the Board of Directors of the company held on October 22, 2010 decided to make the following offer to the existing Equity Shareholders of the Company:
Issue of 21,65,267 Equity Shares of Face Value of Rs. 10/- each for cash at premium of Rs. [*]/- each on
rights basis to the existing Equity Shareholders of Rodium Realty Limited in the ratio of 2 (Two) Equity Shares for every 3 (Three ) Equity Shares held on the Record Date i.e. [*]. The Issue price is Rs. [*]/- for
Issue of each Equity Share on rights basis and the Issue price is [*] times the face value of the shares of Our Company.
The amount payable per Rights Equity Share is under:
Amount payable per Rights Equity
Share (Rs.)
Face Value Premium Total
On Application 5.00 [*] [*]
On Final Call 5.00 [*] [*]
Total 10.00 [*] [*]
* For details on the payment method see “Issue Procedure” on page no. 203 of this Draft Letter of Offer.
Prohibition by SEBI
Our Company, Our Directors, Our Promoters, Group Companies, other companies promoted by the promoters and companies with which Our Company’s directors are associated as directors, have not been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI or any other authorities. Neither we nor our directors, our promoters, group companies, other companies promoted by the promoters and companies with which Our Company’s directors are associated as directors, have been identified as willful defaulters of RBI or any other authorities and no violations of securities laws have been committed by them in the past and no proceedings in relation to such violations are currently pending against them.. Eligibility for the Issue
Rodium Realty Limited is an existing Company registered under the Companies Act, 1956, whose Equity Shares are listed on Bombay Stock Exchange Ltd. It is eligible to offer this Rights Issue in terms of Chapter IV of SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009. Compliance with Reg. 4(2) of the SEBI (ICDR) Regulations Our Company is eligible to make this Rights Issue in terms of Chapter IV of the SEBI (ICDR) Regulations. Our Company has complied with the provisions of Regulation 4 of the SEBI (ICDR) Regulations in connection with the general eligibility requirements for the Issue and confirms that -
1. Neither our Company, nor our Promoters, our Promoter Group, Directors or person(s) in control of our Company are debarred from accessing the capital markets under any order or direction passed by SEBI;
2. None of our Promoters, Directors or persons in control of our Company was or also is a promoter,
director or person in control of any other company which is debarred from accessing the capital markets under any order or direction passed by SEBI;
189
3. Our Company is not declared as willful defaulters by the RBI or is not in default of any payment of interest or repayment of principal amount in respect of any debt instruments issued by it to the public;
4. Our Company is an existing company registered under the Companies Act, whose Equity Shares are
listed on BSE and alongwith this Draft Letter of Offer we have applied to BSE for its in-principle approval for listing of the Equity Shares to be issued pursuant to this Rights Issue and that BSE is the Designated Stock Exchange for the purposes of this Rights Issue. Subsequently, we shall make application to the BSE for permission to trade Equity Shares being offered in terms of this Draft Letter of Offer.
5. All existing partly paid up Equity Shares of our Company have either been fully paid up or forfeited
and as on the date of this Draft Letter of Offer, there are no outstanding partly paid up Equity Shares of our Company;
6. The requirement of funds for the Objects of the Issue is proposed to be financed by the Net Proceeds of the Rights Issue and Term Loan as mentioned in the section titled “Objects of the Issue” beginning on page no. 56 of this Draft Letter of Offer. Our Company has made firm arrangements of finance through verifiable means towards 75% of the stated means of finance for part funding of Project X’czar. The same is in conformity with the provisions of Regulation 4 (2) (g) of the SEBI (ICDR) Regulations.
Compliance with Part E of Schedule VIII of the SEBI Regulations Our Company is an existing listed company registered under the Companies Act whose Equity Shares are listed on the BSE. Our company is not in compliance with Clause (1) of Part E of SEBI (ICDR) Regulations. Our Company has undergone change in management pursuant to acquisition of control by existing promoters in accordance with SEBI (SAST) Regulations and our Company is making this issue for the first time subsequent to such change in control and accordingly, has made disclosure in this Draft Letter of Offer as per Part A of Schedule VIII of SEBI (ICDR) Regulations.
DISCLAIMER CLAUSE OF SEBI AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO
SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THIS DRAFT LETTER OF OFFER TO SECURITIES AND EXCHANGE BOARD OF INDIA (‘SEBI’) SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS
PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THIS DRAFT LETTER OF OFFER. THE LEAD MANAGER TO
THE ISSUE, I.E., VIVRO FINANCIAL SERVICES PRIVATE LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR
MAKING INVESTMENT IN THE PROPOSED ISSUE.
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS
PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF
ALL RELEVANT INFORMATION IN THIS DRAFT LETTER OF OFFER, THE LEAD MANAGER
IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE ISSUER COMPANY
DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS
PURPOSE, THE LEAD MANAGER, I.E. VIVRO FINANCIAL SERVICES PVT. LTD. HAS
FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED AUGUST 11, 2011 WHICH
READS AS FOLLOWS:
190
1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH
COLLABORATORS ETC. AND OTHER MATERIALS IN CONNECTION WITH THE FINALIZATION OF THE DRAFT OFFER DOCUMENT PERTAINING TO THE SAID RIGHTS
ISSUE; 2. ON THE BASIS OF SUCH EXAMINATION AND DISCUSSIONS WITH THE COMPANY, ITS
DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, AND INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND CONTENTS OF THE DOCUMENTS AND OTHER PAPERS FURNISHED BY THE COMPANY;
WE CONFIRM THAT:
a. THE DRAFT LETTER OF OFFER FILED WITH THE BOARD IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;
b. ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE AS ALSO THE REGULATIONS GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED BY THE BOARD,
THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND
c. THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND
ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE
SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS.
3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN
THE DRAFT LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND THAT TILL DATE SUCH REGISTRATION IS VALID.
4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS TO FULFILL THEIR UNDERWRITING COMMITMENTS. – NOTED FOR COMPLIANCE.
5. WE CERTIFY THAT THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN
OBTAINED FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN
SHALL NOT BE DISPOSED / SOLD / TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS/DRAFT PROSPECTUS WITH THE BOARD TILL THE DATE OF
COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT RED HERRING PROSPECTUS/DRAFT PROSPECTUS. – NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.
6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE FOR COMPUTATION OF
PROMOTERS CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT RED HERRING PROSPECTUS/DRAFT PROSPECTUS. – NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.
7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C) AND
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(D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE
RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO
ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE ISSUER ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE.– NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.
8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE
FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE ‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER
CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS
MEMORANDUM OF ASSOCIATION.
9. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION (3) OF SECTION 73 OF
THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK
EXCHANGES MENTIONED IN THE DRAFT LETTER OF OFFER. WE FURTHER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION.
10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF
OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE.
11. WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.
12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT
LETTER OF OFFER: (A) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME, THERE SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE ISSUER, AND
(B) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME. 13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO
ADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE MAKING THE ISSUE.
14. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS BEEN
EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OR THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE ,ETC.
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15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHANGE BOARD OF
INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS
OF COMPLIANCE, PAGE NUMBER OF THE DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.
THE FILING OF THE DRAFT LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE ISSUER FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER
CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI
FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MANAGER ANY IRREGULARITIES OR LAPSES IN THE OFFER DOCUMENT. Disclaimer from the Issuer Company and the Lead Manager Our Company, and the Lead Manager accept no responsibility for statements made otherwise than in this Draft Letter of Offer or in the advertisement or any other material issued by or at the instance of the Issuer and that anyone placing reliance on any other source of information would be doing so at his own risk. Caution All information shall be made available by the Lead Manager and the Company to the Equity Shareholders and no selective or additional information would be available for a section of Equity Shareholders in any manner whatsoever including road show presentations, research or sales reports or at collection centres or elsewhere, after filing of this Draft Letter of Offer to SEBI. Shareholders / Investors who invest in the Issue will be deemed to have represented to the Issuer Company and Lead Manager and their respective directors, officers, employees, agents, affiliates and representatives that they are eligible under all Applicable laws, rules, regulations, guidelines and approvals to acquire Equity shares of Our Company, and are relying on independent advice / evaluation as to their ability and quantum of investment in this issue. Disclaimer In Respect Of Jurisdiction This Draft Letter of Offer has been prepared under the provisions of Indian Law and the applicable rules and regulations hereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Mumbai, State of Maharashtra, India only. The Draft Letter of Offer was filed with SEBI for its observations on [*], 2011. SEBI issued its observations on [*] and the final Letter of Offer has been filed with the Stock Exchange as per the provisions of the Companies Act after incorporating SEBI observations. The distribution of the Draft Letter of Offer and the Issue of Equity Shares on a Rights basis to persons in certain jurisdictions outside India may be restricted by the legal requirements prevailing in those jurisdictions. Any Person in whose possession this Draft Letter of Offer may come are required to inform themselves about it and observe any such restrictions. No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations and SEBI has given its observations. Accordingly, the Equity Shares represented thereby may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as of any time subsequent to this date.
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Selling Restrictions The distribution of this Letter of Offer and the Issue of Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession this Letter of Offer may come are required to inform themselves about and observe such restrictions. The Company is making this Issue of Equity Shares on a rights basis to the Equity Shareholders of the Company and will dispatch this Letter of Offer/Abridged Letter of Offer and CAF to Equity Shareholders who have provided an Indian address. No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that the Draft Letter of Offer was filed with SEBI for observations. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and this Letter of Offer may not be distributed in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, those circumstances, this Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Letter of Offer should not, in connection with the Issue of the Equity Shares or the Rights Entitlements, distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the Rights Entitlements referred to in this Letter of Offer. Neither the delivery of this Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as of any time subsequent to this date. United States Restrictions NEITHER THE RIGHTS ENTITLEMENTS NOR THE SECURITIES THAT MAY BE PURCHASED PURSUANT HERETO HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, RESOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OF AMERICA OR THE TERRITORIES OR POSSESSIONS THEREOF (THE “UNITED STATES” OR THE “U.S.”) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, “US PERSONS” (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”)), EXCEPT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE RIGHTS REFERRED TO IN THIS DRAFT LETTER OF OFFER ARE BEING OFFERED IN INDIA, BUT NOT IN THE UNITED STATES. THE OFFERING TO WHICH THIS DRAFT LETTER OF OFFER RELATES IS NOT, AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS, AN OFFERING OF ANY SHARES OR RIGHTS FOR SALE IN THE UNITED STATES OR AS A SOLICITATION THEREIN OF AN OFFER TO BUY ANY OF THE SAID SHARES OR RIGHTS. ACCORDINGLY, THIS DRAFT LETTER OF OFFER SHOULD NOT BE FORWARDED TO OR TRANSMITTED IN OR INTO THE UNITED STATES AT ANY TIME. NEITHER THE COMPANY NOR ANY PERSON ACTING ON BEHALF OF THE COMPANY WILL ACCEPT SUBSCRIPTIONS OR RENUNCIATIONS FROM ANY PERSON, OR THE AGENT OF ANY PERSON, WHO APPEARS TO BE, OR WHO THE COMPANY OR ANY PERSON ACTING ON BEHALF OF THE COMPANY HAS REASON TO BELIEVE IS, EITHER A “U.S. PERSON” (AS DEFINED IN REGULATION S) OR OTHERWISE IN THE UNITED STATES. ANY PERSON SUBSCRIBING TO THE EQUITY SHARES OFFERED HEREBY WILL BE DEEMED TO REPRESENT THAT SUCH PERSON IS NOT A U.S. PERSON (AS DEFINED IN REGULATION S) OR OTHERWISE IN THE UNITED STATES AND HAS NOT VIOLATED ANY U.S. SECURITIES LAWS IN CONNECTION WITH THE EXERCISE. Designated Stock Exchange The Designated Stock Exchange for the purpose of this Issue will be BSE.
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Disclaimer clause of BSE As required, a copy of this Draft Letter of Offer shall be submitted to the BSE. The disclaimer clause as intimated by the BSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Final Letter of Offer. Filing The Draft Letter of Offer has been filed with SEBI, Plot No. C 4-A, 'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051, India, and with the Designated Stock Exchange i.e. BSE for its observations. All legal requirements applicable until the date of filing the Draft Letter of Offer with the Stock Exchange have been complied with. After SEBI gives its observations, the final Letter of Offer will be filed with the Designated Stock Exchange as per the provisions of the Companies Act. Impersonation
As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of sub- section (1) of Section 68A of the Companies Act, 1956 which is reproduced below:
“Any person who – i. makes in a fictitious name an application to a Company for acquiring or subscribing for any shares
therein, or ii. otherwise induces a Company to allot, or register any transfer of, shares therein to him, or any other
person in a fictitious name shall be punishable with imprisonment for a term which may extend to five years.”
Listing The shares of the company are listed on the BSE (the designated stock exchange) and in-principle approval for listing of shares has been obtained from the BSE through its letter No. [*] dated [*]. The Company will apply to BSE for listing of the securities to be issued pursuant to this issue. If the permission to deal in and for an official quotation of the securities is not granted by BSE within 12 days from the Issue Closing Date, the Company should forthwith repay, without interest, all monies received from the applicants in pursuance of this Letter of Offer. If such money is not repaid within eight days after the Company becomes liable to repay it, then the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money, with interest, as prescribed under Section 73 of the Companies Act 1956. Consents Consents in writing of the Auditors, Lead Manager, Legal Advisor to the Issue and Registrar to the Issue to act in their respective capacities and Directors for their names to appear as such in this Draft Letter of Offer have been obtained and such consents have not been withdrawn up to the time of delivery of this Draft Letter of Offer for registration with the Stock Exchange. M/s M.M. Nissim and Co., Chartered Accountants, being the Auditors of our Company have given their written
consent for the inclusion of their Report in the form and content as appearing in this Draft Letter of Offer and for
their report on the Statement of Tax Benefits, in the form and content as appearing in this Draft Letter of Offer and
such consents and reports have not been withdrawn up to the time of delivery of this Draft Letter of Offer with the
stock exchange.
We are in the process of obtaining consent from Bankers to the Issue. To the best of knowledge of the company, there are no other consents required for this Issue. However, should the need arise, necessary consents shall be obtained by the Company.
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Expert Opinion Except for the restated financial statements and audit reports of the Auditor of our Company on the financial statements of the Company as at and for the years ended March 31, 2011, 2010, 2009, 2008 and 2007 and their report on Statement of Tax Benefits, we have not obtained any other expert opinion in relation to this Issue. Expenses of the Issue The expenses of the Issue have been listed below:
Sr. No. Particulars Rs. In Lakhs % of the Issue Size
1. Lead Manager, Legal Advisor and Other Fees [*] [*]
2. Statutory Fees payable to SEBI and Stock Exchange, Registrar and Depository Charges
[*] [*]
3. Advertising, Printing, Stationery, Stamp Duty and Postage expenses (including transportation costs)
[*] [*]
4. Misc. Expenses [*] [*]
TOTAL [*] [*]
[*] shall be finalized before filing of final Letter of Offer with Stock Exchange. The percentage of the total Issue expenses of Rs. [*] Lakhs is [*] % of the total Issue size. Previous public or rights issue, if any (during the last 5 Years) There has been no public or rights issue during last 5 years by Our Company.
Previous Issues of Securities otherwise than for Cash
Neither Our Company nor any other listed group - company/ subsidiary/ associate have made any issue of Equity Shares for consideration other than cash during the last five years.
Commission or Brokerage on Previous Issues The Company has not made any public / rights issue during last five years, hence any commission or brokerage has not been paid. There are no outstanding against underwriting commission, brokerage and selling commission payable by the Company on account of previous capital issues made by the Company. Particulars of Listed Group Companies/ subsidiaries /associates which made capital issue during the last three years Neither Our Company nor any other listed group- company/ subsidiary/ associate have made any capital issue during the last three years. Performance vis-à-vis Objects The company has not made any public or rights issues in the past 10 years.
Listed Group Companies/ associates companies There are no listed group companies / associate companies. Outstanding debentures or bonds There are no outstanding debentures or bonds and any other instruments which are outstanding as on the date of offer document.
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Outstanding Preference Shares As on the date of filing of this Draft Letter of Offer, there are outstanding 70,00,000 9% Cumulative Redeemable Preference Shares of Rs. 10/- each fully paid up. Dematerialized Dealing Our Company has entered into Agreements dated January 15, 2010 with National Securities Depository Limited (NSDL) and with Central Depository Services (India) Limited (CDSL) dated October 22, 2001, and its Equity Shares bear the ISIN No.: INE513E01024. Stock Market Data As Our Company’s shares are actively traded on the BSE, Our Company’s stock market data have been given for BSE. The high and low closing prices recorded on the BSE for the preceding three years and the number of Equity Shares traded on the days the high and low prices recorded are stated below: Prices for the last three years:
High Low
Month Date
Price
(Rs.)
Volume
(Nos)
Date
Price
(Rs.)
Volume
(Nos.)
Average
Price for the
Month (Rs.)
Aug’08 No transaction during this month
Sep’08 September 11,
2008
8.12 1000 September 30, 2008 4.44 500 6.11
Oct’08 October 1, 2008 4.22 400 October 23, 2008 2.85 1100 3.39
Nov’08 No transaction during this month
Dec’08 December 11, 2008 3.08 400 December 10, 2008 2.94 500 3.04
Jan’09 No transaction during this month
Feb’09 February 24, 2009 2.91 100 February 24, 2009 2.91 100 2.91
Mar’09 March 18, 2009 2.77 1100 March 18, 2009 2.77 1100 2.77
Apr’09
May’09
Jun ‘09
Jul ‘09
No transaction during the period April 2009 to July 2009
Aug ’09 August 12, 2009 2.9 1100 August 12, 2009 2.9 1100 2.9
Sep ’09 September 16,
2009
3.04 400 September 16, 2009 3.04 400 3.04
Oct’09 October 29, 2009 3.19 200 October 29, 2009 3.19 200 3.19
Nov’09 No transaction during this month
Dec’09 December 11, 2009 3.5 400 December 8, 2009 3.34 100 3.42
Jan’ 10 January 29, 2010 4.24 100 January 22, 2010 3.67 200 3.95
Feb’ 10 February 26, 2010 8.3 1100 February 2, 2010 4.45 100 6.19
Mar’ 10 March 31, 2010 17.15 100 March 5, 2010 8.71 100 12.49
Apr’ 10 April 30, 2010 44.6 6300 April 1, 2010 18 300 29.37
May’ 10 May 31, 2010 123.25 2400 May 3, 2010 46.8 6300 79.22
Jun’10 June 16, 2010 220.95 9200 June 1, 2010 129.4 500 172.98
Jul’10 July 14, 2010 194.7 2900 July 2, 2010 136 6600 171.89
Aug’10 August 24, 2010 206.35 785 August 4, 2010 182 650 196.56
Sep’10 September 28,
2010
232 6691 September 6, 2010 198 1472 214.29
Oct’10 October 7, 2010 260 13,810 October 1, 2010 230.15 8742 244.64
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Nov’10 November 10,
2010
254.5 9,277 November 29, 2010 205.6 3,175 235.70
Dec’10 December 24, 2010 228.10 4,548 December 9, 2010 203.6 9,428 217.97
Jan’11 January 17, 2011 230.4 3,635 January 11, 2011 218.15 6,304 224.48
Feb’11 February 3, 2011 219.70 14,972 February 25, 2011 201.8 10,133 209.67
Mar’11 March 3, 2011 209.9 10,382 March 22, 2011 190.4 11,259 199.83
Apr’11 April 29, 2011 209.15 16,730 April 18, 2011 195.65 8,509 203.21
May’ 11 May 2, 2011
209.2 19,779 May 27 , 2011 185.10
9,519
196.72
June’11 June 14, 2011 217.15 19,401 June 2, 2011 192.05 20,102 204.73
July’11 July 11, 2011 199.20 15,975 July 29, 2011 189.80 5,098 195.57
Source : Official Website of Bombay Stock Exchange Ltd. www.bseindia.com
The Board of Directors of Our Company approved the Rights Issue at their meeting held on October 22, 2010. The high and low prices of Our Company’s shares as quoted on the Bombay Stock Exchange Limited, Mumbai (BSE) on October 23, 2010, the day on which the trading happened immediately following the date of the Board Meeting is as follows:
Date Volume (Nos.) High (Rs.) Low (Rs.)
October 23, 2010 5,391 245.50 242.00 Source : Official Website of Bombay Stock Exchange Ltd. www.bseindia.com
Volume of Shares traded in the last six months:
Month Volume (Nos.)
February, 2011 2,59,863 March, 2011 2,14,297 April, 2011 1,80,937 May, 2011 3,49,518 June, 2011 4,02,180 July, 2011 2,54,746 Source : Official Website of Bombay Stock Exchange Ltd. www.bseindia.com
Compliance with Listing Agreement The Company is listed on BSE and has complied with the requirements under the Listing Agreement of the Stock Exchange. It has paid the requisite fees of the Stock Exchange. Also no disciplinary action has been initiated by the Stock Exchange or SEBI against Our Company or any of our Directors. Investor Grievances and Redressal Mechanism Our Company has adequate arrangements for redressal of Investor complaints as well as a well-arranged correspondence system developed for letters of routine nature. The share transfer and dematerialization for our Company is being handled by the Cameo Corporate Services Limited, Registrar and Share Transfer Agent, which is also the Registrar to the Issue. Letters are filed category wise after being attended to. The Redressal norm for response time for all correspondence including shareholders complaints is within 7 (seven) to 10 (ten) days. All investor grievances received by our Company have been handled by the Registrar and Share Transfer agent in consultation with the compliance officer. The contact details of the Registrar and Share Transfer agent to our Company are as follows: CAMEO CORPORATE SERVICES LIMITED Subramanian Building, No.1 Club House Road, Chennai – 600 002 Tel: 91 44 2846 0390;
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Fax: 91 44 2846 0129; Contact Person: Ms. Sreepriya E-mail: [email protected] Website: www.cameoindia.com Investor grievances arising out of this Issue Our Company’s investor grievances arising out of the Issue will be handled by Cameo Corporate Services Limited, who is the Registrar to the Issue. The Registrar will have a separate team of personnel handling only post-Issue correspondence. All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as folio no., DP ID, Client ID, DP name, name and address, contact telephone / mobile numbers, email id of the first applicant, number and type of shares applied for, whether applied on plain paper, CAF serial number, amount paid on application and the name of the bank / SCSB and the branch where the application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the Renouncee should be furnished. The average time taken by the Registrar for attending to the routine grievances will be 7-10 days from the date of receipt of complaints. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavour of the Registrar to attend to them as expeditiously as possible. Our Company undertakes to resolve the Investor grievances in a time bound manner. Investors may contact the Compliance Officer at the below mentioned address and/ or Registrar to the
Issue at the above mentioned address in case of any pre-Issue/ post -Issue related problems such as non-receipt of allotment advice/share certificates/ demat credit/refund orders etc.
Company Secretary and Compliance Officer: Ms. Kalpita Keluskar 501, X’ cube, Plot No. 636, Off New Link Road, Andheri (W), Mumbai - 400053, Maharashtra, India. Tel No: 91 22 4231 0800; Fax No: 91 22 2673 4144; Email: [email protected]; Website: www.rodium.net; Status of complaints
Particulars Status
No. of investor complaints received during the three years preceding the filing Draft Letter of Offer with the SEBI and the number of complaints disposed off during that period.
Nil
No. of shareholders’ complaints pending as on the date of filing this Draft Letter of Offer Nil
Total No. of complaints pending as on the date of filing of this Draft Letter of Offer of Listed Group Company.
NA
Time normally taken by the Company for disposal of various types of investor Grievances
7 days
Registrar to the Issue will also handle the investors’ grievances related to the Issue in co-ordination with Compliance Officer of the Company. All grievances relating to the present Issue may be addressed to the Registrar with a copy to the Compliance Officer, giving full details such as name of the applicant, address, folio number, number of Equity Shares applied for, amount paid on application and bank and branch. The Company would monitor the work of the Registrar to ensure that the investors’ grievances are settled expeditiously and satisfactorily.
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Change in Auditors during the last three years
The changes in the Auditors of the Company in the last three year are as under:
Audit Firm Date of Appointment Date of Cessation / Resignation
M/s. Dagliya and Co. November 15, 1994 December 24, 2009
M/s. Ashar and Co. January 27, 2010 August 2, 2010 M/s. M. M. Nissim and Co. August 2, 2010 -- Capitalization of Reserves or Profits during the last 5 years We have not capitalized any reserves or profits during the past 5 years by way of Bonus Issue or otherwise. Revaluation of Assets during the last 5 years None of the Assets of the Company have been revalued during the last 5 years.
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SECTION IX- OFFERING INFORMATION (A) TERMS OF THE ISSUE
The Rights Equity Shares being offered are subject to the terms and conditions of this Draft Letter of Offer, the enclosed Composite Application Form (“CAF”), the Memorandum and Articles of Association of the
Company, the approvals from the GOI, FIPB and RBI, if applicable, the provisions of the Companies Act,
1956, regulations and guidelines issued by SEBI, terms and conditions as stipulated in the allotment advice or letter of allotment or other documents/ certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to laws as applicable, guidelines, notifications, regulations and rules relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, the Government of India, the Stock Exchange(s), the RBI, ROC and/or other authorities, as in force on the date of the Issue and to the extent applicable.
Ranking of the Equity Shares
The Equity Shares being offered shall be subject to the provisions of the Companies Act and the Memorandum of Association and Articles of Association. The dividend payable on the partly paid-up Equity Shares, until fully paid-up, shall rank for dividend in proportion to the amount paid-up. The Equity Shares being offered shall rank pari-passu with in all respects with the existing Equity Shares once fully paid-up including the right to receive dividend. The voting rights in a poll, whether present in person or by representative or by proxy shall be in proportion to the paid-up value of the Equity Shares held, and no voting rights shall be exercisable in respect of moneys paid in advance until the moneys have become payable. Further no person shall be entitled to exercise any voting rights either personally or by proxy at any meeting of the Company in respect of partly paid-up Equity Shares on which any calls or other sums payable by him have not been paid.
Mode of payment of dividend
The dividend is paid to all the eligible shareholders as per the provisions of the Companies Act, 1956 and recommendations by the Board of Directors and will depend on a number of factors, including but not limited to earnings, capital requirements and overall financial condition of Our Company. Face value and Issue Price
Each Equity Share shall have the face value of Rs. 10/- and is being offered at a price of Rs. [*]/- each for cash. The Issue Price has been arrived in consultation between the Company and the Lead Manager.
Rights Entitlement The Equity shareholders of the Company whose name appears as beneficial owner as per the list furnished by depositories in respect of the Equity Shares held in electronic form or appears in the Register of Members of our Company in respect of the Equity Shares held in physical form on the Record Date i.e. [*], are entitled to the number of Equity Shares set out in Block I of Part A of the enclosed CAFs. The Eligible Equity Shareholders are entitled to 2 (two) Rights Shares for every 3 (three) Equity Shares held by them on the Record Date. Principal terms and conditions of the Issue Payment Method
The issue price per Equity Share shall be payable as follows:
Amount payable per Rights Equity Share (Rs.)
Face Value Premium Total
On Application 5.00 [*] [*]
On Final Call 5.00 [*] [*]
Total 10.00 [*] [*]
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*The Investors shall be required to make the balance payment towards the Final Call Notice by the due
date, which shall be separately notified by our Company.
Note: 1. Out of the amount of Rs. [*] paid on application, Rs. [*] would be adjusted towards the face value of the
Rights Equity Shares and Rs. [*] shall be adjusted towards the premium of the rights equity shares. 2. Out of the amount of Rs. [*] paid on Final call, Rs. [*] would be adjusted towards the face value of the Rights
Equity Shares and Rs. [*] shall be adjusted towards the premium of the rights equity shares. 3. Our Company reserves the right to adjust the amount received over and above the Application money towards
the Final Call if such adjustment makes the total Rights Equity Shares allotted by our Company into fully paid-up Rights Equity Shares.
4. Final Call Notice shall be sent by our Company for making the payment towards the balance amount due. 6. Rights Equity Shares in respect of which the Final Call payable remains unpaid may be forfeited, at any time
after the due date for payment of the balance amount due. Procedure for Final Call Notice Our Company would convene a meeting of the Board of Directors to pass the required resolution for making the Final Call Notice and suitable intimation would be given by our Company to the Stock Exchange. Further, advertisements for the same will be published in one English national daily with wide circulation, one Hindi national daily with wide circulation and one Regional daily newspaper. Record date for Final Call and suspension of trading Our Company would fix a record date by giving at least seven (7) working days prior notice to the Stock Exchange for the purpose of determining the list of Allottees to whom the notice for Final Call would be sent. Once the record date has been fixed, trading in the partly paid Rights Equity Shares for which Call Notice have been made would be suspended for the period as may be applicable under the rules and regulations prior to such record date that has been fixed for the Final Call. Separate ISIN for Partly Paid Shares In addition to the present ISIN for the existing Equity Shares, our Company would obtain a separate ISIN for its partly paid-up Rights Equity Shares. The partly paid-up Rights Equity Shares offered under the Issue will be traded under a separate ISIN for the period as may be applicable under the rules and regulations prior to the record date for the Final Call Notice. The ISIN representing partly paid-up Rights Equity Shares will be terminated after the record date for the Final Call Notice. On payment of the Final Call money in respect of the partly paid-up Rights Equity Shares, such partly paid-up Rights Equity Shares would be converted into fully paid-up Equity Shares and merged with the existing ISIN for our Equity Shares. Listing of partly paid-up Equity Shares on Rights Basis The partly paid-up Rights Equity Shares would be listed on the Stock Exchange. For an applicable period, under the rules and regulations, prior to the record date for the Final Call, the trading of then existing partly paid-up Rights Equity Shares would be terminated. The process of corporate action for crediting the partly paid-up and fully paid-up Rights Equity Shares to the Investors’ demat accounts may take about two weeks’ time from the last date of payment of the account under the Final Call notice. The listing and trading of the partly paid-up Rights Equity Shares shall be based on the current regulatory framework applicable thereto. Any change in the regulatory regime would accordingly affect the schedule.
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Rights of the Equity shareholders
Subject to the applicable laws, the equity Shareholders shall have the following rights: • Right to receive dividend, if declared; The dividend payable on partly paid-up Equity Shares, until
fully paid-up, shall rank for dividend in proportion to the amount paid up;
• Right to attend general meetings and exercise voting powers, unless prohibited by law;
• Right to vote on a poll either in person or by proxy;
• Right to receive offers for rights shares and be allotted bonus shares, if announced; • Right to receive surplus on liquidation; • Right of free transferability; and • Such other rights, as may be available to a shareholder of a listed public company under the
Companies Act, 1956, Memorandum and Articles of Association of the Company and the terms of the Listing Agreement with BSE.
For a detailed description of the main provisions of the Company's Articles of Association dealing with voting rights, dividend, forfeiture and lien, transfer and transmission and/ or consolidation/splitting, please refer section titled "Description of Equity Shares and Terms of the Articles of Association of the Company" beginning on page 229 of this Draft Letter of Offer. Market Lot
The Equity Shares of the Company are tradable only in dematerialized form. The market lot for Equity Shares in dematerialized mode is one.
In case of holding in physical form, the Company would issue to the allottees one certificate for the Equity Shares allotted to one folio ("Consolidated Certificate"). In respect of the Consolidated Certificate, the Company will, upon receipt of a request from the Equity Shareholder, split such Consolidated Certificate into smaller denomination in accordance with the provisions of the Articles of Association of the Company.
Nomination Facility In terms of Section 109A of the Companies Act, nomination facility is available in case of Equity Shares. The applicant can nominate any person by filling the relevant details in the CAF in the space provided for this purpose. A sole Equity Shareholder or first Equity Shareholder, along with other joint Equity Shareholders being individual(s) may nominate any person(s) who, in the event of the death of the sole holder or all the joint- holders, as the case may be, shall become entitled to the Equity Shares. A Person, being a nominee, becoming entitled to the Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale of the Equity Share by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. When the Equity Share is held by two or more persons, the nominee shall become entitled to receive the amount only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on request at the registered office of the Company or such other person at such addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant portion of the CAF. Only one nomination would be applicable for one folio. Hence, in case the Equity Shareholder(s) has already registered the nomination with the Company, no further nomination needs to be made for Equity Shares to be allotted in this Issue under the same folio. In case the allotment of Equity Shares is in dematerialized form, there is no need to make a separate nomination for the Equity Shares to be allotted in this Issue. Nominations registered with respective DP of the applicant would prevail. If the applicant requires to change the existing nomination, they are requested to inform their respective DP.
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Joint Holders Where two or more persons are registered as the holders of Equity Shares, they shall be deemed (so far as the Company is concerned) to hold the same as joint- holders with benefits of survivorship subject to provisions contained in the AOA.
Minimum Subscription If our Company does not receive the minimum subscription of 90% of the Issue, our Company shall forthwith refund the entire subscription amount received within 15 days from Issue Closing Date. If there is a delay in the refund of subscription by more than eight (8) days after the date from which our Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date or the date of refusal by the Stock Exchanges, whichever is earlier) our Company shall pay interest for the delayed period at the rates prescribed under Sections 73 of the Companies Act. Additional Subscription by Promoters and Promoter Group The Promoters along with the Promoter Group has clarified that they intend to subscribe to the full extent of their entitlement in the Issue. They reserve the right to subscribe to their entitlement in the Issue by subscribing for renunciation, if any, made within the Promoter Group to another person or entity forming part of the Promoter Group. They may also apply for additional Equity Shares in the Issue, and in case of under-subscription in the Issue, shall apply for additional shares such that at least 90% of the Issue is subscribed. As a result of this subscription and consequent allotment, they may acquire shares over and above their entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding with the entitlement of Equity Shares under the Issue. This subscription and acquisition of additional Equity Shares by them, if any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the SEBI Takeover Regulations. The Promoter Group intends to subscribe to such unsubscribed portion as per the relevant provisions of the law. Allotment to the Promoter Group of any unsubscribed portion, over and above their entitlement shall be done in compliance with Clause 40A the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements. The Promoters have provided the following undertaking vide letters dated May 24, 2011: “The subscription by the Promoters and/or members of the Promoter Group for the Equity Shares in the Issue
and the allotment of the Equity Shares will be in continuous compliance with the minimum public shareholding
requirement specified under Clause 40A of the Listing Agreement with the Stock Exchanges and the Company
will take such steps as may be necessary to ensure such compliance with Clause 40A of the Listing Agreement.” For details, see “Terms of the Issue - Basis of Allotment” on page 225 of this Draft Letter of Offer. Disposal of Odd Lots The Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of this Issue. The Company shall as far as possible issue certificates in the denomination of 1-2-5-10-20-50 equal to the number of Equity Shares being allotted to the Equity Shareholder(s). Restrictions on transfer and transmission of shares and on their consolidation/ splitting
For a detailed description in respect of restrictions, if any, on transfer and transmission of shares and on their consolidation / splitting, please refer sub-heading “Description of Equity Shares and Terms of the Articles of Association” appearing on page no. 229 of this Draft Letter of Offer. New Financial Instruments The Company is not issuing any new financial instruments like Deep Discount Bonds, Debentures with warrants, Secured Premium Notes, etc. through this Issue.
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Option to receive Equity Shares in Dematerialized Form Applicants to the Equity Shares of Our Company issued through this Issue shall be allotted the securities in dematerialized (electronic) form at the option of the applicant. The Company has signed agreements dated October 22, 2001 and January 15, 2010 with CDSL and NSDL respectively, which enables the Investors to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates. In this Issue, the Allottees who have opted for Equity Shares in dematerialized form will receive their Equity Shares in the form of an electronic credit to their beneficiary account with a DP. The CAF shall contain space for indicating number of shares applied for in demat and physical form or both. Investors will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Applications, which do not accurately contain this information, will be given the securities in the physical form. No separate applications for securities in physical and / or dematerialized form should be made. If separate applications are made, the application for physical securities will be treated as multiple applications and is liable to be rejected. In case of partial allotment, allotment will be done in demat option for the shares sought in demat and balance, if any, will be allotted in physical shares.
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(B) ISSUE PROCEDURE Basis of the Offer The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the Depositories in respect of the Equity Shares held in the electronic form and on the Register of Members of the Company in respect of Equity Shares held in the physical form at the close of business hours on the Record Date. The Company has in consultation with the Designated Stock Exchange fixed the Record Date for determining the Shareholders who are entitled to receive this offer for Equity Shares on a rights basis. The Equity Shares are being offered for subscription in the ratio of 2 (two) Equity Shares for every 3 (three) Equity Shares held by the Equity Shareholders. Option to Subscribe Other than this Issue, our Company has not given any person any option to subscribe to the Equity Shares.
Rights Entitlement The Equity shareholders of the Company whose name appears as beneficial owner as per the list furnished by depositories in respect of the Equity Shares held in electronic form or appears in the Register of Members of our Company in respect of the Equity Shares held in physical form on the Record Date i.e. [*], are entitled to the number of Equity Shares set out in Block I of Part A of the enclosed CAFs. The Eligible Equity Shareholders are entitled to two [2] Rights Shares for every three [3] Equity Shares held by them on the Record Date.
The eligible equity shareholders shall be entitled to the following: 1. 2 (two) Equity Shares for every 3 (three) Equity Shares held as on the Record Date. Fractional entitlements,
if any, of 0.5 or in excess thereof shall be rounded off to next higher integer, subject to the minimum entitlement of 1 Equity Share, and less than 0.5 will be ignored.
2. Rights Entitlement on Equity Shares held in the pool account of the clearing members on the Record Date
shall be considered, and such claimants are requested to:
a. Approach the concerned depository through the clearing member of the Stock Exchange with requisite details; and
b. Depository in turn should furnish details of the transaction to the Registrar to the Issue. Fractional Entitlement Fractional entitlement, if any, will be rounded off to the next higher integer and the Share required for the same may be adjusted from one of the Promoter’s entitlements. Offer to Non-Resident Equity Shareholders/ Applicants Applications received from NRIs and non-residents for allotment of Equity Shares shall be inter alia, subject to the conditions imposed from time to time by the RBI under the Foreign Exchange Management Act, 1999 (FEMA) in the matter of refund of application moneys, allotment of Equity Shares, issue of letter of allotment / notification No. FEMA 20/200-RB dated May 3, 2000. The Board of Directors may at its absolute discretion, agree to such terms and conditions as may be stipulated by RBI while approving the allotment of Equity Shares, payment of dividend etc. to the non-resident shareholders. The rights shares purchased by non-residents shall be subject to the same conditions including restrictions in regard to the repatriability as are applicable to the original shares against which rights shares are issued. By virtue of Circular No. 14 dated September 16, 2003 issued by the RBI, overseas corporate bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003. Accordingly, OCBs shall not be eligible to subscribe to the Equity Shares. The RBI has
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however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003 that OCBs which are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh investments as incorporated non-resident entities. Thus, OCBs desiring to participate in this Issue must obtain prior approval from the RBI. On providing such approval to the Company at its registered office, the OCB shall receive the Letter of Offer and the CAF. Letter of offer and CAF shall only be dispatched to non-resident Equity Shareholders with registered address in India. Overseas Shareholders The Company is issuing Equity Shares on a rights basis to the Equity Shareholders of the Company and will dispatch the Letter of Offer/Abridged Letter of Offer and Composite Application Form (“CAF”) to all the Shareholders who have an Indian address and to those existing overseas shareholders having foreign addresses. Persons receiving a copy of this Letter of Offer/ Abridged Letter of Offer should not, in connection with the issue of the Equity Shares or the Rights Entitlements, distribute or send this Letter of Offer/ Abridged Letter of Offer in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Letter of Offer is received by any person in any such territory, or by their
agent or nominee, they must not seek to subscribe to the Equity Shares or the Rights Entitlements referred to in
this Letter of Offer.
Applications by ASBA Investors For Equity Shareholders wishing to apply through the ASBA process for Rights Issues, kindly refer section titled “Procedure for Application through the Applications Supported By Blocked Amount (“ASBA”) Process” on page no. 214 of this Draft Letter of Offer. Notices
All notices to the Equity Shareholder(s) required to be given by the Company shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation, one in regional language newspaper and/or, will be sent by ordinary post to the registered holders of the Equity Share(s) from time to time. Authority for the Issue The present Issue of Equity Shares has been authorized by the Board of Directors of the Company under section 81 (1) of the Companies Act, 1956 vide a resolution passed at their meeting held on October 22, 2010
Issue Schedule
Issue Opening Date [*]
Last Date for receiving requests for split forms [*]
Issue Closing Date [*]
Issue of Duplicate Equity Share Certificates If any Equity Share Certificate(s) is/are mutilated or defaced or the pages for recording transfers of Equity Shares are fully utilized, the Company against the surrender of such certificate(s) may replace the same, provided that the same will be replaced as aforesaid only if the certificate numbers and the distinctive numbers are legible. If any Equity Share Certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to the satisfaction of the Company and upon furnishing such indemnity/surety and/or such other documents as the Company may deem adequate, duplicate Equity Share Certificate(s) shall be issued.
Options Available to the Equity Shareholders
The Equity Shareholders will be having the following five options:
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• Apply for his entitlement in part; • Apply for his entitlement in part and renounce the other part; • Apply for his entitlement in full; • Apply for his entitlement in full and apply for additional Equity Shares; • Renounce his entire entitlement. Renouncees for Equity Shares can apply for the Equity Shares renounced to them and also apply for additional Equity Shares. Impersonation Attention of the applicants is specifically drawn to the provisions of sub-Section (1) of Section 68A of the Companies Act, 1956 which is reproduced below: "Any person who a. makes in a fictitious name an application to a Company for acquiring or subscribing for, any shares therein,
or b. otherwise induces a Company to allot, or register any transfer of shares therein to him, or any other person
in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years." How to apply Resident Equity Shareholders Applications should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be completed in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by the Lead Manager or by the Registrar to the Issue or by the Company at any offices except in the case of postal applications to the Registrar to the Issue as per instructions given in the Draft Letter of Offer. Non-resident Equity Shareholders on Non-Repatriation basis Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter alia, be subject to the conditions as may be imposed from time to time by RBI, in the matter of refund of application moneys, allotment of Equity Shares, issue of Letters of Allotment/ certificates/ payment of dividends etc. Application by Mutual Funds In case of a mutual fund, a separate application can be made in respect of each scheme of the mutual fund registered with SEBI and such applications in respect of more than one scheme of the mutual fund will not be treated as multiple applications provided that the application clearly indicates the scheme concerned for which the application has been made. Applications made by asset management companies or custodians of a mutual fund shall clearly indicate the name of the concerned scheme for which application is being made. As per the current regulations, the following restrictions are applicable for investments by mutual funds: No mutual fund scheme shall invest more than 10% of its net asset value in the Rights 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 mutual fund under all its schemes should own more than 10% of any company’s paid-up share capital carrying voting rights.
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Investment by FIIs
In accordance with the current regulations, the following restrictions are applicable for investment by FIIs: The Issue of Equity Shares under this Issue to a single FII should not exceed 10% of the post-issue paid up capital of the Company. In respect of an FII investing in the Equity Shares on behalf of its sub- accounts the investment on behalf of each sub-account shall not exceed 5% of the total paid up capital of the Company. Applications by Non Resident Indians Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3)(i) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. NRI Investors should note that applications by ineligible non-residents (including on account of restriction or prohibition under applicable local laws) and where a registered address in India has not been provided are liable to be rejected. 1. CAFs have been made available for eligible NRIs at the Company’s Registered Office and with the Lead
Manager(s). 2. Eligible NRI applicants may please note that only such applications as are accompanied by payment in free
foreign exchange shall be considered for allotment. The eligible NRIs who intend to make payment through Non-Resident Ordinary (NRO) accounts shall use the form meant for Resident Indians and shall not use the forms meant for reserved category.
Applicants residing at places other than designated collection centers Applicants residing at places other than the cities where the bank collection centres have been opened and non-resident applicants applying on a non-repatriation basis should send their completed CAF by registered post/ speed post to the Registrar to the Issue, Cameo Corporate Services Limited along with demand draft, net of bank and postal charges, payable at Chennai in favour of “RRL – RIGHTS ISSUE” crossed “A/c Payee only” so that the same are received on or before closure of the Issue i.e. [*], 2011. Non-resident investors applying on a repatriation basis should send their completed CAF by registered post/ speed post to the Registrar to the Issue, Cameo Corporate Services Limited along with demand draft for the full application amount, payable at Chennai in favour of “RRL – RIGHTS ISSUE”, crossed “A/c Payee only” so that the same are received on or before closure of the Issue i.e. [*], 2011. The Company will not be liable for any postal delays and applications received through mail after the closure of the Issue, which are liable to be rejected and returned to the applicants. Applications by mail should not be sent in any other manner except as mentioned here. All application forms duly completed together with cash/ cheque/ demand draft for the application money must be submitted before closure of the Issue to the bankers to the Issue named herein or to any of its branches mentioned on the reverse of the CAF. The CAF along with application money must not be sent to the Company or the Lead Manager to the Issue or the Registrar to the Issue except as mentioned above. The applicants are required to strictly adhere to these instructions. Failure to do so could result in the application being liable to be rejected with Company, the Lead Manager and the Registrar to the Issue not having any liabilities to such applicants. The CAF consists of four parts: Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares Part B: Form for renunciation Part C: Form for application for renouncee Part D: Form for request for split application forms
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You may exercise any one of the following options with regard to the Equity Shares offered to you, using the enclosed CAF:
Sr. No
Option Available Action Required
1 Accept whole or part of your entitlement without renouncing the balance
Fill in and sign Part A (All joint holders must sign)
2. Renounce all the Equity Shares offered to you to one person (joint Renouncees are deemed as one person) without your applying for any of the Equity Shares offered to you
Fill in and sign Part B indicating the number of Equity Shares renounced in Block VII and handover the ENTIRE FORM to the Renouncee. The Renouncee/ joint Renouncee(s) must fill in and sign Part C of CAF.
3 Accept your entitlement in full and apply for additional Equity Shares
Fill in and sign Part A including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)
4 Renounce your entitlement in full to one person (Joint Renouncees are considered as one)
Fill in and sign Part B (all joint holders must sign) indicating the number of Equity Shares renounced and hand it over to the Renouncee. The Renouncees must fill in and sign Part C (All joint Renouncees must sign)
5 Accept a part of your entitlement and renounce the balance to one or more Renouncee(s) OR Renounce all your entitlement offered to you to more than one Renouncee Please note that once you renounce your shares, you can not apply for additional shares in the Issue. Also, a renouncee can apply for additional shares if and only if all the entitlements have been renounced in his favour by the original holder.
Fill in and sign Part D (all joint holders must sign) requesting for Split Application Forms. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for Split Forms. Splitting will be permitted only once. On receipt of the Split Form take action as indicated below: For the Equity Shares you wish to accept, if any, fill in and sign Part A. For the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand it over to the Renouncee(s). Each of the Renouncee should fill in and sign Part C for the Equity Shares accepted by them.
6 Introduce a joint holder or change the sequence of joint holders. This will be treated as a renunciation.
Fill in and sign Part B and the Renouncee must fill in and sign Part C.
Acceptance of the Rights Issue You may accept the Offer and apply for Equity Shares offered, either in full or in part by filling Part A of the enclosed CAF and submit the same along with the application money payable to the Bankers to the Issue or any of the branches as mentioned on the reverse of the CAF before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of the Company thereof in this regard. Applicants at centers not covered by the branches of collecting banks can send their CAF together with the cheque/ demand draft /net of bank and postal charges, payable at Chennai to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected. The CAF should be complete in all respects, as explained in the INSTRUCTIONS indicated in the CAF. If any portion of the CAF is / are detached or separated, such application is liable to be rejected.
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Application for additional Equity Shares You are also eligible to apply for additional Equity Shares over and above your Rights Entitlement provided that you have applied for all Equity Shares offered to you without renouncing them in full or in part. However, the additional Equity Shares cannot be renounced in full or in part, in favour of any other person(s). If you desire to apply for additional Equity Shares, you may fill in the number of additional Equity Shares in Part A of the CAF. The allotment of additional Equity Shares will be at the sole discretion of the Board on an equitable basis with reference to the number of Equity Shares held by you on the Record Date in consultation with the Designated Stock Exchange. In the case of requests for additional Equity Shares by Non Residents, the allotment will be subject to the approval of Reserve Bank of India. The Board may reject any application for additional Equity Shares without assigning any reasons thereof. The Renouncee can also make an application for additional shares.
Renunciation You may renounce all or any of the Equity Shares, you are entitled to in favour of any individual, limited companies, or statutory corporations / institutions. However renunciation in favour of more than three persons as joint holders, trust or society (unless the same is registered under the Societies Registration Act, 1860 or any other applicable trust laws and is authorised under its constitution to hold shares in a company), OCBs, minors (unless acting through natural or legal guardians), Partnership Firms, or their nominees, or any of them will not be accepted. Renunciation in favour of Non – Residents/ FIIs Any renunciation from Resident(s) to Non- Resident(s) is subject to the renouncer(s)/ Renouncee(s) obtaining requisite approval(s) of the FIPB and/or necessary permission of the RBI under the Foreign Exchange Management Act, 1999 (FEMA) and the said permission must be attached to the CAF.
Procedure for renunciation
The right of renunciation is subject to the express condition that the Board shall be entitled in its
absolute discretion to reject the request for allotment to Renouncee(s) without assigning any reason
thereof.
i. To renounce the whole offer in favour of one Renouncee
If you wish to renounce the offer indicated in Part A, in whole, please complete Part B of the CAF. In case of joint holding, all joint holders must sign Part B of the CAF. The person in whose favour renunciation has been made should complete and sign Part C of the CAF. In case of joint Renouncees, all joint Renouncees must sign this part C of the CAF. Renoncee(s) shall not be entitled to further renounce the entitlement in favour of any other person.
ii. To renounce in part/ or renounce the whole to more than one person(s)
If you wish to either accept this Offer in part and renounce the balance or renounce the entire offer in favour of two or more Renouncees, the CAF must be first split into requisite number of forms. Please indicate your requirement of split forms in the space provided for this purpose in Part D of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the last date of receiving requests for split forms i.e. [*] On receipt of the required number of split forms from the Registrar to the Issue, the procedure as mentioned in paragraph (i) above shall have to be followed. Requests for split forms will be entertained only once. In case the signature of the equity Shareholder(s), who has renounced the Equity Shares, does not agree with the specimen registered with the Company, the application is liable to be rejected.
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Renouncee(s) The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part C of the CAF and submit the entire CAF to the Bankers to the Issue on or before the Issue Closing Date i.e. [*] along with the application money. Change and or introduction of additional holders If you wish to apply for Equity Shares jointly with any other person(s), not more than three, who is/ are not already joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed. However, this right of renunciation is subject to the express condition that the Board of Directors of the Company shall be entitled in its absolute discretion to reject the request for allotment of equity shares from the Renouncee(s) without assigning any reason thereof. Please note that: a. Part A of the CAF must not be used by any person(s) other than those in whose favour this Issue has
been made. If used, this will render the application invalid. b. Only the person to whom this Draft Letter of Offer has been addressed to and not the Renouncee(s) shall
be entitled to renounce and to apply for split forms. Forms once split cannot be split again. c. Split form(s) will be sent to the applicant(s) by post at the applicant’s risk.
Availability of duplicate CAF In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a duplicate CAF on the request of the applicant who should furnish the registered folio number/ DP and Client ID no. and his/ her full name and address to the Registrar to the Issue. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/found subsequently. If the applicant violates any of these requirements, he/ she shall face the risk of rejection of both the applications. Applications under Power of Attorney In case of applications made under a power of attorney or by limited companies or bodies corporate or registered societies or mutual funds or trusts, a certified true copy of the relevant power of attorney or relevant resolution or authority to make the investment and sign the application, as the case may be, along with a copy of the memorandum and articles of association and/ or bye-laws must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF after submission of the CAF to the Bankers to the Issue or any of their collection centers, failing which the applications are liable to be rejected. In case the above referred documents are already registered with the Company, the same need not be furnished again. However, the serial number of registration or reference of the letter, vide which these papers were lodged with the Company/ Registrar to the Issue must be mentioned just below the signature(s) on the CAF. In no case should these papers be attached to the application submitted to the Bankers to the Issue or at its collection centers.
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Application on Plain Paper A resident Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Issue on plain paper, along with demand draft for the full application amount, net of bank and postal charges favouring the Bankers to the Issue, crossed “A/c
Payee only” and marked “RRL - Rights Issue”, payable at Chennai directly to the Registrar to the Issue by registered post/ speed post so as to reach them on or before the closure of the Issue i.e. [*].The Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any. The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars:
• Name of Issuer being Rodium Realty Limited
• Ratio of the Rights Issue being 2 (two) Equity Share for every 3 (three) fully paid up Equity Shares held on Record Date.
• Name and address of the Equity Shareholder including joint holders
• Registered Folio Number/ DP and Client ID no.
• Number of Equity Shares held as on Record Date i.e. [*]
• Certificate numbers and Distinctive numbers, if held in Physical form
• Number of Rights Equity Shares entitled, Number of Rights Equity Shares applied for out of entitlement
• Number of additional Equity Shares applied for, if any
• Total number of Equity Shares applied for
• Total amount paid at the rate of Rs. [*] per Equity Share on Application, out of which Rs. [*] as Face Value and the remaining Rs. [*] towards Share Premium.
• Particulars of cheque/ draft enclosed
• In case of non-resident shareholders, NRE/ FCNR/ NRO account number, name and address of the bank and branch
• If the payment is made by drafts purchased from NRE/ FCNR accounts as the case may be, an account debit certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/ FCNR account
• If the payment is made by a draft purchased from an NRO account, an account debit certificate from the bank issuing the draft, confirming that the draft has been issued by debiting the NRO account
• Savings/ Current Account Number and name and address of the bank where the equity Shareholder will be depositing the refund order
• PAN number of the Equity Shareholder and where relevant, for each joint holder, and
• Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the Company.
Please note that those who are making the application otherwise than on original CAF shall not be
entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the applicant violates any of these requirements, he/ she shall face the risk of rejection of both the applications The Company shall refund such application
amount to the applicant without any interest thereon. For applicants residing at places where the bank collection centres have been opened, CAFs duly completed together with cheque/demand draft payable at par or drawn on local banks in those centers,
for the Application Money must be submitted before the close of the subscription list to the Bankers to the Issue named herein or to any of its branches mentioned on the reverse of the CAF. The CAF along with application money must not be sent to our Company or the Lead Manager to the Issue or the
Registrar to the Issue.
Investors residing at places other than places where the bank collection centres have been opened by the Company for collecting CAFs, are requested to send their CAFs together with demand draft for the full application amount, net of bank and postal charges favouring the Bankers to the Issue, crossed “A/c
Payee only” and marked “RRL - Rights Issue”, payable at Chennai directly to the Registrar to the Issue
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by registered post/ speed post so as to reach them on or before the closure of the Issue i.e. [*]. The Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in
transit, if any.
The applicants are requested to strictly adhere to these instructions. Failure to do so could result in the application being liable to be rejected with our Company, the Lead Manager and the Registrar not having any liabilities to such applicants.
Quoting of Permanent Account Number in the application forms: Pursuant to the circular MRD/ DoP/ Circ-05/ 2007 dated April 27, 2007, SEBI has mandated Permanent Account Number (PAN) to be the sole identification number for all participants transacting in the securities market, irrespective of the amount of the transaction with effect from July 2, 2007. Each of the applicants should mention his/her PAN allotted under the I.T. Act. Applications without this information 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 application is liable to be rejected on this ground Last date for submission of CAF The last date for submission of CAF is [*]. The Issue will be kept open for a minimum of 15 days and the Board of Directors/ Committee of Directors will have the right to extend the said date for such period as it may determine from time to time but not exceeding 30 (thirty) days from the Issue Opening Date. If the CAF together with the amount payable is not received by the Bankers to the Issue/ Registrar to the Issue on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board of Directors/ Committee of Directors, the offer contained in this Draft Letter of Offer shall be deemed to have been declined and the Board of Directors/ Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under the heading “Basis of Allotment”. Incomplete application CAFs which are not complete with regard to any of the particulars required to be given therein or are not accompanied with the application money amount payable are liable to be rejected.
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(C) MODE OF PAYMENT
For Resident Shareholders/Applicants: Payment(s) must be made by cheque/ demand draft and drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub-member of the Bankers' Clearing House located at the centre where the CAF is submitted. A separate cheque/draft must accompany each CAF. Only one mode of payment should be used. Money orders, postal orders and outstation cheques will not be accepted and applications accompanied by any such instruments will be rejected. Shareholders/ applicants residing at places other than those mentioned in the CAF and applicants who wish to send their applications but not having collection centers should send their application by registered post, to the Registrar to the Issue enclosing a demand draft drawn on a clearing bank and payable at Chennai net of bank charges and postal charges, before the closure of the issue. Such cheques /drafts should be payable to "RRL - RIGHTS ISSUE" and marked 'A/c Payee only’. No receipt will be issued for the application money received. However, the collection centre receiving the application will acknowledge receipt of the application by stamping and returning the acknowledgement slip at the bottom of each CAF. The Company is not responsible for any postal delay/ loss in transit on this account. For Non-Resident Shareholders/Applicants As regards the application by non-resident equity shareholders, the following further conditions shall apply:
Application with repatriation benefits Payment by NRIs/ FIIs/ foreign investors must be made by demand draft/ cheque payable at Chennai or funds remitted from abroad in any of the following ways:
• By Indian Rupee drafts purchased from abroad and payable at Chennai or funds remitted from abroad (submitted along with Foreign Inward Remittance Certificate); or
• By cheque/ draft on a Non-Resident External Account (NRE) or FCNR Account maintained in Chennai; or
• By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable in Chennai; or
• FIIs registered with SEBI must remit funds from special non-resident rupee deposit account. All cheques/ drafts submitted by non-residents applying on repatriable basis should be drawn in favour of "RRL - RIGHTS ISSUE - NR" at Chennai and crossed ‘A/c Payee only’ for the amount payable. A separate cheque or bank draft must accompany each application form. Applicants may note that where payment is made by drafts purchased from NRE/ FCNR accounts as the case may be, an account debit certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/ FCNR account should be enclosed with the CAF. In the absence of the above the application shall be considered incomplete and is liable to be rejected. In the case of NRIs who remit their application money from funds held in FCNR/NRE Accounts, refunds and other disbursements, if any shall be credited to such account details of which should be furnished in the appropriate columns in the CAF. In the case of NRIs who remit their application money through Indian Rupee Drafts from abroad, refunds and other disbursements, if any will be made in US Dollars at the rate of exchange prevailing at such time subject to the permission of RBI. The Company will not be liable for any loss on account of exchange rate fluctuation for converting the Rupee amount into US Dollars or for collection charges charged by the applicant’s Bankers. Application without repatriation benefits As far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modes specified above, payment may also be made by way of cheque drawn on NRO Account maintained in Chennai or Rupee
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Draft purchased out of NRO Account maintained elsewhere in India but payable at Chennai. In such cases, the allotment of Equity Shares will be on non-repatriation basis. All cheques/drafts submitted by non-residents applying on non-repatriation basis should be drawn in favour of "RRL - RIGHTS ISSUE” payable at Chennai and must be crossed ‘A/c Payee only’ for the amount payable. The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.
If the payment is made by a draft purchased from an NRO account, an account debit certificate from the bank issuing the draft, confirming that the draft has been issued by debiting the NRO account, should be enclosed with the CAF. In the absence of the above, the application shall be considered incomplete and is liable to be rejected. New demat account shall be opened for holders who have had a change in status from resident Indian to NRI. “Non-resident Indian Applicants may please note that only such application as are accompanied by payment in free foreign exchange shall be considered for allotment. The Non-Resident Indians who
intend to make payment through Non-Resident Ordinary (NRO) accounts shall mention the details of the bank account from which their payment is being made.” Note:
• In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to I. T. Act, 1961.
• In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares cannot be remitted outside India.
• The CAF duly completed together with the amount payable on application must be deposited with the
Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.
• In case of an application received from non-residents, allotment, refunds and other distribution, if any, will
be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to necessary approvals.
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(D) PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY BLOCKED AMOUNT (“ASBA”) PROCESS
SEBI, by its circular dated August 20, 2009, introduced in rights issue - application supported by blocked amount wherein the application money remains in the ASBA Account until allotment. Mode of payment through ASBA in Rights Issue became effective on August 20, 2009. Since this is a new mode of payment in Rights Issues, set forth below is the procedure for applying under the ASBA procedure, for the benefit of the shareholders. This section is for the information of Equity Shareholders proposing to subscribe to the Issue through the
ASBA Process. The Company and the Lead Manager are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Draft Letter of Offer.
Equity Shareholders who are eligible to apply under the ASBA Process are advised to make their independent investigations and ensure that the number of Equity Shares applied for by such Equity Shareholders do not exceed the applicable limits under laws or regulations. Equity Shareholders applying under the ASBA Process are also advised to ensure that the CAF is correctly filled up, stating therein the bank account number maintained with the SCSB in which an amount equivalent to the
amount payable on application as stated in the CAF will be blocked by the SCSB. The list of banks who have been notified by SEBI to act as SCSB for the ASBA Process are provided on the SEBI website (www.sebi.gov.in). For details on designated branches of SCSB collecting the CAF, please refer the SEBI website. Please note that pursuant to the SEBI circular dated April 29, 2011, all applicants who are QIBs or are applying in this Issue for Equity Shares for an amount exceeding Rs. 200,000, shall mandatorily make use
of ASBA facility.
ASBA PROCESS: An ASBA Investor can submit his application through CAF/plain paper, either in physical or electronic mode, to the SCSB with whom the bank account of the ASBA Investor or bank account utilized by the ASBA Investor is maintained. The SCSB shall block an amount equal to the application amount in the ASBA Account specified in the CAF, physical or electronic, on the basis of an authorization to this effect given by the account holder at the time of submitting the CAF. The application data shall thereafter be uploaded by the SCSB in the web enabled interface of the Stock Exchanges as prescribed under circular issued by SEBI - SEBI/CFD/DIL/DIP/38/2009/08/20 dated August 20, 2009 or in such manner as may be decided in consultation with the Stock Exchanges. The amount payable on application shall remain blocked in the ASBA Account until finalization of the Basis of Allotment and consequent transfer of the amount against the allocated Equity Shares to the separate account opened by our Company for Rights Issue or until failure of the Issue or until rejection of the ASBA application, as the case may be. Once the basis of Allotment is finalized, the Registrar to the Issue shall send an appropriate request to the Controlling Branch for unblocking the relevant ASBA Accounts and for transferring the amount allocable to the successful ASBA Investors to the separate account opened by our Company for Rights Issue. In case of withdrawal/failure of the Issue, the blocked amount shall be unblocked on receipt of such information from the Registrar to the Issue. The Lead Manager, our Company, its directors, affiliates, associates and their respective directors and officers and the Registrar to the Issue shall not take any responsibility for acts, mistakes, errors, omissions and commissions etc. in relation to applications accepted by SCSBs, Applications uploaded by SCSBs, applications accepted but not uploaded by SCSBs or applications accepted and uploaded without blocking funds in the ASBA Accounts. It shall be presumed that for applications uploaded by SCSBs, the amount payable on application has been blocked in the relevant ASBA Account. Equity Shareholders who are eligible to apply under the ASBA Process The option of applying for Equity Shares in the Issue through the ASBA Process is available to all Equity Shareholders of the Company on the Record Date and who:
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• is holding the Equity Shares in dematerialised form and has applied towards his/ her rights entitlements or additional Equity Shares in the Issue in dematerialised form;
• has not renounced his entitlements in full or in part;
• is not a Renouncee;
• has not split the CAF.
• is applying through a bank account maintained with one of the SCSBs. CAF The Registrar to the Issue will dispatch the CAF to all Equity Shareholders as per their entitlement on the Record Date for the Issue. Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in Part A of the CAF or on the plain paper application providing necessary details and indicate that they wish to apply through the ASBA payment mechanism. On submission of the CAF after selecting the ASBA Option in Part A, the Equity Shareholders are deemed to have authorized (i) the SCSB to do all acts as are necessary, including blocking or unblocking of funds in the bank account maintained with the SCSB specified in the CAF or on the plain paper and transfer of funds to the separate bank account maintained by the Company as per the provisions of section 73(3) of the Companies Act, 1956 on receipt of instruction from the Registrar to the Issue after finalization of the basis of Allotment; and (ii) the Registrar to the Issue to issue instructions to the SCSB to remove the block on the funds in the bank account specified in the CAF or on the plain paper, upon finalization of the basis of Allotment.
Application in electronic mode will only be available with such SCSB who provides such facility. The Equity Shareholder shall submit the CAF/ plain paper application to the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB. However, no more than five applications (including CAF and plain paper application) can be submitted per bank account in the Issue. In case of withdrawal/ failure of the Issue, the Lead Manager, through the Registrar to the Issue, shall notify the SCSBs to unblock the blocked amount of the equity Shareholder applying through ASBA within one day from the day of receipt of such notification. Acceptance of the Issue You may accept the Issue and apply for the Equity Shares either in full or in part, without renouncing the balance, by filling Part A of the CAF sent by the Registrar to the Issue and selecting the ASBA process option in Part A of the CAF and submit the same to the SCSB before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of the Company in this regard. Mode of payment The Equity Shareholder applying under the ASBA Process agrees to block the entire amount payable on application with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in a bank account maintained with the SCSB. After verifying that sufficient funds are available in the bank account provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrar to the Issue. Upon receipt of intimation from the Registrar to the Issue the SCSBs shall transfer such amount as per Registrar to the Issue’s instruction allocable to the Equity Shareholders applying under the ASBA Process from bank account with the SCSB mentioned by the Equity Shareholder in the CAF. This amount will be transferred in terms of the SEBI (ICDR) Regulations, into the separate bank account maintained by the Company as per the provisions of section 73(3) of the Companies Act, 1956. The balance amount remaining after the finalisation of the basis of allotment shall be either unblocked by the SCSBs or refunded to the investors by the Registrar to the Issue on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Manager to the respective SCSB.
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The Equity Shareholders applying under the ASBA Process would be required to block the entire amount payable on their application at the time of the submission of the CAF. The SCSB may reject the application at the time of acceptance of CAF if (i) the bank account with the SCSB details of which have been provided by the equity Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF or (ii) more than five (5) applications (including CAF and plain paper application) are submitted per account held with the SCSB in the Issue. Subsequent to the acceptance of the application by the SCSB, the Company would have a right to reject the application only on technical grounds.
Options available to the Equity Shareholders applying under the ASBA The summary of options available to the Equity Shareholders is presented below. You may exercise any of the following options with regard to the Equity Shares, using the respective CAF received from Registrar to the Issue:
Option Available Action Required
Accept whole or part of your entitlement without renouncing the balance.
Fill in and sign Part A of the CAF (All joint holders must sign)
Accept your entitlement in full and apply for additional Equity Shares
Fill in and sign Part A of the CAF including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)
The Equity Shareholder applying under the ASBA Process will need to select the ASBA option process in
the CAF and provide required necessary details. However, in cases where this option is not selected, but the CAF is tendered to the SCSB with the relevant details required under the ASBA process option and
SCSB blocks the requisite amount, then that CAF would be treated as if the Equity Shareholder has selected to apply through the ASBA process option. Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares that you are entitled to, provided that you have applied for all the Equity Shares (as the case may be) offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board of Directors of the Company or any Committee of Directors, in consultation with the Designated Stock Exchange and in the manner prescribed under “Basis of Allotment” on page 225 of this Draft Letter of Offer. If you desire to apply for additional Equity Shares please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF. Renunciation under the ASBA Process Renouncees cannot participate in the ASBA Process. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF and who is not applying under the ASBA Process may make an application to subscribe to the Issue on plain paper. Equity Shareholders applying on the basis of a plain paper application are required to indicate their choice of applying under the ASBA Process. The envelope should be superscribed “RRL – RIGHTS ISSUE” and should be postmarked in India. The application on plain paper, duly signed by the Investors including joint holders, in the same order as per
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specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars:
• Name of Issuer, being Rodium Realty Limited;
• Name and address of the Equity Shareholder including joint holders;
• Registered Folio Number/ DP and Client ID no.;
• Number of Equity Shares held as on Record Date;
• Number of Equity Shares entitled to;
• Number of Equity Shares applied for;
• Number of additional Equity Shares applied for, if any;
• Total number of Equity Shares applied for;
• Total amount paid at the rate of Rs.[*]/- per Equity Share;
• Savings/ Current Account Number along with name and address of the SCSB and Branch from which the money will be blocked
• Except for applications on behalf of the Central or State Government and the officials appointed by the courts, PAN number of the Investor and for each Investor in case of joint names, irrespective of the total value of the Equity Shares applied for pursuant to the Issue; and
• Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the Company.
• A representation that the equity Shareholder is not a “U.S. Person” (as defined in Regulations under the Securities Act)
• In the application, the ASBA Investor shall, inter alia, give the following confirmations/ declarations:-
• That he/ she is an ASBA Investor as per the SEBI (ICDR) Regulations.
• That he/ she has authorized the SCSBs to do all acts as are necessary to make an application in the Issue, upload his/ her application data, block or unblock the funds in the ASBA Account and transfer the funds from the ASBA Account to the separate account maintained by the Company for Rights Issue after finalization of the basis of Allotment entitling the ASBA Investor to receive Equity Shares in the Issue etc.
• The Equity Shareholder applying on the plain paper application, should authorise the SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB
• If an applicant makes an application in more than one mode i.e. both in the CAF and on the plain paper, then both the applications may be liable for rejection.
Last date of Application
The last date for submission of the duly filled in CAF is [*]. The Issue will be kept open for a minimum of 15 (fifteen) days and the Board of Directors or any Committee of Directors thereof, if any, will have the right to extend the said date for such period as it may determine from time to time but not exceeding 30 (thirty) days from the Issue Opening Date. If the CAF together with the amount payable is not received by the Banker to the Issue/Registrar to the Issue or if the CAF is not received by the SCSB on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board of Directors /Committee of Directors, the offer contained in this Letter of Offer shall be deemed to have been declined and the Board of Directors/Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under “Basis of Allotment”. Option to receive securities in dematerialized form EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES OF OUR COMPANY UNDER THE ASBA PROCESS CAN ONLY BE ALLOTTED IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE BEING HELD ON RECORD DATE.
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Issuance of intimation letters Upon approval of the basis of Allotment by the Designated Stock Exchange, the Registrar to the Issue shall send the Controlling Branches, a list of the ASBA Investors who have been allocated Equity Shares in the Issue, along with:
- The number of Equity Shares to be allotted against each successful ASBA; - The amount to be transferred from the ASBA Account to the separate account opened by the Bank for
Rights Issue, for each successful ASBA; - The date by which the funds referred to in paragraph above, shall be transferred to separate account
opened by Our Company for the Rights Issue; and - The details of rejected ASBAs, if any, along with reasons for rejection to enable SCSBs to unblock the
respective ASBA Accounts. General instructions for Equity Shareholders applying under the ASBA Process (a) Please read the instructions printed on the CAF carefully. (b) Application should be made on the printed CAF only and should be completed in all respects. The CAF
found incomplete with regard to any of the particulars required to be given therein, and/or which are not completed in conformity with the terms of this Letter of Offer are liable to be rejected. The CAF/ plain paper application must be filled in English.
(c) The CAF/ plain paper application in the ASBA Process should be submitted at a Designated Branch of the
SCSB and whose bank account details are provided in the CAF and not to the Bankers to the Issue/ Collecting Banks (assuming that such Collecting Bank is not a SCSB), to the Company or Registrar to the Issue or Lead Manager to the Issue.
(d) All applicants, and in the case of application in joint names, each of the joint applicants, should mention his/
her PAN number allotted under the I. T. Act, 1961, irrespective of the amount of the application. CAF/ plain paper applications without PAN will be considered incomplete and are liable to be rejected.
(e) All payments will be made by blocking the amount in the bank account maintained with the SCSB. Cash
payment is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.
(f) Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to
the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF/ plain paper application as per the specimen signature recorded with the Company or Depositories.
(g) In case of joint holders, all joint holders must sign the relevant part of the CAF/ plain paper application in the
same order and as per the specimen signature(s) recorded with the Company. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant.
(h) All communication in connection with application for the Equity Shares, including any change in address of
the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/ sole applicant Equity Shareholder, folio numbers and CAF number.
(i) Only the person or persons to whom Equity Shares have been offered and not Renouncee(s) shall be eligible
to participate under the ASBA process.
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Do’s:
a. Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are filled in. In case of non-receipt of the CAF, the application can be made on plain paper with all necessary details as indicated under the heading “Application on Plain Paper” on page 210 of this Draft Letter of Offer.
b. Ensure that you submit your application in physical mode only. Electronic mode is only available with
certain SCSBs and not all SCSBs and you should ensure that your SCSB offers such facility to you. c. Ensure that the details about your Depository Participant and beneficiary account are correct and the
beneficiary account is activated as Equity Shares will be allotted in the dematerialized form only. d. Ensure that the CAF/ plain paper application are submitted at the SCSBs whose details of bank account have
been provided in the CAF. e. Ensure that you have mentioned the correct bank account number in the CAF. f. Ensure that there are sufficient funds (equal to {number of Equity Shares as the case may be applied for} X
{Issue Price of Equity Shares, as the case may be}) available in the bank account maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.
g. Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on
application mentioned in the CAF/ plain paper application, in the bank account maintained with the respective SCSB, of which details are provided in the CAF/ plain paper application and have signed the same.
h. Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF/ plain paper
application in physical form. i. Each applicant should mention their PAN allotted under the I. T. Act. j. Ensure that the name(s) given in the CAF/ plain paper application is exactly the same as the name(s) in
which the beneficiary account is held with the Depository Participant. In case the CAF/ plain paper application is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF/ plain paper application.
k. Ensure that the demographic details are updated, true and correct, in all respects. Don’ts: 1. Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB. 2. Do not pay the amount payable on application in cash, by money order or by postal order. 3. Do not send your physical CAF/ plain paper application to the Lead Manager to the Issue/ Registrar to the
Issue/ Collecting Banks (assuming that such Collecting Bank is not a SCSB)/ to a branch of the SCSB which is not a Designated Branch of the SCSB/ Company; instead submit the same to a Designated Branch of the SCSB only.
4. Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground. 5. Do not instruct your respective banks to release the funds blocked under the ASBA Process. 6. Do not submit more than five (5) applications (including CAF and plain paper application) per bank account
maintained with the SCSB for the Issue.
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Grounds for Technical Rejection under the ASBA Process In addition to the grounds listed under “Grounds for Technical Rejections” on page 221 of this Draft Letter of Offer, applications under the ABSA Process are liable to be rejected on the following grounds: 1. Application for entitlements or additional Equity Shares in physical form.
2. DP ID and Client ID mentioned in CAF/ plain paper application not matching with the DP ID and Client ID
records available with the Registrar to the Issue.
3. Sending CAF/ plain paper application to the Lead Manager/ Registrar to the Issue/ Collecting Bank (assuming that such Collecting Bank is not a SCSB)/ to a branch of a SCSB which is not a Designated Branch of the SCSB/ Company.
4. Renouncee applying under the ASBA Process.
5. Insufficient funds are available with the SCSB for blocking the amount.
6. Funds in the bank account with the SCSB whose details are mentioned in the CAF/ plain paper application
having been frozen pursuant to regulatory orders.
7. Account holder not signing the CAF/ plain paper application or declaration mentioned therein.
8. Submitting the GIR number instead of the PAN.
9. Application on split form. Depository account and bank details for Equity Shareholders applying under the ASBA Process IT IS MANDATORY FOR ALL THE EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL EQUITY
SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. EQUITY SHAREHOLDERS
APPLYING UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF. Equity Shareholders applying under the ASBA Process should note that on the basis of name of these
Equity Shareholders, Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF/ plain paper application, the Registrar to the Issue will obtain from the Depository demographic details of these Equity Shareholders such as address, bank account details for printing on refund orders and occupation (“Demographic Details”). Hence, Equity Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF/ plain paper
application. These Demographic Details would be used for all correspondence with such Equity Shareholders including mailing of the letters intimating unblock of bank account of the respective Equity Shareholder. The Demographic Details given by Equity Shareholders in the CAF would not be used for any other purposes by the Registrar to the Issue. Hence, Equity Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs, the Equity Shareholders applying under the ASBA Process would be deemed to have authorized the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records.
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Letters intimating allotment and unblocking or refund (if any) would be mailed at the address of the
Equity Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories. Refunds, if any, will be made directly to the bank account in the SCSB and which details are
provided in the CAF and not the bank account linked to the DP ID. Equity Shareholders applying under the ASBA Process may note that delivery of letters intimating unblocking of bank account may get delayed if the same once sent to the address obtained from the Depositories are returned undelivered. In
such an event, the address and other details given by the Equity Shareholder in the CAF would be used only to ensure dispatch of letters intimating unblocking of bank account. Note that any such delay shall be at the sole risk of the Equity Shareholders applying under the ASBA Process and none of the Company, the SCSBs or the Lead Manager shall be liable to compensate the
Equity Shareholder applying under the ASBA Process for any losses caused to such Equity Shareholder due to any such delay or liable to pay any interest for such delay. In case no corresponding record is available with the Depositories that match three parameters, namely, name(s) of the Equity Shareholder(s) (including the order of names of joint holders), the DP ID and the beneficiary account number, then such applications are liable to be rejected. Application will not be accepted by the Lead Manager or by the Company. Note on cash payment (section 269 SS)
Having regard to the provisions of Section 269 SS of the I. T. Act, 1961, subscriptions against applications for securities should not be effected in cash and must be effected only by ‘Account Payee’ cheques or ‘Account Payee’ bank drafts, if the amount payable is Rs. 20,000/- or more. In case payment is effected in contravention of this provision, the application is liable to be rejected. Payment by Stock invest In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003- 04 dated November 5, 2003, the Stockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue. Bank details of the applicant The applicant must fill in the relevant column in the CAF giving particulars of Savings Bank/ Current Account Number and the name of the Bank with whom such accounts is held, to enable the Registrar to the Issue to print the said details in the Refund Orders, if any, after the name of the payees. Please note that provision of Bank Account details has now been made mandatory and applications not containing such details are liable to be rejected. Application number on the cheque/ demand draft
To avoid any misuse of instruments, the applicants are advised to write the application number and name of the first applicant on the reverse of the cheque/ demand draft. Grounds for Technical Rejections Investors are advised to note that applications are liable to be rejected on technical grounds, including the following:
• Amount paid does not tally with the amount payable for;
• Bank account details (for refund) are not given/ incomplete/ incorrect
• Age of first Investor not given;
• Except for CAF on behalf of the Central or State Government and the officials appointed by the courts, PAN number not given for application of any value;
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• In case of CAF under power of attorney or by limited companies, corporate, trust, etc., relevant documents are not submitted;
• If the signature of the Equity Shareholder does not match with the one given on the CAF and for Renounce(s) if the signature does not match with the records available with their depositories;
• If the Investors desires to have Equity Shares in electronic form, but the CAF does not have the Investor’s depository account details;
• CAFs are not submitted by the Investors within the time prescribed as per the CAF and the Draft Letter of Offer;
• CAFs not duly signed by the sole/ joint Investors;
• Applications by NRIs, FIIs and non-residents without prior RBI approval to subscribe to the partly paid up Equity Shares of the Company; CAFs by OCBs; CAFs accompanied by Stockinvest;
• In case no corresponding record is available with the depositories that matches three parameters, namely, names of the Investors (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s identity;
• CAF that do not include the certification set out in the CAF to the effect that the subscriber is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the securities in compliance with all applicable laws and regulations;
• CAF which have evidence of being executed in/ dispatched from the US;
• CAF by ineligible non-residents (including on account of restriction or prohibition under applicable local laws) and where a registered address in India has not been provided;
• CAF where the Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements;
• Submission of the GIR number instead of the PAN;
• Applications by Renouncees who are persons not competent to contract under the Indian Contract Act, 1872, including minors;
• Multiple CAF; and
• Please read the Letter of Offer and the instructions contained herein and in the CAF carefully before filling in the CAF. The instructions contained in the CAF are each an integral part of the Draft Letter of Offer and must be carefully followed. CAF is liable to be rejected for any non-compliance of the provisions contained in the Draft Letter of Offer or the CAF.
General instructions for Investors (a) Please read the instructions printed on the enclosed CAF carefully. (b) Application should be made on the printed CAF, provided by the Company except as mentioned under the
head “Terms of the Issue” on page 198 and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of the Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the Investors, details of occupation, address, father’s/ husband’s name must be filled in block letters.
(c) The CAF together with cheque/ demand draft should be sent to the Bankers to the Issue/ Collecting Bank or
to the Registrar to the Issue and not to the Company or the Lead Manager. Investors residing at places other than cities where the branches of the Bankers to the Issue have been authorised by the Company for collecting applications, will have to make payment by demand draft payable at Chennai of an amount net of bank and postal charges and send their CAFs to the Registrar to the Issue by registered post. If any portion of the CAF is/ are detached or separated, such application is liable to be rejected.
Applications where separate cheques/ demand drafts are not attached for amounts to be paid for Equity Shares are liable to be rejected. (d) Except for CAF on behalf of the Central or State Government and the officials appointed by the courts, PAN
of the Investor and for each Investor in case of joint names, irrespective of the total value of the Equity
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Shares applied for pursuant to the Issue. CAF without PAN will be considered incomplete and are liable to be rejected.
(e) It is mandatory for Investors to provide information as to their savings/ current account number and the name
of the Bank with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees. Application not containing such details is liable to be rejected.
(f) The payment against the application should not be effected in cash if the amount to be paid is Rs. 20,000 or
more. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon. Payment against the application if made in cash, subject to conditions as mentioned above, should be made only to the Bankers to the Issue.
(g) Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to
the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company or depositories.
(h) In case of an application under power of attorney or by a body corporate or by a society, a certified true copy
of the relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under this Issue and to sign the application and a copy of the memorandum and articles of association and/ or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the above referred documents are already registered with the Company, the same need not be furnished again, however, the serial number of registration or reference of the letter, vide which these papers were lodged with the Company/ Registrar to the Issue must be mentioned just below the signature(s) on the CAF . In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue.
(i) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per
the specimen signature(s) recorded with the Company. Further, in case of joint Investors who are Renouncees, the number of Investors should not exceed three. In case of joint Investors, reference, if any, will be made in the first Investor’s name and all communication will be addressed to the first Investor.
(j) All communication in connection with application for the Equity Shares, including any change in address of
the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/ sole Investor, folio numbers and CAF number. Please note that any intimation for change of address of Equity Shareholders, after the date of allotment, should be sent to the Registrar to the Issue in the case of Equity Shares held in physical form and to the respective depository participant, in case of Equity Shares held in dematerialized form.
(k) Split forms cannot be re-split. (l) Only the person or persons to whom Equity Shares have been offered and not Renouncee(s) shall be entitled
to obtain Split forms. (m) Investors must write their CAF number at the back of the cheque/ demand draft. (n) Only one mode of payment per application should be used. The payment must be either in cash or by cheque/
demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub-member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted.
(o) A separate cheque/ demand draft must accompany each CAF. Outstation cheques/ demand drafts or post-
dated cheques and postal/ money orders will not be accepted and applications accompanied by such cheques/ demand drafts/ money orders or postal orders will be rejected. The Registrar to the Issue will not accept
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payment against application if made in cash. (For payment against application in cash please refer point (f) above).
(p) No receipt will be issued for application money received. The Bankers to the Issue/ Collecting Bank/
Registrar to the Issue will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.
(E) DEMATERIALISATION As per the provisions of the Depositories Act, 1996, the shares of a body corporate may be held in dematerialized form i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through electronic mode. The Company has entered into a tripartite agreement dated 15th January, 2010 with the National Securities Depository Limited. (NSDL) and Cameo Corporate Services Limited for dematerialisation of the Equity Shares of the Company. The Company has also entered into a tripartite agreement dated 22nd October, 2001 with the Central Depository Services (India) Limited (CDSL) and Cameo Corporate Services Limited for dematerialisation of the Equity Shares of the Company. The ISIN No. granted to the Equity Shares of the Company is INE 513E01024. An applicant has the option to seek allotment in physical or demat mode. An applicant who seeks allotment in demat mode must have at least one Beneficiary Account with any of the Depository Participants (DP) of NSDL or CDSL registered with SEBI, prior to the application. Such applicants must necessarily fill in the details (including the Depository Participant’s ID and Beneficiary Account Number) appearing under the head “Request for shares in electronic form” in the CAF. Applicant must indicate in the CAF, the number of Equity Shares they wish to receive in electronic form out of the total number of equity shares applied for. In case of partial allotment, shares will first be allotted in electronic form and the balance, if any, will be allotted in physical form. Names in the CAF should be identical to those appearing in the account details in the Depository. In case of joint holders, the name should necessarily be in the same sequence as they appear in the account details in the Depository. No separate application for demat and physical shares is to be made. If such applications are made the application for physical shares will be treated as multiple applications and rejected accordingly. It may be noted that Equity Shares allotted in electronic form can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL. Non-transferable allotment letters/ refund orders will be directly sent to the applicant by the Registrar to the Issue. The applicant is responsible for the correctness of the applicants demographic details given in the share application form vis-à-vis those with his/ her DP. Equity shares allotted in demat mode will be credited directly to the respective Beneficiary Account. Disposal of application and application moneys No acknowledgment will be issued for the application moneys received by Our Company. However, the Banker to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto in case the application concerned is not made in terms of the Draft Letter of Offer. In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares allotted, will be refunded to the applicant within 15 days from the Issue Closing Date. If
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such money is not repaid within 8 days from the day the Company becomes liable to repay it, the Company and every Director of the Company who is an officer in default shall, on and from expiry of 8 days, be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the Companies Act.
For further instruction(s), please read the CAF carefully. Basis of Allotment The basis of allotment shall be finalized by the Board of Directors of the our Company or Committee of Directors of Our Company authorized in this behalf by the Board of Directors of the Company. 1. Subject to provisions contained in this Draft Letter of Offer, the Articles of Association of the Company
and approval of the Designated Stock Exchange (BSE), the Board will proceed to allot the Equity Shares in the following order of priority:
a) Full allotment to those Equity Shareholders who have applied for their Rights Entitlement either in full or in part and also to the Renouncees(s) who has/ have applied for Equity Shares renounced in their favour, in full or in part. (subject to the other provisions contained under the paragraph titled “Renunciation”).
b) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them
as part of the Issue and have also applied for additional Equity Shares. The allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an undersubscribed portion after making full allotment in (a) above. The allotment of such Equity Shares will be at the sole discretion of the Board of Directors of the Company/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Rights Issue.
c) Allotment to the Renouncees who having applied for the Equity Shares renounced in their favour
have also applied for additional Equity Shares, provided there is surplus after making full allotment in (a) and (b) above. The allotment of such additional Equity Shares will be made on a proportionate basis at the sole discretion of the Board of Directors of the Company/ Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Rights Issue.
d) Allotment to any other person as the Board may in their absolute discretion deem fit, provided there is a
surplus after making full allotment under (a), (b), (c) above. 2. The Company shall not retain any over subscription. 3. After taking into account the allotments made under 1(a), 1(b) and 1(c) above, if there is still any
under subscription, the unsubscribed portion shall be disposed off by the Board of Directors of the Company or Committee of Directors authorized in this behalf by the Board of Directors of the Company upon such terms and conditions and to such person/ persons and in such manner as the Board of Directors of the Company/ Committee of Directors may in its absolute discretion deem fit, as part of the Rights Issue and not preferential allotment.
(F) ALLOTMENT ADVICES/ REFUND ORDERS The Company will issue and dispatch allotment advice/ Equity Share certificates/ demat credit and/ or letters of regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any, within a period of 15 (fifteen) days from the date of closure of the Issue. If such money is not repaid within 8 (eight) days from the day the Company becomes liable to pay it, the Company shall pay that money with interest as stipulated under section 73 of the Companies Act. Investors residing in the 68 cities specified by SEBI pursuant to its circular dated February 1, 2008, with amendments, if any, will get refunds through ECS only except where the Investors are otherwise disclosed as applicable/ eligible to get refunds through direct credit and RTGS, provided the MICR details are recorded
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with the Depositories or the Company. In case of those Investors who have opted to receive their Rights Entitlement in dematerialized form using electronic credit under the depository system, and advice regarding their credit of the Rights Equity Shares shall be given separately. Investors to whom refunds are made through electronic transfer of funds will be sent a letter through Registered Post / Speed Post intimating them about the mode of credit of refund within 15 (fifteen) working days of the Issue Closing Date. In case of those Investors who have opted to receive their Rights Entitlement in physical form, the Company will issue the corresponding share certificates under Section 113 of the Companies Act, 1956 or other applicable provisions. In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Equity Shareholders (including the order of names of joint holders), the DP ID and the beneficiary account number, then such applications are liable to be rejected. Allotment of Equity Shares to non-residents and the issue of letters of allotment/ share certificates to non-residents shall be subject to the approval received from RBI. For non-resident applicants, refunds, if any, will be made as under:
• Where applications are accompanied by Indian Rupee Drafts purchased abroad and payable at Chennai, India, refunds will be made in convertible foreign exchange equivalent to Indian Rupees to be refunded. Indian Rupees will be converted into foreign exchange at the rate of exchange, which is prevailing on the date of refund. The exchange rate risk on such refunds shall be borne by the concerned applicant and the Company shall not bear any part of the risk.
• Where the applications made are accompanied by NRE/ FCNR/ NRO cheques, refunds will be credited to NRE/ FCNR/ NRO accounts respectively, on which such cheques are drawn and details of which are provided in the CAF.
The letter of allotment / refund orders would be sent by registered post/speed post to the sole/first applicant's registered address. Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked ‘A/c Payee only’ and would be drawn in favour of the sole/first applicant. Mode of making refunds The payment of refund, if any, would be done through any of the following modes: 1. ECS/ NECS – Payment of refund would be done through ECS/ NECS for Investors having an account at any
centre where such facility has been made available. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories. The payment of refunds is mandatory for Investors having a bank account at any centre where ECS/ NECS facility has been made available by the RBI (subject to availability of all information for crediting the refund through ECS/NECS), except where the Investor, being eligible, opts to receive refund through National Electronic Fund Transfer (NEFT), direct credit or RTGS.
2. NEFT – Payment of refund shall be undertaken through NEFT wherever the Investors’ bank has been
assigned the Indian Financial System Code (IFSC), which can be linked to a MICR, if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the Investors have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the Investors through this method.
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3. Direct Credit – Investors having bank accounts with the Bankers to the Issue shall be eligible to receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by the Company.
4. RTGS – Investors having a bank account at any centre where such facility has been made available and
whose refund amount exceeds Rs. 1 million, have the option to receive refund through RTGS. Such eligible Investors who indicate their preference to receive refund through RTGS are required to provide the IFSC Code in the CAF. In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the refund bank(s) for the same would be borne by the Company. Charges, if any, levied by the Investor’s bank receiving the credit would be borne by the Investor.
5. For all other applicants, except for whom the payment of refund is possible through the four options specified
above, the refund orders will be dispatched through speed post/ registered post for refund orders. Such refunds will be made by cheques, pay orders or demand drafts drawn in favour of sole/ first applicant and will be payable at par. Adequate funds would be made available to the Registrar to the Issue for this purpose.
Printing of Bank Particulars on Refund Orders As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the Investor’s bank account, where available, are mandatorily required to be given for printing on the refund orders. Bank account particulars will be printed on the refund orders/ refund warrants which can then be deposited only in the account specified. The Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud. (G) INTEREST IN CASE OF DELAY IN ALLOTMENT/ DESPATCH Company shall ensure dispatch of refund orders, if any, under registered post or speed post or through modes as mentioned in section, “Terms of the Issue” clause “Mode of Payment”, as applicable, only at the sole or First Applicant’s sole risk within 15 (fifteen) days of closure of the Rights Issue, and adequate funds for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by the Issuer. In case of those shareholders who have opted to receive their Right Entitlement Shares in dematerialized form by electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately.
Undertakings by the Company The Company undertakes that: 1. The complaints received in respect of the Issue shall be attended to by the Company expeditiously and
satisfactorily. 2. All steps for completion of the necessary formalities for listing and commencement of trading at all the stock
exchanges where the Equity Shares are to be listed will be taken within 7 (seven) working days of finalization of basis of allotment.
3. That funds required for making refunds to unsuccessful applicants as per the modes disclosed shall be made
available to the Registrar to the Issue by the Company. 4. That where refunds are made through electronic transfer of funds, a suitable communication shall be sent to
the applicant within 15 days of the Issue Closing Date, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund.
5. That no further issue of Equity Share shall be made till the Equity Share offered through this Offer
Document are listed or till the application moneys are refunded on account of non-listing, under subscription, etc.
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6. Adequate arrangements shall be made to collect all ASBA applications and to consider them similar to non-
ASBA applications while finalising the basis of allotment. The Issuer and Lead Manager shall update the Letter of Offer and keep the investors informed of any material changes till the listing and trading commences.
Underwriting The present Issue is not underwritten. Utilization of Issue Proceeds The Board of Directors declares that: (i) All monies received out of this Issue shall be transferred to a separate bank account as per sub-section (3)
of Section 73 of the Companies Act. (ii) Details of all monies utilized out of the Issue shall be disclosed under an appropriate separate head in the
balance sheet of the Company indicating the purpose for which such monies have been utilized. (iii) Details of all unutilized monies out of the Issue, if any, shall be disclosed under an appropriate separate
head in the balance sheet of the Company indicating the form in which such unutilized monies have been invested.
(iv) The Company shall utilize the funds collected in the Issue only after the basis of allotment is finalized. Minimum Subscription If the Company does not receive the minimum subscription of 90% of the Issue, the Company shall forthwith refund the entire subscription amount received within 15 (fifteen) days from the Issue Closing Date. If such money is not repaid within 8 (eight) days from the day the Company becomes liable to repay it, (i.e. 15 days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is earlier) the Company and every Director of the Company who is an officer in default shall, on and from expiry of 8 (eight) days, be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the Companies Act. Important 1. Please read this Draft Letter of Offer carefully before taking any action. The instructions contained in the
accompanying CAF are an integral part of the conditions of this Draft Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected.
2. All enquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for SAFs must
be addressed (quoting the registered folio number/ DP and Client ID number, the CAF number and the name of the first equity Shareholder as mentioned on the CAF and superscribed “RRL – Rights Issue” on the envelope and postmarked in India) to the Registrar to the Issue at the following address:
Cameo Corporate Services Limited Subramanian Building No. 1 Club House Road, Chennai -600 002 Tel.: +91-044-2846 0390 Fax: +91-044-28460129 Website: www.cameoindia.com Email: [email protected]
3. It is to be specifically noted that this Issue of Equity Shares is subject to the risks and uncertainties
mentioned in the section titled “Risk Factors “beginning on page 14 of this Draft Letter of Offer.
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(C) DESCRIPTION OF EQUITY SHARES AND TERMS OF ARTICLES OF ASSOCIATION
Capitalized terms used in this section have the meaning given to such terms in the Articles of the Company. Pursuant to Schedule II of the Companies Act, 1956 and the SEBI (ICDR) Regulations, the main provisions of the Articles of Association of the Company relating to voting rights, dividend, lien, forfeiture, restrictions on transfer and transmission of Equity Shares and or their consolidation/ splitting are required to be stated. Please note that each provision herein below is numbered as per the corresponding article number in the Articles of Association of the Company as they stand on the date of this Offer and defined terms herein have the meaning given to them in the said Articles of Association. Table ‘A’ to apply: 1. The Regulations contained in Table ‘A’ in the First Schedule to the Companies Act, 1956, referred to hereinafter as thereto so far as the same are applicable to a Public Company as defined in the Act, shall apply to this Company in the same manner as if all such Regulations of Table ‘A’ are specifically contained in these Articles, subject to the modifications herein contained.
Board is Authorised to undertake Business: 2. Any branch or kind of business which by the Memorandum of Association of the Company or by these presents is expressly or by implication authorised to be undertaken by the Company, subject to the Provisions of Section 149 of the Act, may be undertaken by the Board, at such time or times as they shall think fit and further may be suffered by them to be in abeyance, whether such branch or kind of business may have been actually commenced or not so long as the Board may deem it expedient not to commence or proceed with such branch or kind of business. Allotment of Disposal of Shares:
3. The shares shall be under the control of the Board of Directors, who may allot or otherwise dispose of the same to such persons on such terms and conditions and at such time as the Board of Directors may think fit, whether at par or at a premium or (subject to the, Provisions of the Act) at a discount and for such time and for such consideration as the Board of Directors think fit, provided that the option or right to call for shares shall not be given to any person, except with the sanction of the Company in General Meeting; provided further that the amount paid in advance of calls shall not in respect thereof, confer a right to dividend or to participate in profits.
Issue of Share Certificates:
4. Whenever any public issue of shares is made under a prospectus issued for the purpose, share certificates shall be issued in market lots and where share certificates are issued in either more or less than market lots, sub-division or consolidation of share certificates into market lots shall be done free of charge.
Issue of Preference Shares:
5. Subject to the Provisions of Section 80 of the Act, the Company shall have powers to issue preference shares including cumulative convertible preference shares, Debentures, which are at the option of the Company liable to be redeemed and the resolution authorising such issue shall prescribe the manner, terms and conditions of redemption.
Underwriting and Brokerage:
6. Subject to provisions of Section 76 of the Act, the Company may at any time pay commissionto any person in consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) for any share or debenture in the Company or procuring or agreeing to procure subscription (whether absolute or conditional) for any share or debenture of the Company but so that the commission shall not exceed in the
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case of shares five percent of its price at which the shares are issued or in the case of debentures two and half percent of its price at which the debentures are issued. Such commission may be satisfied by payment of cash or by allotment of fully or partly paid shares or partly in one way and partly in the other.
Division and Sub-division of Shares:
The Company may by ordinary resolution:
7. (a) Consolidate and divide all or any of than its existing shares.
(b) Sub-divide the whole or any part of its share capital into shares of smaller amount than is fixed by the Memorandum of Association subject to clause (d) of sub section (1) of section 94 of the Act.
(c) Cancel any shares which, at the date of passing of the resolution, have not been taken or agreed to be taken by any person.
Transfer and Transmission of Shares:
8. (a) The instrument of transfer shall be in writing and all the Provisions of Section 108 of the Act and of any statutory modification thereof for the being shall be duly complied with in respect of all transfer of shares and registration thereof,
(b) Subject to the Provisions of Section 111 of the Act, and Section 22A of the Securities Contracts (Regulation) Act. 1956, the Board without assigning any reason for such refusal, may refuse to register any transfer of or the transmission by operation of law of the right to a share PROVIDED THAT registration of a transfer shall not be refused on the ground of the transferor being alone or jointly with any other person or persons indebted to the Company on any account whatsoever except a lien on the shares.
(c) No fee shall be charged for transmission of shares or for registration of any power of Attorney, Probate, Letters of Administration or other similar documents. No fee shall be charged for registration of transfers, consolidation or sub-division of share certificates or for issue of New certificates in replacement of those which are old, decrepit, worn out or where the cages on the reverse for recording transfers have been utilised.
Calls:
9. The Board may, from time to time, subject to the terms on which any shares may have been issued and subject to the provisions of Section 91 of the Act, make such calls as the Board thinks fit upon the members in respect of all moneys unpaid on the shares held by them respectively and not by the conditions of allotment thereof made payable at fixed times and each member shall pay the amount of every call so made on him to the persons and at the time:; and places appointed by the Board. A call may be made payable by installments and shall be deemed to have been made when the resolution of the board authorising such call was made.
Payment of Interest:
10. (1) If a sum called in respect of a share is not paid before or on the day appointed thereof, the person from who the sum is due shall pay interest thereon from the day appointed for payment thereof to the time of actual payment at 18% per annum or at such other rate as the Board may determine.
(2) The Board shall be at liberty to waive payment of any such interest wholly or in part.
Interest out of Capital:
11. Where any shares are issued for the purposes of raising money to defray the expenses of the construction of
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any work or building or the provision of any plant which cannot be made profitable for a lengthy period, the Company may pay interest on so much of that share capital as its for the time being paid up, for the period and subject to the conditions and restrictions provided by Section 208 of the Act may charge the same to capital as part of the cost construction of the work or building or the provision of the plant.
Lien:
12. The Company shall have a first and paramount lien upon all the shares (excluding fully paid up shares) registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale thereof for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares. Such lien shall extend to all dividends and bonus from time to time declared in respect of such shares. Unless otherwise agreed the registration of transfer of shares shall not operate as waiver of the Company’s lien, if any, on such shares. The Board of Directors may at any time declare any shares to be wholly or partly to be exempt from the provisions of this clause.
Dividend:
13. Dividend on fully paid shares shall be free of any charge and in respect of partly paid shares dividends can be adjusted only to the extent of calls presently payable on the shares subject to the provisions of Section 205 of the Act. No unclaimed dividend shall be forfeited by the Board and the Company shall comply with all the provisions of Section 205A of the Act, in respect of all unclaimed or unpaid dividend.
Payment of Unclaimed dividend:
14. That the unclaimed dividends will not be forfeited and in case of such unclaimed dividends the procedure as prescribed under provisions of 205A of the Companies Act, 1956 will be followed. Dividend in respect of Shares pending registration of transfer by the Board shall be dealt with in accordance with the Section 206A of the Act.
Payment of Calls in Advance:
15. Any member willing to advance all or any part of money due upon the shares held by him beyond the sums actually called for and upon the money so paid in advance or remitted thereto as from time to time exceeds the amount of calls shall not entitle the member thereof to dividend or to participation in profits on the uncalled amount nor shall be entitled to any voting rights in respect of the same until such amount would (but for such payment) become presently payable. The Directors may however at their discretion repay the amount at any time so advanced by giving to such member three months notice in writing.
Debentures:
16. The Board of Directors of the Company shall have the right to issue from time to time debentures with or without conversion on rights in to shares in any manner, the Board may deem fit.
Borrowing Powers of the Board:
17. (a) The Board may from time to time at its discretion borrow and secure the payment of any for the purpose of the company, provided that the Board shall not, except with the consent of the Company in general meeting, borrow moneys to be borrowed by the company in general meeting, borrow moneys where the moneys to be borrowed by the Company (apart from temporary loans from the Company’s bankers in the ordinary course of business) will exceed the aggregate of the paid- up capital of the Company and its free reserves, that is to say reserves not set apart for any specific purpose of the Company, of the paid-up capital of the Company and its free reserves, that is to say, reserves not set apart for any specific purpose of the Company.
(b) Subject to the provisions of clause (a) above, the Board may raise or secure the repayment of such sums or
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sums in such manner and upon such terms and conditions in all respects as it thinks fit by the issue of bonds perpetual or redeemable, debentures or debenture stock or mortgage or charge or other security on the whole of the undertaking or any part thereof or any property of the Company (both present and future) including its uncalled capital for the time being. Any bonds, debentures, debenture stock or other securities issued or to be issued by the Company shall be under the control of the Board which may issue them on such terms and conditions in such manner and for such consideration as it shall consider to be for the benefit of the Company.
Number of Directors:
18. The Company shall have not less than three and not more than fifteen Directors including all kinds of Directors.
Present Directors: 19. The First Directors of the Company shall be the following.
1. Sri Balkishan Boob 2. Sri Bhagawandas Boob 3. Sri Ramanujdas Boob 4. Sri Ramnivas Boob
Share Qualification:
20. (a) No Share Qualification is necessary for any individual for being appointed as Director of the Company.
Retirement of Directors:
(b) At every Annual General Meeting one third of the total number of Directors, whose period of office is liable to retirement by rotation shall retire in accordance with the provisions of Section 255 and 256 of the Act and they are eligible for re-appointment.
Nominee Directors:
21. (a) If the Board of Directors enter unto any contract with Industrial Development Bank of India (IDBI), Industrial Finance Corporation of India (IFCI), or Industrial Credit and Investment Corporation of India Limited (ICICI) or Life Insurance Corporation of India (LIC) or Unit Trust of India (UTI) or the Karnataka State Financial Corporation (KSFC) or Karnataka State Industrial Investment and Development Corporation Limited (KSIIDC) or with any credit institutions for providing any guarantee for undertaking or subscription of the shares of the Company. The Board of Directors of this Company shall have the power to agree that subject to the provisions of Section 255 of the Companies Act, 1956, such institutions shall have the right to appoint or nominate by notice in writing addressed to the Company one or more Directors on the Board of Directors of the Company during such period and upon such conditions as may be mentioned in the agreement and such Directors shall not be liable to retire by rotation (nor be required to hold any Qualification Shares). The Board of Directors may also agree that any such Director(s) may be removed by the Institution or Institutions entitled to appoint or nominate them and such person or persons may appoint or nominate another or others in his or their place(s) and also fill in any vacancy, which may occur as a result of any such Director(s) ceasing to hold office for any reason whatsoever. The Directors(s) appointed or nominated under this Article shall be entitled to exercise and enjoy all the rights and privileges exercised and enjoyed by the Director(s) appointed by the Company including the Payment of remuneration and travelling and halting expenses of such Director(s) as may be agreed by the Company with such person or persons aforesaid and also be entitled to attend General Meetings, and Meetings of Committee which he is a member and receive notice, agenda papers and minutes thereof.
(b) The Board of Directors of the Company shall have no power to remove from office the Nominee Directors. At the option of the Corporation such Nominee Directors shall not be required to hold any share
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qualification in the Company. Also at the option of the Corporation such Nominee Director/s shall not be liable to retirement by rotation Subject to as aforesaid, the Nominee Director/s shall be entitled to the rights and privileges and be to the same obligations any of the Directors of the Company.
(c) The Nominee Directors so appointed shall hold the said office only so long as any moneys owing by the Company to the Corporation or long as the Corporation holds debentures in the Company as a result of Direct subscription or private placement or so long as the Corporation holds in shares the Company as a result of under writing or direct subscription or the liability of the Company arising out of the guarantee is outstanding and the Nominee Director/s so appointed in exercise of the said power shall ipso facto cease to be directors if the monies are paid off or the Corporation ceasing to hold Debentures/Shares in the Company or on the satisfaction of the liability of the Company arising out of the guarantee furnished by the corporation.
(d) The Nominee Director/s appointed under this Article shall be entitled to receive all notices of and attend all General Meetings, Board Meetings and of the meetings of the Committee of which the Nominee Directors is/are member’s as also the minutes of such meetings. The Corporation shall be entitled to receive all such notices and minutes.
(e) The Company shall pay to the Nominee Directors sitting fees, expenses to which the other Directors of the company are entitled, but if any other fees, commission, monies or remuneration in any form is payable to the directors of the Company, the fees, commission, monies and remuneration in relation to such Nominee Director/s shall accrue to the Corporation. Any expenses that may be any expenses that may be incurred by the Corporation or such Nominee Director/s in connection with their appointment or Directorship shall be paid or reimbursed by the Company to the Corporation or as the case may be, to such Nominee Director/s.
(f) Provided that, if any such Nominee Director/s is an Officer of the Corporation the sitting fees, in relation to such Nominee Director/s shall also accrue to the Corporation and the same shall accordingly be paid by the Company directly to the Corporation.
(g) In the event of the Nominee Director/s being appointed as Whole time Director/s, such Nominee Director/s shall exercise such powers and have such right as are usually exercised or available to a Whole time Director in the Management of the Company. Such Whole time Directors shall be entitled to receive such remuneration, fees, commission and monies as may be approved by the Corporation.
Additional Directors:
22. The Board shall have power to appoint one or more individuals to be additional directors, provided that the total number of Directors, including Additional Directors so appointed shall not any time exceed fifteen.
Casual Directors:
23. The Board shall have the power to fill up the casual vacancy on the Board caused by the death or resignation of any Director. The Director so appointed shall hold office only up to the date on which the Director in whose place he has been appointed would have been office if it had not been vacated as aforesaid.
Alternate Directors:
24. The Board of Directors may appoint any individual to be an Alternate Director during the absence of a director from the state in which the Meetings of the Board are ordinarily held, provided such absence shall not be for a lesser period than three months. Such appointee while he holds office as Alternate Director shall be entitled to receive notice of all the meetings of the Board, to attend and vote thereat and on all resolutions proposed to be passed by circulation.
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Sitting Fees:
25. The Directors of the Company for the time being shall be paid a sitting fee of such sum as may be decided by the Board from time to time but within the limits laid down under Rule 10B of Companies (Central Government) General Rules and Forms 1956 read with first proviso to Section 310 of the Companies Act, 1956 from time to time for every meeting of the Board or of any Committee of the Board attended by them in addition to all travelling and halting expenses incurred by them in attending and returning from such meetings of the Board or/of any committee of the Board or/of General Meeting of the Company.
Remuneration for Extra Services:
26. If any Director(s) is/are appointed to advise the Board as an expert or be called upon to perform extra services or make special exertions for any of the purposes of the Company the Board may, subject to and in accordance with the provisions of the Act and in particular Sections 309 and 314 of the Act, pay to such Director(s) such special remuneration as it may think fit which remuneration may be in the form of either salary or commission based on percentage of profits or party in one form and partly in another and may either be in addition to or in substation of the remuneration specified in the last preceding Article.
27. The non-whole time Directors may be paid such remuneration as may be determined by the Board in accordance with the provisions of Section 309(4) of the Act.
Directors and their contracts with the Company:
28. Subject to the provisions of the Act, the Directors shall not be disqualified by reason of their office as such from contracting with the Company either as a vendor, purchaser, lender, agent, broker or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company with any Director or with the Company or partnership firm in which any Director shall be Director, Member, Partner or otherwise interested be avoided, nor shall any Director so contracting or being so interested in any contract or arrangement be liable to account, to the Company for any profits realized on such contract or arrangement by reason only of such Director holding the Office of fiduciary relation thereby established but the nature of the interest must be disclosed by him at the Meeting of the Board of director, at which the contract or arrangements is determined, if the interest then exists, or in any other case at the first meeting of the Board after the acquisition of the interest, provided nevertheless that no director shall vote as a Director in respect of any contracts, or arrangements in which he is so interested as aforesaid, and if he does so his vote shall not be counted but he shall be entitled to be present at the meeting during the transaction of the business in relation to which he is precluded from voting although he shall not be counted for the purpose of ascertaining whether there is quorum of Directors present. This restriction shall not apply to any contract by or on behalf of the Company to give the Directors any security by way of indemnity against any loss, which they or any of them may suffer by becoming or being sureties for the Company. A general notice that any Director is a Director or a Member of any specified firm and is to be regarded as interested in any subsequent transaction will be sufficient disclosure under this Article and after such General notice it shall not be necessary to give special notice relating to any particular transaction with such company or firm.
29. Nothing in Article 26 shall apply to any contract or arrangement entered into between this Company and any other Company where any of the Directors of this Company or two or more of them together hold not more than 2 percent of the paid up share capital of the Company.
Power and Duties of the Board of Directors General Powers:
30. The business of the Company shall be managed by the Board who may exercise all such powers of the Company as are not, by the Act or any statutory modification thereof for the time being in force or by these Articles, required to be exercised by the Company in General Meetings, subject nevertheless to any regulation of the Articles or to the provisions of the said Act and to such regulations being not inconsistent with the aforesaid regulations, to provisions as may prescribed by the Company in General Meetings, but no
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regulations made by Company in General Meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made.
30(a) To hold property/ies on behalf of the Company in the name of Director/s for operational convenience and director will act as nominee of the Company in respect of the property acquired on behalf of the Company by giving appropriate disclosure to the Board.
Delegation of Powers
31. Subject to the provisions of Section 292 of the Act, the Board may delegate all or any of its powers to any Directors or other persons jointly or severally or to anyone Director at their discretion.
Attorney of the Company:
32. The Board may appoint at any time and from time to time by a power of Attorney under the Company's seal any person to be the attorney of the Company for such purposes and with such authorities and discretion not exceeding those vested in or exercisable by the Board in these Articles and for such period and subject to such conditions as the Board may from time to time think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with such Attorney as the Board may think fit.
Managing Director:
33. Subject to the provisions of the Act and approval of the Central Government wherever necessary, the Directors may from time to time, appoint one or more of their body to be Managing Director/Joint Managing Director of the Company for a fixed term not exceeding five years at a time for which he or they is or are to hold office and may from time to time (subject to the provisions of any contract between him or them and the Company) remove or dismiss him from office and appoint another or others in his or their places. The Managing Director/Joint Managing Director shall not while he or they continues or continue to hold that office, be subject to retirement by rotation and shall not be reckoned as Director to retire by rotation. But he or they shall ipso facto cease to be Managing Director if he or they cease to hold the office of the Director(s) for any cause whatsoever.
Remuneration of Managing Director:
34. Subject to the provisions of Section 269 of the Schedule XIII there under and subject to the Provisions of Section 198 and 309 of the Act, and subject to the approval of the Central Government if necessary, the board of directors may determine the remuneration payable to the Managing Director /Joint Managing Director in any manner they may deem fit. The remuneration may be in the form of monthly salary or commission based on profits or partly in one way and partly in another.
Payment of Allowances:
35. The Directors may in addition to the remuneration referred to in preceding clause provide to the Managing Director/s such allowances, amenities, benefits and facilities as they may deem fit from time to time with such sanction as may be necessary.
36. The Managing Director/s shall be entitled to reimbursement of all his or their out of pocket expenses incurred by him or them in connection with the business of the Company.
Powers and Duties of the Managing Director: 37. Subject to the provisions of the Act, the Directors may from time to time entrust upon the managing
Directors for the time being such of the powers exercisable under these presents by the Board of Directors as may think fit and many confer such terms and conditions and with such restrictions as they may think
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expedient and they may confer such powers either collaterally with or subject to such restrictions or to the exclusion of and in substitution for all or any of the powers of the Board of Directors in that behalf and may from time to time revoke, withdraw, alter or vary all or any of such powers. The Managing Director/ Joint Managing Director may exercise all the powers entrusted to them by the Board of Directors jointly and severally in any manner as they may deem fit.
Whole-time Directors:
38. Subject to the provisions of the Act, the Board may from time to time appoint one or more of their body to
the office of whole-time Director with any designation or any such period and on such terms and conditions including remuneration payable to him/them as the Board may deem fit.
Selling Agents: 39. Subject to the provisions of the Act, the board may appoint any firm or body corporate as the sole selling
agents of the Company for such area and on such terms and conditions as the Board may deem fit from time to time.
Common Seal of the Company:
40. The Board shall provide a seal for the purpose of the Company and shall have power from time to time to
destroy the same and substitute a new seal in lieu there of and the Board shall provide for the safe custody of the seal for the time being.
41. The seal shall not be affixed to any instrument except by the authority of a resolution of the Board or committee and unless the Board otherwise determines every deem or other instrument to which the seal is required to be affixed shall, unless the same is executed by a duly constituted Attorney for the Company, be signed by atleast two Directors in whose presence, the seal of the Company shall have been affixed provided nevertheless that any instrument bearing the seal of the Company and issued for valuable consideration shall be binding on the Company notwithstanding any irregularity in the affixture thereof.
Secrecy:
42. No member shall be entitled to inspect the Company’s books, works establishment without the permission of the board or require discovery of any matter which is or may be in the nature of trade secret mystery of trade or secret process, which may relate to the conduct of the business of the Company and which in the opinion of the board will not be expedient in the interest of the members of the Company to communicate to the public.
Passing of resolution by Postal Ballot
43. Board may after following procedures prescribed under Section 192(A) of the Companies Act, 1956 and Companies (Passing of resolution by Postal Ballot) Rules, 2001 pass resolution by postal ballot in respect of items prescribed in Section 192(A) of the Companies Act, 1956.
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SECTION X – OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION The following contracts (not being contracts entered into in the ordinary course of business carried on by Our Company or entered into more than two years before the date of this Draft Letter of Offer) which are or may be deemed material to have been entered or are to be entered into by Our Company. These contracts and also the documents for inspection referred to hereunder, may be inspected at the Registered Office of Our Company situated at Plot No. 636, 501, X’ cube, Off New Link Road, Andheri (W), Mumbai- 400053, Maharashtra, India., from 10.00 a.m. to 5.00 p.m., from the date of this Draft Letter of Offer until the Issue Closing Date, on any working days. A. Material Contracts 1. Addendum dated August 10, 2011 to the original agreement dated November 01, 2010 entered between Our
Company and Lead Manager i.e. Vivro Financial Services Private Limited. 2. Agreement dated August 10, 2011 entered between Our Company and Cameo Corporate Services Limited
to act as the Registrar to the present Rights Issue. 3. Agreement dated [*], 2011 entered between Our Company and Banker to the Issue. B. Documents available for inspection 1. Certificate for Incorporation dated May 17, 1993. 2. Certificate for Commencement of Business dated May 24, 1993. 3. Fresh Certificate of Incorporation consequent upon Change of Name of the Company dated August 24,
2010. 4. Copy of the Memorandum and Articles of Association of the Company, as amended till date. 5. Copy of the Board Resolution dated October 22, 2010 approving the present Rights Issue. 6. Consents of the Promoters, Directors, Lead Manager to the Issue, Legal Advisors to the Issue, Registrar to
the Issue, Statutory Auditors and Compliance Officer of the Company to include their names in the Draft Letter of Offer to act in their respective capacities.
7. Prospectus dated May 20, 1996 for the Initial Public Offering made by the Company. 8. Annual Reports of the Company for the last five Financial Years i.e. 2011, 2010, 2009, 2008, 2007. 9. Letter dated August 11, 2011 from the Statutory Auditors of the Company M/s. M. M. Nissim and Co.,
Chartered Accountants, Mumbai confirming Tax Benefits as mentioned in the Draft Letter of offer. 10. Report of the Statutory Auditors of the Company M/s. M. M. Nissim and Co., Chartered Accountants,
Mumbai, dated August 11, 2011 prepared as per Indian GAAP and mentioned in this Draft Letter of Offer and copies of Summary of Assets and Liabilities and Profit and Loss Accounts as restated of the Company.
11. Copy of the Leave and License Agreement for use of office premises no. 501 situated on the 5th Floor, X’cube, Plot No. C-16, Off New Link Road, Andheri (W), Mumbai-400053 between Sigma Fiscals Pvt. Ltd. and Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Mehul Nisar, Mr. Rohit K. Dedhia, Mr, Keshavji G. Dedhia and Vishal Cotspin Limited dated August 20, 2010.
12. Leave and License Agreement for the use of office premises no.401 situated on the 4th Floor, X’cube, Plot No. C-16, Off New Link Road, Andheri (W), Mumbai-400053 between Sigma Fiscals Pvt. Ltd., Mr. Deepak Chheda and Rodium Properties dated 20th Day of August 2010.
13. Leave and License Agreement for the use of office premises no.402 situated on the 4th Floor, X’cube, Plot No. C-16, Off New Link Road, Andheri (W), Mumbai-400053 Mr. Harish Nisar, Mr. Mehul Nisar, Mr. Rohit K. Dedhia, Mr. Keshavji G. Dedhia and Rodium Properties dated August 20, 2010.
14. Deed of Retirement cum Dissolution executed on April 1, 2010 between Vishal Cotspin Limited, Mr. Deepak Chheda, Mr. Harish Nisar, Mr. Mehul Nisar, Mr. Rohit Dedhia, Mr. Keshavji Dedhia, Mr. Shailesh Shah, Mr. Dinesh Shah, Mr. Anil Shah, Mr. Tejas Shah and Sigma Fiscals Private Limited.
15. Agreement for appointment of Mr. Deepak Chheda as the Managing Director of the Company dated February 1, 2010 for a period of three years w.e.f. November 14, 2009 and revision in remuneration vide resolution dated August 2, 2010.
16. Agreement for appointment of Executive Director(s) namely Mr. Shailesh Shah, Mr. Rohit Dedhia and Mr. Harish Nisar dated February 1, 2010 for a period of three years w.e.f. November 14, 2009 and revision in remuneration vide resolution dated August 2, 2010.
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17. Land Purchase agreement for X’czar project dated December 9, 2009. 18. Development Agreement for X’enus Project dated May 15, 2009 19. Land Purchase Agreement for X’enus Project dated June 8, 2009 20. Development agreement for X’point Project dated May 7, 2010 21. Due Diligence certificate dated August 11, 2011 issued by the Lead Manger to the Rights Issue. 22. Supplemental Agreement between Share Transfer Agent i.e. Cameo Corporate Services Ltd. and Our
Company dated April 12, 2010 for extentsion of the Original Agreement dated February 18, 2003 to act as a Share Transfer Agent of Our Company.
23. Tripartite Agreement dated January 15, 2010 entered into with NSDL, Our Company and the Registrar of the Company.
24. Tripartite Agreement dated October 22, 2001 entered into with CDSL, Our Company and the Registrar of the Company.
25. SEBI Observation letter no. [*] dated [*]. 26. In-principle listing approval for this Issue dated [*] from BSE.
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DECLARATION
No statement made in this Draft Letter of Offer contravenes any of the provisions of the Companies Act, 1956 and the rules made there under. All the legal requirements connected with the said Issue as also the guidelines, regulations, instructions, etc. issued by SEBI, Government and any other competent authority in this behalf have been duly complied with. We hereby certify that all disclosures made in this Draft Letter of Offer are true and correct. Signed by all the Directors of the Company:
Place: Mumbai Date: August 11, 2011
Mr. Deepak Chheda
Chairman and Managing Director
Mr. Sudhir Mehta
Non Executive and Independent Director
Mr. Harish Nisar Executive Director
Mr. Yogesh Shah Non Executive and Independent Director
Mr. Shailesh Shah Executive Director
Mr. Vatsal Shah Non Executive and Independent Director
Mr. Rohit Dedhia Executive Director
Mr. Nilesh Vikamsey Non Executive and Independent Director
Mr. Mehul Nisar Chief Financial Officer
Ms. Kalpita Keluskar Company Secretary and Compliance Officer