private & confidential – for private …2015 to 31.03. 2023 secured by first pari-passu charge...
TRANSCRIPT
1
PRIVATE&CONFIDENTIAL–FORPRIVATECIRULATIONONLYDATEDJULY20,2020(This Disclosure Document/Private Placement Offer Letter is neither a Prospectus nor aStatementinLieuofProspectus)THIS DISCLOSURE DOCUMENT CONTAINS DISCLOSURE AS PER SCHEDULE – I DISCLOSURESSPECIFIEDUNDERSECURITIESANDEXCHANGEBOARDOFINDIA(ISSUEANDLISTINGOFDEBTSECURITIES)REGULATIONS,2008,ASAMENDED,SECURITIESANDEXCHANGEBOARDOFINDIA(LISTINGOBLIGATIONANDDISCLOSUREREQUIREMENTS)REGULATIONS,2015,ASAMENDEDANDFORMNO.PAS-4PURSUANTTOSECTION42ANDSECTION71OFTHECOMPANIESACT,2013,ASAMENDEDANDRULE14(1)OFCOMPANIES(PROSPECTUSANDALLOTMENTOFSECURITIES)RULES,2014READWITHTHECOMPANIES(SHARECAPITALANDDEBENTURES)RULES,2014,EACHASAMENDED.
J.K.CementLimitedJ.K.CementLimitedwasincorporatedonNovember24,1994asJ.K.CementLimited, under the Companies Act, 1956. Our Company received thecertificateforcommencementofbusinessdatedDecember30,1994fromthethenRegistrarofCompanies,Kanpur,UttarPradesh.TheCINofourCompanyisL17229UP1994PLC017199.Registered&CorporateOffice:KamlaTower,Kanpur,UttarPradesh208001CIN:L17229UP1994PLC017199PhoneNo:+91-512-2371478-81Faxno.:+91-512-2332665/2399854;EmailID:[email protected]:www.jkcement.com;
DISCLOSUREDOCUMENTDISCLOSUREDOCUMENTCUMAPPLICATIONFORMFORPRIVATEPLACEMENTBYJ.K.CEMENTLIMITED(THE“ISSUER”/“COMPANY”)OF2,500SECURED,LISTED,RATED,REDEEMABLE,NON-CONVERTIBLEDEBENTURESOFFACEVALUEOFRS. 10,00,000EACHAMOUNTINGTORS.250CRORES(THE“ISSUE”).
GENERALRISKInvestmentindebtinstrumentsinvolvesadegreeofriskandinvestorsshouldnotinvestanyfundsinthedebtinstrument,unlesstheycanaffordtotaketheriskattachedtosuchinvestments.Investonlyafter reading the risk factors in the Disclosure Document carefully including the risk involved. Thesecurities have not been recommended or approved by the Securities and Exchange Board of India(“SEBI”)nordoesSEBIguaranteetheaccuracyoradequacyofthisDisclosureDocument.Investorsareadvised to take an informed decision and to read the risk factors carefully before investing in thisoffering. For taking an investment decision, investors must rely on their own examination of theCompanyandtheIssueincludingtherisksinvolved.TheSEBIdoesnottakeanyresponsibilityforthisIssueinanymanner.
GENERALDISCLAIMERThis DisclosureDocument cumApplication Form is neither a prospectus nor a statement in lieu ofprospectusanddoesnotconstituteanoffertothepublicgenerallytosubscribefororotherwiseacquiretheDebentures to be issuedby the Issuer. ThisDisclosureDocument is for the exclusiveuse of theintended recipient(s) to whom it is addressed and delivered, and it should not be circulated ordistributed to thirdparties. It cannotbe acteduponby anypersonother than towhom it hasbeenspecificallyaddressed.Multiplecopieshereofgiventothesameperson/entityshallbedeemedtobeofferedtothesameperson.
ISSUER’SABSOLUTERESPONSIBILITYThe Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that thisDisclosureDocumentcontainsallinformationwithregardtotheIssuerandtheIssue,whichismaterialinthecontextoftheIssue,thattheinformationcontainedintheDisclosureDocumentistrueandcorrectinallmaterialaspectsandisnotmisleadinginanymaterialrespect,thattheopinionsandintentions
2
expressedhereinarehonestlyheldandthattherearenootherfacts,theomissionofwhichmakethisDisclosureDocumentasawholeoranyofsuchinformationortheexpressionofanysuchopinionsorintentionsmisleadinginanymaterialrespect.
CREDITRATINGCAREAA;Stable(DoubleA;Outlook:Stable)”hasbeenassignedbyCARERatingsLimitedfortheissueofDebentures.Theaboveratingsarenotarecommendationtobuy,sellorholdDebenturesandinvestorsshouldtaketheirowndecision.Theratingsmaybesubjecttosuspension,revisionorwithdrawalatanytimebytheassigning credit rating agency, on the basis of factors such as new information or unavailability ofinformationorothercircumstanceswhichsuchcreditratingagencybelievesmayhaveanimpactonitsrating,andeachratingshouldbeevaluatedindependentlyofanyotherrating.Theratingsobtainedaresubjecttorevisionatanypointoftimeinthefuture.
LISTINGTheDebenturesareproposedtobelistedontheWholesaleDebtMarketSegmentoftheBSELimited.DEBENTURETRUSTEETOTHEISSUE REGISTRARTOTHEISSUE
IDBITRUSTEESHIPSERVICESLIMITEDAsianBuilding,GroundFloor,17-R,KamaniMarg,BallardEstate,Mumbai–400001,Maharashtra,IndiaTelNo.:+912240807000Fax:+912266311776Contactperson:JimitPoojariWebsite:www.idbitrustee.comEmail:[email protected]/[email protected]
NSDLDatabaseManagementLimited4thFloor,TradeWorldAWing,KamalaMillsCompound,SenapatiBapatMarg,LowerParel,Mumbai–400013Tel:022-49142591Fax:022-49142503Email:[email protected];InvestorGrievanceEmailId:[email protected]:www.nsdl.co.inContactPerson:NileshBhandareSEBIRegistrationNo:INR000004181
SOLEARRANGERTOTHEISSUE
HDFCBankLimitedPeninsulaBusinessPark, 4thFloor,TowerB, SenapatiBapatMarg,LowerParel,Mumbai–400013,IndiaTel:+912233958234Fax:+912230788584E-mail:[email protected]:Mr.DarshanJakhotiyaWebsite:www.hdfcbank.com
ISSUESCHEDULEISSUEOPENINGDATE July22,2020
IssueClosingDate July22,2020
PAYINDATESJuly23,2020
DeemedDateofAllotment July23,2020
InconsultationwithArranger,theIssuerreservestherighttopreponetheissueearlierfromtheaforesaiddateorpostponetheIssueatitssoleandabsolutediscretionwithoutgivinganyreasonsorpriornotice.IntheeventofanychangeintheaboveIssueSchedule,theIssuerwillintimatetheinvestorsabouttherevisedIssueSchedule.
3
Sr.No INDEX PageNo.
1. DEFINITION/ABBREVIATION 62. DISCLAIMER 83. ISSUERINFORMATION 114. MANAGEMENT’SPERCEPTIONOFRISKFACTOR 135. BRIEFSUMMARYOFBUSINESS/ACTIVITIESOFISSUERANDITSLINEOFBUSINESS 326. OVERVIEW 327. CORPORATESTRUCTURE 34
8. KEYOPERATIONAL&FINANCIALPARAMETERS 34
9. PROJECT COST AND MEANS OF FINANCING, IN CASE OF FUNDING OF NEWPROJECTS 35
10. SUBSIDIARIES 35
11.
BRIEFHISTORYOFISSUERSINCEINCEPTION,DETAILSOFACTIVITIESINCLUDINGANY REORGANIZATION, RECONSTRUCTION OR AMALGAMATION, CHANGES INCAPITAL STRUCTURE, (AUTHORIZED, ISSUED AND SUBSCRIBED) ANDBORROWINGS
36
12. DETAILSOFSHARECAPITALASONLASTQUARTEREND 36
13. CHANGESINITSCAPITALSTRUCTUREASONLASTQUARTEREND,FORTHELASTFIVEYEARS 36
14. EQUITYSHARECAPITALHISTORYOFTHECOMPANYASONLASTQUARTERENDFORTHELASTFIVEYEARS 36
15. DETAILSOFANYACQUISITIONORAMALGAMATIONINTHELAST1YEAR 3716. DETAILSOFANYREORGANIZATIONORRECONSTRUCTIONINTHELAST1YEAR 37
17. DETAILSOFTHESHAREHOLDINGOFTHECOMPANYASONTHELATESTQUARTEREND 37
18. SHAREHOLDINGPATTERNOFTHECOMPANYASONLASTQUARTEREND 37
19. LIST OF TOP 10 HOLDERS OF EQUITY SHARES OF THE COMPANY AS ON THELATESTQUARTEREND 37
20. DETAILSREGARDINGTHEDIRECTORSOFTHECOMPANY 3821. DETAILSOFCHANGEINDIRECTORSSINCELASTTHREEYEARS 4122. DETAILSREGARDINGTHEAUDITORSOFTHECOMPANY 4223. DETAILSOFCHANGEINAUDITORSINCELASTTHREEYEARS 4224. DETAILSOFBORROWINGSOFTHECOMPANY,ASONTHELATESTQUARTEREND 4225. DETAILSOFSECUREDLOANFACILITIES 4226. DETAILSOFUNSECUREDLOANFACILITIES 4827. DETAILSOFANYINTER-CORPORATELOANS,DEPOSITSANDOTHERBORROWINGS 4828. LISTOFTOP10DEBENTUREHOLDERS 48
29. THEAMOUNTOFCORPORATEGUARANTEEISSUEDBYTHEISSUERALONGWITHNAME OF THE COUNTERPARTY (LIKE NAME OF THE SUBSIDIARY, JV ENTITY,GROUPCOMPANY,ETC)ONBEHALFOFWHOMITHASBEENISSUED.
49
30. DETAILSOF COMMERCIAL PAPER: - THETOTAL FACEVALUEOF COMMERCIALPAPERSOUTSTANDINGASONTHELATESTQUARTER 49
31. DETAILSOFRESTOFTHEBORROWING(IFANYINCLUDINGHYBRIDDEBTLIKEFCCB,OPTIONALLYCONVERTIBLEDEBENTURES/PREFERENCESHARES 49
32.
DETAILSOFALLDEFAULT/SAND/ORDELAY IN PAYMENTSOF INTERESTANDPRINCIPAL OF ANY KIND OF TERM LOANS, DEBT SECURITIES AND OTHERFINANCIALINDEBTEDNESSINCLUDINGCORPORATEGUARANTEEISSUEDBYTHECOMPANY,INTHEPAST5YEARS
49
33. DETAILSOFANYOUTSTANDINGBORROWINGSTAKEN/DEBTSECURITIESISSUEDWHERETAKEN/ISSUED(I)FORCONSIDERATIONOTHERTHANCASH,WHETHER 49
4
INWHOLEORPART,(II)ATAPREMIUMORDISCOUNT,OR(III)INPURSUANCEOFANOPTION
34. REGULATORYCONFIRMATIONS 4935. DETAILSOFPROMOTERSOFTHECOMPANY 50
36. DETAILSOFPROMOTERHOLDINGINTHECOMPANYASONTHELATESTQUARTEREND 50
37.
ABRIDGED VERSION OF AUDITED STANDALONE FINANCIAL INFORMATION(PROFIT& LOSS STATEMENT, BALANCE SHEET AND CASH FLOW STATEMENT)FOR LAST THREE YEARS AND AUDITOR QUALIFICATIONS-ATTACHED ASANNEXURE
51
38. CONFIRMATION ON CHANGE IN ACCOUNTING POLICIES, RELATED PARTYTRANSACTIONS,RESERVATION/QUALIFICATIONSBYTHEAUDITORS 51
39.
ANYMATERIALEVENT/DEVELOPMENTORCHANGEHAVING IMPLICATIONSONTHE FINANCIALS/CREDIT QUALITY (E.G. ANY MATERIAL REGULATORYPROCEEDINGSAGAINSTTHEISSUER/PROMOTERS,TAXLITIGATIONSRESULTINGIN MATERIAL LIABILITIES, CORPORATE RESTRUCTURING EVENT ETC) AT THETIMEOFISSUEWHICHMAYAFFECTTHEISSUEORTHEINVESTOR’SDECISIONTOINVEST/CONTINUETOINVESTINTHEDEBTSECURITIES
52
40. REGULATORYCONFIRMATIONS 54
41.
THE NAMES OF THE DEBENTURE TRUSTEE(S) SHALL BE MENTIONED WITHSTATEMENT TO THE EFFECT THAT DEBENTURE TRUSTEE(S) HAS GIVEN HISCONSENTTOTHEISSUERFORHISAPPOINTMENTUNDERREGULATION4(4)ANDINALLTHESUBSEQUENTPERIODICALCOMMUNICATIONSSENTTOTHEHOLDERSOFDEBTSECURITIES.
55
42.
DETAILEDRATINGRATIONALE(S)ADOPTED(NOTOLDERTHANONEYEARONTHEDATEOFOPENINGOFTHE ISSUE)/CREDITRATINGLETTER ISSUED (NOTOLDER THANONEMONTHONTHEDATEOFOPENINGOF THE ISSUE) BY THERATINGAGENCIESSHALLBEDISCLOSED-ATTACHEDASANNEXURE
56
43. IFTHESECURITYISBACKEDBYAGUARANTEEORLETTEROFCOMFORTORANYOTHERDOCUMENT/LETTERWITHSIMILARINTENT 56
44. COPY OF CONSENT LETTER FROM THE DEBENTURE TRUSTEE-ATTACHED ASANNEXURE 56
45. NAMES OF ALL THE RECOGNISED STOCK EXCHANGES WHERE THE DEBTSECURITIES ARE PROPOSED TO BE LISTED CLEARLY INDICATING THEDESIGNATEDSTOCKEXCHANGE
56
46. OTHERDETAILS 5747. DRRCREATION 5748. ISSUE/INSTRUMENTSPECIFICREGULATIONS-RELEVANTDETAILS 5849. DISCLOSURESPERTAININGTOWILFULDEFAULT 5950. LEGALPROCEEDINGS 60
51.
APPLICATION PROCESS;WHO CANAPPLY, HOWTOBID, RIGHT TOACCEPTORREJECTBIDS,PAYMENTMECHANISM,DEPOSITORYARRANGEMENTS,PROCEDUREFORAPPLYINGFORTHEDEMATFACILITY,LETTEROFALLOTMENT/DEBENTURECERTIFICATE / REFUNDORDER / ISSUEOF LETTEROFALLOTMENT, ISSUEOFDEBENTURE CERTIFICATES, INSTRUCTIONS FOR APPLICATION, SUCCESSION,RIGHT TO ACCEPT OR REJECT APPLICATIONS, ALLOTMENT,TRANSFER/TRANSMISSION,TAXBENEFITS,LOSSOFLETTER(S)OFALLOTMENT/PRINCIPALANDINTERESTPAYMENTINSTRUMENTS,refunds,governinglaw,
65
52. PERMISSION/CONSENTFROMTHEPRIORCREDITORSANDUNDERTAKINGONCREATIONOFCHARGE 71
53. MATERIALCONTRACTSANDAGREEMENTS 7154. INVESTORGRIEVANCEANDREDRESSALSYSTEMS 7255. TERMSHEET:ISSUEDETAILS 7256. DISCLOSUREOFCASHFLOWS 8257. FUTUREBORROWINGS 8358. RIGHTSOFDEBENTUREHOLDER(S) 83
5
59. NOTICES,EVENTSOFDEFAULT,ADDITIONALCOVENANTS, 8460. FORMPAS–4 8561. DECLARATION 9162. ANNEXURES
6
DEFINITION/ABBREVIATIONDEFINITIONS/ABBREVIATIONS/TERMSUSEDApplicableLaws Any statute, national, state, provincial, local,municipal or other law,
treaty,code,regulation,ordinance,rule,judgment,order,decree,bye-law, approval of any governmental authority, directive, guideline,policy, requirementorothergovernmentalrestrictionoranysimilarform of decision of or determination by, or any interpretation oradministrationhavingtheforceoflawofanyoftheforegoingbyanygovernmental authority having jurisdiction over the matter inquestion,whetherineffectasofthedateofthisDisclosureDocumentoratanytimethereafterinIndia
ApplicationForm Means theapplication form for subscribing to theDebenturesof theCompanyandreferredtoasAnnexureofthisDisclosureDocument.
Application Money /ApplicationMonies
meansmoney paid or payable by an Investor on its application forsubscriptiontotheDebentures
ArticlesofAssociation TheArticlesofAssociationoftheCompanyBeneficiary/Beneficiaries Thosepersonswhosenamesappearonthebeneficiarydetailsprovided
bytheDepositories(NSDL)asontheRecordDateBoard/BoardofDirectors TheBoardofDirectorsoftheCompanyBSEEBPGuidelines UpdatedOperationalGuidelines for issuanceofSecuritiesonPrivate
PlacementbasisthroughanElectronicBookMechanismissuedbyBSEvidetheirNoticeno.20180928-24datedSeptember28,2019andanyamendmentsthereto
BusinessDay • In relation to themaking of payment of any amount due to theDebenture Trustee and/or theDebentureHolders, shallmean adayonwhichscheduledcommercialbanksandmoneymarketinMumbaiandKanpurareopenfornormalbankingbusiness,otherthanaSaturday,aSundayorabankholidayorapublicholidayforthepurposeofSection25oftheNegotiableInstrumentsAct,1881(26of1881),asamendedoradaywhennohighvalueclearingorRTGSisavailableforanyreasonwhatsoeverataplacewheretheregistered/corporateofficeoftheCompanyissituated;and
• in relation to all other matters, shall mean a day other than aSaturday,aSundayorpublicholidayforthepurposeofSection25oftheNegotiableInstrumentsAct,1881(26of1881),asamendedon which scheduled commercial banks and money market inMumbaiandKanpurareopenfornormalbankingbusiness.
CARERatingsLimited CreditAnalysisandResearchLimited
CompaniesAct,1956 TheCompaniesAct1956,totheextentnotrepealedandreplacedbytheCompaniesAct,2013
CompaniesAct,2013 TheCompaniesAct,2013totheextentnotifiedandincludesanyrules,circulars,notificationsandordersframed/issuedthereunder,eachasamendedfromtimetotime
Company/Issuer J.K.CEMENTLIMITEDCoupon means,inrespectofaDebenturefortheCouponPeriod,theamountof
interestpayableonthefacevalueattheCouponRateCouponPaymentDate(s) meansthedate(s)onwhichCouponwillbepaidtotheInvestorsonan
annualbasisfromDeemedDateofAllotmenttillredemption.CouponPeriod Annually
CDSL CentralDepositoryServices(India)LimitedDebentureHolders Persons who are for the time being holders of the Debentures and
whose names are last mentioned in the Debentures/ DebentureRegisterandshallincludetheirBeneficiaries.
DebentureRegister TheRegisterofDebentureHoldersmaintainedbytheCompanyand/ortheRegistrarandTransferAgentundertheCompaniesAct,2013
7
DebentureTrustee/Trustee IDBITrusteeshipServicesLimitedDebenture TrusteeshipAgreement/Appointmentletter
Theagreement/appointmentletterexecutedbytheCompanywiththeDebentureTrustee
DebentureTrustDeed ThedebenturetrustdeedenteredintobetweentheCompanyandtheDebentureTrustee.
Debentures/NCDs Private Placement of Secured, Listed, Rated, Redeemable, Non-Convertible Debentures of Face Value of Rs. 10,00,000/- eachaggregatingtoRs.250crores
SEBIDebtRegulations Securities and Exchange Board of India (Issue and Listing of DebtSecurities) Regulations, 2008 as amended from time to time andincludesanycirculars,notifications,etc.issuedthereunder.
DeemedDateofAllotment Means the date on which the Debenture Holders transfer theApplicationMoniesinrespectoftheDebenturesandsuchdatebeingthedateonwhichtheDebenturesshallhavebeendeemedtohavebeenallottedtotheDebentureHolders.
Depositories NSDL&CDSLDP DepositoryParticipantEligibleInvestors AllQIBs,andanynon-QIBInvestorsspecificallymappedbytheIssuer
ontheBSEBOND–EBPPlatform,areeligibletobid/invest/applyforthis Issue. All investors are required to comply with the relevantregulations/guidelinesapplicabletothemforinvestinginthisIssue
FY FinancialYearGOI GovernmentofIndiaINR/Rupees ThelawfulcurrencyoftheRepublicofIndiaInvestors Thosepersons towhoma copyof thisDisclosureDocumentmaybe
sent,specificallyaddressedtosuchperson,withaviewtoofferingtheDebenturesforsale(beingofferedonaprivateplacementbasis)underthisDisclosureDocument
Issue Private placement of secured, listed, rated redeemable, non-convertible debentures of face value of Rs. 10,00,000/- eachaggregatingtoRs.250crores
LetterofAllotment LetteraddressedbyoronbehalfoftheCompanytoanInvestorstatingtherein,inter-aliathattheInvestor’sapplicationhasbeenacceptedforallotmentforthenumberofDebenturesmentionedinsuchadviceandthe Application Money paid by it has been accordingly adjustedtowardspaymentoftheallotmentmoneyonthenumberofDebenturesbeingallottedtoit.
MCA MinistryofCorporateAffairs,GovernmentofIndiaNSDL NationalSecuritiesDepositoryLimitedOfferDocument/InformationMemorandum/DisclosureDocument
ThisofferdocumentandprivateplacementofferletterdatedJuly20,2020preparedbytheCompanyinrelationtotheprivateplacementofDebenturesaggregatingtoRs.250crores
RBI ReserveBankofIndiaRedemptionDate ThedateonwhichthedebenturesshallberedeemedtotheInvestorsRegistrarofCompanies UttarPradesh,KanpurSEBI SecuritiesandExchangeBoardofIndiaestablishedundertheSecurities
andExchangeBoardofIndiaAct,1992SEBIEBPCircular Securities and Exchange Board of India circular no.
SEBI/HO/DDHS/CIR/P/2018/05 dated January 5, 2018 anyamendmentsthereto
WilfulDefaulter An issuer who is categorized as a wilful defaulter by any bank orfinancial institution or consortium thereof, in accordance with theguidelinesonwilfuldefaultersissuedbytheReserveBankofIndiaandincludesanissuerwhosedirectororpromoteriscategorizedassuch
8
DISCLAIMER(S)DISCLAIMEROFTHEISSUERThisDisclosureDocumentisneitheraprospectusnorastatementinlieuofprospectusandispreparedinaccordancewiththeSEBIDebtRegulations,theCompaniesAct,2013andtheCompanies(ProspectusandAllotmentofSecurities)Rules,2014readwiththeCompanies(Sharecapitalanddebentures)Rules,2014,eachasamendedfromtimetotime.ThisDisclosureDocumentdoesnotconstituteanoffertopublic ingeneraltosubscribefororotherwiseacquiretheDebenturestobeissuedbytheIssuer.ThisDisclosureDocumentisfortheexclusiveuseoftheaddresseeandrestrictedforonlytheintendedrecipientanditshouldnotbecirculatedordistributedtothirdparty(ies).ItisnotandshallnotbedeemedtoconstituteanofferoraninvitationtothepublicingeneraltosubscribetotheDebenturesissuedbytheIssuer.ThisDebentureIssueismadestrictlyonprivateplacementbasis.ApartfromthisDisclosureDocument,noofferdocumentorprospectushasbeenpreparedinconnectionwiththeofferingofthisDebentureIssueorinrelationtotheIssuer.ThisDisclosureDocumentisnotintendedtoformthebasisofevaluationfortheprospectivesubscriberstowhomitisaddressedandwhoarewillingandeligibletosubscribetotheDebenturesissuedbytheIssuer.ThisDisclosureDocumenthasbeenpreparedtogivegeneralinformationregardingtheIssuertopartiesproposingtoinvestinthisissueofDebenturesanditdoesnotpurporttocontainalltheinformationthatanysuchpartymayrequire.TheIssuerbelievesthattheinformationcontainedinthisDisclosureDocumentistrueandcorrectasofthedatehereof.TheIssuerdoesnotundertaketoupdatethisDisclosureDocumenttoreflectsubsequenteventsafterthedateoftheDisclosureDocumentanditshouldnotberelieduponbytheprospectivesubscriberswithrespecttosuchsubsequenteventswithoutfirstconfirmingitsaccuracyandrelevancywiththeIssuer.However,theIssuerreservesitsrightforprovidingtheinformationatitsabsolutediscretion.TheIssueracceptsnoresponsibilityforstatementsmadeinanyadvertisementoranyothermaterialandanyoneplacingrelianceonanyothersourceofinformationwouldbedoingsoathisownriskandresponsibility.Prospectivesubscribersmustmake theirown independentevaluationandjudgmentbeforemakingtheinvestmentandarebelievedtobeexperiencedininvestingindebtmarketsand are able to bear the economic risk of investing in theseDebentures. It is the responsibility of theprospective subscriber tohaveobtained all consents, approvals or authorizations requiredby them tomakeanoffer tosubscribe for,andpurchase theDebentures. It is theresponsibilityof theprospectivesubscribertoverifyiftheyhavenecessarypowerandcompetencetoapplyfortheDebenturesundertherelevantlawsandregulationsinforce.Prospectivesubscribersshouldconducttheirowninvestigation,duediligenceandanalysisbeforeapplyingfortheDebentures.NothinginthisDisclosureDocumentshouldbeconstruedasadviceorrecommendationbytheIssuerorbytheArrangertotheIssuetosubscriberstotheDebentures.TheprospectivesubscribersalsoacknowledgethattheArrangertotheIssuedoesnotowethesubscribersanydutyofcare inrespectof thisprivateplacementoffer tosubscribe for theDebentures.Prospective subscribers should also consult their own advisors on the implications of application,allotment,sale,holding,ownershipandredemptionoftheseDebenturesandmattersincidentalthereto. ThisDisclosureDocumentisnotintendedfordistribution.ItismeantfortheconsiderationofthepersontowhomitisaddressedandshouldnotbereproducedbytherecipientandthecontentsofthisDisclosureDocumentshallbekeptutmostconfidential.Thesecuritiesmentionedhereinarebeingissuedonprivateplacementbasisandthisofferdoesnotconstituteapublicoffer/invitation.TheIssuerreservestherighttowithdraw the Issue prior to the Issue Closing Date(s) in the event of any unforeseen developmentadversely affecting the economic and regulatory environment or any other force majeure conditionincludinganychangeinApplicableLaw.Insuchanevent,theIssuerwillrefundtheApplicationMoney,ifany,alongwithinterestpayableonsuchApplicationMoney,ifany.DISCLAIMEROFTHESECURITIES&EXCHANGEBOARDOFINDIAThisDisclosureDocumenthasnotbeenapprovedbySEBI.ThedebentureshavenotbeenrecommendedorapprovedbySEBInordoesSEBIguaranteetheaccuracyoradequacyofthisDisclosureDocument.ItistobedistinctlyunderstoodthatthisDisclosureDocument/PrivatePlacementOfferLettershouldnot,inanyway,bedeemedorconstruedthatthesamehasbeenclearedorvettedbySEBI.SEBIdoesnottakeanyresponsibility either for the financial soundness of any scheme or the project for which the Issue isproposed to bemade, or for the correctness of the statementsmade or opinions expressed in PrivatePlacementOfferLetter.PursuanttoRule14(3)oftheCompanies(ProspectusandAllotmentofSecurities)
9
Rules, 2014, the Issuer shall maintain a complete record of private placement offers in FORM PAS-5.HoweverSEBIreservestherighttotakeupatanypointoftime,withtheIssuer,anyirregularitiesorlapsesinPrivatePlacementOfferLetter.DISCLAIMEROFTHESTOCKEXCHANGEAsrequired,acopyofthisDisclosureDocumenthasbeensubmittedtotheBSELimited(“BSE”)forhostingthesameonitswebsite.ItistobedistinctlyunderstoodthatsuchsubmissionoftheDisclosureDocumentwithBSEandhosting thesameon itswebsite shouldnot inanywaybedeemedorconstrued that theDisclosureDocumenthasbeenclearedorapprovedbyBSE;nordoesitinanymannerwarrant,certifyorendorsethecorrectnessorcompletenessofanyofthecontentsofthisDisclosureDocument;nordoesitwarrantthatthisIssuer’sDebentureswillbelistedorcontinuetobelistedontheExchange;nordoesittakeresponsibilityforthefinancialorothersoundnessofthisIssuer,itspromoters,itsmanagementoranyschemeorprojectoftheIssuer.EverypersonwhodesirestoapplyfororotherwiseacquireanyDebenturesoftheIssuerpursuanttothisIssuemaydosopursuanttoindependentinquiry,investigationandanalysisandshallnothaveanyclaimagainsttheexchangewhatsoeverbyreasonofanylosswhichmaybesufferedbysuchpersonconsequenttoorinconnectionwithsuchsubscription/acquisitionwhetherbyreasonofanythingstatedoromittedtobestatedhereinoranyotherreasonwhatsoever.DISCLAIMERINRESPECTOFJURISDICTIONTheprivateplacementofDebenturesismadeinIndiatocompanies,corporatebodies,trustsregisteredundertheIndianTrustsAct,1882,societiesregisteredundertheSocietiesRegistrationAct,1860oranyotherApplicableLaws,providedthatsuchtrust/societyisauthorisedunderconstitution/rules/byelawstoholdDebenturesinacompany,IndianmutualfundsregisteredwithSEBI,scheduledcommercialbanks,systemically important NBFCs, high net worth individuals, Indian financial institutions, insurancecompanies, commercial banks including regional rural banks and cooperative banks, foreign portfolioinvestors, provident, pension, gratuity, superannuation funds as defined under Applicable Laws. ThisDisclosureDocumentdoesnot, however, constitute anoffer to sell or an invitation to subscribe to theDebenturesofferedherebyinanyotherjurisdictiontoanypersontowhomitisunlawfultomakeanofferor invitationinsuchjurisdiction.AnypersonintowhosepossessionthisDisclosureDocumentcomesisrequiredtoinformhimaboutandtoobserveanysuchrestrictions.AnydisputesarisingoutofthisIssuewillbesubjecttotheexclusivejurisdictionofthecourtsatMumbai.AllinformationconsideredadequateandrelevantabouttheIssuerhasbeenmadeavailableinthisDisclosureDocumentfortheuseandperusalof thepotential investorsandnoselectiveoradditional informationwouldbeavailable forasectionofinvestorsinanymannerwhatsoever.DISCLAIMEROFTHEARRANGERTOTHEISSUETheroleoftheArrangerintheassignmentisconfinedtomarketingandplacementoftheDebenturesonthebasisofthisInformationMemorandumaspreparedbytheIssuer.TheArrangerhasneitherscrutinizednorvettednorreviewednorhasitdoneanyduediligenceforverificationofthecontentsofthisInformationMemorandum. The Arranger shall use this Information Memorandum for the purpose of solicitingsubscription(s)fromEligibleInvestorsintheDebenturestobeissuedbytheIssueronaprivateplacementbasis. It is to be distinctly understood that the aforesaid use of this InformationMemorandumby theArrangershouldnotinanywaybedeemedorconstruedtomeanthattheInformationMemorandumhasbeenprepared, cleared, approved, reviewedorvettedby theArranger;nor should thecontents to thisInformationMemoranduminanymannerbedeemedtohavebeenwarranted,certifiedorendorsedbytheArrangersoastothecorrectnessorcompletenessthereof.TheIssuerhaspreparedthisInformationMemorandumandtheIssuerissolelyresponsibleandliableforitscontents.TheIssuerwillcomplywithall laws,rulesandregulationsandhasobtainedallregulatory,governmental, corporateandothernecessaryapprovals for the issuanceof theDebentures.The IssuerconfirmsthatalltheinformationcontainedinthisInformationMemorandumhasbeenprovidedbytheIssuerorisfrompubliclyavailableinformation,andsuchinformationhasnotbeenindependentlyverifiedby the Arranger. No representation or warranty, expressed or implied, is or will be made, and noresponsibility or liability is or will be accepted, by the Arranger or their affiliates for the accuracy,
10
completeness, reliability, correctness or fairness of this Information Memorandum or any of theinformationoropinionscontainedtherein,andtheArrangerherebyexpresslydisclaimsanyresponsibilityorliabilitytothefullestextentforthecontentsofthisInformationmemorandum,whetherarisingintortorcontractorotherwise,relatingtoorresultingfromthisInformationMemorandumoranyinformationor errors contained therein or any omissions there from. Neither Arranger and its affiliates, nor itsdirectors,employees,agentsorrepresentativesshallbeliableforanydamageswhetherdirectorindirect,incidental, special or consequential including lost revenue or lost profits that may arise from or inconnection with the use of this document. By accepting this Information Memorandum, the EligibleInvestor accepts terms of this Disclaimer Clause of Arranger, which forms an integral part of thisInformationMemorandumandagreesthattheArrangerwillnothaveanysuchliability.EachpersonreceivingthisInformationMemorandumacknowledgesthatsuchpersonhasnotreliedontheArranger and/or its affiliates that may be associated with the Debentures in connection with itsinvestigationoftheaccuracyofsuchinformationoritsinvestmentdecision.Issuer hereby declares that the Issuer has exercised due-diligence to ensure complete compliance ofapplicabledisclosurenormsinthisInformationMemorandum.TheArranger:(a)isnotactingastrusteeorfiduciaryfortheinvestorsoranyotherperson;and(b)isundernoobligationtoconductany"knowyourcustomer" or other procedures in relation to any person. The Arranger is not responsible for: (a) theadequacy,accuracyand/orcompletenessofany information (whetheroralorwritten) suppliedby theIssueroranyotherperson inor inconnectionwith this InformationMemorandum;or (b) the legality,validity, effectiveness, adequacy or enforceability of this Information Memorandum or any otheragreement,arrangementordocumententeredinto,madeorexecutedinanticipationoforinconnectionwiththisInformationMemorandum;or(c)anydeterminationastowhetheranyinformationprovidedortobeprovidedtoanyinvestorisnon-publicinformationtheuseofwhichmayberegulatedorprohibitedbyapplicablelaworregulationrelatingtoinsiderdealingorotherwise.The Arranger or any of their directors, employees, affiliates or representatives do not accept anyresponsibilityand/orliabilityforanylossordamagearisingofwhatevernatureandextentinconnectionwith the use of any of the information contained in this document. By accepting this InformationMemorandum,investor(s)agree(s)thattheArrangerwillnothaveanysuchliability.DISCLAIMEROFTHEISSUEDEBENTURETRUSTEETheTrusteedoesnot guarantee the termsof payment regarding the Issue as stated in thisDisclosureDocumentandshallnotbeheldliableforanydefaultinthesame.NeithertheTrusteenoranyofitsaffiliates/ representatives make any representations or assume any responsibility for the accuracy of theinformationgiveninthisDisclosureDocument.DISCLAIMEROFTHERATINGAGENCYAsatthedateofthisDisclosureDocument,thecreditratingagencyhasassignedCAREAA;Stable(DoubleA;Outlook:Stable)byCARERatingsLimitedtotheNCDs.Theratingassignedbythecreditratingagencyisanopiniononcreditqualityandisnotarecommendationtobuy,sellorholdtherateddebtinstruments.Investorsshouldtaketheirowndecisions.Thecreditratingagencyhasbased itsratingon informationobtained fromsourcesbelievedbythemtobeaccurateandreliable.Thecreditratingagencydoesnot,however,guaranteetheaccuracy,adequacyorcompletenessofanyinformationandisnotresponsibleforanyerrorsoromissionsorfortheresultsobtainedfromtheuseofsuchinformation.Theratingmaybesubjecttorevisionorwithdrawalatanytimebythecreditratingagencyandshouldbeevaluatedindependentlyofanyotherrating.Theratingagencyhastherighttosuspendorwithdrawtheratingatanytimebasisoffactorssuchasnewinformationorunavailabilityofinformationoranyothercircumstances
11
(A) ISSUERINFORMATION:NAMEANDADDRESSOFTHEFOLLOWING:Sr.No. PARTICULARS : DETAILS(i) REGISTEREDANDCORPORATEOFFICEOFTHEISSUER
• Name : J.K.CEMENTLIMITED• Address : KamlaTower,Kanpur,UttarPradesh208001,India• TeleNo : +91-512-2371478-81• FaxNo : +91-512-2332665/2399854• Email : [email protected]
(iii) COMPLIANCEOFFICEROFTHEISSUER• Name : ShambhuSingh• Address : KamlaTower,Kanpur,UttarPradesh208001,India• TeleNo : +91-512-2371478-81• FaxNo : +91-512-2332665/2399854• Email : [email protected]
(iv) CHIEFFINANCIALOFFICEROFTHEISSUER• Name : AjayKumarSaraogi• Address : KamlaTower,Kanpur,UttarPradesh208001,India• TeleNo : +91-512-2371478-81• FaxNo : +91-512-2332665/2399854• Email : [email protected]
(v) SOLEARRANGERTOTHEISSUE• Name : HDFCBankLimited
• Address : PeninsulaBusinessPark,4thFloor,TowerB,SenapatiBapatMarg,LowerParel,Mumbai–400013,India
• TeleNo : +912233958234• FaxNo : +912230788584• Email : [email protected]• Website : www.hdfcbank.com• ContactPerson : DarshanJakhotiya
(vi) DEBENTURETRUSTEEOFTHEISSUE
• Name : IDBITRUSTEESHIPSERVICESLIMITED
• Address :AsianBuilding,GroundFloor,17-R,KamaniMarg,BallardEstate,Mumbai–400001,Maharashtra,India
• TeleNo : +912240807000• FaxNo : +912266311776• Email : [email protected]/[email protected]• Website : www.idbitrustee.com
(vii) REGISTRARTOTHEISSUE• Name : NSDLDatabaseManagementLimited
• Address : 4thFloor,TradeWorldAWing,KamalaMillsCompound,SenapatiBapatMarg,LowerParel,Mumbai–400013
• TeleNo : 022-49142591• FaxNo : 022-49142503
• InvestorGrievanceEmailId
• Email : [email protected];• Website : www.nsdl.co.in
(viii) AUDITORSOFTHEISSUERA Name : M/s.S.R.Batliboi&Co,LLP,CharteredAccountants.
• Address :2nd&3rdFloor,GolfViewCorporateTowerB,Sector42,SectorRoadGurugram,Haryana122002,IndiaE-mail:[email protected]
12
ICAIFirmRegistrationNo.301003E/E300005• TeleNo : +911244644000• FaxNo : +911244644050
(viiii) CREDITRATINGAGENCY
A Name : CreditAnalysisandResearchLimited
• Address :B-47,13thFloor,E-1Block,VideoconTower,JhandewalanExtension,NewDelhi–110055
• TeleNo : +911145333200• FaxNo : +911145333238• EmailId : [email protected]• Website : www.careratings.com
13
MANAGEMENT’SPERCEPTIONOFRISKFACTORS
ThefollowingaretherisksrelatingtotheCompany,theDebentures,andthemarketingeneralenvisagedbythemanagement of the Company. Potential investors should carefully consider all the risk factors in thisDisclosureDocumentcumApplicationLetterforevaluatingtheCompanyanditsbusinessandtheDebenturesbeforemakingany investment decision relating to theDebentures. TheCompanybelieves that the factorsdescribedbelowrepresenttheprincipalrisksinherentininvestingintheDebenturesbutdoesnotrepresentthatthestatementsbelowregardingrisksofholdingtheDebenturesareexhaustive.Theorderingoftheriskfactors is intended to facilitate ease of reading and reference and does not in any manner indicate theimportance of one risk factor over another. Investors should also read the detailed information set outelsewhereinthisDisclosureDocumentcumApplicationLetterandreachtheirownviewspriortomakinganyinvestmentdecision.INTERNALRISKFACTORS1. The recent outbreak of COVID-19 could have a significant adverse effect on our results of
operations,andcouldnegativelyimpactourbusiness,revenues,financialconditionandresultsofoperations.
AnationallockdownwasdeclaredbyGovernmentofIndiawitheffectfromMarch24,2020asaresultoftherecentoutbreakofCOVID-19virus,whichisspreadinginvariousjurisdictionsacrosstheworld(the“Pandemic”).Itisanticipatedthattheseimpactswillcontinueforsometime.AmongstvariousmeasuresannouncedtomitigatetheeconomicimpactfromthatPandemic,theReserveBankofIndiaissued circulars datedMarch 27, 2020 and April 17, 2020 (the “RBI circulars”) allowing lendinginstitutionstoofferamoratoriumtocustomersonpaymentofinstalmentsfallingduebetweenMarch1,2020andMay31,2020.
TheCOVID-19Pandemichasadverselyaffectedouroperations,leadingtosuspensionofoperationsacrossourunitswitheffect fromMarch25,2020onaccountof theoutbreakof thePandemic.Werestartedouroperationswithlimitedmanpowerafterreceivingrequisiteclearancesfromthedistrictadministrations.Thishadanadverseeffectonourfinancialsandledtocompanieslikeoursaskingouremployeestoworkfromhome.WhileeveryeffortisbeingmadetoensurenormaloperationsofourCompany,noassurancecanbemadethatourtechnologicalsystemswillfunctionsmoothlywhileouremployeesworkfromhome. Ifsuchasituationcontinues foranextendedperiodof time in future,reducedphysicalcontactwithcustomersand/orinadequacyoftechnologicalsystemstosupportallnormaloperationsunderworkfromhomesituationmayadverselyimpactourbusinessoperations.Theaboveriskscanthreatenthesafeoperationofourfacilitiesandcausedisruptionofoperationalactivities,environmentalharm,lossoflife,injuriesandimpactthewellbeingofourpeople.
We have resumed operations at our various plants gradually with the Government approval andfollowing the guidelines ofMinistry of HomeAffairs, Government of Indiawith closemonitoring/implementation of directives / guidelines issued by regulatory bodies from time to time. Ouroperationsaregraduallystabilizingafterrelaxationsinthelockdownandallthefourintegratedandtwosplitgrindingunitsofgreycementaswellasoneunitofwhitecement/wallputtyandoneunitofwallputtyonlyareoperational,anddespatchesaretakingplacefromalltheplants.Wearecloselymonitoringinternationalpet-cokepriceandavailabilityandtakingnecessaryactionstoensureanduninterrupted fuel supply. On account of lower power demand, power plant is not consistentlyoperatingresultinglowerflyashavailability.Therefore,wearesecuringflyashfromtheotherpowerplantshavingmoreleaddistance.PPbagsareusedforpackagingofcementandaremanufacturedbylabour intensive units. There is labour shortage on account ofmigration of labour in these units,however,uninterruptedsupplyhasbeenensuredonaccountofthelargepoolofbagsuppliers.Initially,wemetthesuppliesbyroadonaccountofthecurfewimposedintheNimbaheraplantareahavingtherailheadandresumedraildespatchesfromMay23,2020.Loweravailabilityoftruckdriversmayhaveimpact on the inbound and outbound logistics. Further, labour shortagemay have impact on theclearanceofmaterialattherailwayyardandturnaroundtimeoftherakes.Currently,majorportionofthecementdemandiswitnessedfromretailmarketinruralandthesemiurbanarea.Cementdemandisexpectedtoremainsluggishduetoshortageoflabourinurbanareas.
14
Ourfinancialresourcesremainentirelyprotectedinspiteofadverseimpactonouroperationsduringthe lockdown. There has been continuous review of the cash flow position with reduction inoutstandingamountduringthelockdownperiod.Further,inventoriesofalltheinputmaterials,Semifinishedfoodsandcementatallthelocationsandinward/outwardmovementofmaterialshavebeenclosely monitored. All the vendors / contractors continue to work with us based on long termrelationshipandwearealsocommitted toallbusinessassociates.Further incase the lockdown isextended,itcouldresultinmutedeconomicgrowthorgiverisetoarecessionaryeconomicscenario,inIndiaandglobally,whichcouldadverselyaffectthebusiness,prospects,resultsofoperationsandfinancialconditionofourCompany.
2. Ourbusinessisdependentuponourabilitytominesufficientlimestoneforouroperations.
Limestoneisakeyrawmaterialusedinthemanufactureofcement.Limestoneconsumptionatourmanufacturingunits in India inFiscals2018,2019and2020wasapproximately9.02MnT,9.67MnT,and10.07MnT, respectively,whichwasalmost entirely servicedbyour captivemines.We sourcelimestoneforourmanufacturingplantsinIndiafromcaptivelimestonemineslocatedinproximitytoourplants.AsonMarch31,2020weoperated11limestoneminessituatedinRajasthanandKarnataka,with aggregate limestone reserves amounting to approximately 486.82MnT (includingproven andprobable), with remaining lease duration for the mines ranging from 12to 44 years. Further, inFujairah,UAE,wehavebeenallottedonelimestoneminewithreservessuitableforproductionofwhitecement.ThemineatFujairahisnowoperatingandtheleaseforthemineisvaliduntil2033.WehavealsoobtainedminingleasesforadditionallimestoneminesinthestateofMadhyaPradeshandareintheprocessofobtainingotherregulatoryandenvironmentalapprovalsforthesame.Theestimatedlimestonereservesintheseminesareapproximately518.5MnT(includingprovenandprobable).
Ifourminingrightsarerevokedornotreneweduponexpiration,orsignificantrestrictionson theusageoftherightsareimposedorapplicableenvironmentalstandardsaresubstantiallyincreased,ourabilitytooperateourplantsadjacenttotheaffectedminingsitescouldbedisrupteduntilalternativelimestonesourcesarelocated,whichcouldmateriallyandadverselyaffectourfinancialconditionandresultsofoperations.
PursuanttoarecentamendmenttotheMinesandMinerals(DevelopmentandRegulation)Act,1957and rules issued thereto, the grant of mining leases by respective state governments is to becompulsorilycarriedoutthroughanauctionprocess.Forthepurposeofparticipatingintheauctionofmininglease,anapplicantisalsorequiredtomeetcertaineligibilityrequirements.Forinstance,ifthevalueofestimatedresources ismore than₹1,000crores, theapplicant, includingan individual, isrequiredtohaveanetworthmorethan2%ofthevalueoftheestimatedresources.Therespectivestategovernmentsmayalsoprescribeadditionaleligibilityrequirementsfromtimetotime.Wecannotassureyouifwewillbeabletosuccessfullycompeteintheauctionprocessorbeabletoparticipateatall.Anyfailureonourparttoacquireminingleasesinthefuture,ortobeabletoretainourextantleases,mayhaveanadverseimpactonourbusinessandoperations.
Wealsodonot ownall the land in respect ofwhichwehave receivedmining leases. Such land isacquiredfromtherespectiveownersfromtimetotime,dependingonourrequirements.Wecannotassureyou thatwewill successfullyacquire (whetheron freeholdor leaseholdbasis), the lands towhichwe have obtainedmining rights from the respective state governments. Further, there arenumerousuncertaintiesinherentinestimatingquantitiesofreserves,includingmanyfactorsbeyondourcontrol.Ingeneral,estimatesofreservesbyindependentconsultantsorourCompanyarebaseduponseveralvariablefactorsandassumptions,suchasgeologicalandgeophysicalcharacteristicsofthe reserves, historical production performance from the properties, the quality and quantity oftechnicalandeconomicdata,extensiveengineeringjudgments,theassumedeffectsofregulationbyGoIagenciesandfutureoperatingcosts.Allsuchestimatesinvolveuncertainties,andclassificationsofreservesareonlyattemptstodefinethedegreeoflikelihoodthatthereserveswillresultinrevenueforourCompany.Forthosereasons,estimatesoftheeconomicallyrecoverablereservesattributabletoanygroupofpropertiesandclassificationofsuchreservesbasedonriskofrecovery,preparedbydifferentengineersorbythesameengineersatdifferenttimes,mayvarysubstantially.Inaddition,suchestimatescanbeandwillbesubsequentlyrevisedasadditionalpertinentdatabecomesavailablepromptingrevision.Actualreservesmayvarysignificantlyfromsuchestimates.Totheextentactualreservesaresignificantlylessthanourestimates,ourfinancialconditions,cashflowsandresultsof
15
operationsare likely tobemateriallyandadversely impacted.While theseestimatesarebasedondetailedstudiesconductedby independentexperts,therecanbenoassurancethattheseestimateswould not be materially different from estimates prepared by other experts in accordance withdifferentinternationallyrecognizedcodesorstandards.
3. TheoperationsofourCompanyaresubjecttomanufacturingriskandmaybedisruptedbyfailureinthefacilities.
WeownandoperatefourgreycementplantsinRajasthanandKarnatakaandtwogrindingunitsoneinHaryanaandotherinUttarPradesh.Inaddition,weownandoperateawhitecementplantatGotan,Rajasthan(whichalsomanufactureswallputty)andanadditionalwallputtyplantatKatni,MadhyaPradesh.Further,wealsoownandoperateadualprocesscementplanthavingcapacitytoproducebothwhiteandgreycement(interchangeably)inFujairah,U.A.E.TheFujairahplantiscurrentlyusedformanufacturingwhitecementonly.AsonMarch31,2020,wehaveanaggregateinstalledcapacityof13.97MnTforgreycement,1.2MnT(including0.6MnTinUAE)forwhitecementand0.9MnTforwallputty.OurCompany’smanufacturingoperationscouldbedisruptedforreasonsbeyonditscontrol.Thesedisruptionsmayincludeextremeweatherconditions,fire,naturalcatastrophesorrawmaterialsupplydisruptions. In addition, there is a risk that production difficulties such as capacity constraints,mechanicalandsystemsfailures,construction/upgradedelaysordelaysinthedeliveryofmachinerymay occur, causing suspension of production and reduced output. For instance, in January 2016,clinkerextractionandcementproductionactivityatourMuddapurplantwastemporarilystopped,owingtodamagetotheclinkersilo.WhiletheoperationsattheplantresumedinFebruary2016bywayofalternatearrangements,therestorationoftheclinkersilowascompletedbyOctober2016.AnysignificantmanufacturingdisruptioncouldadverselyaffecttheabilityofourCompanytomakeandsellproducts,whichcouldhaveamaterialadverseeffectonitsbusiness,financialconditionandfutureresultsofoperations.In addition, due to the nature of our business and despite compliance with requisite safetyrequirementsandstandards,theoperationsofourCompanyaresubjecttooperatingrisksassociatedwith cement manufacturing. These hazards include storage tank leaks and ruptures, explosions,dischargesorreleasesofhazardoussubstances,manualhandling,exposuretodustandtheoperationof mobile equipment and manufacturing machinery. Our Company is also engaged in miningoperationsforlimestoneandissubjecttorisksassociatedwithmining,includingfires,explosionsandotheraccidentsat themine site.Theseoperating risksmay result inpersonal injuryandpropertydamageandintheimpositionofcivilandcriminalpenalties.Theoccurrenceofanyoftheseeventscouldhaveamaterial adverseeffecton theproductivity andprofitabilityofourplants andon thebusiness,financialcondition,cashflowsandfutureresultsofoperationsofourCompany.Inability to utilize our Company’s manufacturing capacities to optimum levels or streamline itsproductionplanningandprocurementprocesseswilladverselyimpactitsfutureresultsofoperation.
4. Wearesubjecttorisksassociatedwithourexpansionstrategy,whichistobefundedpartiallyoutoftheNetProceeds.
As part of our strategy, we are seeking to expand our manufacturing capacity and consequentlyexpandingourmarketreachinthecountry.WeintendtoutilizeapartoftheNetProceedsoftheIssuetowardscapitalexpenditureforthe1,500tpdclinkerexpansionatNimbahera,RajasthanFurther,intheeventweareabletosecuresuchdebtfinancing,anyinabilitytocompleteconditionsprecedentortomaintainexistingcovenantsstipulatedinthegoverningregulationsmayresultinafailuretoachievefinancialclosureandcouldadverselyaffectourabilitytocompleteexpansionplansinatimelymanneroratall,andmaysubjectustotimeandcostoverruns
5. Wemaybeunabletosustainourgrowthandmarginsinthewhitecementsegment.
Weareoneofthetwomajorplayersinthewhitecementmarketinthecountry,whotogetherhold90%oftotalmarketshareintermsofinstalledcapacity.(Source:IBM,MinistryofMinesReport)Ason
16
March31,2020,wehaveanaggregateinstalledcapacityof1.20MnTPAforwhitecement(including0.6MnTPAinUAE)andof0.90MnTPAforwallputty.Wecannotassureyouthatwewillbeabletosustainthegrowthandmarginsrecordedbyusinthewhitecementsegment.WemanufacturewhitecementatourplantsinGotan,RajasthanandFujairah,UAE.Thereisariskthatproductiondifficultiessuchascapacityconstraints,mechanicalandsystemsfailures, construction/upgrade delays or delays in the delivery of machinery may occur, causingsuspension of production and reduced output. Any significant manufacturing disruption couldadverselyaffecttheabilityofourCompanytomanufactureanddistributewhitecement.The operations at these plants could also be disrupted for reasons beyond our control, includingextremeweatherconditions,fire,naturalcatastrophesorrawmaterialsupplydisruptions,includingbywayofchangesingovernmentalpolicyandjudicialintervention.Forinstance,onOctober24,2017,theSupremeCourtof Indiabanned theuseofpetcoke in thestatesofUttarPradesh,HaryanaandRajasthanwitheffectfromNovember1,2017.Theban,however,wassubsequentlyrelaxedforuseofpetcokeinthecementindustry.Similarly,inAugust2018,theGovernmentofIndiabannedtheimportofpetcokeforuseasfuelinthecountry,withanexceptionforimportofpetcokeforuseasfeedstockor in themanufacturingprocess in,amongothers, thecement industry.Whileadequateexceptionshavebeenmade for the cement industry in recentpolicydecisionsbanning theuseand importofpetcoke,wecannotassureyou thatwewill continue toenjoysuchexemptionsor thatany furtherprohibitionsormorestringentcompliancerequirementswillnotbeimposedonus.Petcokeisakeyfuelusedinthewhitecementmanufacturingprocess.Intheeventthesupplyofpetcokeisinterrupted,wewouldberequiredtorelyonmoreexpensivealternatives,includingfueloil.Anysuchbanonimportoruseofpetcokemaythereforeaffectourproductionvolumes,aswellasprofitability.Further,pursuanttoarecentamendmenttotheMinesandMinerals(DevelopmentandRegulation)Act,1957andrulesissuedthereto,thegrantofminingleasesinIndiabyrespectivestategovernmentsistobecompulsorilycarriedoutthroughanauctionprocess.Wecannotassureyouifwewillbeabletosuccessfullycompeteintheauctionprocess,ortoparticipateatall.Anyfailureonourparttoacquireminingleasesforwhite-cementgradelimestone,ortobeabletoretainourextantleases,mayhaveanadverseimpactonwhitecementproduction.Inthefuture,wemayalsofacecompetitionfromnewentrantsinthesegment,whomightgainaccesstowhitecementgradelimestonereservesthroughtheauctionprocess.Someoftheseplayersmayalreadyhaverobustdistributionnetworks,whichcouldeat into ourmarket share. So as to retain our dominant position in the segment,wemay also berequiredtoincuradditionalexpendituretowardsexpandingourproductioncapacity,securinglargerlimestone reserves through the auction process, and also strengthening and incentivising ourdistributionnetwork.
6. Wearedependentuponthecontinuedsupplyofpowerandfuel,thesupplyandcostofwhichcan
besubjecttosignificantvariationduetofactorsoutsideourcontrol.
Weusesignificantamountsofenergy,includingelectricityandcoal,inthemanufacturing,distributionandsaleofourproducts.Powerand fuelexpensesareourmost significantexpensesand togethercomprised23%,25%and24%ofourTotalExpensesinFiscals2018,2019and2020,respectively,on a consolidatedbasis. A significant portion of electricity requirements at our plants inMangrol,Nimbahera,MuddapurandGotanismetbyourthermalandwasteheatrecoverypowerplants,havinganaggregatecapacityofapproximately125.70MW,asonMarch31,2020.Further,wealsoprocureelectricityfromstateelectricityboardsandprivatesuppliersthroughthegridatmarketrates,acrossour plants, including in Fujairah, UAE. If the power supply to one ormore of ourmanufacturingfacilitiesisdisrupted,wemaynotbeabletomakealternativearrangementsinatimelymanner,oratall,andanysuchalternativearrangementsmaybeontermsthatarenotfavourabletous.Accordingly,anysuchdisruptioncouldadverselyaffectthenormaloperationsoftheaffectedmanufacturingfacility,reduce theeconomiesof scalewhichwe currently enjoyandwouldhaveanadverseeffectonourbusinessandresultsofoperations.Additionally,wealsousecoke,petcoke, ligniteand fueloilas fuel forclinkerisation,aspartofourmanufacturing processed.We do not enter into long term agreementswith our suppliers of coal,petcokeandlignite,andinsteadprocuresuchfuelonthebasisofspotorfortnightlycontractswithoursuppliers.Whilebothourclinkerprocessandourcaptivethermalpowerplanthavethecapabilityto
17
usealternatefuelsofvaryingcalorificvalue,absenceoflongtermsupplycontractssubjectustoriskssuchaspricevolatilityandfailuretosourcefuelintime,whichwouldresultinadelayinmanufacturingof the final product. For instance, in the past, there have been instances where the lignite madeavailablewasinsufficientandwhilewewereabletosupplementourrequirementswithimportedcoal,wecannotassureyouthatsuchdisruptionsinsupplyofsuchfuels,asthecasemaybe,willnottakeplaceorthatwewillbeabletoanticipateshortfallsintimetocompensatewithothersourcesineveryinstance.Changesingovernmentalpolicyandjudicialinterventionmayalsoleadtodisruptionofourfuelsupply.OnOctober24,2017,theSupremeCourtofIndiabannedtheuseofpetcokeinthestatesofUttarPradesh,HaryanaandRajasthanwitheffectfromNovember1,2017.Theban,however,wassubsequently relaxed for use of petcoke in the cement industry. Similarly, in August 2018, theGovernmentofIndiabannedtheimportofpetcokeforuseasfuelinthecountry,withanexceptionforimportofpetcokeforuseasfeedstockorinthemanufacturingprocessin,amongothers,thecementindustry.Whileadequateexceptionshavebeenmadeforthecementindustryinrecentpolicydecisionsbanningtheuseandimportofpetcoke,intheeventanysuchbansareextendedtothecementindustry,it may adversely impact our fuel supply or cost thereof, affecting our production volumes andprofitability.Energyprices,inparticular,havebeenandmaycontinuetobevolatile.Factorssuchasinternationalpoliticalandmilitaryinstability,adverseweatherconditionsandothernaturaldisastersmaydisruptfuel supplies and further increase prices in the future. Aswe are often responsible for deliveringproductstothedealersorcustomers,asthecasemaybe,wearefurtherexposedtoincreasedenergypricesasacomponentofourtransportationcosts.Whilewegenerallyattempttopassincreasedcosts,includinghigherenergycosts,ontoourcustomers,pricingpressurefromourcompetitors,themarketpowerofourcustomersorotherpricingfactorsmaylimitourabilitytodoso,andanyincreasesinenergypricescouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Therecanbenoassurancethatwewillhaveanadequate,uninterruptedandcosteffectivesupplyofpowerandfuelrequiredforourmanufacturingprocess,thelackofwhichcoulddisruptouroperations,therebyadverselyaffectingourbusiness,financialconditionandresultsofoperations.
7. Wearedependentonthirdpartydistributors,withwhomwedon’thavebindingtermagreements
Wesupplyourproductstoindustrialandretailconsumers,throughvariouschannelsincludingdealersandretailers.Ourwhitecementandwallputtyproductsaresuppliedpan-India,throughanetworkofover56,712dealersandretailers,asonMarch31,2020.Inthegreycementsegment,wearepresentinover17states/union territories, throughanetworkofover14,007dealersandretailers, asonMarch31,2020.We do not enter into any short or long term agreements with our distributors, and conduct ourdistribution business through purchase orders. Any adverse experience of distributors (whetherdealersorretailers),ornegativepublicityattractedbysuchdistributorscouldadverselyaffectourreputationandbrandandbusinessprospects.Aswedonothaveanyexclusivityarrangementswithourdistributors,ourdistributorsmayalsofreelydealwithourcompetitors. If thetermsofferedtosuchdistributorsbyourcompetitorsaremorefavourablethanthoseofferedbyus,theymaydeclinetodistributeourproductsandterminatetheirarrangementswithus.Insuchacase,ourproductsmaynotattainasmuchreachasourcompetitorsinthemarketandwemaylosemarketshare.We are also continuously seeking to increase penetration through distribution by engagingdistributorstargetedatdifferentmarketsandgeographies.Wecannotassureyouthatwewillbeableto successfully identify and appoint new distributors. Further, we may not be able to enter intodistributionarrangementsinnewgeographicregionsduetoexistingrelationshipsofourcompetitorswith distributors in such areas, including any exclusive arrangements that may be in place. Anyinabilitytoenterintonewgeographicmarketsorpenetrateexistingmarketscouldadverselyaffectourgrowth,futureprospects,financialconditionandresultsofoperation.
8. Disruptionsintransportationofrawmaterialsandfinishedproductscouldaffectourbusiness.
18
Theproductionofcementisdependentonasteadysupplyofvariousrawmaterials.Theseinputsaretransported to our plants by road, and cement is transported to our customers by road and railtransport.Transportofourinputsandfinishedproductsissubjecttovariousbottlenecksandotherhazardsbeyondourcontrol,includingpoorroadandothertransportinfrastructure,accidents,adverseweather conditions, strikes and civil unrest. Either an increase in the price of transportation orinterruptionsintransportationofourinputsorfinishedproductscouldhaveanadverseeffectonourbusiness,financialconditionandresultsofoperations.Inaddition,cementisaperishableproductasitsqualitydeterioratesuponcontactwithmoistureoveraperiod.Therefore,prolongedstorageorexposuretomoistureduringtransportmayresultinsuchcementstocksbeingwrittenoff.Similarly,ourcementissoldinbagsthatmaysplitopenduringtransport,againresultinginsuchstockbeingwritten off. For instance, there were disruptions in transportation of raw materials and finishedproductsduetonationwidelockdown.Formoredetails,see–“RiskFactor–InternalRiskFactors-TherecentoutbreakofCOVID-19couldhaveasignificantadverseeffectonourresultsofoperations,andcouldnegatively impactourbusiness, revenues, financial conditionand resultsofoperations.”Therecanbenoassurancethatanysuchdisruptionwillnotoccurinthefuturebecauseofthesefactorsandthatsuchdisruptionswillnotbematerial.We typically use third party transportation providers for the supply of our rawmaterials and fordeliveries of ourproducts to our customers.Transportation strikesbymembersof various Indiantruckers’unionshavehadinthepast,andcouldhaveinthefuture,anadverseeffectonourreceiptofsuppliesandourabilitytodeliverourproducts.Inaddition,transportationcostshavebeensteadilyincreasing. InFiscals2018,2019,2020, freightsand forwardingamounted to28%,26%and24%,respectively,ofourtotalexpenditure.Continuingincreasesintransportationcostsorunavailabilityoffreightsandforwardingforourproductsmayhaveanadverseeffectonourbusinessandresultsofoperations.Anincreaseinthefreightcostsorunavailabilityofcarriersfortransportationofourproductstoourexportmarketsmayalsohaveanadverseeffectonourbusiness,operatingmargins,andresultsofoperations.
9. Constructionactivity,whetherresidentialornon-residential,isinfluencedbymanyfactors,andanyreductionintheactivityinoneorbothmarketscouldhaveamaterialadverseeffectonus
Ourresultsofoperationscanvarymaterially in response tomarketconditionsandchanges in thedemandforourproducts.Historically,demandforourproductshasbeencloselytiedtoconstructionactivity,residential,non-residentialandinfrastructurerelatedinIndia.Oursuccessandfuturegrowthprospectsdepend,toasignificantextent,onconditionsintheseendmarketsandthedegreetowhichthesemarketsarestronginthefuture.Residentialconstructionactivitylevelsareinfluencedbyandsensitivetoanumberoffactors,includingmortgageavailability,thecostoffinancingahome(inparticular,mortgagetermsandinterestrates),unemployment levels, household formation rates, gross domestic product, residential vacancy andforeclosurerates,demandforsecondhomes,existinghousingprices,rentalprices,housinginventorylevels,buildingmixbetweensingle-andmulti-familyhomes,consumerconfidence,seasonalweatherfactors, the available labour pool and government policy and incentives. Similarly, non-residentialconstructionactivity isprimarilydrivenby levelsofbusiness investment,availabilityof creditandinterestrates,aswellasmanyofthefactorsthatimpactresidentialconstructionactivitylevels.AsperCRISIL,theCementdemandwillriseto4-5%CAGRuptoFiscal2025asagainst5%CAGRduringfiscal2016-2020ledbyraftofinfrastructureinvestmentandmoderaterevivalinhousingdemand.Thesituationincementspacewasalreadysubduedwithdemandslippingto2%YearonYearinFiscal2020visavisgrowthof12%and9%inFiscal2019andFiscal2018,respectively.InFiscal2021therewouldbe12-15%declineyearonyearduetoCovid19pandemicwithGovernmentimposinglockdowninallstates.
10. Weengageinahighlycompetitivebusinessandanyfailuretoeffectivelycompetecouldhaveamaterialadverseeffectonus.
19
ThecementindustryinIndiaishighlyfragmentedandcompetitive.WefacecompetitionfromdomesticcementcompanieswhichoperateintheIndianmarket,aswellascompaniesthatarejointventureswith international cementcompanies.Thesecompetitorsmay limitouropportunity toexpandourmarketshareandmaycompetewithusonpricingofproducts.Someofourcompetitorsarelargerthanweare,aremorediversified,withoperationsacrossIndia,havegreaterfinancialresourcesthanwedo,haveaccesstoabettertechnology,cheapercostofcapitalandmaybeabletoproducecementmoreefficientlyortoinvestlargeramountsofcapitalintotheirbusinesses.Ourbusinesscouldbeadverselyaffectedifweareunabletocompetewithourcompetitors.Forexample,ifanyofourcurrentorfuturecompetitorsdevelopmoreefficientproductionfacilities,enablingthemtoproducecementandclinkeratasignificantlylowercostandsellatlowerpricesthanus,wemayberequiredtolowerthepriceswecharge forourproductsandourbusiness, cash flowsandresultsofoperationscouldbeadverselyimpacted.Current and future competitors may also introduce new and more competitive products andsupporting services, make strategic acquisitions or establish cooperative relationships amongthemselvesorwiththirdparties,includingdistributorsofourproducts,therebyincreasingtheirabilitytoaddresstheneedsofourtargetcustomers.Ifwecannotcompeteinpricing,providecompetitiveproductsorservicesorexpandintonewmarkets, thiscouldhaveamaterialnegativeeffectonourbusiness,financialconditionandprospects.
11. ThebusinessandactivitiesofourCompanyareregulatedbytheCompetitionAct,2002,whichmayrestrainourflexibilityinpricingourproducts.
The Competition Act, 2002, as amended (“Competition Act”) regulates, among others, practiceshavinganappreciableadverseeffectoncompetition(“AAEC”)intherelevantmarketinIndia.UndertheCompetitionAct,anyformalorinformalarrangement,understandingoractioninconcert,whichcauses or is likely to cause an AAEC is considered void and results in imposition of substantialpenalties. Furthermore, any agreement among competitors which directly or indirectly involvesdeterminationofpurchaseorsaleprices,limitsorcontrolsproduction,sharesthemarketbywayofgeographicalareaornumberofcustomersintherelevantmarketordirectlyorindirectlyresultsinbid-riggingorcollusivebiddingispresumedtohaveanAAECintherelevantmarketinIndiaandisconsideredvoid.TheCompetitionActalsoprohibitsabuseofadominantpositionbyanyenterprise.OnMarch4,2011,theGovernmentofIndiaissuedandbroughtintoforcethecombinationregulation(“Merger Control”) provisions under the Competition Act with effect from June 1, 2011. Theseprovisionsrequireacquisitionsofshares,votingrights,assetsorcontrolormergersoramalgamationsthatcrosstheprescribedassetandturnoverbasedthresholdstobemandatorilynotifiedtoandpre-approvedbytheCompetitionCommissionofIndia("CCI").Additionally, onMay11, 2011, theCCI issued theCompetitionCommissionof India (Procedure inregardtothetransactionofbusinessrelatingtocombinations)Regulations,2011,asamended,whichsetsoutthemechanismforimplementationoftheMergerControlregimeinIndia.TheCompetitionActaimsto,amongothers,prohibitallagreementsandtransactionswhichmayhaveanAAECinIndia.Further,theCCIhasextra-territorialpowersandcaninvestigateanyagreements,abusiveconductorcombinationoccurringoutsideIndiaifsuchagreement,conductorcombinationhasanAAECinIndia.IntheeventweenterintoanyagreementortransactionthatisheldtohaveanAAEConcompetitionin the relevant market in India, the provisions of the Competition Act will be applicable. Anyprohibition or substantial penalties levied under the Competition Act could adversely affect ourfinancialconditionandresultsofoperations,whichinturnmayhaveamaterialadverseimpactourbusinessorprospects,andourabilitytomakedistributionstotheshareholders.Forinstance,theCCIhasimposedpenaltiesof₹12,854lakhsand₹928lakhsonourCompany,intwoseparateordersdatedAugust 31, 2016 and January19, 2017, respectively for alleged contraventionof provisions of theCompetitionAct2002.OurCompanypreferredappealsbefore theCompetitionAppellateTribunal(“COMPAT”)againsttheaboveorders.ThenotificationdatedMay26,2017issuedbytheMinistryofFinancereplacedtheCOMPATwiththeNationalCompanyLawTribunal(“NCLAT”)witheffectfromMay26,2017.SubsequentlyNCLAT,NewDelhibyitscommonorderdatedJuly25,2018dismissedboththeappealsi.e.AppealNo.1andAppealNo.2andreaffirmedthequantumofpenalty.Aggrievedbythesaidorder,ourCompanyfiledanappealdatedSeptember18,2018beforetheSupremeCourtofIndiaundersection53ToftheCompetitionActtosetasidethecommonorderdatedJuly25,2018,
20
wherethematteriscurrentlypending.Further,thismattermayimpactthegoingconcernstatusoftheCompanyanditsfutureoperations.TherecanbenoassurancethatwewillbesuccessfulinourappealbeforetheSupremeCourt.Further,anysimilarproceedingsinthefuturemayrestrainourflexibilityinpricingourproducts,andhaveamaterial adverse effect on our business, prospects, results of operations, cash flows and financialcondition.
12. Wemay be unable to respond to technological advances and emerging industry standards in
relationtotheproductswemanufacture.
OurgreycementplantsatNimbaheraandMangrolhavinggreycementcapacityof3.5MnTPAwereacquiredaspartoftheerstwhilecementdivisionofJaykayEnterprisesLimited(thenknownasJ.K.SyntheticsLimited),witheffect fromNovember4,2004.Subsequentlycapacityofgreycementhasbeen increased to 14MnTPA pan India by adopting state of art technology. However, the earliercapacity of 3.5 Mn TPA bears high fuel costs whichmaymake newer plants or equipment morecompetitive than ours ormay require us tomake additional capital expenditures to upgrade ourfacilities.
13. Creditandnon-paymentrisksofourcustomers,especiallyduringtimesofeconomicuncertaintyandtightcreditmarkets,couldhaveamaterialadverseeffectonus.
Mostofoursalestotradeandnon-tradecustomersareonacreditbasis,withstandardpaymenttermsofbetween15to60days.Whilewegenerallymonitortheabilityofourcustomerstopaytheseopencredit arrangements and limit the creditwe extend towhatwebelieve is reasonablebasedon anevaluationofeachcustomer’sfinancialconditionandpaymenthistory,wemaystillexperiencelossesbecause of a customer’s inability to pay. As a result, while wemaintain what we believe to be areasonableallowance fordoubtful receivables forpotential credit lossesbaseduponourhistoricaltrends and other available information, there is a risk that our estimates may not be accurate,particularlyintimesofeconomicuncertaintyandtightcreditmarkets.Theremayalsobedelaysassociatedwiththecollectionofreceivablesfromourclients.AsonMarch31,2020,Rs.744.26lakhsofouraccountsreceivablewereoutstandingforaperiodofmorethansixmonths. Our operations involve significant working capital requirements and inability to collectreceivables from our clients in a timely manner or at all, or inadequate provisions for doubtfulreceivables,couldadverselyaffectourbusiness,resultsofoperationsandcashflow.
14. The seasonality of ourbusinessand its susceptibility toadverseweatherandother conditions
couldhaveamaterialadverseeffectonus.
Demandforourproductsinsomemarketsistypicallyseasonal,asclimaticconditions,particularlythemonsoon,affectthelevelofactivityintheconstructionindustry.Theseasonalnatureofourbusinesshasledtovariationinourquarterlyresultsinthepastandmaycontinuetodosointhefuture.Constructionactivitycanalsobeaffectedinanyperiodbyadverseweatherconditionssuchasstorms,torrentialrainsandfloods,naturaldisasterssuchasfiresandearthquakesandsimilarevents,anyofwhich could reduce demand for our products, push back existing orders to later dates or lead tocancellations.Furthermore,ourability todeliverproductsontimeoratall toourcustomerscanbesignificantlyimpededbysuchconditionsandevents,suchasthesedescribedabove.Theseconditions,particularlywhenunanticipated,canleavebothequipmentandpersonnelunderutilized.Thegeneralseasonalityofourbusinessandanysevereorprolongedadverseweatherconditionsorothersimilareventscouldhaveamaterialadverseeffectonourbusiness,financialcondition,cashflowsandresultsofoperations.
15. Wearerequiredtodeploylargeamountsofworkingcapitalinadditiontoourcapitalexpenditurewhichwe fund through amixture of debt and equity. Thismay lead to higher fixed costs andconsequently,ourearningsmaybesensitivetochangesinourproductionandsalesvolumes.
21
Duetothehighlevelsoffixedcapitalrequiredtoproducecement,ourprofitabilityissusceptibletosignificant changes in volume. Althoughwe believe that our current cash balance, alongwith ourprojected internal cash flows andour available financing resources,will provide sufficient cash tosupportourcurrentlyanticipatedoperatingandcapitalneeds,ifweareunabletogeneratesufficientcashtooperateandmaintainthepropertyandmachinerynecessarytooperateourcementbusiness,wemay be required to reduce or delay planned capital expenditures or incur additional debt. Inaddition,giventheleveloffixedandsemi-fixedcostswithinourcementbusinessandatourcementproductionfacilities,decreasesinvolumescouldhaveanadverseeffectonourfinancialcondition,cashflow,resultsofoperationsandliquidity.
16. Insufficientinsurancecoveragecouldhaveamaterialadverseeffectonus.
Wemaintainindustrialandfireinsurancecoverageforourplants,thatincludematerialdamagestopropertyandbusinessinterruption,subjecttospecificexclusions.Wealsomaintainfireinsuranceforproducts stored at our godowns.Webelieve that our insurance arrangements are consistentwithindustry standards for cementmanufacturers in India. However, our insurance programdoes notcover, or may not adequately cover, every potential risk associated with our business and theconsequences thereof. Further,we cannot assure you that any claim under the insurance policiesmaintainedbyuswillbehonouredfully,inpartorontime.Inaddition,marketconditionsoranysignificantclaimorseveralclaimsmadebyoragainstuscouldcauseourpremiumsanddeductiblestoincreasesubstantiallyand,insomeinstances,ourcoveragemaybereducedorbecomeentirelyunavailable.Inthefuture,wemaynotbeabletoobtainmeaningfulcoverageatreasonableratesforavarietyofrisks,includingcertaintypesofenvironmentalhazardsandon-goingregulatorycompliance.Totheextentthatwesufferlossordamage,forwhichwedidnotobtainormaintaininsurance,andwhichisnotcoveredbyinsurance,exceedsourinsurancecoverageorwhereourinsuranceclaimsarerejected,thelosswouldhavetobebornebyusandourresultsofoperations,cashflowsandfinancialperformancecouldbeadverselyaffected.
17. Weregularlyworkwithhazardousmaterialsandactivitiesinouroperationsmaycauseinjuriestopeopleorproperty.
Manufacturing and mining sites are inherently dangerous workplaces. Our sites often put ouremployeesandothersnearwithlargepiecesofmechanizedequipment,movingvehicles,chemicalandmanufacturingprocesses,heavyproductsanditemsandhighlyregulatedmaterials.Asaresult,wearesubject toavarietyofhealthandsafety lawsandregulationsdealingwithoccupationalhealthandsafety.Unsafeworksiteshavethepotentialtoincreaseemployeeturnoverandraiseouroperatingcosts and impact our reputation. Further, thesehazards can causepersonal injury and loss of life,catastrophic damage or destruction of property and equipment aswell as environmental damage,whichcouldresultinsuspensionofoperationsandtheimpositionofcivilorcriminalliabilities.Forinstance,acriminalcomplaint ispendingbefore the JudicialMagistrateFirstClass,MudholagainstKailashNathKhandelwal,DirectorofourCompany,forallegedviolationofrule84oftheKarnatakaFactoriesRules,1969punishableundersection92oftheFactoriesAct,1948inrelationtoanaccidentatJ.K.CementWorks,Muddapurthatledtodeathofaworker.Thelossorshuttingdownofourfacilitiescould disrupt our business operations and adversely affect our results of operations, financialconditionandreputation.Wecouldinthefuturefaceclaimsandlitigationfiledonbehalfofpersonsalleginginjurypredominantlybecauseofoccupationalexposuretohazardsatourfacilitieswhichcouldhave an adverse impact on our business. Any failure tomaintain safe work sites or violations ofapplicablelawcouldexposeustosignificantfinanciallossesandreputationalharm,anyofwhichcouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.
18. We are required to obtain, renew ormaintain statutory and regulatory permits, licenses andapprovalstooperateourbusinessandourmanufacturingfacilities,andanydelayorinabilityinobtaining,renewingormaintainsuchpermits,licensesandapprovalscouldresultinanadverseeffectonourresultsofoperations.
Werequirecertainstatutoryandregulatorypermits,licenses,registrationsandapprovalstooperateour business.Wewill be required to renew suchpermits, licenses and approvals, andobtainnewpermits,licensesandapprovalsforanyexistingorproposedoperations.Whilewebelievethatwewill
22
beabletoreneworobtainsuchpermits,licensesandapprovalsasandwhenrequired,therecanbenoassurancethattherelevantauthoritieswillissueanyofsuchpermitsorapprovalsinthetime-frameanticipatedbyusoratall.Failurebyustorenew,maintainorobtaintherequiredpermitsorapprovalsmay result in the interruption of our operations and may have a material adverse effect on ourbusiness,financialconditionandresultsofoperations.Further,thesepermits,licensesandapprovalscouldbesubjecttoseveralconditions,andwecannotassureyouthatweandourSubsidiarieswouldbeabletocontinuouslymeetsuchconditionsorbeabletoprovecompliancewithsuchconditionstothestatutoryauthorities.Anynon-compliancemayleadtocancellation,revocationorsuspensionofrelevantpermits,licensesorapprovals,whichmayresultintheinterruptionofouroperationsandmayadverselyaffectourbusiness,financialconditionandresultsofoperations.
19. Ouroperationsaresubjecttoenvironmental,labourandotherregulations.
We are subject to environmental, health and safety and other regulatory and/ or statutoryrequirementsinthejurisdictionsinwhichweoperate.Ourmanufacturingoperationsmaygeneratepollutantsandwaste,someofwhichmaybehazardous.Weareaccordinglysubjecttovariousnational,state, municipal and local laws and regulations concerning environmental protection in India,including lawsaddressing thedischargeofpollutants into theair andwater, themanagementanddisposalofanyhazardoussubstances,andwastesandtheclean-upofcontaminatedsites.Wemayincursubstantialcostsincomplyingwithenvironmentallawsandregulations,includingforreasonsofinvestment in, among other things, environmental monitoring, pollution control equipment, andemissionsmanagement.Wecannotassureyouthatcompliancewithsuchlawsandregulationswillnotresult indelays incurtailmentofproduction,amaterial increaseinourcostsorotherwisehaveanadverseeffectonourfinancialcondition,cashflowsandresultsofoperations.Ifweweretobeinnon-compliancewithanysuchlawsregulations,wecouldfurtherbeexposedtocivilpenalties,criminalsanctionsandrevocationofkeybusinesslicenses.
Wearealsosubjecttolawsandregulationsgoverningrelationshipswithemployees,insuchareasasminimumwageandmaximumworkinghours,overtime,workingconditions,hiringandterminatingofemployees,contractlabourandworkpermits.Furthermore,thesuccessofourexpansionstrategyiscontingentupon,amongotherthings,receiptofallrequiredlicenses,permitsandauthorisations.Changesor concessions requiredby regulatory authorities could also involve significant costs anddelayorpreventcompletionoftheconstructionoropeningofaplantorcouldresultinthelossofanexistinglicense.The legal framework governing environmental protection, labour welfare and safety in India arebecomingmorestringent,andthescopeandextentofsuchdevelopments,includingtheireffectonouroperations, cannot be predicted with any certainty. Stricter laws and regulations, or stricterinterpretationoftheexistinglawsandregulations,mayimposenewliabilitiesonusorresultintheneed for additional investment, either of which could affect our business, financial condition orprospects.
20. Labourdisruptionsandotherunionactivitycouldhaveamaterialadverseeffectus.
AsofMarch31,2020,wehadatotalof3,678full-timeemployees,includingtrainees.Further,asofMarch31,2020,approximately2,696contractlabourerswereworkingatourmanufacturingfacilities.AsignificantportionoftheworkersofourCompany,includingcontractlabourers,arerepresentedbylabourunions.Whileweconsiderthecurrentlabourrelationstobegood,therecanbenoassurancethatourCompanywillnotexperience futuredisruptionsto itsoperationsduetodisputesorotherproblemswithitsworkforce,whichcouldadverselyaffectitsbusinessandfutureresultsofoperations.Forinstance,awritpetitionfiledbythesecretaryofNirmanMazdoorPanchayatSangamispendingbeforetheHighCourtofDelhiagainstourCompanyandsixothercementcompaniesprayingfor,interalia,issueofawritofmandamusforpaymentofminimumwagestotheworkersinvolvedinloadingandunloadingworkofcementaspertheminimumwagesprescribedbytheGovernmentofDelhiandprovisionofwelfaremeasurestosuchworkersundertheUnorganizedWorkers’SocialSecurityAct,2008.
23
OurCompanyemployssizeablecontractlabourersatitsfacilities.Thenumbersofcontractlabourersvaryfromtimetotimebasedonthenatureandextentofworkcontractedtoindependentcontractors.Whilewebelievethatsuchahighproportionofemployeesoncontractgivesusthenecessaryflexibilityand helps us run our business in an efficient and cost-effective manner, it also makes us moresusceptible to sudden shortages and lack of skilled personnelwhile competing for themwith ourcompetitors in themarketweoperate.All contract labourers engagedat our facilities are assuredminimumwages thatare fixedby therespectivestategovernment fromtime to time.Anyupwardrevision of suchminimumwages, or offer of permanent employment, or the unavailability of therequirednumberofcontractlabourers,mayalsoadverselyaffectourbusinessandfutureresultsofourCompany’soperations.Ifweareunabletomanageincreasesinouroverheadcosts,thiscouldhaveamaterialadverseeffectonourbusiness,prospects,resultsofoperations,cashflowsandfinancialcondition.
21. Ouroperationsaredependentonourability toattractandretainqualifiedpersonnelandanyinabilityonourparttodoso,couldadverselyaffectourbusiness,cashflow,resultsofoperationsandfinancialcondition.
Our success is, to a large extent, attributable to the vision, expertise andmanagerial skills of ourdirectorsandmanagementteam.Inviewoftheirexperienceinandknowledgeofthecementbusiness,theircombinedinvolvementisimportanttoourfutureprospects.Competitionforqualifiedpersonnelwithrelevantindustryexpertiseisintenseandthelossofservicesofourkeypersonnelmayadverselyaffectourbusiness,cashflow,resultsofoperationsandfinancialcondition.Wemayrequirea longperiod of time to hire and train replacement personnelwhen qualified personnel terminate theiremployment with our Company. We may also be required to increase our levels of employeecompensationmorerapidlythaninthepasttoremaincompetitiveinattractingemployeesthatourbusinessrequires.Wecannotassureyouthatwewillbeabletoretaintheseindividualsorfindadequatereplacementsinatimelymanner,oratall.Anyinabilityonourparttoattractandretainqualifiedpersonnelandseniormanagement could adversely affect our business, cash flow, results of operations and financialcondition.
22. Any inability toprotectour intellectualpropertyor claims thatwe infringeon the intellectual
propertyrightsofotherscouldhaveamaterialadverseeffectonus.
Webelieve thatwehave ahighdegreeof brand recall and trust in India,which is oneof our keystrengths in a highly competitive industry.Wehave obtained 64 trademark registrations in India,includingforkeybrandnamessuchas“J.K.SuperCement(BuildSafe)”,as“J.K.SuperStrong(BuildSafe)”,“J.K.CementWhitemaxx”,,“JKCementWallmaxx”,“J.K.PrimaxX”,“J.K.CementTilemaxx”and“J.K.CementGypsomaxx”.Additionally,fromtimetotime,wealsoobtaintrademarkregistrationsincertainforeignjurisdictionswhereorproductsaresold.Further,wehavealsoappliedforregistrationof38othertrademarks,whicharependingatvariousstagesoftheregistrationprocess.However, there can be no assurance that third parties will not infringe our intellectual property,causingdamagetoourbusinessprospects,reputationandgoodwill.Wemaynotbeabletopreventinfringement of our trademarks and a passing off action may not provide sufficient protection.Additionally,wemayberequiredtolitigatetoprotectourtrademarks,whichmayadverselyaffectourbusiness.Wecannotassureyouthatwewillsuccessfullyobtainorenforceourtrademarksandanysucheventcouldhaveanadverseeffectonourbusiness,cashflow,resultsofoperationsandprospects.
23. InabilitytoeffectivelyachieveoperationalefficiencybyitsSubsidiariesandmarketitsproductininternationalmarket.
WehadinvestedinourFujairahPlantwithaviewofcapitalisingonthegrowingdemandforcementasaresultofafast-growingconstructionsectorintheGCCregion.However,therewasaslowdownofconstructionintheGCCregiononaccountofhugecorrectionsinthepriceofcrudeoil.Thisresultedinourplantnotbeingrunatoptimumcapacityutilisation,causingustoincurlossesattheFujairahPlant.
24
WhileweintendtorationaliseouroperationsandbeginshippingwhitecementfromourFujairahplanttooursouthIndianmarketsinadditiontotheinternationalmarketswealreadysupply,therecanbenoguaranteethatwewouldbeabletodothissuccessfullyoratall.Ifweareunabletoeffectivelyutiliseourcapacity,itcouldhaveamaterialadverseeffectonourbusiness,resultsofoperations,financialconditionandprospects.J.K.CementWorks(Fujairah)FZCisincurringlossesforthepastseveralyearssinceitsincorporationanditsnetworthhasbeensignificantlyeroded.Duringthecurrentyear,basedonbusinessvaluationof J.K.CementWorks(Fujairah)FZC' (subsidiaryof J.K.Cement(Fujairah)FZC)byan independentexternal valuer, theCompanyhas recognizedprovision towardsdiminution of carrying amount ofinvestmentJ.K.Cement(Fujairah)FZCof₹.16,151lacs.Additionally,theCompanyhasalsoprovidedforoutstandingreceivableforearlieryearsfromJ.K.Cement(Fujairah)FZCamountingto₹.1,664lacs.Thetotalamountof₹.17,815lacshasbeendisclosedasexceptionalitem.
24. Currencyexchangeratesanddisruptionsinourforeignoperationscouldhaveamaterialadverseeffectonus.
WeoperateproductionfacilitiesinUAE,andwearethereforesubjecttoseveralrisksspecifictothatcountry. These risks include economic downturns, social, political, and economic instability,unexpectedchangesinregulatoryrequirements,tariffsandothertradebarriers,currencyexchangefluctuations,actsofwarorterrorismandimport/exportrequirements.Forinstance,asaresultoftheslowdownofconstruction in theMiddleEast,ourFujairahplantrecordedanannualproductionofcementof0.288MnT,0.247MnTand0.281MnTincalendaryears2017,2018and2019,constitutinganannualcapacityutilizationof48%,41%and47%,respectively.
Further,ourfinancialstatementsarereportedinIndianRupeeswithinternationaltransactionsbeingtranslated into IndianRupees. If the IndianRupee strengthens in relation to theUAEDirham, ourIndianRupeereportednetsalesandincomewilldecrease.Additionally,sinceweincurcostsinforeigncurrencies, fluctuation in those currencies’ value can negatively impactmanufacturing and sellingcosts.ChangesintherelevantexchangeratesbetweentheIndianRupeeandtheothercurrenciestowhichweareexposed,whichcanbeandhavebeenvolatile,haveaffectedandwillcontinuetoaffectthevalueofourassetsandliabilitiesdenominatedincurrenciesotherthantheIndianRupee,ourcostsandourrevenues,eachofwhichcouldhaveanadverseeffectonourresultsofoperations.Therecanbenoassurancesthatanyofthesefactorswillnotmateriallyimpactourproductioncostorotherwisehaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.
25. OurCompanyhas,inthepast,beeninviolationofcertainprovisionsofforeignexchangelawsinrelationtoitsoverseasdirectinvestmentinFujairah.
TheForeignExchangeManagementAct,1999,alongwiththeregulationsframedthereunder,eachasamended(together“FEMA”)imposestringentconditionsonoverseasdirectinvestments,includingtheamountofpermissibleinvestment,methodoffunding,andtheroutingoftheinvestment,methodoffunding,andtheroutingoftheinvestment.InadditiontorequiringpriorapprovaloftheRBIincertaincases,theFEMAalsolaysdownvariouspostfactoreportingrequirementstobefollowedbycompaniesmaking overseas direct investments. Our Company has, in the past, been non-compliant withprovisions of the FEMA, in relation to its investment in it foreign Subsidiaries, being J. K. Cement(Fujairah)FZCandJ.K.CementWorks(Fujairah)FZC.Thecontraventionsincludeddelayinmakingrequisite filings under FEMA for remittances made to and bank guarantee issued to our foreignSubsidiaries,androutingofsuchremittancesthroughdifferentauthorizeddealersinsteadofone.TheRBI,pursuanttoitsorderdatedApril26,2012hadtakenalenientviewbecauseoftheviolationhavingarisen out of our maiden overseas investment and allowed the offences to be compounded on apaymentof₹2.5lakhs,whichhassincebeenpaidbytheCompany.TherecanbenoassurancethatsimilarviolationsofforeignexchangelawsshallnotoccurinthefutureorshallnotbedealtwithinamorestringentmannerbytheRBI.Further,therecanbenoassurancethat our investments in Fujairah shall not get adversely affected because of changes in foreignexchangelawsandthepolicytowardsoverseasdirectinvestment.
25
26. Inability to meet our obligations, including financial and other covenants, under our debtfinancingarrangementcouldadverselyaffectourbusinessandresultsofoperations.
Inordertosecureourfinancingarrangements,wehavecreatedchargebywayofequitablemortgageoncertainofour immovablepropertiesandhypothecatedcertainmovableproperties,presentandfutureincludingmovableplantandmachineryrelatedtoourprojects.IntheeventofadefaultbyourCompanyunderanyloanfacility,therespectivelendermayenforceitsrightsagainstourCompany,includingbywayofappropriationandsaleofsuchproperty.Wecannotassureyouthatwewillnotdefaultonanyofour repaymentobligationsorother termsof theborrowingarrangements in thefuture,or thatourrespective lenderswillnotenforce theirrightsuponsuchdefault.Ourbusiness,financialcondition,cashflowsandresultsofoperationscouldbeadverselyaffectedintheeventofanysuchdefaultonourpart.Ourfinancingagreementsalsocontaincertainrestrictivecovenantsthatlimitourabilitytoundertakecertaintypesoftransactions,anyofwhichcouldaffectourbusinessandfinancialconditions.Wearerequiredtoobtainpriorapprovalfromourlendersfor,amongotherthings:
§ alterationofourcapitalstructure;§ effectinganyamalgamationorreconstruction;§ amendingourmemorandumofarticlesandarticlesofassociation;§ concludinganyborrowingarrangements,eithersecuredorunsecured;§ permittransferofcontrollinginterestormakeanydrasticchangeinthemanagementset-up;§ creationoffurthercharge,lienorencumbranceinfavourofanyotherlenders;§ undertakingnewprojectsorimplementinganyschemeofexpansionoracquirefixedassets;§ investmentbywayofsharecapitalinorlendoradvancetoorplacedepositswithanyother
entity;§ undertakingguaranteeobligationsonbehalfofanyotherlenderoranythirdparty;§ declaringdividends;and§ effectinganyrepaymentofmoniesbroughtinbythepromoters/Directorsorprincipal
shareholders.
Certainofourborrowingsalsorequireustomaintaincertainfinancialratioswhicharetestedattimesonanannualbasis,suchastotaldebttonetworthanddebtservicecoverageratiosandimposeotherobligationsonussuchasrequiringustomaintainpromoterandpromotergroupshareholdingofatleast51%ofourpaid-upcapital.ThefinancingarrangementsenteredbyourCompanyalsohavecross-defaultprovisionswithrespectto other facilities availed of by our Company and provisions prescribing debt to equity and otherfinancialratios.Further,certain financingarrangementsofourCompanyalsoentitlethe lenderstocancel the undrawn amount of the facility in certain circumstances, including downgrading of thecredit ratingofourCompanybya credit ratingagencyoradverse remark,qualifiedopinionor itsequivalentbytheauditorsofourCompany.Wemaybeforcedtosellsomeorallourassetsifwedonothavesufficientcashorcreditfacilitiestomakerepayments.Additionally,someofourborrowingsmaybesecuredagainstalloraportionofourassets,andlendersmaybeabletosellsuchassetstoenforcetheirclaimsforrepayment.Anyfailuretomeetourobligationsundercreditfacilitiescouldhaveanadverseeffectonourbusiness,cashflow,resultsofoperationsandfinancialresults.In the event we breach any financial or other covenants contained in any of our financingarrangements,wemayberequiredtoimmediatelyrepayourborrowingseitherinwholeorinpart,togetherwithanyrelatedcosts.
27. Ourcurrentindebtednessandanyfutureindebtednessthatwemayincurcouldhaveamaterialadverseeffectonus
Our Company’s non-current borrowings as on March 31, 2020 amounted to Rs. 2,283.91 Crores.Besides,therearecurrentmaturitiesoflong-termdebtsamountingtoRs.337.41Croresandshort-termborrowingsofRs.138.85Crores.Wearepermittedbythetermsofourdebtinstrumentstoincursubstantialadditionalindebtedness,subjecttotherestrictionstherein.Ourindebtednessmay,amongothers:
26
• limit our ability to borrow money for our working capital, capital expenditures, debt service
requirementsorothercorporatepurposes;• requireustodedicateasubstantialportionofourcashflowstopaymentsonourindebtedness,
which would reduce the amount of cash flows available to fund working capital, capitalexpenditures,productdevelopmentandothercorporaterequirements;
• increaseourvulnerabilitytogeneraladverseeconomicandindustryconditions;and• limit our ability to respond to business opportunities, including growing our business through
acquisitions.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance ourobligationsoncommerciallyreasonableterms,couldhaveamaterialadverseeffectonourbusiness,financialcondition,cashflowsandresultsofoperations.
28. We have entered into certain related party transactions. These transactions or any future
transactionswithourrelatedpartiescouldpotentiallyinvolveconflictsofinterest.
Wehaveenteredintocertaintransactionswithrelatedparties,includingmembersofourPromoterGroup.Furthermore, it is likely thatwewillenter intorelatedparty transactions in the future.Wecannotassureyouthatwecouldnothaveachievedmorefavourabletermsifsuchtransactionswerenotenteredintowithrelatedparties.Therecanbenoassurancethatsuchtransactions,individuallyorintheaggregate,willnothaveanadverseeffectonourfinancialconditionandresultsofoperations.
29. OurPromoterswillcontinuetoretainmajoritycontrolinourCompany,whichwillenablethemto
influencetheoutcomeofmatterssubmittedtoshareholdersforapproval.
AsonJune30,2020,ourPromotersheld58.07%ofourCompany’s issued,subscribedandpaid-upEquitySharecapitalandourPromoterswill continue toownasubstantialportionofEquitySharecapital.Accordingly,ourPromoterswillcontinuetoexercisesignificantinfluenceoverourbusinesspoliciesandaffairsandallmattersrequiringshareholders’approval,includingthecompositionofourBoard of Directors, the adoption of amendments to our AoA and MoA, the approval of mergers,strategicacquisitionsorjointventuresorthesalesofsubstantiallyallourassets,andthepoliciesfordividends,lending,investmentsandcapitalexpenditures.Thisconcentrationofownershipmayalsodelay,deferorevenpreventachangeincontrolofourCompanyandmaymakesometransactionsmoredifficultorimpossiblewithoutthesupportofthesestockholders.TheinterestsofthePromotersasourCompany’scontrollingshareholderscouldconflictwithourCompany’sinterestsortheinterestsofitsothershareholders.WecannotassureyouthatourPromoterswillacttoresolveanyconflictsofinterestinourCompany’soryourfavour.
30. Certain of our Promoters, Directors, Key Management Personnel and Senior ManagementPersonnelhaveinterestinourCompanyotherthantotheextentofreimbursementofexpensesincurredornormalremunerationorbenefits
Other than regular remuneration or benefits and reimbursement of expenses, certain of ourPromoters,Directors,KeyManagementPersonnelandSeniorManagementPersonnelareinterestedinourCompanytotheextentoftheirshareholdinginourCompany,andprofessional/advisoryfeesandrentpayabletothem.
31. WedonotownourRegisteredandCorporateOfficeandcertainotherpremisesfromwhichweoperate.
WedonotownthepremisesonwhichourRegisteredandCorporateofficeissituated.Suchpremiseshavebeenleasedtousbythecurrentownersofthepremises,beingYadupatiSinghania,oneofourPromoters,andfiveothers,until2026.Iftheownersofsuchpremisesrevokethearrangementunderwhichweoccupythepremisesorrefusetorenewtheleaseonfavourabletermsoratall,wemaysuffera disruption in our operations which could have a material adverse effect on our business andoperations.
27
OurgreycementunitsatNimbaheraandMangrolaresituatedonlandleasedbytheStateofRajasthanforaperiodof99yearsandaresubjecttocertaintermsandconditions.Ifweareunabletomeetsuchtermsandconditions, the landshallrevert to theStateofRajasthanand itshallhavethepowertoremove therefrom all buildings and structures constructed by our Company, andwemay suffer adisruption in our operations which could have a material adverse effect on our business andoperations.
Substantiallyallofourfeederdepotsandcertainsalesofficesarelocatedleased/licensedproperty.Certain of these propertiesmaynot have been constructed or developed in accordancewith localplanning and building laws and other statutory requirements. In addition, there may be certainirregularitiesintitleinrelationtosomeofourleasedproperties.Forexample,someoftheagreementsforsucharrangementsmaynothavebeendulyexecutedand/oradequatelystampedorregisteredinthelandrecordsofthelocalauthorities.Wecannotassureyouthatwewillbeabletocontinueouruseofallsuchpropertiesorenforceourrightsundersuchagreements,whichmayimpairouroperationsandadverselyaffectourfinancialcondition.
32. There are outstanding litigation pending against our Company, its Promoters and Directors,which, if determined adversely, could affect our business, cash flow, results of operations andfinancialcondition.
OurCompany,itsPromotersandDirectorsarecurrentlyinvolvedinseverallegalproceedings.Theselegalproceedingsarependingatdifferentlevelsofadjudicationbeforevariouscourts,tribunalsandstatutory, regulatory and other judicial authorities in India, and, if determined against us, couldadverselyaffectourbusiness,cashflow,resultsofoperationsandfinancialcondition.Wecangivenoassurancethattheselegalproceedingswillbedecidedinourfavourorthatanyfurtherliabilitymayarisefromtheseclaimsinthefuture.Anyadversedecisioncouldadverselyaffectourcashflowsandresultsofoperations.The amounts claimed in these proceedings have been disclosed in our consolidated financialstatements to theextentascertainable.Shouldanynewdevelopmentsarise, suchasanychange inapplicableIndianlaworanyrulingsagainstusbyappellatecourtsortribunals,wemayneedtomakeprovisionsinourfinancialstatementsthatcouldincreaseexpensesandcurrentliabilities,whichcouldadverselyaffectourresultsofoperations.
33. Wehavecertaincontingentliabilities,which,ifmaterialized,mayadverselyaffectourfinancialcondition.
AsofMarch31,2020,wehadcertaincontingentliabilitiesnotprovidedfor,amountingtoRs.66,256.28lakhsonastandalonebasisdeterminedinaccordancewithIndAS37.Thisincludesdemandagainstthe Company in certain taxation related matters, on issues such as not allowing depreciation ongoodwillandadditionaldepreciationonpowerplants,aggregatingtoRs.8,134.44lakhs(asofMarch31,2020).Thesemattersarependingadjudicationatvariouslevelsandanyadverseordermayimpactourfinancialcondition.Further,thecontingentliabilityofamountsdisclosedinourauditedfinancialstatementsrepresentsestimatesandassumptionsofourmanagement.
ForfurtherinformationonsuchcontingentliabilitiesdeterminedinaccordancewithIndAS37,see“Financial Statements” annexed to this Disclosure Document. If any of these contingent liabilitiesmaterialize,ourfinancialconditionmaybeadverselyaffected.
34. OurCompanyhasgivencorporateguaranteesinrelationtocertaindebtfacilitiesprovidedtooneofourSubsidiaries,which,ifinvoked,willrequiretheCompanytopaytheguaranteedamounts.
OurCompanyhasprovidedcorporateguaranteesinrelationtocertaindebtfacilitiespresentlyavailedbyoneofitsSubsidiaries.AsonMarch31,2020,theaggregateoutstandingamountinrelationtosuchfacilitiesis48,439.21lakhs.Anydefaultorfailurebytherelevantborrower(s)torepaytheloansinatimelymanner,oratall,couldtriggerrepaymentobligationsonthepartofourCompanyinrespectofsuch loans, thereby potentially having an adverse effect on our financial conditions and results ofoperations.
28
35. Ourabilitytopaydividendsinthefuturewilldependuponfutureearnings,financialcondition,cashflows,workingcapitalrequirementsandcapitalexpenditures.
Theamountoffuturedividendpayments,ifany,willdependuponanumberoffactors,includingbutnot limited to our future earnings, financial condition, cash flows, working capital requirements,contractualobligations,applicableIndianlegalrestrictionsandcapitalexpenditures.Inaddition,ourabilitytopaydividendsmaybeimpactedbyanumberoffactors,includingrestrictivecovenantsundertheloanorfinancingagreementsourCompanymayenterintotofinanceourfundrequirementsforourbusinessactivities.Therecanbenoassurancethatwewillbeabletopaydividendsinthefuture.Wemaydecidetoretainallofourearningstofinancethedevelopmentandexpansionofourbusinessand,therefore,maynotdeclaredividendsonourEquityShares.Additionally,inthefuture,wemayberestrictedbythetermsofourfinancingagreementsinmakingdividendpaymentsunlessotherwiseagreedwithourlenders.
EXTERNALRISKFACTORS1. WefacerisksrelatedtopublichealthepidemicsandpandemicsinIndiaandabroad.
Ourbusinesscouldbemateriallyandadverselyaffectedbytheoutbreakofpublichealthepidemics,orthefearofsuchanoutbreak,inIndiaorelsewhere.AnumberofcountriesinAsia,includingIndia,aswellascountriesinotherpartsoftheworld,aresusceptibletocontagiousdiseasesandhaveconfirmedcases of diseasesincludingthe highly pathogenic ones such as H7N9, H5N1 and H1N1 strains ofinfluenzainbirdsandswinesandmorerecently,theCOVID-19virus.CertaincountriesinSoutheastAsiahave reported casesofbird-to-human transmissionof avianand swine influenza, resulting innumerous humandeaths. TheWorldHealthOrganization and other agencies have recently issuedwarnings on the COVID-19 virus and on a potential avian or swine influenza pandemic if there issustainedhuman-to-humantransmission.While,onJanuary30,2020,theWorldHealthOrganizationdeclaredtheCOVID-19outbreakahealthemergencyofinternationalconcern,onMarch11,2020,theWorldHealthOrganizationhascategorisedtheCOVID-19virusoutbreakasapandemic.Inresponseto the outbreak, the governments of many countries, including India have taken preventative orprotective actions and have imposed a number of measures designed to contain the outbreak,including country-wide lockdowns, business closures, travel restrictions, quarantines andcancellationsofgatheringsandevents.Thisinturnhasimpactedtheoperationofbusinesses,reducedregionaltravelsandtradeandloweredindustrialproductionandconsumptiondemand.TheCOVID-19 pandemic has also affected the operations of our customers, in turn reducing demand for ourproducts, which could affect our business, financial condition and results of operations. FuturepotentialimpactstotheCompanyincludedisruptionsorrestrictionsonouremployees’abilitytowork,lackofdemandfornewloansortheborrower’sabilitytopaytherequiredmonthlypayments.Changestotheoperatingenvironmentmayalsobeimpacted.TheCOVID-19outbreakisongoingandtheactualextentoftheoutbreakanditsimpactontheeconomyglobally ingeneraland in India, inparticular remainsuncertainat thispoint in timeandmay turnsevereinfuture.WorseningofthecurrentoutbreakofCOVID-19virusorfutureoutbreaksofCOVID-19virus,avianorswineinfluenzaorasimilarcontagiousdiseasescouldadverselyaffecttheIndianeconomyandeconomicactivityintheregion.Iftheoutbreakofanyoftheseepidemicsorothersevereepidemics,continuesforanextendedperiod,occuragainand/orincreasesinseverity,itcouldhaveanadverseeffectoneconomicactivityworldwide, includingIndia,andcouldmateriallyandadverselyaffectourbusiness,financialconditionandresultsofoperationsandthetradingpriceoftheEquityShares, theDebentures,andothersecurities.Similarly,anyother futurepublichealthepidemicsoroutbreakofavianorswineinfluenzaorothercontagiousdiseaseinIndiacouldalsomateriallyandadverselyaffectourbusiness,financialcondition,resultsofoperations.Inanefforttocontainthespreadofsuchcontagiousdiseases,variousstategovernmentsinIndiahaveorderedcompleteorpartialshutdownofcorporateofficesandbusinesses.Therecanalsobenoassurance that thepoliciesandcontrols foroutbreakpreventionanddiseaserecurrence or any stimulus packages introduced by GOI, will be successful in preventing diseaseoutbreaksorrecurrencesorthatanyactualorsuspectedoutbreakofCOVID-19orothercontagious
29
diseaseaffectingtheIndiaorelsewherewillnotoccur.Therecanalsobenoassurancethatanyfutureoutbreak of contagious diseaseswill not have amaterial adverse effect on our business, financialcondition,andresultsofoperations.
2. Thecementindustryiscyclicalandisaffectedbyanumberoffactorsbeyondourcontrol.
Thecementindustry,likemostcapital-intensivecommodityindustries,iscyclicalinnature,especiallywithrespecttosupply.Giventhehighgestationperiod,thereisatimelagbetweenthecapacitybuild-upandcementdemand,beingapproximately24to30months(Source:CRISILReport).Demandforcement is linked toeconomicgrowth.Hence,when theeconomy is strong,demand increases.Asaresult,theprofitabilityofplayersincreases,leadingtocapacityadditionsbyexistingplayersandtheentryofnewplayers.However,sinceittakesaroundtwotothreeyearstobuildacementplant,itislikely that demand could either decrease or stagnate, or capacity additions could exceed demandbeforecompletionofthesecapacities.Thiscouldleadtodecreaseincementpriceswiththeindustryfacingadownturn,andplayersreducingoperatingratesorshuttingtheirplants.
3. AslowdownineconomicgrowthinIndiacouldcauseourbusinesstosuffer.
OurperformanceandthegrowthofourbusinessarenecessarilydependentonthehealthoftheoverallIndianeconomy.AnyslowdownorperceivedslowdownintheIndianeconomyorfuturevolatilityinglobalcommoditypricescouldadverselyaffectourbusiness.Additionally,anincreaseintradedeficit,adowngradinginIndia’ssovereigndebtratingoradeclineinIndia’sforeignexchangereservescouldnegativelyaffectinterestratesandliquidity,whichcouldadverselyaffecttheIndianeconomyandourbusiness.AnydownturninthemacroeconomicenvironmentinIndiacouldalsoadverselyaffectourbusiness,resultsofoperations,financialconditionandthetradingpriceoftheEquityShares.India’seconomycouldbeadverselyaffectedbyageneralrise in interestratesor inflation,adverseweatherconditionsaffectingagriculture,commodityandenergypricesaswellasvariousotherfactors.AslowdownintheIndianeconomycouldadverselyaffectthepolicyoftheGoItowardsourindustry,which may in turn adversely affect our financial performance and our ability to implement ourbusinessstrategy.The Indian economy is also influenced by economic and market conditions in other countries,particularlyemergingmarketconditionsinAsia.AdeclineinIndia’sforeignexchangereservesandexchangeratefluctuationsmayalsoaffectliquidityandinterestratesintheIndianeconomy,whichcouldadverselyimpactourfinancialcondition.Alossofinvestorconfidenceinotheremergingmarketeconomies or anyworldwide financial instabilitymay adversely affect the Indian economy,whichcouldmateriallyandadverselyaffectourbusiness,cash flow,resultsofoperationsandthemarketpriceoftheEquityShares.Further,otherfactorswhichmayadverselyaffecttheIndianeconomyarescarcityofcreditorotherfinancing in India, resulting in an adverse impact on economic conditions in India and scarcity offinancingofourdevelopmentsandexpansions;volatilityin,andactualorperceivedtrendsintradingactivityon,India’sprincipalstockexchanges;changesinIndia’stax,trade,fiscalormonetarypolicies,likeapplicationofGST;politicalinstability,terrorismormilitaryconflictinIndiaorincountriesintheregionorglobally,includinginIndia’svariousneighbouringcountries;occurrenceofnaturalorman-made disasters; infectious disease outbreaks or other serious public health concerns; prevailingregional or global economic conditions, including in India’s principal export markets; and othersignificantregulatoryoreconomicdevelopmentsinoraffectingIndiaoritsfinancialservicessectors.
4. PoliticalinstabilityorchangesintheeconomicpoliciesbytheGovernmentofIndiacouldimpact
ourfinancialresultsandprospects.
WeareincorporatedinIndiaandderivesubstantialmajorityofourrevenuesfromoperationsinIndia.Consequently,ourperformanceandthemarketpriceofourEquitySharesand/ortheDebenturesorother securities,maybeaffectedby interest rates, governmentpolicies, taxation, social andethnicinstabilityandotherpoliticalandeconomicdevelopmentsaffectingIndia.TheGovernmentofIndia(“GoI”)hastraditionallyexercisedandcontinuestoexercisesignificantinfluenceovermanyaspectsof
30
theIndianeconomy.Ourbusiness,andthemarketpriceandliquidityofourEquityShares,and/ortheDebentureorothersecurities,maybeaffectedbychangesintheGoI'spolicies,includingtaxation.Since1991,successiveIndiangovernmentshavepursuedpoliciesofeconomicliberalisation,includingsignificantlyrelaxingrestrictionsontheprivatesector.However,therecanbenoassurancethatsuchpolicieswillbecontinuedandanysignificantchangeintheGoI'spoliciesinthefuturecouldaffectourbusinessandeconomicconditionsinIndiaingeneral.AseconomicliberalisationpolicieshavebeenamajorforceinencouragingprivatefundingintheIndianeconomy,anychangeinthesepoliciescouldhaveasignificantimpactonbusinessandeconomicconditionsinIndia,whichcouldadverselyaffectourbusinessandourfuturefinancialconditionandthepriceofourEquityShares.Inaddition,anygeopoliticalstabilityaffectingIndiawilladverselyaffecttheIndianeconomyandtheIndiansecuritiesmarketsingeneral,whichcouldaffectthepriceofourEquityShares.
5. AdeclineinIndia’sforeignexchangereservesmayadverselyaffectliquidityandinterestratesin
theIndianeconomy,whichcouldhaveanadverseimpactonus.Arapiddecreaseinreserveswouldalsocreateariskofhigherinterestratesandaconsequentslowdowningrowth.
India’sforeignexchangereservesstoodatU.S.$475.5billionasatMarch27,2020.Flowstoforeignexchangereservescanbevolatile,andpastdeclinesmayhaveadverselyaffectedthevaluationoftheRupee.TherecanbenoassurancethatIndia’sforeignexchangereserveswillnotdecreaseagaininthefuture.Furtherdeclineinforeignexchangereserves,aswellasotherfactors,couldadverselyaffectthevaluation of the Rupee and could result in reduced liquidity and higher interest rates that couldadverselyaffectourbusiness,financialconditionandresultsofoperations.
6. AnydowngradingofIndia'sdebtratingbyaninternationalratingagencycouldhaveanadverseimpactonourbusiness.
India’s sovereign rating isBaa3with a “negative” outlook (Moody’s),BBB-with a “stable” outlook(S&P)andBBB-witha“negative”outlook(Fitch).AnyadverserevisiontotheratingofIndia'sdomesticor international debt by international rating agencies may adversely impact our ability to raiseadditional financing and the interest rates and other commercial terms at which such funding isavailable.Thiscouldhaveanadverseeffectonourbusinessandfuturefinancialperformance,itsabilitytoobtainfinancingforcapitalexpendituresandthetradingpriceoftheEquityShares.
7. Ifregionalhostilities, terroristattacksorsocialunrest inIndiaincrease,ourbusinesscouldbeadverselyaffected,andthetradingpriceoftheDebenturescoulddecrease.
Indiahasfromtimetotimeexperiencedinstancesofsocial,religiousandcivilunrestandhostilitieswithneighbouringcountries.MilitaryactivityorterroristattacksinthefuturecouldadverselyimpacttheIndianeconomybydisruptingcommunicationsandmakingtravelmoredifficult,andsuchtensionscouldcreateagreaterperceptionthatinvestmentsinIndiancompaniesinvolvehigherdegreesofrisk.Eventsofthisnatureinthefuture,aswellassocialandcivilunrestwithinothercountriesinAsia,couldadverselyimpacttheIndianeconomyandourrevenue,operatingresultsandcashflows.Forexample,therecentunrestontheIndo-ChinaborderledtoretaliationbyIndiaandescalatedhostilitiesbetweenIndiaandChina.Further,Indiahasalsoexperiencedsocialunrestinsomepartsofthecountry.TheimpactoftheseeventsonthevolatilityofglobalfinancialmarketscouldincreasethevolatilityofthemarketpriceoftheDebentures.
8. Economicdevelopmentsandvolatilityinsecuritiesmarketsinothercountriesmaycausetheprice
oftheEquitySharestodecline.
TheIndianeconomyanditssecuritiesmarketsareinfluencedbyeconomicdevelopmentsandvolatilityinsecuritiesmarketsinothercountries.Investor’sreactionstodevelopmentsinonecountrymayhaveadverseeffectsonthemarketpriceofsecuritiesofcompaniessituatedinothercountries,includingIndia.For instance, the recent financial crisis in theUnitedStatesandEuropeancountries led toaglobalfinancialandeconomiccrisisthatadverselyaffectedthemarketpricesinthesecuritiesmarketsaround the world, including Indian securities markets. Negative economic developments, such asrisingfiscalortradedeficits,oradefaultonnationaldebt,inotheremergingmarketcountriesmay
31
affect investorconfidenceandcauseincreasedvolatility inIndiansecuritiesmarketsandindirectlyaffecttheIndianeconomyingeneral.
9. The extent and reliability of Indian infrastructure, to the extent insufficient, could adversely
impactourcashflow,resultsofoperationsandfinancialcondition.
India'sphysicalinfrastructureislessdevelopedthanthatofmanydevelopednations.Anycongestionordisruptionwith itsport, railandroadnetworks,electricitygrid, communicationsystemsoranyotherpublicfacilitycoulddisruptournormalbusinessactivity.AnydeteriorationofIndia'sphysicalinfrastructurewouldharmthenationaleconomy,disruptthetransportationofgoodsandsupplies,andaddcosts todoingbusiness in India.Theseproblemscould interruptourbusinessoperations,whichcouldhaveadverseeffectonourcashflow,resultsofoperationsandfinancialcondition.
10. OurabilitytoraiseforeigncapitalmaybeconstrainedbyIndianlaw.
Companies operating in India are subject to exchange controls that regulate borrowing in foreigncurrencies.Suchregulatoryrestrictionscouldlimitourfinancingsourcesforacquisitionsandcouldconstrainourabilitytoobtainfinancingsoncompetitivetermsandrefinanceexistingindebtedness.Inaddition,itcannotbeassuredthatanyapprovalrequiredtoraiseforeigncapitalwillbegrantedtouswithoutonerousconditions,oratall.Limitationsonforeigndebtmayhaveanadverseimpactonourbusiness,financialcondition,cashflowsandresultsofoperations.
11. Significantincreasesinthepriceoforshortagesinthesupplyofcrudeoilcouldadverselyaffect
theIndianeconomyingeneral,includingthecementmanufacturingindustry,whichcouldhaveanadverseeffectonourbusinessandresultsofoperations.
Indiareliessignificantlyonimportstomeetitsrequirementsofcrudeoil.Crudeoilpricesarevolatileandaresubjecttoseveralfactors,includingthelevelofglobalproductionandpoliticalfactors,suchaswarandotherconflicts,particularlyintheMiddleEast,whereasubstantialproportionoftheworld'soilreservesarelocated.AnysignificantincreaseinthepriceoforshortagesinthesupplyofcrudeoilcouldadverselyaffecttheIndianeconomyingeneral, includingthecementmanufacturingindustryandconsequentlyanadverseeffectonourbusiness,cashflowsandresultsofoperations.
32
(B) BRIEF SUMMARY OF BUSINESS/ ACTIVITIES OF COMPANY AND ITS LINE OF BUSINESSCONTAININGATLEASTFOLLOWINGINFORMATION(i) OVERVIEWOurCompanywasincorporatedonNovember24,1994asJ.K.CementLimited,undertheCompaniesAct,1956.OurCompanyreceivedthecertificateforcommencementofbusinessdatedDecember30,1994fromthe then Registrar of Companies, Kanpur, Uttar Pradesh. The CIN of our Company isL17229UP1994PLC017199.As on June 30, 2020, the Board of Directors consists of 14 Directors out of which four are executiveDirectors,threearenonexecutive,non-independentDirectorsandsevenarenon-executive,independentDirectors.ShriYadupatiSinghania,B.TechfromIITKanpuristhekeydrivingforcebehindthesuccessoftheCompany.Underhisdynamicleadershipandguidance,theCompanyachievedsignificantsizeandscaleofoperations.Heisalsoassociatedwithvariousmanagementandindustrialchapters.Underhisguidanceandleadership,Companyhassignificantlyachievedgrowthparticularlyinbusinessdevelopmentandbrandleverage.TheindependentdirectorsoftheCompanyareexperienced,competentandrenownedpersonsfromtheirrespectivefields.Theyareinstrumentalinaddingvaluesinthedecision-makingprocessoftheCompany.
INDUSTRYOVERVIEW:Cementdemandgrowthincurrentfiscalisexpectedtowitnessanunprecedentedcontractionof10-15%owingtospreadofglobalpandemicCovid-19.Thus,thedemandforfiscal2021isexpectedtobe293milliontonsasagainst330milliontonsinprecedingyear.AsperCRISIL,Cementproductioncapacityinfiscal2020stoodat520milliontonsanditisestimatedthatcapacitymayincreaseto541milliontonsby2021.ThecementdemandforthisfiscalwouldremainmutedmainlyduetodiversionoffundtowardhealthandpublicwelfareinH1FY21byGovernment,howeverinH2FY21demandwouldseeagradualpickupmainlydrivenbyincreasedGovernmentspendingoninfrastructureandaffordablehousinginPMAY-UandPMAY-R&PMGSY.Further,keyinfrastructureprojectofroad,metrosandirrigationwoulddrivedemandfortheoveralleconomy.
1) Government ‘’Housing for All - Rural and Urban ‘’scheme alone contributes 10-12% share ofcementdemand inhousingsegment.PMAY–Ghasset the target forconstructionof15millionhouseholdsinruralareaofwhichonly10millionwerecompletedtillFY20.PMAY-Uhassetthetargetforconstructionof10millionhouseholdsofwhichonly3millionwereconstructedtillFY20.Thusremaining5millionhousesinPMAY–G&7millionhouseinPMAY-UwouldgeneratedemandforcementatCAGRof6-7%overFY20-24.(Source:CRISILReport)
2) Road&HighwaysProjects–Indiahasthelargestnetworkofroadacrossworldspanningover5.89
million Kms. In order towiden and revamp 1.25 lakhs Km of roads government of India hasapprovedthelaunchofPhase–IIIofitsruralroadprogrammePradhanMantriGramSadakYojana(PMGSY).TheGovernmentofIndiahasallocatedRs91,823crore(US$13.14billion)undertheMinistry of Road Transport and Highways in current fiscal for construction of roads. TheGovernmentalsoexpectedtoawardroadprojectswithatotallengthofaround4,500kmworth₹50,000crore(US$7.15billion)in2020.(Source:Indiaroadandindustryreport,IBEF)
3) OtherInfrastructureProjects-TheGovernmenthasalsoallocatedmorethanRs.103lakhcrores
overaperiodoffiveyearsfrom2020forInfrastructureProjects.Thesenewprojectswillincludehousing, safe drinking water, access to clean and affordable energy, healthcare, educationalinstitutes,railwaystations,airports,busterminals,metroandrailwaytransportation,logisticsandwarehousing,irrigationprojects,etc.(Source:Indiaroadandindustryreport,IBEF)
BUSINESSOVERVIEW:
33
J.K.Cementisoneofthetop15cementcompaniesinIndiaaspersurveyofCementIndustry&Directory2019.Wemanufacturegreycement,whitecementandwallputty.AsperdatareleasedbyGOIMinistryofMines,IBMtotalwhitecementcapacityinIndiais1.338Milliontonsandtwoofmajorplayersholdalmost1.215Milliontonswhichisalmost90%oftotalmarketshareintermsofinstalledcapacity.Weare2ndlargestplayerofwhitecement inIndiaaspersurveyofCementIndustry&Directory2019.Inthegreycementsegment,wemanufactureandmarketordinaryportlandcement(“OPC”)(43-gradeand53-grade),portlandpozzalanacement(“PPC”)andportlandslagcement(“PSC”)underthebrandname“J.K.SuperCement(BuildSafe)”,“”,as“J.K.SuperStrong(BuildSafe)”.Ourwhitecementandwallputtyaresoldunderthebrandname“J.K.CementWhitemaxx”,,“JKCementWallmaxx”,“J.K.PrimaxX”,“J.K.CementTilemaxx”,and“J.K.CementGypsomaxx””,respectively.We own and operate integrated cement manufacturing plants and split grinding units, which arestrategicallylocatednearourlimestoneminesandarewellconnectedtotheend-marketsbyroadandrailnetworks.WeownandoperatefourgreycementplantsinRajasthanandKarnatakaandagrindingunitatHaryanaandanotherinUttarPradesh.Inaddition,weownandoperateawhitecementplantatGotan,Rajasthan (which also manufactures wall putty) and an additional wall putty plant at Katni, MadhyaPradesh.Further,wealsoownandoperateadualprocesscementplanthavingcapacitytoproducebothwhite and grey cement (interchangeably) in Fujairah, U.A.E. The Fujairah plant is currently used formanufacturingwhitecementonly.AsonMarch31,2020,wehaveanaggregateinstalledcapacityof13.97MnTforgreycement,1.2MnT(including0.6MnTinUAE)forwhitecementand0.9MnTforwallputty.Limestoneandpoweraretwoofthekeyinputsusedinthemanufactureofcement,inadditiontofuel.Wesourcelimestoneforourmanufacturingplantsfromcaptivelimestonemineslocatedinproximitytoourplants.InFiscals2018,2019and2020,significantlyallofourlimestonerequirementsinIndiaacrossplantsweremetbyourcaptivelimestonemines.AsonMarch31,2020,weownandoperate11limestoneminessituatedinRajasthanandKarnatakaandhaveaccesstolimestonereservesaggregatingupto486.82MnT(includingprovenandprobable).Theremainingleasedurationfortheseminesrangesfrom12to44years.Further,inFujairah,UAE,wehavebeenallottedonelimestoneminewithreservessuitableforproductionofwhitecementadjacenttoourplantsite,whichisoperatingnow.WehavealsoobtainedminingleasesforadditionallimestoneminesinthestateofMadhyaPradeshandareintheprocessofobtainingtherequisiteregulatoryandenvironmentalapprovalsforthesame.Theestimatedlimestonereservesintheseminesareapproximately518.5MnT(includingprovenandprobable).Further,wehavefourcaptivepowerplantsandtwowasteheatrecoverypowerplantsacrossRajasthanandKarnataka,withanaggregatecapacityofapproximately125.70MW,asonMarch31,2020.DuringFiscals2018to2020,over75%ofourpowerrequirementinIndiaweremetbycaptivethermalandwaste-heat-recovery-basedpowerplants.Wesellgreycementover17states/unionterritoriesinIndia,aswellasgreyclinkertocustomersinNepal.Ourwhitecementandwallputtyaresoldacrossthecountry.AsonMarch31,2020,ourgreycementissuppliedthroughanetworkofover14,007dealersandretailers.Wealsosupplyourwhitecementandwallputty products through a network of over 56,712dealers and retailers. As on March 31, 2020, ourdistributionnetworkisfurtheraugmentedthrough252feederdepotsservicedby23salesofficesforgreycement and 91feeder depots serviced by 40sales office forwhite cement spread across India.We alsodirectly sell our products to builders, EPC contractors and government entities for various projectsundertakenbythem.Our consolidated revenue from operations in Fiscals 2018, 2019 and 2020 was ₹ 4971.62 crores, ₹5183.32crores, and ₹5734.73crores respectively, and our profit for the year was ₹ 285.58crores, ₹263.63crores, and ₹483.39 crores, respectively. Our EBITDA in Fiscals 2018, 2019 and 2020 was ₹787.45crores,₹834.45crores,and₹1213.44crores,respectively.
34
(ii) CORPORATESTRUCTURE
(iii) KEYOPERATIONALANDFINANCIALPARAMETERSFORTHELAST3AUDITEDYEARS(a) STANDALONEBASIS: (Rs.incrores)PARAMETERS Ason
31.03.2020(Audited)
Ason31.03.2019(Audited)
Ason31.03.2018(Audited)
Networth 3128.89 2892.80 2147.34TotalTermDebts 2422.76 2116.29 2183.21Ofwhich–NonCurrentMaturitiesofLongTermBorrowings
337.41 242.31 170.45
ShorttermBorrowings 138.85 159.81 113.51CurrentMaturitiesofLongTermBorrowings 337.41 242.31 170.45NetFixedAssets 4977.29 4191.90 3684.49Non-CurrentAssets(Otherthannetfixedassets) 762.30 860.14 743.17CashandCashequivalents 36.13 237.42 182.35CurrentInvestments 1.03 394.31 77.57CurrentAssets 2115.48 1895.20 1556.13CurrentLiabilities 1619.58 1436.37 1175.37NetSales 5397.13 4919.19 4709.55EBITDA 1181.53 810.11 760.66EBIT&Exceptionalitems 1053.03 695.66 702.04Interest 222.86 222.08 245.35Exceptionalitem 178.15 0 16.96PAT 400.37 324.89 341.87Dividendamounts 163.01 84.30 67.33Currentratio* 1.31 1.32 1.32Interestcoverageratio 5.06 4.09 3.62GrossDebt/equityratio 0.84 0.76 1.04DebtServiceCoverageRatio 1.96 1.93 2.11(b) CONSOLIDATEDBASIS:
35
(Rs.incrores)PARAMETERS Ason
31.03.2020(Audited)
Ason31.03.2019(Audited)
Ason31.03.2018(Audited)
Networth 3007.42 2694.97 1974.86TotalTermDebts 2884.24 2677.94 2730.56Ofwhich–NonCurrentMaturitiesofLongTermBorrowings
399.70 295.15 209.97
ShorttermBorrowings 180.72 238.15 156.46CurrentMaturitiesofLongTermBorrowings 399.70 295.15 209.97NetFixedAssets 6084.02 5111.17 4547.60Non-CurrentAssets(Otherthannetfixedassets) 223.44 256.05 223.95CashandCashequivalents 38.50 263.06 211.33CurrentInvestments 1.03 394.31 77.57CurrentAssets 2234.57 2045.44 1684.45CurrentLiabilities 1824.68 1609.76 1309.61NetSales 5734.73 5183.32 4971.62EBITDA 1213.44 834.45 787.45EBIT&Exceptionalitems 1010.80 673.55 684.27Interest 276.36 261.11 284.09Exceptionalitem 16.96PAT 483.39 263.63 285.58Dividendamounts 163.01 84.30 67.33Currentratio* 1.22 1.27 1.29Interestcoverageratio 4.56 3.28 2.84GrossDebt/equityratio 1.03 1.01 1.41DebtServiceCoverageRatio 1.82 1.52 1.62*excludingcurrentmaturities#AsperIndASaccounting.GROSSDEBTEQUITYRATIOOFTHECOMPANYGross debt equity ratio of the company before raisingsecurities(Standalone)
0.84
Gross debt equity ratio of the company after raisingsecurities(Standalone)
0.92
**Debtequityratioafterraisingdebtsecuritiesiscomputedonthebasisthatthereisaninflowof₹250croresfromtheproposedissue
(iv) PROJECTCOSTANDMEANSOFFINANCING,INCASEOFFUNDINGOFNEWPROJECTSThefundsbeingraisedbytheIssuerthroughpresentissueofNCDsaretobeutilizedtowardspartfinancing1,500tpdclinkerexpansionatNimbahera,Rajasthan.TotalProjectcost–uptoRs.405crores,tobefinancedusingthedebtofRs.250croresandequity/internalaccrualsofuptoRs.155crores.TheCompanyundertakesthattheproceedsofthecurrentIssueshallnotbeusedforanypurposewhichmaybeincontraventionoftheregulations/guidelines/normsissuedbyRBI/SEBI/RegistrarofCompanies.(v) SUBSIDIARIESOFTHECOMPANY(Ifany)
A. SUBSIDIARYCOMPANYININDIA
1) Jaykaycem(Central)Limited
36
B. SUBSIDIARYCOMPANIESINCORPORATEDOUTSIDEINDIA
1) J.K.Cement(Fujairah)FZC2) JKCementWorks(Fujairah)FZC3) JKWhiteCement(Africa)Limited
(C)BRIEFHISTORYOFTHEISSUERSINCEITSINCORPORATIONGIVINGDETAILSOFIT’SFOLLOWINGACTIVITIES
(i) DETAILSOFSHARECAPITALASON30.06.2020Particulars Numberof
sharesRs.inCr.
AUTHORISED 80000000NosofEquityshareoffacevalueofRs.10each 80000000 80 80000000 80ISSUEDANDSUBSCRIBED 77268251 77.2777268251NosofEquitysharesoffacevalueofRs.10each 77268251 77.27FULLYPAIDUP 77268251 77.2777268251NosofEquitysharesoffacevalueofRs.10each Total 77268251 77.27
(ii) CHANGESINITSCAPITALSTRUCTUREASON30.06.2020,FORTHELASTFIVEYEARSDateofchange(AGM/EGM) Nominal
AmountinRsParticulars
AGMheldon28.7.2018 73410010 7341001NosoffullypaidequitysharesofRs.10eachwereissuedbywayofQIPon31.12.2018atapremiumofRs.685.80perequityshare.
(III)EQUITYSHARECAPITALHISTORYOFTHECOMPANYASON30.06.2020FORTHELASTFIVEYEARSDateofAllotment
NoofEquityShares
FaceValue(Rs.)
IssuePrice(InRs)
Consideration(Cash,otherthancash,etc)(Rs.incr.)
NatureofAllotment
Cumulative-Equitycapitalafterallotment
Remarks
No.ofEquityShares
Equitysharecapital(Rs.inCr.)
Equitysharepremium(inRs.)
31.12.18 7341001
10 695.80
510.79 QualifiedInstitutionalPlacement
77268251
77.27
756.80 QualifiedInstitutionalplacementofequitysharetoQIBs
37
iv) DETAILSOFANYACQUISITIONORAMALGAMATIONINTHELAST1YEARNIL
v) DETAILSOFANYREORGANIZATIONORRECONSTRUCTIONINTHELAST1YEAR
TYPEOFEVENT DATEOFANNOUNCEMENT DATEOFCOMPLETION DETAILS
NIL(D) DETAILSOFTHESHAREHOLDINGOFTHECOMPANYASONTHELATESTQUARTEREND
JUNE30,2020
(i) SHAREHOLDINGPATTERNOFTHECOMPANYASONLASTQUARTEREND(30.06.2020)
Particulars No.ofShares No.ofSharesinDematform
Totalshareholding
as%oftotalno.ofshares
PromotersandPromoterGroup 44866579 44866459 58.07MutualFunds/UTI
16362240
16349378 21.18
FinancialInstitutions/Banks 10403 7192 0.01InsuranceCompanies 1620933 1620923 2.10ForeignInstitutionalInvestors 10392854 10370942 13.45BodiesCorporate 666808 661866 0.86Individuals–ResidentPublic 2642133 2423906 3.42Others 706301 652398 0.91GrandTotal 77268251 76953064 100.00Note:Sharespledgedorencumberedbythepromoters(ifany)
(ii) LIST OF TOP 10 HOLDERS OF EQUITY SHARES OF THE COMPANY AS ON THE LATESTQUARTEREND(30.06.2020)
Sr.No. Particulars
TotalNo.ofEquityshares*
No.ofsharesheldinDematform
Totalshareholdingasa%oftotalno.of
equityshares
1 M/sYaduInternationalLtd. 31034518 31034478 40.162 ShriYadupatiSinghania 12064198 12064198 15.6133 SBI-variousMFSchemes 5799495 5799495 7.5054 FidelityInvestmentTrust 4200833 4200833 5.4365 MiraeAsset-VariousScheme 2203052 2203052 2.8516 AxisMF 1564469 1564469 2.0247 Smt.KavitaY.Singhania 1305452 1305452 1.689
8 FranklinTempletonInvestmentFund
1302041 1302041 1.685
9 AdityaBirlaSunLifeTrusteePvtLtd.
1186911 1186911 1.536
10 KotakEquityFunds-MF 1126802 1126802 1.458
(E) FOLLOWINGDETAILSREGARDINGTHEDIRECTORSOFTHECOMPANY:-
38
(i) DETAILSOFTHECURRENTDIRECTORSOFTHECOMPANYASON30.06.2020
Sr.No.
Name,DesignationDIN,
andOccupationAge Address
Directorofthe
Companysince
Detailsofotherdirectorship(s)*
1. Mr. YadupatiSinghaniaManagingDirectorOccupation:BusinessNationality:IndianDIN:00050364
66 11,GangaKuti,Cantonment,Kanpur,UttarPradesh,India208004
November24,1994
1. J.K.TradersLimited2. Jaykaycem (Northern)
Limited3. J.K.CottonLimited4. Jaykaycem (Central)
Limited5. J.K. Cement (Western)
Limited6. JKPaintsandPigments
Ltd7. Bhagwandas Goenka
EducationalInstitution8. Ace Investments
PrivateLimited9. Express Newspapers
PrivateLimited10. Yadu International
Limited11. Employer'sAssociation
ofNorthernIndia12. UttarPradeshCricket
Association
2 Mr.SudhirJalanNonExecutive,nonindependentDirectorOccupation:BusinessNationality:IndianDIN:00111118
75 7,AliporeRoad,Kolkata-700027
December17,2019
1. Meenakshi TeaCompanyLtd
2. SublimeAgroLtd3. Dhawalgiri Holdings
PvtLtd4. Neo Foods Private
Limited5. Rice Lake Weighing
SystemsIndiaLimited6. Apollo Gleneagles
HospitalLimited7. The Shahjahanpur
ElectricSupplyCo.Ltd.8. Anchor Investments
PvtLtd9. Meenakshi Cerebrum
PropertiesLimited10. ASA Holdings Private
Limited11. BRAR Properties And
HoldingsPvt.Ltd.12. Rieter India Private
Limited13. Conexus Social
ResponsibilityServicesPrivateLimited
3 Mr.PaulHeinzHugentoblerNon-executive,non-independentDirector
71 Eschenweg10,CH-8645,Jona,Switzerland
May17,2014
DalmiaBharatLtd.
39
Sr.No.
Name,DesignationDIN,
andOccupationAge Address
Directorofthe
Companysince
Detailsofotherdirectorship(s)*
Occupation:ProfessionalNationality:SwissDIN:00452691
4 Mrs.SushilaDeviSinghaniaNon-executive,non-independentDirectorOccupation:BusinessNationality:IndianDIN:00142549
84 11,GangaKuti,Cantonment,Kanpur,UttarPradesh,India208004
July26,2014
YaduInternationalLimited
5 Mr.AchintyaKaratiNon-executive,independentDirectorOccupation:ProfessionalAddress:Nationality:IndianDIN:00024412
74 29/203,EastEndApartments,MayurViharPhase–IExtension,Delhi,India110096
October24,2005
1 DeltonCablesLimited2 UflexLimited3 ShyamTelecomLimited4 Sangam(India)Limited5 TFS Business AdvisorsIndiaPrivateLimited
6 JayBharatMarutiLimited7 Ultimate FlexipackLimited
8 A.Karati BusinessAdvisorsPvt.Ltd.
6 Mr.JayantNarayanGodboleNon-executive,independentDirectorOccupation:ProfessionalNationality:IndianDIN:00056830
75 604/A,CottageLandCHS,Plot16/A,Sector19/A,Nerul(E),NaviMumbai,Maharashtra,India400706
July29,2006
1 EMBIOLimited2 Emami Paper MillsLimited
3 Saurashtra CementLimited
4 Kesar Terminals &InfrastructureLimited
7 Dr.KrishnaBehariAgarwalNon-executive,independentDirectorOccupation:BusinessNationality:IndianDIN:00339934
80 7/177,SwaroopNagar,Kanpur,UttarPradesh,India208002
August25,2007
1 KeyCorpLimited2 Jaykay EnterprisesLimited
3 J.K.CottonLimited4 Jaykaycem(Central)Ltd.
8 Mr.SuparasBhandariNon-executive,independentDirectorOccupation:ProfessionalNationality:IndianDIN:00159637
74 A-63,2ndFloor,GulmoharPark,Delhi,India110049
July29,2006
1 LTFoodsLtd.
40
Sr.No.
Name,DesignationDIN,
andOccupationAge Address
Directorofthe
Companysince
Detailsofotherdirectorship(s)*
9 Mrs.DeepaGopalanWadhwaNon-executive,independentDirectorOccupation:RetiredGovernmentOfficerNationality:IndianDIN:07862942
64 N-35,PanchsheelPark,MalviyaNagar,NewDelhi,India110017
Nov.3,2018 1. MindtreeLimited2. Corporate Catalyst IndiaPrivateLimited
3. JKPaperLimited4. Mukand Sumi SpecialSteelLimited
5. Bengal&AssamCompanyLimited.
10 Mr.SaurabhChandraNonExecutive,independentDirectorOccupation:RetiredGovernmentOfficerNationality:IndianDIN:02726077
65 A-09,NithariRoad,NoidaSector-30GautamBudhhaNagarNoida,U.P.-201301
May18,2019
1. VacmetIndiaLimited2. Multi Commodity
Exchange Of IndiaLimited
3. SBI Pension FundsPrivateLimited
11 Mr.AshokSinhaNonExecutive,independentDirectorOccupation:RetiredGovernmentOfficerNationality:IndianDIN:00070477
68 FlatNo.18,Kailash50PeddarRoadCumballaHill,Mumbai-400026
May18,2019
1. CiplaLimited2. The Tata Power
CompanyLtd.3. Coastal Gujarat Power
Ltd.4. Airasia(India)Ltd.5. Axis Asset
Management CompanyLimited
6. MaithonPowerLimited7. The Hospital and
Nursing BenefitsAssociation
12 Mr.AjayKumarSaraogiExecutiveDirector&CFO(WholeTimeDirector)Occupation:BusinessNationality:IndianDIN:00130805
63 H.No.2A/175,AzadNagar,Kanpur,U.P.-208002
June17,2020
1. JKPaintsandPigmentsLtd.
2. Jaykaycem (Central)Ltd.
3. Jaykaycem (Northern)Ltd.
4. YaduInternationalLtd.5. Merchant Chamber of
UttarPradesh
13 Mr.RaghavpatSinghaniaExecutive Director(Whole Time Director-Corporate and WhiteCement)Occupation:BusinessNationality:IndianDIN:02426556)
35 17,OakDrive,DLFChattarpurFarm,NewDelhi-110074
June17,2020
NIL
41
Sr.No.
Name,DesignationDIN,
andOccupationAge Address
Directorofthe
Companysince
Detailsofotherdirectorship(s)*
14 Mr.MadhavkrishnaSinghaniaExecutiveDirector(WholeTimeDirector-GreyCement)Occupation:BusinessNationality:IndianDIN:07022433)
31 17,OakDrive,DLFChattarpurFarm,NewDelhi-110074
June17,2020
NIL
Note:NoneoftheDirectors’namesareappearingintheRBIdefaulterlistand/orECGCdefaultlist.RemunerationoftheDirectors
(Rs.incrores)
Sl.No. NameoftheDirector
RemunerationpaidbythecompanyFY20-21
(UntilJune30,2020) FY19-20 FY18-19 FY17-18
1. YadupatiSinghania** - 21.25 18.60 14.242. ShriSudhirJalan 0.015 0.11 - -3. Smt.SushilaDeviSinghania 0.01 0.11 0.15 0.144. ShriA.Karati 0.015 0.13 0.12 0.125. ShriJ.N.Godbole 0.02 0.14 0.13 0.146. Dr.K.B.Agarwal 0.225 0.17 0.17 0.167. ShriK.N.Khandelwal## 0.0075 0.15 0.14 0.138. ShriRajKumarLohia# - - 0.12 0.129. ShriSuparasBhandari 0.0175 0.14 0.13 0.1310. Mr.PaulHeinzHugentobler 0.01 1.20 1.21 1.1911. Mrs.DeepaGopalanWadhwa 0.015 0.12 0.11 -12. ShriSaurabhChandra* 0.015 0.13 - -13. ShriAshokSinha* 0.0125 0.12 - -14. ShriRaghavPatSinghania*** 0.41 - - -15. ShriMadhavKrishna
Singhania***0.26 - - -
16. ShriAjayKumarSaraogi*** 0.609 - - -**includesremunerationinAEDfromforeignsubsidiarycompaniesduringthecalendaryear2018.#Ceasedw.e.f.3.8.2019##Ceasedw.e.f.17.6.2020*appointedw.e.f.18.5.2019***appointedw.e.f.17.06.2020
(ii) DETAILSOFCHANGEINDIRECTORSSINCELASTTHREEYEARS:-
Sr.No. Name,DesignationandDIN
Dateofappointment/Resignation
DirectoroftheCompanysince(incaseofresignation)
Remarks
1. ShriShyamLalBansal,Non-Executive,IndependentDirector
12.06.2018 06.02.2016 Resignedduetopre-occupation
2. Smt.DeepaGopalanWadhwa,Non-Executive,IndependentDirector
03.11.2018 N.A. AppointedatBoardmeetingasAdditionalDirector
3. ShriSaurabhChandra,Non-Executive,IndependentDirector
18.05.2019 N.A. AppointedatBoardmeetingasAdditionalDirector
42
4. ShriAshokSinha,Non-Executive,IndependentDirector
18.05.2019 N.A. AppointedatBoardmeetingasAdditionalDirector
5. ShriRajKumarLohia,Non-Executive,IndependentDirector
03.08.2019 30.9.2004 ResolutionforreappointmentatAGMcouldnotbecarriedout
6. ShriSudhirJalan,Non-executive,Non-independentDirector
17.12.2019 N.A. AppointedthroughPostalBallot/E-votingasDirector
7. ShriKailashNathKhandelwal,Non-executive,Non-IndependentDirector
17.06.2020 09.02.2004 Resignedduetopre-occupation
8. ShriRaghavpatSinghania,ExecutiveDirector
17.06.2020 N.A. AppointedatBoardmeetingasAdditionalDirector
9. ShriMadhavkrishnaSinghania,ExecutiveDirector
17.06.2020 N.A. AppointedatBoardmeetingasAdditionalDirector
10. ShriAjayKumarSaraogi 17.06.2020 N.A. AppointedatBoardmeetingasAdditionalDirector
(F) FOLLOWINGDETAILSREGARDINGAUDITORSOFTHECOMPANY(i) DETAILSOFTHESTATUTORYAUDITOROFTHECOMPANY:-
NAME ADDRESS AUDITORSSINCEM/s S.R. Batliboi & Co. LLP,CharteredAccountants
GolfViewCorporateTowerB,Sector42,SectorRoad,Gurgaon-122002TelephoneNo.+911244644000Fax:+911244644050
April1,2017
(ii) DETAILSOFCHANGEINAUDITORSINCELASTTHREEYEARS:-
Name AddressDateof
Appointment/Resignation
DateofCessation
AuditoroftheIssuersince(incaseof
resignation)
Remarks
Therehasbeennochangeintheauditorsincelastthreeyears(G) DETAILSOFBORROWINGSOFTHECOMPANYOUTSTANDINGASON(30.06.2020)
DetailsofSecuredLoanFacilities:-1. CashCredit/WorkingCapitalDemandLoan(“WCDL”)facilitiesavailedbyourCompany
(₹incrores)
Sr.No.
Bank AmountSanctioned
Amountoutstanding
asperBankason30.06.2020
RepaymentDate/Sched
ule
Prepayment
43
1 IndianBank(erstwhileAllahabadBank)LeadBank
65.00 14.82 OnDemand NotApplicable
2 IndianBank 65.00 0.003 StateBankofIndia 65.00 44.994 PunjabNationalBank
(erstwhileUnitedBankofIndia)
10.00 0.00
5 UnionBank(erstwhileAndhraBank)
35.00 0.00
6 IDBIBank 45.00 28.997 BankofBaroda 55.00 22.998 CanaraBank 35.00 12.60
Total 375.00 124.39 Note:Non-FundBasedsanctionedlimithasnotbeenconsideredinabove.2. OverdraftagainstFixedDeposit(“ODFD”)facilityavailedbyourCompany
(₹incrores)
Sr.No.
Bank AmountSanctioned
Amountoutstanding asperBank ason30.06.2020
RepaymentDate/Sched
ule
Prepayment
1 StateBankofIndia 5.40 0.72
OnDemand
NotApplicable
2 PunjabNationalBank(erstwhileOrientalBankofCommerce)
22.69 3.85
3 UnionBank 0.98 0.694 IDBIBank 41.28 0.805 HDFCBankLtd. 0.90 0.156 ICICIBank 0.45 0.077 UnionBank(erstwhile
CorporationBank)0.45 0.15
Total 72.15 6.43 3. DetailsofSecuredCorporateLoan,TermLoanandTermLoanunderConsortiumason30.06.2020:
(₹incrores)
SN
Lender's
Name
DateofSanction
Amount
Sanctioned
AmountOutstandingasperBankason30.06.2020
RepaymentSchedule/Final
MaturityDate
Security Prepayment
1 StateBankofIndia
21.08.2015
100.00 58.46 31unequal
quarterly
install
Securedbypari-passufirstchargeonthe Company's PPE (movable &immovable) by way of equitablemortgageon immovableAssetsandhypothecationonmovableproperty,plant&Equipment(PPE)relatedto
Nil, if paidout of ownsources oftheCompany.
44
mentspayable
during30.09.2016to
31.03.2024
company's existing plant at i)Company's Existing Plant atNimbahera having capacity of 3.25MnTPA.ii)Company'sExistingPlantat Mangrol having capacity of 0.75MnTPA.iii)Company'sExistingPlantatGotanconsistingofWhiteCementplanthavingcapacityof0.40MnTPAandThermalPowerPlant.
2%,incasethe loan isprepaidother thanownsources.
2 ExportImportBankofIndia
10.02.2014
50.00 21.58 28equalquarterly
installmentspayable
during30.06.2016to
30.03.2023
Secured by equitable mortgage ofimmovable properties andhypothecation of movable PPEpertaining to undertaking of J.K.CementWorks,Gotanexceptcurrentassetsandvehicles.
prepaymentpremiumat the rate0.50%p.a
3 StateBankofIndia
LoanAgreementexecuted
on08.03.201
6
80.30 29.00 25unequal
quarterly
installmentspayable
during31.03.2016to
31.03.2022
SecuredbyFirstPari-passuchargebyway of equitable mortgage ofimmovable Properties (exceptmining land) and hypothecationmoveablenoncurrentassets,presentandfuturePertainingtoJ.K.CementWorksandThermalpowerplant,Muddapur,Karnataka.
Nil, if paidout of ownsources oftheCompany.2%,incasethe loan isprepaidother thanownsources.
4 StateBankofIndia
20.05.2019
150.00 66.06 34unequal
quarterly
installmentspayable
during01.06.2020to
01.09.2028
Securedbyfirstpari-passuchargebyway of equitable mortgage theimmovableassetsexceptminingland& vehicles and hypothecationmovable PPE, present and futurepertaining to J.K. Cement Works,Muddapur,Karnataka.
Nil, if paidout of ownsources oftheCompany.0.50%, incase theloan isprepaidfromotherthan ownsources.
45
5 StateBankofIndia
28.03.2013
50.00 15.46 32unequal
quarterly
installmentspayable
during30.06.2015to
31.03.2023
Securedbyfirstpari-passuchargebyway of equitable mortgage theimmovableassetsexceptmininglandand hypothecation movable PPE,presentandfuturepertainingto J.K.Cement Works, Muddapur,Karnataka.
Nil, if paidout of ownsources oftheCompany.0.50%, incase theloan isprepaidfromotherthan ownsources.
6 IndianBank(erstwhile
Allahabad
Bank)
29.04.2013
25.00 10.23 32equalquarterly
installmentspayable
during14.11.2015to
14.08.2023
Securedbyfirstpari-passuchargebyway of equitable mortgage theimmovableassetsandhypothecationmovable PPE, present and futurepertaining to J.K. Cement Works,Muddapur, Karnataka (excludingcurrentassets).
Nil, if paidout of ownsources oftheCompany.0.50%, incase theloan isprepaidfromotherthan ownsources.
7 ExportImportBankofIndia
09.01.2015
100.00 68.47 28unequal
quarterly
installmentspayable
during01.06.2017to
01.03.2024
Securedagainst exclusive chargeonmovable PPE (by way ofhypothecation) and on immovablePPE(by way of equitablemortgage)related to theWall Putty project atKatni, Madhya Pradesh (excludingcurrent assets and mining land, ifany).
Nil, if paidout of ownsources oftheCompany.0.50%, incase theloan isprepaidfromotherthan ownsources.
8 IDBIBank(LeadBank
CommonLoan
Agreementdated15.09.201
6amended
on22.01.201
8
126.75 117.00 52unequal
quarterly
installmentspayable
during31.03.2018to
Securedby First chargebywayofmortgage, on the immovableproperties,bothpresentandfuturepertainingto,thenewcementPlantat Mangrol, Rajasthan (save andexceptminingland)havingcapacityof 1.50 MnTPA including captivepower plant of 25MW andwasteheatrecoverybasedpowerplantof10 MW and split Grinding Unit atJharli, Haryana having capacity of1.50MnTPA and hypothecation ofthe movable PPE of the aboveplants (save and except Current
Nil, if paidout of ownsources oftheCompany.0.50%, incase theloan isprepaidfromotherthan ownsources.
IndianBank(erstwhileAllahabadBank)
97.50 90.63
UnionBank(erstwh
90.00 83.04
46
ileAndhraBank)
31.12.2030
Assets), both present and futureand second charge on currentassets, present and future,pertaining to the above plants(subject topriorchargecreatedortobecreatedontheCurrentAssetsin favour of the Working CapitalLenders for securing the WorkingCapitalFacilities.
AXISBank
121.88 113.28
CanaraBank
73.13 67.50
BankofBaroda
73.13 67.50
ExportImportBankofIndia
170.62 158.60
IndianBank
97.50
89.77
TheJammu&KashmirBank
40.00 37.16
StateBankofIndia
124.50 115.71
UnionBankofIndia
50.00 45.96
PunjabNationalBank(erstwhileUnitedBankofIndia)
60.00 54.90
PunjabNationalBank(erstwhileOrientalBankofCommerce)
45.00 41.71
9 IndianBank(erstwhileAllahabadBank)LeadBank
ConsortiumLoanAgreementexecutedon07.03.2019
250.00 157.09 44unequal
quarterly
installmentspayable
during01.11.2022to
(i)Securedbypari-passufirstchargebywayofequitablemortgageoftheimmovable properties, present andfuture,pertainingtotheMangrol3rdLine clinker unit, Mangrol WHRPlant, Aligarh Grinding unit andBalasinorGrindingunitbutexcludingmining land.(ii) First pari-passu charge withexisting lendersbywayofequitablemortgage of the immovableproperties present and future,pertaining to theMangrolexpandedGrinding unit and Nimbahera
Nil, if paidout of ownsources oftheCompany.0.50%, incase theloan isprepaidfromotherthan ownsources.
StateBankofIndia
250.00 150.78
CanaraBank
250.00 162.50
47
UnionBankofIndia
160.00 95.88 01.08.2033
expandedGrindingunitbutexcludedthe mining land.(iii) Secured by pari-passu firstcharge by way of hypothecation ofthe movable fixed assets bothpresentandfuture,pertainingtotheMangrol 3rd Line clinker unit,MangrolWHRPlant,AligarhGrindingunit and Balasinor Grinding unit,(save and except the current assetsand vehicles) (iv) First pari-passucharge by way of hypothecation ofthe movable fixed assets, bothpresent and future, pertaining toMangrolexpandedGrindingunitandNimbahera expanded Grinding unit(save and except the current assetsand vehicles).(v)Securedbysecondchargebywayof hypothecation of the currentassetspertainingtoMangrol3rdlineclinker unit ,Mangrol WHR Plant,Aligarh Grinding unit ,BalasinorGrinding unit ,Mangrol ExpandedGrinding unit and NimbaheraExpandedGrindingunitbothpresentand future (subject to prior chargecreated or to be created on thecurrent assets in favour ofborrower's bankers for securingtheirworkingcapitaladvances.).
UnionBank(erstwhileAndhraBank)
130.00 82.81
PunjabNationalBank(erstwhileUnitedBankofIndia)
130.00 77.38
TheJammu&KashmirBank
130.00 77.81
4. SecuredNon-ConvertibleDebentures
4.1 OurCompanyhas issued secured, redeemable, non-convertibledebenturesundervarious seriesofwhich₹382.50croresisoutstandingasonJune30,2020,thedetailsofwhicharesetforthbelow:
(₹Incrores)
Sr.No.
DebentureName/Series
ISINAmountOutstand
ing
DateofAllotment
FinalMaturityDate
Coupon
(p.a.)in%
Tenor/
Period(Days)
CreditRating
1 NonConvertibleDebenturesissuedinFY2010-11
INE823G07029
21.00 20.08.2010
20.08.2020
10.50%
10Years
CARE‘AA’
INE823G07037
3.00 25.08.2010
25.08.2020
10.50%
10Years
CARE‘AA’
INE823G07045
16.50 09.09.2010
09.09.2020
11.00%
10Years
CARE‘AA’
INE823G07052
3.00 02.11.2010
02.11.2020
10.50%
10Years
CARE‘AA’
INE823G07060
4.50 01.01.2011
01.01.2021
11.00%
10Years
CARE‘AA’
INE823G07078
18.00 24.01.2011
24.01.2021
11.00%
10Years
CARE‘AA’
INE823G07086
11.10 05.02.2011
05.02.2021
11.00%
10Years
CARE‘AA’
INE823G07102
5.40 28.03.2011
28.03.2021
11.00%
10Years
CARE‘AA’
48
Sr.No.
DebentureName/Series
ISINAmountOutstand
ing
DateofAllotment
FinalMaturityDate
Coupon
(p.a.)in%
Tenor/
Period(Days)
CreditRating
2 NonConvertibleDebenturesissuedinFY2013-14
INE823G07110
#20.00 23.07.2013
23.07.2020
10.50%
10Years
CARE‘AA’
INE823G07128
25.00 02.08.2013
02.08.2023
10.50%
10Years
CARE‘AA’
INE823G07136
20.00 08.08.2013
08.08.2023
10.50%
10Years
CARE‘AA’
INE823G07144
35.00 13.09.2013
13.09.2023
11.00%
10Years
CARE‘AA’
INE823G07151
25.00 01.10.2013
01.10.2023
11.00%
10Years
CARE‘AA’
INE823G07169
50.00 09.10.2013
09.10.2023
11.00%
10Years
CARE‘AA’
INE823G07177
5.00 09.10.2013
09.10.2023
11.00%
10Years
CARE‘AA’
INE823G07185
20.00 01.10.2013
01.10.2023
10.50%
10Years
CARE‘AA’
3 NonConvertibleDebenturesissuedinFY2014-15
INE823G07193
100.00 06.05.2015
06.05.2025
9.65% 10Years
CARE‘AA’
TOTAL 382.50 #Note:Put/Calloptionisapplicableon20Nos.Non-ConvertibleDebenturesunderISININE823G07110.OurCompanyhasgivennoticetodebentureholderforavailmentofcalloptionbypaymentofentireoutstandingonJuly23,2020againstthese20Nos.debentures.DetailsofUnsecuredLoanFacilities:-
(AmountinCrores)
S.No.
Lender’sname
DateofSanction
AmountSanctione
d
AmountOutstandingasonJune30,2020
FinalMaturityDate
Repaymentschedule Prepayment
NILDETAILSOFANYINTER-CORPORATELOANS,DEPOSITSANDOTHERBORROWINGS
(Rs.incrores)
Sr.No. Lender’sName Dateof
disbursementRateofInterest
Maturitydate
AmountoutstandingasonJune30,2020
1. NIL(iv)LISTOFTOP10DEBENTUREHOLDERS(ASON30.06.2020)
Sr.No. NAMEOFDEBENTUREHOLDERS Rs.inCr.
1. LifeInsuranceCorporationofIndia. 118.002 CanaraBank 90.503 UnionBank 50.004 PunjabNationalBank 29.505 BankofIndia 25.006 IDBIMutualFund 15.00
49
7 BankofBaroda 10.008 JKCementLtd.EmployeeGratuityFund 8.009 IDBIBankLtd. 5.4010 AKCapitalFinanceLtd. 5.00
Total 356.40(v)THEAMOUNTOFCORPORATEGUARANTEEISSUEDBYTHEISSUERALONGWITHNAMEOF
THECOUNTERPARTY(LIKENAMEOFTHESUBSIDIARY,JVENTITY,GROUPCOMPANY,ETC)ONBEHALFOFWHOMITHASBEENISSUEDASON30.06.2020
TheCompanyprovidedcorporateguarantee forextending financialaccommodation toFujairahstepdown subsidiary amounting to Rs. 464.33 crores (USD 61.479 Mn outstanding as on 30.06.2020).ConversionrateofUSDtoINRasonJune30,2020is75.527/USD. (vi)DETAILS OF COMMERCIAL PAPER:- THE TOTAL FACE VALUE OF COMMERCIAL PAPERS
OUTSTANDINGASON30.06.2020Nil
(vii) DETAILS OF REST OF THE BORROWING (IF ANY INCLUDING HYBRID DEBT LIKE FCCB,
OPTIONALLYCONVERTIBLEDEBENTURES/PREFERENCESHARES)ASON30.06.2020PartyName(incaseofFacility)/InstrumentName
TypeofFacility/Instrument
AmtSanctioned/Issued
PrincipalAmtOutstanding
RepaymentDate/Schedule
CreditRating
Secured/Unsecured
Security
Nil(viii)DETAILSOFALLDEFAULT/SAND/ORDELAYINPAYMENTSOFSTAUTORYDUES,INTERESTAND PRINCIPAL OF ANY KIND OF TERM LOANS, DEPOSITS, DEBT SECURITIES AND OTHERFINANCIALINDEBTEDNESSINCLUDINGCORPORATEGUARANTEEISSUEDBYTHECOMPANY,INTHEPAST5YEARS
Nil(ix)DETAILSOFANYOUTSTANDINGBORROWINGSTAKEN/DEBTSECURITIESISSUEDWHERETAKEN/ISSUED(I)FORCONSIDERATIONOTHERTHANCASH,WHETHERINWHOLEORPART,(II)ATAPREMIUMORDISCOUNT–,OR(III)INPURSUANCEOFANOPTION;
Nil
(X)AnyDefaultinAnnualfilingoftheCompanyundertheCompaniesAct,2013ortherulesmadethereunder.
Nil
(xi) Class andnamesof theproposed allottees and thepercentage of post privateplacementcapitalthatmaybeheldbythem
NotApplicable(xii)changeincontrolpursuanttotheprivateplacement
NotApplicable(xii)thenumberofpersonstowhomallotmentonpreferentialbasis/privateplacement/rightsissuebasishavealreadybeenmadeduringtheyear(bothintermsofnumberofsecuritiesandprice);
Nil
50
(xiii) details of significant and material orders passed by any regulator, court or tribunalimpactingthegoingconcernoftheissueranditsfutureoperations;Exceptasstatedin“MaterialoutstandingregulatorylitigationinvolvingourCompany”onpage59,ofthisInformationMemorandum,therearenosignificantandmaterialorderspassedbytheregulators,courtsandtribunalsimpactingthegoingconcernstatusofourCompanyanditsfutureoperations.(H)DETAILSOFPROMOTERSOFTHECOMPANYi. DETAILS OF PROMOTER HOLDING IN THE COMPANY AS ON THE LATEST QUARTER END30.06.2020Categoryofshareholder
Nos.ofshareholders
No.offullypaidupequitysharesheld
Totalnos.sharesheld
Shareholdingasa%oftotalno.ofshares(calculatedasperSCRR,1957)Asa%of(A+B+C2)
Numberofequitysharesheldindematerializedform
A1)Indian
0
Individuals/HinduundividedFamily
11 1,36,33,859 1,36,33,859 17.64 1,36,33,839
GaurHariSinghaniaJointlywithVasantlalD.Mehta&RaghubirPrasadSinghania
1 20 20 0
SushilaDeviSinghania
1 85,957 85,957 0.11 85,957
YadupatiSinghania 1 1,20,64,198 1,20,64,198 15.61 1,20,64,198KavitaYSinghania 1 13,05,452 13,05,452 1.69 13,05,452KalpanaSinghania 1 4,263 4,263 0.01 4,263ManoramaDeviSinghania
1 31,465 31,465 0.04 31,465
NidhipatiSinghania
1 33,428 33,428 0.04 33,428
RamapatiSinghania
1 49,662 49,662 0.06 49,662
AbhishekSinghania
1 58,994 58,994 0.08 58,994
MadhavKrishnaSinghania
1 210 210 0 210
RaghavpatSinghania
1 210 210 0 210
AnyOther(specify)
12 3,12,32,720 3,12,32,720 40.42 3,12,32,620
KailashNathKhandelwalJointlywithRadhaRaniKhandelwal
1 1,000 1,000 0 1,000
RadhaRaniKhandelwalJointlywithKailashNathKhandelwal
1 500 500 0 500
51
YaduInternationalLtd.
1 3,10,34,518 3,10,34,518 40.16 3,10,34,478
J.K.TradersLtd. 1 1,81,254 1,81,254 0.23 1,81,254G.H.SecuritiesPvt.Ltd.
1 20 20 0
YaduSecuritiesPvt.Ltd.
1 40 40 0
AjayKumarSaraogi
1 3,340 3,340 0 3,340
PushpaSaraogi 1 5,048 5,048 0.01 5,048AmritaSaraogi 1 3,000 3,000 0 3,000AnilKumarAgrawal
1 3,940 3,940 0.01 3,940
PrashantSeth 1 20 20 0 20SatishKumarAgarwal
1 40 40 0 40
SubTotalA1 23 4,48,66,579 4,48,66,579 58.07 4,48,66,459A2)Foreign
0
A=A1+A2 23 4,48,66,579 4,48,66,579 58.07 4,48,66,459(I) ABRIDGED VERSION OF AUDITED CONSOLIDATED (WHEREVER AVAILABLE) ANDSTANDALONEFINANCIALINFORMATION(LIKEPROFIT&LOSSSTATEMENT, BALANCE SHEETAND CASH FLOW STATEMENT) FOR AT LEAST LAST THREE YEARS AND AUDITORQUALIFICATIONS,IFANY.*REFERANNEXURE1
Anychangeinaccountingpoliciesduringthelastthreeyearsandtheireffectontheprofitsandthereservesofthecompany.–There is no change in accounting policies in last three financial years except as required by IndianAccountingStandards(IndAS)notifiedunderCompaniesAct,2013.Relatedpartytransactionsenteredduringthelastthreefinancialyearsimmediatelyprecedingthe year of circulation of Disclosure Document including with regard to loans made or,guaranteesgivenorsecuritiesprovided:The Company has entered into contracts / Arrangements / Transactions with Related Parties. AllRelatedPartyTransactionswereplacedbeforetheAuditCommitteeforreviewandapproval.ApprovalhasbeenobtainedforRelatedPartyTransactionswhichareofrepetitivenatureand/orenteredintheOrdinaryCourseofBusinessandareatArm’sLength.ApprovalofBoardhasbeenobtainedforRelatedPartyTransactionswhereverrequired.
Summary of reservations or qualifications or adverse remarks of auditors in the last fivefinancialyearsimmediatelyprecedingtheyearofcirculationofDisclosureDocumentandtheirimpactonthefinancialstatementsandfinancialpositionofthecompanyandthecorrectivestepstaken and proposed to be taken by the company for each of the said reservations orqualificationsoradverseremark.–There has been no qualification raised of the auditors in the last five financial years immediatelyprecedingtheyearofcirculationofDisclosureDocument.
(K) ANY MATERIAL EVENT/ DEVELOPMENT OR CHANGE HAVING IMPLICATIONS ON THEFINANCIALS/CREDIT QUALITY (E.G. ANY MATERIAL REGULATORY PROCEEDINGS AGAINST THEISSUER/PROMOTERS, TAX LITIGATIONS RESULTING IN MATERIAL LIABILITIES, CORPORATERESTRUCTURING EVENT ETC) AT THE TIME OF ISSUEWHICHMAY AFFECT THE ISSUE OR THEINVESTOR’SDECISIONTOINVEST/CONTINUETOINVESTINTHEDEBTSECURITIES.
52
MaterialoutstandingtaxlitigationagainstourCompany:1. Our Company has received 11 show cause notices from the Excise Department for alleged short
paymentofcentralexcisedutyoncementsold in50kgbagsto industrial/ institutionalconsumerscumulatively amounting to ₹ 202.12 crores for the period between July 2011 toMarch 2018 andcontravention of Rules 4, 6 and 8 of the Central Excise Rules, 2002. Thesematters are currentlypending.
2. OurCompanyreceivedashowcausenoticedatedOctober3,2008fromtheOfficeoftheCommissioner,Central Excise Commissionerate, Jaipur – II, Jaipur, Rajasthan for alleged irregular availing andutilizationofinadmissibleCENVATcreditof₹6.61croreduringtheperiodfromOctober,2007toApril,2008oncapitalgoodslikeparts,componentsandaccessoriesreceivedinourfactoryatNimbahera,Chittorgarh and subsequently, cleared for use in the captive power plant being assembled at theaforesaidfactorybyThermaxInstrumentationLtd.andcontraventionofRules3(1),3(5)and9oftheCENVATCreditRules,2004.Thematteriscurrentlypending.
3. Deputy Commissioner of Income Tax – VI, Kanpur (“DCIT”) passed an assessment order datedDecember24,2010(“DCITOrder”)undersection143(3)oftheIncomeTaxAct,1961forassessmentyear 2008-09. The DCIT Order was subsequently rectified vide an order dated March 10, 2015(“Rectification Order”) whereby, additional depreciation claimed by our Company on plant andmachinery used for power generation was disallowed. Aggrieved by the Rectification Order, ourCompanyfiledanappealtotheCommissionerofIncomeTax(Appeals)II,Kanpur(“CIT(A)”)whichwasallowedbyCIT(A)byanorderdatedApril10,2015infavourofourCompany.Thereafter,DCITfiledanappealagainst theorderof theCIT(A)beforetheIncomeTaxAppellateTribunal,LucknowwhichwasdismissedbyanorderdatedOctober16,2015(“Impugnedorder”).AgainsttheImpugnedOrder,PrincipalCommissionerofIncomeTax–I,KanpurhasfiledanappealbeforetheHighCourtofJudicatureatAllahabad.Thecumulativetaxeffectofthisproceedingis₹10.72crore.Thematteriscurrentlypending.
4. Deputy Commissioner of Income Tax – VI, Kanpur (“DCIT”) passed an assessment order datedFebruary28,2011(“DCITOrder”)undersection143(3)oftheIncomeTaxAct,1961forassessmentyear2009-10,interalia,disallowingdepreciationclaimedongoodwillandaddingsubsidiesreceived,expenses incurred on advertisements/publicity and certain preliminary pre-operational expensesincurredtowardsincorporatingourCompany,tothetotalincome.AggrievedbytheDCITOrder,ourCompanyfiledanappealtotheCommissionerofIncomeTax(Appeals)II,Kanpur(“CIT(A)”)whichwaspartlyallowedbyanorderdatedJanuary24,2012infavourofourCompanyexceptinrelationtotheadditionofadvertisement/publicityexpensestothetotalincome.Thereafter,DCITfiledanappealagainst the order of the CIT(A) before the Income Tax Appellate Tribunal, Lucknow which wasdismissedbyanorderdatedOctober30,2015 (“Impugnedorder”).Against the ImpugnedOrder,PrincipalCommissionerofIncomeTax–I,Kanpurhasfiledincometaxappealno.266of2016beforetheHighCourtofJudicatureatAllahabad.Thecumulativetaxeffectofthisproceedingis₹11.11crore.Thematteriscurrentlypending.MaterialoutstandingregulatorylitigationinvolvingourCompany:AgainstourCompany:
1. TheCompetitionCommissionofIndia(“CCI”)byitsorderdatedJune20,2012incaseno.29/2010heldourCompanyandcertainothercementmanufacturersguiltyof,inter-alia,collusivepricefixing,andlimiting and controlling the production and supply of cement in themarket, thereby contraveningsection3(3)(a)andsection3(3)(b)oftheCompetitionAct,2002(the“CompetitionAct”).TheCCIalsodirected our Company to cease and desist from indulging in any activity relating to agreement,understandingorarrangementonprices,productionandsupplyofcementinthemarket.Furthermore,theaforesaidorderoftheCCIimposedapenaltyof₹128.54croreonourCompanyundersection27(b)of theCompetitionAct.Aggrievedby the aforesaidorder, ourCompany filed appeal no. 112/2012before theCompetitionAppellateTribunal (“COMPAT”) against theaforesaidorderdated June20,
53
2012oftheCCI.Subsequently,theCOMPATbyitsorderdatedDecember11,2015allowedtheappealandsetasidetheaforesaidorderoftheCCIandremandedbackthemattertotheCCIwithadirectiontopassafreshorder.Subsequently,theCCIbyitsorderdatedAugust31,2016(“ImpugnedOrder”)passedasimilarorderaswaspassedon June20,2012,directingourCompany to ceaseanddesist from indulging inanyactivity relating to agreement, understanding or arrangement on prices, production and supply ofcementinthemarket.TheImpugnedOrderalsoimposedapenaltyof₹128.54croreonourCompanyundersection27(b)oftheCompetitionAct.AggrievedbytheImpugnedOrder,ourCompanyfiledappealno.55/2016(“AppealNo.1”)beforetheCOMPAT, seeking setting aside of the Impugned Order and also filed an interlocutory applicationbearingreferenceno.149/2016tostaytheImpugnedOrderanddirectthatnocoerciveactionbetakenforrealizationofpenaltyamounttillthefinaladjudicationoftheAppealNo.1.TheCOMPATbyitsorderdatedNovember21,2016stayedtheImpugnedOrdersubjecttodepositof10%ofthepenaltyamount.Subsequently, theCOMPATby its orderdatedFebruary16, 2017 in I.A.No. 176/2016 (“ModifiedOrder”)reducedtheaforesaidpenaltyto₹65.56crore,andaccordingly,modifiedthead-interimorderdatedNovember21,2016.OurCompanyhasdepositedtherequisiteamountintermsoftheModifiedOrder.Inparallel,theCCIinitsorderdatedAugust31,2016inRTPENo.52/2006heldourCompany,ShreeCementLimitedandcertainothercementmanufacturersguiltyof,inter-alia,collusivepricefixing,andlimitingandcontrollingtheproductionandsupplyinthemarket,therebycontraveningsection3(3)(a)andsection3(3)(b)of theCompetitionAct.However, theCCIdidnot findappropriate to issueanyremediesagainstourCompanyastheCCIbyitsseparateorderincaseno.29/2010hadimposedapenaltyof₹128.54croreanddirectedourCompanytoceaseanddesistfromindulginginanyactivityrelatingtoagreement,understandingorarrangementonprices,productionorsupplyofcementinthemarket.Aggrievedbythis,ourCompanyfiledappealno.72/2016(“AppealNo.2”)seekingtosetasidetheorderdatedAugust31,2016inRTPENo.52/2006.ThenotificationdatedMay26,2017issuedbytheMinistryofFinancereplacedtheCOMPATwiththeNationalCompanyLawAppellateTribunal(“NCLAT”)witheffect fromMay26,2017.SubsequentlyNCLAT,NewDelhiby its commonorderdated July25,2018 (“NCLATOrder”)dismissedboth theappealsi.e.AppealNo.1andAppealNo.2andreaffirmedthequantumofpenalty.Aggrievedbythesaidorder,ourCompanyfiledanappealdatedSeptember18,2018beforetheSupremeCourtofIndia(“Supreme Court”) under section 53T of the Competition Act to set aside the NCLAT Order. TheSupremeCourtbyanorderdatedOctober5,2018admittedtheappealandstayedtheoperationoftheNCLATOrder taking into consideration ad-interim order datedNovember 21, 2016 readwith theModifiedOrder,ondepositoftwofixeddepositreceiptsof₹6.56croreand₹0.52crore,eachvaliduptoApril08,2019.Thematteriscurrentlypending.
2. TheerstwhileMonopoliesandRestrictiveTradePracticesCommission(“MRTPCommission”)byitsletter dated May 25, 2006 directed Director General of Investigation & Registration (“DGIR”) toconductapreliminaryinvestigationintotherestrictivetradepracticesallegedlyadoptedbycementmanufacturersbyformingacartel.Thisinvestigationwasorderedonthebasisofcertainpressreports.TheDGIRsubmitted itspreliminaryreportdatedJuly4,2007statingthatourCompanyalongwithcertainother cementmanufacturerswere engaged in restrictive tradepracticesby fixingpricesofcementinconjunctionwitheachother,therebycontraveningsection33(1)(d)readwithsection2(a)oftheMonopoliesandRestrictiveTradePracticesAct,1969(“MRTPAct”)andrequestedtheMRTPCommissiontopasssuchordersasitmaydeemfitandappropriateundersection37(1)oftheMRTPAct.TheMRTPCommissionorderedanenquiryandissuedanoticeofenquirydatedAugust6,2007inRTPE No. 15/2007 to our Company for filing a reply to the notice of enquiry. Subsequently, ourCompany has filed its responses to the notice of enquiry. Subsequently, in view of the matterspertainingtocartelizationbycementcompaniespendingbeforetheSupremeCourt,theCompetitionAppellateTribunalvideitsorderdatedJuly5,2016adjournedthematterwithlibertytobothoreitherparty to fileanapplication for listingof thismatterafter theaforesaidmatterspendingbefore theSupremeCourtaredisposedoff.Thematteriscurrentlypending.
54
3. The Director, Supplies & Disposal, Haryana (“Informant”) filed informationwith the Competition
Commissionof India (“CCI”)under section19(1)of theCompetitionAct,2002 (“CompetitionAct”)againstourCompanyandcertainothercementmanufacturers(“OppositeParties”),alleging,inter-alia,thattheOppositePartiescolludedwitheachotherandattemptedtorigthebidinanoticeinvitingtenderforsupplyofcementissuedbytheInformant,therebycontraveningsection3oftheCompetitionAct.Subsequently,theCCIbyitsorderdatedJanuary2,2014passedanorderundersection26(1)ofthe Competition Act directing the Director General to initiate an investigation into the matter.Thereafter,referencecaseno.05/2013wasregisteredandtheCCI,byitsorderdatedJanuary19,2017(“ImpugnedOrder”),heldtheOppositePartiesincontraventionofsection3(1)readwithsection3(3)of theCompetitionActanddirected theOppositeParties to ceaseanddesist from indulging in theacts/conductincontraventionoftheCompetitionAct.TheImpugnedOrderalsoimposedapenaltyof₹ 9.26 crore on our Company under section 27(b) of the Competition Act. Aggrieved by this, ourCompanyfiledappealno.05/2017(“Appeal”)beforetheCompetitionAppellateTribunal(“COMPAT”)seeking, inter-alia, setting aside of the Impugned Order. Alongside, our Company also filedinterlocutoryapplicationno.20/2017beforetheCOMPATseeking,inter-alia,stayingtheexecutionoftheImpugnedOrderandadirectionthatnocoerciveactionbetakenforrealizationofpenaltyamounttill the finaladjudicationof theAppeal.The ImpugnedOrderwassubsequentlystayedbyanorderdatedApril3,2017passedbytheCOMPAT.ThenotificationdatedMay26,2017issuedbytheMinistryofFinancereplacedtheCOMPATwiththeNationalCompanyLawAppellateTribunal(“NCLAT”)witheffectfromMay26,2017.ThematteriscurrentlypendingbeforeNCLAT.
4. TheerstwhileMonopoliesandRestrictiveTradePracticesCommissioninRTPENo.99/1990videitsorderdatedDecember20,2017(“ImpugnedOrder”)heldourCompanyandothersguiltyofindulgencein restrictive trade practices and collusive price fixing of cement, thereby contravening section33(1)(d)oftheMonopoliesandRestrictiveTradePracticeAct,1969,andpassedaceaseanddesistorder and a direction to our Company to not to indulge in any arrangement directly or indirectlythrough the instrumentality of CementManufacture Association in relation to fixing the prices ofcementinconcert.AggrievedbytheaforesaidImpugnedOrder,ourCompanyfiledanappealbearingreferenceno.1092/2008before theSupremeCourtof India (“SupremeCourt”), seeking, inter-alia,settingasideoftheImpugnedOrder.Thismatterhasbeentaggedwithcivilappealno.686/2008whichispendingbeforetheSupremeCourt.TheSupremeCourtvideitsorderdatedFebruary8,2012grantedastay.Thematteriscurrentlypending.
THEREHASBEENNOSUCHEVENTATTHETIMEOFISSUEWHICHMAYAFFECTTHEISSUEORTHEINVESTOR’SDECISIONTOINVEST/CONTINUETOINVESTINTHEDEBTSECURITIES.Detailsofanyinquiry, inspectionsorinvestigationsinitiatedorconductedundertheCompaniesAct,2013oranypreviouscompanylawinthelastthreeyearsimmediatelyprecedingtheyearofissue of private placement offer cum application letter in the case of company and all of itssubsidiaries, and if therewereanyprosecutions filed (whetherpendingornot), fines imposed,compounding of offences in the last three years immediately preceding the year of the privateplacementoffercumapplicationletterandifso,section-wisedetailsthereofforthecompanyandallofitssubsidiaries;NILFinancialorothermaterialinterestofthePromoters,DirectorsorKeyManagerialPersonnelintheoffer:NILDetailsofany litigationor legalaction-pendingor takenbyanyMinistryorDepartmentof theGovernmentorastatutoryauthorityagainstanypromoteroftheIssuerduringthelastthreeyearsandanydirectionissuedbysuchMinistryorDepartmentorstatutoryauthorityuponconclusionofsuchlitigationorlegalaction:-Except as stated below, there are no litigation or legal action pending or taken by any Ministry orDepartmentoftheGovernmentorastatutoryauthorityagainstourPromotersduringthelastthreeyearsimmediatelyprecedingtheyearofcirculationofthisInformationMemorandumandnodirectionhasbeen
55
issuedbyanysuchMinistryofDepartmentorstatutoryauthorityuponconclusionofsuchlitigationorlegalaction.OurDirectors, Yadupati Singhania and SushilaDevi Singhania and certain other persons (“Applicant”),forming part of the promoter group of Jaykay Enterprises Limited, filed a suo-moto application datedJanuary 16, 2017 with the Securities and Exchange Board of India (“SEBI”) for settling the delayedcompliancewhichoccurredingivingopenofferunderregulation3(1)oftheSEBI(SubstantialAcquisitionofSharesandTakeovers)Regulations,2011,whileacquiringcertainequitysharesofJaykayEnterprisesLimited.Pursuanttopaymentofanamountof₹0.18croreascommunicatedtotheApplicantbySEBIvideitse-maildatedOctober11,2007fortheaforesaiddefault,theSEBIvideitsorderdatedNovember9,2017bearingreferenceno.SO/EFD-2/SD/174/NOV/2017recordedthattheproceedingsthatmaybeinitiatedfortheaforesaiddefaultaresettledandnoenforcementactionwouldbeinitiatedfortheaforesaiddefault.Detailsofactsofmaterialfraudscommittedagainstthecompanyinthelastthreeyears,ifany,andifso,theactiontakenbythecompany:NIL(L)THENAMESOFTHEDEBENTURETRUSTEE(S)SHALLBEMENTIONEDWITHSTATEMENTTOTHEEFFECT THAT DEBENTURE TRUSTEE(S) HAS GIVEN HIS CONSENT TO THE ISSUER FOR HISAPPOINTMENT UNDER REGULATION 4 (4) AND IN ALL THE SUBSEQUENT PERIODICALCOMMUNICATIONSSENTTOTHEHOLDERSOFDEBTSECURITIES.In accordance with the provisions of (i) SEBI Debt Regulations issued vide circular no. LAD-NRO/GN/2008/13/127878datedJune06,2008,asamended,(ii)SecuritiesandExchangeBoardofIndia(Issue and Listing of Debt Securities) (Amendment) Regulations, 2012 issued vide circular no. LAD-NRO/GN/2012-13/19/5392datedOctober12,2012,asamended,(iii)Section71(5)oftheCompaniesAct,2013and(iv)SecuritiesandExchangeBoardofIndia(DebentureTrustees)Regulations,1993,theIssuerhasappointedIDBITrusteeshipServicesLimitedtoactasTrustees(“Trustees”)forandonbehalfoftheholder(s)oftheDebentures.TheaddressandcontactdetailsoftheTrusteesareasunder:Name: IDBITrusteeshipServicesLimited
Address: AsianBldg.,GroundFloor,17,R.KamaniMarg,BallardEstate,Mumbai400001
TeleNo: TelNo.:+912240807001FaxNo: Fax:+912266311776EmailId: [email protected]/[email protected]: www.idbitrustee.com
TheCompanyherebyundertakes that aDebentureTrustDeed shall be executedby it in favourof theDebentureTrusteewithinthreemonthsofclosureoftheissueoroffer.TheDebentureTrustDeedshallcontainsuchclausesasmaybeprescribedunderCompaniesAct,2013andFormno.SH.12asperRule18(5)ofCompanies(ShareCapitalandDebenture)Rule,2014underitandthosementionedinScheduleIVoftheSecuritiesandExchangeBoardofIndia(DebentureTrustees)Regulations,1993.TheDebentureHolder(s) shall,without furtheractordeed,bedeemed tohave irrevocablygiven theirconsenttotheDebentureTrusteeoranyoftheiragentsorauthorizedofficialstodoallsuchacts,deeds,matters and things in respect of or relating to the Debentures as the Debenture Trusteemay in theirabsolutediscretiondeemnecessaryorrequiretobedoneintheinterestoftheholder(s)oftheDebentures.AnypaymentmadebytheCompanytotheDebentureTrusteeonbehalfofthedebentureholder(s)shalldischarge theCompanypro tanto to theDebentureHolder(s).TheDebentureTrustee shallprotect theinterestoftheDebentureHoldersintheeventofdefaultbytheCompanyinregardtotimelypaymentofinterest and repayment of principal and shall take necessary action at the cost of the Company. NoDebentureHoldershallbeentitledtoproceeddirectlyagainsttheCompanyunlesstheDebentureTrustee,havingbecomesoboundtoproceed,failtodoso.IntheeventofCompanydefaultinginpaymentofinterest
56
ondebenturesorredemptionthereof,anydistributionofdividendbytheCompanyshallrequireapprovaloftheDebentureTrusteeTheDebentureTrusteeshallperformitsdutiesandobligationsandexerciseitsrightsanddiscretions,inkeepingwith the trust reposed in theDebentureTrusteeby theholder(s) of theDebentures and shallfurtherconductitself,andcomplywiththeprovisionsofallApplicableLaws,providedthat,theprovisionsofSection20oftheIndianTrustsAct,1882,shallnotbeapplicabletotheDebentureTrustee.TheDebentureTrusteeshallcarryoutitsdutiesandperformitsfunctionsasrequiredtodischargeitsobligationsunderthe terms of CompaniesAct, 2013, SEBIDebt Regulations, the Securities and ExchangeBoard of India(Debenture Trustees) Regulations, 1993, the Debenture Trusteeship Agreement, security documents,DisclosureDocumentandallotherrelatedtransactiondocuments,withduecare,diligenceandloyalty. TheDebentureTrusteeshallbevestedwiththerequisitepowersforprotectingtheinterestofholder(s)oftheDebentures.TheDebentureTrusteeshallensuredisclosureofallmaterialeventsonanon-goingbasisandshallsupervisetheimplementationoftheconditionsregardingcreationofsecurityforthedebentures.(M)THEDETAILEDRATINGRATIONALE(S)ADOPTED(NOTOLDERTHANONEYEARONTHEDATEOFOPENINGOFTHEISSUE)/CREDITRATINGLETTERISSUED(NOTOLDERTHANONEMONTHONTHEDATEOFOPENINGOFTHEISSUE)BYTHERATINGAGENCIESSHALLBEDISCLOSED.CAREAA;Stable(DoubleA;Outlook:Stable)byCARERatingsLimited.Otherthanthecreditratingsmentionedhereinabove,Issuerhasnotsoughtanyothercreditratingfromanyothercreditratingagency(ies) fortheDebenturesofferedforsubscriptionunderthetermsof thisDisclosureDocument.Theaboveratingsarenotarecommendationtobuy,sellorholdsecuritiesandinvestorsshouldtaketheirowndecision.Theratingsmaybesubjecttorevisionorwithdrawalatanytimebytheassigningratingagenciesandeachratingshouldbeevaluatedindependentlyofanyotherrating.Theratingsobtainedaresubject to revision at any point of time in the future. The rating agencies have the right to suspend,withdrawtheratingatanytimeonthebasisofnewinformationetc.ThecopiesofRatingLetter(s)andRatingrationale(s)issuedbyCARERatingsLimitedvidealetterdatedJuly3,2020andJuly13,2020areenclosedinthisDisclosureDocumentunderthereferenceofANNEXURE2.
(N) IF THE SECURITY IS BACKED BY A GUARANTEE OR LETTER OF COMFORT OR ANY OTHERDOCUMENT/LETTERWITHSIMILARINTENT,ACOPYOFTHESAMESHALLBEDISCLOSED.INCASESUCH DOCUMENT DOES NOT CONTAIN DETAILED PAYMENT STRUCTURE (PROCEDURE OFINVOCATION OF GUARANTEE AND RECEIPT OF PAYMENT BY THE INVESTOR ALONG WITHTIMELINES)NotApplicable(O)COPYOFCONSENTLETTERFROMTHEDEBENTURETRUSTEESHALLBEDISCLOSEDThecopyofletterdatedJune30,2020fromIDBITrusteeshipServicesLimitedconveyingtheirconsenttoactasTrusteeforthecurrentissueofDebenturesisenclosedinANNEXURE3appearinginthisDisclosureDocument.(P)NAMESOFALLTHERECOGNISEDSTOCKEXCHANGESWHERETHEDEBTSECURITIESAREPROPOSEDTOBELISTEDCLEARLYINDICATINGTHEDESIGNATEDSTOCKEXCHANGE.
TheDebenturesareproposedtobe listedontheWholesaleDebtMarket(“WDM”)Segmentof theBSELimited.TheCompanyshallobtainanin-principleapprovalfromBSEforlistingofsaidDebenturesonitsWDMSegment.InpursuanceofSEBIDebtRegulations,theIssuershallmakelistingapplicationtoBSEforlistingofNCDswithin15DaysfromtheDeemedDateofAllotmentoftheNCD’s.
57
Incaseofdelayin listingofthedebtsecuritiesbeyond20daysfromtheDeemedDateofAllotment,theIssuerwillpayadditionalinterestofatleast1%p.a.overthecouponratefromtheexpiryof30daysfromtheDeemedDateofAllotmenttillduelistingofsuchNCDs.InconnectionwithlistingofDebentureswithBSE,theCompanyherebyundertakesthat:
(a) It shall comply with conditions of listing of Debentures as may be specified in the Listing
AgreementwithBSE.
(b) RatingsobtainedbytheCompanyshallbeperiodicallyreviewedbythecreditratingagenciesandanyrevisionintheratingshallbepromptlydisclosedbytheCompanytoBSE.
(c) Anychangeinratingshallbepromptlydisseminatedtotheholder(s)oftheDebenturesinsuchmannerasBSEmaydeterminefromtimetotime.
(d) TheCompany,theDebentureTrusteeandBSEshalldisseminateall informationandreportsonDebentures including compliance reports filed by the Company and the Debenture TrusteeregardingtheDebenturestotheholder(s)ofDebenturesandthegeneralpublicbyplacingthemontheirwebsites.
(e) Debenture Trustee shall disclose the information to the holder(s) of the Debentures and thegeneralpublicbyissuingapressreleaseinanyofthefollowingevents:a. defaultbytheCompanytopayinterestonDebenturesorredemptionamount;b. revisionofratingassignedtotheDebentures;c. failuretocreatechargeontheassets.
(f) Theinformationreferredtoinpara(e)aboveshallalsobeplacedonthewebsitesoftheDebenture
Trustee,CompanyandBSE.
(g) TheIssuershall,tilltheredemptionofDebentures,submititslatestaudited/limitedreviewhalfyearlyconsolidated(whereveravailable)andstandalonefinancialinformationsuchasStatementofProfit&Loss,BalanceSheetandCashFlowStatementandauditorqualifications,ifany,totheDebenture Trustee within the timelines as mentioned in the SEBI (Listing Obligations andDisclosureRequirements)Regulations,2015asamendedfromtimetotime.Besides,theIssuershallwithin180daysfromtheendofthefinancialyear,submitacopyofthelatestannualreportto the Debenture Trustee and the Debenture Trustee shall be obliged to share the details sosubmittedwiththeDebentureholder(s)withinsevenworkingdaysoftheirspecificrequest.
(Q)OTHERDETAILS:DRRCREATION–TheCompanyshallcomplywiththerequirementswithregardtoDebentureRedemptionReserve(DRR)inaccordancewiththeCompanies(ShareCapitalandDebenturesRules),2014,asamendedfromtimetotimetotheextentapplicabletotheCompany.ii.NameandaddressoftheValuerwhoperformedvaluationofthesecurityoffered:
Niliii. ISSUE/INSTRUMENTSPECIFICREGULATIONS-RELEVANTDETAILS(COMPANIESACT, RBI GUIDELINES,ETC).
1. SecuritiesandExchangeBoardofIndia(IssueandListingofDebtSecurities)Regulations,2008,asamended.
2. SecuritiesandExchangeBoardofIndia(ListingObligationsandDisclosureRequirements)Regulations2015,asamended.
3. TheCompaniesAct,2013totheextentapplicableandnotified.
58
4. TheCompaniesAct,1956provisionstotheextentnotreplacedbynotificationsw.r.tActof2013(18of2013),asamended.
5. Companies(ShareCapitalandDebentures)Rules,2014,asamended.6. IncomeTaxAct,1961,asamended.
59
DISCLOSURESPERTAININGTOWILFULDEFAULTIncaseoflistingofdebtsecuritiesmadeonprivateplacement,thefollowingdisclosuresarerequiredtobemadeunderSEBIDebtListingRegulations:NameoftheBankdeclaringtheentityasaWilfulDefaulter:NILTheyearinwhichtheentityisdeclaredasaWilfulDefaulter:NILOutstandingamountwhentheentityisdeclaredasaWilfulDefaulter:NILNameoftheentitydeclaredasaWilfulDefaulter:NILStepstaken,ifany,fortheremovalfromthelistofwilfuldefaulters:NILOtherdisclosures,asdeemedfitbytheIssuerinordertoenableinvestorstotakeinformeddecisions:NILAnyotherdisclosureasspecifiedbytheBoard:NIL
60
LEGAL PROCEEDINGS Our Company and its Subsidiaries are involved in various legal proceedings from time to time, mostly arising in the ordinary course of business. These legal proceedings are initiated by us and also by suppliers, regulators, and other parties. These legal proceedings are primarily in the nature of tax disputes, labour disputes, writ petitions, criminal complaints, civil suits and petitions pending before various authorities. This section discloses outstanding legal proceedings considered material in accordance with our Company’s “Policy for Determination of Materiality of Events/ Information” framed in accordance with Regulation 30 of the SEBI Listing Regulations (“Policy of Materiality”). Additionally, solely for the purpose of the Issue, our Company has also disclosed in this section, (i) all outstanding criminal proceedings involving the Company, Subsidiaries and Directors; and (ii) all other outstanding litigation involving our Company and its Subsidiaries, where the amount involved in such proceedings exceeds ₹ 5.00 crores. Further, other than as disclosed in this section, (i) there are no litigation or legal action pending or taken by any Ministry or Department of the Government or a statutory authority against any of our Promoters during the last three years immediately preceding the year of circulation of this Information Memorandum and no directions have been issued by such Ministry or Department or statutory authority upon conclusion of such litigation or legal action; (ii) there are no inquiries, inspections or investigations initiated or conducted under the Companies Act, 2013 or the Companies Act, 1956 in the last three years immediately preceding the year of circulation of this Information Memorandum involving our Company or any of its Subsidiaries nor are there any prosecutions filed (whether pending or not), fines imposed, compounding of offences in the last three years immediately preceding the year of this Information Memorandum involving our Company or its Subsidiaries; (iii) there are no defaults in repayment of (a) statutory dues; (b) debentures and interest thereon; (c) deposits and interests thereon and (d) any loan obtained from any bank or financial institution and interest thereon, as of the date of this Information Memorandum; (iv) there are no material frauds committed against us in the last three years; (v) there are no defaults in annual filing of our Company under the Companies Act, 2013 and the rules made thereunder; and (vi) there are no significant and material orders passed by the regulators, courts and tribunals impacting the going concern status of our Company and its future operations. It is clarified that for the purposes of the above, pre-litigation notices received by our Company, Subsidiaries, Directors or our Promoters shall, unless otherwise decided by our Board, not be considered as litigation until such time that our Company or any of its Subsidiaries or Directors or Promoters, as the case may be, is impleaded as a defendant in litigation proceedings before any judicial forum. Summaries of certain legal proceedings and other proceedings for the purposes of this section are set forth below:
I. Litigation involving our Company and its Subsidiaries A. Outstanding criminal proceedings involving our Company and/or its Subsidiaries Against our Company
1. N. Navaneeth Mohan, Senior Assistant Director of Factories, Belgaum Division – 2, Belgaum filed a criminal
complaint (C.C. No. 379/15) before Judicial Magistrate First Class, Mudhol (“JMFC”) under section 200 of the Code of Criminal Procedure, 1973 against Kailash Nath Khandewal and Antriksha Kumar Jain (together, the “Company Personnel”) for alleged violation of Rule 84 of the Karnataka Factories Rules, 1969 punishable under section 92 of the Factories Act, 1948 in relation to an accident at J.K. Cement Works, Muddapur (“Factory”) that led to death of a worker. In the meanwhile, the Company Personnel filed private complaint no. 27/2015 before JMFC against Abdul Rehman Khan, the contractor at the Factory (“Contractor”) under section 101 of the Factories Act, 1948. The JMFC took cognizance of the matter and the private complaint was converted into a criminal case bearing no. 957/15. The Contractor pleaded guilty and was subsequently convicted by the JMFC. Thereafter, Antriksha Kumar Jain filed a discharge application under section 101 of the Factories Act, 1948 (“Discharge Application”). The JMFC allowed the Discharge Application by an order dated May 28, 2016 and also re-issued the summons against Kailash Nath Khandelwal. Aggrieved by this, Kailash Nath Khandelwal filed criminal petition no. 100847/2016 before the High Court of Karnataka (“High Court”) under section 482 of the Code of Criminal Procedure, 1973 against
61
the proceeding before the JMFC, which was subsequently stayed by the High Court. The matter is currently pending in relation to Kailash Nath Khandewal.
2. The Labour Enforcement Officer, Ahmedabad (“Complainant”) filed a criminal complaint bearing reference number 4449/2006 (“Complaint”) dated March 23, 2006 against our Company represented by our Director, Yadupati Singhania and three others, namely Rahul Saxena, Anil Gupta and Ramesh Prasad (collectively, the “Accused”) before the Metropolitan Magistrate VI, Ahmedabad allegedly for violation of provisions of the Payment of Gratuity Act, 1972 (“Payment of Gratuity Act”) and its rules for, inter-alia, non-display of notice specifying the name of the officer with designation authorized to receive notice under the Payment of Gratuity Act and rules, and failure to pay interest on delayed payment of gratuity to an employee. Our Company filed special criminal application no. 2733/2013 (“Application”) before the High Court of Gujarat (“High Court”), seeking the High Court to quash the aforesaid Complaint and stay the proceedings of the Complaint till the final disposal of the Application. The High Court by its order dated September 12, 2013 granted ad interim relief by staying the proceedings in the Complaint. The matter is currently pending.
By our Company 1. Our Company filed a complaint against Anil Patel and others under sections 23, 24, 34, 44, 52, 406, 415, 418,
420, 425, 463, 467, 468 and 471 of the Indian Penal Code, 1860 (“Complaint”) before Additional Chief Judicial Magistrate, Merta (“ACJM”) for supplying a poor-quality crusher machine. The Complaint was dismissed by an order dated April 15, 2017 passed by the ACJM. Aggrieved by this, our Company filed a revision petition before the Session Judge, Merta seeking quashing of the order passed by the ACJM. The matter is currently pending.
2. Our Company has filed 87cases under section 138 of the Negotiable Instruments Act, 1881 against various parties and the cumulative amount involved in these cases is approximately ₹ 7.73crores.
Against our Subsidiaries As on the date of this Information Memorandum, there are no outstanding criminal proceedings initiated against our Subsidiaries. By our Subsidiaries As on the date of this Information Memorandum, there are no outstanding criminal proceedings initiated by our Subsidiaries. B. Material outstanding civil litigation involving our Company and/or its Subsidiaries Against our Company 1. Bhanwar Singh and others (“Petitioners”) filed a writ petition bearing reference number 6591/2011 in the
nature of public interest litigation against our Company and others (“Respondents”) before the High Court of Rajasthan (“High Court”) praying for, inter-alia, a ban on mining activities within a radius of 10 kilometers from the Chittorgarh Fort in Rajasthan. The High Court by its order dated May 25, 2012 (“Impugned Order”) held, inter-alia, that no mining and blasting activities could take place within 10 kilometers from the Chittorgarh Fort Wall, and cancelled all mining leases within the aforesaid radius. Aggrieved by the Impugned Order, our Company has filed a special leave petition bearing reference number 23551/2012 before the Supreme Court of India (“Supreme Court”) against the Impugned Order seeking, inter-alia, to set aside the Impugned Order and to staying the operation and implementation of the Impugned Order as interim relief. The Supreme Court, subsequently stayed the operation of the Impugned Order and by its order dated July 29, 2013, permitted mining operations to be carried out beyond 2 kilometers from the Chittorgarh Fort Wall. The matter is currently pending.
By our Company
62
1. Our Company filed writ petition no. 4147/2007 (“Original Petition”) before the High Court of Judicature at Rajasthan (“High Court”) challenging the constitutional validity of the Rajasthan Tax on Entry of Goods into Local Areas Act, 1999 and the rules made thereunder (together, the “Act”). The Original Petition was dismissed by the High Court by an order dated December 18, 2014 (“Impugned Order”) as the subject matter of the Original Petition was sub-judice before the Supreme Court of India (“Supreme Court”). Aggrieved by the Impugned Order, our Company filed special leave petition no. 376 of 2015 (“SLP”) before the Supreme Court. The Supreme Court took all matters relating to constitutional validity of entry tax arising from various high courts together for deciding at once in civil appeal no. 3453/2002 (“Appeal”) and consequently, the SLP was tagged with the Appeal. Thereafter, by a judgment dated November 11, 2016 (“Appeal Order”) passed in the Appeal, the constitutional validity of the entry tax was upheld by the Supreme Court. As a result thereof, the SLP was dismissed by the Supreme Court by its order dated March 22, 2017 with leave granted to our Company to approach the High Court again for adjudication of certain pending issues not decided by the Appeal Order in light of the principles enunciated therein. Subsequently, our Company filed two writ petitions (7093/2017 and 8021/2017) before the High Court against the State of Rajasthan and others for adjudication of the aforesaid pending issues and prayed for, inter alia, declaration of the Act as being discriminatory and ultra vires of the Constitution of India, 1950, quashing of demand notices issued under the Act and refund of the entry tax and interest thereon paid by the Company. Our Company has already paid a cumulative amount of ₹ 80.26 crore towards entry tax and interest thereon and the outstanding liability on the Company is ₹ 48.21 crore (“Outstanding Amount”). The High Court has granted interim protection to our Company against any coercive attempts at recovering the Outstanding Amount and the matter is currently pending.
2. Our Company had entered into a Power Delivery Agreement with VS Lignite Power Private Limited
(“VSLP”) dated March 7, 2007 (“Agreement”). VSLP subsequently failed to meet its contractual obligation to supply minimum guaranteed power under the Agreement. Aggrieved by this, our Company referred the matter to arbitration. Thereafter, an arbitral award dated June 14, 2012 (“MGP Award”) was passed whereby, VSPL was, inter alia, directed to supply power to our Company at ₹ 2.85 per Kwh for the entire period of the Agreement and to compensate for the amount spent by our Company on sourcing deficient electricity from Rajasthan Rajya Vidyut Vitran Nigam Limited (“RRVVNL”) due to short supply of minimum guaranteed power under the Agreement. VSPL then challenged the MGP award under section 34 of the Arbitration and Conciliation Act, 1996 (“Act”) before the Additional District Judge, Jaipur Metropolitan, who by its order March 16, 2013 refused to set aside the MGP award. VSPL, thereafter filed an application under section 37 of the Act before the High Court of Rajasthan in S.B Civil Misc. Appeal No. 1473/2013 which was dismissed vide an order January 12, 2017 (“Impugned Order”). Against the Impugned Order, VSPL filed a special leave petition before the Supreme Court of India which was dismissed by an order dated November 6, 2017. Since VSPL, failed to comply with the MGP Award, our Company filed an execution petition which is currently pending in the Commercial Court at Jaipur.
In parallel, VSPL by its letter dated February 28, 2015 to our Company expressed its inability to supply power to our Company with effect from March 1, 2015 due to an alleged occurrence of a force majeure event in terms of the Agreement and subsequently terminated the Agreement. Aggrieved by this, our Company referred the matter to arbitration. Thereafter, an interim award dated January 11, 2017 (“Interim Award”) passed by the arbitral tribunal so constituted, rejected the contention of VSPL regarding the occurrence of a force majeure event. VSPL challenged the Interim Award under section 34 of the Act which was eventually rejected by an order dated July 10, 2017 passed by the Additional District Judge, Jaipur Metropolitan, Jaipur. Thereafter, an arbitral award dated October 29, 2017 (“Force Majeure Award”) was passed whereby, VSPL was directed to restore supply of power to our Company and to compensate for the amount spent by our Company on sourcing electricity from RRVVNL due to non-supply of power by VSPL. Against the Force Majeure Award, VSPL preferred an application under section 34 of the Act before the District and Session Judge, Jaipur Metropolitan (“Application”). Our Company has filed its objections to the Application. The matter is currently pending. Further, our Company by its letters dated November 19, 2017 has raised demand of ₹ 116.14 crore and ₹ 22.78 crore from VSPL towards short supply of minimum guaranteed power from April 1, 2014 to February 28, 2015 and non-supply of power from March 1, 2015 to October 31, 2017.
3. Our Company filed a claim for refund of excess excise duty of ₹ 40.66 crores paid by our Company for the
period between September 1984 and October 1991 (“Refund Amount”) before the Assistant Commissioner,
63
Central Excise, Ajmer (“Assistant Commissioner”). The Assistant Commissioner by its order dated May 27, 2003 rejected our claim for the Refund Amount. Aggrieved by this, our Company filed an appeal before the Commissioner (Appeals) Central Excise & Customs, Jaipur (“Commissioner Appeals”) against the aforesaid order passed by the Assistant Commissioner. The Commissioner Appeals by its order April 1, 2004 upheld the order passed by the Assistant Commissioner except to the extent of allowing refund of ₹ 2.15 crores paid by our Company for the period between September 1984 to June 1985 (“Repayment Amount”). Aggrieved by the order passed by Commissioner Appeals, our Company filed an appeal before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (“CESTAT”). The CESTAT by its order April 26, 2005 dismissed our appeal and also directed the Repayment Amount to be deposited in the Consumer Welfare Fund. Aggrieved by this, our Company filed central excise appeal no. 49 of 2007 before the High Court of Rajasthan claiming the Refund Amount along with interest at the rate of 15% per annum from the respective dates of payment of such excess duty, till the date of refund thereof to our Company. The matter is currently pending.
4. Our Company filed civil writ petition no. 2790/2013 (“First Petition”) against Ajmer Vidyut Vitaran Nigam Limited and others (“Respondents”) before the High Court of Rajasthan (“High Court”), seeking setting-aside, inter-alia, (a) the demand of electricity duty, water cess and urban cess raised by the Respondents on the units of electricity supplied by a captive generating plant at Bikaner established by V.S. Lignite Power Private Limited (“Captive Generating Plant”); and (b) a declaration that no electricity duty, water cess or urban cess is leviable on the electricity supplied by Captive Generating Plant to our Company. Our Company sought the aforesaid relief on the grounds that our Company is purchasing power from a captive power plant established by V.S. Lignite Power Private Limited and being its user-member, our Company is exempt from payment of electricity duty as per the notification dated March 8, 2006 (“Notification”) which remitted the electricity duty payable on the electricity consumed by a person generating energy for his use or consumption. The High Court by its order dated March 15, 2013 directed our Company to deposit the amount of bill except the amount of electricity duty and water conservation cess subject to the undertaking that in the event of dismissal of the First Petition, our Company would deposit the said amount within a period of fifteen days from the date of such dismissal. Meanwhile, our Company also filed civil writ petition no. 3547/2014 (“Second Petition”) against the Respondents before the High Court, seeking, inter-alia, quashing of demand/recovery of electricity duty, water conservation cess, urban cess, and cross subsidy surcharge amounting to ₹ 3.33 crore and ₹ 9.10 crore on the units of power supplied to Gotan and Nimbahera units of our Company, respectively, by the Captive Generating Plant, on similar grounds raised in the First Petition. The High Court by its order dated May 9, 2014 restrained the Respondents from taking any coercive action against our Company for not depositing the bill under the head of electricity duty, urban cess, water conservation cess and cross subsidy. Both these matters are currently pending.
Against our Subsidiaries As on the date of this Information Memorandum, there are no material outstanding civil litigations initiated against our Subsidiaries. By our Subsidiaries As on the date of this Information Memorandum, there are no material outstanding civil litigations initiated by our Subsidiaries.
II. Litigation involving our Directors
Except as stated below and as stated in this Information Memorandum and as set out below, there are no other outstanding criminal proceedings involving our Directors.
1. The Directorate of Revenue Intelligence, Lucknow (“DRI”) issued a show cause notice dated October 1,
2008 to PGY Associates, our Directors Sushila Singhania and Yadupati Singhania in the capacity of being partners of PGY Associates, and others, for wrongful availment of drawback incentives on export of ready-made garments to Russian firms under the then existing rupees-rouble agreement. Subsequently, the Commissioner of Customs, Inland Container Depot, New Delhi issued an order dated March 31, 2012
64
(“Impugned Order”) directing, inter alia, disallowance and recovery of drawback incentives to the tune of ₹ 3.31 crore and imposition of a penalty amount of ₹ 1 crore on Yadupati Singhania. Aggrieved by the aforesaid Impugned Order, PGY Associates, Yadupati Singhania and Sushila Singhania have filed appeal bearing reference nos. C/2102/2012, C/2103/2012 and C/2516/2012, respectively, before the Customs, Excise and Service Tax Appellate Tribunal (“Tribunal”), New Delhi on July 19, 2012 seeking the Tribunal to set aside the Impugned Order. The Tribunal in custom appeal nos. C/2102-2106 and 2516/2012-B by its order dated December 29, 2016 recorded that the issue of jurisdiction of DRI to issue cause notice is pending before the Supreme Court and ordered to list the appeals in due course. Subsequently, the matter was disposed off on July 4, 2017. Subsequently, the Tribunal by its orders dated July 17, 2017 and July 4, 2017 set aside the Impugned Order and remanded the matter to the original adjudicating authority to decide the issue of jurisdiction after the availability of Supreme Court decision, and also ordered to maintain status quo till the final decision. The matter is currently pending.
2. The Assistant Commissioner of Income Tax, (Circle V) Kanpur (“ACIT”) filed a criminal case (C.C.
No. 108/1989) before Special Chief Judicial Magistrate, Kanpur (“SCJM”) under section 271(1)(c) read with section 274 of the Income Tax Act, 1961(“IT Act”) against M/s Plastic Products Limited together with its directors including Yadupati Singhania (“Accused”). The ACIT alleged violation of section 277 of the IT Act alleging deliberate verification by signature of false and incorrect statement in the return of income of the said company and seeking the issue of summons against the Accused. As of now, Yadupati Singhania, one of the Accused, has not received any summons.
65
i. APPLICATIONPROCESS.
TheIssuerproposestoissuetheDebenturesonthetermsassetoutinthisDisclosureDocumentsubjecttotheprovisionsof theCompaniesAct, theSEBIDebtListingRegulationsandotherapplicable laws.Thissectionappliestoallapplicants.Modeofbidding:TheDebenturesareproposedtobeissuedintheopenbiddingmodeinaccordancewiththeSEBIEBPCircularsreadwiththeBSEEBPOperationalGuidelines.Therearetwomodesofbiddingprescribed by the SEBI EBP Circular readwith the BSE EBPOperational Guidelines, namely: (a) openbidding;and(b)closedbidding.UnderclosedbiddingthereshallbenorealtimedisseminationofbidsontheEBP.WHOCANAPPLYAllEligibleInvestorsspecificallymappedbytheIssuerontheEBP,areeligibletobid/invest/applyforthisIssue.ThelistofEligibleInvestorsisprovidedbelow:• ScheduledCommercialBanks• FinancialInstitutions(FIs)• ForeignPortfolioInvestors(SubjecttoapplicableSEBI,RBInorms)• MutualFundsregisteredwithSEBI• InsuranceCompaniesregisteredwithIRDA• ProvidentandPensionandGratuityFunds• NBFCs• HighNetWorthIndividuals• Anyotherinvestor(s)authorisedtoinvestintheseDebentures,subjecttocompliancewiththerelevant
regulations/guidelinesapplicabletothemforinvestinginthisIssue.All applicants are required to complywith the relevant regulations/ guidelines applicable to them forinvestingintheIssueasperthenormsapprovedbySEBI,RBIoranyotherstatutorybodyfromtimetotime,includingbutnotlimitedtoBSEEBPOperationalGuidelinesaspublishedbyBSEonitswebsiteforinvestinginthisIssue.ThecontentsofthisDisclosureDocumentandanyotherinformationsuppliedinconnection with this Disclosure Document or the Debentures are intended to be used only by thoseinvestorstowhomitisdistributed.Itisnotintendedfordistributiontoanyotherpersonandshouldnotbereproducedordisseminatedbytherecipient.TheIssuewillbeundertheelectronicbookmechanismasrequiredintermsoftheSEBIEBPCircularreadwiththeBSEEBPOperationalGuidelines.However,outoftheaforesaidclassofinvestorseligibletoinvest,thisDisclosureDocumentisintendedsolelyfortheuseofthepersontowhomithasbeensentby the Issuer for thepurposeofevaluatingapossible investmentopportunitybytherecipient(s)inrespectofthesecuritiesofferedherein,anditisnottobereproducedordistributedtoanyotherpersons(otherthanprofessionaladvisorsoftheprospectiveinvestorreceivingthisDisclosureDocumentfromtheIssuer).All investors are required to comply with the relevant regulations/ guidelines applicable to them forinvestingintheissueoftheDebenturesasperthenormsapprovedbyGovernmentofIndia,ReserveBankofIndia,SecuritiesExchangeBoardofIndiaoranyotherstatutorybodyfromtimetotime.HOWTOBID:All Eligible Investors will have to register themselves with BSE’s Bond Platform offered by BSE forparticipatinginelectronicbookbuildingmechanism.Itisaone-timeexercise(ifnotalreadyregistered).EligibleInvestorsshouldrefertotheBSEEBPOperationalGuidelines for issuanceofdebtsecuritiesonprivateplacementbasisthroughanelectronicbookmechanismasavailableonthewebsiteofBSE.EligibleInvestorswill also have to complete themandatory know-your-customer verification process. EligibleInvestorsshouldrefertotheSEBIEBPCircular.(a)ThedetailsoftheIssueshallbeenteredontheEBPbytheIssueratleast2(two)workingdayspriortotheIssueOpeningDate,inaccordancewiththeSEBIEBPCircular readwith theBSEEBPOperational Guidelines. (b) The Issuewill be open for bidding for thedurationofthebiddingwindowthatwouldbecommunicatedthroughtheIssuer’sbiddingannouncement
66
on the EBP, at least 1 (one)working day before the start of the IssueOpeningDate. Some of the keyguidelinesintermsofthecurrentSEBIEBPCircularreadwiththeBSEEBPOperationalGuidelines,areasfollows:(a) ModificationofBid:EligibleInvestorsmaynotethatmodificationofbidisallowedduringthebidding
period. However, in the last 10 minutes of the bidding period, revision of bid is only allowed forimprovementofyieldandupwardrevisionofthebidsize.
(b) CancellationofBid:EligibleInvestorsmaynotethatcancellationofbidisallowedduringthebidding
period. However, in the last 10minutes of the bidding period /window, no cancellation of bids ispermitted.
(c) MultipleBids:EligibleInvestorsmaynotethatmultiplebidsarepermitted.(d) WithdrawalofIssue:TheIssuermay,atitsdiscretion,withdrawtheissueprocessonthefollowing
conditions:(i)Non-receiptofbidsuptothebaseissuesize;(ii)Thebidderhasdefaultedonpaymenttowardstheallotment,withinthestipulatedtimeframe,duetowhichtheIssuerisunabletofulfilthebaseissuesize;(iii)Thecut-offyieldenteredbythebidderishigherthantheestimatedcut-offyielddisclosedtotheEBP.ProvidedthattheIssuershallacceptorwithdrawtheIssueontheEBPwithin1(one)hourof theclosingof thebiddingwindow,andnot later than6pmontheIssueClosingDate.However, Eligible Investors should also refer to the SEBI EBP Circulars read with the BSE EBPOperationalGuidelines,asprevailingonthedateofthebid.
RIGHTTOACCEPTORREJECTBIDS:TheIssuerreservesitsfull,unqualifiedandabsoluterighttoacceptorrejectanybid(s),inpartorinfull,withoutassigninganyreasonthereofandtomakeprovisional/finalallocationsatitsabsolutediscretion.
PROVISIONAL/FINALALLOCATION:
Allocationshallbemadeonayield-timeprioritybasis.Postcompletionofbiddingprocess,theIssuerwillupload theprovisionalallocationon theBSE-BONDEBPPlatform.Once theallocation isdone then thesuccessfulbidderscanseetheirrespectiveallocationsontheallocationreportgeneratedbytheBSE-BONDEBPPlatform.
PAYMENTMECHANISM:
SubscriptionshouldbeasperthefinalallocationmadetothesuccessfulbidderasnotifiedbytheIssuer.Successfulbiddersshouldpay-inthesubscriptionamountintotheBankAccountofClearingCorporationon or before 10.30 am on the Pay-inDate, the details ofwhich have been provided in this DisclosureDocument.SuccessfulbiddersshouldensurethattheypayfromthebankaccountsthattheyhaveregisteredwiththeBSE-BONDEBPPlatformatthetimeofregistration.Note:Ifthesuccessfulbiddersfailtopaythesubscriptionmonieswithinthetimeprescribed,theirbidwillbeliabletoberejectedandtheIssuershallbenotbeliabletoissueandallotanydebenturestosuchbidders.
SubscriptionmonieswillbepaidoutfromtheClearingCorporationAccountintotheIssuer’sAccount.ThistransferwillbedoneinaccordancewiththeprocedureprescribedbytheSEBIEBPCircularsreadwiththeBSE EBPOperational Guidelines. Cheque(s), demand draft(s),Money orders, postal orderswill not beaccepted.ThebankwithwhichtheClearingCorporationAccountisexistingassumesnoresponsibilityforanyapplicationslostinmail.ApplicationsshouldbeforthenumberofDebenturesappliedbytheinvestor.Applicationsnotcompletedinthesaidmannerareliabletoberejected.Theapplicantorinthecaseofanapplicationinjointnames,eachoftheapplicant,shouldmentionhis/herPANdetails,orwherethesamehasnotbeenallotted,theGIRNo.andtheincometaxcircle/ward/district.AspertheprovisionofSection139A (5A) of the IncomeTaxAct, PAN/GIRNo. needs to bementioned on the tax deducted at sourcecertificates.Hence, the investor shouldmention his PAN/GIRNo. In case neither the PANnor theGIRNumberhasbeenallotted,theapplicantshallmention“Appliedfor”norincasetheapplicantisnotassessedto incometax,theapplicantshallmention ‘NotApplicable’(statingreasonsfornon-applicability) inthe
67
appropriateboxprovidedforthepurpose.Applicationformswithoutthisinformationwillbeconsideredincompleteandareliabletoberejected.Allapplicantsarerequestedtoticktherelevantcolumn“CategoryofInvestor”intheapplicationform.
TERMSOFPAYMENT:
Thefull-facevalueoftheDebenturesappliedfor,istobepaidinsuchprocessashasbeenlistedinthisDisclosureDocument.
FORCEMAJEURE:
The Issuer reserves the right towithdraw the issueprior to the IssueClosingDate in theeventofanyunforeseendevelopmentadverselyaffectingtheeconomicandregulatoryenvironment.
POST-ALLOCATIONDISCLOSURESBYTHEEBP
UponallocationoftheDebentures,theIssuershalldisclosethesizeoftheIssue,couponrate,thenumberofsuccessfulbidder,categoryofthesuccessfulbiddersetc.,inaccordancewiththeSEBIEBPCirculars.TheBSE-BONDEBPPlatformshalluploadthedataprovidedbytheIssueronitswebsitetomakeitavailabletothepublic.
DEPOSITORYARRANGEMENTS
TheIssuerhasappointedNSDLDataManagementServicesLimitedastheRTAforthepresentIssue.TheIssuer has entered into necessary depository arrangements with NSDL for dematerialization of theDebenturesofferedunderthepresentIssue,inaccordancewiththeDepositoriesAct,1996andregulationsmadethereunder.Inthiscontext,theIssuerhassignedtripartiteagreementwiththeNSDLandtheRTAfordematerializationoftheDebenturesofferedunderthepresentIssue.
PROCEDUREFORAPPLYINGFORTHEDEMATFACILITYApplicant(s)musthaveabeneficiaryaccountwithanyDepositoryParticipantofNSDLpriortomakingtheapplication.(b)ForsubscribingtotheDebentures,namesshouldbe identical tothoseappearing intheaccountdetailsof theDepository. Incaseof jointholders, thenamesshouldnecessarilybe inthesamesequenceastheyappearintheaccountdetailsintheDepository.(c)Ifincomplete/incorrectbeneficiaryaccountdetailsaregivenwhichdoesnotmatchwiththedetailsinthedepositorysystem,itwillbedeemedtobeanincompleteapplicationandthesamebeheldliableforrejectionatthesolediscretionoftheIssuer.(d)TheDebenturesshallbedirectlycreditedtothebeneficiaryaccountandafterdueverification,allotmentadvice/refundorder,ifany,wouldbesentdirectlytotheapplicantbytheRTAbuttheconfirmationofthecreditof theDebentures to theapplicant’sdepositoryaccountwillbeprovided to theapplicantby theDepositoryParticipantoftheapplicant.(e)InterestorotherbenefitswithrespecttotheDebentureswouldbepaidtothoseholderswhosenamesappearonthelistofbeneficialownersgivenbythedepositorytotheIssuerasontheRecordDate.Incase,thebeneficialownerisnotidentifiedbythedepositoryontheRecordDateduetoanyreasonwhatsoever, the Issuershallkeep inabeyancethepaymentof interestorotherbenefits,tillsuchtimethebeneficialownerisidentifiedbythedepositoryandintimatedtotheIssuer.Onreceivingsuchintimation,theIssuershallpaytheinterestorotherbenefitstothebeneficiariesidentified,withinaperiodof15calendardaysfromthedateofreceivingsuchintimation.(f)ApplicantsmaypleasenotethattheDebenturesshallbeallottedandtradedonthestockexchange(s)onlyindematerializedform.Letterofallotment/Debenturecertificate/Refundorder/Issueofletterofallotment:Thebeneficiaryaccountoftheinvestor(s)withNSDL/DepositoryParticipantwillbegiveninitialcreditwithin2(two)daysfromtheDeemedDateofAllotmentandconfirmationofthecreditofDebenturesshallbeprovidedbytherelevantDepositorywithin2(two)daysfromtheDeemedDateofAllotment.Theinitialcreditintheaccountwillbeakintotheletterofallotment.Oncompletionoftheallstatutoryformalities,suchcreditintheaccountwillbeakintoadebenturecertificate.
68
ISSUEOFDEBENTURECERTIFICATES:Subjecttothecompletionofallstatutoryformalitieswithintimeframeprescribedintheapplicablelaws,theinitialcreditakintoaletterofallotmentinthebeneficiaryaccountoftheinvestorwouldbereplacedwiththenumberofDebenturesallotted.TheDebenturessinceissuedinelectronic(dematerialized)form,will be governed as per the provisions of the Depository Act, SEBI (Depositories and Participants)Regulations,1996,asamended,rulesnotifiedbyNSDL/DepositoryParticipantfromtimetotimeandotherapplicablelawsandrulesnotifiedinrespectthereof.TheDebenturesshallbeallottedindematerializedformonly.INSTRUCTIONSFORAPPLICATION:1) ApplicationmustbecompletedinBLOCKLETTERSINENGLISH.Ablankmustbeleftbetweentwoor
morepartsofthename.
2) SignaturesshouldbemadeinEnglish.3) TheDebenturesarebeingissuedatpartothefacevalue.Fullamounthastobepaidonapplicationper
Debentureappliedfor.Applicationsforincorrectamountsareliabletoberejected.4) Money orders or postal orderswill not be accepted. The payments can bemade byNEFT/ RTGS.
Payment shall bemade from the bank account of the person subscribing. In case of joint holders,moniespayableshallbepaidfromthebankaccountofthepersonwhosenameappearsfirst intheapplication.
5) Nocashwillbeaccepted.
6) TheapplicantshouldmentionitspermanentaccountnumberortheGIRnumberallottedtoitundertheIncomeTaxAct,1961andalsotherelevantIncome-taxcircle/ward/District.
7) Applications under power of attorney/relevant authority: In case of an applicationmade under a
powerofattorneyorresolutionorauthoritytomaketheapplicationacertifiedtruecopyofsuchpowerofattorneyorresolutionorauthoritytomaketheapplicationandtheMemorandumandArticlesofAssociationand/orbye-lawsoftheinvestormustbeattachedtotheapplicationformatthetimeofmaking theapplication, failingwhich, the Issuerreserves the full,unqualifiedandabsoluteright toacceptorrejectanyapplicationinwholeorinpartandineithercasewithoutassigninganyreasontherefore. Further anymodifications / additions in the power of attorney or authority should benotified to the Issuer at its registered office.Names and specimen signatures of all the authorizedsignatoriesmustalsobelodgedalongwiththesubmissionofthecompletedapplication.
8) Anapplicationonce submitted cannotbewithdrawn.Theapplications shouldbe submittedduring
normalbankinghoursattheregisteredofficeoftheCompany.
9) TheapplicationswouldbescrutinizedandacceptedasperthetermsandconditionsspecifiedinthisDisclosureDocument.
10) Anyapplication,whichisnotcompleteinanyrespect,isliabletoberejected.
11) The investor/applicantshallapply for theDebentures inelectronic, i.e.,dematerialised formonly.
Applicants should mention their Depository Participant’s name, DP-ID and Beneficiary AccountNumber in the application form. In case of any discrepancy in the information ofDepository/Beneficiary Account, the Issuer shall be entitled to not credit the beneficiary’s demataccountpendingresolutionofthediscrepancy.TheapplicantisrequestedtocontacttheofficeoftheIssuerasmentionedaboveforanyclarifications.
SUCCESSION:
69
IncasetheDebenturesareheldbyapersonotherthananindividual,therightsintheDebentureshallvestwiththesuccessoracquiringinteresttherein,includingaliquidatororsuchpersonappointedaspertheapplicablelaws.Overandabovetheaforesaidtermsandconditions,theDebentures,ifanyissuedunderthisDisclosureDocument,shallbesubjecttothisDisclosureDocument,thedebenturetrustdeedandalsobesubjecttotheprovisionsoftheconstitutionaldocumentsoftheIssuer.OPTIONTOSUBSCRIBE:TheIssuerhasmadearrangementsforissueandholdingoftheDebenturesindematerializedform.RIGHTTOACCEPTORREJECTAPPLICATIONS:TheIssuerreservesitsfull,unqualifiedandabsoluterighttoacceptorrejectanyapplication,inpartorinfull,withoutassigninganyreasonthereof.Therejectedapplicantswillbeintimatedalongwiththerefundwarrant, if applicable, to be sent. Applicationwould be liable to be rejected on one ormore technicalgrounds, includingbutnotrestrictedto:1) incompleteapplicationforms;2)applicationsexceedingtheIssuesize;3)bankaccountdetailshavenotbeenprovided;4)detailsforissueofDebenturesinelectronic/dematerialisedformnotgiven;5)PANorGIRNo.andtheincometaxcircle/ward/districtisnotgiven;6)incaseofapplicationsmadethroughpowerofattorneys,iftherelevantdocumentsarenotsubmitted.ThefullamountofDebenturehastobesubmittedalongwiththeapplicationform.Also,incaseofoversubscription, the Issuer reserves the right to increase the size of the placement subject to necessaryapprovals/certifications,andthebasisofallotmentshallbedecidedbytheIssuer.ALLOTMENT:TheDebenturesallottedtoinvestorindematerializedformwouldbedirectlycreditedtothebeneficiaryaccountasgivenintheapplicationformafterverification.TheDebentureswillbecreditedtotheaccountoftheallottee(s)assoonaspracticablebutinanyeventwithintwo(2)daysofDeemedDateofAllotment.REGISTEROFDEBENTURESHOLDER(S):AregisterofallDebentureHolder(s)containingnecessaryparticularsof theDebentureHolderswillbemaintainedbytheIssueratitsregisteredoffice.TRANSFER/TRANSMISSION:The Debentures shall be transferable freely to all classes of Eligible Investors. It is clarified that theDebenturesarenotintendedtobeheldbyanycategoryofpersonswhoarenotEligibleInvestors.Subjecttotheforegoing,theDebenturesmaybetransferredand/ortransmittedinaccordancewiththeapplicableprovisionsoftheCompaniesAct.TheDebenturesheldindematerializedformshallbetransferredsubjecttoandinaccordancewiththerules/proceduresasprescribedbydepositoriesandtherelevantDepositoryParticipantsof the transferoror transfereeandanyotherapplicable lawsand rulesnotified in respectthereof.Thetransferee(s)shouldensurethatthetransferformalitiesarecompletedpriortotheRecordDate.Intheabsenceofthesame,interestwillbepaid/redemptionwillbemadetotheperson,whosenameappearsintheregisterofDebentureholdersmaintainedbytheDepositories.Insuchcases,claims,ifany,bythetransfereeswouldneedtobesettledwiththetransferor(s)andnotwiththeIssuer.Provided further that nothing in this section shall prejudice any power of the Issuer to register asDebentureHolderanypersontowhomtherighttoanyDebentureoftheIssuerhasbeentransmittedbyoperationoflaw.SubjecttothetermsoftheDebentureTrustDeed,thenormalprocedurefollowedfortransferofsecuritiesheldindematerializedformshallbefollowedfortransferoftheseDebenturesheldinelectronicform.Thesellershouldgivedeliveryinstructionscontainingdetailsofthebuyer’sDepositoryParticipantaccounttoitsDepositoryParticipant.TheIssuerundertakesthattherewillbeacommontransferform/procedurefortransferofdebentures.
70
The Debentures shall be issued only in dematerialised form in compliancewith the provisions of theDepositoriesAct,1996(asamendedfromtimetotime),anyotherapplicableregulations(includingofanyrelevantstockexchange)andtheseconditions.NophysicalcertificatesoftheDebentureswouldbeissued.AUTHORITYFORTHEPLACEMENT:ThisprivateplacementofDebentures isbeingmadepursuant to theresolutionpassedby theboardofdirectorsdatedJune17,2020oftheIssuerauthorizingtheIssuertoborrowmoniesbywayofissueofnon-convertibledebentures.The Issuercancarryon itsexistingactivitiesand futureactivitiesplannedby it inviewof theexistingapprovals,andnofurtherapprovalsfromanyGovernmentauthorityarerequiredbytheIssuertocarryonits said activities save and except asmay be required for creation of security in connection with theDebentures.COMPLIANCEOFFICER:The investormaycontact the Issuer incaseofanypre -issue/post-issuerelatedproblemssuchasnoreceiptoflettersofallotment/Debenturecertificates/refundorders/interestcheques.PAYMENTSATPAR:Paymentoftheprincipal,allinterestandothermonieswillbemadetotheregisteredDebentureHolder(s)/beneficial owner(s) and in case of joint holders to the onewhose name stands first in the register ofDebentureHolder(s)/ in the listofbeneficialowner(s)provided to the Issuerby theDepository.Suchpaymentshallbemadethroughelectronicclearingservices(ECS),realtimegrosssettlement(RTGS),directcreditornationalelectronicfundtransfer(NEFT).RIGHTTORE-PURCHASEANDRE-ISSUEDEBENTURE(S):The Issuer will have the power, exercisable at its sole and absolute discretion from time to time, torepurchaseapartorallofitsDebenturesfromthesecondarymarketsorotherwise,atanytimepriortothematurity date, subject to applicable law and in accordance with the prevailing guidelines/regulationsissued by the RBI, SEBI and other authorities. In the event of a part or all of its Debentures beingrepurchasedasaforesaidorredeemedunderanycircumstanceswhatsoever, the Issuershallhave,andshallbedeemedalwaystohavehad, thepowertoreissuetheDebentureseitherbyreissuingthesameDebenturesorbyissuingotherdebenturesintheirplace,inaccordancewithapplicablelaws.The Issuermayalso,at itsdiscretionandasper theprevailingguidelines/regulationsofRBIandotherauthoritiesatanytimepurchasetheDebenturesatdiscount,atparoratpremiumintheopenmarket.SuchDebenturemay,attheoptionofIssuer,becancelled,heldorresoldatsuchpriceandonsuchtermsandconditionsastheIssuermaydeemfitandaspermittedbylaw.If the Debentures are held by a foreign institutional investor, the Issuer can purchase them only inaccordancewithapplicable lawincludingprevailingguidelines/regulations issuedbytheRBI,SEBIandotherregulatoryauthorities.AllcostsincurredbytheDebentureHolders(includingbutnotlimitedtobreakcostsrelatingtointerest,currency exchange and/or hedge agreements) pursuant to the repurchase by the Issuer before theredemptiondateassetoutabove,willbebornebytheIssuerandwillbecalculated(andtheDebentureHolderswillbereimbursed)onthebasisasifanaccelerationeventhadoccurred.TAXBENEFITS:
71
Therearenospecific taxbenefitsattachedtotheDebentures. InvestorsareadvisedtoconsiderthetaximplicationsoftheirrespectiveinvestmentintheDebentures.AlltherightsandremediesoftheDebentureholder(s)shallvestinandshallbeexercisedbytheDebentureTrusteeswithouthavingitreferredtotheDebenturesholder(s).LOSSOFLETTER(S)OFALLOTMENT/PRINCIPALANDINTERESTPAYMENTINSTRUMENTS:LossofLetter(s)ofAllotmentand/orprincipalpaymentinstrument/interestpaymentinstrumentshouldbeintimatedtotheIssueralongwiththerequestforissueofaduplicateLetter(s)ofAllotment/paymentinstrument(s).IfanyLetter(s)ofAllotment/paymentinstrument(s)islost,stolen,ordestroyed,thenuponproductionofproofthereof,tothesatisfactionoftheIssueranduponfurnishingsuchindemnity,astheIssuermaydeemadequateanduponpaymentofanyexpensesincurredbytheIssuerinconnectionthereof,newLetter(s)ofAllotment/paymentinstrument(s)shallbeissued.AfeewillbechargedbytheIssuer,notexceedingsuchsumasmaybeprescribedbylaw.REFUNDS:Forapplicantswhoseapplicationshavebeenrejectedorallottedinpart,refundorderswillbedispatchedwithin7(seven)daysfromtheAllotmentDateoftheDebentures.DEBENTURESSUBJECTTOTHEDEBENTURETRUSTDEED,etc.:Over and above the aforesaid terms and conditions, the Debentures, issued under this DisclosureDocument,shallbesubjecttoprevailingguidelines/regulationsandalsobesubjecttotheprovisionsoftheDebentureTrustDeedandalldocumentstobeenteredintobytheIssuerinrelationtotheIssue,includingthisDisclosureDocument,theDebentureTrustDeedandothertransactiondocuments.GOVERNINGLAW:TheDebenturesaregovernedbyandwill be construed in accordancewith Indian law.The IssuerandIssuer’sobligationsundertheDebenturesshall,atalltimes,besubjecttothedirectionsofSEBIandstockexchangesandotherapplicableregulationsfromtimetotime.Applicants,bypurchasingtheDebentures,agreethatthecourtsatMumbaishallhaveexclusivejurisdictionwithrespecttomattersrelatingtotheDebentures.PERMISSION / CONSENT FROM THE PRIOR CREDITORS AND UNDERTAKING ON CREATION OFCHARGE:The Issuer undertakes to obtain consent from the prior creditors (if required) for the creation of theSecurityfortheDebenturesbeingissued.Conflict,incaseofanyrepugnancy,inconsistencyorwherethereisaconflictbetweentheconditionsasarestipulatedinthisDisclosureDocumentandtheDebentureTrustDeedexecutedbytheIssuer,theprovisionsascontainedintheDebentureTrustDeedshallprevailandoverridetheprovisionsofsuchDisclosureDocument.MATERIALCONTRACTSANDAGREEMENTS:Byverynatureandvolumeof itsbusiness, theCompany is involved in a largenumberof transactionsinvolving financial obligations and therefore it may not be possible to furnish details of all materialcontractsandarrangementsinvolvingfinancialobligationsoftheCompany.However,thecontractsanddocumentsreferredtobelow(notbeingcontractsenteredintointheordinarycourseofbusinesscarriedonbytheCompany)whichareormaybedeemedtobematerialhavebeenenteredintobytheCompany.CopiesofthecontractsanddocumentsreferredtobelowmaybeinspectedattheRegisteredOfficeoftheCompanyfrom11.00amto1.00pmonanyworkingday(MondaytoFriday)untilthedateofclosingofthisIssue.1)MemorandumandArticlesofAssociationoftheCompany;2)CertificateofIncorporationoftheCompany.
72
3)Certified true copyof theBoard resolutiondated June17,2020approving issueofNon-ConvertibleDebentures;4)CertifiedtruecopyoftheresolutionpassedbytheShareholdersdatedAugust6,2016undersection180(1)(c)oftheCompaniesAct,2013;5)CopiesofAnnualReportsofCompanyforthelastthreefinancialyears.6)CreditRatingLetter&RationalefromCARERatingsLimited7)CopyofTripartiteAgreementbetweentheCompanyandNationalSecuritiesDepositoryLimitedandRegistrarandTransferAgents8)DebentureTrusteeAppointment letter dated June30, 2020executedbetween theCompany and theDebentureTrustee.INVESTORGRIEVANCEANDREDRESSALSYSTEMSArrangementshavebeenmadetoredressinvestorgrievancesexpeditiouslyasfaraspossible,theIssuerendeavorstoresolvetheinvestor’sgrievanceswithin30daysofitsreceipt.AllgrievancesrelatedtotheissuequotingtheApplicationNumber(includingprefix),numberofDebenturesappliedfor,amountpaidonapplicationanddetailsofcollectioncenterwheretheApplicationwassubmitted,maybeaddressedtotheComplianceOfficeratregisteredofficeoftheIssuer.AllinvestorsareherebyinformedthattheIssuerhasappointedaComplianceOfficerwhomaybecontractedincaseofanypre-issue/post-issuerelatedproblemssuchasnon-creditofletter(s)ofallotment/debenturecertificate(s)inthedemataccount,non-receiptofrefundorder(s),interestwarrant(s)/cheque(s)etc.ContactdetailsoftheComplianceOfficeraregivenelsewhereinthisDisclosureDocument.COMPLIANCEOFFICEROFTHEISSUERName : ShambhuSinghAddress : KamlaTower,Kanpur,UttarPradesh208001,IndiaTeleNo : +91-512-2371478-81FaxNo : +91-512-2332665/2399854Email : [email protected]:Subject ParticularsNameoftheSecurity 7.36%JKCL2024Issuer/Company J.K.CementLimitedPromoters PersonsdefinedaspromotersunderSecuritiesExchangeBoardofIndia
(IssueofCapitalandDisclosureRequirements)Regulations,2018,asamended.
TypeofInstrument Redeemable,Secured,Listed,Non-Convertible,TaxableDebentures(“NCD”/“Debentures”)
NatureofInstrument/Seniority
Securedonfirstpari-passubasiswithotherlenders
ModeofIssue PrivatePlacementDebentureTrustee IDBITrusteeshipServicesLimitedPurposeandobjectsoftheissue
Towardspartfinancingof1,500tpdclinkerexpansionatNimbahera,Rajasthanincludingreimbursementofcapitalexpenditurealreadyincurred.
DetailsoftheutilizationoftheProceeds
Thefundswillbeutilizedaspertheobjectsmentionedabove.
CostofProjectandMeansofFinance
TotalProjectcost–uptoRs.405crore,tobefinancedusingdebtofRs.250croreandequity/internalaccrualsofuptoRs.155crore.Breakupofreimbursementuptolast12monthsandfreshcapextobeprovided.
EligibleInvestor • ScheduledCommercialBanks• FinancialInstitutions(FIs)• ForeignPortfolioInvestors
73
• MutualFunds• InsuranceCompanies• ProvidentandPensionandGratuityFunds• NBFCs• HighNetWorthIndividuals• Any other investor(s) authorised to invest in these Debentures,
subjecttothecompliancewiththerelevantregulations/guidelinesapplicabletothemforinvestinginthisIssue.
IssueOpeningDate July22,2020IssueClosingDate July22,2020PayinDate July23,2020DeemedDateofAllotment July23,2020OwnershipCovenant Promoters to maintain a minimum shareholding of 51% and
managementcontrolof the Issueratall timesduringthecurrencyoftheseDebentures.
Rating CAREAA/StablebyCARERatingsLimitedIssueSize Rs.250Crores(RupeesTwoHundredFiftyCrores)Optiontoretainoversubscription(Amount)
NA
IssuePrice Rs.10,00,000/-(RupeesTenLakhonly)perDebentureFaceValue Rs.10,00,000/-(RupeesTenLakhonly)perDebentureMinimumApplication 1Debentureandinmultiplesof1DebenturethereafterEarlyRedemptionOption NATenureofNCD 4Years(DoortoDoor)CouponRate 7.36%p.a.CouponType FixedCouponPaymentFrequency
SemiAnnual
CouponpaymentDates PleaserefertoIllustrativeCashFlowRedemptionDate July23,2024RedemptionAmount In5semiannualequalinstallmentsasgivenbelowstartingfrom24th
monthonwardsgoingupto48months(equaltranches)Attheendof24thmonthfromDateofAllotment:20%ofprincipalatparAttheendof30thmonthfromDateofAllotment:20%ofprincipalatparAttheendof36thmonthfromDateofAllotment:20%ofprincipalatparAttheendof42thmonthfromDateofAllotment:20%ofprincipalatparAttheendof48thmonthfromDateofAllotment:20%ofprincipalatpar.
RedemptionPremium/Discount
NA
Discountatwhichsecurityisissuedandtheeffectiveyieldasaresultofsuchdiscount.
NA
PutDate NAPutPrice NACallDate NACallPrice NAPutNotificationTime NACallNotificationTime NA
74
Security TheNCDswouldbesecuredinfavouroftheDebentureTrustee.TheSecurityCover(FACR)willbeatleast1.25timesonBookvalueoftheoutstandingfacevalueoftheNCDsatalltimesduringthetenureofNCDs.Pari-passu first chargeon theFixedAssets related to theCompany’sGreyCementplants(excludingminingland,miningleasesandvehicles)at(a)Nimbaherahavingcapacityof3.25Mn.tpaand(b)MangrolLine1inthestateofRajasthan.“FixedAssetCoverageRatio”or“FACR”shallmeanatanytime,theratioof(i)isto(ii)below:
• AnamountcalculatedbasedonthebookvalueofassetsofIssuer
providedasSecurity(asmortgaged/hypothecated/chargedorasproposedtobemortgaged/hypothecated/chargedassecurityfortheDebentures),calculatedinaccordancewithInd-AS;
• Theaggregateof theoutstanding loans,debenturesoranyotherborrowings,havingfirstparipassuchargeonSecurityofIssuerasmortgaged/hypothecated/chargedorasproposedtobemortgaged/hypothecated/chargedassecurityfortheDebentures
Forthepurposehereof,thebookvalueoftheassetsshallbecalculatedonthebasisofthelatestannualauditedfinancialstatements,preparedinaccordancewithInd-AS,submittedbytheBorrower.
SecurityCreation Issuer shall create and perfect security in favour of theDebentureTrusteewithin90daysoftheIssuePay-InDate.
StepUpCouponRate In the event of a credit rating downgrade of the Debentures by anyrating agency, the Coupon will be revised upwards by 0.25 % perannumincaseofratingdowngradefromAAtoAA-inthecreditrating(the “Coupon Reset”) and the increase in the Coupon Rate will beeffectivefromthedateonwhichthedowngradeoccurs.SuchAdditionalCouponshallbepayableontheoutstandingDebenturefromthedateofsuchdowngradeinthecreditrating.IntheeventofratingdowngradeoftheDebenturetoA+orsuspension/ withdrawal of the rating of the Issuer / Debenture by any ratingagency,thebondholderwouldreservearighttorecalltheoutstandingprincipal amount on Debentures NCDs along with othermonies/accruedinterestdueinrespectthereof.
FinancialCovenant The Following financial covenants on standalone basis will beapplicabletotheIssuer.ThesecovenantswillbetestonannualbasisbasedontheauditedfinancialstatementsoftheIssuer.• DSCRmin->1.05xinFY21and1.20xthereafter• TOL/TNW–max3.50x“Debt Service Coverage Ratio” or “DSCR” shall, in relation to anyFinancialYear,meantheratioof(i)isto(ii)below:• The aggregate of: (a) profit after tax for that period; (b)
depreciationforsuchperiod;(c) interestandfinancechargesforsuchperiodasperprofitandlossaccount;(d)deferredtax;and(e)othernoncashadjustments,ifany.
• Anamountequaltothesumofinterestandfinancechargesasperprofit and loss account and the scheduled repayment instalmentexcludingsuchdebtwhichisrefinanced/takenoverforthatperiodorprepaidbeforescheduledrepayment.
75
“Total Outside Liabilities” shallmean all indebtedness (other thanwhichiscontingent)oftheborrowerincludingallcorporateguaranteesissuedbytheIssuer.“TangibleNetWorth”shallmeantheaggregateof:• The amount paid up on the share capital (equity or preference
sharecapitalincludingshareapplicationmonies)oftheIssuer;and• The amount standing to the credit of the reserves of the Issuer
(including,withoutlimitation,anysharepremiumaccount,capitalreserve, government grant or subsidy, debenture redemptionreserve,generalreserveaccount,retainedearningsandanycreditbalance on the accumulated profit and loss account) excludingrevaluationreserves;
afterdeductingtherefrom:
o Anydebitbalanceontheprofitandlossaccountorimpairment
oftheissuedsharecapitaloftheBorrower(excepttotheextentthatdeductionwithrespecttothatdebitbalanceorimpairmenthasalreadybeenmade);and
o Amounts attributable to capitalized items such as goodwill,trademarksunamortizedfees,expenses,otherintangibleassetsifnotpaidfor.
IssuerconfirmsthattherearenootherfinancialcovenantsgiventoanyotherTermLender(s)whichissuperiortotheabovecovenants.DetailsoftheaforementionedfinancialcovenantsarealignedwiththefinancialcovenantsstatedintheDebentureTrustDeed.
NegativeCovenants • TheIssuershallnotsell,transferorotherwisedisposeofanyofitssecured assets for the proposed NCDs (excluding subleasing ofland/facilities), without the prior written approval of theDebenture Trustee, which shall not be unreasonably withheld,duringanyfinancialyearexceptaspermittedhereunder:• Ifthecostofassetsproposedtobesold,transferredordisposed
of in any financial year is less than 5% of the cost of suchsecuredassets;and
• SuchdisposaldoesnotresultinbreachofFACRof1.25.• The Issuer shall not without written approval of the debenture
trusteewhichshallnotbeunreasonablywitheld,createfirstparipassu charge over any of its Security for the proposed NCDs(excludingsubleasingof land/facilities).However, theIssuercancreatepari-passuchargeforincrementalamountofRs.400Crorewithout prior approval of the Debenture Trustee provided theFACRonSecurityasaresultofcreationofsuchpari-passuchargedoesnotfallbelow1.35x.Thisadditionalcushionof1.35xFACRisproposedonlyforparipassucharge.
• The Issuer shall not enter into any amalgamation, demerger,merger or reconstruction without the prior consent of theDebentureTrustee,whichisnottobeunreasonablywithheld.
• Restrictionsonenteringintoanyfinancialobligationofalong-termnature/adverselyaffectingtheIssuer’sfinancialswhichcouldleadtobreachofTOL/TNWandifpaymentdefaultexists.
• The Issuer shall not, without the prior written consent ofDebenture Trustee, amend or modify any of its constitutionaldocuments i.e. Memorandum of Association and Articles ofAssociation,whichhaveamaterialadverseeffect.
• Nomaterialchangeofbusiness.
76
• IftheapprovalforpointsmentionedaboveisnotreceivedfromtheDebentureTrusteewithinonemonth,theIssuerwillhavearightto prepay the outstanding debentures in part or in full withoutprepaymentpenalty.
DetailsoftheaforementionednegativecovenantsarealignedwiththenegativecovenantsstatedintheDebentureTrustDeed.
MandatoryPrepayment TheIssuerwillberequiredtomandatorilyprepaytheentireamountsdue to the investor, without payment of any prepayment premiumwithin30BusinessDaysontheoccurrenceofanyofthebelowevents:• IfthePromotershareholdingfallsbelow51%ofissuedandpaidup
sharecapital.• Cancellation of any authorizations which havematerial adverse
financialimpactontheIssuer.
IntheeventtheIssuerdoesnotmaketheprepaymentswithinthetimeperiodsmentionedabovetheIssuershallberequiredtopayinterestat2%p.a.overandabovetheCouponRatefromthedateofoccurrenceofevent,tillsuchtimethatsuchpaymentsaremade. TheIssuerwillberequiredtomandatorilyprepaytheamountsduetothe investor,without payment of any prepayment premium and theotherpersonswhoarepermittedsecurity interestholderswhohavesecurityinterestovertheencumberedassets,onaproportionatebasis,if such prepayment is required under the terms of their respectivefinancing/debenturedocuments,within30BusinessDaysofreceiptofthe followingamountsorwithin30BusinessDaysofdemandby theDebentureTrustee,whicheverislater:• insurance proceeds under insurance policies in excess of 5% of
encumbered assets per claim, provided that such insuranceproceedsmay be first utilized towards reinstating the damagedasset, and the remaining proceeds shall be used towardsprepaymentasperthissub-section;
• proceedsfromdisposalofanyencumberedassetsinexcessof5%
of the encumbered assets and which have not been used forreplacementofassetpursuanttowhichtheywerereceived.
IntheeventtheIssuerdoesnotmaketheprepaymentswithinthetimeperiodsmentionedabovetheIssuershallberequiredtopayinterestat2%p.a. over and above the CouponRate from the date of receipt ofmonies,tillsuchtimethatsuchpaymentsaremade.
DayCountBasis Actual/ActualdaycountbasisSubscriptionDate Subscription Date, being the date on which the Debentures shall
deemedtohavebeenallottedtotheSubscribers.Listing ProposedontheWholesaleDebtMarket(WDM)segmentofBSEorNSE
Limited(BSE).TheDebentureswillbelistedwithinthestatutorytimeperiodallowedundertheSEBIDebtRegulations.CompanyalsoreservestherighttogettheDebentureslistedonsuchotherrecognizedstockexchangesasCompanymaydeemfitaftergivingpriornotificationofsuchproposedlistingtotheDebentureTrustee.
MarketLot The market lot will be one Debenture (“Market Lot”). Since thedebenturesarebeingissuedonlyindematerializedform,theoddlotswillnotariseeitheratthetimeofissuanceoratthetimeoftransferofdebentures.
77
RecordDate Thedatefalling15(fifteen)calendardayspriortothedateonwhichInterest is due and payable on the Debentures, or the date ofredemptionofsuchDebentures.
BusinessDayConvention AdaywhichisnotaSaturday,Sundayorapublicholidayandonwhichclearing of cheque and RTGS facilities are available in Mumbai andKanpur. If any Coupon or principal payment date fall on a publicholiday/non-workingday/Saturday/SundayitwillbeconstruedtobethesucceedingworkingdayincaseofInterestandprecedingworkingdayincaseofprincipalunlessspecifiedotherwisehereinabove.IntermsoftheSEBICircularNo.CIR/IMD/DF/18/2013datedOctober29, 2013 and SEBI Circular No. CIR/MD/DF-1/122/2016 datedNovember11,2016,asamended.Incaseofpaymentofprincipalontheprecedingdayasabove,itsvaluedateshallbeconsideredforcalculationofinterest.
RolesandResponsibilitiesofDebentureTrustee
The Debenture Trustee shall perform its duties and obligations andexerciseitsrightsanddiscretions,inkeepingwiththetrustreposedinthe Trustees by the holder(s) of the Debentures and shall furtherconductitselfandcomplywiththeprovisionsofallapplicablelaws.TheTrusteesshallcarryoutitsdutiesandperformitsfunctionsasrequiredto discharge its obligations, the Debenture Trusteeship Agreement;Information Memorandum and all other related transactiondocuments,withduecare,diligenceandloyalty.TheCompanyshallprovidetheTrusteewith:• Annual(audited)financialstatementsoftheCompany(prepared
on both standalone and consolidated basis) within 180 (OneHundred and Eighty) calendar days following the closure of theprecedingFinancialYear;and
• Quarterlyun-auditedaccounts(preparedonconsolidatedbasisoftheCompanywithin60(sixty)daysofendofquarter.
Depository Applications will be made for the Debentures to be deposited withNSDLandCSDL
IssuancemodeoftheInstrument
Dematonly.TheIssuerwillissuetheDebentures/LettersofAllotmentindematerializedformwithintwobusinessdaysfromtheDeemedDateofAllotment.
TradingmodeoftheInstrument
Dematonly.
SettlementmodeoftheInstrument
Dematonly.
Resolutionsrequired TheIssuershouldensurethatalltheconsentsandresolutionsrequiredtoissueNCDsareinplacepriortotheissue.
TransactionDocuments TheTransactionDocumentsshallbeasfollows:• DebentureTrustDeed;• consentletterfromtheDebentureTrustee;• InformationMemorandum;• Rating letternotbeingmore thanonemonthold from the issue
openingdateandratingrationalenotolderthanoneyearfromtheissueopeningdate
• thelistingapprovalbytheStockExchange;and• Any other document as advised by Legal Counsel / Debenture
Trustee.DefaultInterestRate • Thecompanywillbe required topayadditional2%p.a. interest
overandabovetheapplicablecouponratefromtheexpiryofthestipulatedperiodof90daysfromthedateofdisbursementtillthedate of security creation, in case the company could not createsecuritywithinstipulatedperiod.
78
• Incaseofdefault inpaymentof interest/principalonduedates,additionalinterest@2%p.a.overthecouponratewillbepayablebycompanyforthedefaultingperiodonthedefaultedamount.
• Incaseofadelayinlistingbeyond20daysfromtheDeemedDateof Allotment, the couponwill be step up by 1% for the delayedperiod.
• Withoutprejudicetotheinvestorsrighttocallaneventofdefaultforanyotherdefaultunder the transactiondocumentscompanywillberequiredtopayadditional2%p.a.interestoverandabovetheapplicablecouponrate.
ConditionsPrecedenttoDisbursement
The subscription from investors shall be accepted for allocation andallotmentbytheIssuersubjecttothefollowing:• RatingLetter(notolderthan1month).• RatingRationale/Report(notolderthan1Year).• LetterfromTrusteeconveyingtheirconsenttoactastrusteefrom
thedebentureholders.• Execution of the following transaction documents in a form
acceptabletoDebentureHolder/Investor.• InformationMemorandum.• NSE/BSEinprincipleapprovalletterforlistingoftheNCDs.• Acopyof a resolutionof theboardofdirectorsor committeeof
director authorize for this purpose of the Company. In caseresolution is passed by committee of directors, a copy of theresolutionauthorizing the committeeofdirectors topass sucharesolutionshouldalsobeprovided.
• Shareholder resolutions of the Issuer in relation under sections180(1)(c)and180(1)(a)oftheCompaniesAct,2013approvingthecurrentborrowinglimitoftheIssuer.
• Issuer tocertify that there isnobreachofanyrepresentationorwarrantycontainedintheFacilityagreement.
• Issuer to certify that no Event of Default exists, and issue ofDebentureswouldnotleadtoanEventofDefault.
ConditionSubsequenttoDisbursement
• BoardResolutionortheresolutionbycommitteeofdirectors forallotmentandIssueof letterofallotmentontheDeemedDateofAllotment.
• Credit of dematerialized LOA/Debentures within 2 days fromDeemedDateofAllotment.
• Securitytobecreatedandperfectedwithin90daysoftheDeemedDateofAllotment.
• Closing opinion from Investor Legal Counsel in form andnaturesatisfactorytotheDebentureTrustee.
• Besides,theIssuershallperformallactivities,whethermandatoryor otherwise, as mentioned elsewhere in the InformationMemorandum.
• ExecutionofDebentureTrustDeed.• AllinsurancepoliciespertainingtotheSecurityshallbeendorsed
in favor of the Trustee alongwith other lenders secured as losspayee,within30daysfromDeemedDateofAllotment.
• CAcertificateforenduseoffundstobefurnishedwithin60daysfromtheDeemedDateofAllotmentcertifying(i)theend-useoftheinvestmentamounts,providingabreak-upofinvestmentamountsutilized by the Issuer towards (a) reimbursement of capitalexpenditure already incurred, (b) capital expenditure incurredafterdateofallotmentoutofinvestmentamountinrelationtotheProject,andinvestmentamountswhichremainun-utilisedbytheIssuer.
• IncaseofReimbursementofCapex-CACertificateshouldconfirmthe amount of capex incurred during one year immediately
79
preceding the Deemed Date of Allotment of the Debentures forwhichreimbursementhasbeentakenandthesamewasnotfundedbyanydebt.FurtherconfirmationthattheactualenduseoffundsisincompliancewiththeobjectsoftheIssue.
CrossDefault Any Financial Indebtedness, including obligations under guaranteesissued, of the Issuer, isnotpaidwhendueand suchamountofnon-paymentisgreaterthanRs.5croreandthesameisnotrectifiedwithinacureperiodof30days.
RepresentationandWarranties
TheIssuershallmakethefollowingrepresentationsintheDebentureTrustDeedincludingbutnotlimitedto:• Corporateexistence,capacityandauthorityincludingcompliance
with provisions relating to inter corporate borrowing andguaranteesundertheCompaniesAct2013,asamendedfromtimetotime;
• Legal,validandbindingnatureoftheTransactionDocuments;• Corporate and governmental authorizations and consents
(including those from central and state government, localauthorities), no contravention of existing agreements andconstitutionaldocuments,oranydocumentwhichisbinding;
• Maintenanceoftitleoverassetsandrightunderthecontracts;Nooutstandingdefault,materiallitigation,violationoflawormaterialagreements;
• Completeness and accuracy of financial statements and otherinformationsharedbytheIssuer;
• Issuerisnotanon-bankingfinancialcompanyoracoreinvestmentcompany;
• Compliancewithlaws(includinganti-bribery,anti–corruption/anti-moneylaundering,sanctions/anti-terrorismlaws);
• EachoftherepresentationswillremaincorrectandcompliedwithsolongtheFacilityand/oranysumthereunderremainoutstanding
• Anyother representationsasmaybe requiredby theDebentureHoldersandcapturedintheDebentureTrustDeed.
InformationCovenants The Issuershallprovideappropriatelycertifiedcopiesofeachof thefollowing:• Copies of insurance policies notifying maintenance of adequate
insuranceinrelationtothesecuredassets;• Unaudited quarterly financial statements and annual audited
consolidated and standalone financial statements within 180calendardaysfollowingtheclosureoftheprecedingFinancialYearprescribedtimelineslaidbySEBI;
• The Issuer shall keepTrustee informed of the happening of anyevent likely to have Material Adverse Change in the Issuer,subsidiaries,orJVs.
• Details of any material litigation, arbitration or administrativeproceedings;
• Notificationofanydefaultoreventofdefault;• The Issuer shall keep the Trustee advised of any circumstances
adverselyaffectingthefinancialpositionoftheCompany,includinganyactiontakenbyanycreditoragainstthesaidcompanieslegallyorotherwise.
Details of the aforementioned information covenants are stated indetailintheDebentureTrustDeed.
Inspection DebentureTrusteetohavetherighttoinspecttheassetsoftheIssuerbeingchargedwithapriorintimationintermsofthedebenturetrustdeed.
80
Environmentrelatedcovenants
The Issuer shall, at all times during the currency of the assistance,comply with the environmental, health, safety, social and otherrequirementsincludingthefollowing:• Ensurecompliancewithprovisionsofallapplicablelegislation,and
clearanceissuedthereunder.• To inform the Trustee within ten (10) working days of the
occurrence of any social, labor, health and safety, security orenvironmental incidents, accidents or any other circumstanceswhichcouldreasonablybeexpectedtohaveanymaterialadversechangesontheIssuer'sbusinessandtakecorrectivemeasuresassuggestedbytheTrustee,ifany.
EventofDefault EventsofDefaultasstatedintheDebentureTrustDeed,includingbutnotlimitedtothefollowing:• Non-Paymentofprincipalorcoupononduedates.• BreachofanytermsoftheTransactionDocuments;ifnotcuredin
30days.• BreachofanycovenantsoftheTransactionDocumentsifnotcured
in30days.• Misrepresentationsofanyrepresentationsandwarranties; ifnot
curedin30days.• Cross-defaultundertheTransactionDocumentsforthedebentures
ifitinexcessofRs.5croreandsameisnotcuredwithin30days.• Insolvency,reorganization,liquidation,suspensionofpaymentsof
debts,windingup,illegality,cessationofbusinessbyIssuer.• Applicationforinvoluntarywindingup/applicationfiledbyIssuer
forvoluntary insolvencyoragainst Issuerby financialcreditor/operationalcreditorunderInsolvencyandBankruptcyCode,2016,asamended,ifnotcuredin7days.
• UnlawfulnessoftheTransactionDocumentsoranyMoratoriumonpaymentbeingimposed.
• Nationalization or Expropriation of any substantial part of theassetsoftheIssuer.
• Reorganization, liquidation, suspension of payments of debts,windingup,illegality,cessationofbusiness.
• IllegalityoftheTransactionDocumentifnotcuredin30days.• EnforceabilityofSecurityismateriallyaffectedasisinjeopardy.• MaterialAdverseEffects;ifnotcuredwithin30days.• CessationofbusinessoftheIssuer.• Fraudandmisappropriation.• Anysecurityceasingtobeeffectiveifnotcuredwithin30days• Breach/non-creationofanySecuritydocument,withinstipulated
timeframeunlessextendedwithmutualconsentwithTrustee• Failure to obtain / maintain any insurance as required by the
Trustee, and or review from time to time, or failure to payinsurancepremiumwhendue,withinaperiodof90days.
• ThePromoteror Issueroranyof theirdirectorsare included inRBI's wilful defaulters (except nominee directors nominated byany financial institution). In case an independent director isincludedinwilfuldefaulterlist,cureperiodof30daystoreplacehim.
• Any other Event of Default as may be defined in TransactionDocuments.
ConsequenceofEventofDefault
TheconsequencesofdefaultasstatedintheDebentureTrustDeedwillincludebutnotlimitedto,thefollowing:• Accelerationofalloutstandingdues,cancellationoftotalIssueand
enforcementofSecurity;• To transfer assets of the Issuer comprised within the Security
created in favour of the Debenture Trustee or such any other
81
personbywayof lease, leaveandlicense,saleorotherwise.Anysurplusrealizedfromthetransferofassetsafter fulfilmentofallobligationsoftheIssuerundertheIssueshallbepaidtotheIssuer.
• EnforceitsrightundertheTransactionDocuments;• Appropriate any amount in the accounts and utilize it for the
payments/repaymentsoftheanyamountsoutstandingundertheIssue;
• Default Interest shall be charged from the date of defaultirrespectiveofthesamebeingdeclaredbytheDebentureHolderstillsuchdatethedefaultsubsists;
• Anycosts incurred inrespectof theaboveshallbeborneby theIssuer;
• Exercise any other right that the Trustee may have under theFinancingAgreementsandSecuritydocumentsorunderapplicablelaw;
• StipulateanyfurthertermsandconditionsastheTrusteedeemfitwithrespecttoTransactionDocuments.
DividendRestriction TheIssuershallnotdeclareorpaydividendtotheshareholderforanyfinancial year if an event of non-payment of interest, principalinstalmentandothermoniesdueunderthefinancingdocumentshasoccurred.
MaterialAdverseEffect the occurrence, effect or consequence of an event, circumstance,occurrence or condition (including any roll-back of regulatoryapproval, material to operations of the Company) which in the soleopinion of Debenture Trustee has caused, as of any date ofdetermination,orcouldbeexpectedtohaveamaterialadverseeffectonormaterialadversechangein:• The financial condition, performance, assets, operations,
properties,orbusinessoftheIssuer;• The ability of the Issuer to perform its obligations under the
TransactionDocuments;• thevalidity,legalityorenforceabilityofanyoftheDebenturesor
anyTransactionDocuments(includingtheabilityofanypartytoenforceanyofitsremediesthereunder),or
• The effectiveness, validity, legality, enforceability, priority orranking of the Encumbrances created under the TransactionDocuments.
ForceMajeure ThetermsheetiscontingentontheassumptionthatfromthedateoftheprovisionofthistermsheettotheDeemedDateofAllotment,thereisnomaterialadversechangeinthefinancialconditionsoftheIssueroranyofitsaffiliateandIndiandebtmarketswhichinthereasonableopinionoftheArrangerwouldmakeitinadvisabletoproceedwiththeissue. In case of such material adverse change, the terms may berenegotiatedtothemutualsatisfactionoftheArrangerandtheIssuer.
GoverningLawandJurisdiction
This Information Memorandum and the Transaction Documents forthisDebentureissuanceshallbegovernedbyIndianLawandshallbesubjecttothejurisdictionofcourtsofMumbaiorsuchotherplaceasmaybemutuallyagreeduponbytheIssuerandtheDebentureTrusteeintheDebentureTrustDeed.
Taxesdutiescostandexpenses
Relevant taxes, duties and levies are to be borne by the Issuer. Allcharges/feesandanyamountspayableunderinrelationtotheissueoftheDebenturesandtheDebentureObligationsbytheIssuertotheDebentureHoldersasmentionedhereindonotincludeanyapplicabletaxes,leviesincludingservicetaxetc.andallsuchimpositionsshallbebornebytheIssueradditionally,exceptincometaxes.
Approvals TheIssueragreestocomplywithallapplicablelawsinrespectoftheIssue. The Issuer will be responsible for taking all the necessaryauthorizations and / or approvals internal, external regulatory,statutoryorotherwise.
82
Mannerofbidding OpenModeofsettlement ICCLModeofallotment UniformPriceNote:SubjecttodeductionofTaxatsourceasapplicable.**TheIssuerreservesitssoleandabsoluterighttomodify(pre-pone/postpone)theaboveissueschedulewithoutgivinganyreasonsorpriornotice.Insuchacase,investorsshallbeintimatedabouttherevisedtimeschedulebytheIssuer.TheIssueralsoreservestherighttokeepmultipleDeemedDate(s)ofAllotmentatitssoleandabsolutediscretionwithoutanynotice.IncaseiftheIssueClosingDate/PayinDateis/arechanged(pre-poned/postponed),theDeemedDateofAllotmentmayalsobechanged(pre-poned/postponed)bytheIssuerat its soleandabsolutediscretion.Consequent tochange inDeemedDateofAllotment, theCouponPaymentDatesand/orCallOptionDateand/orRedemptionDatemayalsobechangedatthesoleandabsolutediscretionoftheIssuer.U)DISCLOSUREOFCASHFLOWS:asperSEBICircularNo:CIR/IMD/DF/18/2013datedOctober29,2013&SEBICircularDatedNovember11,2016Company J.K.CEMENTLIMITEDTenure 4yearsFaceValue(persecurity) Rs.10,00,000DeemedDateofAllotment July23,2020RedemptionDate July23,2024CouponRate 7.36%p.a.Frequencyofthecouponpaymentwithspecifieddates
Semi-Annual
DaycountConvention Actual/ActualIllustrativecashflowperDebenture:
Date Principal Interest RepaymentOutstanding Total
Thursday,July23,2020 1,000,000.00 1,000,000.00
Friday,January22,2021 1,000,000.00 36,800.00 1,000,000.00 36,800.00
Friday,July23,2021 1,000,000.00 36,699.18 1,000,000.00 36,699.18
Friday,January21,2022 1,000,000.00 36,699.18 1,000,000.00 36,699.18
Friday,July22,2022 1,000,000.00 36,699.18 200,000.00 800,000.00 236,699.18
Monday,January23,2023 800,000.00 29,843.29 200,000.00 600,000.00 229,843.29
Friday,July21,2023 600,000.00 21,656.55 200,000.00 400,000.00 221,656.55
Tuesday,January23,2024 400,000.00 15,002.30 200,000.00 200,000.00 215,002.30
Tuesday,July23,2024 200,000.00 7,339.84 200,000.00 - 207,339.84
83
Illustrativetotalcashflow:
Date Principal Interest RepaymentOutstanding Total
Thursday,July23,2020
2,500,000,000.00
2,500,000,000.00 -
Friday,January22,2021
2,500,000,000.00 92,000,000.00
2,500,000,000.00 92,000,000.00
Friday,July23,2021
2,500,000,000.00 91,747,945.21
2,500,000,000.00 91,747,945.21
Friday,January21,2022
2,500,000,000.00 91,747,945.21
2,500,000,000.00 91,747,945.21
Friday,July22,2022
2,500,000,000.00 91,747,945.21 500,000,000.00
2,000,000,000.00 591,747,945.21
Monday,January23,2023
2,000,000,000.00 74,608,219.18 500,000,000.00
1,500,000,000.00 574,608,219.18
Friday,July21,2023
1,500,000,000.00 54,141,369.86 500,000,000.00
1,000,000,000.00 554,141,369.86
Tuesday,January23,2024
1,000,000,000.00 37,505,753.42 500,000,000.00 500,000,000.00 537,505,753.42
Tuesday,July23,2024 500,000,000.00 18,349,589.04 500,000,000.00 - 518,349,589.04
FUTUREBORROWINGSTheCompanywillbeentitledtoborrow/raiseloansoravailoffinancialassistanceinwhateverformasalsotoissuedebentures/NCDs/othersecuritiesinanymannerhavingsuchrankinginpriority,paripassuorotherwise, subject to applicable consents, approvals or permissions that may be required under anystatutory/regulatory/contractual requirement subject to fulfilment of the covenantsmentioned in theTermsheet.
RIGHTSOFDEBENTUREHOLDER(S)TheDebentureHolderswillnotbeentitledtoanyrightsandprivilegesofshareholdersotherthanthoseavailabletothemunderstatutoryrequirements.TheDebenturesshallnotconferupontheholderstherightto receive notice, or to attend and vote at the generalmeetings of shareholders of the Company. Theprincipalamountandinterest,ifany,ontheDebentureswillbepaidtothesoleholderonly,andinthecaseofjointholders,totheonewhosenamestandsfirstintheRegisterofdebentureholders.TheDebenturesshallbesubjecttootherusualtermsandconditionsincorporatedinthedebenturecertificate(s)thatwillbe issued to the allottee(s) of such Debentures by the Company and also in the Trustee Agreement /DebentureTrustDeed.
MODIFICATIONOFRIGHTSThe rights, privileges, terms and conditions attached to the Debentures may be varied, modified orabrogatedwiththeconsent,inwriting,ofthoseDebenturesHolderswhoholdatleastthree-fourthoftheoutstandingamountoftheDebenturesorwiththesanctionaccordedpursuanttoaresolutionpassedataseparatemeetingofthedebentureholdersrepresentingthree-fourthofoutstandingamountofdebentures,providedthatnothinginsuchconsentorresolutionshallbeoperativeagainsttheCompanywheresuchconsentorresolutionmodifiesorvariesthetermsandconditionsoftheDebentures,ifthesamearenotacceptabletotheCompany.
DEBENTUREHOLDERNOTASHAREHOLDERTheDebentureHolderswillnotbeentitledtoanyoftherightsandprivilegesavailabletotheshareholders.If,however,anyresolutionaffectingtherightsattachedtotheDebenturesisplacedbeforethemembersoftheCompany,suchresolutionwill firstbeplacedbefore theDebentureHolders throughtheDebentureTrusteefortheirconsideration.
84
NOTICESAllnoticesrequiredtobegivenbytheIssuerorbytheDebentureTrusteetotheDebentureHoldersfromtimetotime,shallbedeemedtohavebeengivenifsentbyregisteredpost/sentbyaperson/overnightcourier(ifforinlanddelivery)orinternationalcourier(iforoverseasdelivery)/totheoriginalsole/firstallotteesoftheDebentures.AllnoticesrequiredtobegivenbytheDebentureHolder(s),includingnoticesreferredtounder“PaymentofInterest”and“PaymentonRedemption”shallbesenttotheCompanySecretaryoftheCompanyattheRegisteredOfficebyregisteredpost/speedpostorbyhanddeliverytosuchpersonsatsuchaddressasmaybenotifiedbytheIssuerfromtimetotime.
EVENTSOFDEFAULTPleaserefertoclause“EventsofDefault”intheTermSheetofthisDisclosureDocument.
ADDITIONALCOVENANTSa. Defaultinpayment:AdditionalInterestof2%p.a.overandabovetheagreedcoupon/interestcalculatedfortheperiodfromthedateonwhichanypaymentisduebytheIssueruntilthedatethepaymentismade.b. SecurityCreation:ThesecurityistobecreatedperfectedwithinaperiodofthreemonthsfromDateofAllotment.TheCompanyshallpayapenalinterestof2%p.a.overthecouponrateforthedelayedperiodtilltheactualdateofcreationofthesecurity,iftheCompanyfailstocreatethesecuritywithinthestipulatedtime.FurtheriftheCompanyfailstocreatethesecurityaftertheextendedtimeifany,theinvestorsreservestherighttore-calltheinvestmentalongwithalltheamountsoutstanding.c. DelayinListing:TheIssuerproposestolisttheDebenturesonWDMoftheBSEandaccordinglyshallmakeanapplicationtoBSE.The Issuer furthercovenants that itshallensure listingofallDebentureswithin15daysof theDeemedDateofAllotment.Incaseofdelayinlistingofthedebtsecuritiesbeyond15daysfromtheDeemedDateofAllotment, theIssuerwillpayadditional interestofat least1%p.a.overthecouponratetotheDebentureHoldersforthedelayedperiodi.e.fromtheexpiryof30daysfromtheDeemedDateofAllotmenttillduelistingofsuchDebentures.
Incaseofdelayinlistingofthedebtsecuritiesbeyond15daysfromtheDeemedDateofAllotment,theIssuershallberesponsibleforthecostsofsuchlistingofDebentures.Onthehappeningofanyoftheeventofdefault,inadditiontotherightsspecifiedabove,theDebentureHoldersTrusteesshallhavetherightasindicatedintheSEBIRegulations/CompanyAct2013fromtimetotime.
85
FORMNO.PAS–4
PRIVATEPLACEMENTOFFERLETTER
Pursuanttosection42andrule14(1)ofCompanies(ProspectusandAllotmentofSecurities)Rules,2014
1. GENERALINFORMATIONa. Name,address,websiteandothercontactdetailsofthecompanyindicatingbothregistered
officeandcorporateoffice:Sr.No PARTICULARS : DETAILS(i) REGISTEREDANDCORPORATEOFFICEOFTHEISSUER• Name : J.K.CementLimited• Address : KamlaTower,Kanpur,UttarPradesh208001• TeleNo : +91-512-2371478-81;• FaxNo : +91-512-2332665/2399854;• Email : [email protected]• Website : www.jkcement.com;
b. Dateofincorporationofthecompany:November24,1994c. Business carriedonby the companyand its subsidiarieswith thedetails of branchesor
units,ifany:
PleaserefertheOverviewofBusinessActivitiesspecifiedinSectionBofthisDisclosureDocument.BusinesscarriedbySubsidiaries:JAYKAYCEMCentralLtd.–LimestoneMineshasbeenallottedtotheJAYKAYCEMCentralLtd.anditisproposedtosetupaCementPlant.Presently,itisundertheprocessofobtainingclearancesandlandacquisition.J.K.Cement(Fujairah)FZC–CarryoutoperationsofaWhiteCementunitinUAE,havingcapacityof0.6MNTPAthroughastepdownsubsidiaryJ.K.CementWorks(Fujairah)FZC.ThiscatersWhiteCementandothervalueaddedproductstothemarketofGCCandExporttoothercountriesalso.IthasalsoestablishedasubsidiaryinEastAfricanamelyJ.K.WhiteCement(Africa)Ltd.tomarkettheseproducts.DetailsofBranchesofthecompanyareasunder;Wehave23greycementand40whitecementsalesofficesacrossthenationincludingatlocationslike Goa, Kerala, Pune, Kolhapur, Solapur, Raichur, Aurangabad, Aurangabad, Belgaum, Hubli,Bangalore, Mangalore, Hassan, Davangere, Hyderabad, Vijaywada, Chennai, Cochin, Trichy,Ahmedabad, Mumbai, Pune, Nagpur and Tuticorin in the south; Delhi, Haryana, Hissar, UttarPradesh, Uttaranchal, Punjab, Chandigarh, Rajasthan, Madhya Pradesh, Gujarat, Raipur, Jaipur,Indore, Bhopal, Gurgaon, Gwalior, Jabalpur, Jodhpur, Kota and Bikaner in the north; Kanpur,Ghaziabad, Lucknow, Dehradun, Varanasi, Modinagar, Muradnagar, and Khurja in the Central,Ranchi,Kolkata,Patna,Bhubaneshwar,SiliguriandGuwahatiintheeast.
d. Briefparticularsofthemanagementofthecompany:
PleasereferDetailsofDirectorsspecifiedinSectionEofthisDisclosureDocument.e. Names,addresses,DINandoccupationsofthedirectors:
86
PleasereferDetailsofDirectorsspecifiedinSectionEofthisDisclosureDocument.f. Management’sperceptionofriskfactors:
Pleaserefertopageno.13ofthisDisclosureDocument.g. Details of default, if any, including therein the amount involved, durationof default and
presentstatus,inrepaymentof:i)statutorydues:Nodefaultii)debenturesandinterestthereon:Nodefaultiii)depositsandinterestthereon:Nodefaultiv)Loanfromanybankorfinancialinstitutionandinterestthereon:Nodefault
h. Names,designation,addressandphonenumber,emailIDofthenodal/complianceofficer
ofthecompany,ifany,fortheprivateplacementofferprocess:
COMPLIANCEOFFICEROFTHEISSUERName : ShambhuSinghAddress : KamlaTower,Kanpur,UttarPradesh208001,IndiaTeleNo : +91-512-2371478-81FaxNo : +91-512-2332665/2399854Email : [email protected]
i. AnyDefaultinAnnualfilingoftheCompanyundertheCompaniesAct,2013ortherulesmade
thereunder.None
2. PARTICULARSOFTHEOFFERa. Dateofpassingofboardresolution:
ThepresentplacementofDebenturesisbeingmadepursuanttotheresolutionpassedbytheBoardofDirectorsoftheCompanyatitsmeetingheldonJune17,2020.
b. Dateofpassingofresolutioninthegeneralmeeting:
TheShareholdersof theCompanyvide their resolutiondatedAugust6,2016haveapprovedanaggregateborrowinglimitsoftheCompany,includingthroughissueofdebenturesunderSection180(1)(c)oftheCompaniesAct,2013.
c. Kindsofsecuritiesoffered(i.e.whethershareordebenture)andclassofsecurity;
Secured,Listed,Rated,Redeemable,Non-ConvertibleDebenturesoffacevalueofRs.10lakhseachamountingtoRs.250crores
d. Price at which the security is being offered including the premium, if any, along with
justificationoftheprice;
Priceatwhichthesecurityisbeingoffered
FaceValue Rs.10,00,000/-Discount NilPremium NilTotal(Justification) Rs.10,00,000/-
e. Nameandaddressofthevaluerwhoperformedvaluationofthesecurityoffered;
87
NotApplicable
f. Thejustificationfortheallotmentproposedtobemadeforconsiderationotherthancashtogetherwithvaluationreportoftheregisteredvaluer;NotApplicable
g. Relevantdatewithreferencetowhichthepricehasbeenarrivedat(RelevantDatemeansa
dateatleastthirtydayspriortothedateonwhichthegeneralmeetingofthecompanyisscheduledtobeheld)NotApplicable
h. Theclassorclassesofpersonstowhomtheallotmentisproposedtobemade;
Pleasereferto‘WhocanApply’sectionofthisDisclosureDocument.
i. Intention of promoters, directors or keymanagerial personnel to subscribe to the offer(applicableincasetheyintendtosubscribetotheoffer)required;NotApplicable
j. Thenamesoftheproposedallotteesandthepercentageofpostprivateplacementcapitalthatmaybeheldbythem;NotApplicable
k. Thenumberofpersonstowhomallotmentonpreferentialbasis/privateplacement/rightsissuehasalreadybeenmadeduringtheyear, intermsofnumberofsecuritiesaswellasprice;TheCompanyhasnotallottedanysecuritiesduringthecurrentFiscal.
l. Thechangeincontrol, ifany, inthecompanythatwouldoccurconsequenttotheprivateplacement;TherewillbenochangeincontrolconsequenttotheIssue.
m. Thepre-issueandpost-issueshareholdingpatternofthecompany;Pleaserefertothe‘ShareholdingPatternoftheCompany’intheDisclosureDocument.
n. Amountwhichthecompanyintendstoraisebywayofsecurities;
Rs.250croreso. Termsofraisingofsecurities:Duration,ifapplicable,Rateofdividendorrateofinterest,
modeofpaymentandrepayment:
PleaserefertheTermsheetofthisDisclosureDocumentp. Proposedtimescheduleforwhichtheofferletterisvalid:
PleaserefertheTermsheetofthisDisclosureDocumentq. Purposesandobjectsoftheoffer:
PleaserefertheTermsheetofthisDisclosureDocument
88
r. Contribution being made by the promoters or directors either as part of the offer orseparatelyinfurtheranceofsuchobjects:
NIL
s. Principletermsofassetschargedassecurity,ifapplicable:
PleaserefertheTermsheetofthisDisclosureDocument3. DISCLOSURESWITHREGARDTOINTERESTOFDIRECTORS,LITIGATIONETC.a. Any financial or other material interest of the directors, promoters or key managerial
personnel in the offer and the effect of such interest in so far as it is different from theinterestsofotherpersons.
Directorsarenotpersonallyinterestedintheoffer.
b. DetailsofanylitigationorlegalactionpendingortakenbyanyMinistryorDepartmentof
the Government or a statutory authority against any promoter of the offeree companyduringthe last threeyears immediatelyprecedingtheyearof thecirculationof theofferletterandanydirectionissuedbysuchMinistryorDepartmentorstatutoryauthorityuponconclusionofsuchlitigationorlegalactionshallbedisclosed.
Exceptasstatedbelow,therearenolitigationorlegalactionpendingortakenbyanyMinistryorDepartmentoftheGovernmentorastatutoryauthorityagainstourPromotersduringthelastthreeyears immediately preceding the year of circulation of this InformationMemorandum and nodirection has been issued by any such Ministry of Department or statutory authority uponconclusionofsuchlitigationorlegalaction.
1. Our Directors, Yadupati Singhania and Sushila Devi Singhania and certain other persons(“Applicant”),formingpartofthepromotergroupofJaykayEnterprisesLimited,filedasuo-motoapplicationdatedJanuary16,2017withtheSecuritiesandExchangeBoardofIndia(“SEBI”)forsettlingthedelayedcompliancewhichoccurredingivingopenofferunderregulation3(1)oftheSEBI(SubstantialAcquisitionofSharesandTakeovers)Regulations,2011,whileacquiringcertainequitysharesofJaykayEnterprisesLimited.Pursuanttopaymentofanamountof₹0.18croreascommunicatedtotheApplicantbySEBIvideitse-maildatedOctober11,2007fortheaforesaiddefault, the SEBI vide its order dated November 9, 2017 bearing reference no. SO/EFD-2/SD/174/NOV/2017recordedthattheproceedingsthatmaybeinitiatedfortheaforesaiddefaultaresettledandnoenforcementactionwouldbeinitiatedfortheaforesaiddefault.
c. Remunerationofdirectors(duringthecurrentyearandlastthreefinancialyears)RemunerationoftheDirectors
(Rs.incrores)
Sl.No. NameoftheDirector
RemunerationpaidbythecompanyFY20-21
(UntilJune30,2020) FY19-20 FY18-19 FY17-18
1. YadupatiSinghania** - 21.25 18.60 14.242. ShriSudhirJalan 0.015 0.11 - -3. Smt.SushilaDeviSinghania 0.01 0.11 0.15 0.144. ShriA.Karati 0.015 0.13 0.12 0.125. ShriJ.N.Godbole 0.02 0.14 0.13 0.146. Dr.K.B.Agarwal 0.225 0.17 0.17 0.167. ShriK.N.Khandelwal## 0.0075 0.15 0.14 0.138. ShriRajKumarLohia# - - 0.12 0.129. ShriSuparasBhandari 0.0175 0.14 0.13 0.1310. Mr.PaulHeinzHugentobler 0.01 1.20 1.21 1.1911. Mrs.DeepaGopalanWadhwa 0.015 0.12 0.11 -12. ShriSaurabhChandra* 0.015 0.13 - -
89
13. ShriAshokSinha* 0.0125 0.12 - -14. ShriRaghavPatSinghania*** 0.41 - - -15. ShriMadhavKrishna
Singhania***0.26 - - -
16. ShriAjayKumarSaraogi*** 0.609 - - -**includesremunerationinAEDfromforeignsubsidiarycompaniesduringthecalendaryear2018.#Ceasedw.e.f.3.8.2019##Ceasedw.e.f.17.6.2020*appointedw.e.f.18.5.2019***appointedw.e.f.17.06.2020d. Related party transactions entered during the last three financial years immediately
preceding the year of circulation of offer letter includingwith regard to loansmade or,guaranteesgivenorsecuritiesprovided:
PleaserefertoAnnexure1fortherelatedpartytransactionsforthefinancialyears2017-18,2018-19,2019-2020.
e. Summaryofreservationsorqualificationsoradverseremarksofauditors inthelast fivefinancial years immediately preceding the year of circulation of offer letter and of theirimpactonthefinancialstatementsandfinancialpositionofthecompanyandthecorrectivestepstakenandproposedtobetakenbythecompanyforeachofthesaidreservationsorqualificationsoradverseremark:
Therehasbeennoqualificationraisedoftheauditorsinthelastfivefinancialyearsimmediatelyprecedingtheyearofcirculationofofferletter.
f. Details of any inquiry, inspections or investigations initiated or conducted under the
CompaniesActoranypreviouscompanylawinthelastthreeyearsimmediatelyprecedingtheyearofcirculationofofferletterinthecaseofcompanyandallofitssubsidiaries.Alsoiftherewereanyprosecutionsfiled(whetherpendingornot)finesimposed,compoundingofoffencesinthelastthreeyearsimmediatelyprecedingtheyearoftheofferletterandifso,section-wisedetailsthereofforthecompanyandallofitssubsidiaries:
Nil
g. Detailsofactsofmaterialfraudscommittedagainstthecompanyinthelastthreeyears,if
any,andifso,theactiontakenbythecompany:
Nil4. FINANCIALPOSITIONOFTHECOMPANY
a. thecapitalstructureofthecompanyinthefollowingmannerinatabularform-(i)(A)theauthorised,issued,subscribedandpaidupcapital(numberofsecurities,description
andaggregatenominalvalue):
KindlyrefertosectionCoftheDisclosureDocument
(B)sizeofthepresentoffer:Rs.250crores
(C)paidupcapital:
1. After the offer: Since the said offer pertains to Redeemable,Listed,Secured and Rated Non-ConvertibleDebentures,itwillnothaveanyimpactonissuedsharecapitalofthecompany.
90
2. Afterconversionofconvertibleinstruments(ifapplicable):N.A.
(D)Sharepremiumaccount(beforeandaftertheoffer):
AsonMarch31,2020 Rs.756.79croreAftertheOffer SincethesaidofferpertainstoRedeemable,Listed,SecuredandRatedNon-
Convertible Debentures, it will not have any impact on Share PremiumAccountoftheCompany
(ii) The details of the existing share capital of the Issuer company in a tabular form,indicatingthereinwithregardtoeachallotment,thedateofallotment,thenumberofsharesallotted,thefacevalueofthesharesallotted,thepriceandtheformofconsideration.ProvidedthattheIssuercompanyshallalsodisclosethenumberandpriceatwhicheachofthe allotments were made in the last one year preceding the date of the offer letterseparatelyindicatingtheallotmentsmadeforconsiderationsotherthancashandthedetailsoftheconsiderationineachcase;
PleaserefertotheDetailsofSharecapitalandChangesinsharecapitalstructureinthisDisclosureDocument.
b. Profitsof thecompany,beforeandaftermakingprovision for tax, for the three financial
yearsimmediatelyprecedingthedateofcirculationofofferletter:(Amountincrores)
Profitsbeforeandaftermaking
provisionfortax
Details
LastAuditedFiscalYear(2019-20)
PrecedingYear
(2018-19)
PrecedingYear
(2017-18)
PBT Standalone 652.01 473.57 439.72Consolidated 734.44 412.43 383.21
PAT Standalone 400.37 324.89 341.87Consolidated 483.39 263.63 285,58
c. Dividends declaredby the company in respect of the said three financial years; interest
coverageratioforlastthreeyears(Cashprofitaftertaxplusinterestpaid/interestpaid)
DetailsLastAuditedFiscalYear(2019-20)
FinancialYear(2018-19)
FinancialYear(2017-
18)Dividends(includingDDT)paidbythecompany(Rs.InCrores)
163.01 84.30 67.33
InterestCoverageRatio 5.06 4.09 3.62d. Asummaryofthefinancialpositionofthecompanyasinthethreeauditedbalancesheets
immediatelyprecedingthedateofcirculationofofferletter;
RefertoANNEXURE1e. Audited Cash Flow Statement for the three years immediately preceding the date of
circulationofofferletter;
ReferANNEXURE1f. Anychangeinaccountingpoliciesduringthelastthreeyearsandtheireffectontheprofits
andthereservesofthecompany.
92
APPLICATIONFORM
J.K.CEMENTLIMITEDAPubliclimitedcompanyincorporatedundertheCompaniesAct,1956
DateofIncorporation:November24,1994RegisteredOffice:KamlaTower,Kanpur,UttarPradesh–208001
TelephoneNo.:+91-512-2371478-81;ContactPerson:
Website:http://www.jkcement.com;
ISSUEOFUPTO2,500(SECURED,RATED,LISTED,REDEEMABLE,NON-CONVERTIBLEDEBENTURESOF J.K.CEMENTLIMITEDOFFACEVALUEOFRS.10,00,000/- (RUPEESTENLAKHSONLY)EACHAGGREGATINGUPTORS.RS.250CRORE(RUPEESTWOHUNDREDFIFTYCROREONLY)DEBENTUREAPPLIEDFOR:NumberofDebentures________Inwords____________________________________________AmountRs._____________________/-_inwordsRupees______________________________________________________________________________________CroresonlyDETAILSOFPAYMENT:RTGS/NEFTNo._____________Drawnon_____________________________________________Fundstransferredto______________________Dated____________TotalAmountEnclosed(InFigures)_____________(Inwords)______________________________________APPLICANT’SNAMEINFULL(CAPITALS) SPECIMENSIGNATURE
APPLICANT’SADDRESSADDRESS
STREET
CITY
PIN PHONE FAX
APPLICANT’SPAN/GIRNO.___________ITCIRCLE/WARD/DISTRICT____WEARE()COMPANY()OTHERS()SPECIFY__________
93
Wehave readandunderstood theTermsandConditionsof the issueofDebentures including theRiskFactorsdescribedintheMemorandumandhaveconsideredtheseinmakingourdecisiontoapply.WebindourselvestotheseTermsandConditionsandwishtoapplyforallotmentoftheseDebentures.Werequestyoutopleaseplaceourname(s)ontheRegisterofHolders.
NameoftheAuthorisedSignatory(ies)
Designation Signature
Applicant’s Signature Wetheundersigned,areagreeabletoholdingtheDebenturesoftheCompanyinDemat.Detailsofmy/ourBeneficialOwnerAccountaregivenbelow:DEPOSITORY NSDL()CDSL()DEPOSITORYPARTICIPANTNAME DP-ID BENEFICIARYACCOUNTNUMBER NAMEOFTHEAPPLICANT(S)
ApplicantBankAccount:(SettlementbywayofCheque/DemandDraft/PayOrder / Direct Credit / ECS / NEFT/RTGS/otherpermittedmechanisms)
FOROFFICEUSEONLYDATEOFRECEIPT________________WeunderstandandconfirmthattheinformationprovidedintheInformationMemorandumisprovidedbytheIssuerandthesamehasnotbeenverifiedbyanylegaladvisorstotheIssuerandotherintermediariesand their agents and advisors associatedwith this Issue.We confirm thatwe have for the purpose ofinvestingintheseDebenturescarriedoutourownduediligenceandmadeourowndecisionswithrespecttoinvestmentintheseDebenturesandhavenotreliedonanyrepresentationsmadebyanyoneotherthantheIssuer,ifany.TheIssuerunderstandsandacceptsthattheApplicants'intentiontosubscribetotheIssueissubjectto(i)theabsenceofmaterialadversechangesintheavailabilityofcurrencyhedgingaccessibletoitbetweentheIssueOpeningDateandthePay-inDateand/or(ii)thehedgingpricebeingacceptabletotheApplicants.Weunderstandthat:(i) incaseofallotmentofDebenturestous,ourBeneficiaryAccountasmentionedabovewould get credited to the extent of allottedDebentures, (ii) theApplicantmust ensure that thesequenceofnamesasmentionedintheApplicationFormmatchesthesequenceofnameheldwithourDepositoryParticipant,(iii)ifthenamesoftheApplicantinthisapplicationarenotidenticalandalsonotinthesameorderastheBeneficiaryAccountdetailswiththeabovementionedDepositoryParticipantoriftheDebenturescannotbecreditedtoourBeneficiaryAccountforanyreasonwhatsoever,theCompanyshallbeentitledatitssolediscretiontorejecttheapplicationorissuetheDebenturesinphysicalform.Weunderstandthatweareassumingonourownaccount,allriskoflossthatmayoccurorbesufferedbyusincludingastothereturnsonand/orthesalevalueoftheDebentures.Weundertakethatuponsaleortransfertosubsequentinvestorortransferee(“Transferee”),weshallconveyallthetermsandconditionscontainedhereinandinthisInformationMemorandumtosuchTransferee.
94
Applicant’s Signature
FOROFFICEUSEONLYDATEOFRECEIPT______________________
-------------------------------------------------(TEARHERE)--------------------------------------------
ACKNOWLEDGMENTSLIP(TobefilledinbyApplicant)SERIALNO. - - - - - - - -
Receivedfrom_______________________________________________
Address______________________________________________________________________________________________________________________________________UTR#______________Drawnon_______________________________forRs._____________onaccountofapplicationof_____________________Debenture
CARE Ratings Ltd.
CORPORATE OFFICE: 4th Floor, Godrej Coliseum, Somaiya
Hospital Road, Off Eastern Express Highway, Sion (E),
Mumbai - 400 022.
Tel.: +91-22- 6754 3456 Fax: +91-22- 022 6754 3457
Email: [email protected] www.careratings.com
13th Floor, E-1 Block, Videocon Tower
Jhandewalan Extension, New Delhi - 110 055.
Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
CIN-L67190MH1993PLC071691
No. CARE/DRO/RL/2020-21/1670 Mr. A.K. Saraogi President (Corporate Affairs) & Chief Financial Officer J.K. Cement Ltd. Kamla Tower, Kanpur 208 001, Uttar Pradesh
July 3, 2020
Confidential
Dear Sir,
Credit rating for proposed Non-Convertible Debenture issue
Please refer to your request for rating of proposed long-term non-convertible debenture
(NCD) issue aggregating to Rs.250 crore of your company. The proposed NCDs would have
tenure of four (4) years with repayment in six/ seven semi-annual equal installments.
2. The following ratings have been assigned by our Rating Committee:
Instrument Amount (Rs. crore)
Rating1 Rating Action
Proposed Non-Convertible Debenture issue
250.00 (enhanced from Rs.200 crore)
CARE AA; Stable (Double A ; Outlook : Stable)
Reaffirmed
Total 250.00 (Rs. Two Hundred and Fifty
Crore)
3. Please arrange to get the rating revalidated, in case the proposed issue is not made
within a period of six months from the date of our initial communication of rating to you
(that is July 3, 2020).
1Complete definitions of the ratings assigned are available at www.careratings.com and in other CARE publications.
CARE Ratings Ltd.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055.
Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
4. In case there is any change in the size or terms of the proposed issue, please get the
ratings revalidated.
5. Please inform us the below-mentioned details of issue immediately, but not later than 7
days from the date of placing the instrument:
Instrument type
ISIN Issue Size (Rs cr)
Coupon Rate
Coupon Payment
Dates
Terms of Redemption
Redemption date
Name and contact
details of Debenture
Trustee
Details of top 10
investors
6. Kindly arrange to submit to us a copy of each of the documents pertaining to the NCD
issue, including the offer document and the trust deed.
7. The rationale for the rating will be communicated to you separately. A write-up (press
release) on the above rating is proposed to be issued to the press shortly, a draft of
which is enclosed for your perusal as Annexure. We request you to peruse the annexed
document and offer your comments if any. We are doing this as a matter of courtesy to
our clients and with a view to ensure that no factual inaccuracies have inadvertently
crept in. Kindly revert as early as possible. In any case, if we do not hear from you by July
07, 2020, we will proceed on the basis that you have no any comments to offer.
8. CARE reserves the right to undertake a surveillance/review of the rating from time to
time, based on circumstances warranting such review, subject to at least one such
review/surveillance every year.
9. CARE reserves the right to revise/reaffirm/withdraw the rating assigned as also revise
the outlook, as a result of periodic review/surveillance, based on any event or
information which in the opinion of CARE warrants such an action. In the event of failure
on the part of the entity to furnish such information, material or clarifications as may be
required by CARE so as to enable it to carry out continuous monitoring of the rating of
CARE Ratings Ltd.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055.
Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
the debt instrument, CARE shall carry out the review on the basis of best available
information throughout the life time of such instrument. In such cases the credit rating
symbol shall be accompanied by “ISSUER NOT COOPERATING”. CARE shall also be
entitled to publicize/disseminate all the afore-mentioned rating actions in any manner
considered appropriate by it, without reference to you.
10. Our ratings do not factor in any rating related trigger clauses as per the terms of the
facility/instrument, which may involve acceleration of payments in case of rating
downgrades. However, if any such clauses are introduced and if triggered, the ratings
may see volatility and sharp downgrades.
11. Users of this rating may kindly refer our website www.careratings.com for latest update
on the outstanding rating.
12. CARE ratings are not recommendations to buy, sell or hold any securities.
If you need any clarification, you are welcome to approach us in this regard. We are indeed,
grateful to you for entrusting this assignment to CARE.
Thanking you,
Yours faithfully,
[Harish Chellani] [Jasmeen Kaur] Senior Manager Deputy General Manager [email protected] [email protected] Encl.: As above
Disclaimer
CARE Ratings Ltd.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055.
Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
CARE’s ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE’s ratings do not convey suitability or price for the investor. CARE’s ratings do not constitute an audit on the rated entity. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. CARE or its subsidiaries/associates may also have other commercial transactions with the entity. In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is, inter-alia, based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors. CARE is not responsible for any errors and states that it has no financial liability whatsoever to the users of CARE’s rating.
CARE Ratings Ltd. CORPORATE OFFICE: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (E), Mumbai - 400 022. Tel.: +91-22- 6754 3456 Fax: +91-22- 022 6754 3457 Email: [email protected] www.careratings.com
13th Floor, E-1 Block, Videocon Tower Jhandewalan Extension, New Delhi - 110 055.
Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
CIN-L67190MH1993PLC071691
No. CARE/DRO/RR/2020-21/1313
Mr. A.K. Saraogi
President (Corporate Affairs) &
Chief Financial Officer
J.K. Cement Ltd.
Kamla Tower, Kanpur 208 001,
Uttar Pradesh
July 13, 2020
Dear Sir,
Credit rating for proposed Non-Convertible Debenture issue
Please refer to our letter dated July 3, 2020 on the above subject.
2. The rationale for the rating is attached as an Annexure-I.
3. We request you to peruse the annexed document and offer your comments, if any. We are
doing this as a matter of courtesy to our clients and with a view to ensure that no factual
inaccuracies have inadvertently crept in. Kindly revert as early as possible. In any case, if we
do not hear from you by July 14, 2020, we will proceed on the basis that you have no
comments to offer.
If you have any further clarifications, you are welcome to approach us.
Thanking you,
Yours faithfully,
Encl.: As above
[Harish Chellani] [Jasmeen Kaur]
Senior Manager Associate Director
CARE Ratings Ltd.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
Annexure - I
Rating Rationale
J.K. Cement Limited
Rating
Facilities Amount (Rs. crore)
Rating1 Rating Action
Proposed Non-Convertible Debentures
250.00 (enhanced from Rs.200 crore)
CARE AA; Stable [Double A; Outlook: Stable]
Reaffirmed
Total Facilities 250.00 (Rs. Two Hundred and Fifty
Crore)
Details of instruments/facilities in Annexure-1
Detailed Rationale & Key Rating Drivers
The reaffirmation of rating of the non-convertible debentures (NCDs) of J.K. Cement Limited (JKCL)
derives strength from the extensive experience of the promoters in cement business, the company’s
established presence in grey cement across diversified geographical markets and its dominant
position in white cement, ensuring healthy margins from the product, and its strong brand image in
both segments. The rating also takes into account satisfactory financial performance of the company
during the FY20, its comfortable financial profile and its strong liquidity position.
The rating is, however, constrained on account of the timing of the significant capacity expansion
which is nearing completion and would come on-stream at a time when the cement industry is
impacted on account of the outbreak of Covid-19 pandemic, the incremental debt required for the
residual portion of the expansion programme which shall lead to increased overall gearing in the
next 1-2 years, support extended by JKCL to its loss-making subsidiary J.K Cement Works Fujairah
(JKCWF, rated CARE AA (SO); Stable), cyclicality associated with the cement industry, exposure to
volatility in input costs and cement demand dependent on construction activity and infrastructure
spend in the economy and the uncertainty regarding the timing of the on-going Covid-19 pandemic
clearing out.
Rating Sensitivities: The sensitivities indicate the possible direction of movement of rating in future
(positive or negative), on happening of, inter alia, the following events:
Positive Factors:
Improvement in leverage levels, going forward, with overall gearing sustaining below unity, on a
consolidated basis.
Timely stabilization of enhanced capacities such that the overall capacity utilization levels ramp
up to 75% -80%
Sustained growth in top-line by around 15-20% p.a.
1Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications
CARE Ratings Ltd.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
Turnaround of loss-making subsidiary J.K. Cement Works Fujairah
Sustained profitability in light of volatile input costs
Negative Factors
Time and cost overruns in the ongoing capex and extended stabilization period for the enhanced
capacities amidst the ongoing Covid-19 pandemic
Increase in leverage levels such that overall gearing, on a consolidated basis, increases beyond
1.50x
Structural changes in the white cement industry impacting the profitability of the company
Detailed description of the key rating drivers
Key Rating Strengths
Experienced promoters, established presence and strong brand image
The promoters of JKCL have extensive experience in the business of cement manufacturing and
marketing. JKCL also has an experienced and qualified management team, which has facilitated the
company’s growth over two decades. The company has a strong presence in the grey cement
segment across the northern, western and southern markets of India, with presence in more than 10
states and has established brands like ‘JK Super Cement’ and ‘JK Super Strong Cement’. Besides, the
company has a pan-India presence in white cement and wall putty, which are sold, respectively,
under brand names, ‘JK White Cement’ and ‘JK Wall Putty’.
Dominant position in white cement industry
JKCL is the second largest white cement manufacturer in India with an installed capacity of 0.6
million tonnes per annum (MTPA). The company also produces wall putty, a value-added product of
white cement, for which it has an overall capacity of 0.9 MTPA as on March 31, 2020. The white
cement segment is characterised by a small industry with significant entry barriers, and
consequently a duopoly structure as of now, which ensures healthy operating margins for the
manufacturers. Besides, consistently strong growth in the white cement and wall putty segments
has created a steady cash flow stream for JKCL and contributed significantly towards its PBILDT over
the years.
Consistent improvement in operating and financial performance
During FY20, the company has reported improvement in financial performance. The consolidated
operating income of JKLC has grown by around 11% on y-o-y basis to Rs.5,887 crore (Rs.5310 crore
in FY19), its PBILDT has increased by around 46% to Rs.1299 crore in FY20 (Rs.890 crore in FY19), and
its PAT has increased by 83% to Rs.483 crore in FY20 (Rs.264 crore in FY19). The improvement in
performance in FY20 is primarily on account of higher sales realizations and reduced input costs.
JKCL’s volume growth in the white cement and wall putty segments continued to be steady at 10%
in FY20. The volumes in the grey cement segment declined by 2% during FY20 owing to Covid-19
pandemic, which affected the operations of the company during last 10 days of March 2020. While
net sales realization for white cement and putty remained at similar level during FY20 over FY19, the
net sales realization in grey cement segment improved by more than 13% during FY20, which has
offset the decline in volumes during the FY20.
CARE Ratings Ltd.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
Owing to nation-wide lockdown, the volumes are expected to be lower in Q1 FY21. It may however,
be noted that the company has gradually ramped up its operations on all the plants following partial
lifting of the lockdown. The ramp up in rural areas has been moderate which has resulted in
increased trade volumes for grey cement subsequent to lifting of lockdown. The sales volume of
white cement, however, has declined, with white cement being a high value commodity with
demand primarily in urban areas. Cement demand is closely linked to the overall economic growth,
particularly the housing and infrastructure sector, which has fallen given the lockdown related
restrictions owing to Covid-19 pandemic. Going forward, the ability of the company to sustain or
improve its operational performance amidst the ongoing Covid-19 pandemic, and revive its volumes
and realizations over the rest of the FY21 shall be a key monitorable.
Comfortable financial risk profile and strong liquidity position
JKCL’s financial risk profile improved during the FY19 facilitated by improvements in the capital
structure and debt service coverage ratios. The company raised equity aggregating Rs. 510.79 crore
in the month of Dec 2018 which has strengthened the company’s capital structure. The company’s
interest coverage ratio stood at 3.41x for FY19, which further improved to 4.70x for FY20 on account
of improvement in PBILDT levels. Furthermore, the overall gearing of the company also improved to
1.10x as on March 31, 2020 at the back of healthy profits generation as against 1.12x as on March
31, 2019 , however, drawdown of debt for the ongoing capex would result in some increase in
gearing levels in the next year.
Key Rating Weaknesses
Ongoing capital expenditure though satisfactory progress achieved
JKCL had undertaken a brownfield expansion of 4.2 MTPA for a total estimated expenditure of about
Rs.1,998 crore, which had started in FY18. The expansion comprises of an additional clinker capacity
of about 2.64 MTPA at Mangrol and additional grinding capacity of 1 MTPA each at Nimbahera and
Mangrol. Besides, two new split grinding units of 1.5 MTPA at Aligarh, Uttar Pradesh and 0.7 MTPA
at Balsinor, Gujarat would be added under the planned expansion. The aggregate project cost is
funded in debt equity ratio of 1.86:1. The entire debt has been tied up and drawn to the extent of
Rs. 760 crore as on March 31, 2020. Equity has been infused aggregating Rs. 668 crore as on March
31, 2020 as against the total equity requirement of Rs. 698 crore. The company has incurred
expenses of Rs.1,480 crore till March 31, 2020.
While the company had commissioned the 1 MTPA grey cement grinding unit at Nimbahera and a
2.64 MTPA grey clinker at Mangrol in September 2019, 1 MTPA Cement Grinding Capacity at
Mangrol and 1.5 MTPA at Aligarh has also been commissioned and commercial despatches have
since started from February 2020. The balance 0.7 MTPA grinding unit at Balasinor is at an advanced
stage and likely to be commissioned by FY21.
While a large part of the capex has been completed, the company remains exposed to project risk
for the residual portion of the expansion project, which would be substantially funded through term
debt, resulting in increased gearing ratio during the FY21. The timely completion and stabilization of
operations of the new capacity shall be a key monitorable.
Furthermore, the capacities would come on-stream at a time when the cement industry is impacted
on account of the outbreak of Covid-19 pandemic and the entire industry would grapple with
CARE Ratings Ltd.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
volume ramp-up with normalization of the ongoing scenario. However, this is mitigated to a large
extent by the strong brand image enjoyed by the company. Besides, the company expects to
enhance its distribution network during the current period which would enable it to increase its
supply as and when the demand normalizes.
JKCWF’s weak operating performance and financial risk profile
JKCL, under its step-down subsidiary JKCWF, had established a green-field dual process cement plant
in September 2014 at Fujairah, UAE, having installed capacity of 0.6 MTPA of white cement or 1
MTPA of grey cement. JKCWF has reported net loss since the commencement of operations (net loss
of Arab Emirate Dirhams (AED) 38.15 million and AED 37.23 million in CY 19 and CY18 respectively).
The operating levels have remained relatively low due to weak demand in the Gulf countries on
account of subdued construction activity. JKCWF remains dependent on infusion of funds from JKCL
for meeting its debt obligations in near term. Consequently, operational and financial improvement
in performance would remain a crucial rating sensitivity of JKCL.
Exposure to volatility in input costs as well as sales realization prices
While JKCL has fuel supply agreements (FSA) to meet part of the coal requirement, it has a
significant dependence on petroleum coke (sourced from domestic markets) and imported coal,
thereby exposing the company to any adverse volatility in the prices of commodities. Additionally,
the company is meeting part of its fuel requirement through imports, which also exposes it to the
risk of any adverse fluctuation in exchange rates. The ability of the company to manage costs and
improve realizations remains crucial. Besides, realizations and profitability get impacted by demand,
supply, offtake etc., which are inherent risks associated with the cement industry.
Liquidity Position: Strong
The liquidity position of the company continues to be strong with free cash balance (including liquid investments) of around Rs.980 crore as on July 1, 2020. The average utilisation of fund-based working capital limits (including commercial paper) was comfortable at 31.95% for 12 months ending May 31, 2020. The company has principal repayments of around Rs.415 crore in FY21 on a consolidated basis vis-à-vis gross cash accruals of Rs.851 crore in FY20.
The company has not availed moratorium for its debt obligations under the COVID-19 - Regulatory
Package announced by the RBI on March 27, 2020 and May 22, 2020.
Analytical approach:
Consolidated
Applicable Criteria
Criteria on assigning ‘Outlook’ and ‘Credit Watch’ to Credit Ratings CARE’s Policy on Default Recognition Financial Ratios – Non-Financial Sector Rating Methodology – Manufacturing Companies Rating Methodology - Cement Industry Rating Methodology – Short Term Instruments Rating Methodology: Factoring Linkages in Ratings Liquidity Analysis of Non-Financial Sector Entities
CARE Ratings Ltd.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
About the Company
JKCL (CIN No: L17229UP1994PLC017199), a part of the JK group (North), was incorporated in
November 1994. JKCL’s installed capacity for grey cement stood at 13.97 MTPA, with facilities
located at Nimbahera, Mangrol and Gotan in Rajasthan (aggregating 7.97 MTPA), Jhajjar in Haryana
(1.50 MTPA capacity including split grinding unit at Jhajjar, commissioned in FY15), Muddarpur in
Karnataka (3.0 MTPA) and Aligarh in Uttar Pradesh (1.50 MTPA). The company’s white cement plant
has a capacity of 0.6 MTPA is located at Gotan and wall putty plant of 0.5 MTPA is located at Gotan
and 0.4 MTPA at Katni, Madhya Pradesh (commissioned on May, 2016 and June 2018).
JKCL, under its step-down subsidiary J.K Cement Works (Fujairah), FZC UAE (JKCWF, rated ‘CARE AA
(SO)’, backed by corporate guarantee from JKCL) , has a dual process cement plant having
interchangeable capacity of 0.6 mtpa of white cement or 1 mtpa of grey cement.
Financial Performance (Rs. crore)
Particulars 2018 2019 2020
(12m, A) (12m, A) (12m, A)
Working Results
Total Operating income 4887.65 5310.19 5886.96
PBILDT 830.43 890.10 1298.77
Interest 284.09 261.12 276.36
Depreciation 231.32 241.28 287.96
PBT 383.22 412.43 734.45
PAT (after deferred tax) 285.59 263.63 483.39
Gross Cash Accruals 520.40 549.97 851.17
Financial Position
Equity Capital 69.93 77.27 77.27
Net Worth 1952.74 2665.59 3007.42
Total capital employed 5182.39 5990.31 NA
Key Ratios
Growth
Growth in Total income (%) 20.07 8.60 10.86
Growth in PAT (after D.Tax) (%) 66.07 -7.69 83.36
Profitability
PBILDT/Total Op. income (%) 16.99 16.76 22.06
PAT (after deferred tax)/ Total income (%) 5.84 4.96 8.21
ROCE (%) 13.09 12.06 NA
Solvency
Long Term Debt Equity ratio(times) 1.43 1.03 NA
Overall gearing ratio(times) 1.51 1.12 1.10
Interest coverage(times) 2.92 3.41 4.70
Term debt/Gross cash accruals(years) 5.35 4.97 NA
CARE Ratings Ltd.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
Liquidity
Current ratio(times) 1.25 1.15 NA
Quick ratio(times) 0.83 0.78 NA
Turnover
Average collection period (days) 16 17 NA
Average creditors (days) 38 61 NA
Average inventory (days) 81 78 NA
Operating cycle (days) 58 34 NA
A: Audited NA: Not Available
Covenants of rated instrument/facility: Detailed explanation of the rated instruments/ facilities is given in Annexure-4 Status of non-cooperation with previous CRA: Not Applicable Any other information: Not Applicable Rating History for last three years: Please refer Annexure-2 Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to [email protected] for any clarifications.
Contact us
Media Contact
Mradul Mishra
Contact no. – +91-22-6837 4424
Email ID – [email protected]
Analyst Contact:
Name: Ms. Jasmeen Kaur
Tel: 011-45333245
Mobile: 9810401324
Email: [email protected]
About CARE Ratings: CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices.
CARE Ratings Ltd.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
Disclaimer
CARE’s ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE’s ratings do not convey suitability or price for the investor. CARE’s ratings do not constitute an audit on the rated entity. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. CARE or its subsidiaries/associates may also have other commercial transactions with the entity. In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is, inter-alia, based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors. CARE is not responsible for any errors and states that it has no financial liability whatsoever to the users of CARE’s rating. Our ratings do not factor in any rating related trigger clauses as per the terms of the facility/instrument, which may involve acceleration of payments in case of rating downgrades. However, if any such clauses are introduced and if triggered, the ratings may see volatility and sharp downgrades.
Annexure-1: Details of Instruments/Facilities
Name of the Instrument
Date of Issuance
ISIN Coupon Rate
Maturity Date
Size of the Issue
(Rs. crore)
Rating assigned along with Rating
Outlook
Proposed Debentures-Non Convertible Debentures
NA NA NA NA 250.00 CARE AA; Stable
Annexure-2: Rating History of last three years
Sr. No.
Name of the Instrument/Bank
Facilities
Current Ratings Rating history
Type
Amount Outstanding (Rs. crore)
Rating
Date(s) & Rating(s)
assigned in 2020-2021
Date(s) & Rating(s)
assigned in 2019-2020
Date(s) & Rating(s)
assigned in 2018-2019
Date(s) & Rating(s)
assigned in 2017-2018
1. Fund-based - LT-Cash Credit
LT 375.00 CARE AA; Stable
- CARE AA; Stable (16-Dec-19)
1)CARE AA; Stable (08-Oct-18)
1)CARE AA; Stable (14-Sep-17)
2. Commercial Paper ST 150.00 CARE A1+
- CARE A1+ (16-Dec-19)
1)CARE A1+ (08-Oct-18)
1)CARE A1+ (14-Sep-17)
3. Non-fund-based - ST-BG/LC
ST 350.00 CARE A1+
- CARE A1+ (16-Dec-19)
1)CARE A1+ (08-Oct-18)
1)CARE A1+ (14-Sep-17)
4. Debentures-Non Convertible Debentures
LT 31.50 CARE AA; Stable
- CARE AA; Stable (16-Dec-19)
1)CARE AA; Stable (08-Oct-18)
1)CARE AA; Stable (14-Sep-17)
5. Debentures-Non LT 69.00 CARE AA; - CARE AA; 1)CARE AA; 1)CARE AA;
CARE Ratings Ltd.
13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Tel: +91-11-4533 3200 Fax: +91-11-4533 3238
Convertible Debentures
Stable
Stable (16-Dec-19)
Stable (08-Oct-18)
Stable (14-Sep-17)
6. Term Loan-Long Term
LT 2811.68 CARE AA; Stable
- CARE AA; Stable (16-Dec-19)
1)CARE AA; Stable (08-Oct-18)
1)CARE AA; Stable (14-Sep-17)
7. Debentures-Non Convertible Debentures
LT 51.00 CARE AA; Stable
- CARE AA; Stable (16-Dec-19)
1)CARE AA; Stable (08-Oct-18)
1)CARE AA; Stable (14-Sep-17)
8. Debentures-Non Convertible Debentures
LT 200.00 CARE AA; Stable
- CARE AA; Stable (16-Dec-19)
1)CARE AA; Stable (08-Oct-18)
1)CARE AA; Stable (14-Sep-17)
9. Debentures-Non Convertible Debentures
LT 100.00 CARE AA; Stable
- CARE AA; Stable (16-Dec-19)
1)CARE AA; Stable (08-Oct-18)
1)CARE AA; Stable (14-Sep-17)
10. Debentures-Non Convertible Debentures
LT - - - - 1)Withdrawn (08-Oct-18)
1)CARE AA; Stable (14-Sep-17)
11. Debentures-Non Convertible Debentures
LT 250.00 CARE AA; Stable
CARE AA; Stable (June
12, 2020)
- - -
Annexure-3: Details of Rated Facilities: Not applicable as the rating is with respect to proposed Non-
Convertible Debentures
Annexure-4: Detailed explanation of covenants of the rated instrument / facilities: NA
(This follows our press release for entity published on July 9, 2020)
EXTRACT OF THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS (NO.4 OF 2020) OF J.K.CEMENT LIMITED HELD ON 17TH JUNE, 2020 IN WHICH PROPER QUORUM WAS PRESENT.
PRIVATE PLACEMENT OF NON CONVERTIBLE DEBENTURES UPTO RS. 250 CRORES
The President (C/A) & CFO informed the Directors that the Company the Company has taken up the project of increase in clinker capacity at its Nimbahera Line-3 plant from existing 5000 tpd. to 6500 tpd. by harnessing the inherent potential and through carrying out modification / additions. The Project Cost is estimated to be Rs. 405 Crores as per the Report prepared by M/s Holtec Consulting Pvt Ltd. The Company proposes to raise Redeemable, Secured, Listed, Non-Convertible and Taxable Debentures (NCDs) to be utilized for part financing the aforesaid capital expenditure already incurred (through reimbursement) and to be incurred. Actual end use may slightly vary depending upon the end use allowed by the subscriber
The NCDs are proposed to be repaid in installments with door to door maturity of approximately 4 years. The NCDs are proposed to be secured by pari-passu first charge on the Fixed Assets related to the Company’s Grey Cement plants (excluding mining land and vehicles) at Nimbahera and Mangrol Line 1 with Security Cover of minimum 1.25.
The aforesaid security shall rank pari-passu among all the Lenders, if any participating in the Facility. Actual end use, repayment schedule etc. may slightly vary depending upon the end use allowed by the subscriber
The Directors discussed, raised certain queries which were answered appropriately. Thereafter following resolution was passed unanimously:-
“RESOLVED THAT pursuant to the provisions of the Memorandum and Articles of Association of the Company and subject to approval of the shareholders of the Company and the provisions of Section 179 and all other applicable provisions of the Companies Act, 2013, read with Companies (Prospectus and Allotment of Securities) Rules, 2014 and Companies (Share Capital and Debentures) Rules, 2014 (including any statutory modification or re-enactment thereof for the time being in force) and other applicable laws, the Board of Directors of the Company be and is hereby grant its approval to raise up to Rs. 250 Crores (Rupees Two Hundred Fifty Crores only) by way of issuance of Non-convertible Debentures (“NCDs”) or through any other similar borrowing instrument (“Borrowing Instruments”) in one or more tranches / issuances, whether listed or not and whether secured or not.”
- : 2 : -
“RESOLVED FURTHER THAT the Committee of Directors of Board of Directors of the Company which was constituted vide Board Resolution dated 27.10.2004 be and is hereby authorised to negotiate, and finalise the terms and conditions in connection with the offer and/or issue of the NCDs and /or any Borrowing Instruments, in one or more tranches / issuances up to Rs. 250 Crores (Rupees Two Hundred Fifty Crores only), to foreign portfolio investors, companies and bodies corporate including public sector undertakings, scheduled commercial banks, financial institutions, provident funds, pension funds, gratuity funds, non banking financial companies and mutual funds, Insurance companies, foreign institutional investors, individuals and any other investor approved by the Committee of Directors of the Board.” “RESOLVED FURTHER THAT for the purpose of offering, issuing and allotting the NCDs and/or Borrowing Instruments, the Committee of Directors of Board of Directors of the Company be and is hereby authorised to take all such decisions as it may deem fit in its absolute discretion, to take all steps and to perform all such acts, deeds, matters and things as it may deem necessary to complete above process and with power to settle questions, difficulties or doubts that may arise in this regard, without requiring any further approval of the Board of Directors of the Company.”
“RESOLVED FURTHER THAT without restricting authority and/or powers delegated by the Board of Directors hereinabove, for the issuance of NCDs, the Committee of Directors of Board of Directors of the Company be and is hereby also authorised to:
1. offer and allot the NCDs on private placement as it may deem fit and appropriate in the interest of the Company;
2. to decide / confirm / ratify / amend / modify the terms and conditions and number of the NCDs to be issued, timing, nature, type, pricing and such other terms and conditions of the issue including coupon rate, minimum subscription, listing, security, if any, etc. and to issue and allot the NCDs;
3. to do all such acts, deeds, matters and things including execution of all such deeds, documents, instruments, applications and writings as it may, at its discretion, deem necessary and desirable for such purpose, and to vary, modify or alter any of the terms and conditions;
4. to accept and receive subscription / application money, to appropriate the proceeds of the issue for the aforesaid purpose and to make allotment of the NCDs and to authorize maintenance of register of debenture holders, register of charges or any other statutory register as may be required;
- : 3 : -
5. to finalize details of security(s) to be provided and matters incidental to or connected therewith and incur any expenditure in relation to the creation of such security;
6. to open relevant bank account(s), if required and authorize officials of the Company to operate the same where ever necessary;
7. to apply to and liaise with National Security Depository Limited and/or Central Depository Services (India) Limited for the issuance of letter(s) of allotment / NCDs to the proposed allottees in dematerialized form;
8. to appoint, modify or change the debenture trustee(s), consultants, legal counsels, advisors, rating agency(ies), inter-mediatory, other agencies on such terms and condition and be paid fees / reimbursement, from time to time; and
9. to seek, if required, the consent of the Company’s lenders, and other third parties with whom the Company has entered into various commercial and other agreements, all concerned government and regulatory authorities and any other consents that may be required in connection with the issuance of NCDs and creation of security for the NCDs.”
“RESOLVED FURTHER THAT Shri A.K. Saraogi, President (C/A) & CFO, Shri Atul Bagla, Vice President, Mr. Prashant Seth, Vice President, Shri Shambhu Singh, Asst. Vice President (Legal) & Company Secretary be and are hereby authorised individually to approve the terms of the private placement offer letter/Form PAS-4/Information Memorandum in relation to the NCDs, the debenture trust deed and other transaction documents including their execution and despatch, and to perform all such acts, deeds, matters and things as may be required to give effect of this resolution, including affixing the Common Seal of the Company to such documents, deeds, evidences, writings and undertakings and/or other related papers executed in furtherance of the aforesaid resolutions, wherever necessary and if applicable in the presence of any of the authorised signatories, who shall sign the same in token thereof.”
Date: June 30, 2020
J. K. Cement Limited
Kamla Tower, Kanpur,
Uttar Pradesh 208 001
Dear Sirs,
Re: Proposed issue by J. K. Cement Limited (“the Company”) of secured, redeemable, non-convertible Debentures (“NCDs”) of upto ₹ 250 crore (“Issue”) on private placement basis
We hereby give our consent to our name being included as the Registrar to the Issue in the Disclosure
Document/Information Memorandum to be filed/uploaded on the stock exchange(s) where the NCDs are proposed to be
listed (“Stock Exchange(s)”) and subsequent periodical communications sent to the holders of the NCDs pursuant to the
Issue.
We hereby authorise you to deliver this letter of consent to the Stock Exchange(s) and/or such other regulatory authority,
as may be required by law.
The following details with respect to us may be disclosed:
Name: NSDL Database Management Limited
Address: 4th Floor, Trade World A Wing, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel,
Mumbai – 400 013
Tel: 022-49142591
Fax: 022- 49142503
Email: [email protected];
Investor Grievance Email Id: [email protected]
Website: www.nsdl.co.in
Contact Person: Nilesh Bhandare
SEBI Registration No: INR000004181
We confirm that we are registered with the SEBI and that such registration is valid as on date of this letter. We further
certify that we have not been prohibited by SEBI to act as an intermediary in capital market issues. We further confirm
that no enquiry/investigation is being conducted by SEBI on us. We further confirm that we are not an associate/deemed
associate of the Company.
We also agree to keep strictly confidential, until such time as the proposed transaction is publicly announced by the Issuer
in the form of a press release, (i) the nature and scope of this respect; and (ii) our knowledge of the proposed transaction
of the Issuer.
Copy of our SEBI registration certificate and declaration regarding our registration with SEBI in the required format is
attached as Annexure A.
We shall immediately intimate the Arrangers and the Company or any other concerned party(ies) of any changes, additions
or deletions in respect of the afore stated details till the date when the NCDs of the Issuer offered, issued and allotted
pursuant to the Issue, are traded on the Stock Exchange(s). In absence of any such communication from us, the above
information should be taken as updated information until the listing and trading of the NCDs on the Stock Exchange(s).
Yours faithfully,
For NSDL Database Management Limited
Vijay Gupta
Sr. Vice President
Annexure A
We hereby confirm that as on date the following details in relation to our registration with the Securities and Exchange
Board of India as a “Registrar” is true and correct:
Sr. No.
Details Confirmation
1. Registration Number INR000004181
2. Date of registration / date of last renewal of registration / date of application for renewal of registration
May 17, 2016
3. Date of expiry of registration May 16, 2021
4. Details of any communication from SEBI prohibiting from acting as an intermediary
-
5. Details of any pending inquiry / investigation being conducted by SEBI
-
6. Details of any penalty imposed by SEBI -