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DRAFT LETTER OF OFFER March 21, 2011
For the Equity Shareholders of the Company only
GAYATRI PROJECTS LIMITED (Our Company was originally incorporated as “Andhra Coastal Constructions Private Limited” pursuant to a certificate of incorporation dated September 15, 1989 issued by the
Registrar of Companies, Hyderabad, Andhra Pradesh as a private company limited by shares under the provisions of the Companies Act, 1956, as amended. The name of our Company was changed to Gayatri Projects Private Limited on March 31, 1994. Our Company was converted into a public company with effect from December 2, 1994, pursuant to which our name was changed to Gayatri Projects Limited. The certificate to commence business was obtained by our Company on September 15, 1989. Our Company has been
allotted a Corporate Identification Number, L99999AP1989PLC057289, under the Companies Act, 1956.)
Registered and Corporate Office: B-1, T.S.R. Towers, 6-3-1090, Raj Bhavan Road, Somajiguda, Hyderabad – 500082, Tel No: +91 40 2331 4284, Fax No.: +91 40 2339 8984/3/5.
Company Secretary and Compliance Officer: I.V. Lakshmi E-mail: cs@gayatri.co.in, Website: www.gayatri.co.in
Promoters: T.V. Sandeep Kumar Reddy and T. Indira Subbarami Reddy
FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF OUR COMPANY ONLY
DRAFT LETTER OF OFFER
ISSUE OF 5,994,500 EQUITY SHARES OF `̀̀̀ 10 EACH (“RIGHTS EQUITY SHARES”) FOR CASH AT A PREMIUM OF `̀̀̀ [●] PER RIGHTS
EQUITY SHARE, AGGREGATING TO `̀̀̀ [●] MILLION TO THE ELIGIBLE EQUITY SHAREHOLDERS OF GAYATRI PROJECTS LIMITED
IN THE RATIO OF ONE RIGHTS EQUITY SHARE FOR EVERY TWO EQUITY SHARES HELD ON THE RECORD DATE, I.E. [●] ALONG
WITH ONE DETACHABLE WARRANT FOR EVERY ONE RIGHTS EQUITY SHARE ALLOTED IN THE ISSUE (COLLECTIVELY
CALLED AS “RIGHTS SECURITIES”). THE ISSUE PRICE FOR THE RIGHTS EQUITY SHARE IS [●] TIMES THE FACE VALUE OF THE
RIGHTS EQUITY SHARE. THE TOTAL ISSUE INCLUDING CONVERSION OF WARRANTS INTO EQUITY SHARES WOULD NOT
EXCEED `̀̀̀ [●]
GENERAL RISKS
Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in relation to this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India, (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of this document. Investors are advised to refer to the section titled “Risk Factors” from pages 1 to 24 before making an investment in this Issue.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Draft Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect.
LISTING
The existing Equity Shares of our Company are listed on the Bombay Stock Exchange Limited, (“BSE”). The zero coupon convertible bonds (“FCCB”) due 2012 convertible into Equity Shares issued in August 1, 2007, are listed on the Singapore Exchange Securities Trading Limited (the “SGX-ST”). Our Company has pursuant to a letter dated June 7, 2010, applied to the NSE for admission of our Equity Shares to deal on the NSE. Our Company has received an in-principle approval from the BSE for listing the Rights Securities arising from this Issue pursuant to a letter dated [●]. For the purposes of the Issue, the Designated Stock Exchange is the BSE.
LEAD MANAGER TO THE ISSUE REGISTRARS TO THE ISSUE
Edelweiss Capital Limited
14th Floor, Express Towers, Nariman Point, Mumbai – 400 021 Telephone: +91 22 4086 3535 Facsimile: +91 22 4086 3610 E-mail: gayatri.rights@edelcap.com Investor Grievance E-mail: customerservice.mb@edelcap.com Website: www.edelcap.com Contact Person: Sumeet Lath/ Dipti Samant SEBI Registration No. INM0000010650
Karvy Computershare Private Limited Plot Nos. 17-24 , Vittal Rao Nagar, Madhapur , Hyderabad-500081 , Telephone: +91 40 4465 5000 Facsimile: +91 40 2343 1551; Email: gayatrirights@karvy.com Investors grievance mail: gayatrirights@karvy.com Website : http://karisma.karvy.com; Contact Person: M. Murali Krishna SEBI Registration No.: INR000000221
ISSUE SCHEDULE
ISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT
APPLICATION FORMS:
ISSUE CLOSES ON
[●] [●] [●]
THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
TABLE OF CONTENTS
SECTION I - GENERAL ............................................................................................................................iv DEFINITIONS AND ABBREVIATIONS.................................................................................................... iv PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA .......................... xi FORWARD LOOKING STATEMENTS .................................................................................................... xii
SECTION II – RISK FACTORS .................................................................................................................1
SECTION III – INTRODUCTION ...........................................................................................................25
THE ISSUE .................................................................................................................................................. 25 SUMMARY OF FINANCIAL STATEMENTS .......................................................................................... 27 GENERAL INFORMATION....................................................................................................................... 36 CAPITAL STRUCTURE............................................................................................................................. 41 OBJECTS OF THE ISSUE .......................................................................................................................... 47 STATEMENT OF TAX BENEFITS............................................................................................................ 55
SECTION IV – OUR MANAGEMENT....................................................................................................61
SECTION VI – FINANCIAL INFORMATION ......................................................................................68 FINANCIAL STATEMENTS...................................................................................................................... 68 MARKET PRICE INFORMATION.......................................................................................................... 146 PRINCIPAL TERMS OF LOANS AND ASSETS CHARGED AS SECURITY......................................148
SECTION VII – LEGAL AND OTHER INFORMATION...................................................................155 OUTSTANDING LITIGATIONS AND OTHER DEFAULTS ................................................................ 155 GOVERNMENT AND OTHER APPROVALS ........................................................................................ 160 MATERIAL DEVELOPMENTS............................................................................................................... 161 OTHER REGULATORY AND STATUTORY DISCLOSURES............................................................. 164
SECTION VIII – OFFERING INFORMATION...................................................................................175 TERMS OF THE ISSUE............................................................................................................................ 175
SECTION IX –STATUTORY AND OTHER INFORMATION ..........................................................210
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION................................................... 210
DECLARATION ...................................................................................................................................... 212
iv
SECTION I - GENERAL
DEFINITIONS AND ABBREVIATIONS
The following list of defined terms is intended for the convenience of the reader only and is not exhaustive.
Company Related Terms
Description
“GPL” or “the Company” or “our Company” or “we” or “us” or “our”
: Gayatri Projects Limited, a public limited company incorporated under the provisions of the Companies Act, having its registered and corporate office at B-1, T.S.R. Towers, 6-3-1090, Raj Bhavan Road, Somajiguda, Hyderabad – 500082
Articles/Articles of Association/AoA
: Articles of Association of our Company
Auditor : Statutory Auditors of our Company, namely, M/s. C. B. Mouli & Associates
Board / Board of Directors : The board of directors of our Company or a committee thereof
Compliance Officer and Company Secretary
: I.V. Lakshmi
Corporate Office : The corporate office of our Company located at B-1, T.S.R. Towers, 6-3-1090, Raj Bhavan Road, Somajiguda, Hyderabad – 500082
Director(s) : Any or all director(s) of our Company, as the context may require
Equity Share(s) : The equity share(s) of our Company having a face value of ` 10, inter alia including such equity shares of our Company outstanding and fully-paid up, as on the Record Date, unless otherwise specified in the context thereof
FCCB(s) : Zero coupon convertible bonds due 2012 convertible into Equity Shares as issued by our Company in August 1, 2007 which are listed on the SGX-ST
Group Companies : Companies, firms, ventures, etc. promoted by the Promoters of our Company, including such entities which are covered under section 370 (1)(B) of the Companies Act
Joint Ventures : IJM Gayatri Joint Venture, Gayatri ECI Joint Venture, Gayatri RNS Joint Ventures, Gayatri Ranjit Joint Venture, Gayatri GDC Joint Venture, Gayatri BCBPPL Joint Venture, Jaiprakash Gayatri Joint Venture, Gayatri-Ratna Joint Venture, MEIL-GAYATRI-ZVS-ITT Consortium, Simplex Gayatri Consortium and Gayatri-JMC Joint Venture, Maytas-Gayatri Joint Venture, Vishwanath-Gayatri Joint Venture
Memorandum/Memorandum of Association
: Memorandum of Association of our Company
v
Description
Promoter(s) : The promoters of our Company namely, T.V. Sandeep Kumar Reddy and T. Indira Subbarami Reddy.
Promoter Group : Unless the context requires otherwise, the entities forming part of our promoter group as disclosed by us to the BSE from time to time.
Registered Office : The Registered Office of our Company located at B-1, T.S.R. Towers, 6-3-1090, Raj Bhavan Road, Somajiguda, Hyderabad – 500082
Subsidiaries : Subsidiaries of our Company, namely, Gayatri Infra Ventures Limited, Gayatri Energy Ventures Private Limited, Gayatri Jhansi Roadways Limited, Gayatri Lalitpur Roadways Limited, Thermal Powertech Corporation India Limited, Indore Dewas Tollways Limited and HKR Roadways Limited.
Conventional and General Terms
Term Description
Companies Act : The Companies Act, 1956, as amended
Copyright Act : The Copyright Act, 1955, as amended
Depository : A depository registered with SEBI under the SEBI (Depositories and Participants) Regulations, 1996, as amended from time to time
Depositories Act : The Depositories Act, 1996, as amended
Financial Year/Fiscal : The period of 12 months beginning April 1 and ending March 31 of that particular year, unless otherwise stated
IT Act : The Income Tax Act, 1961, as amended
Indian GAAP : The generally accepted accounting principles in India
Industrial Policy : The industrial policy and guidelines issued by the Ministry of Industry, GoI
Listing Agreement : The equity listing agreement signed between our Company and the BSE
Non Resident : Persons resident outside India as defined in the FEMA
Regulation S : Regulation S under the Securities Act.
Rupees / ` : The lawful currency of India
SEBI Act : The Securities and Exchange Board of India Act, 1992, as amended
SEBI (ICDR) Regulations : The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended
vi
Term Description
Securities Act : The United States Securities Act of 1933, as amended
Takeover Code : The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended
Trademarks Act : The Trademarks Act, 1999 as amended.
Weights & Measures Act : The Standard of Weights & Measures Act , 1976 as amended
Issue Related Terms
Term Description
Abridged Letter of Offer : The abridged letter of offer to be sent to Eligible Equity Shareholders of our Company with respect to this Issue in accordance with the provisions of the SEBI (ICDR) Regulations and the Companies Act.
Allottee(s) : The successful applicant(s) eligible for Allotment of Rights Securities pursuant to the Issue
Allotment/Allotted : Unless the context otherwise requires, the allotment of Rights Securities pursuant to the Issue to the Allottees
ASBA/Application Supported by Blocked Amount
: The application (whether physical or electronic) used by ASBA Investors to make an application authorizing the SCSB to block the amount payable on application in their specified bank account maintained by SCSBs
ASBA Investor : An applicant who; a) holds the shares of our Company in dematerialized form as on the record date and has applied for Rights Entitlements and / or additional shares in dematerialized form; b) has not renounced his/her Rights Entitlements in full or in part; c) is not a Renouncee; d) is applying through a bank account maintained with SCSBs.
Bankers to the Issue : The bankers to the Issue being [●] and [●].
Business Day : Any day, other than Saturday or Sunday or public holidays, on which commercial banks are open for business in Mumbai and Hyderabad.
Composite Application Form/CAF
: The form used by an Investor to make an application for allotment of Rights Securities pursuant to Issue
Consolidated Certificate : In case of holding of Rights Equity Shares in physical form, our Company would issue one certificate for the Rights Equity Shares allotted to one folio
Controlling Branches of the SCSBs
: Such branches of the SCSBs which coordinate applications under the Issue by the ASBA Investors with the Registrar to the Issue and the BSE and a list of which is available at http:// www.sebi.gov.in/pmd/scsb.html
vii
Term Description
Designated Branches : Such branches of the SCSBs which shall collect CAF from ASBA investor and a list of which is available on http:// www.sebi.gov.in/pmd/scsb.html
Designated Stock Exchange/DSE
: Bombay Stock Exchange
Draft Letter of Offer/DLOF : This draft letter of offer dated March 21, 2011 filed with SEBI for its comments
Eligible Equity Shareholder(s)
: A holder(s) of Equity Shares as on the Record Date
Investor(s) : The Equity Shareholders of our Company on the Record Date i.e. [●], and Renouncees
Issue : Issue of 5,994,500 Rights Equity Shares for cash at a premium of ` [●] per Rights Equity Share, aggregating to ` [●] million to the Eligible Equity Shareholders of the Company in the ratio of one Rights Equity Share for every two Equity Shares held on the Record Date i.e [●] along with one Warrant for every one Rights Equity Share allotted in the Issue.
Issue Closing Date : [●]
Issue Opening Date : [●]
Issue Price : ` [●] per Rights Equity Share with one Warrant per Rights Equity Share
Issue Proceeds : The monies received by our Company pursuant to the Rights Equity Shares which are Allotted pursuant to the Issue
Lead Manager : Edelweiss Capital Limited
Letter of Offer : The letter of offer to be filed with the BSE after incorporating SEBI comments on this Draft Letter of Offer
Record Date : [●]
Registrar to the Issue or Registrar
: Karvy Computershare Private Limited
Renouncee(s) : Any person(s) who have/has acquired Rights Entitlements from Eligible Equity Shareholders
Reserved Rights Securities : Equity Shares and Warrants reserved for issuance and allotment to holders of outstanding FCCBs as on the Record Date in accordance with the provisions of Regulation 53 of the SEBI (ICDR) Regulations, on the same terms and in the same ratio as the Rights Securities offered under this Issue assuming the maximum number of Equity Shares to be allotted on conversion of all outstanding FCCBs
viii
Term Description
Rights Entitlement : The number of Rights Securities that an Eligible Equity Shareholder is entitled to in proportion to his/ her shareholding in our Company as on the Record Date
Rights Equity Shares : The equity shares of face value ` 10 each of our Company offered and to be issued and allotted pursuant to the Issue
Rights Securities : Rights Equity Shares along with the Warrants
SAF(s) : Split Application Form(s)
Self Certified Syndicate Bank or SCSB
: The banks which are registered with SEBI under the SEBI (Bankers to an Issue) Regulations, 1994 and offers services of ASBA, including blocking of bank account and a list of which is available on http://
www.sebi.gov.in/pmd/scsb.html
Special Depository Account
: A special depository account with NSDL by the name of "Gayatri Projects Limited – Warrant Exercise Escrow Account" in connection with the exercise of Warrants in accordance with the terms as detailed in the section titled “Terms of the Issue” on page 175
Warrants : The detachable warrants exercisable for Equity Shares offered along with the Rights Equity Shares under this Issue in accordance with the terms and conditions specified in the section titled “Terms of the Issue” on page 175.
Warrant Exercise Application Form
: A form as prescribed by our Company to be submitted by Warrant holders desirous of tendering their Warrants for conversion into Equity Share in the Warrant Exercise Period I or Warrant Exercise Period II, , or, upon publication of the public notice in connection with the aforesaid call option as the case may be.
Warrant Exercise Period I : A period that commences on the completion of the 30th month from the date of allotment of the Warrants and shall continue up to the completion of the 31st month from the date of allotment of the Warrants
Warrant Exercise Period II : A period that commences on the completion of the 58th month from the date of allotment of warrants and shall continue up to the completion of the 59th month from the date of allotment of Warrants
Warrant Exercise Price : ` [●] per Warrant
Abbreviations
Term Description
AGM : Annual General Meeting
AS : Accounting Standards, as issued by the ICAI
BOOT : Build, Own, Operate and Transfer
BOT : Build, Operate and Transfer
ix
Term Description
BPLR : Benchmark Prime Lending Rate
BSE : The Bombay Stock Exchange Limited
CAF : Composite Application Form
CAGR : Compounded Annual Growth Rate
CDSL : Central Depository Services (India) Limited
CFO : Chief Financial Officer
DEPB : Duty Entitlement Pass Book Scheme
DP : Depository Participant
EBIDTA : Earnings Before Interest, Depreciation, Taxes & Amortization
EPC : Engineering Procurement and Construction
ECGC : Export Credit Guarantee Corporation
EGM : Extraordinary General Meeting
EPS : Earnings per share
FDI : Foreign Direct Investment
FEMA : Foreign Exchange Management Act, 1999, as amended and any circulars, notifications, rules and regulations issued pursuant to the provisions thereof
FI : Financial Institution
FII(s) : Foreign Institutional Investors registered with SEBI under applicable laws
FIPB : Foreign Investment Promotion Board
FY : Financial Year
GBP or £ : Great Britain Pound
GDP : Gross Domestic Product
GoI : Government of India
HRD : Human Resource Development
HUF : Hindu Undivided Family
ICAI : Institute of Chartered Accountants of India
ISIN : International Securities Identification Number
x
Term Description
ITAT : Income Tax Appellate Tribunal
JPY : Japanese Yen
KwH : Kilowatt hour
MICR : Magnetic Ink Character Recognition
Mn : Million
MoU : Memorandum of Understanding
N.A. : Not Applicable
NAV : Net asset value
NECS : National Electronic Clearing Service
NEFT : National Electronic Fund Transfer
NR : Non Resident
NRI(s) : Non Resident Indians, as defined in the Foreign Exchange Management (Deposit) Regulations, 2000, as amended
NSDL : National Securities Depository Limited
NSE : The National Stock Exchange of India Limited
OCB(s) : Overseas Corporate Body(ies)
PAN : Permanent Account Number
RBI : Reserve Bank of India
RoC : Registrar of Companies Andhra Pradesh 2nd Floor CPWD Building, Kendriya Sadan, Sultan Bazar, Koti, Hyderabad-500195
RTGS : Real time gross settlement
SEBI : Securities and Exchange Board of India
SGX-ST : Singapore Exchange Securities Trading Limited
STT : Securities Transaction Tax
TPA : Tonne per annum
USD or US$ : United States Dollar
VAT : Value Added Tax
w.e.f. : With effect from
xi
Term Description
WTG : Wind Turbine Generators
PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA
Unless stated otherwise, the financial information and data in this Draft Letter of Offer is derived from our Company’s audited consolidated and/or unconsolidated financial statements as on March 31, 2010 prepared in accordance with India GAAP, applicable accounting standards and guidance notes issued by the ICAI, the applicable provisions of the Companies Act and other statutory and/or regulatory requirements, and the unaudited consolidated and/or standalone financial statements as at and for the six month period ended September 30, 2010 which have been subject to limited review in accordance with Standard on Review Engagement (SRE) 2400, Engagements to Review Financial Statements issued by the Institute of Chartered Accountants of India, and are included in this Draft Letter of Offer as required under the SEBI (ICDR) Regulations. Our Company‘s fiscal year commences on April 1 and ends on March 31 of the following calendar year, so all references to a particular fiscal year are to the twelve-month period ended March 31 of that year. Our Company is an Indian listed company and prepares its financial statements in accordance with Indian GAAP, applicable accounting standards and guidance notes issued by the ICAI, the applicable provisions of the Companies Act and other statutory and/or regulatory requirements. Indian GAAP differs significantly in certain respects from IFRS and US GAAP. Neither the information set forth in our financial statements nor the format in which it is presented should be viewed as comparable to information prepared in accordance with IFRS or any accounting principles other than principles specified in the Indian Accounting Standards.
Currency of Presentation
All references to “India” contained in this Draft Letter of Offer are to the Republic of India, all references to the “Rupees” or “`” or “Rs.” are to Indian Rupees, the official currency of the Republic of India.
Unless stated otherwise, throughout this Draft Letter of Offer, all figures have been expressed in millions. In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off, and unless otherwise specified, all financial numbers in parenthesis represent negative figures. All references to “India” contained in this Draft Letter of Offer are to the Republic of India, all references to the “US”, or the “U.S.” or the “USA” or the “United States” is to the United States of America, and all references to “UK” or the “U.K.” are to the United Kingdom. All references to “JPY” are to Japanense Yen, the official currency of Japan. In this Draft Letter of Offer, references to the singular also refers to the plural and one gender also refers to any other gender, wherever applicable, and the words ‘Lakh” or “Lac” mean “100 thousand”; “10 lakhs” means a “million”, and; “10,000 lakhs” means a “billion”.
xii
FORWARD LOOKING STATEMENTS
Our Company has included statements in this Draft Letter of Offer which contain words or phrases such as “may”, “will”, “aim”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “potential” and similar expressions or variations of such expressions, that are or may be deemed to be forward looking statements. All forward looking statements are subject to risks, uncertainties and assumptions about our Company that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, factors affecting:
• Our ability to compete effectively;
• Significant increase in the price or the availability of raw materials;
• Our Company‘s inability to meet its substantial working capital requirements or maintain its existing credit facilities;
• Indian governmental policies regarding the infrastructure sector, various duties and taxes, the monetary and interest rate policies and other policies affecting our Company’s business;
• Our Company’s inability to meet the consistent quality requirements of its customers or a change in customer preferences;
• Competition in the infrastructure industry
• Regulatory changes pertaining to the industries in India in which our Company has its businesses and our ability to respond to them;
• Our ability to successfully implement our strategy;
• Our ability to develop new products that appeal to consumers;
• Our exposure to market risks;
• General economic and political conditions in India and globally, which have an impact on our business activities;
• Our ability to attract and retain qualified personnel;
• Any adverse outcome in legal proceedings in which our Company, our Promoters and Group Companies, Directors or key managerial personnel may be involved;
• The monetary and fiscal policies of India;
• Unanticipated turbulence in interest rates; and
• Equity prices or other rates or prices, the performance of the financial markets in India and globally.
For a further discussion of factors that could cause our Company‘s actual results to differ, please refer to the section titled “Risk Factors” on page 1 of this Draft Letter of Offer. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither our Company nor the Lead Manager nor any of their respective affiliates or advisors have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI / BSE’s requirements, our Company and Lead Manager will ensure that Investors are informed of material developments until the time of the grant of listing and trading permission for the Rights Securities by the BSE.
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SECTION II – RISK FACTORS
An investment in equity and equity related securities involves a high degree of risk. You should carefully
consider all of the information in this Draft Letter of Offer, including the risks and uncertainties described
below, before making an investment. Our Company’s actual results could differ materially from those
anticipated in the “Forward Looking Statements” at page xii as a result of certain factors, including the
considerations described below. If any of the following risks actually occur, our business, financial
condition, results of operations and prospects could suffer, the trading price of our Equity Shares and the
Rights Securities could decline and you may lose all or part of your investment. You should also pay
particular attention to the fact that we are governed in India by a legal and regulatory environment which
in some material respects may be different from that which prevails in other countries.
Unless specified or quantified in the relevant risk factors detailed below, we are not in a position to
quantify the financial or other implications of any of the risks described in this section.
Materiality:
Additionally, our business operations could also be affected by additional factors that are not presently
known to us or that we currently consider as immaterial to our operations. The following factors have been
considered for determining their materiality:
1. Some events may not be material individually but may be found material collectively.
2. Some events may have a material impact qualitatively instead of quantitatively.
3. Some events may not be material at present but may have material impacts in the future.
A. INTERNAL RISK FACTORS
1. Legal proceedings have been initiated against our Company and three of our Joint Ventures.
An unfavourable outcome in connection with the aforesaid proceedings, would inter-alia
require us to make appropriate provisions in connection with the same in our financial
statements, which in turn could adversely affect our business, results of operations and
financial condition. Our Company and three of our Joint Ventures are defending legal proceedings which are pending at different levels of adjudication before various courts and tribunals. If any new developments arise, for example, a change in Indian law or rulings against us by the appellate courts or tribunals, we may face losses and may have to make provisions in our financial statements, which could increase our expenses and our liabilities, which in turn, may have a material adverse effect on our business, results of operations and financial condition. A summary of these proceedings initiated against our Company and Joint Ventures are mentioned below.
Category Company Joint Ventures
No. Amount
Involved (` In
millions)
No. Amount
Involved (` In
millions)
Civil proceedings 9 45.95 5 323.36
Arbitral Proceedings 1 87.18 3 339.22
Tax Proceedings 4 33.18 2 122.84
2
For further details of the legal proceedings which materially affect our financial condition and results of operations, please see the section titled “Outstanding Litigations and Other Defaults” on page 155.
2. Our Joint Venture, IJM Gayatri Joint Venture is defending various proceedings against the
NHAI in connection with the road contracts between the said Joint Venture and the NHAI. Any
unfavourable outcome in connection with the aforesaid proceedings, whether individually
and/or in the aggregate, could adversely affect the results of our operations and financial
condition.
IJM Gayatri Joint Venture, a joint venture between our Company and IJM Corporation, Berhard, Malaysia, wherein our Company holds a share of 40% of the interest in the profits and the losses thereof, has executed road works for NHAI in the State of Andhra Pradesh. The said Joint Venture incurred excess of expenditure over income amounting to ` 1,344.5 million due to several alleged contractual failures on part of the NHAI. IJM Gayatri Joint Venture has raised various claims in excess of ` 3,000 million against the NHAI and the Government of Andhra Pradesh in various arbitral and legal proceedings in connection with the contracts between the aforesaid Joint Venture and the NHAI, which are pending final hearing and disposal before appropriate courts and/or arbitral authorities. While IJM Gayatri has obtained favourable awards from relevant arbitral tribunals in connection with certain claims, the NHAI has contested such awards before appropriate courts of law and inter-alia prayed for the same to be set aside. In case of any unfavourable outcome in connection with the aforesaid proceedings, IJM Gayatri Joint Venture may not be able to recover the claims made under the aforesaid proceedings in part or at all, which would inter-alia require us to book losses to the extent of our share in the aforenamed Joint Venture in our unconsolidated financial statements, which in turn, individually and/or in the aggregate, could adversely affect the results of our operations and financial condition. For further details please refer to the section titled “Outstanding Litigations and Other Defaults” beginning on page 155 of this Draft Letter of Offer.
3. The auditors’ reports on our Company’s unconsolidated financial statements for the financial
year ended March 31, 2010 and the limited review report on our Company’s standalone
financial statements for the six month period ended September 30, 2010 have been qualified by
the Auditors. The aforesaid qualifications relate to the non provisions for the losses incurred by
two of our Joint Ventures in our unconsolidated financial statements. Accordingly, in the event
the Company is required to make appropriate provisions for the aforementioned losses, our
profitability and financial condition could be adversely affected.
Our Company has received qualifications and/or limitations in the auditor’s reports on our unconsolidated financial statements for the financial year ended March 31, 2010 and the standalone limited reviewed financial statements for the six months period ended September 30, 2010. Such qualifications and/or limitations relate to the non provision of losses incurred by two of our Joint Ventures, as further detailed below: (i) Our Joint Venture, IJM Gayatri Joint Venture has executed road works in Package I, II &
III and AP 13 of NHAI, APSH 7 and APSH 8 in the State of Andhra Pradesh. The joint venture incurred excess of expenditure over income amounting to ` 1,344.5 million due to several contractual failures on part of the employer. IJM Gayatri Joint Venture has raised various claims in excess of ` 3,000 million against the NHAI and the Government of Andhra Pradesh in various arbitral and legal proceedings in connection with various contracts between the aforesaid Joint Venture and the NHAI. There is substantial progress in the proceedings in the arbitration and the management is reasonably confident of recovery of these claims. During the year under review in the matter of dispute out of the work of the “Warangal-Khammam- Tallada Road work”, the committee of Arbitrators has awarded a claim of ` 124.2 million in favour of the joint venture. The management has also obtained independent legal opinion from eminent counsel in this regard who have opined on the recoverability of the claims. In view of this, the share of
3
the losses of our Company (40%) in the joint venture is not provided in the books of our Company. In the unlikely situation of not awarding the entire amount of claims, our Company has to provide an amount of ` 537.8 million towards its share of 40% in the IJM-Gayatri Joint Venture.
(ii) Gayatri-ECI JV, a joint venture between ECI Engineering & Construction Company
Limited and our Company with a sharing ratio of 50:50. The said Joint Venture is executing road projects in Assam, awarded by NHAI. The Joint Venture due to extraneous and law and order problems in the State of Assam could not progress the work as planned and hence incurred losses of ` 296.3 million till year 2008-09. However due to changed strategy of the company and over all improvement of the law and order situation, the progress of the work has improved substantially and the joint venture has posted a profit of ` 48.17 million during the year 2009-10 and a profit of `23.49 million during the six month period ended September 30, 2010 and to that extent the accumulated losses have been recovered. Since now the substantial portion of the project work has started, the losses incurred in the earlier years can be recovered from these profits. Hence, the losses in the Joint Venture are not considered by our Company.
In the event the Company is required to make appropriate provisions for the aforementioned losses, our profitability and financial condition could be adversely affected.
4. The failure of a joint venture partner to perform its obligations could impose additional
financial and performance obligations on our Company, which we may not be in a position to
fulfil at all times, in a timely manner or at all, which in turn, could adversely affect our ability
to complete projects undertaken by such joint ventures and impair our ability to realize profits
therefrom.
Our Company enters into various joint ventures with domestic as well as international infrastructure companies as part of its business and as on the date of this Draft Letter of Offer we have 13 joint ventures. The success of these joint ventures depends significantly on the satisfactory performance by our Company’s joint venture partners of their obligations. If our Company’s joint venture partners fail to perform these obligations satisfactorily, the joint venture may be unable to perform adequately or deliver its contracted services. In such a case, our Company may be required to make additional investments and/or provide additional services to ensure the adequate performance and delivery of the contracted services. We may not in all cases be in a position to fulfil such additional obligations in a timely manner or at all which could adversely affect the ability of such joint venture to continue with a project, which in turn, could impair our ability to realize profits from such Joint Venture. In the past three of our Joint Ventures have incurred losses as per their respective audited financial statements, as set forth in the table below:
Year Ended March 31 (` in Million) Entity
2010 2009
IJM-Gayatri Joint Venture (5.43) (10.57)
Gayatri-ECI Joint Venture - (139.96)
Jaiprakash-Gayatri Joint Venture - (0.06)
If these Joint Ventures fail to improve or sustain their operating performance, as the case may be, our overall profitability on a consolidated basis will be materially and adversely impacted.
5. Our Company has issued a corporate guarantee for an amount of ` 51,510.00 million to Rural
Electrification Corporation Limited in connection with a loan sanctioned by the Rural
Electrification Corporation Limited to our Subsidiary, Thermal Powertech Corporation India
Limited, which if invoked would materially adversely affect our financial condition.
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Our Company has issued a corporate guarantee dated September 13, 2010 to Rural Electrification Corporation Limited, the security agent for the consortium of banks for the projects undertaken by Thermal Powertech Corporation India Limited, our Subsidiary, for an amount of ` 51,510.00 million. The aforesaid guarantee is towards timely repayment of instalments of the principal amount of loan of ` 51,510.00 million sanctioned to Thermal Powertech Corporation India Limited and any interest and charges thereon, and is a continuing guarantee until Thermal Powertech Corporation India Limited has executed back-to-back power purchase agreements for 990 Mega Watt of power generated through competitive bidding to the satisfaction of the consortium banks for the tenure of the aforesaid loan. As on the date of this Draft Letter of Offer, Thermal Powertech Corporation India Limited has executed power purchase agreements for 430 Mega Watt of power generated with PTC India Limited, and no monies in connection with the aforesaid loan have been drawdown by Thermal Powertech Corporation India Limited. However, if Thermal Powertech Corporation India Limited is unable to execute the required power purchase agreements for the balance 560 Mega Watt of power in a timely manner and if the aforesaid guarantee is invoked and we are compelled to pay the entire or part of the amount secured thereby, our financial condition would be adversely affected.
6. We have in the past failed to pay interest on our debt obligations in a timely manner. If in the
future our Company fails to make interest payments to our lenders in a timely manner or at all
we may be liable for pre-mature repayments of the relevant loans with interest or otherwise face
action for default under the relevant borrowing agreements.
We had issued 14% secured redeemable non-convertible debentures of ` 100 each of the aggregate
value of ` 150 million on a private placement basis to the Unit Trust of India, (“UTI”) in May, 2001. We delayed payment of interest during 2001-02 and 2002-03 due to financial constraints. Consequently, UTI issued recall notice in January, 2003 and enforcement of guarantee notice in
February, 2004. We cleared all our dues to UTI in September, 2004. If in the future our Company fails to make interest payments to our lenders in a timely manner or at all we may be liable for pre-mature repayments of the relevant loans with interest or otherwise face action for default under the relevant borrowing agreements.
7. Our Company has in the past delayed in filing form FC-GPR in connection with allotment of
Equity Shares to certain Non Residents, in connection with which the RBI has issued a warning
dated January 31, 2011. In future, if we fail to comply with the requirements of the FEMA or
regulations issued thereunder we may be subject to compounding proceedings under FEMA.
Our Company has in the past delayed in filing Form FC-GPR within the prescribed period of 30 days from the date of inward remittance and allotment of Equity Shares to certain Non Residents in Fiscal 2008 and Fiscal 2011. Accordingly, our Company has violated the provisions of the FEMA and the Foreign Exchange Management (Transfer or Issue of Security by Person Resident Outside India) Regulations, 2000, as amended. RBI has pursuant to a letter dated January 31, 2011, made a note of the aforesaid violation and has advised our Company to desist from committing such contraventions of the provisions of FEMA and regulations framed thereunder, failing which compounding proceedings under FEMA will be invoked against our Company.
8. In the past our Company has been highly dependent on water-related infrastructure projects
and road work contracts. In the event our Company is unable to procure sufficient orders in
connection with such water infrastructure projects or road work contracts in the future, our
operations and revenues could substantially reduce which in turn could affect our profitability.
As on December 31, 2010, 58.60% and 31.06% of our order book was represented by orders and/or contracts for water supply projects such as construction of canals and irrigation facilities and roadways contracts, including job works for construction and/or maintenance of state and national highways and other roadways, respectively. Our Company has historically depended on water-related projects and roadwork contracts to generate a bulk of our revenues. The two segments collectively represented 87.64% of our total revenues for the financial year ended March
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31, 2010, on an unconsolidated basis and 77.77% of our total revenues for the six month period ended September 30, 2010, on a standalone basis. However, the number and nature of infrastructure projects and/or roadwork contracts that are being contemplated or undertaken at any given time in India depend upon factors such as budgetary allocation, development objectives and priorities of the Government, among others. Additionally, competitors may in future gain the necessary pre-qualification to bid for such projects and/or contracts and the resulting increase in competition may reduce the margins that our Company currently enjoys in these divisions. In the event that the budgetary allocation or external funding for projects in these divisions is reduced, or the Company’s bids for water-related projects and/or roadwork contracts are not successful due to increased competition, our operations and revenues could significantly reduce which in turn would affect our profitability.
9. Historically, we have relied upon a limited number of customers for securing repeat orders
and/or contracts. Our top 5 customers for Fiscals 2010, 2009 and 2008 have constituted
54.96%, 58.37% and 68.48% of our total revenues, respectively. Our inability to maintain our
relationship with such customers and/or procure orders in significant numbers and/or size
could adversely affect our revenues and thereby our profitability.
A significant proportion of our Company’s revenues are derived from a limited number of customers. Our top 5 customers for Fiscals 2010, 2009 and 2008 have constituted 54.96%, 58.37% and 68.48% of our total revenues, respectively. If we are unable to competitively bid for and/or otherwise secure orders and/or contracts with such customers in commercially favourable terms, in sufficient numbers, and/or for sufficient value, or at all, our revenues may be adversely affected, which in turn would affect our profitability.
10. Our Company’s revenues are highly dependent upon Central and State Governments and
public sector undertakings. Any change in the Central and State Governments, changes in
policies and/or our inability to recover payments therefrom in a timely manner, would adversely
affect our operations and revenues which in turn would adversely affect our profitability. Our Company relies heavily upon Central and State Governments and public sector undertakings (“PSUs”) who appoint our Company on large-scale infrastructure projects in India. As on December 31, 2010, 83.35% of our order book was represented by contracts and/or orders awarded by the Central and State Governments and PSUs. Additionally, many of our Company’s projects are public sector sponsored projects and these are often subject to delay. Such delays could be on account of a change in the Central and State Governments, changes in policies impacting the public at large, scaling back of Government policies or initiatives, changes in governmental or external budgetary allocation, or insufficiency of funds, which can significantly and adversely affect the business, financial condition and results of operations of our Company. Our Company’s business is also directly affected by changes in Central and State Governments spending. Any change or downturn that leads to decreased spending on infrastructure projects could adversely affect our business and thereby our results of operations.
Further, infrastructure contracts awarded by the Central and State Governments may include provisions which enable the client to terminate the contract without cause at any time after providing our Company with notice that may vary from 30 to 90 days. Performance guarantees are also common features of our Company’s contracts and are typically unconditional and payable on demand, and can be invoked by the client without cause. Since the majority of our Company’s projects are contracts with the Central and State Governments or their agencies, our Company is susceptible to such termination or invocation. In the event that a contract is so terminated or invoked without cause, our Company’s revenues will be adversely affected. Further, we may not be able to recover our payments in connection with such contracts in a timely manner, which could adversely affect our working capital cycles, revenues and profitability.
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11. The BSE has in the past suspended the trading of securities of two of our listed group
companies namely, Gayatri BioOrganics Limited and Gayatri Tissues & Paper Limited, which
have been revoked.
The BSE had vide a notice dated September 3, 2001, suspended the trading of securities of Gayatri BioOrganics Limited inter-alia in connection with alleged non-payment of annual listing fees.Similarly, the BSE had vide a notice dated December 21, 2004, suspended the trading of securities of Gayatri Tissues & Paper Limited in connection with alleged non-compliances with requirements of the listing agreement with BSE. The aforementioned suspensions have been revoked by BSE with effect from December 30, 2008 and April 26, 2010, respectively, upon compliance with the requirements of BSE and submission of relevant responses to the queries raised by BSE, and consequently, the trading in securities of the aforementioned companies have resumed on the BSE.
12. We may not be able to proceed with the Issue, if our Company does not obtain the
confirmations and waivers from complying with certain terms and conditions of the FCCB
offering circular from the holders of outstanding FCCBs and/or the trustees to the FCCBs in a
timely manner or at all.
Pursuant to a letter dated January 21, 2011 addressed to the trustees for the FCCBs, our Company has sought (a) a confirmation from the trustees that our Company can suspend the conversion of the outstanding FCCBs into Equity Shares from the Record Date fixed in connection with the Issue by our Company till the listing of the Rights Securities issued thereunder, and (b) a waiver from complying with certain pre-conditions to a rights issue as contained in the offering circular in connection with the FCCBs so as to ensure that our Company is in compliance with applicable statutory, regulatory and contractual requirements in connection with the FCCBs and the Issue. If our Company is unable to obtain the aforesaid confirmations and/or waivers from the holders of the FCCBs and/or the trustee for the FCCBs, we may not be in a position to consummate the Issue.
13. An outstanding road work order of a contract price of `̀̀̀ 3,118. 86 million in connection with
the improvement of the Naranpur – Pandapada – Harichandanpur – Brahmanipal – Duburi
Road in Orissa in favour of our Joint Venture, Gayatri RNS Joint Venture could stand
cancelled if the relevant awarding authority does not extend the completion date for the
aforesaid order, which could adversely affect our profitability.
Our Joint Venture, Gayatri RNS Joint Venture is executing a road work contract for improvement of the Naranpur – Pandapada – Harichandanpur – Brahmanipal – Duburi Road in Orissa for the Keonjhar (Roads & Bridges) Division, State of Orissa. The aforementioned order is for a value of ` 3,118.86 million. The date of commencement as per the aforementioned contract was November 15, 2007 and the date of completeion as stated in the contract was November 14, 2010. Pursuant to a letter dated October 1, 2010, to the project manager cum resident engineer, SM Consultants, Gayatri RNS Joint Venture has sought an interim extention of 36 months from the aforementioned completion date for completion of certain works, inter-alia on the grounds of alleged delays in handing over of land, Maoist attacks and unseasonal rains. The State of Orissa has not given its approval for the aforesaid extention. The value of outstanding work as on December 31, 2010 in our order books in connection with the aforementioned order is ` 2,257.66 million, which represents 3.79% of our aggregate outstanding order book as on December 31, 2010. If the State of Orissa does not give its approval for or refuses the extention sought by Gayatri RNS Joint Venture, the said order could stand cancelled and Gayatri RNS Joint Venture may not be able to recover the expenses and their outstanding contract amounts, in part or entirely in connection with the aforementioned project which would adversely impact the profitability of Gayatri RNS Joint Venture and our Company.
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14. Given the long term nature of the projects we undertake, we face various kinds of
implementation risks and our inability to successfully manage such risks may have an adverse
impact on the functioning of our business.
Since contracts for major business projects are performed over an extended period of time, some of the project risks that this business is subject to include the following:
• long completion periods and significant capital outlay before project completion and generation of positive cash flows;
• delays in the construction of projects giving rise to potential liabilities and lower than expected returns;
• significant financial exposure to, and uncertainty as to, the long-term viability of large turnkey projects;
• delays in project execution due to environmental, rehabilitation and resettlement risks; and
• change in government policies and/or regulatory requirements;
• change in political and economic conditions in the country;
• unforeseen conditions, such as adverse weather conditions and natural disasters, encountered during project execution.
A combination of circumstances may result in significant losses on a particular project, as a consequence of which our Company’s operations and profitability may be materially and adversely affected.
15. We may be unable to pre-qualify to bid on certain larger infrastructure projects on our own and
if we are unable to forge alliances with third parties, we may be precluded from bidding for
those large infrastructure projects, which could have an adverse effect on our growth prospects
and operations.
We enter into contracts primarily through a competitive bidding process or on negotiated rate basis. Our competition varies depending on the size, nature and complexity of the project and on the geographical region in which the project is to be executed. We compete against various infrastructure companies. In selecting contractors for major projects, clients generally limit the tender to contractors who are pre-qualified based on several criteria, including experience, technical ability, past performance, reputation for quality, safety record, financial strength and the size of previous contracts executed in similar projects with them or otherwise. Additionally, while these are important considerations, price is a major factor in most tender awards and in negotiated contracts and our business is subject to intense price competition. In competitive bidding, once the prospective bidders satisfy the technical requirements of the tender, the project is usually awarded based on the price of the contract quoted by the prospective bidder. There could be no assurance that our Company would in such cases be able to attain an award of such contracts at commercially favourable and/or expected terms or at all, which could have a material negative effect on our Company’s financial condition, results of operations and prospects. Further, if we are unable to pre-qualify to bid on certain large projects on our own, we may have to enter into memoranda of understanding or joint venture agreements with various other companies. In cases where we are unable to forge an alliance with appropriate companies to meet pre-qualification requirements, we may lose out on opportunities to bid, which could have an adverse effect on our growth prospects and operations.
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16. Our Company is subject to risks arising out of fixed-price contracts, time and cost overruns in
connection with our projects and underestimating the amount of work or the quantity of
material required. If such risks materialized, our Company could experience reduced profits or,
in some cases, a loss which could adversely affect our results of operations and financial
condition.
Typically, contract prices are established in part on cost and scheduling estimates, which are based on a number of assumptions, such as the future economic conditions, the price and availability of labour, equipment and materials and other relevant factors. If any of these estimates prove inaccurate or circumstances change, cost overruns may occur and our Company could experience reduced profits or, in some cases, a loss. In addition to the risk of cost overruns, our Company also bears the risk of underestimating the amount of work or the quantity of material required. Further, a proportion of our Company’s contracts is, and will continue to be, fixed-price contracts awarded through competitive bidding. As on December 31, 2010, 14.78% of our order book was represented by fixed price contracts. In fixed-price contracts our Company bears all or a portion of the risks of cost increases and therefore tries to account for any contingencies when determining its contract price. Further, our business requires various materials including, steel, cement and aggregates (sand, bricks and sized metals). Material costs are included in the line item “materials consumed” in our statements of profit and loss. Materials consumed, which also includes the cost of our mechanical and other equipment, constituted 32.93% of our total costs for Fiscal 2010 on an unconsolidated basis and 30.36% of our total costs for the six month period ended September 30, 2010 on a standalone basis. Our ability to pass on increases in the price of materials and other project related inputs may be limited in the case of fixed-price contracts with limited price escalation provisions. Unanticipated increases in the price of materials consumed and other project related inputs may also have compounding effects by increasing costs of performing other parts of the contract. This may contribute to our profits on such projects being less than originally estimated or may even result in us experiencing losses. Depending on the size of the project, the variation from the estimated contract value could have a significant adverse effect on our results of operations and financial condition.
17. Our operating expenses include fixed costs that are not dependent upon our volume of business.
As a result, any decline in our operating performance may be magnified because we may be
unable to reduce expenses immediately, or at all in response to a potential shortfall in volume of
business.
Our operating expenses include various fixed costs, which are as such, not dependent on our volume of business. Our fixed costs include the majority of our employment expenses and are incurred irrespective of the contracts for projects undertaken by us. Any shortfall in connection with the execution of our contracts may cause significant variations in operating results in any particular quarter, as we would not be able to reduce our fixed operating expenses in the short term. The effect of any decline in order bookings may thereby be magnified because a portion of our earnings are committed to paying these fixed costs. Thus, it is possible that in the future some of our financial results may be below the expectations of the public, market analysts and investors and the market price of our Equity Shares could decline.
18. Failure on the part of our sub-contractors to perform their obligations in a timely manner or at
all could adversely affect our ability to complete projects in a timely manner or at commercially
viable terms, which in turn could subject us to time and cost overruns, defaults under the
contracts for such projects and loss of revenue and profitability.
Our Company relies on sub-contractors in relation to specific aspects of a particular project. If our sub-contractors, for any reason, fail to meet their specified completion dates, and/or do not perform their obligations in accordance with the contracts executed with them, our ability to complete the project in a timely manner or at commercially viable terms, could be adversely
9
impacted. Furthermore, failure to meet the specifications (including technical requirements and quality standards) prescribed by our customers on the part of such sub-contractors could result in the breach of our contracts with our customers, and/or us having to incur additional expenses to remedy such failure on the part of our sub-contractors. In addition, our Company could be liable to pay penalties to our customers due to the insufficiency of performance guarantees in our Company’s agreements with sub-contractors. Further, such failure could also result in us losing our relationship with aggreived customers. Accordingly, any or all of aforementioned events could subject us to a loss of business, revenues and profitability.
19. If our Company is not able to obtain, renew or maintain the permits and approvals required to
operate its businesses, this may have a material adverse effect on its businesses.
Our operations are subject to the receipt of required licences, permits and authorizations, including local land use permits, building and zoning permits, environmental permits, and health and safety permits. In the future, our Company may be required to renew such permits and approvals or to obtain new permits and approvals. While our Company believes that it will be able to obtain such permits and approvals and has not experienced any difficulty in renewing and maintaining these permits and approvals in the past, as and when required, there can be no assurance that the relevant authorities will issue any such permits or approvals in the time-frame anticipated by our Company or at all. Failure by our Company to renew, maintain or obtain the required permits and approvals, intellectual property and technology licences may interrupt our Company’s operations and may have a material adverse effect on our Company’s results of operations, financial condition and prospects.
20. Our results of operations of our infrastructure business may be adversely affected if we are
unable to attract and/or deploy sufficient labour to various projects and/or to pass on
unanticipated increases in labour costs.
Our operations are labour intensive and subject to the availability of labour in sufficient numbers. If we are unable to attract and/or deploy sufficient labour resources to our projects, our operations may be adversely affected. Further, our ability to pass on increases in labour costs may be limited. This may contribute to our profits on such projects being less than originally estimated or may even result in us experiencing losses. Depending on the size of the project, the variation from the estimated contract value could have a significant adverse effect on our results of operations and financial condition.
21. The failure of our Subsidiaries to complete its projects in a timely or a profitable manner, could
affect the profitability of our Subsidiaries, which in turn would require us to write down our
investments in such Subsidiaries and would adversely impact our operations and profitability on
a consolidated basis.
Our Company has made and may continue to make certain capital investments, loans, advances and other commitments to support certain of its Subsidiaries. These investments and commitments inter-alia include capital contributions and providing corporate guarantees to lenders in order to enhance the financial condition or liquidity position of the Subsidiaries of our Company. For instance on February 14, 2011, inter alia, the Board of Directors have approved investment up to 50% in the equity share capital of Jinbhuvish Power Generations Private Limited through our Subsidiary Gayatri Energy Ventures Private Limited in connection with the establishment of a 600MW(2 x 300) thermal power project in the state of Maharashtra and we have invested ` 2,366.00 million through Gayatri Energy Ventures Private Limited in Thermal Powertech Corporation India Limited, a company incorporated for the purposes of a proposed establishment of a coal based thermal power plant at Krishnapatnam, Nellore Andhra Pradesh, India. We have little or no prior experience in executing power projects. Accordingly, if the projects and/or purposes for which our Subsidiaries have been incorporated are not completed on commercially
10
favourable terms, profitably, in a timely manner we may not realize any dividend income from such Subsidiaries, which in turn would affect our profitability. In the past two of our Subsidiaries have incurred losses as per their respective audited financial statements, as set forth in the table below:
Year Ended March 31 (` in Million) Entity
2010 2009
Gayatri Infra Venture Limited (13.38) -
Gayatri Energy Venture Pvt. Ltd. (0.14) -
Further, if the business and operations of these Subsidiaries deteriorate, our Company’s investments may be required to be written down or written off or further capital injections may be required to be made. Additionally, certain loans or advances may not be repaid or may need to be restructured, or our Company may be required to outlay capital under its commitments to support such companies. If these Subsidiaries fail to improve or sustain their operating performance, as the case may be, our overall profitability on a consolidated basis will be materially and adversely impacted, which in turn may materially and adversely affect the valuation of our Company and Subsidiaries as a whole.
22. Two of our Group Companies namely, Gayatri Sugars Limited and Gayatri BioOrganics
Limited have in Fiscal 2004 failed to meet certain debt obligations. Such failure to meet debt
obligations could affect our group’s capability to raise debt and we may not be able to raise the
required debt to complete the projects and thereby adversely affecting our financial condition
and results of operations.
Our Group Company, Gayatri Sugars Limited is operating under a Corporate Debt Restructuring CDR scheme since August, 2003. On account of downturn in the sugars industry, the term loans of IDBI and IFCI had been restructured under the Corporate Debt Restructuring (CDR) system during the year 2003-04. The CDR package was implemented w.e.f. April 01, 2004 and the interest payments and repayment of the term loan was paid as per schedule. In 2007, Gayatri Sugars Limited proposed to settle the dues of IDBI and IFCI with One Time Settlement (OTS), which was agreed by the relevant banks with a reduction of ` 62.00 million out of one of the term loans. Accordingly the long term loan dues were cleared by OTS on March 31, 2008. With payment of the terms loans of IDBI and IFCI, the credit facilities restructured under the CDR system has been settled. Further, Gayatri Sugars Limited has asked the Canara Bank and Corporation Bank (“Working Capital Banks”) for coming out of the CDR system, in the same manner as the long term dues were restructured and settled through OTS. But the banks have said they want to continue for some time in the CDR system. At the monitoring meeting held on October 19, 2010, the matter was discussed by members of the monitoring committee and Gayatri Sugars Limited was advised to pay the Right of Recompense (ROR) to the extent of ` 84.30 million as per the applicable guidelines, by March 31, 2010. Gayatri Sugars Limited has requested the aforesaid banks for an extension till December 31, 2011. However in the meeting held on October 19, 2010, the Chief General Manager, CDR suggested Gayatri Sugars Limited to pay 50% upfront and the balance payment till December 31, 2011. Gayatri Sugars Limited however has requested a full payment of ` 84.30 million to the Working Capital Banks by December 31, 2011, which is presently under consideration. Further, Gayatri BioOrganics Limited had offered a One Time Settlement Scheme, (“OTS”), to Financial Institutions/Banks consequent to a declaration as a sick industrial company by the BIFR. The principal amount outstanding for term loan was ` 253.75 million and for working capital was ` 44.71 million and as against this, OTS amount offered and accepted by the relevant financial institutions and banks was ` 158.25 million and ` 44.71 million. Gayatri BioOrganics Limited has
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already cleared the dues to the concerned financial institutions and banks and appropriate no due certificates have been issued by such financial institutions and banks in this regard. Such failures to meet debt obligations could affect our group’s capability to raise debt and we may not be able to raise the required debt to complete the projects and thereby adversely affecting our financial condition and results of operations.
23. Our listed Group Companies namely, Gayatri Tissues and Paper Limited, Gayatri Sugars
Limited and Gayatri BioOrganics Limited have in the past received notices from SEBI alleging
violations under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
1997.
In connection with Gayatri Tissues & Paper Limited, SEBI vide their letter dated July 21, 2004 alleged violations to the reporting requirements under regulations 6(2) and 6(4) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“Takeover Code”) for the year 1997 and under regulation 8(3) of the Takeover Regulations for the years 1998, 1999, 2000, 2001 & 2002. This letter of the SEBI also referred to the appointment of an adjudicating officer under provisions of the SEBI Act to adjudicate and enquire into such alleged violations. In the said letter, SEBI also stated that it has decided to consider request for a consent order under provisions of section 15 T (2) (b) of the SEBI Act if the company was willing to pay an amount of ` 175,000 as penalty for the alleged violations. The company has in its response dated August 4, 2004 denied the alleged violations and also showed its inability to pay the said amount. The aforesaid company has not received any further communication from SEBI in relation to this matter. In connection with Gayatri Sugars Limited, SEBI vide their letter dated November 29, 2004 alleged violations to the reporting requirements under regulations 8(3) of the Takeover Code for the years 1999, 2000, 2001 & 2002. This letter of the SEBI also referred to the appointment of an adjudicating officer under provisions of the SEBI Act to adjudicate and enquire into such alleged violations. In the said letter, SEBI also stated that it has decided to consider request for a consent order under provisions of section 15 T (2) (b) of the SEBI Act if the company was willing to pay an amount of ` 1,00,000 as penalty for the alleged violations. The aforesaid company has in its response vide its letter dated December 29, 2004 stated that there has not been a per se violation of the regulations as there has been no change in the shareholding from 1999-2002. The aforesaid company has not received any further communication from SEBI. In connection with Gayatri BioOrganics Limited, SEBI vide their letter alleged violations to the reporting requirements under various regulations of the Takeover Code for the years 1999, 2000, 2001 & 2002. This letter of the SEBI also referred to the appointment of an adjudicating officer under provisions of the SEBI Act to adjudicate and enquire into such alleged violations. In the said letter, SEBI also stated that it has decided to consider request for a consent order under provisions of section 15 T (2) (b) of the SEBI Act if the company willing to pay the penalty imposed by SEBI for the alleged violations. The aforesaid company has in its response stated that there has not been a per se violation of the regulations as there has been no change in the shareholding. The aforesaid company has not received any further communication from SEBI.
24. Seasonality and weather conditions, from time to time, restrict our ability to carry on
construction activities and fully utilize our resources, which in turn could adversely affect our
business.
Our business operations may be materially and adversely affected by severe weather, which may require us to evacuate personnel or curtail services and may result in damage to a portion of our equipment or facilities, resulting in the suspension of operations. In addition, such weather may prevent us from delivering materials to our project sites in accordance with contract schedules or generally reduce our productivity. Our operations are also adversely affected by difficult working conditions and extremely high temperatures during summer months and during monsoon, which restrict our ability to carry on construction activities and fully utilize our resources. We record
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revenues for those stages of a project that we complete, after we receive certification from the client that such stage has been successfully completed. During periods of curtailed activity due to adverse weather conditions, we may continue to incur operating expenses, but our revenues from operations may be delayed or reduced, thereby adversely impacting our results of operations and financial condition for such periods.
25. Our Company’s aggregate order book may be subject to unexpected adjustments and
cancellations and hence may not indicate what our future sales will be.
As at December 31, 2010, our Company’s aggregate order book was approximately ` 59,619.31 million. Our Company cannot guarantee that the revenues anticipated in its order book will be realized or, if realized, will be realized on time or result in profits. Projects may remain in its order book for an extended period of time. In addition, project delays or cancellations or adjustment to the scope of work may occur from time to time due to a client’s default, incidents of force majeure, legal impediments or our Company’s default and may impact contracts reflected in its order book. This reduction in our Company’s order book could adversely affect its revenues and profits.
26. Our operations are highly working capital intensive and accordingly we require adequate
capital and financing from time to time to meet our working capital requirements. Inability to
obtain adequate financing to meet our Company’s capital resource requirements, in a timely
manner, on commercially favourable terms to us, or at all, may have an adverse effect on our
results of operations.
Our Company has had, and expects to have, substantial liquidity and capital resource requirements. As at February 28, 2011, our Company had aggregate outstanding borrowings on an unconsolidated basis in the form of working capital facilities for amounts aggregating ` 3,781.90 million. Project financing is a combination of net working capital, advances from customers and bank financing. Further, typically our operations, have long working capital cycles, particularly in connection with projects with long gestation periods and government contracts. The inability of our Company to obtain such financing, in a timely manner, on commercially favourable terms to us, or at all may impair our business, results of operations, financial condition and prospects.
27. If our Company is unable to obtain the necessary funds for its growth plans, the business and
operations of our Company will be adversely affected.
The funding requirements for expanding the operations of our Company are substantial, and the ability to finance these plans is subject to a number of risks, contingencies and other factors, some of which are beyond our Company’s control, including general economic and capital markets conditions and the ability to obtain financing on acceptable terms.
There can be no assurance that debt or equity financing or our Company’s internal accruals will be available or sufficient to meet the funding of our Company’s growth plans.
The ability of our Company to obtain required capital on acceptable terms is subject to a variety of uncertainties, including:
• limitations on our Company’s ability to incur additional debt, including as a result of prospective lenders’ evaluations of our Company’s creditworthiness and pursuant to restrictions on incurrence of debt in our Company’s existing and anticipated credit facilities;
• investors’ and lenders’ perception of, and demand for, debt and equity securities of infrastructure companies, as well as the offerings of competing financing and investment opportunities in India by our competitors;
• whether it is necessary to provide credit support or other assurances from our Promoter on terms and conditions and in amounts that are commercially acceptable to them;
13
• limitations on the ability of our Company to raise capital in the capital markets and conditions of the Indian, U.S. and other capital markets in which our Company may seek to raise funds; and
• our Company’s future results of operations, financial condition and cash flows. Any inability to raise sufficient capital to fund our growth plans could have a material adverse effect on our business and results of operations. For details, please refer to the section titled “Objects of the Issue” on page 47 of this Draft Letter of Offer.
28. If our Company may not be able to successfully manage the growth of its operations, in a cost
effective and efficient manner, our results of operations and financial condition could be
adversely affected.
Our Company has been rapidly expanding its operations in recent years. As it continues to grow, our Company must continue to improve its managerial, technical and operational knowledge and allocation of resources, and implement an effective management information system. In order to fund its ongoing operations and future growth, our Company needs to have sufficient internal sources of liquidity or access to additional financing from external sources. Further, our Company will be required to manage relationships with a greater number of customers, suppliers, contractors, service providers, lenders and other third parties. Our Company will need to further strengthen its internal control and compliance functions to ensure that it will be able to comply with its legal and contractual obligations and it’s operational and compliance risks. There can be no assurance that our Company will not suffer from capital constraints, operational difficulties or difficulties in expanding existing business and operations, and training an increasing number of personnel to manage and operate the expanded business. Further, there can be no assurance that our Company will be able to successfully manage its growth or that its expansion plans will not adversely affect its existing operations and thereby have a material adverse effect on its business, financial condition, results of operations and future prospects. In addition, the projects undertaken by our Company are increasing in scale and complexity. Our Company will need to continue to improve its project management system and supporting infrastructure, such as its information technology and human resources systems, and training programmes, in order to ensure that it will be able to continue to successfully execute large, complex projects on a timely basis. There can be no assurance that our Company will be able to improve its project management system and supporting infrastructure at a rate commensurate with the increase in size and complexity of the projects that it undertakes, and any resulting impairment in our Company’s project management and execution capabilities may have a material adverse effect on its business, financial condition, results of operations and future prospects.
29. Most of our arrangements with our lenders contain various restrictive covenants, which may
restrict our ability to take various business decisions and measures in a timely manner or at all,
which in turn may adversely affect our growth prospects. Further, any non compliance with
such covenants could potentially subject us to action for breach of such arrangements.
Most of our Company’s loan agreements contain covenants which restrict certain activities and require our Company to obtain lenders’ consents before, among other things, undertaking new projects, issuing new securities, declaring dividends in the event of non-payment and making certain investments beyond the approved amount. They also allow those lenders to sell assets of certain value in the event of non-payment. Certain of the loan agreements also give the lenders the right to nominate directors to the Board in the event of any default under such agreements. As is typical of loan agreements, there are also a significant number of non-financial covenants in our loan agreements. These range from not being able to open ordinary accounts without some lenders’ consent to not effecting any change in management. There can be no assurance that the relevant lenders would provide required consents and/or waivers in a timely manner or at all,
14
which could adversely impact our ability to take various decisions and/or could restrict the manner in which we operate. This could adversely affect our growth prospects. While we are in compliance with all of our financial covenants or have obtained consents or waivers with regard to compliance, we may not in all instances be able in the future to comply with such non-financial covenants or obtain consents or waivers with regard to these covenants. In the event that any lender calls an event of default, including for breach of non-financial covenants, it would trigger cross defaults in our loan agreements, most, if not all, whereby all our loans could be accelerated and due immediately. Any such action could materially adversely affect our operations and financial condition.
30. The offer, issuance and allotment of Rights Securities to Non Residents would be subject to our
Company obtaining appropriate approval from the FIPB in connection with the issuance and
allotment of Warrants to Non Residents.
Pursuant to a letter dated March 11, 2011 our Company has sought an approval from the FIPB in connection with the offer, issuance and allotment of Warrants to Non Residents. Accordingly, our Company will not able to issue and allot Rights Securities to Non Residents, unless the aforesaid approval from the FIPB in this regard is obtained.
31. Our Promoters have pledged their Equity Shares as additional/collateral security under
agreements with various lenders in connection with various credit facilities obtained by our
Group Companies. In the event of any default under the relevant agreements, the lenders may
enforce aforementioned pledges, which could result in a change in control of our Company.
As per the disclosures made by our Promoters under the provisions of the Takeover Code in connection with the details of the Equity Shares held by them, as on December 31, 2010, 5,995,217 Equity Shares representing 50.01%, of the paid-up equity share capital of our Company, and representing 90.93% of the aggregate holding of Equity Shares by our Promoters are pledged with banks and financial institutions. The following table elucidates the details of Equity shares pledged by our Promoters with banks and financial institutions as on December 31, 2010:
Sl.
No.
Name of the Promoter Number of shares pledged or
otherwise encumbered
Financial
institution
with which the
shares are
pledged
1 T. Indira Subbarami Reddy 1,850,000 HDFC Bank Limited
T. Indira Subbarami Reddy 2,650,055 Industrial Finance Corporation of India Limited
2 T.V. Sandeep Kumar Reddy 1,495,162 Industrial Finance Corporation of India Limited
Total 5,995,217 -
In the event of any default under the relevant agreements, the lenders may enforce aforementioned pledges, which could result in a change in control of our Company.
32. Our Company’s success depends largely upon its highly-skilled professionals and its ability to
attract and retain these professionals. If our Company is unable to attract and retain
15
professionals and skilled workers, its business and results of operations may be adversely
affected.
Our Company’s ability to successfully complete projects and to attract new clients depends largely on its ability to attract, train, motivate and retain highly-skilled professionals, particularly project managers and engineers, and other skilled workers. If the Company cannot hire and retain highly-skilled personnel, its ability to bid for, and win, new projects and to continue to expand its business will be impaired, and consequently its revenues could decline. Further, our Company may not be able to re-deploy and retrain its professionals to keep pace with continuing changes in technology, evolving standards and changing needs of its clients. In addition, a significant increase in the wages paid by competing employers could result in increased attrition among our Company’s skilled workforce, increases in the wage rates that it pays or both. As a result of the recent growth in the infrastructure industry in India and the expected future growth, the demand for highly-skilled professionals and workers has significantly increased in recent years, and if our Company is unable to attract and retain professionals and skilled workers, its business and results of operations may be adversely affected.
33. Our operations could be adversely affected by any statutory and/or regulatory requirements
pertaining to labour, strikes, work stoppages or increased wage demands by our employees
and/or contract labourers or any other kind of disputes with our employees and/or contract
labourers.
Our operations are highly labour intensive and we employ a combination of in-house labour and contract labourers for the purposes of our projects. Though historically, we have not faced any labour related disputes or disruptions, there can be no assurance that we will not experience disruptions to our operations due to disputes or other problems with our work force, which may adversely affect our operations. Further, we enter into contracts with independent contractors to complete specified assignments and these contractors are required to source the labour necessary to complete such assignments. Although we do not engage these labourers directly, it is possible under Contract Labour (Regulation and Abolition) Act, 1970, and judicial interpretation of the provisions thereof, that we may be held responsible for wage payments and/or compensation for accidents and/or death at the work site in the course of employment to labourers engaged by contractors should the contractors default on wage and/or compensation payments. Any requirement to fund such payments may adversely affect our profitability. Furthermore, pursuant to the provisions of the Contract Labour (Regulation and Abolition) Act, 1970, we may be required to retain such contract labourers as our employees. Any such order from a court or any other regulatory authority would require us to incur additional fixed costs which in turn may adversely affect our profitability.
34. Changes in technology may render our Company’s current technologies obsolete or require our
Company to make substantial capital investments. The cost of implementing new technologies
or expanding capacity could be significant and could adversely affect our Company’s results of
operations.
Our Company’s business is subject to rapid and significant changes in technology. Although our Company strives to keep its technology in accordance with the latest international technological standards, the technologies currently employed may become obsolete or subject to competition from new technologies in the future. The cost of implementing new technologies or expanding capacity could be significant and could adversely affect our Company’s results of operations.
35. There can be no assurance that our Company will at all times benefit from the related party
transactions it enters into from time to time.
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Our Company has from time to time engaged in a variety of transactions with related parties. The summary of our aggregate related part transactions for the financial year ended March 31, 2010 are as follows:
`̀̀̀ in millions Sl Description
Subsidiary
&Step-
down
Subsidiaries
Associate
Companies
Entities in
which KMP
are
interested
Joint
ventures
KMP
1 Contract Receipts 1,688.75
2,926.52
713.29
2,884.17
-
2 Contract payments 31.20
- 40.91
- -
3 Office Rent & Maintenance - - 2.65
- -
4 Other Payments 10.20
16.40
1.20
3.50
… …
5 Donations - - 6.21
- -
6 Remuneration Paid - - - - 31.95
7 Contract Advances/ Other Adv. 311.07
254.86
125.56
549.86
-
8 Corporate Guarantees 1,600.00
- - - -
Our Company’s policy on transactions with related parties is that such transactions are conducted at arm’s length on normal commercial terms in the ordinary and normal course of business. Our Company may enter into additional transactions with its related parties in the future. Although regulations in India do require disclosure of related party transactions in a listed company’s financial statements, such regulations do not require shareholders’ approval or an independent assessment of connected or related party transactions. As a result, there is no independent verification that the terms of such transactions or that any of our Company’s transactions with its associated companies will benefit our Company.
36. The objects of the Issue are based on the internal estimates of our management, and have not
been appraised by any bank or financial institution. Any inability on our part to effectively
utilise the Issue Proceeds could adversely affect our financials.
The funds raised under this Issue will be used for repayment of existing debts, meeting enhanced working capital requirements, general corporate purposes and to meet Issue expenses. The objects of the Issue, with respect to working capital requirements, are based on management estimates and have not been appraised by any bank or financial institution. Utilization of the funds raised in the Issue is not subject to monitoring by any independent agency. Any inability on our part to effectively utilise the Issue Proceeds could adversely affect our financials. However, utilization of Issue proceeds would be disclosed to shareholders in the manner required under the Listing Agreement.
37. Our inability to maintain adequate insurance coverage could adversely affect our operations
and profitability.
Our Company is involved in large projects where design, construction or systems failures can result in substantial injury or damage to third parties. Furthermore, our operations are subject to inherent risks, such as burglary and break-ins, defects, malfunctions and failures of equipment, fire
17
and natural disasters. As at December 31, 2010, over 88.70 per cent. Of our Company’s projects were covered under contractor’s all risk insurance policies. Our insurance may not be adequate to completely cover any or all our liabilities. Further, there is no assurance that the insurance premiums payable by us will be commercially justifiable. Our inability to procure and/or maintain adequate insurance cover in connection with our business/ assets may adversely affect our operations and profitability.
38. The trade mark for “Gayatri” is not registered in the name of our Company, our Group
Companies or our Promoters. We may be unable to use our brand name if the same is
registered by any third party and may also be subject to potential action for alleged
infringement by other parties, which in turn would affect our reputation and profitability.
Neither our Company, our Promoters nor our group companies have registered the trade name “Gayatri” with the Registrar of Trade Marks under the Trade Marks Act, 1956 (as modified by the Trade Marks Act, 1999). In the event that any infringement claim is brought against our Company (or its group companies) our Company (or its group companies) will be required to establish their right to the exclusive use of the “Gayatri” name. Any failure to protect our intellectual property, including any trademarks, brand names and trade secrets, may adversely affect our competitive business position, financial condition and results of our operations. If any of our unregistered trademark or propriety rights are registered by a third party, we may not be able to make use of such trademark or propriety rights in connection with our business and consequently, we may be unable to capitalize on the brand recognition associated with our Company and our Subsidiaries in aggregate or our Company individually. Further, we may also be required to invest significant resources in developing a new brand, which would adversely affect our financial condition. Further, our inability to protect and/or use our brand name would affect our reputation.
39. We have experienced negative cash flows in the past. Any negative cash flows in the future
could adversely affect our financial condition and the trading price of our Equity Shares. We have experienced negative cash flows (only negative flows are indicated for each period), in the past, as follows:
Fiscal 2010 (` in million)
Fiscal 2009 (` in million)
Net cash from/(used in) Operating Activities (424.32) 490.25
Net cash from/(used in) Investing Activities (255.40) (795.87)
Any negative cash flows in the future could adversely affect our financial condition and the trading price of our Equity Shares. During the course of our business, we have entered into various capital commitments. In the event that the proposed Issue is not completed or is delayed and we are unable to make other alternative arrangements to raise funds to meet our cash flows requirements, it would have an adverse effect on our business, financial condition and results of operations
40. Our contingent liabilities which have not been provided for in our financial statements could
adversely affect our financial condition.
Our contingent liabilities as of September 30, 2010 aggregated to ` 63,327.15 million, on a standalone basis. The contingent liabilities consist principally of sales tax and service tax claims. In the event that any of these contingent liabilities materialize, our results of operation and financial condition may be adversely affected.
As of September 30, 2010, we had the following contingent liabilities that have not been provided for in our financial statements:
18
(` in millions)
Bank Guarantees 7,307.51
Corporate Guarantees given to Group Companies 55,866.60
Disputed Liability of Sales Tax, Service Tax and Siegniorage Charges 153.04
Total 63,327.15
41. Your Equity Shareholding in our Company may be diluted if the holders of the FCCBs convert
the FCCBs held by them into Equity Shares.
On August 1, 2007, our Company issued 308 FCCBs (zero coupon convertible bonds due July 2012 convertible into Equity Shares) of the face value of JPY 10,000,000 each aggregating to an issue size of JPY 3,080,000,000. As on the date of this Draft Letter of Offer, 271 of the aforementioned FCCBs, are outstanding which would entitle the holders thereof to acquire a maximum of 31,08,031 Equity Shares excluding any reservations/adjustments at the relevant FCCB conversion price.
In accordance with the provisions of Regulation 53 of the SEBI (ICDR) Regulations, our Company shall make a reservation of Equity Shares and Warrants in favour of the holders of the aforementioned FCCBs, (“Reserved Rights Securities”). The Reserved Rights Securities shall be allotted to the holders of the aforementioned FCCBs on the same terms and in the same ratio as the Rights Securities being offered pursuant to this Draft Letter of Offer to the Eligible Equity Shareholders of our Company at the relevant time of conversion thereof.
The shareholders of our Company vide a resolution passed vide a postal ballot pursuant to a postal ballot notice dated January 21, 2011, have approved the reservation of Equity Shares and Warrants per such Equity Share of our Company in connection with the Issue for holders of all outstanding FCCBs of our Company. Accordingly, your Equity Shareholding in our Company may be diluted if the holders of the FCCBs convert the FCCBs held by them into Equity Shares.
42. There is no assurance that our Company will always have access to sufficient supplies of water
and electricity in the future to accommodate our project requirements and planned growth. Any
prolonged business interruption, inter-alia including any disruption or discontinued supply of
power or water at our project sites could have a material adverse effect on our business.
Irregular or interrupted supply of power or water, electricity shortages or government intervention, particularly in the form of power rationing are factors that could adversely affect our Company’s operations. There is no assurance that our Company will always have access to sufficient supplies of electricity and/or water in the future to accommodate project requirements and planned growth. If there is an insufficient supply of electricity or water to satisfy our Company’s requirements or a significant increase in electricity prices, we may need to limit or delay our production, which could adversely affect the business, financial condition and results of operations of our Company.
43. As of February 28, 2011 our Company had unsecured loans amounting to `̀̀̀ 2,903.83 million
and repayment of these loans may be recalled by lenders at any time. In such event, we may
have to raise funds to refinance these obligations.
As of February 28, 2011 our Company had unsecured loans amounting to ` 2,903.83 million and repayment of these loans may be recalled by lenders at any time. In such event, we may have to raise funds to refinance these obligations. This requirement to refinance loans on short notice may have a material and adverse effect on our business operations and financial condition.
44. Conflicts of interest may arise out of common business objects shared by our Company and
certain of our Group Companies, namely, Gayatri Property Ventures Private Limited, Gayatri
Realty Ventures Private Limited, Gayatri Urban Ventures Private Limited, Indira Realty
19
Holdings Private Limited, Rajeev Realtors Private Limited, T Rajeev Reddy Real Estate
Developers Private Limited, T. Gayatri Engineering Company Private Limited, Indore Dewas
Tollways Limited, Cyberabad Expressways Limited, Hyderabad Expressways Limited, HKR
Roadways Limited, Balaji Highways Holding Private Limited
Our Promoter has interests in other companies and entities, as named above, whose main objects and objects ancillary thereto in their respective memoranda of association permit such entities to carry out activities similar to those of our Company and such entities may compete with us. As a result, conflict of interests may arise in allocating or addressing business opportunities and strategies amongst our Company and the aforenamed entities in circumstances where our interests differ from theirs. There can be no assurance that the interests of our Promoter will be aligned in all cases with the interests of our minority shareholders or the interests of our Company. There can be no assurance that the aforenamed entities will not compete with our existing business or any future business that we may undertake or that their interests will not conflict with ours.
45. Except three properties, all other properties, used by our Company for the purposes of its
activities including our registered office are not owned by us. Any termination of the relevant
lease or leave and license agreements in connection with such properties or our failure to renew
the same could adversely affect our activities.
Currently, except 3 tracts of land which are owned by our Company, none of the other properties used by our Company for the purposes of our business activities, including the premises where the registered office of our Company is located is owned by us. Termination of the leave and license agreements in connection with such properties which are not owned by us or our failure to renew the same, and upon favourable conditions, in a timely manner or at all, could require us to vacate such premises at short notice, could adversely affect our operations, financial condition and profitability.
EXTERNAL RISK FACTORS
46. If our Company fails to comply with environmental, employee-related or health and safety laws
and regulations or any other local laws or regulations in India, this may adversely affect our
Company’s business and results of operations.
As an infrastructure company, our Company is required to comply with various laws and regulations relating to the environment. Although our Company believes that it complies in all material respects with all applicable statutes and with the regulations thereunder, it may incur substantial costs to comply with requirements of environmental laws and regulations in the future. Environmental laws and regulations in India are not as extensive as they are in other countries. They have, however, been increasing in stringency and it is possible that they will become significantly more stringent in the future. If any of its projects are shut down, our Company will continue to incur costs in complying with regulations, appealing any decision to stop construction, continuing to pay labour and other costs which continue even if construction has ceased. As a result, our Company’s overall operating expenses may increase, adversely affecting its business and results of operations. Our Company is also subject to health and safety laws and regulations as well as laws and regulations governing its relationship with its employees in areas such as minimum wages, maximum working hours, overtime, working conditions, hiring and terminating employees, contract labour and work permits.
47. If there is a change in tax regulations, the tax liabilities of our Company may increase and thus
adversely affect our Company’s financial results.
The Indian Income Tax Act provides certain tax benefits to companies engaged in infrastructure development and construction, including:
20
• a deduction of 100 per cent. Of the profits (for a period of 10 consecutive assessment years) derived from the business of developing an infrastructure facility;
• a deduction of 100 per cent. Of the profits derived from developing and building housing projects with in five years from the end of the financial year in which the housing project is approved before March 31, 2011; and
• tax-free status on certain income by way of dividends, interest on long-term finance and long-term capital gains from investments/long-term loans, subject to specified conditions.
Some of these benefits are available only for a specified period of time and others are available only in respect of specific projects. As and when the specified period of time expires or specified projects are completed, our Company’s tax liabilities may increase, reducing our Company’s profitability. Further, there can be no assurance that the Central or State Governments will not amend these provisions to our Company’s detriment, or that, after the expiry of the specified period of time, our Government will extend these tax benefits or that it will not enact laws in the future that could adversely impact our Company’s tax incentives and, consequently, tax liabilities and profits.
48. Significant differences exist between Indian GAAP and other accounting principles, such as
U.S. GAAP and IFRS, which may be material to investors’ assessments of our financial
condition. Our failure to successfully adopt IFRS could have a material adverse effect on our
stock price.
Our financial statements, including the financial statements provided in this Draft Letter of Offer are prepared in accordance with Indian GAAP. We have not attempted to quantify the impact of U.S. GAAP or IFRS on the financial data included in this Draft Letter of Offer, nor do we provide a reconciliation of our financial statements to those of U.S. GAAP or IFRS. Each of U.S. GAAP and IFRS differs in significant respects from Indian GAAP.
Accordingly, the degree to which the Indian GAAP financial statements included in this Draft Letter of Offer will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practices. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in this Draft Letter of Offer should accordingly be limited.
The Ministry of Corporate Affairs and the ICAI, the accounting body that regulates the accounting firms in India, have announced a road map for the adoption of, and convergence of Indian GAAP with the IFRS (the “converged accounting standards”) pursuant to which all companies in India will be required to prepare their annual and interim financial statements under converged accounting standards beginning with fiscal period commencing April 1, 2011 or April 1, 2013, as the case may be, subject to certain conditions. Because there is significant lack of clarity on the adoption of and convergence with IFRS and there is not yet a significant body of established practice on which to draw in forming judgments regarding its implementation and application, we have not determined with any degree of certainty the impact that such adoption will have on our financial reporting. There can be no assurance that our financial condition, results of operations, cash flows or changes in shareholders’ equity will not appear materially worse under converged accounting standards than under Indian GAAP. As we transition to converged accounting standards, we may encounter difficulties in the ongoing process of implementing and enhancing our books of accounts. Moreover, there is increasing competition for the small number of IFRS-experienced accounting personnel available as more Indian companies begin to prepare financial statements based on converged accounting standards. There can be no assurance that our adoption of converged accounting standards will not adversely affect our reported results of operations or financial condition and any failure to successfully adopt converged accounting standards by April 2011 or April 2013, as the case may be, could have a material adverse effect on our stock price.
21
49. Political instability or changes in the policies formulated by the Government of India from time
to time could affect the liberalization of the Indian economy and adversely affect our business,
results of operations and financial condition. Our Company is incorporated in India and a significant portion of our Company’s fixed assets and human resources is located in India. Our Company’s business, and the market price and liquidity of the Equity Shares may be adversely affected by changes in foreign exchange rates and regulations, interest rates, government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India. In recent years, India has been following a course of economic liberalization and the Company’s business could be significantly influenced by economic policies followed by the Central Government. The current coalition-led Central Government, which came to power in May 2001, has announced policies and taken initiatives that support the economic policies that have been pursued by previous Central Governments. However, the present Central Government is a multi-party coalition, so there can be no assurance that it will be able to generate sufficient cross-party support to continue to implement any liberalization policies adopted by the previous Central Government or that such policies will continue in the future. Government corruption, scandals and protests against liberalization, which have occurred in the past, could slow the pace of liberalization and deregulation. The rate of economic liberalisation in India could change in future, and statutory/regulatory requirements and/or policies the general economic environment in India, foreign investment, the securities market, currency exchange and other matters affecting our business and/or investment in our securities could change as well. Any significant change in liberalisation and deregulation of policies in India could adversely affect business and economic conditions in India generally and our Company’s business, operations and profitability in particular.
50. A slowdown in economic growth in India may adversely affect our Company’s business and
results of operations.
Our Company’s financial performance and the quality and growth of our Company’s business depend significantly on the health of the overall Indian economy. The Indian economy could be adversely affected by a number of factors. Any slowdown in the Indian economy or volatility of global commodity prices, in particular crude oil, cement, steel and bitumen prices, could adversely affect our Company’s source of raw materials and contractual counterparties, its business, its financial performance.
51. Civil unrest, acts of violence including terrorism or war involving India and other countries
could materially and adversely affect the financial markets and our business.
Civil unrest, acts of violence including terrorism or war, may negatively affect the Indian markets where our Equity Shares will be traded and also materially and adversely affect the worldwide financial markets. These acts may also result in a loss of business confidence, make travel and other services more difficult and ultimately materially and adversely affect our business. Diplomatic relations between the GoI and neighboring countries have suffered post the terrorist attacks on November 26, 2008. While the GoI has been trying to engage in conciliatory efforts any further tension or deterioration of relations might result in investor concern about stability in the region, which could materially and adversely affect the price of the Equity Shares. India has also witnessed civil disturbances in recent years and it is possible that future civil unrest as well as other adverse social, economic and political events in India could have an adverse impact on us. Such incidents could also create a greater perception that investment in Indian companies involves a higher degree of risk and could have an adverse impact on our business, financial condition, results of operations and the price of the Equity Shares.
52. Any downgrading of India’s debt rating by an international rating agency could have a negative
impact on our Company’s business.
22
Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may adversely affect our Company’s ability to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. This could have an adverse effect on our Company’s business and future financial performance and our Company’s ability to obtain financing to fund its growth.
53. The market value of an investor’s investment may fluctuate due to the volatility of the Indian
securities markets. The prices of our Equity Shares on the stock exchange/s may fluctuate as a result of several factors, including:
• volatility in the Indian and global securities market or in the Rupee’s value relative to the U.S. dollar, the Euro and other foreign currencies;
• our profitability and performance;
• performance of our competitors in the Indian infrastructure industry and the perception in the market;
• significant developments in India’s economic liberalization and deregulation policies;
• significant developments in India’s fiscal, environmental and other regulations;
• an assessment of our management, our past and present operations, and the prospects for, and timing of, our future revenues and cost structures; and
• the present state of our development.
Further, there can be no assurance the prices at which our Equity Shares have historically traded will correspond to the prices at which our Equity Shares will trade in the market subsequent to this Issue.
54. There are restrictions on daily movements in the price of our Equity Shares, which may
adversely affect a shareholder’s ability to sell, or the price at which it can sell Equity Shares at a
particular point in time There can be two types of circuit breakers applicable to the stocks listed on the Stock Exchanges (i) daily “price based circuit breaker” which specifies the band within which the price of a particular stock is allowed to move freely and (ii) index based market wide circuit breaker which applies to a stock at three stages of the index movement either way at 10%, 15% and 20%. While the daily price based circuit breaker is applicable to a stock depending on whether it is traded in F&O segment, an index based market wide circuit breaker is applicable to all the stocks listed on all the Stock Exchanges. Further, the daily “price based circuit breaker” operates independently of the index based market wide circuit breakers imposed by SEBI on Indian stock exchanges. Our Company is subject to a daily circuit breaker imposed by all stock exchanges in India which does not allow transactions beyond certain volatility in the price of our Equity Shares and other securities. This circuit breaker operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on stock exchanges. The percentage limits on our Company’s circuit breakers are set by the BSE. The BSE do not inform our Company of the percentage limit of such circuit breakers and may change it without our Company’s knowledge. This circuit breaker effectively limits the upward and downward movements in the price of our Equity Shares. As a result of this circuit breaker, there can be no assurance regarding the ability of an investor to sell our Equity Shares or the price at which investors may be able to sell their Equity Shares at a particular point in time. There cannot be any assurance that the BSE will not halt trading due to the index-based market-wide circuit breaker in future and closure of, or trading stoppage on, the BSE could adversely affect the trading price of our Equity Shares.
55. You may be subject to Indian taxes arising out of capital gains. Any gain realized on the sale of
equity shares held for more than 12 months to an Indian resident, which are sold other than on
23
a recognized stock exchange and as result of which no Securities Transaction Tax, (“STT”),
has been paid, will be subject to capital gains tax in India.
Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian company are generally taxable in India. Any gain realized on the sale of listed equity shares on a stock exchange held for more than 12 months will not be subject to capital gains tax in India if the STT has been paid on the transaction. The STT will be levied on and collected by a domestic stock exchange on which equity shares are sold. Any gain realized on the sale of equity shares held for more than 12 months to an Indian resident, which are sold other than on a �realized�d stock exchange and as result of which no STT has been paid, will be subject to capital gains tax in India. Further, any gain realized on the sale of listed equity shares held for a period of 12 months or less will be subject to capital gains tax in India.
Capital gains arising from the sale of our Equity Shares will be exempt from tax in India in cases where such exemption is provided under the tax treaty between India and the country of which the seller is a resident. Generally, Indian tax treaties, do not limit India’s ability to impose tax on capital gains. As a result, residents of certain countries may be liable for tax in India, as well as in their own jurisdictions on gain upon a sale of our Equity Shares.
56. Foreign investors are subject to foreign investment restrictions under Indian law that limit our
Company’s ability to attract foreign investors, which may adversely impact the market price of
our Equity Shares and also the ability of our Company to raise foreign capital. Under the foreign exchange regulations currently in force in India, transfers of Equity Shares between non-residents and residents are freely permitted (subject to certain restrictions) if they comply with the pricing guidelines and reporting requirements specified by the RBI. If the transfer of Equity Shares, which are sought to be transferred is not in compliance with such pricing guidelines or reporting requirements or falls under any of the exceptions referred to above, then the prior approval of the RBI will be required. Additionally, shareholders who seek to convert the Rupee proceeds from a sale of Equity Shares in India into foreign currency and repatriate that foreign currency from India will require a no objection/ tax clearance certificate from the income tax authority. Our Company cannot assure investors that any required approval from the RBI or any other statutory and/or regulatory authority or agency can be obtained on any particular terms or at all. Similarily, such regulatory restrictions limit our Company’s financing sources and hence could constrain its ability to obtain financing on competitive terms and refinance existing indebtedness. In addition, our Company cannot assure you that the required approvals will be granted to it without onerous conditions, if at all. Limitations on raising foreign debt may have an adverse effect on our Company’s business growth, financial condition and results of operations
57. There is no guarantee that the Rights Securities issued pursuant to the Issue will be listed on
the BSE in a timely manner or at all.
In accordance with Indian law and practice, permission for listing and trading of the Rights Securities issued pursuant to the Issue will not be granted until after such Rights Securities have been issued and allotted. Such approval will require all other relevant documents authorising the issuing of Rights Securities to be submitted. There could be a failure or delay in listing the Rights Securities on the BSE. Any failure or delay in obtaining the approval would restrict your ability to dispose of your Rights Securities. Further, historical trading prices, therefore, may not be indicative of the prices at which the Rights Securities will trade in the future.
Prominent Notes
• Issue of 5,994,500 Rights Equity Shares for cash at a premium of ` [●] per Rights Equity Share, aggregating to ` [●] million to the Eligible Equity Shareholders of the Company in the ratio of one Rights Equity Share for every two Equity Shares held on the Record Date i.e. [●] along with one Warrant for every one Rights Equity Share allotted *.
24
*Please note that the Issue size in terms of the number of Rights Equity Shares is subject to change in the
event of conversion of any outstanding FCCBs prior to the Record Date, and accordingly the number of
Equity Shares outstanding after the Issue (prior to conversion of the Warrants and assuming full conversion
of the Warrants) would also be subject to such change.
• As on the date of this Draft Letter of Offer, 37 FCCBs have been converted into Equity Shares, and 271 FCCBs, are outstanding which would entitle the holders thereof to acquire a maximum of 3,108,031 Equity Shares excluding any reservations/adjustments at the relevant FCCB conversion price. In accordance with the provisions of Regulation 53 of the SEBI (ICDR) Regulations, our Company shall make a reservation of Equity Shares and Warrants in favour of the holders of the aforementioned FCCBs, (“Reserved Rights Securities”). The Reserved Rights Securities shall be allotted to the holders of the aforementioned FCCBs on the same terms and in the same ratio as the Rights Securities being offered pursuant to this Draft Letter of Offer to the Eligible Equity Shareholders of our Company at the relevant time of conversion thereof.
• Our net worth was ` 2,804.12 millions as per the audited unconsolidated financial statements of our Company as at March 31, 2010, and our net worth was ` 3,788.87 millions as per the audited consolidated financial statements of our Company as at March 31, 2010, as disclosed in the section titled “Financial Statements” on page 68 of this Draft Letter of Offer.
• The cumulative value of transactions between our Company and our Group Companies in the last one year preceding February 28, 2011, with SEBI was ` 11,227.97 millions.
• There are no financing arrangements whereby our Promoter Group, our Directors and their relatives, (“Financier”), have financed the purchase by any other person of securities of our Company other than in the normal course of the business of the Company during the period of six months immediately preceding the date of filing this Draft Letter of Offer with SEBI.
• All information shall be made available by the Lead Manager and our Company to the existing shareholders of our Company and no selective or additional information would be available only to a section of the investors in any manner whatsoever.
• The Lead Manager and our Company shall update this Draft Letter of Offer and keep the shareholders/public informed of any material changes till the listing and trading commencement; and
• Investors may contact Compliance Officer or the Lead Manager for any complaints pertaining to the Issue.
25
SECTION III – INTRODUCTION
THE ISSUE
The Board of Directors of our Company have pursuant to a resolution passed at their meeting held on
January 21, 2011 authorized this offer of Rights Securities on a rights basis.
The following is a summary of the Issue. This summary should be read in conjunction with, and is qualified
in it’s entirely by, more detailed information in the section titled “Terms of the Issue” on page 175 of this
Draft Letter of Offer.
Rights Securities being offered
by our Company*
5,994,500 Rights Equity Shares with one Warrant per Rights Equity Share
Rights Entitlement for Rights
Securities
One Rights Equity Share for every two Equity Shares held on the Record Date i.e. [●] along with one Warrant for every one Rights Equity Share allotted.
Record Date [●]
Face Value per Rights Equity
Shares
` 10
Issue Price per Rights Equity
Share
` [●] at a premium of ` [●] per Rights Equity Share
Warrant Exercise Price ` [●] per Warrant
Tenure of the Warrants 60 months from the date of allotment of the Warrants, i.e. Warrants which are not tendered to be converted into Equity Shares at the completion of the Warrant Exercise Period II (60 months), shall lapse and the relevant holder/s of such Warrants shall not be entitled to allotment of the attendant Equity Shares against such Warrants**.
Warrant Exercise Period I A period that commences on the completion of the 30th month from the date of allotment of the Warrants and shall continue up to the completion of the 31st month from the date of allotment of the Warrants
Warrant Exercise Period II A period that commences on the completion of the 58th month from the date of allotment of warrants and shall continue up to the completion of the 59th month from the date of allotment of Warrants
Equity Shares outstanding
prior to the Issue
11,989,000 Equity Shares
Issue size ` [●]
Equity Shares outstanding
after the Issue prior to
conversion of the Warrants*
17,983,500 Equity Shares
Equity Shares outstanding
after the Issue assuming full
conversion of the Warrants*
23,978,000 Equity Shares
Terms of the Issue For more information, please refer to the section titled “Terms of the
Issue” on page 175 of this Draft Letter of Offer. * Please note that the Issue size in terms of the number of Rights Equity Shares is subject to change in the event of
conversion of any outstanding FCCBs prior to the Record Date, and accordingly the number of Equity Shares
outstanding after the Issue (prior to conversion of the Warrants and assuming full conversion of the Warrants)
would also be subject to such change.
** Please note that in the event our Company exercises a call option (as further detailed in the section titled “Terms
of the Issue” on page 175 of this Draft Letter of Offer), all Warrants not tendered for conversion into Equity
Shares when so called upon at the Warrant Exercise Price, shall lapse.
26
Payment terms
The payment terms available to the Investors are as follows:
Due Date Amount
On Application of Rights Equity Shares ` [●] which constitutes 100% of the full amount of the Issue Price of ` [●].
27
SUMMARY OF FINANCIAL STATEMENTS
.
A. UNCONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2010
Rs. In Millions
AS AT AS AT
Particulars
31st MARCH, 2010 31st MARCH, 2009
SOURCE OF FUNDS Share Holders Funds Share Capital 111.05 101.05 Equity Warrants 35.63 0.00 Reserves and Surplus 2,657.43 2,804.11 2,056.49 2,157.54
Loan Funds Secured Loans 3,600.35 2,479.91 Unsecured Loans 2,485.31 6,085.66 1,127.69 3,607.60
Deferred Tax Liability 177.79 185.83
TOTAL 9,067.56 5,950.97
APPLICATION OF FUNDS Fixed Assets Gross Block 3,002.95 2,747.84
Less: Depreciation 1,341.51 1,141.16
Net Block 1,661.44 1,606.68
Investments 1,283.39 1,283.39
Current Assets, Loans and Advances
Inventories 693.33 604.35
Sundry Debtors 3,149.06 2,239.12
Cash and Bank Balances 2,052.19 587.65 Loans and Advances 4,043.36 2,764.87
9,937.94 6,195.99
Less: Current Liabilities and Provisions
Liabilities 3,738.46 3,014.64 Provisions 76.75 120.45
3,815.21 3,135.09
Net Current Assets 6,122.73 3,060.90
TOTAL 9,067.56 5,950.97
28
B. UNCONSOLIDATED PROFIT & LOSS ACCOUNT FOR YEAR ENDED MARCH 31,
2010
Rs. In Millions
YEAR ENDED YEAR ENDED
Particulars
31st MARCH, 2010 31st MARCH, 2009
INCOME Gross Contract Receipts 12,524.86 10,045.95 Other Income 42.04 64.09
TOTAL 12,566.90 10,110.04
EXPENDITURE Work Expenditure 10,532.23 8,649.11 (Increase) / Decrease in WIP (18.89) (116.58) Employee’s Remuneration & Benefits 280.44 207.01 Administrative Expenses 208.11 170.59 Interest and Financial Charges 554.42 368.55 Depreciation 200.57 197.01
TOTAL 11,756.88 9,475.69
Profit before Tax 810.02 634.35 Provision for Taxation - Current Tax 284.59 216.77 - Fringe Benefit Tax 2.33 - Deferred Tax (8.04) 276.55 (0.94) 218.16
Profit after Tax and before prior period adjustments 533.47 416.19
Less : Prior Period Adjustments 42.57 3.03
Profit after prior period adjustments 490.90 413.16 Balance in Profit and Loss account brought forward 1,031.04 725.17
Balance available for appropriation 1,521.94 1,138.33
APPROPRIATIONS : Interim Dividend 27.76 Final Dividend 27.76 40.42 Dividend tax 9.44 6.87 Transfer to General Reserve 70.00 134.96 60.00 107.29
Balance carried to Balance sheet 1,386.98 1,031.04
Earning per share of Face value of Rs. 10/- each
Basic (Rs.) 46.02 40.89 Diluted (Rs.) 36.67 32.56
29
C. CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2010
Rs. In Millions
AS AT AS AT
Particulars
31st MARCH 2010 31st MARCH 2009
SOURCE OF FUNDS Share Holders Funds Share Capital 111.05 101.05 Equity Warrants / Share Application Money 39.20 - Reserves and Surplus 3,639.23 3,789.48 2,816.33 2,917.38
Loan Funds Secured Loans 10,495.04 9,359.67 Unsecured Loans 6,688.93 17,183.97 2,008.16 11,367.83
Minority Interest Liability 1,344.93 943.88
Deferred Tax Liability 162.73 193.34
TOTAL 22,481.11 15,422.43
APPLICATION OF FUNDS Fixed Assets Gross Block 4,378.73 3,013.34
Less: Depreciation 1,343.91 1,174.71
Net Block 3,034.82 1,838.63
Capital Work in Progress 10,761.61 7,216.03
Investments 432.31 419.26
Current Assets, Loans and Advances
Inventories 693.33 604.35
Sundry Debtors 2,971.01 2,054.43 Cash and Bank Balances 3,130.76 2,391.13
Loans and Advances 6,351.20 4,548.59
13,146. 30 9,598.50
Less: Current Liabilities and Provisions
Liabilities 4,813.59 3,518.19
Provisions 80.94 132.45
4,894.53 3,650.64
Net Current Assets 8,251.77 5,947.86
Miscellaneous Expenditure 0.60 0.65
(to the extent not written off or adjusted)
TOTAL 22,481.11 15,422.43
30
D. CONSOLIDATED PROFIT & LOSS ACCOUNT FOR YEAR ENDED MARCH 31, 2010
Rs. in Millions
YEAR ENDED YEAR ENDED
Particulars
31st MARCH 2010 31st MARCH 2009
INCOME
Gross Contract Receipts 12,745.06 10,272.06
Other Income 64.66 78.79
TOTAL 12,809.72 10,350.85
EXPENDITURE
Work Expenditure 10,738.55 8,858.62
(Increase) / Decrease in WIP (18.89) (88.18)
Employee’s Remuneration & Benefits 298.94 228.21
Administrative Expenses 227.77 190.71
Interest and Financial Charges 555.40 394.25
Depreciation 200.58 209.20
TOTAL 12,002.35 97,92.81
Profit before Tax 807.37 558.04
Provision for Taxation - Current Tax 284.69 218.68
- Fringe Benefit Tax - 2.49
- Deferred Tax (30.62) 254.07 8.60 229.77
Profit after Tax and before prior period adjustments 553.30 328.27
Minority Interest (1.33) 4.47
554.63 323.80
Less : Prior Period Adjustments 42.84 3.03
Profit after prior period adjustments 511.79 320.77
Balance in Profit and Loss account brought forward 895.10 659.47
Balance available for appropriation 1,406.89 980.24
APPROPRIATIONS :
Interim Dividend 27.76 --
Final Dividend 27.76 40.42
Dividend tax on Dividend 9.44 6.87
Transfer to General Reserve 70.00 134.96 60.00 107.29
Balance carried to Balance sheet 1,271.93 872.95
Earning per share of Face value of Rs. 10/- each
Basic (Rs.) 47.98 31.74
Diluted (Rs.) 38.23 25.28
31
E. UN-AUDITED STANDALONE BALANCE SHEET AS AT SEPTEMBER 30, 2010
Rs. in Millions
AS AT AS AT
Particulars
SEPTEMBER 30, 2010 MARCH 31, 2010
SOURCE OF FUNDS
Share Holders Funds
Share Capital 113.91 111.05
Equity Warrants 35.63 35.63
Reserves and Surplus 3,005.20 3,154.74 2,657.43 2,804.11
Loan Funds
Secured Loans 4,020.05 3,600.35 Unsecured Loans 2,409.38 6,429.43 2,485.31 6,085.66
Deferred Tax Liability 173.58 177.79
TOTAL 9,757.75 9,067.56
- -
APPLICATION OF FUNDS
Fixed Assets
Gross Block 3,197.47 3,002.96
Less: Depreciation 1,453.53 1,341.52
Net Block 1,743.94 1,661.44
Investments 2,284.57 1,283.38
Current Assets, Loans and Advances
Inventories 700.81 693.32
Sundry Debtors 3,336.65 3,149.07
Cash and Bank Balances 1,210.07 2,052.19
Loans and Advances 4,523.49 4,043.36
9,771.02 9,937.94
Less: Current Liabilities and Provisions
Liabilities 4,019.59 3,738.46
Provisions 22.19 76.74
4,041.78 3,815.20
Net Current Assets 5729.24 6,122.74
TOTAL 9757.75 9,067.56
32
F. UN-AUDITED STANDALONE FINANCIAL RESULTS FOR THE HALF-YEAR
ENDED SEPTEMBER 30, 2010
Rs. in Millions
Half Year Ended
30.09.2010 30.09.2009 S.No Particulars
Unaudited Unaudited
1 (a) Net Sales/ Income from Operations 6,230.82 5,413.42
(b) Other Operating Income - -
2 Expenditure a. Increase/ {Decrease} in Stock in Trade (73.55) (58.26) b. Consumption of Raw Material & Work Expenditure 5,264.30 4,645.56 c. Purchase of traded goods - - d. Employees Cost 162.02 113.35 e. Depreciation 112.01 91.63 f. Other Expenditure 94.10 82.33
g. Total 5,558.88 4,874.61
3 Profit from Operations before Other Income, Interest
and Exceptional Items 671.94 538.81
4 Other Income 26.61 30.09
5 Profit from Operations before Interest and Exceptional
Items 698.55 568.90 6 Interest 296.88 238.90
7 Profit from Operations before Exceptional Items 401.67 330.00 8 Exceptional Items - -
9 Profit(+)/ Loss (-) from Ordinary Activities before tax (7-
8) 401.67 330.00
10 Tax Expenses 132.77 100.34
11 Net Profit / Loss (-) from Ordinary Activities after tax (
9-10 ) 268.90 229.66
12 Extraordinary Items (net of tax expenses) - -
13 Net Profit / Loss (-) for the Period(11-12) 268.90 229.66
14 Paid Up Equity Capital 113.91 111.05 (Face Value of the Share ) 10.00 10.00
15 Reserves excluding revaluation reserves as per Balance
Sheet of previous accounting year 2,804.12 2,056.50
16 Earning Per Share (EPS) a) Basic and diluted EPS before Extraordinary Items for the
period, for the year to date and for the previous year (not to be annualized) 18.17 17.90
b) Basic and diluted EPS after Extraordinary Items for the period, for the year to date and for the previous year (not to be annualized) 18.17 17.90
17 Public Share Holding - Number of shares 52,95,732 50,08,789
- Percentage of holding. 46.49% 49.57%
18 Promoters and promoter group share holdings a) Pledged / Encumbered - Number of shares 56,04,245 - Percentage of shares (as a % of the total shareholding of
promoter and promoter group) 91.94%
33
Half Year Ended
30.09.2010 30.09.2009 S.No Particulars
Unaudited Unaudited
- Percentage of shares (as a % of the total share capital of the company) 49.20%
b) Non-Encumbered - Number of shares 4,91,502 - Percentage of shares (as a % of the total shareholding of
promoter and promoter group) 8.06% - Percentage of shares (as a % of the total share capital of
the company) 4.31%
34
G. UN-AUDITED CONSOLIDATED BALANCE SHEET AS AT SEPTEMBER 30, 2010
Rs. in Millions
ASAT ASAT
Particulars
SEPTEMBER 30, 2010 MARCH 31, 2010
SOURCE OF FUNDS
Share Holders Funds
Share Capital 113.91 111.04
Equity Warrants/Share Appl. Money 72.82 39.20 Reserves and Surplus 4,449.72 4,636.45 3,639.23 3,789.47
Loan Funds
Secured Loans 16,588.01 10,495.04 Unsecured Loans 3,274.36 19,862.37 6,688.93 17,183.97
Minority Interest Liability 1,535.14 1,344.93
Deferred Tax Liability 155.48 162.73
TOTAL 26,189.44 22,481.10
APPLICATION OF FUNDS
Fixed Assets
Gross Block 10,803.56 4,378.73
Less: Depreciation 1,548.13 1,343.90
Net Block 9,255.43 3,034.83
Capital Work in Progress 8,416.52 10,761.60
Investments 356.68 432.31
Current Assets, Loans & Advances
Inventories 700.81 693.32
Sundry Debtors 4,061.39 2,971.01
Cash and Bank Balances 1,697.06 3,130.76
Loans and Advances 4,338.86 6,351.20
10,798.12 13,146.29
Less: Current Liabilities and Provisions
Liabilities 2,615.64 4,813.59
Provisions 23.09 80.94
2,638.73 4,894.53
Net Current Assets 8,159.39 8,251.76
Miscellaneous Expenditure 1.42 0.60
(to the extent not written off or adjusted)
TOTAL 26,189.44 22,481.10
35
H. UN-AUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE HALF-YEAR
ENDED SEPTEMBER 30, 2010
Rs. in Millions Sl. Particulars For the Half Year Ended September 30, 2010
1 (a) Net Sales/ Income from Operations 6,910.59
(b) Other Operating Income -
2 Expenditure a. Increase/ {Decrease} in Stock in Trade (73.55) b. Consumption of Raw Material & Work expenditure 4,854.31 c. Purchase of traded goods - d. Employees Cost 175.77 e. Depreciation 203.60 f. Other Expenditure 104.16 g. Total 5,264.29
3 Profit from Operations before Other Income, Interest
and Exceptional Items 1,646.30 4 Other Income 36.31
5 Profit from Operations before Interest and Exceptional
Items 1,682.61 6 Interest 444.15
7 Profit from Operations before Exceptional Items 1,238.46 8 Exceptional Items -
9 Profit(+)/ Loss (-) from Ordinary Activities before tax
(7-8) 1,238.46
10 Tax Expenses 129.87
11 Net Profit / Loss (-) from Ordinary Activities after tax (
9-10 ) 1,108.59
12 a Extraordinary/ Prior period Items (net of tax expenses) (0.84) b Minority Interest (Net of Tax) (243.55)
13 Net Profit / Loss (-) for the Period(11-12) 864.20
14 Paid Up Equity Capital 113.91 (Face Value of the Share ) 10.00
15 Reserves excluding revaluation reserves as per Balance
Sheet of previous accounting year 3,639.23
16 Earning Per Share (EPS) a) Basic and diluted EPS before Extraordinary Items for the
period, for the year to date 58.59
b) Basic and diluted EPS after Extraordinary Items for the period, for the year to date 58.59
17 Public Share Holding
- Number of shares 52,95,732
- Percentage of holding. 46.49%
18 Promoters and promoter group share holdings
a) Pledged / Encumbered
- Number of shares 56,04,245
- Percentage of shares (as a % of the total shareholding of promoter and promoter group) 91.94%
- Percentage of shares (as a % of the total share capital of the company) 49.20%
b) Non-Encumbered
- Number of shares 4,91,502
- Percentage of shares (as a % of the total shareholding of promoter and promoter group) 8.06%
- Percentage of shares (as a % of the total share capital of the company) 4.31%
36
GENERAL INFORMATION
Dear Eligible Equity Shareholder(s), Pursuant to the resolution passed by the Board of Directors of our Company at its meeting held on January 21, 2011 it has been decided to make the following offer to the Eligible Equity Shareholders of our Company, with a right to renounce: Issue of 5,994,500 Rights Equity Shares for cash at a premium of ` [●] per Rights Equity Share, aggregating to ` [●] million to the Eligible Equity Shareholders of the Company in the ratio of one Rights Equity Share for every two Equity Shares held on the Record Date i.e. [●] along with one Warrant for every one Rights Equity Share allotted in the Issue. For further details please refer to the section titled “Terms of the Issue” on page 175 of this Draft Letter of Offer. Registered and Corporate Office of our Company
Gayatri Projects Limited
B-1, T.S.R. Towers, 6-3-1090, Raj Bhavan Road, Somajiguda, Hyderabad – 500082 Telephone: +91 40 2331 4284 Fax: +91 40 2339 8984/3/5 Website: www.gayatri.co.in Email: cs@gayatri.co.in
Registration No. : 057289 Corporate Identity No.: L99999AP1989PLC057289 Address of the RoC
Registrar of Companies, Andhra Pradesh, 2nd Floor, CPWD Building, Kendriya Sadan, Sultan Bazar, Koti, Hyderabad-500195 The Equity Shares of our Company are listed on the BSE. The FCCBs (zero coupon convertible bonds due 2012 convertible into Equity Shares) issued in August 1, 2007, are listed on the SGX-ST. Our Company has pursuant to a letter dated June 7, 2010, applied to the NSE for admission of our Equity Shares to deal on the NSE.
Company Secretary and Compliance Officer
CS IV Lakshmi
B-1, T.S.R. Towers, 6-3-1090, Raj Bhavan Road, Somajiguda, Hyderabad – 500082 Telephone: +91 40 2331 4284 Fax: +91 40 2339 8984/3/5 Website: www.gayatri.co.in Email: cs@gayatri.co.in Investors may contact the Compliance Officer for any pre-issue /post-issue related matters such as non-receipt of letters of allotment/ share certificates/ refund orders, etc. All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the SCSB, giving full details such as name, address of the applicant, number of Equity Shares applied for, Amount blocked, ASBA Account number and the Designated Branch of the SCSB where the CAF was submitted by the ASBA Investors.
37
Board of Directors
Name Category/Designation
T. Indira Subbarami Reddy Non-Executive Chairman T.V. Sandeep Kumar Reddy Managing Director J Brij Mohan Reddy C.H. Hari Vittal Rao
Executive Vice Chairman Non- Executive and Independent Director
Dr. V.L. Moorthy Non- Executive and Independent Director G. Siva Kumar Reddy Non- Executive and Independent Director
For further details of our Directors, please refer to the section titled “Our Management” on page 61 of this Draft Letter of Offer.
Lead Manager to the Issue:
Edelweiss Capital Limited
14th Floor, Express Towers, Nariman Point, Mumbai – 400 021 Telephone: +91 22 4086 3535 Facsimile: +91 22 4086 3610 E-mail: gayatri.rights@edelcap.com Investor Grievance E-mail: customerservice.mb@edelcap.com Website: www.edelcap.com Contact Person: Sumeet Lath / Dipti Samant SEBI Registration No. INM0000010650
Bankers to the Issue:
[●]
Self Certified Syndicate Bankers:
The list of banks that have been notified by SEBI to act as SCSBs for the Applications Supported by Blocked Amount (“ASBA”) Process are available at the SEBI website (URL reference: http:// www.sebi.gov.in/pmd/scsb.html). Details relating to designated branches of SCSBs collecting the ASBA forms, are available at the above mentioned link.
All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a
copy to the SCSB, giving full details such as name, address of the applicant, number of Rights
Securities applied for, Amount blocked, ASBA Account number and the Designated Branch of the
SCSB where the CAF was submitted by the ASBA Investors.
For more details on the ASBA process, please refer to the details given in CAF and also please refer to the section titled “Terms of the Issue” on page 175 of this Draft Letter of Offer.”
Domestic Legal Advisor to the Issue
J Sagar Associates
Vakils House, 18, Sprott Road Ballard Estate Mumbai- 400 001 Tel: +91 22 6656 1500 Fax: +91 22 6656 1515 Email: jsa.mumbai@jsalaw.com
38
Contact Person: Avik Sen Gupta
Statutory Auditors of our Company
C. B. Mouli & Associates
Chartered Accounts 125, M G Road Secunderabad -500003 Telephone: +91 40 2784 0777 Fax: +91 40 2784 8545 Email: ourauditor@gmail.com Registrar to the Issue
Karvy Computershare Private Limited Plot Nos. 17-24 , Vittal Rao Nagar, Madhapur , Hyderabad-500081 , Telephone: +91 40 4465 5000 Facsimile: +91 40 2343 1551; Email: gayatrirights@karvy.com Investors grievance mail: gayatrirights@karvy.com Website : http://karisma.karvy.com; Contact Person: Murali Krishna SEBI Registration No.: INR000000221
Note: Investors are advised to contact the Registrar to the Issue/Compliance Officer in case of any pre-Issue/post-Issue related problems such as non-receipt of the Letter of Offer/abridged letter of offer/CAF/allotment advice/share certificate(s)/refund orders.
MINIMUM SUBSCRIPTION
If our Company does not receive the minimum subscription of 90% of the Issue, or the subscription level falls below 90%, after the Issue Closing Date on account of cheques being returned unpaid or withdrawal of applications, our Company shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after our Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date), our Company will pay interest for the delayed period at 15% per annum as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.
ADDITIONAL SUBSCRIPTION BY THE PROMOTERS
Our Promoters and Promoter Group, have undertaken, vide their letters dated March 14, 2011, to fully subscribe for their Rights Entitlement. They reserve the right to subscribe for their Rights Entitlement either by themselves and/or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any member of the Company to any member of the Promoter Group. They also intend to apply for Rights Securities in addition to their Rights Entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining any approvals required under applicable law, to ensure that 100% of the Issue is subscribed. Such subscription for Rights Securities over and above their Rights Entitlement, if allotted, may result in an increase in their percentage shareholding above their current percentage shareholding. Further, such acquisition by them of additional Rights Securities shall (i) not result in a change of control of the management of our Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. Presently our Company is complying with clause 40A of the Listing Agreement and the minimum public shareholding required to be maintained for continuous listing is 25% of the total paid up equity capital.
39
The Promoter and/or members of the Promoter Group intend to subscribe for any undersubscribed portion as per the provisions of applicable law. Allotment to the Promoter and/or members of the Promoter Group of any undersubscribed portion, over and above their Rights Entitlement, shall be completed in compliance with clause 40A of the Listing Agreements and other applicable laws prevailing at that time relating to continuous listing requirements and the minimum public shareholding of 25% of the total paid up equity capital required to be maintained for continuous listing shall be maintained. For further details of under subscription and allotment to the Promoter and Promoter Group, please refer to “Basis of Allotment” below under this section titled “Terms of the Issue” on page 193 of this Draft Letter of Offer. In case the permission to deal in and for an official quotation of the Rights Securities is not granted by the BSE, our Company shall forthwith repay without interest, all monies received from the applicants in pursuance of this Draft Letter of Offer and if such money is not repaid within eight days after the day from which our Company is liable to repay it, our Company shall pay interest @ 15% per annum as prescribed under Section 73(2) / 73(2A) of the Companies Act, 1956.
ISSUE SCHEDULE
The subscription will open upon the commencement of the banking hours and will close upon the close of banking hours on the dates mentioned below:
Issue Opening Date: [●] Last date for receiving requests for SAFs: [●] Issue Closing Date: [●]
Monitoring Agency
A monitoring agency is not required vide Regulation 16(1) of the SEBI (ICDR) Regulations. Our Board will monitor the use of proceeds of this Issue as per clause 49 of the Listing Agreement.
Underwriting This Issue is not being underwritten. Allocation of Responsibilities
The responsibilities for various activities in this Issue of the Lead Manager are as follows:
Sr.
No.
Activities
1. Capital structuring with the relative components and formalities such as the composition of debt and equity, type of instruments, etc.
2. Drafting & design of the offer document. The designated Lead Manager shall ensure compliance with stipulated requirements and completion of prescribed formalities (including finalization of Letter of Offer) with Stock Exchanges, the Registrar of Companies and SEBI.
3. Selection of various agencies connected with the issue, namely Registrars to the Issue, Bankers to the Issue, printers and advertisement agencies.
4. The post Issue activities will involve essential follow up steps, which must include finalization of basis of allotment / weeding out of multiple applications, listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as Registrar to the Issue, Bankers to the Issue and the bank handling refund business. Lead Managers shall be responsible for ensuring that these agencies fulfill their functions and enable them to discharge this responsibility through suitable agreements with the Company.
40
Trustees
As this is an Issue of Rights Equity Shares and Warrants, the appointment of trustee/s is not required. Credit Rating
As this is an Issue of Rights Equity Shares and Warrants, we are not required to obtain a credit rating in connection with the Issue and/or the Rights Securities. For details in connection with principal terms of loans and assets charged as security, please see pages 148 to 154 of this Draft Letter of Offer.
41
CAPITAL STRUCTURE
Our share capital as on the date of filing of this Draft Letter of Offer is set forth below:
(`̀̀̀ in Millions except share data)
Aggregate Value at
nominal value
Aggregate
Value at
Issue
Price
A) AUTHORISED SHARE CAPITAL
40,000,000 Equity Shares of ` 10 each 400.00
B) ISSUED, SUBSCRIBED AND PAID UP EQUITY SHARE
CAPITAL BEFORE THE ISSUE
11,989,000 Equity Shares of ` 10 each 119.89
C) PRESENT ISSUE IN TERMS OF THIS DRAFT LETTER OF
OFFER*
5,994,500 Rights Equity Shares fully paid up with one Warrants for every one Rights Equity Share
59.94 [•]
D) PAID UP EQUITY SHARE CAPITAL AFTER THE ISSUE*
17,983,500 Equity Shares of ` 10 each fully paid up shares prior to conversion of the Warrants
179.84 [•]
E) PAID UP EQUITY SHARE CAPITAL AFTER EXERCISE OF
THE WARRANTS*
23,978,000 Equity Shares assuming full conversion of the Warrants into Equity Shares of ` 10 each
239.78
F) SHARE PREMIUM ACCOUNT
Before the Issue 749.34
After the Issue** [•]
* Please note that the Issue size in terms of the number of Rights Equity Shares is subject to change in the event of
conversion of any outstanding FCCBs prior to the Record Date, and accordingly the number of Equity Shares
outstanding after the Issue (prior to conversion of the Warrants and assuming full conversion of the Warrants)
would also be subject to such change.
** No premium has been assumed on exercise of the Warrants.
Notes to the Capital Structure
1. Outstanding Instruments:
On August 1, 2007, our Company issued 308 FCCBs (zero coupon convertible bonds due July 2012 convertible into Equity Shares) of the face value of JPY 10,000,000 each aggregating to an issue size of JPY 3,080,000,000. As on the date of this Draft Letter of Offer, 37 FCCBs have been converted into Equity Shares, and 271 of the aforementioned FCCBs, are outstanding which would entitle the holders thereof to acquire a maximum of 3,108,031 Equity Shares excluding any
42
reservations/adjustments at the relevant FCCB conversion price.
In accordance with the provisions of Regulation 53 of the SEBI (ICDR) Regulations, our Company shall make a reservation of Equity Shares and Warrants in favour of the holders of the aforementioned FCCBs, (“Reserved Rights Securities”). The Reserved Rights Securities shall be allotted to the holders of the aforementioned FCCBs on the same terms and in the same ratio as the Rights Securities being offered pursuant to this Draft Letter of Offer to the Eligible Equity Shareholders of our Company at the relevant time of conversion thereof.
The shareholders of our Company vide a resolution passed vide a postal ballot pursuant to a postal ballot notice dated January 21, 2011, have approved the reservation of Equity Shares and Warrants of our Company in connection with the Issue for holders of all outstanding FCCBs of our Company. Further details of Reserved Rights Shares in connection with the aforementioned FCCBs are as follows:
Particulars Details
Outstanding FCCBs as on the date of this Draft Letter of Offer
271 of face value of JPY 10 million each aggregating JPY 2,710 million
Conversion Price 1JPY = ` 0.33003 with a fixed rate of exchange on conversion of JPY 10,000,000 (per bond)
Maximum number of Equity Shares to be allotted assuming conversion of all outstanding FCCBs
3,108,031 Equity Shares
Reserved Rights Securities based on full acceptance of the rights entitlement on conversion of FCCBs after the Issue
1,554,016 Rights Equity Shares and 1,554,016 Warrants
Save as provided hereinabove, as on the date hereof there are no other outstanding options, or other convertible securities of our Company.
2. Details of securities held by our Promoter and Promoter Group
The table below presents the details of the securities of our Company held by our Promoters and Promoter Group as on December 31, 2010 including details of lock-in, pledge and/or encumbrance on such securities:
Total Shares held Shares pledged or otherwise encumbered Sl.
No.
Name of the
Shareholder Number As a % of
total number of
Equity Shares
outstanding as on
December 31, 2010
Number % of Total
shares held
As a % of
total number of
Equity Shares
outstanding as on
December 31, 2010
Promoters
1 T. Indira Subbarami Reddy
4,798,816 40.03 4,500,055 93.77 37.53
2 T.V. Sandeep Kumar Reddy
1,793,922 14.96 1,495,162 83.35 12.47
Promoter Group
3 G Sulochanamma 225 0.00 - -
-
4 J Brij Mohan Reddy 225 0.00 - -
-
5 T Saritha Reddy 80 0.00 - - -
43
Total Shares held Shares pledged or otherwise encumbered Sl.
No.
Name of the
Shareholder Number As a % of
total number of
Equity Shares
outstanding as on
December 31, 2010
Number % of Total
shares held
As a % of
total number of
Equity Shares
outstanding as on
December 31, 2010
Promoters
Total 6,593,268 54.99 5,995,217 90.93 50.01
3. The Promoters of our Company do not hold any FCCBs issued by our Company. 4. The aggregate number of Equity Shares of the Promoters/Promoter Group which are subject to
pledge as on December 31, 2010 are as follows: Sl. No. Name of the Promoter Number of shares pledged or
otherwise encumbered
Financial institution with which
the shares are pledged
1 T. Indira Subbarami Reddy 1,850,000 HDFC Bank Limited
2,650,055 Industrial Finance Corporation of India Limited
2 T.V. Sandeep Kumar Reddy 1,495,162 Industrial Finance Corporation of India Limited
Total 5,995,217 -
5. Transactions in Equity Shares by the Promoters and the Promoter Group in the last one year from
the date of this Draft Letter of Offer: Sl. No. Name of Promoter/Promoter
Group Person/Entity
Date of Transaction Nature of
Transaction
No. of
Equity
Shares
Price per Equity
Share
1. T.V. Sandeep Kumar Reddy October 19, 2010 Market Sale 100,000 ` 395.07
2. T.V. Sandeep Kumar Reddy October 29, 2010 Allotment upon conversion of warrants
298,760 `142.52
3. T. Indira Subbarami Reddy October 29, 2010 Allotment upon conversion of warrants
298,761 `142.52
6. Except for provided above, no Equity Shares have been purchased or sold by the Promoters or the
Promoter Group our Company within the last one year immediately preceding the date of this Draft Letter of Offer.
7. Shareholding Pattern:
The table below presents our Company’s shareholding as on December 31, 2010:
Category of
Shareholder
No. of
Shareholders
Total No. of
Shares
Total No. of
Shares held in
Dematerialized
Form
Total Shareholding
as a % of total No.
of Shares
Shares pledged or
otherwise encumbered
As a %
of
(A+B)
As a %
of
(A+B+C)
Number
of shares As a
% of
Total No.
of Shares
(A) Shareholding
of Promoter and
Promoter Group
(1) Indian
Individuals 5 6,593,268 5,995,217 54.99 54.99 5,995,217 90.93
44
Category of
Shareholder
No. of
Shareholders
Total No. of
Shares
Total No. of
Shares held in
Dematerialized
Form
Total Shareholding
as a % of total No.
of Shares
Shares pledged or
otherwise encumbered
As a %
of
(A+B)
As a %
of
(A+B+C)
Number
of shares As a
% of
Total No.
of Shares
/ Hindu Undivided Family
Sub Total 5 6,593,268 5,995,217 54.99 54.99 5,995,217 90.93
(2) Foreign - - - - - - -
Total
shareholding of
Promoter and
Promoter Group
(A)
5 6,593,268 5,995,217 54.99 54.99 5,995,217 90.93
(B) Public
Shareholding
(1) Institutions
Mutual Funds / UTI
4 1,255,608 1,255,608 10.47 10.47 - -
Venture Capital Funds
1 588,351 588,351 4.91 4.91 - -
Foreign Institutional Investors
5 434,081 434,081 3.62 3.62 - -
Sub Total 10 2,278,040 2,278,040 19.00 19.00 - -
(2) Non-
Institutions
Bodies Corporate
290 1,122,055 1,122,055 9.36 9.36 - -
Individuals - -
Individual shareholders holding nominal share capital up to
` 1 lakh
8,570 1,124,653 1,122,493 9.38 9.38 - -
Individual shareholders holding nominal share capital in
excess of ` 1 lakh
11 727,895 727,895 6.07 6.07 - -
Any
Others (Specify) 253 143,089 142,864 1.19 1.19 - -
Non Resident Indians
222 111,467 111,467 0.93 0.93 - -
Clearing Members
30 31,397 31,397 0.26 0.26 - -
Directors & their Relatives & Friends
1 225 - - - - -
Sub Total 9,124 3,117,692 3,115,307 26.00 26.00 - -
Total Public
shareholding (B) 9,134 5,395,732 5,393,347 45.01 45.01 - -
Total (A)+(B) 9,139 11,989,000 11,388,564 100.00 100.00 5,995,217 50.01
(C) Shares held by
Custodians and
against which
Depository
Receipts have
been issued
- - - - - - -
(1) Promoter and Promoter Group
- - - - - - -
(2) Public - - - - - - -
Sub Total - - - - - - -
45
Category of
Shareholder
No. of
Shareholders
Total No. of
Shares
Total No. of
Shares held in
Dematerialized
Form
Total Shareholding
as a % of total No.
of Shares
Shares pledged or
otherwise encumbered
As a %
of
(A+B)
As a %
of
(A+B+C)
Number
of shares As a
% of
Total No.
of Shares
Total (A)+(B)+(C) 9,139 11,989,000 11,388,564 - 100.00 5,995,217 50.01
8. As on December 31, 2010, details of locked-in Equity Shares are as follows: Sl.
No.
Name of the Shareholder No. of Equity
Shares
Locked-in Equity Shares as % of
Total No. of Equity Shares
1 T. Indira Subbarami Reddy 298,761 2.49
2 T.V. Sandeep Kumar Reddy 298,760 2.49
Total 597,521 4.98
9. Our Promoters and Promoter Group, have undertaken, vide their letters dated March 14, 2011, to
fully subscribe for their Rights Entitlement. They reserve the right to subscribe for their Rights Entitlement either by themselves and/or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any member of the Company to any member of the Promoter Group. They also intend to apply for Rights Securities in addition to their Rights Entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining any approvals required under applicable law, to ensure that 100% of the Issue is subscribed. Such subscription for Rights Securities over and above their Rights Entitlement, if allotted, may result in an increase in their percentage shareholding above their current percentage shareholding. Further, such acquisition by them of additional Rights Securities shall (i) not result in a change of control of the management of our Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code.
Presently our Company is complying with clause 40A of the Listing Agreement and the minimum public shareholding required to be maintained for continuous listing is 25% of the total paid up equity capital. The Promoter and/or members of the Promoter Group intend to subscribe for any undersubscribed portion as per the provisions of applicable law. Allotment to the Promoter and/or members of the Promoter Group of any undersubscribed portion, over and above their Rights Entitlement, shall be completed in compliance with clause 40A of the Listing Agreements and other applicable laws prevailing at that time relating to continuous listing requirements and the minimum public shareholding of 25% of the total paid up equity capital required to be maintained for continuous listing shall be maintained. For further details of under subscription and allotment to the Promoter and Promoter Group, please refer to “Basis of Allotment” below under this section titled “Terms
of the Issue” on page 193 of this Draft Letter of Offer. In case the permission to deal in and for an official quotation of the Rights Securities is not granted by the BSE, our Company shall forthwith repay without interest, all monies received from the applicants in pursuance of this Draft Letter of Offer and if such money is not repaid within eight days after the day from which our Company is liable to repay it, our Company shall pay interest @ 15% per annum as prescribed under Section 73(2) / 73(2A) of the Companies Act, 1956. If our Company does not receive the minimum subscription of 90% of the Issue, or the subscription level falls below 90%, after the Issue Closing Date on account of cheques being returned unpaid or withdrawal of applications, our Company shall refund the entire subscription
46
amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after our Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date), our Company will pay interest for the delayed period at 15% per annum as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.
10. Persons and Entities owning more than 1% (one percent) of our Equity Shares:
The following table sets out the persons and entities who beneficially own more than 1% (one percent) of our Equity Shares as at December 31, 2010:
Sl
no.
Name of the shareholder No of
Equity
Shares
Percentage (%)
Promoter and Promoter Group Shareholders
1. T. Indira Subbarami Reddy 4,798,816 40.03
2. T.V. Sandeep Kumar Reddy 1,793,922 14.96
Sub-Total (A) 6,592,738 54.99
Public Shareholders
3. Reliance Capital Trustee Co Limited -Reliance Infrastructure Fund
1,000,000 8.34
4. IL&FS Trust Company Limited (A/c IL&FS Private Equity Trust)
588,351 4.91
5. Ashish Dhawan 312,869 2.61
6. Bajaj Allianz Life Insurance Company Ltd 303,273 2.53
7. Merlin Holding Private Limited 160,000 1.33
8. UTI Master Value Fund 143,133 1.19
9. Emerging India Focus Funds 125,826 1.05
Sub-Total (B) 2,633,452 21.97
Total (A+B) 9,226,190 76.96
11. The terms of issue to Eligible Equity Shareholders have been presented under the section titled
“Terms of the Issue” on page 175 of this Draft Letter of Offer. 12. At any given time, there shall be only one denomination of the Equity Shares of our Company.
13. We have not revalued our assets during the last five Financial Years. 14. Issue to remain open for a minimum of 15 days and a maximum period which shall not exceed 30
days as may be determined by the Board. 15. All the Equity Shares of our Company are fully paid up and there are no partly paid up Equity
Shares as on the date of this Draft Letter of Offer. Further, the Rights Equity Shares when issued shall be fully-paid up and the Equity Shares allotted pursuant to conversion of the Warrants shall be fully paid-up.
47
OBJECTS OF THE ISSUE
The Objects of this Issue are to raise funds for: (i) Long term incremental working capital margin requirement for Fiscal 2012; (ii) Repayment of existing debt; (iii) General corporate purposes; and (iv) To meet the Issue expenses. The main objects clause of our Company’s Memorandum of Association enables us to undertake our existing activities and the activities for which funds are being raised by our Company pursuant to the Issue. We intend to utilize the proceeds of the Issue after deducting expenses relating to the Issue (“Net
Proceeds”) which is estimated at ` [●] Million for the abovementioned objects. The details of the proceeds of the Issue are as follows:
(` in million)
S.
No.
Description Amount
1 Gross Proceeds of the Issue [●]
2 Issue related Expenditure [●]
3 Net Proceeds of the Issue [●]
The Net Proceeds from the Issue, would not include amounts received pursuant to exercise of the Warrants, as such amounts are not determinable now, and can only be determined upon the exercise of such Warrants, as described in the section titled "Terms of the Issue" beginning on page 175.
Use of Net Proceeds
The utilization of the Net Proceeds of this Issue is as follows:
(` in million)
Sl.
No.
Expenditure Items Amount up to which will
be financed from Net
Proceeds of the Issue
1. Long term incremental working capital margin requirement for Fiscal 2012 1,105.14
2. Repayment of existing debt 750.00
3. General Corporate purposes [●]*
TOTAL [●]*
* To be finalized upon determination of the Issue Price.
Our fund requirements and deployment of the Net Proceeds of the Issue is based on internal management appraisals and estimates. These are based on current conditions and are subject to change in light of changes in external circumstances or costs, or in other financial condition, business or strategy. We operate in highly competitive and dynamic market conditions and may have to revise our estimates from time to time on account of external circumstances or costs in our financial condition, business or strategy. Consequently, our fund requirements may also change. Any such change in our plans may require rescheduling of our expenditure programs and increasing or decreasing expenditure for a particular object vis-à-vis the utilization of Net Proceeds.
48
In case of variations in the actual utilization of funds earmarked for the purposes set forth above, increased fund requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other purposes for which funds are being raised in this Issue. If surplus funds are unavailable, the required financing will be through our internal accruals, cash flow from our operations and/or debt, as required. In the event that estimated utilization out of the Net Proceeds in a Fiscal is not completely met, the same shall be utilized in the next Fiscal. Means of Finance:
Since our fund requirements as stated herein are proposed to be funded entirely from the proceeds of the Issue, we are not required to make any firm arrangements of finance through verifiable means towards 75% of the stated means of finance excluding the amount to be raised through the proposed Issue as required under Regulation 4(2)(g) of the SEBI (ICDR) Regulations. Deployment Schedule: We confirm that no amounts have been deployed as on the date of this Draft Letter of Offer towards the aforesaid objects of this Issue, accordingly the entire objects of the Issue are proposed to be financed from the proceeds of the Issue in the following manner:
Sl.
No.
Expenditure Items Amount deployed
towards the
expenditure items
(`̀̀̀ in million)
Deployment for the
Financial Year
2012 (`̀̀̀ in million)
1. Long term incremental working capital margin requirement NIL 1,105.14
2. Repayment of existing debt NIL 750.00
3. General Corporate purposes - [●]*
TOTAL [●]*
* To be finalized upon determination of the Issue Price.
A. Incremental long term working capital margin requirement
Our business is working capital intensive and we avail majority of our working capital in the ordinary course of business under facilities from various banks and financial institutions.
The incremental long-term working capital margin requirement has been calculated on the basis of additional working capital requirement which will be required in FY 2011 and FY 2012 considering growth in activities of our Company and the resultant increase in number of orders. We propose to utilize upto ` 1,105.14 million towards our incremental working capital margin requirements for FY 2012 from the Net Proceeds of the Issue.
(` in Millions)
Particulars
Holding
Level
(Days) FY 2009
Holding
Level
(Days) FY 2010
Holding
Level
(Days) FY 2011
Holding
Level
(Days) FY 2012
Extracted for Audited
Unconsolidated
Financial Statements
Extracted for Audited
Unconsolidated
Financial Statements
Estimated on an Unconsolidated Basis
Current
Assets
49
Particulars
Holding
Level
(Days) FY 2009
Holding
Level
(Days) FY 2010
Holding
Level
(Days) FY 2011
Holding
Level
(Days) FY 2012
Cash & Bank Balances(1) 205.09 1,395.90 2,961.17 3,967.48
Receivables 80 2,239.12 91 3,149.07 89 3,872.37 87 4,752.37
Stock 54 383.03 46 453.11 30 382.00 30 478.00
Work In Progress 9 221.32 8 240.20 15 550.00 15 690.00
Other Current Assets 419.49 709.23 744.21 781.51
Loans and Advances(2) 2,376.72 3,309.05 3,342.14 3,375.56
Total
Current
Assets (A) 5,844.77 9,256.56 11,851.89 14,044.92
Current Liabilities (Other than Bank Borrowings for Working Capital) 407.77 1,330.14 1,239.89 79.99
Sundry Creditors 47 1,123.22 52 1,505.34 33 1,217.00 40 1,835.00
Other Current Liabilities 864.87 1,514.45 2,352.51 3,982.30
Total of
other
current
Liabilities
(B) 2,395.86 4,349.93 4,809.40 5,897.29
Net
Working
Capital (A-
B) 3,448.91 4,906.63 7,042.49 8,147.63
Working Capital Borrowings 2,006.34 2,594.43 4,000.00 4,000.00
Margin 1,442.57 2,312.20 3,042.49 4,147.63
Increment
al Margin 869.63 730.29 1,105.14
Funded
Through
Internal Accruals - 869.63 730.29 NIL
Net Issue Proceeds - - NIL 1,105.14
(1) Excludes deposits as margin money against bank guarantees and deposits earmarked for projects undertaken including
interest thereon. (2)
Excludes (i) advance towards share application money, (ii) prepaid expenses and (iii) deposits with
50
government agencies and others.
Basis of Estimation:
The incremental long term working capital requirements are based on historical company data and estimation of the future requirements in Fiscal 2012 considering the growth in activities of our Company and in line with norms accepted by our bankers.
Justification for holding period levels:
Inventory Stocks: This represents closing stock of Construction Materials like, Steel, Cement, Metal, Bitumen etc., and Spare Parts, Oils, Lubricants etc. The stock holding levels for the year 2010-11 and 2011-12 are assumed to be maintained at about 30 days level. The Company has recently introduced a centralized inventory control system to monitor the inventory holding levels and to control holding levels which is expected to assist us in monitoring our inventory holding levels in a more organized manner and consequently bring down our inventory holding levels. Hence, the holding levels are assumed at 30 days. Work-in-Progress: Work-in-Progress represents the value of work executed but not billed as on the date of closure of Accounting Year. This value of the work is billed in the next year. The majority of the present works are road works where the cycle of issue of materials and actual billing is more. Thus, the projected level of work-in-progress is estimated at 15 days. Therefore there is an increase in the holding levels in work in progress.
Receivables The holding period of receivables is projected at approximately 89 days and 87 days level for FY 2011 and FY 2012, respectively, and they are in line with the past trends and industry peers.
Creditors The suppliers normally offer 30 days credit for the purchases made and sub-contractors offer between 30 days to 45 days credit for settlement of bills. The assumed level of creditors is in line with the industry norms.
All the aforesaid projections are based on our management’s estimates and have not been appraised by any bank or financial institution.
Our Company has entered into a working capital consortium agreement dated January 31, 2011 with a consortium of banks with Bank of Baroda as the consortium leader, for working capital facilities consisting of fund based facilities aggregating up to a limit of ` 4,000 million.
Details of the working capital tied up by our Company towards our aforementioned working capital requirements as on February 28, 2011, is as follows:
(` in Millions)
Sr No Bank name Date of sanction Limit (Fund Based)
1. Bank of Baroda November 12, 2010 1,440.00
2. Canara Bank January 1, 2011 750.00
3. Indian Overseas Bank October 20, 2009 460.00
4. Syndicate Bank September 19, 2009 100.00
5. Andhra Bank December 28, 2010 100.00
6. IDBI Bank Limited January 20, 2011 350.00
7. Corporation Bank December 13, 2010 70.00
8. Union Bank of India January 25, 2011 80.00
9. The Federal Bank Limited December 16, 2010 150.00
10. Punjab National Bank December 1, 2010 500.00
Total 4,000.00
51
In case of any delay in receipt of the Net Issue Proceeds, we would meet our long term working capital requirements as specified hereinabove from internal accruals and/or fresh debts and the Net Issue Proceeds will be utilized to repay such debts.
B. Repayment of existing Debts As on February 28, 2011, we have term loans aggregating ` 3,818.94 million on an unconsolidated basis. Out of the aforesaid outstanding term loans, our Company proposes to repay ` 750.00 million out of the Net proceeds of the Issue, which will enable us to improve our debt equity ratio. We operate in businesses which are capital-intensive, and over the last few years there is an increased reliance on borrowings to meet our cash flow requirements for our operations, investments in fixed assets and to repay our existing borrowings. To improve the overall financial health of our Company and to improve our financial condition, one of the objects of the Issue to repay the belowmentioned identified existing term loans from banks, falling due from July 1, 2011 to December 31, 2011. This repayment will help us to reduce the interest burden and thereby improve our financial condition and results of operations.
The Company intends to utilize the proceeds of the issue up to ` 750.00 million towards repayment of a portion of debt as given below. Details of outstanding amounts under these borrowings as on February 28, 2011:
Sr.
No
Name of
the Bank
Amount
sanctioned
(` in
million)
Principal
Amount
Outstanding
as on
February
28, 2011 (`
in million)
Rate of
Interest
Term of the
loan
Principal
Amount
to be
repaid
from the
Net Issue
Proceeds
for loans
repayable
between
July 2011
to
December
2011
Purpose as
per the
Sanction
Letter*
Secured
/Unsecured
1. Bank of Maharashtra
500 500 Sanctioned: Bank Prime Lending Rate -0.50% Current: 13.25%
1 year (in 4 equal quarterly installment of `125.00 million each commencing from the end of 15 months from the date of first disbursement)
250.00 To meet the ongoing capital expenditure already incurred and/or to be incurred by the company
Secured
52
Sr.
No
Name of
the Bank
Amount
sanctioned
(` in
million)
Principal
Amount
Outstanding
as on
February
28, 2011 (`
in million)
Rate of
Interest
Term of the
loan
Principal
Amount
to be
repaid
from the
Net Issue
Proceeds
for loans
repayable
between
July 2011
to
December
2011
Purpose as
per the
Sanction
Letter*
Secured
/Unsecured
2. Bank of Baroda
500 500 Sanctioned: Base rate + 3.00% with monthly rests Current: 12.50%
12 months 500.00 Long term working capital/general corporate purposes/ preliminary expenses of various projects
Unsecured
Total 1,000.00 1,000.00 750.00
*As per the certificate dated March 3, 2011 received from VAS & Co., independent chartered accountants,
all the aforementioned loans have been utilized for the purposes indicated in the respective loan
documents.
C. General Corporate Purposes
We, in accordance with the policies of our Board, will have flexibility in applying the remaining Net Proceeds of this Issue, for general corporate purposes inter-alia including meeting our capital expenditure requirements, investment in subsidiaries and joint venture undertakings, strategic initiatives, brand building exercises and strengthening of our marketing capabilities, and such other purposes as may be permitted under applicable statutory/regulatory requirements, and as approved by our Board of Directors. The quantum of utilization of funds towards each of the above purposes will be determined by the Board of Directors based on the amount actually available under the head “General Corporate Purposes” and the business requirements of the Company, from time to time. D. Issue Expenses
The estimated Issue related expenditure is as follows:
S.
No.
Activity Expense Amount*
(in ` million)
Percentage of
Total Estimated
Issue
Expenditure*
Percentage of Issue
Size*
1 Fees of the Lead Manager, Legal Advisor and Registrar
[●] [●] [●]
2 Advertising and marketing expenses
[●] [●] [●]
53
S.
No.
Activity Expense Amount*
(in ` million)
Percentage of
Total Estimated
Issue
Expenditure*
Percentage of Issue
Size*
3 Printing and stationery, distribution, postage etc.
[●] [●] [●]
4 Other expenses (including but not limited to stock exchange and SEBI filing fee etc.)
[●] [●] [●]
Total Estimated Issue
Expenditure
[●] [●] [●]
*To be completed after finalization of the Issue Price Interim Use of Funds
Our management, in accordance with the policies established by our Board of Directors from time to time, will have flexibility in deploying the Net Proceeds. Pending utilization for the purposes described above, we intend to invest the funds in high quality interest bearing liquid instruments including investment in money market mutual funds, deposits with banks and other interest bearing securities for the necessary duration. Such investments will be approved by the Board or its committee from time to time, in accordance with its investment policies.
Proceeds from the exercise of Warrants
We will utilize the funds as approved by our Board including for our working capital requirements and general corporate purposes which may be undertaken from time to time. In the event that the Warrants proposed to be issued are not exercised by the Warrant holders at the end of the Warrant Exercise Period II, then such Warrants shall lapse and the proceeds from the Warrants will reduce to the extent of lapsed Warrants. For further details please refer to the heading “Terms of the Warrants” on page 181 of the section titled “Terms of the Issue”.
Bridge Loan
We have not raised any bridge loans which are required to be repaid from the Net Proceeds. Monitoring Utilization of Funds from Issue
Our Board will monitor the utilization of the proceeds of the Issue. The Company will disclose the utilization of the proceeds of the Issue, including interim use, under a separate head along with details, for all such proceeds of the Issue that have not been utilized. The Company will indicate investments, if any, of unutilized proceeds of the Issue in the balance sheet of the Company for the relevant Financial Years subsequent to the listing. We will, on a quarterly basis, disclose to the Audit Committee the uses and applications of the Issue Proceeds in accordance with the provisions of the Listing Agreement. We also will on an annual basis, prepare a statement of funds which have been utilized for purposes other than those stated in this Draft Letter of Offer, if any, and place it before the Audit Committee. Such disclosure will be made only until such time that all the Issue Proceeds have been utilized in full. The statement shall be certified by our Auditors. Further, in accordance with clause 43A of the Listing Agreement we will furnish to the Stock Exchange on a quarterly basis, a statement including material deviations if any, in the utilization of the Issue Proceeds from the objects of the Issue as stated above. This information will also be published in newspapers simultaneously with the interim or annual financial results, after placing the same before the Audit Committee.
54
The Company shall inform material deviations in the utilization of Issue proceeds to the Stock Exchange and shall also simultaneously make the material deviations/adverse comments, of the Audit committee, if any, public through advertisement in newspapers. Except in the usual course of business, no part of the proceeds from the Issue will be paid by the Company as consideration to its Promoter, Directors, Group Companies or key managerial employees.
55
STATEMENT OF TAX BENEFITS
Statement of Possible Direct Tax Benefits available to Gayatri Projects Limited and its Shareholders The Board of Directors, Gayatri Projects Ltd 6-3-1090, TSR Towers, Rajbhavan Road, Somajiguda, Hyderabad – 500082. Dear Sirs, We hereby enclose Annexure ‘A’ stating the possible tax benefits available to Gayatri Projects Limited (‘The Company') and it's shareholders under the Income Tax Act, 1961 and Wealth Tax Act, 1957 presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on the business imperatives that the company faces in the future, the Company may or may not choose to fulfill. The benefits discussed in the Annexure “A” are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of his or her participation in the issue. We do not express any opinion or provide any assurance as to whether:
• The Company or its shareholders will continue to obtain these benefits in future; or
• The conditions prescribed for availing the benefits have been / would be met with. The contents of the Annexure are based on the information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company and the interpretations of current tax laws.
For C.B.MOULI & ASSOCIATES
Chartered Accountants Firm Registration No: 002140S
MANI OOMMEN Partner Place : Hyderabad Membership No: 24046 Date : January 28, 2011.
56
SPECIAL TAX BENEFITS: At present, the Company does not enjoy any special tax benefits. GENERAL TAX BENEFITS: The following key tax benefits are available to the Company and the prospective shareholders under the current direct tax laws in India. The tax benefits listed below are the possible benefits available under the current tax laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives it faces in the future, it may or may not choose to fulfil. This statement is only intended to provide the information pertaining to the tax benefits available to the Company and its shareholders in a general and summary manner and does not purport to be a complete analysis or listing of all the provisions or possible tax consequences of the subscription, purchase, ownership or disposal etc. of shares or debentures as the case may be. In view of the individual nature of tax consequences and the changing tax laws, each investor is advised to consult his or her own tax adviser with respect to specific tax implications arising out of his or her participation in the issue.
Benefits available under the Income-Tax Act, 1961 (hereinafter referred to as “the Act”) to the
Company and Shareholders of the Company -
1. Under Section 10(34) of the Act, income earned by way of dividend from a domestic company
referred to in Section 115(O) of the Act is exempt from tax in India in the hands of its shareholders, provided dividend distribution tax at the rate of 16.995% including surcharge and education cess (proposed to be reduced to 16.609% by the Finance Bill 2010) is paid by the Company declaring the dividend.
2. Under Section 10(38) of the Act, long-term capital gain on sale of equity shares or units of an
equity oriented fund is exempt from tax provided that the transaction of such sale is chargeable to Securities Transaction Tax.
3. The long-term capital gains accruing otherwise than as mentioned in 2 hereinabove shall be
chargeable to tax at the rate of 20 % (plus applicable surcharge and education cess) in accordance with and subject to the provisions of Section 112 of the Act. However, if the tax on long term capital gains resulting on sale of listed securities, calculated at the rate of 20% with indexation benefit exceeds the tax calculated at the rate of 10% without indexation benefit, then such gains are chargeable to tax at the concessional rate of 10% (plus applicable surcharge and education cess).
4. Under Section 111A of the Act, short-term capital gains on sale of equity shares or units of an
equity oriented fund, where the transaction of such sale is chargeable to Securities Transaction Tax, shall be chargeable to tax at the rate of 15% (plus applicable surcharge and education cess).
5. In accordance with and subject to the conditions specified in Section 54EC of the Act, long term
capital gains [other than those exempt U/S 10(38)] shall not be chargeable to tax to the extent such capital gains are invested in long term specified assets as defined in that section within six months from the date of such a transfer; and if only a part of the capital gain is so reinvested, the exemption shall be allowed proportionately, provided that the investment made on or after April 1, 2007 in the long term specified assets by an assessee during any financial year, does not exceed fifty lakh rupees. However, if the said long term specified assets are transferred or converted into money within a period of three years from the date of their respective acquisition, the amount of capital gains not charged to tax earlier would become chargeable to tax as long term capital gains in the year in which the long term specified assets are transferred or converted into money.
57
Other benefits available to the Company, in addition to those mentioned above are as follows:
1. The Company is entitled to claim depreciation at the prescribed rates on specified tangible and
intangible assets under Section 32 of the Act.
In case of any new plant and machinery (other than ships and aircraft) that will be acquired and installed by the Company, the Company is entitled to a further sum equal to twenty percent of the actual cost of such machinery or plant, subject to the fulfillment of the conditions specified in Section 32 of the Act.
Unabsorbed depreciation if any, for an Assessment Year can be carried forward and set off in the subsequent Assessment Years as per the provisions of Section 32 of the Act, subject to sub section (2) of Section 72 and sub section (3) of Section 73 of the Act.
2. Under Section 35 of the Act, the Company is eligible for a deduction of the entire amount of the
revenue expenditure incurred on scientific research related to the business of the Company, in the year in which such expenditure is incurred.
Where the Company does not itself carry on scientific research but makes contributions to other institutions for this purpose, a weighted deduction is allowed of one and one-fourth (proposed to be increased to one and three fourth by the Finance Bill 2010) times of payment if:
• the payment is made to an approved scientific research association (the word “scientific research association” is proposed to be substituted by the word “research association” by the Finance Bill 2010); or
• the payment is made to an approved university, college or institution to be used for scientific research; or
• the payment is made to an approved university, college or institution to be used for research in social science or statistical research; or
• the payment is made to an approved company registered in India to be used by it for scientific research.
3. Under Section 35 (2AB) of the Act, the Company is eligible for a weighted deduction of a sum
equal to one and one-half times of the expenditure incurred on in-house research and development, if it satisfies the required conditions as per the provisions of that section (This deduction is proposed to be increased to two times of the said expenditure by the Finance Bill 2010).
4. As per Section 35D of the Act, the Company is eligible for deduction in respect of specified
preliminary expenditure incurred by the Company in connection with extension of its undertaking or in connection with setting up of a new unit of an amount equal to 1/5th of such expenses over 5 successive previous years, subject to conditions and limits specified in that section.
5. As per Section 35DDA of the Act, the Company is eligible for deduction in respect of payments
made to its employees in connection with their voluntary retirement in accordance with any scheme or schemes of voluntary retirement of an amount equal to 1/5th of such expenses in the year in which such expenses were incurred and the balance amount shall be deducted in equal installments for each of the four immediately succeeding previous years subject to conditions and limits specified in that section.
6. Debenture Interest - Interest paid on Debentures will be allowed as a deduction under Section 36(1)(iii) of the Act in computing business income, but in case the Debenture borrowings are utilized for acquisition of an asset for extension of company’s existing business, then, interest attributable to such borrowings, for a period beginning from the date on which the capital was
58
borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as a deduction.
7. Under Section 115JAA (1A) of the Act, credit is allowed in respect of any tax paid, as Minimum
Alternate Tax (MAT) (the rate of MAT is proposed to be increased to 19.93% including surcharge and education cess, from 16.995% by the Finance Bill 2010) under Section 115JB of the Act, for assessment year commencing on or after April 1, 2006. Credit eligible for carry forward is the difference between MAT paid and the tax computed as per the normal provisions of the Act. Such MAT credit shall be available for set-off against future tax liability subject to meeting the prescribed conditions, up to ten assessment years immediately succeeding the assessment year in which the tax credit becomes allowable.
Other benefits available to the Shareholders of the Company, in addition to those mentioned above
are as follows:
1. Resident Shareholders
According to the provisions of Section 54F of the Act and subject to the conditions specified therein, in the case of an individual or a Hindu Undivided Family (HUF), capital gains arising on transfer of long term assets [other than a residential house and those exempt u/s 10(38)] are not chargeable to tax if the entire net consideration from the transfer of the asset is invested within the prescribed period in a residential house. If only a part of such net consideration is so invested, the exemption shall be allowed proportionately. For this purpose, net consideration means full value of the consideration received or accruing as a result of the transfer of capital asset, as reduced by any expenditure incurred, wholly and exclusively in connection with such transfer.
Such benefit will not be available if the individual or Hindu Undivided Family –
• owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or
• purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or
• constructs any residential house, other than the new asset, with in a period of three years after the date of transfer of the original asset; and
• the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head ‘Income from house property’.
If the new residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, will be deemed to be income chargeable under the head ‘Capital Gains’ of the year in which the residential house is transferred.
2. Non-Resident Shareholders
i. Under provisions of Section 115G of the Act, it shall not be necessary for a non-resident
Indian to furnish his return of income if his total income in respect of which he is assessable under the Act during the relevant previous year consisted only of investment income or income by way of long term capital gains or both; and the tax deductible at source under the provisions of Chapter XVII B of the Act, has been deducted from such income.
ii. Under Section 115-I of the Act, a non resident Indian may elect not to be governed by the provisions of Chapter XII-A of the Act for any assessment year by furnishing his return of income under Section 139 of the Act, declaring therein that the provisions of this Chapter shall not apply to him for that assessment year; and if he does so, the provisions of this Chapter shall not apply to him for that assessment year and his total
59
income for that assessment year shall be computed and tax on such total income shall be charged in accordance with other provisions of the Act, as may be applicable.
iii. Under the first proviso to Section 48 of the Act, in case of a non resident, capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company, shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilized in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency for the purpose of computing capital gains.
3. Mutual Funds
In terms of Section 10(23D) of the Act, any income of a Mutual Fund registered under the Securities and Exchange Board of India Act, 1992 or regulations made thereunder and such other Mutual Fund set up by a public sector bank or a public financial institution or authorized by the Reserve Bank of India and subject to such conditions as the Central Government may, by a notification in the Official Gazette, specify in this behalf, shall be exempt from income tax.
4. Foreign Institutional Investors (FIIs)
i. Under Section 115AD of the Act capital gains arising on transfer of short term capital
assets, being shares and debentures in a company, are taxed as follows:
a. Short term capital gain on transaction of sale of equity shares entered into a recognized stock exchange, which is subject to Securities Transaction Tax, shall be taxed at the rate of 15% (plus applicable surcharge and education cess); and
b. Short term capital gain on transfer of shares/debentures other than those mentioned above would be taxable at the rate of 30% (plus applicable surcharge and education cess).
ii. Under Section 115AD of the Act, capital gains arising on transfer of long term capital
assets [other than those exempt U/S 10 (38) of the Act], being shares and debentures in a company, are taxed at the rate of 10% (plus applicable surcharge and education cess).
Nothing contained in first and second proviso of Section 48 of the Act shall apply for computation of capital gain arising on the transfer of the shares and debentures referred above.
5. Venture Capital Companies/ Funds
As per the provisions of Section 10 (23FB) of the Act, exemption is available to any income, which arises, from investment in a venture capital undertaking, to :
i. A Venture Capital Company which has been granted a certificate of registration under the
Securities and Exchange Board of India Act, 1992 and regulations made there under; and which fulfills the conditions as may be specified.
ii. A Venture Capital Fund, operating under a trust deed registered under the provisions of Registration Act 1908 or operating as a venture capital scheme made by Unit Trust of India, which has been granted a certificate of registration under the Securities and Exchange Board of India Act, 1992, and regulations made there under; and which fulfills the conditions as may be specified.
6. Benefits available to Debenture Holders
Interest Income: In case of resident debenture holders, tax at source under Section 193 of the Act shall be deducted at applicable rates by the payer at the time of credit of such interest to the
60
account of the payee or at the time of payment thereof by any other mode, whichever is earlier. Tax at source is not liable to be deducted in case of amount of interest or, as the case may be, the aggregate of the amounts of such interest paid or likely to be paid during the financial year to an individual does not exceed two thousand five hundred rupees on debentures listed on a recognized stock exchange in India in accordance with Securities Contracts (Regulation) Act 1956 and any rules made there under. Due credit for taxes deducted would be available under Section 199 of the Act to the debenture holders.
In case of non-resident debenture holders, tax at source at applicable rates will be deducted under Section 195 read with Sections 90 or 91 of the Act. Due credit for such taxes deducted would be available under Section 199 of the Act to the Debenture holders.
Capital Gains: Under Section 2 (29A), read with Section 2 (42A) of the Act, a debenture listed in a recognized stock exchange of India is treated as a long term capital asset, if the same is held by the debenture holder, for a period of 12 months or more, immediately preceding the date of its transfer. Under Section 112 of the Act, if the tax payable in respect of any income arising from transfer of long term capital asset, being a listed security, calculated at the rate of 20% with indexation benefit exceeds the tax calculated at the rate of 10% without indexation benefit, then such gains are chargeable to tax at the concessional rate of 10% (plus applicable surcharge and educational cess.) Short-term capital gains on the transfer of listed debentures, where debentures are held for a period less than 12 months would be taxed at the normal rates of tax, in accordance with and subject to the provisions of the Act.
Benefits available under the Wealth Tax Act, 1957
Shares or debentures in a company held by a shareholder or debenture holder will not be treated as an asset within the meaning of Section 2(ea) of Wealth tax Act, 1957. Hence, wealth tax is not leviable on shares or debentures held in a company.
NOTES:
A. All the above benefits are as per the current tax laws and will be available only to the sole/ first
named holder in case the shares / debentures are held by joint holders. B. In respect of non-residents, taxability of capital gains mentioned herein above shall be further
subject to any benefits available under the Double Taxation Avoidance Agreement, if any, between India and the country in which the non-resident has fiscal domicile.
C. In view of the individual nature of tax consequences, each investor is advised to consult his/ her own tax advisor with respect to specific tax consequences of his/ her participation in the issue.
D. The above statement of possible direct tax benefits sets out the provisions of law in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of equity shares or debentures.
E. Tax benefits available to the Company and its shareholders will vary/change upon applicability of Direct Taxes Code Bill, 2009 which is proposed to be made applicable w.e.f. 1st April, 2012.
61
SECTION IV – OUR MANAGEMENT
BOARD OF DIRECTORS
As per the Articles of Association of our Company, we must have a minimum of three (3) and maximum of twelve (12) directors. At present, our Company has 6 Directors, of which we have 1 Non Executive Non Independent Chairperson, 2 Executive Non Independent Directors, and 3 Non Executive and Independent Directors.
T. V. Sandeep Kumar Reddy, Managing Director and J Brij Mohan Reddy, Executive Vice Chairman, manage the day-to-day affairs of our Company. The remaining directors in the Board are non-executive directors of which three directors are independent directors on the Board.
The Board of Directors of our Company comprises of the following members:
Sl.
No
Name, Designation,
Father’s/Husband’s Name, DIN,
Address and Occupation
Age
(in
yrs.)
Date of
Appointment and
Term
Other Directorships
1 T Indira Subbarami Reddy
W/o. T Subbarami Reddy Chairperson, Non-executive and
Non Independent Director
6-3-249/5/ARoad No. 1Banjara Hills Hyderabad – 500 034 Occupation: Entrepreneur DIN No: 00009906
57 September 1, 2005 Retire By Rotation
1. Gayatri Sugars Limited; 2. Gayatri Tissue & Papers Limited; 3. Gayatri Hi-tech Hotels Limited; 4. Bhandara Thermal Power
Corporation Limited; 5. Gayatri Energy Ventures Private
Limited; 6. Amaravathi Thermal Power Private
Limited; 7. Balaji Highways Holding Private
Limited; 8. Deep Corporation Private Limited; 9. DLF Gayatri Home Developers
Private Limited; 10. Gayatri Contech Private Limited; 11. Gayatri Domicile Private Limited; 12. Gayatri Fin Holdings Private
Limited; 13. Gayatri Hotel Ventures Private
Limited; 14. Gayatri Hotels & Theatres Private
Limited; 15. Gayatri Hotels (Vizag) Private
Limited; 16. Gayatri Leasefin Private Limited; 17. Gayatri Property Ventures Private
Limited; 18. Gayatri Realty Ventures Private
Limited; 19. Gayatri Urban Ventures Private
Limited; 20. GSR Sugars Private Limited; 21. Indira Constructions Private
Limited;
62
Sl.
No
Name, Designation,
Father’s/Husband’s Name, DIN,
Address and Occupation
Age
(in
yrs.)
Date of
Appointment and
Term
Other Directorships
22. Indira Energy Holdings Private Limited;
23. Indira Realty Holdings Private Limited;
24. Maheswari Hotels & Theatres Private Limited;
25. Rajeev Realtors Private Limited; 26. T Rajeev Reddy Real Estate
Developers Private Limited; 27. T. Gayatri Engineering Company
Private Limited; and 28. TSR Holdings Private Limited
2 T. V. Sandeep Kumar Reddy
S/o. T Subbarami Reddy
Managing Director
8-2-331/2/A, Road # 3, Banjara Hills, Hyderabad – 500 034 Occupation: Entrepreneur DIN No: 00005573
43 September 1, 2005 Re-appointed with effect from October 01, 2009 for a period of 5 years.
1. Gayatri Sugars Limited; 2. Gayatri Bio-Organics Limited; 3. Cyberabad Expressways Limited; 4. Gayatri Energy Ventures Private
Limited; 5. Gayatri Hi-Tech Hotels Limited; 6. Gayatri Infra Ventures Limited; 7. Hyderabad Expressways Limited; 8. Bhandara Thermal Power
Corporation Limited; 9. Indore Dewas Tollways Limited; 10. Thermal Powertech Corporation
India Limited; 11. HKR Roadways Limited; 12. Amaravati Thermal Power Private
Limited; 13. Balaji Highways Holding Private
Limited; 14. Deep Corporation Private Limited; 15. DLF Gayatri Home Developers
Private. Limited; 16. Gayatri Contech Private Limited; 17. Gayatri Domicile Private Limited; 18. Gayatri Fin Holdings Private
Limited; 19. Gayatri Hotel Ventures Private
Limited; 20. Gayatri Hotels & Theatres Private
Limited; 21. Gayatri Hotels (Vizag) Private
Limited; 22. Gayatri LeaseFin Private Limited; 23. Gayatri Property Ventures Private
Limited; 24. Gayatri Realty Ventures Private
Limited; 25. Gayatri Urban Ventures Private
Limited; 26. Indira Constructions Private
Limited; 27. Indira Energy Holdings Private
63
Sl.
No
Name, Designation,
Father’s/Husband’s Name, DIN,
Address and Occupation
Age
(in
yrs.)
Date of
Appointment and
Term
Other Directorships
Limited; 28. Indira Publications Private Limited; 29. Indira Realty Holdings Private
Limited; 30. Jinbhuvish Power Generations
Private Limited; 31. Maheswari Film Production Private
Limited; 32. Sandeep Housing Developers
Private Limited; 33. T Anirudh Reddy Builders &
Developers Private Limited; 34. T Rajeev Reddy Real Estate
Developers Private Limited; 35. T. Gayatri Engineering Company
Private Limited; 36. TSR Holdings Private Limited; and 37. Sembcorp Gayatri O&M Company
Private Limited.
3 J Brij Mohan Reddy
S/o Late J.C.K.Reddy
Executive Vice Chairman
8-2-618, Road No.: 11, Banjara Hills, Hyderabad- 500 034 Occupation: Entrepreneur DIN No : 00012927
69 March 30, 1994 Reappointed for a period of three years from October 01, 2009.
1. Balaji Highways Holding Private Limited;
2. Chamundeswari Builders Private Limited;
3. Gayatri Infra Ventures Limited; 4. Gayatri Jhansi Roadways Limited; 5. Gayatri Lalitpur Roadways Limited; 6. Western Up Tollway Limited; 7. Indore Dewas Tollways Limited;
and 8. HKR Roadways Limited.
4 Ch. Hari Vittal Rao
S/o. Ch Venkateswara Rao Independent Non-Executive
Director
Plot # 24, Kamalapuri Colony Srinagar Colony Road Hyderabad – 500 073 Occupation : Professional DIN No : 00012970
71 November 04, 2005 Retire By Rotation
1. APR Constructions Limited; and 2. Gayatri Infra Ventures Limited.
5 Dr. V L Moorthy
S/o. V Narasimham Independent Non-Executive
Director
408, H. No.: 6-3-1103, Gulrez Apartments, Raj Bhavan Road Somajiguda, Hyderabad – 500 082
74 November 04, 2005 Retire By Rotation
1. Gayatri Tissue & Papers Limited; 2. Gayatri Capital Limited; 3. Sandeep Housing Developers
Private Limited; and 4. Bhandara Thermal Power
Corporation Limited
64
Sl.
No
Name, Designation,
Father’s/Husband’s Name, DIN,
Address and Occupation
Age
(in
yrs.)
Date of
Appointment and
Term
Other Directorships
Occupation: Professional DIN No : 00013083
6 G Siva Kumar Reddy
S/o- Late G. Sreenivasalu Reddy Independent- Non-Executive
Director
8-2-684/4/5/6 Road No. 12, Banjara Hills, Hyderabad - 500034 Occupation: Entrepreneur DIN No: 00439812
55 March 30, 1994 Retire By Rotation
1. Srinivas Resorts Limited; 2. G.S.R. Projects Private Limited; 3. Anirudh Townships Private Limited;
and 4. GSR Ventures Private Limited.
BRIEF BIOGRAPHY OF OUR DIRECTORS T. Indira Subbarami Reddy, aged 57 years, a Promoter of our Company and the non-executive chairperson of our Company, is wife of Dr. T. Subbarami Reddy. T. Indira Subbarami Reddy has over 14 years of experience in the construction industry and has been a director in our Company since March 8, 1996.
T. V. Sandeep Kumar Reddy, aged 43 years, our Company’s Managing Director, is also a Promoter of our Company and has been associated with our Company since its incorporation in the year 1989. T. V. Sandeep Kumar Reddy holds a masters degree in construction engineering and management from University of Michigan at Ann Arbor, USA and also holds a bachelor degree in civil engineering from Purdue University. T. V. Sandeep Kumar Reddy is responsible for overseeing the day to day affairs of our Company. In the last Fiscal the amount of remuneration paid to him was ` 20.55 millions. J. Brij Mohan Reddy, aged 69 years, our Company’s executive vice chairman, is a graduate in engineering from the University of California, Berkley, United States. J. Brij Mohan Reddy has over 47 years of experience in the heavy engineering construction and the harbour engineering industries. He has been associated with our Company since 1989 and currently is a whole –time director in our Company since March 30, 1994. In the last Fiscal the amount of remuneration paid to him was ` 11.40 millions.
G. Siva Kumar Reddy, aged 55 years, our Company’s non-executive and independent director is a post graduate in commerce from Madras University. G. Siva Kumar Reddy has over 25 years of experience. He has been associated with our Company since March 30, 1994. Ch. Hari Vittal Rao, aged 71 years, our Company’s non-executive and independent director is a CAIIB from Indian Institute of Bankers, and holds a bachelors degree in arts from Andhra University. Ch. Hari Vittal Rao has over 47 years of experience as a banker and was employed with Bank of Baroda and Naandi Foundation in the past. He has been associated with our Company since November 04, 2005.
Dr. V L Moorthy, aged 74 years our Company’s non-executive and independent director is a master in science and a doctorate in philosophy in the field of pure chemistry from University of Calcutta. He has experience of 40 years in the fields of paper and pulp industry and was employed with ITC Bhadrachalam Paper Board. He has been associated with our Company since November 04, 2005.
65
NATURE OF RELATIONSHIP BETWEEN DIRECTORS
Except our non-executive chairman, T. Indira Subbarami Reddy and our Managing Director, T. V. Sandeep Kumar Reddy who are related to each other as mother and son, and our Executive Director J Brij Mohan Reddy and our Managing Director T.V. Sandeep Kumar Reddy who are related to each other father-in-law and son-in law. None of our other Directors on the Board are related to each other. DIRECTORSHIPS IN COMPANIES SUSPENDED/DELISTED
Except as stated below, none of our Directors hold directorships in listed companies whose shares have been/were suspended from trading /delisted from the stock exchanges within a period of five years immediately preceding the date of this Draft Red Herring Prospectus: The BSE had pursuant to a notice dated September 3, 2001, suspended the trading of securities of Gayatri BioOrganics Limited with effect from September 3, 2001, inter-alia in connection with alleged non-payment of annual listing fees. Our Managing Director T.V. Sandeep Kumar Reddy is a director on the board of directors of Gayatri BioOrganics Limited. The aforementioned suspension has been revoked by BSE with effect from December 30, 2008 and the trading in securities of the aforementioned companies have accordingly resumed on the BSE. Similarly, the BSE had vide a notice dated December 21, 2004, suspended the trading of securities of Gayatri Tissue & Papers Limited with effect from December 21, 2004, in connection with alleged non-compliances with requirements of the listing agreement with BSE. Our directors, T. Indira Subbarami Reddy and Dr. V L Moorthy are directors on the board of directors of Gayatri Tissue & Papers Limited. The aforementioned suspension has been revoked by BSE with effect from April 26, 2010 and the trading in securities of the aforementioned companies have accordingly resumed on the BSE. ARRANGEMENTS WITH MAJOR SHAREHOLDERS, CUSTOMERS, SUPPLIERS OR
OTHERS
There is no arrangement or understanding between our Company and major shareholders, customers, suppliers or others, pursuant to which of any of the Directors of our Company was appointed as a Director or member of senior management of our Company.
SERVICE AGREEMENTS ENTERED INTO BETWEEN OUR COMPANY AND OUR
DIRECTORS:
There are no service contracts executed between our Company and any of our Directors providing for benefits upon termination of employment.
Compensation paid to Managing Director, Whole-Time Directors of the Company
T. V. SANDEEP KUMAR REDDY, MANAGING DIRECTOR T. V. Sandeep Kumar Reddy has been re-appointed as a Managing Director of the Company with effect from October 01, 2009 for a period of 5 years. The remuneration payable by way of salary, perquisites and commission is as follows:
66
Name & Designation Salary Perquisites and
Allowances (p.a.)
Commission
Sri T. V. Sandeep Kumar Reddy Managing Director
` 2 million per month (in the pay scale of ` 2 million to ` 4 million)
(With an increment not exceeding ` 0.5 million per
annum)
` 1.5 million 1% of the net profits of the company computed
pursuant to Section 349 & 350 of the Companies
Act, 1956
The perquisites and allowances payable to the whole time director shall include medical allowance; leave travel allowance for self and family including dependants; club fees, accident/medical reimbursement; encashment of leave and such other perquisites and / or allowances, up to the amounts specified above, subject to an overall ceiling of remuneration stipulated in Sections 198 and 309 of the companies Act, 1956.
The said perquisites and allowances shall be evaluated, wherever applicable, as per the income tax act, 1961, and the rules framed there under (including any statutory modifications or re-enactment thereof for the time being in force). However the company’s contribution to Provident fund, Superannuation or Annuity fund, to the extent these singly or together are not taxable under the Income Tax Act, 1961, and gratuity payable and encashment of leave at the end of the tenure, as per the rules of the Company, shall not be included in the computation of limits for the remuneration which includes salary, perquisites and allowances.
The terms and conditions and payment of remuneration within the limits specified herein may be altered and varied from time to time by the Board of Directors of the company as it may, at its discretion deem fit. The Board is also entitled to revise the salary, perquisites and allowances payable to the said Managing Director shall not exceed the limits specified under Section 309 read with Schedule XIII of the Companies Act, 1956 (including any statutory modifications or re-enactment thereof for the time being in force) or any amendment made thereto. The Managing Director will not be entitled for sitting fees. Commission:
In addition to the salary and perquisites, T.V.Sandeep Kumar Reddy is also eligible for commission up to 1% of the net profits of the Company calculated as per the provisions of section 198 of the Companies Act, 1956
SRI J. BRIJ MOHAN REDDY, EXECUTIVE VICE CHAIRMAN
Sri J. Brij Mohan Reddy as Executive Vice Chairman of the Company has been re-appointed for a period of three years commencing from October 1, 2009 to September 30, 2012 with the following terms and conditions. Terms:
Period: For a period of 3 years commencing from October 1, 2009 to September 30, 2012. Remuneration: Salary of `1.14 million per month and other perquisites as applicable to the senior management of the Company. The remuneration may be reviewed by the board from time to time. The terms and conditions of the appointment of the Appointee may be altered and varied from time t3 time by the Board as it may, in its discretion deem fit, irrespective of the limits stipulated under Schedule XIII to
67
the Act or any amendments made hereafter in this regard in such manner as may be agreed to between the Board and the Appointee, subject to such approvals as may be required.
Remuneration payable to our non-executive and independent Directors
All our Company’s Non-Executive Directors, including its Chairperson, are entitled to sitting fees of ` 15,000 per meeting of the Board of Directors and ` 7,500 for Audit committee thereof.
Interest of Directors All of our Directors may be deemed to be interested to the extent of fees payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them under our Articles, and to the extent of remuneration paid to them for services rendered as an officer or employee of our Company. Our Directors may also be regarded as interested in the Equity Shares, if any, held by them or that may be subscribed by or allotted to the companies, firms, trusts, in which they are interested as directors, members, partners, trustees and promoter, pursuant to this Issue. All of our Directors may also be deemed to be interested to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. Shareholding of our Directors in our Company as on December 31, 2010 is as follows:
Sl. No Name of the Director Number of Shares % of holding
01 T. V. Sandeep Kumar Reddy 1,793,922 14.96
02 T. Indira Subbarami Reddy 4,798,816 40.03
03 J Brij Mohan Reddy 225 Negligible
04 G Siva Kumar Reddy 225 Negligible
68
SECTION VI – FINANCIAL INFORMATION
FINANCIAL STATEMENTS
INDEX
Sl.
No.
Particulars Page No.
1. Auditors report for the audited Unconsolidated financial statements of our Company as at March 31, 2010 and for the financial year ended March 31, 2010
69
2. Auditors report for the audited Consolidated financial statements of our Company as at March 31, 2010 and for the financial year ended March 31, 2010
95
3. Limited Review Report for the unaudited standalone financial statements of our Company as at September 30, 2010 and for the six month period ended September 30, 2010
115
4. Limited Review Report for the unaudited consolidated financial statements of our Company as at September 30, 2010 and for the six month period ended September 30, 2010
131
5. Certain other financial information (Working Results) 146
69
AUDITORS REPORT
Auditor’s report for the audited Unconsolidated financial statements of Gayatri Projects Limited as at 31st
March 2010 and for the financial year ended 31st March 2010.
The Board of Directors, Gayatri Projects Limited
B1, 6-3-1090, TSR Towers,
Rajbhavan Road, Somajiguda,
Hyderabad – 500 082.
Dear Sirs,
1. We are engaged to report on the Unconsolidated financial statements of Gayatri Projects Limited (‘the Company’), for the year ended March 31, 2010 annexed to this report in Annexure I to IV for the purpose of inclusion in this Draft Letter of Offer and Letter of Offer (the ‘Offering Documents’) prepared by the Company in connection with the Rights Issue (‘Rights Issue’) of its equity shares, in accordance with the provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended, till date (“SEBI Regulations”). Our responsibility is to report on such statements based on our procedures.
2. We have examined the attached unconsolidated financial information of Gayatri Projects Limited , as
approved by the Board of Directors of the Company prepared in terms of the requirements of :
1. Paragraph B (1) of Part II of Schedule II of the Companies Act, 1956 (“the Act”);
2. The Guidance Note on Reports in Company Prospectus and Guidance Note on Audit Reports/
Certificates on Financial Information in Offer Documents issued by the Institute of Chartered Accountants of India and terms of reference received from the Company in connection with the proposed issue of Equity Shares of the Company on Right basis, (“Right Issue”).
3. The terms of reference dated January 24, 2011 received from the Company, requesting us to carry
out the assignment, in connection with the Offering Documents being issued by the Company for its proposed Rights Issue of equity shares under the SEBI Regulations
3. We report that the figures disclosed in the ‘Unconsolidated Financial Statements’ have been extracted by
the management from the audited financial statements for the year ended March 31, 2010, audited by us and in respect of which we have issued an audit opinion dated May 28, 2010. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with significant accounting policies and notes to accounts in Schedule 18 Subject to Note No.8(a) and 8(b) of II of Schedule 18 regarding non provisions for the losses incurred by Joint Ventures give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India
4. For the purpose of this report we have not performed any additional audit procedures on the above referred
audited financial statements of the Company for the year ended March 31, 2010, including evaluating the possible impact, if any, of subsequent events on the earlier audited financial statements of the Company.
5. The Unconsolidated Financial Statements annexed to this report are extracted from the audited financial
statements for the year ended March 31, 2010. These ‘Unconsolidated Financial Statements’ have been prepared using the same set of accounting policies used for preparing the audited financial statements as at March 31, 2010. The accounting policies and notes to accounts have been reproduced as they were disclosed in the relevant year.
6. We have not audited any Unconsolidated Financial Statement of the Company as of any date or for any
period subsequent to March 31, 2010. Accordingly, we express no opinion on the financial position, results
70
of operations or cash flows of the Company as of any date or for any period subsequent to March 31, 2010. However, we have conducted a limited review of the Balance Sheet of the Company as at September 30, 2010 and the Profit and Loss for the period ended on that date.
7. At the Company’s request, we have also examined the following information proposed to be included in the
Offering Documents prepared by the management and annexed to this report: (i) Accounting Ratios enclosed as Annexure V and (ii) Capitalisation Statement enclosed as Annexure VI
8. In our opinion, the financial information contained in Annexure I to IV of this report read along with the
Significant Accounting Policies & Notes to Accounts as considered appropriate have been prepared in accordance with the provisions of Paragraph B (1) of Part II of Schedule II of the Companies Act, 1956 (“the Act”) and Schedule VIII Part E (5) (X) and other applicable provisions of the SEBI Regulations
9. This report should not be in any way construed as a re-issuance or re-dating of any of the previous audit
report issued by us nor should this report be construed as a new opinion on any of the financial statement referred to herein.
10. This report is intended solely for your information and for inclusion in the Offering Documents in
connection with the proposed Issue by the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.
Yours faithfully, For C.B.Mouli & Associates
Chartered Accountants
Firm Reg. No. 002140S Mani Oommen Partner Membership No.: 24046
Place: Hyderabad Date : March 19, 2011.
71
ANNEXURE – I
BALANCE SHEET AS AT 31
st MARCH, 2010 Rs. in Millions
AS AT AS AT
Particulars Schedule
31st MARCH, 2010 31st MARCH, 2009
SOURCE OF FUNDS Share Holders Funds Share Capital 1 111.05 101.05 Equity Warrants 35.63 0.00 Reserves and Surplus 2 2,657.43 2,804.11 2,056.49 2,157.54
Loan Funds Secured Loans 3 3,600.35 2,479.91 Unsecured Loans 4 2,485.31 6,085.66 1,127.69 3,607.60
Deferred Tax Liability 177.79 185.83
TOTAL 9,067.56 5,950.97
APPLICATION OF FUNDS Fixed Assets 5 Gross Block 3,002.95 2,747.84 Less: Depreciation 1,341.51 1,141.16
Net Block 1,661.44 1,606.68
Investments 6 1,283.39 1,283.39
Current Assets, Loans and Advances
Inventories 7 693.33 604.35
Sundry Debtors 8 3,149.06 2,239.12
Cash and Bank Balances 9 2,052.19 587.65 Loans and Advances 10 4,043.36 2,764.87
9,937.94 6,195.99
Less: Current Liabilities and Provisions 11
Liabilities 3,738.46 3,014.64 Provisions 76.75 120.45
3,815.21 3,135.09
Net Current Assets 6,122.73 3,060.90
TOTAL 9,067.56 5,950.97
Accounting Policies and Notes on Accounts 18
Schedules referred to above form an integral part of the accounts
72
ANNEXURE – II
PROFIT & LOSS ACCOUNT FOR YEAR ENDED 31
st MARCH 2010
Rs. in Millions
YEAR ENDED YEAR ENDED
Particulars Schedule
31st MARCH, 2010 31st MARCH, 2009
INCOME Gross Contract Receipts 12,524.86 10,045.95 Other Income 12 42.04 64.09
TOTAL 12,566.90 10,110.04
EXPENDITURE Work Expenditure 13 10,532.23 8,649.11 (Increase) / Decrease in WIP 14 (18.89) (116.58) Employee’s Remuneration & Benefits 15 280.44 207.01 Administrative Expenses 16 208.11 170.59 Interest and Financial Charges 17 554.42 368.55 Depreciation 5 200.57 197.01
TOTAL 11,756.88 9,475.69
Profit before Tax 810.02 634.35 Provision for Taxation - Current Tax 284.59 216.77 - Fringe Benefit Tax 2.33 - Deferred Tax (8.04) 276.55 (0.94) 218.16
Profit after Tax and before prior period adjustments 533.47 416.19
Less : Prior Period Adjustments 42.57 3.03
Profit after prior period adjustments 490.90 413.16 Balance in Profit and Loss account brought forward 1,031.04 725.17
Balance available for appropriation 1,521.94 1,138.33
APPROPRIATIONS : Interim Dividend 27.76 Final Dividend 27.76 40.42 Dividend tax 9.44 6.87 Transfer to General Reserve 70.00 134.96 60.00 107.29
Balance carried to Balance sheet 1,386.98 1,031.04
Earning per share of Face value of Rs. 10/- each
Basic (Rs.) 46.02 40.89
Diluted (Rs.) 36.67 32.56
Accounting Policies and Notes on Accounts 18
Schedules referred to above form an integral part of the accounts
73
ANNEXURE – III
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2010 (Rs. in Millions)
Year Ended Year Ended
31st March, 2010 31st March, 2009
A. CASH FLOW FROM OPERATING ACTIVITIES:
Net Profit before tax and Extra Ordinary items 810.02 634.36
Adjustments for:
Depreciation 200.57 197.01
Loss on sale of fixed assets 0.08 -
Interest 554.42 368.56
Operating Profit before Working Capital changes 1565.09 1199.93
Adjustments for:
Trade and other receivables (2224.11) (953.30)
Change in Inventories (88.97) (218.75)
Trade payables 615.16 684.51
Cash generated from operations (132.83) 712.39
Direct taxes paid (248.92) (219.11)
Cash flow before prior period adjustments (381.75) 493.28
Prior period adjustments (42.58) (3.03)
Net cash flow from operating activities after prior period adj. (424.33) 490.25
B. CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of Fixed Assets (255.50) (174.92)
Sale of Fixed Assets 0.10 -
Investments - (620.96)
Net Cash used in Investing Activities (255.40) (795.88)
C. CASH FLOW FROM FINANCING ACTIVITIES:
Interest paid (554.42) (368.56)
Proceeds from preferential allotment 185.00 -
Proceeds from Share Warrants 35.63 -
Proceeds from long term borrowing 1120.45 355.82
Proceeds from Short term borrowing 1357.62 150.00
Net Cash from Financing activities 2144.28 137.26
Net increase in Cash and Cash Equivalents (A+B+C) 1464.55 (168.37)
Cash & Cash Equivalents as at 1st April (Opening Balance) 587.64 756.01
Cash & Cash Equivalents as at 31st March (Closing Balance) 2052.19 587.64
Note: - - 1 Cash and Cash Equivalents consist of Cash on hand and balances with Banks that includes Margin
Money Deposits for Bank Guarantees of Rs. 656.30 Millions (Previous Year Rs. 382.56 Millions) 2 The Cash flow statement is prepared in accordance with the indirect method stated in Accounting
Standard 3 issued by ICAI on Cash flow statements and presents Cash flows by Operating, Investing and Financing activities. 3 Figures in brackets represent cash outflows. 4 Notes on Accounts stated in Schedule 18 form an integral part of the Cash flow statement.
74
ANNEXURE – IV
SCHEDULES FORMING PART OF BALANCE SHEET Rs. in Millions
AS AT AS AT Particulars
31st MARCH, 2010 31st MARCH, 2009
SCHEDULE NO : 1 :
SHARE CAPITAL
Authorised Share Capital :
150,00,000 Equity Shares of Rs. 10/- each 150.00 150.00
(Year ended March 31, 2008 - 150,00,000)
150.00 150.00
Issued, Subscribed and paid-up capital :
111,04,761 Equity Shares of Rs. 10/- each, fully paid-up 111.05 101.05
(Year ended March 31, 2009 - 101,04,761)
a) 50,00,000 shares of Rs. 10/- each fully paid
b) 40,00,000 shares of Rs. 10/- each fully paid bonus shares in the ratio of 5:4 were allotted by capitalization of General Reserve
c) 10,00,000 shares of Rs. 10/- each fully paid shares were allotted to public at a premium of Rs. 285/- through Initial Public Offer.
d) 1,04,761 shares of Rs. 10/- each fully paid shares were allotted by way of conversion of FCCB at a premium of Rs. 368.3453
e) 10,00,000 shares of Rs. 10/- each fully paid shares were allotted at premium of Rs. 175/- through Preferential allotment
111.05 101.05
SCHEDULE NO : 2
RESERVES AND SURPLUS
Securities Premium Account
At the Commencement of the Year 415.45 415.45
Add : Additions for the year on account
of Preferential allotment 175.00 -
590.45 415.45
General Reserve
At the Commencement of the Year 610.00 550.00
Add : Transfer from Profit and Loss A/c. 70.00 60.00
680.00 610.00
Profit and Loss Account Balance 1,386.98 1,031.04
2,657.43 2,056.49
75
Rs. in Millions
AS AT AS AT
Particulars
31st MARCH, 2010 31
st MARCH, 2009
SCHEDULE NO : 3
SECURED LOANS
I] From Banks
A)Term Loans
i) Equipment Loans 276.55 347.19
(Refer to Note 3(a) of II of Sch, 18)
ii) Vehicle Loans 3.77 5.85
(Refer to Note 3(c) of II of Sch, 18)
iii) Term Loans 654.99 -
(Refer to Note 3(a) of II of Sch, 18)
B] Working Capital Loan Account 2,594.43 2,006.34
(Refer to Note 3(b) of II of Sch, 18)
II] From Others
Equipment And Vehicle Loans 70.61 120.53
(Refer Note 3 of II of Sch.18)
3,600.36 2,479.91
SCHEDULE NO : 4
UNSECURED LOANS
Short Term Loans from Banks 1,507.62 150.00
[Against Personal Guarantees of the Promoter Directors]
Foreign Currency Convertible Bonds (FCCB) 977.69 977.69
(Refer Note 2 of II of Sch.18)
2,485.31 1,127.69
SCHEDULE NO : 5
FIXED ASSETS
Rs. in Millions
GROSS BLOCK DEPRECIATION NET BLOCK
PARTICULARS As at Additions Deletions As at Up to For the On deletion Up to As on As on
01/04/2009 During the year 31/03/2010 31/03/2009 year for the year 31/03/2010 31/03/2010 31/03/2009
Land 1.17 - - 1.17 - - - - 1.17 1.17
Plant & Machinery 1,709.39 116.89 1,826.28 452.00 84.32 536.32 1,289.96 1,257.39
Vehicles 110.78 21.76 0.40 132.14 53.94 11.45 0.22 65.17 66.97 56.84
Earth Moving Machinery 892.44 113.91 1,006.35 615.97 103.06 719.03 287.32 276.47
Office Sheds 7.60 - 7.60 7.60 - 7.60 - -
Furniture & Fixtures 26.46 2.95 29.41 11.65 1.74 13.39 16.02 14.81
Capital Work in Progress - - - - - - - - -
TOTAL : 2,747.84 255.51 0.40 3,002.95 1,141.16 200.57 0.22 1,341.51 1,661.44 1,606.68
Previous Year 2,572.93 175.08 0.17 2,747.84 944.15 197.01 - 1,141.16 1,606.68 1,628.78
76
Rs. in Millions
AS AT AS AT
Particulars
31st MARCH, 2010 31st MARCH, 2009
Nos Rs.in
Millions Nos Rs.in
Millions
SCHEDULE NO : 6
INVESTMENTS
(Refer Note 4 of II of Sch.18)
Shares in Companies :
A) Trade Investments
Long Term - Unquoted Shares - Subsidiary Companies
Equity shares of Rs.10/- each, fully paid, in Gayatri Infra Ventures Ltd (GIVL)
1250000 1,253.24 1250000 1,253.24
Equity shares of Rs.10/- each, fully paid, in Gayatri Energy Ventures Pvt. Ltd.
50000 0.50 50000 0.50
Long Term-Unquoted Shares-Associate Companies
Equity shares of Rs.10/- each, fully paid in Gayatri Thermal Power Corporation Ltd.
24500 0.25 24500 0.25
B) Other Investments
Long Term - Quoted Shares
Equity Shares of Rs10/- each fully paid in Gayatri Sugars Ltd 2931000 29.31 2931000 29.31
Equity Shares of Rs10/- each fully paid in Syndicate Bank
Ltd 1728 0.09 1728 0.09
1,283.39 1,283.39
Aggregate amount of Quoted Investments 29.40 29.40
Aggregate amount of Unquoted Investments 1,253.99 1,253.99
Aggregate Market value of Quoted Investments 12.55 10.87
77
Rs.in Millions
AS AT AS AT
Particulars
31st MARCH, 2010 31st MARCH, 2009
SCHEDULE NO : 7
INVENTORIES
- Construction Materials, stocks and spares at cost 453.12 383.03
- Closing Work-in-progress 240.21 221.32
(As certified by Management) 693.33 604.35
SCHEDULE NO : 8
SUNDRY DEBTORS (Un-secured)
Over Six Months Considered Good 186.97 200.27
Others, Considered Good 2,962.09 2,038.85
3,149.06 2,239.12
SCHEDULE NO : 9
CASH AND BANK BALANCES
Cash on Hand 13.96 9.34
Bank Balances: In Current Accounts
With Scheduled Banks 1,381.93 195.75
In Deposit Accounts
With Scheduled Banks
Margin Money (Bank Guarantees/LCs) 453.37 322.73
Fixed Deposits 183.61 48.63
Interest Accrued on Deposits 19.32 11.20
2,052.19 587.65
SCHEDULE NO : 10
LOANS AND ADVANCES (Unsecured considered good)
Advances to Associates 577.31 717.93
Advances to Suppliers, Sub-contractors and Others 2,718.65 1,654.42
Advances receivable in cash or kind
or value to be received 13.09 4.36
Advance towards Share Application Money 616.08 312.67
Prepaid Expenses 116.66 60.55
Deposits with Govt. Agencies and Others 1.57 14.94
4,043.36 2,764.87
SCHEDULE NO : 11
CURRENT LIABILITIES AND PROVISIONS
a) Current Liabilities
Sundry Creditors 1,505.34 1,123.22
Advances received from Contractee – Clients 2,147.00 1,836.00
Other liabilities 86.12 55.42
3,738.46 3,014.64
b) Provisions
Taxation 26.92 62.58
Dividend 27.76 40.42
Dividend Tax 4.72 6.87
Employee Benefits 17.35 10.58
76.75 120.45
3,815.21 3,135.09
78
Rs.in Millions
YEAR ENDED YEAR ENDED
PARTICULARS 31st MARCH, 2010 31st MARCH, 2009
SCHEDULE NO : 12
OTHER INCOME
Interest Income (TDS Rs.4.71Millons, Prev.yr Rs.6.03 Millions)
37.62
31.02
Miscellaneous Income 4.42 33.07
42.04 64.09
SCHEDULE NO : 13
WORK EXPENDITURE
Steel 590.77 750.86
Cement 313.38 243.62
Bitumen 1,181.52 665.31
Metal 475.46 224.20
Sand & Gravel 162.90 123.58
HSD Oils and Lubricants 697.55 383.77
Stores and Consumables 33.87 20.46
Other Materials 98.91 126.54
Departmental Recoveries 123.83 121.35
Work executed by sub contractors 2,808.35 3,429.28
Earth Work 1,298.74 1,045.13
Concrete Work 856.18 392.18
Transport Charges 184.33 134.17
Hire Charges 151.94 37.72
Road work 607.21 556.99
Repairs and Maintenance 201.38 103.75
Works Contract Tax / VAT 220.13 121.18
Royalties, Seigniorage and Cess 195.66 75.14
Insurance 23.47 10.06
Other Work Expenditure 306.64 83.82
10,532.22 8,649.11
SCHEDULE NO : 14
INCREASE/DECREASE IN W.I.P.
Opening Work in Progress 221.32 104.74
Less : Closing Work in Progress 240.21 221.32
(18.89) (116.58)
79
Rs. in Millions
PARTICULARS YEAR ENDED YEAR ENDED
31st MARCH, 2010 31st MARCH, 2009
SCHEDULE NO : 15
EMPLOYEE'S REMUNERATION & BENEFITS
Salaries 209.55 163.45
Contribution to Provident Fund 3.15 1.89
Other Employee Benefits 35.79 26.07
Directors' Remuneration & Perquisites 31.95 15.60
280.44 207.01
SCHEDULE NO : 16
ADMINISTRATIVE EXPENSES
Printing and Stationery 7.83 5.41
Telephones 9.58 7.90
Traveling and Conveyance 27.63 26.83
Advertisement Expenses 5.95 5.06
General Expenses 9.97 8.53
Consultancy Fee 48.93 20.93
Donations 24.81 20.21
Rent 23.83 16.66
Power and fuel 9.03 6.13
Rates and Taxes 19.87 29.07
Tender Expenses 3.05 3.10
Insurance 1.68 2.36
Auditors Remuneration 2.50 1.50
Other Administration Expenses 13.46 16.90
208.12 170.59
SCHEDULE NO : 17
INTEREST AND FINANCE CHARGES
a) Interest on:
Working Capital Loans 240.32 216.90
Term Loans 92.48 68.57
Mobilisation Advance 28.01 8.89
Equipment Loans 24.45 25.16
Vehicle Loans 4.50 3.60
Others 25.18 414.94 3.33 326.45
b) Financial Charges
Commission on - Bank Guarantees 95.91 24.60
- Letters of Credit 5.13 101.04 0.74 25.34
c) Bank Charges 38.44 16.76
554.42 368.55
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SCHEDULE NO 18
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
(Forming part of accounts as at and for the year ended 31st March, 2010)
I SIGNIFICANT ACCOUNTING POLICIES
1. Basis for preparation of financial statements
The financial statements have been prepared to comply in all respects with Accounting Standards notified under Companies (Accounting Standards) Rules 2006 and the relevant provisions of the Companies Act, 1956. The accounts are prepared under historical cost convention and on the going concern basis, with revenue recognized, expenses accounted on their accrual and in accordance with applicable notified Accounting Standards and the accounting policies have been consistently applied by the Company.
2. Use of estimates
The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Although these estimates are based upon management best knowledge of current events and actions, actual results could differ from the estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.
3. Revenue recognition
i) Income is recognized on fixed price construction contracts in accordance with the percentage completion
basis, which necessarily involve technical estimates of the percentage of completion, and costs to completion, of each contract / activity, on the basis of which profits and losses are accounted. Such estimates, made by the Company and certified to the Auditors have been relied upon by them, as these are of technical nature.
ii) The stage of completion of contracts is measured by reference to the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract.
iii) Price escalation and other claims and/or variation in the contract work are included in contract revenue only when: a) Negotiations have reached at an advanced stage such that it is probable that customer will accept
the claim; and b) The amount that is probable will be accepted by the customer can be measured reliably.
iv) Incentive payments, as per customer-specified performance standards, are included in contract revenue only when:
a) The contract is sufficiently advanced that it is probable that the specified performance standards will
be met; and b) The amount of the incentive payment can be measured reliably.
v) Insurance claims are accounted for on cash basis. 4. Revenue receipts on Joint Venture Contracts
a) In work sharing Joint Venture arrangements, revenues, expenses, assets and liabilities are
accounted for in the Company’s books to the extent work is executed by the Company.
b) In jointly controlled entities, the share of profits or losses is accounted as and when dividend/ share of profit or loss are declared by the entities.
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5. Inventories and work in progress
Raw Materials, construction materials and stores & spares are valued at weighted average cost. Expenditure incurred during the work in progress of contracts up to the stage of completion is carried forward as work-in-progress. Cost includes direct material, work expenditure, labour cost and appropriate overheads.
6. Fixed assets and Depreciation
i) Fixed Assets are stated at cost of acquisition, less accumulated depreciation thereon. Expenditure
which are capital in nature are capitalized at cost, which comprises of purchase price (net of rebates and discounts), import duties, levies, financing costs and all other expenditure directly attributable to bringing the asset to its working condition for its intended use. Capital Work in Progress comprises advances paid to acquire fixed assets and the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.
ii) Depreciation is provided on straight line method at the rates prescribed in Schedule XIV of the
Companies Act, 1956. Leasehold improvements are amortized over the period of lease.
7. Foreign Currency Transactions
Foreign exchange transactions are accounted at the rates prevailing on the date of transactions. Monetary assets and current liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates. The difference in translation of monetary assets and liabilities and realized gains and losses on foreign exchange transactions are recognized in the Profit and Loss Account.
8. Investments
Investments are classified as long term and current investments. Long Term Investments are carried at cost less provision for permanent diminution, if any, in value of such investments. Current investments are carried at lower of cost and fair value. Dividend income is accounted when the right to receive dividend is established.
9. Employee Benefits
Liability for employee benefits, both short and long term, for present and past service which are due as per the terms of employment are recorded in accordance with Accounting Standard (AS) 15 “Employee Benefits” issued by the Companies (Accounting Standard) Rules, 2006. i) Gratuity
In accordance with the Payment of Gratuity Act, 1972 the Company provides for Gratuity covering eligible employees. The liability on account of Gratuity is provided on the basis of valuation of the liability by an independent actuary as at the year end. ii) Provident Fund
In accordance with applicable local laws, eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan to which both the employee and employer contributes monthly at a determined rate (currently up to 12% of an employee’s salary). These contributions are either made to the respective Regional Provident Fund Commissioner, or the Central Provident Fund under the State Pension Scheme, and are expenses as incurred. iii) Compensated Absences Liability for compensated absence is treated as a long term liability and is provided on the basis of valuation by an independent actuary as at the year end.
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10. Deferred Revenue Expenditure
Projects and Other amenities expenditure incurred up to March 31, 2010, the benefit of which is spread over more than one year is grouped under Prepaid Expenditure and is amortized over the period in which benefits would be derived.
11. Borrowing Costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such asset. A qualifying asset is one that requires substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
12. Leases
Assets taken on finance lease are capitalized at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost, so as to obtain a constant periodic rate of interest on outstanding liability for each period. Operating leases in respect of office & other equipment, house for employees, Office buildings are cancelable / renewable by mutual consent on agreed terms. Lease payments under an operating lease are recognized as an expense in the Profit and Loss Account.
13. Earnings per Share (EPS)
In arriving at the EPS, the Company’s net profit after tax, computed in terms of the Indian GAAP, is divided by the weighted average number of equity shares outstanding on the last day of the reporting period. The EPS thus arrived at is known as ‘Basic EPS’. To arrive at the diluted EPS the net profit after tax, referred above, is divided by the weighted average number of equity shares, as computed above and the weighted average number of equity share that could have been issued on conversion of shares having potential dilutive effect subject to the terms of issue of those potential shares. The date/s of issue of such potential shares determine the amount of the weighted average number potential equity shares.
14. Taxation
i) Current Tax Provision for Current tax is made based on the liability computed in accordance with the relevant tax rates and provisions of Income Tax Act, 1961.
ii) Deferred Taxes
Deferred Tax is accounted for by computing the tax effect of timing differences which arise during the year and reverse in subsequent periods. Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized.
15. Impairment of Fixed Assets
The carrying amount of assets, other than inventories is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the assets is estimated. The recoverable amount is the greater of the asset’s net selling price and value in use which is determined based on the estimated future cash flow discounted to their present values. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
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16. Provisions for Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.
Contingent liabilities are present obligations arising from a past event, when it is not probable / probability is remote that an outflow of resources will be required to settle the obligation and they are not recognized but are disclosed in the notes.
Contingent Assets are neither recognized nor disclosed in the financial statements. Provisions for Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.
II. NOTES TO ACCOUNTS
1. Contingent Liabilities not provided for
Rs. in Millions
S.No Particulars FY 2009-10 FY 2008-09
1 Guarantees given by Banks towards performance & contractual commitments a) Issued on behalf of Company b)Guarantees given to Subsidiaries/Group Companies
4450.97
823.25
4124.88
3.14
2 Corporate guarantees given to Group companies 3356.60 1669.60
3 Disputed Liability of Sales Tax, Service Tax and Seigniorage Charges
153.04
164.40
4 Estimated amounts of contracts remains to be executed on capital account and not provided for.
-
-
2. a) Share Capital
During the year, the Company has allotted 10,00,000 equity shares of Rs.10/- each at a premium of Rs.175/- on preferential basis to M/s Reliance Capital Trustee Co. Ltd - Reliance Infrastructure Fund. b) Share Warrants:
During the year the Company has allotted 10,00,000 Share warrants on a preferential basis to the promoters of the Company at a price of Rs.142.52 per warrant with a right to apply and be allotted Equity Shares of the Company of Rs.10/- each at a premium of Rs.132.52 per share within a period not exceeding 18 months from the date of allotment. The Company is in receipt of Rs.35.63 Millions as 25% advance against the said share warrants allotted. The promoter has a right to exercise to subscribe for the warrants on or before 13th March 2011.
3. Loan Funds:
Secured Loans:
a) Term Loan:
Term Loans availed from banks and others are secured by hypothecation of specific assets, comprising plant and machinery, and construction equipment, acquired out of the said loans and personal guarantees of Directors.
84
b) Working Capital Facilities: Fund based and non-fund based working capital facilities from the consortium of Banks are secured by: i) Hypothecation against first charge on stocks, books debts and other current assets of the Company both present and future ranking pari pasu with consortium banks.
ii) Hypothecation against first charge on all unencumbered fixed assets of the Company both present and future ranking pari passu with consortium banks.
iii) Equitable mortgage of properties belonging to Promoters, Directors, group companies. iv) Personal guarantee of promoter Directors, group companies/firms and relatives.
c) Vehicle Loans:
Vehicle loans availed are secured by hypothecation of vehicles acquired out of the said loans. Unsecured Loans:
FCCB BONDS:
The Company has issued 308 FCCB Bonds of JPY 10000000 each aggregating to JPY 308,00,00,000 due in the year 2012 equivalent to Rs.1017.32 Millions. The bonds are listed in the Singapore Stock Exchange. Out of the above, 12 Bonds of value of JPY 120 million were converted in the year 2007-08 leaving a balance of 296 Bonds of JPY 10000000 each equivalent to Rs. 977.69 Millions. During the year under review the company has not received any request for conversion of the Bonds.
4. Investments:
i) Gayatri Sugars Ltd Market value of the investment in Gayatri Sugars Limited as at 31st March 2010 is Rs.12.40 Millions which is lesser than the carrying amount in the Balance Sheet by Rs. 16.91 Millions. In the opinion of the Management, the diminution in the value of investment is purely temporary in nature hence provision for the same is not provided for in the books.
ii) Gayatri Energy Ventures Private Limited (GEVL)
GEVL is a wholly owned subsidiary of the company and it is establishing mega coal based power project at Krishnapatnam, Andhra Pradesh State in collaboration with the Sembcorp Industries Ltd, Singapore. During the current year the Company has invested Rs. 303.42 Millions in GEVL. The investment to the extent of shares allotted is shown in the Investment schedule and the balance in the Loan and Advances schedule. Investment in Equity Shares of GEVL have been pledged in favour of PTC India Limited for a loan of Rs.1,000.00 Millions sanctioned to Thermal Powertech Corporation of India Ltd (a wholly owned subsidiary of GEVL)
5. Deferred Tax
Deferred Tax Liability as at March 31, 2010 comprises of the following:
(Rs. in Millions)
31.03.2010 31.03.2009
A) Deferred Tax Asset on timing differences due to :
Provision for Gratuity and Leave Encashment 2.30 0.24
B) Deferred Tax Liability on timing differences due to:
Depreciation 180.09 186.07
Net Deferred Tax Liability (B-A) 177.79 185.83
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6. Particulars of Loans and Advances in the nature of loans as required by clause 32 of the Listing
Agreement.
(Rs. in Millions)
Balances as on Maximum outstanding Name of the Company Relationship
31.03.2010 31.03.2009 2009-10 2008-09
Gayatri Infra Ventures Limited
Subsidiary -- 0.20 0.33 9.98
Gayatri Jhansi Roadways Limited
Step down Subsidiary
2.16 5.02 9.99 5.83
IJM Gayatri Joint Venture Joint Venture 577.31 577.31 577.31 577.31
Gayatri ECI Joint Venture Joint Venture 30.80 196.23 196.23 222.86
7. Impairment of Assets
In the opinion of the management, there are no impaired assets requiring provision for impairment loss as per the accounting standard 28 on Impairment of assets. The recoverable amount of building, plant and machinery and computers has been determined on the basis of ‘Value in use’ method.
8. Joint Venture Losses not considered
a) IJM-Gayatri Joint Venture The IJM – Gayatri Joint Venture is a joint venture in which IJM Corporation Berhad, Malaysia holds 60%
and Gayatri Projects Limited holds 40% share. The Joint venture has executed road works in Package I, II
& III and AP 13 of NHAI, APSH 7 and APSH 8 in the State of Andhra Pradesh. The joint venture incurred
excess of expenditure over income amounting to Rs. 1,344.50 Millions due to several contractual failures
on part of the employer.
The JV has raised claims in excess of Rs. 3000 Millions on the National Highways Authority of India and
Andhra Pradesh State Government, which are pending for consideration before the appropriate
authorities. There is substantial progress in the proceedings in the arbitration and the management is
reasonably confident of recovery of these claims. During the year under review in the matter of dispute out
of the work of the “Warangal-Khammam- Tallada Road work”, the committee of Arbitrators has awarded
a claim of Rs. 124.20 Millions in favour of joint venture.
The management has also obtained independent legal opinion from eminent counsel in this regard who
have opined on the recoverability of the claims. In view of this, the share of the losses of GPL (40%) in the
joint venture is not provided in the books of the Company. In the unlikely situation of not awarding the
entire amount of claims, GPL has to provide an amount of Rs. 537.80 Millions towards its share of 40% in
the IJM-Gayatri Joint Venture.
b) Gayatri – ECI JV
Gayatri-ECI JV, a joint venture between ECI Engineering & Construction Company Limited and Gayatri
Projects Limited with a sharing ratio of 50:50. The joint venture is executing road projects in Assam,
namely AS-10,AS-11 and AS-27 awarded by NHAI.
The joint venture due to extraneous and law and order problems in the State could not progress the work as
planned and hence incurred losses of Rs. 296.30 Millions till year 2008-09. However due to changed
strategy of the company and over all improvement of the law and order situation, the progress of the work
has improved substantially and the joint venture has posted a profit of Rs. 48.17 Millions during the year
2009-10 and to that extent the accumulated losses have been recovered. Since now the substantial portion
of the project work has started, the losses incurred in the earlier years can be recovered from these profits.
Hence, the losses in the joint venture are not considered by the parent company.
86
c) Other Joint ventures
Profit / (Loss) of all other joint ventures, other than the above, are recognized in the books.
9. Employee’s Benefits:
i) The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard – 15 (Revised) issued by the Institute of Chartered Accountants of India are as under:-
ii) (a) Changes in the Benefit Obligations:
(Rs.in Millions)
Gratuity Leave Encashment Particulars
2009-10 2008-09 2009-10 2008-09
Present Value of Obligation as at the beginning of the year 9.59 9.31 0.99 0.54
Interest Cost 0.77 0.75 0.08 0.04
Current Service Cost 0.72 0.08 0.51 0.13
Benefits Paid (0.15) (0.46) (0.11) (0.02)
Actuarial loss / (gain) on Obligations 3.72 (0.09) 1.24 0.29
Present Value of Obligation at year end 14.64 9.59 2.71 0.99
(b) Amount recognized in Balance Sheet:
(Rs.in Millions)
Gratuity Leave Encashment Particulars
2009-10 2008-09 2009-10 2008-09
Estimated Present Value of obligations as at the end of the year 14.64
9.59 2.71
0.99
Fair value of Plan Assets as at the end of the year - - - -
Net Liability recognized in Balance Sheet 14.64
9.59 2.71
0.99
(c) Expenses Recognized in Profit & Loss:
(Rs.in Millions)
Gratuity Leave Encashment Particulars
2009-10 2008-09 2009-10 2008-09
Current Service Cost 0.72 0.08 0.51 0.14
Interest Cost 0.77 0.75 0.08 0.04
Expected return on Plan Asset - - - -
Net Actuarial (Gain)/Loss recognized in the year 3.72 2.23 1.24 0.81
Total expenses recognized in Profit & Loss Account 5.21 3.05 1.83 0.99
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(d) Principal Actuarial Assumption:
Gratuity Leave Encashment Particulars
2009-10 2008-09 2009-10 2008-09
Discount Rate 8% 8% 8% 8%
Salary Escalation Rate 4% 4% 4% 4%
Retirement Age 60 60 60 60
Morality LIC
(1994-96) LIC
(1994-96) LIC
(1994-96) LIC
(1994-96)
Attrition Rate 1% 1% 1% 1%
(e) The entire present value of funded obligation at the year end is unfunded and hence, fair value of assets
is not furnished. 10. Related party transactions as per Accounting Standard 18 Details of related parties:
Associated Companies Key Management Personnel
Hyderabad Expressway Ltd Mr. T.V.Sandeep Kumar Reddy
Cyberabad Expressway Ltd Mr. J.Brij Mohan Reddy
Western UP Toll way Ltd Mrs.T.Indira Reddy
Subsidiary Companies Joint Ventures
Gayatri Energy Ventures Pvt. Ltd Gayatri RNS Joint Venture
Gayatri Infra Ventures Ltd IJM Gayatri Joint Ventures
Step-down Subsidiary Companies Gayatri Ranjit Joint Venture
Gayatri Lalitpur Roadways Ltd RNS Gayatri Joint Venture
Gayatri Jhansi Roadways Ltd Gayatri - GDC Joint Venture
Thermal Powertech Corporation India Ltd Gayatri – BCBPPL Joint Venture
Entities in which KMP are interested Jaiprakash Gayatri JV
Deep Corporation Pvt. Ltd Gayatri ECI Joint Venture
Indira Constructions Pvt. Ltd Gayatri – Ratna Joint Venture
Gayatri Tissue & Papers Ltd MEIL-GAYATRI-ZVS-ITT Consortium
Gayatri Sugars Ltd Simplex Gayatri Consortium
Gayatri Hi-Tech Hotels Ltd Gayatri-JMC Joint Venture
Gayatri Housing Ventures Pvt. Ltd
Gayatri Hotels & Theaters Pvt. Ltd
GSR Sugars Pvt. Ltd
Gayatri Thermal Power Corporation Ltd
Amaramavathi Thermal Power Pvt. Ltd.
Gayatri Bio-Organics Limited
TSR Foundation
Dr.T.Subbarami Reddy (HUF)
88
(Rs.in Millions)
2009-10
(2008-09)
Sl Description Subsidiary
&Step-down
Subsidiaries
Associate
Companies
Entities in
which KMP
are
interested
Joint
ventures
KMP
1 Equity contribution … (1252.74)
… …
… (0.50)
… …
… …
2 Contract Receipts 1688.75 (1221.25)
2926.52 (1494.72)
713.29 (804.75)
2884.17 (2348.43)
… …
3 Contract payments 31.20 (42.05)
… …
40.91 (3.36)
… …
… …
4 Office Rent & Maintenance … …
… …
2.65 (1.78)
... …
... …
5 Other Payments 10.20 (4.25)
16.40 (19.14)
1.20 (1.20)
3.50 (12.93)
… …
6 Donations … …
… …
6.21 (13.36)
… …
… …
7 Remuneration Paid … …
… …
… …
… …
31.95 (15.60)
8 Contract Advances/ Other Adv. 311.07 (319.14)
254.86 (315.10)
125.56 (419.02)
549.87 (777.47)
… …
9 Corporate Guarantees 1600.00 (440.00)
… …
… (1229.60)
… …
… …
10 Closing balances – Debit 869.56 (109.99)
585.55 (257.22)
215.54 (361.18)
1816.77 (1834.63)
… …
11 Closing balances – Credit 263.91 (312.77)
96.74 (466.12)
193.94 (151.59)
1472.50 (1296.74)
4.59 (2.43)
* Figures in bracket are pertaining to previous year
11. Derivative Instruments
The year end foreign exposures that have not been hedged by a derivate instrument or otherwise are given below:
2009-10 2008-09 Particulars
JPY
Equivalent
(Millions)
INR
Equivalent
(Millions)
JPY
Equivalent
(Millions)
INR
Equivalent
(Millions)
Amount payable in foreign currency: Foreign Currency Convertible Bonds
2960.00
977.69
2960.00
977.69
JPY denotes Japanese Yen 12. Segment Reporting
The Company’s operations predominantly consist of construction / project activities. Hence there are no reportable segments under Accounting Standard – 17. During the year under report of the Company’s business has been carried out only in India. The conditions prevailing in India being uniform, no separate geographical disclosures are considered necessary.
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13. Leases
Disclosure under Accounting Standard – 19 “Leases”, issued by the Institute of chartered Accountants of India. The Company has taken various residential/godowns/offices premises (including Furniture and Fittings if any) under lease and license agreements for periods which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in Profit and Loss Account under Rent, Rates and Taxes. The Company has taken vehicles on financial lease from banks / Financial Institutions. The details of contractual payments under the agreement are as follows:
(Rs.in Millions)
Due Minimum Lease
Payments
Interest Principal
Less than one year 0.24 0.14 0.38
Between one and five years 3.60 1.28 4.88
More than five years -- -- --
14. Earning Per Share (EPS)
Basic Earning per share calculated as per Accounting Standard 20 on Earning per share. For the purpose of computing
Particulars 2009-10 2008-09
Profit After Tax for calculation of Basic EPS (Rs.in Millions) 490.90 413.16
Profit After Tax for calculation of Diluted EPS (Rs.in Millions) 490.90 413.16
Weighted average No. of equity shares as denominator for calculating Basic EPS. (No. in Millions)
10.67 10.11
Add : Adjustment for FCCB
Weighted average No. of equity shares as denominator for calculating Diluted EPS. (No. in Millions)
13.25 12.69
Basic EPS (Rs.) 46.02 40.89
Diluted EPS (Rs.) 36.67 32.56
15. Consolidated Financial Statements
As per the listing agreement entered with the Stock Exchanges, accounting standards notified by Government and provisions of Sec 212 of the Companies Act, 1956, Audited financial statements of the Subsidiaries, Associate Companies and Joint ventures for the year 2009-10 were consolidated and annexed.
The Company has applied for approval from Central Government under section 212(8) of the Companies Act, 1956 for not attaching the annual reports of subsidiary companies.
The Company’s interest in Subsidiaries, Associates and Jointly Controlled Entities as on March 31, 2010 and its proportionate share in the Assets, Liabilities, Income and Expenditure of the entities consolidated as on that date are given below:
S.No Name of the Entity Nature of the
entity
% of
Holding
Country of
Incorporation
1 Gayatri Energy Ventures Limited Wholly owned Subsidiary
100 India
2 Gayatri Infraventures Limited Subsidiary 70.59 India
3 IJM Gayatri Joint Ventures Joint venture 40 India
4 Jaiprakash Gayatri Joint Venture Joint venture 49 India
5 Gayatri ECI Joint Venture Joint venture 50 India
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S.No Name of the Entity Nature of the
entity
% of
Holding
Country of
Incorporation
6 Gayatri – Ratna Joint Venture Joint venture 80 India
7 Gayatri – RCC Joint Venture Joint venture 60 India
8 Gayatri – GDC Joint Venture Joint Venture 70 India
9 Gayatri – BCBPPL Joint Venture Joint Venture 60 India
10 Gayatri – RNS Joint Venture Joint Venture 60 India
11 Gayatri- JMC Joint Venture Joint Venture 75 India
16. Managerial Remuneration: Managerial Remuneration paid during the year: (Rs.in Millions)
Particulars
2009-10 2008-09
Salaries 26.40 15.60
Perquisites 0.75 Nil
Commission 4.80 Nil
Sub-total : 31.95 15.60
Sitting Fee -- 0.17
Contribution to Provident Fund & Superannuation Fund
-- --
Total : 31.95 15.77
Computation of Net Profit in accordance with Section 349 of the Companies Act, 1956
(Rs.in Millions)
Particulars 2009-10 2008-09
Profit Before Taxation 810.02 634.35
Add : Managerial Remuneration 31.95 15.60
Provisional for Doubtful Debts / Advances -
Loss on Sale of Fixed Assets / Written off Assets 0.08
Sub-Total : 842.05 649.95
Less : Profit on Sales of Shares
Profit on Sale of Assets ---
Profit on Sale of Land
Adjustment / Bad debts written off against the provision created earlier
Profit for the year as per Section 349 842.05 649.95
Maximum Commission / Remuneration payable under
Section 309 @ 10%
84.21 65.00
Actual Remuneration taken (Incl. Perks) 31.95 15.60
17. Dues to Micro and Small Enterprises:
On the basis of information available with the Company, there are no dues outstanding for more than 30 days to Small Scale Industrial Undertaking (SSI). The Company has not received any intimation from “suppliers” regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid/payable as required under the said Act have not been given.
18. The unpaid dividend includes Rs. 0.15 Millions (Previous years – Rs. 0.09 Millions) to be transferred to the Investor Education & Protection Fund.
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19. Information as per para 4B of part II of Sch. VI of the Companies Act – Remuneration to Auditors. (Rs. in Millions)
S.No. Particulars 2009-10 2008-09
1. Statutory Audit 1.50 1.00
2. Tax Audit 0.40 0.20
3. Other Services 0.60 0.30
Total 2.50 1.50
Note : Fee mentioned above does not include service tax and education cess thereon.
20. Disclosure pertaining to Accounting Standard -29 is as below. (Rs.in Millions)
Account Head Opening
Balance Provisions made
During the year Paid/Utilized during
the year Closing
Balance Gratuity 9.59 5.21 0.15 14.64
Leave Encashment 0.99 1.83 0.11 2.71
Taxation 62.58 284.59 320.25 26.92
Proposed Dividend & Dividend Tax
47.29 64.96 79.77 32.48
21. Disclosure pursuant to Accounting Standard – 7 “Construction Contracts”
(Rs.in Millions)
Sl No Particulars 2009-10 2008-09
1. Contract revenue recognized for the year ended 12,524.86 10,045.95
2. Contract cost incurred and recognized profits, less losses 11,909.73 9,629.94
3. Amount of advances received till date, net of recoveries 2,147.00 1,895.70
4. Gross amount due from customers for contract works 3,149.07 2,257.48
22. Since the principal business of the Company is construction activities, quantitative data as required by Part
II Para ii, 4c, 4d of Schedule VI to the Companies Act, 1956 is not furnished. 23. Information as per para 4D of part II of Sch. VI of the Companies Act i) CIF value of Imports (Rs. in Millions)
S.No. Particulars 2009-10 2008-09
1. Purchase of Capital Goods 14.16 60.19
ii) Expenditure / (Income) in Foreign Currency: (Rs. in Millions)
S.No. Particulars 2009-10 2008-09
1. Traveling Expenses 0.23 1.48
2. FCCB Expenses 0.21 0.22
3. Fee for Singapore Stock Exchange 0.02 0.04
iii) Details of major raw materials consumption (Rs.in Millions)
2009-10 2008-09 Particulars
Value % Value %
Indigenous 3,258.68 100 2,267.75 100
Imported --- -- -- --
Total : 3,258.68 100 2,267.75 100
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24. Figures of previous year have been regrouped/ rearranged/ reclassified wherever necessary to confirm to the current year presentation.
25. Schedule 1 to 18 form an integral part of accounts Schedules referred to above form an integral part of the accounts
93
ANNEXURE – V
Accounting Ratios
Rs.in Millions
Particulars Year Ended
March 31, 2010
Net Profit after Tax and prior period adjustments
490.90
Net Worth (Excluding Revaluation Reserves) 2,804.11
Earning Per Shares (Rs.) (Basic)
Basic 46.02
Diluted 36.67
Net Asset Value Per Share (Rs.)
Basic 262.89
Diluted 209.47
Return on Net Worth (%) 17.51%
No. of shares at the end of Year 1,11,04,761
Weighted Average Number of Ordinary Shares for Basic Earning per Share (in Nos) 1,06,66,405
Weighted Average Number of Ordinary Shares for Diluted Earning per Share (in Nos) 1,33,86,821
ANNEXURE – VI
Capitalisation Statement
Amount (Rs. in Millions)
Particulars Pre Issue As Adjusted
As at March 31,
2010
Post Issue*
Debt:
Short Term Debt 3,924.57 [●]
Long Term Debt 2,161.09 [●]
Total Debt: 6,085.66 [●]
Shareholders Fund:
Share Capital 111.05 [●]
Equity Warrants 35.63 [●]
Reserve 2657.43 [●]
Total Shareholders Fund 2804.11 [●]
Total Capitalisation 8889.77 [●]
Long Term Debt/ Equity Ratio 0.77 [●]
Total Debt/ Equity Ratio 2.17 [●]
* Will be updated in the Letter of Offer. Note: 1) Working capital loans and term loans payable within one year are considered as short term loans. 2) The term loans payable after one year is considered as long term loans.
94
3) Changes in Capital from 31-03-2010 till date of report Post March 31, 2010, the share capital of our company has increased to Rs 119.89 million comprising of 11,989,000 equity shares of Rs 10 each in the following manner:
� On May 6, 2010, Company has allotted 57,343 Equity shares against the conversion of 5 FCCB’S there by the paid up Equity Share capital of the company increased from Rs. 111.05 Millions to Rs. 111.62 Millions.
� On May 28, 2010 Company has allotted 229,375 Equity shares against the conversion of 20 FCCB’S there by the paid up capital of the company increased from Rs.111.62 Millions to Rs.113.91 Millions.
� On October 29, 2010 Company has allotted 597,521 equity shares against the conversion of 597,521
warrants, upon the receipt of Rs. 63.92 Millions being the balance amount i.e. 75% received upon conversion. Thereby the paid-up capital of the company has been increased from Rs. 113.91 Millions to Rs. 119.89 Millions.
� The outstanding 402,479 warrants have lapsed on March 13, 2011, and the sum received from the promoters towards 25% at the time of allotment i.e Rs.14.34 Millions has been forfeited by the company on March 14, 2011.
95
AUDITORS REPORT
Auditor’s report for the audited consolidated financial statements of Gayatri Projects Limited as at 31st
March 2010 and for the financial year ended 31st March 2010.
The Board of Directors, Gayatri Projects Limited
B1, 6-3-1090, TSR Towers,
Rajbhavan Road, Somajiguda,
Hyderabad – 500 082.
Dear Sirs,
1. We are engaged to report on the consolidated financial statements of Gayatri Projects Limited (‘the
Company’), for the year ended March 31, 2010 annexed to this report in Annexure I to IV for the purpose of inclusion in this Draft Letter of Offer and Letter of Offer (the ‘Offering Documents’) prepared by the Company in connection with the Rights Issue (‘Rights Issue’) of its equity shares, in accordance with the provisions of the Securities and Exchange Board of India, (Issue of Capital and Disclosure Requirements ) Regulations, 2009 as amended, till date (“SEBI Regulations”), Our responsibility is to report on such statements based on our procedures.
2. We have examined the attached consolidated financial information of Gayatri Projects Limited , as
approved by the Board of Directors of the Company prepared in terms of the requirements of :
1. Paragraph B (1) of Part II of Schedule II of the Companies Act, 1956 (“the Act”);
2. The Guidance Note on Reports in Company Prospectus and Guidance Note on Audit Reports/
Certificates on Financial Information in Offer Documents issued by the Institute of Chartered Accountants of India and terms of reference received from the Company in connection with the proposed issue of Equity Shares of the Company on Right basis, (“Right Issue”).
3. The terms of reference dated January 24, 2011 received from the Company, requesting us to carry out the assignment, in connection with the Offering Documents being issued by the Company for its proposed Rights Issue of equity shares under the SEBI Regulations
3. We report that the figures disclosed in the ‘Consolidated Financial Statements’ have been extracted by the
management from the audited financial statements for the year ended March 31, 2010, audited by us and in respect of which we have issued audit opinion dated May 28, 2010
4. For the purpose of this report we have not performed any additional audit procedures on the above referred
audited financial statements of the Company for the year ended March 31, 2010, including evaluating the possible impact, if any, of subsequent events on the earlier audited financial statements of the Company.
5. The Consolidated Financial Statements annexed to this report are extracted from the audited financial
statements for the year ended March 31, 2010. These Consolidated Financial Statements have been prepared using the same set of accounting policies used for preparing the audited financial statements as at March 31, 2010. The accounting policies and notes to accounts have been reproduced as they were disclosed in the relevant year.
6. We have not audited any Consolidated Financial Statement of the Company as of any date or for any period
subsequent to March 31, 2010. Accordingly, we express no opinion on the financial position, results of operations or cash flows of the Company as of any date or for any period subsequent to March 31, 2010. However, we have conducted a limited review of the Balance Sheet of the Company as at September 30, 2010 and the Profit and Loss for the period ended on that date and the accompanying schedules.
96
7. At the Company’s request, we have also examined the following information proposed to be included in the
Offering Documents prepared by the management and annexed to this report: (i) Accounting Ratios enclosed as Annexure V and (ii) Capitalisation Statement enclosed as Annexure VI
8. In our opinion, the financial information contained in Annexure I to IV of this report read along with the
Significant Accounting Policies & Notes to Accounts as considered appropriate have been prepared in accordance with the provisions Paragraph B (1) of Part II of Schedule II of the Companies Act, 1956 (“the Act”) and Schedule VIII Part E (5) (X) and other applicable provisions of the SEBI Regulations.
9. This report should not be in any way construed as a re-issuance or re-dating of any of the previous audit
report issued by us nor should this report be construed as a new opinion on any of the financial statement referred to herein.
10. This report is intended solely for your information and for inclusion in the Offering Documents in
connection with the proposed Issue by the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.
Yours faithfully, For C.B.Mouli & Associates Chartered Accountants Firm Reg. No. 002140S Mani Oommen Partner Membership No.: 24046 Place: Hyderabad Date : March 19, 2011.
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ANNEXURE – I
CONSOLIDATED BALANCE SHEET AS AT 31
st MARCH , 2010
Rs. in Millions
AS AT AS AT
Particulars Schedule
31st MARCH 2010 31st MARCH 2009
SOURCE OF FUNDS Share Holders Funds Share Capital 1 111.05 101.05 Equity Warrants / Share Application Money 39.20 - Reserves and Surplus 2 3,639.23 3,789.48 2,816.33 2,917.38
Loan Funds Secured Loans 3 10,495.04 9,359.67 Unsecured Loans 4 6,688.93 17,183.97 2,008.16 11,367.83
Minority Interest Liability 1,344.93 943.88
Deferred Tax Liability 162.73 193.34
TOTAL 22,481.11 15,422.43
APPLICATION OF FUNDS Fixed Assets 5 Gross Block 4,378.73 3,013.34
Less: Depreciation 1,343.91 1,174.71
Net Block 3,034.82 1,838.63
Capital Work in Progress 10,761.61 7,216.03
Investments 6 432.31 419.26 Current Assets, Loans and Advances
Inventories 7 693.33 604.35
Sundry Debtors 8 2,971.01 2,054.43
Cash and Bank Balances 9 3,130.76 2,391.13
Loans and Advances 10 6,351.20 4,548.59
13,146.30 9,598.50
Less: Current Liabilities and Provisions 11
Liabilities 4,813.59 3,518.19
Provisions 80.94 132.45
4,894.53 3,650.64
Net Current Assets 8,251.77 5,947.86
Miscellaneous Expenditure 0.60 0.65
(to the extent not written off or adjusted)
TOTAL 22,481.11 15,422.43
Accounting Policies and Notes on Accounts 18
Schedules referred to above form an integral part of the accounts
98
ANNEXURE – II CONSOLIDATED PROFIT & LOSS ACCOUNT FOR YEAR ENDED 31
st MARCH, 2010
Rs. in Millions
YEAR ENDED YEAR ENDED
Particulars Schedule
31st MARCH 2010 31st MARCH 2009
INCOME
Gross Contract Receipts 12,745.06 10,272.06
Other Income 12 64.66 78.79
TOTAL 12,809.72 10,350.85
EXPENDITURE
Work Expenditure 13 10,738.55 8,858.62
(Increase) / Decrease in WIP 14 (18.89) (88.18)
Employee’s Remuneration & Benefits 15 298.94 228.21
Administrative Expenses 16 227.77 190.71
Interest and Financial Charges 17 555.40 394.25
Depreciation 5 200.58 209.20
TOTAL 12,002.35 97,92.81
Profit before Tax 807.37 558.04
Provision for Taxation - Current Tax 284.69 218.68
- Fringe Benefit Tax - 2.49
- Deferred Tax (30.62) 254.07 8.60 229.77
Profit after Tax and before prior period adjustments 553.30 328.27
Minority Interest (1.33) 4.47
554.63 323.80
Less : Prior Period Adjustments 42.84 3.03
Profit after prior period adjustments 511.79 320.77
Balance in Profit and Loss account brought forward 895.10 659.47
Balance available for appropriation 1,406.89 980.24
APPROPRIATIONS :
Interim Dividend 27.76 --
Final Dividend 27.76 40.42
Dividend tax on Dividend 9.44 6.87
Transfer to General Reserve 70.00 134.96 60.00 107.29
Balance carried to Balance sheet 1,271.93 872.95
Earning per share of Face value of Rs. 10/- each
Basic (Rs.) 47.98 31.74
Diluted (Rs.) 38.23 25.28
Accounting Policies and Notes on Accounts 18
Schedules referred to above form an integral part of the accounts
99
ANNEXURE – III
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH
2010 (Rs. in Millions)
Year Ended Year Ended
31st March 2010 31st March 2009
A. CASH FLOW FROM OPERATING ACTIVITIES:
Net Profit before tax and Extra Ordinary items 807.37 558.04 Adjustments for: Depreciation 200.57 209.20 Profit on sale of fixed assets 0.08 - Interest 555.40 394.25
Operating Profit before Working Capital changes 1563.42 1161.49
Adjustments for: Trade and other receivables (2719.19) (2607.32) Change in Inventories (88.97) (135.63) Trade payables 1211.41 862.81 Miscellaneous Expenditure 0.05 (0.65)
Cash generated from operations (33.28) (719.30)
Direct taxes paid (284.69) (221.17)
Cash flow before prior period adjustments (317.97) (940.47)
Effect of consideration of new subsidiaries/associates/JV* 170.76 731.41 Prior period adjustments (42.84) (3.03)
Net cash flow from operating activities after prior period adj. (190.05) (212.09)
B. CASH FLOW FROM INVESTING ACTIVITIES: Purchases of Fixed Assets (1379.66) (208.48) Capital WIP (3545.57) (4895.12) Sale of Fixed Assets (18.03) - Investments (13.05) (42.02)
Net Cash used in Investing Activities (4956.31) (5145.62)
C. CASH FLOW FROM FINANCING ACTIVITIES: Interest paid (555.40) (394.24) Minority Interest 401.05 1119.14 Proceeds from preferential allotment 185.00 - Proceeds from Share Warrants 39.20 Proceeds from long term borrowing 4458.51 5426.08 Proceeds from Short term borrowing 1357.62 150.00
Net Cash from Financing activities 5885.98 6300.98
Net increase in Cash and Cash Equivalents (A+B+C) 739.62 943.27
Cash & Cash Equivalents as at 1st April (Opening Balance) 2391.14 1447.87
Cash & Cash Equivalents as at 31st March (Closing Balance) 3130.76 2391.14
*The effect of consolidation of new subsidiaries, and associates and JVs which were exempted from consolidation in the comparable last year are considered in the current year for consolidation.
Note: 1 Cash and Cash Equivalents consist of Cash on hand and balances with Banks that includes Margin
Money Deposits for Bank Guarantees of Rs.859.48 Millions (Previous Year Rs.1419.16 Millions) 2 The Cash flow statement is prepared in accordance with the indirect method stated in Accounting
Standard 3 issued by ICAI on Cash flow statements and presents Cash flows by Operating, Investing and Financing activities. 3 Figures in brackets represent cash outflows. 4 Notes on Accounts stated in Schedule 18 form an integral part of the Cash flow statement.
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ANNEXURE – IV
SCHEDULES FORMING PART OF CONSOLIDATED BALANCE SHEET
Rs. in Millions
AS AT AS AT
Particulars
31st MARCH 2010 31st MARCH 2009
SCHEDULE NO : 1 :
SHARE CAPITAL
Authorised Share Capital :
150,00,000 Equity Shares of Rs.10/- each 150.00 150.00
(Year ended March 31, 2009 - 150,00,000)
150.00 150.00
Issued, Subscribed and paid-up capital :
101,04,761 Equity Shares of Rs.10/- each, fully paid-up 111.05 101.05
(Year ended March 31, 2009 - 101,04,761)
a) 50,00,000 shares of Rs.10/- each fully paid
b) 40,00,000 shares of Rs.10/- each fully paid bonus shares in the ratio of 5:4 were allotted by capitalization of General Reserve
c) 10,00,000 shares of Rs.10/- each fully paid shares were allotted to public at a premium of Rs. 285/- through Initial Public Offer.
d) 1,04,761 shares of Rs.10/- each fully paid shares were allotted by way of conversion of FCCB at a premium of Rs.368.3453
e) 10,00,000 shares of Rs.10/- each fully paid shares were allotted at premium of Rs. 175/- through Preferential allotment
111.05 101.05
SCHEDULE NO : 2
RESERVES AND SURPLUS
Securities Premium Account
At the Commencement of the Year 916.62 415.45
Add : Additions for the year on account - -
of Preferential Allotment 239.85 537.08
Less : Shares Issue Expenses - 1,156.47 35.91 916.62
Capital Reserve (Capital Grant) 530.83 416.76
General Reserve
At the Commencement of the Year 610.00 550.00
Add : Transfer from Profit and Loss A/c. 70.00 60.00
680.00 610.00
Profit and Loss Account Balance 1,271.93 872.95
3,639.23 2,816.33
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Rs. in Millions
AS AT AS AT
Particulars
31st MARCH 2010 31st MARCH 2009
SCHEDULE NO : 3
SECURED LOANS
I] From Banks
A)Term Loans
i) Equipment Loans 276.55 365.10
ii) Vehicle Loans 3.77 5.85
iii) Term Loans 1,654.99 -
iv) Long Term - Project Finance 5,894.69 6,861.85
B] Working Capital Loan Account 2,594.43 2,006.34
II] From Others
Equipment And Vehicle Loans 70.61 120.53
10,495.04 9,359.67
SCHEDULE NO : 4
UNSECURED LOANS
Short Term Loans from Banks 1,507.62 150.00
[Personal Guarantees of the Promoter Directors]
Foreign Currency Convertible Bonds (FCCB) 977.69 977.69
Other (Partners Capital Account) 4,203.62 880.47
6,688.93 2,008.16
SCHEDULE NO : 5
FIXED ASSETS
(Rs. In Millions)
GROSS BLOCK DEPRECIATION NET BLOCK
PARTICULARS As at Additions Deletions As at Up to
For
the
On
deletion Up to As on As on
01/04/2009 During the year 31/03/2010 31/03/2009 year
for the
year 31/03/2010 31/03/2010 31/03/2009
Land 1.17 1,330.26 - 1,331.43 - - - - 1,331.43 1.17
Plant & Machinery
1,850.32 15.33 - 1,865.65 463.50 84.59 11.01 537.08 1,328.57 1,386.82
Vehicles 121.97 15.99 0.40 137.56 55.93 11.96 1.38 66.51 71.05 66.04
Earth Moving Machinery
990.36 15.99 - 1,006.35 634.24 103.06 18.27 719.03 287.32 356.12
Office Sheds 21.60 - 14.00 7.60 9.13 - 1.53 7.60 - 12.47
Furniture & Fixtures
28.05 2.09 - 30.14 11.96 1.90 0.17 13.69 16.45 16.09
Capital Work in Progress
- - - - - - - - - -
TOTAL : 3,013.47 1,379.66 14.40 4,378.73 1,174.76 201.51 32.36 1,343.91 3,034.82 1,838.71
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Rs. in Millions
AS AT AS AT
Particulars
31st MARCH 2010 31st MARCH 2009
SCHEDULE NO : 6
INVESTMENTS
Shares in Companies :
A) Trade Investments
Long Term-Unquoted Shares-Associate Companies
Equity shares of Rs.10/- each, fully paid at Rs.90/- premium in Western UP Tollway Ltd
361.82
268.02
Equity shares of Rs.10/- each, fully paid in Gayatri Thermal Power Corporation Ltd.
0.24
0.24
B) Other Investments
Long Term - Quoted Shares
Equity Shares of Rs.10/- each fully paid in Gayatri Sugars Ltd
29.31
29.31
Equity Shares of Rs.10/- each fully paid in
Syndicate Bank Ltd
0.09
0.09
Mutual Funds 40.85 121.60
432.31 419.26
Aggregate amount of Quoted Investments
29.36 Aggregate amount of Unquoted Investments 268.27
Aggregate Market value of Quoted Investments 10.87
103
Rs. in Millions
AS AT AS AT
Particulars
31st MARCH 2010 31st MARCH 2009
SCHEDULE NO : 7
INVENTORIES
- Construction Materials, stocks and spares at cost 453.12 383.03
- Closing Work-in-progress 240.21 221.32
(As certified by Management) 693.33 604.35
SCHEDULE NO : 8
SUNDRY DEBTORS (Un-secured)
Over Six Months Considered Good 186.97 200.27
Others, Considered Good 2,784.04 1,854.16
2,971.01 2,054.43
SCHEDULE NO : 9
CASH AND BANK BALANCES
Cash on Hand 14.67 9.69
Bank Balances:
In Current Accounts: With Scheduled Banks 2,234.62 948.29
In Deposit Accounts
With Scheduled Banks
Margin Money (Bank Guarantees/LCs) 453.37 322.73
Fixed Deposits 406.11 1,096.42
Interest Accrued on Deposits 21.99 14.00
3,130.76 2,391.13
SCHEDULE NO : 10
LOANS AND ADVANCES (Unsecured considered good)
Advances to Associates 601.36 1,675.22
Advances to Suppliers, Sub-contractors and Others 3,320.80 1,676.43
Advances receivable in cash or kind or value to be received 13.82 14.89
Advance towards Share Application Money 15.52 12.16
Pre-operative/Prepaid Expenses 2,325.15 1,104.35
Deposits with Govt. Agencies and Others 74.55 65.54
6,351.20 4,548.59
SCHEDULE NO : 11
CURRENT LIABILITIES AND PROVISIONS
a) Current Liabilities
Sundry Creditors 2,323.43 1,528.29
Advances received from Contractee – Clients 2,376.45 1,886.69
Other liabilities 113.71 103.21
4,813.59 3,518.19
b) Provisions
Taxation 31.11 74.59
Proposed Dividend 27.76 40.42
Dividend Tax 4.72 6.87
Employee Benefits 17.35 10.57
80.94 132.45
4,894.53 3,650.64
104
Rs. in Millions
YEAR ENDED YEAR ENDED
PARTICULARS 31st MARCH 2010 31st MARCH 2009
SCHEDULE NO : 12
OTHER INCOME
Interest Income 40.24 42.14
Commission Income - 12.93
Miscellaneous Income 24.42 23.72
64.66 78.79
SCHEDULE NO : 13
WORK EXPENDITURE
Steel 590.98 761.10
Cement 313.38 258.76
Bitumen 1,181.52 668.80
Metal 475.46 229.49
Sand & Gravel 162.90 123.92
HSD Oils and Lubricants 697.55 393.50
Stores and Consumables 33.87 22.03
Other Materials 98.91 126.91
Departmental Recoveries 123.83 121.35
Work executed by sub contractors 3,006.96 3,551.33
Earth Work 1,298.77 1,068.92
Concrete Work 856.18 392.90
Transport Charges 184.33 136.61
Hire Charges 151.95 40.06
Road work 607.21 556.99
Repairs and Maintenance 201.38 109.54
Works Contract Tax / VAT 220.20 121.17
Royalties, Seigniorage and Cess 195.66 78.85
Insurance 23.47 12.50
Other Work Expenditure 314.04 83.89
10,738.55 8,858.62
SCHEDULE NO : 14
INCREASE/DECREASE IN W.I.P.
Opening Work in Progress 221.31 133.13
Less : Closing Work in Progress 240.20 221.31
(18.89) (88.18)
105
Rs. in Millions
PARTICULARS YEAR ENDED YEAR ENDED
31st MARCH 2010 31st MARCH 2009
SCHEDULE NO : 15
EMPLOYEE'S REMUNERATION & BENEFITS
Salaries 228.05 183.01
Contribution to Provident Fund 3.15 1.88
Other Employee Benefits 35.79 27.72
Directors' Remuneration & Perquisites 31.95 15.60
298.94 228.21
SCHEDULE NO : 16
ADMINISTRATIVE EXPENSES
Printing and Stationery 7.94 5.60
Telephones 9.64 8.39
Traveling and Conveyance 29.61 28.47
Advertisement Expenses 5.95 5.06
General Expenses 10.07 8.63
Consultancy Fee 52.48 22.29
Donations 24.81 20.21
Rent 27.74 19.29
Power and fuel 9.03 6.28
Rates and Taxes 26.19 29.07
Tender Expenses 5.58 13.76
Insurance 1.68 2.36
Auditors Remuneration 2.86 1.74
Other Administration Expenses 14.19 19.56
227.77 190.71
SCHEDULE NO : 17
INTEREST AND FINANCE
CHARGES
a) Interest on:
Working Capital Loans 240.32 216.90
Term Loans 92.48 71.49
Mobilisation Advance 28.01 24.87
Equipment Loans 24.45 25.16
Vehicle Loans 4.50 6.25
Others 26.11 415.87 3.33 348.00
b) Financial Charges
Commission on - Bank Guarantees 95.91 28.05
- Letters of Credit 5.13 101.04 0.85 28.90
c) Bank Charges 38.49 17.35
555.40 394.25
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SCHEDULE NO 18:
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED FINANCIAL
ACCOUNTS
A SIGNIFICANT ACCOUNTING POLICIES
1. Basis for preparation of financial statements
The financial statements have been prepared to comply in all respects with accounting standards notified under Companies (Accounting Standards) Rules 2006 and the relevant provisions of the Companies act, 1956. The accounts are prepared under historical cost convention and on the going concern basis, with revenue recognized, expenses accounted on their accrual and in accordance with applicable notified Accounting Standards and the accounting policies have been consistently applied by the Company.
2. Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amounts of income and expenses during the year of account. Although these estimates are based upon management best knowledge of current events and actions, actual results could differ from the estimates. Difference between the actual results and estimates are recognized in the period in which the results are known /materialized.
3. Revenue recognition
i) Income is recognized on fixed price construction contracts in accordance with the percentage completion
basis, which necessarily involve technical estimates of the percentage of completion, and costs to completion, of each contract / activity, on the basis of which profits and losses are accounted. The estimates made by the Company being technical in nature have been relied upon by the auditors.
ii) The stage of completion of contracts is measured by reference to the proportion that contract costs
incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract.
iii) An expected loss on construction contract is recognized as an expense immediately when it is certain
that the total contract costs will exceed the total contract revenue.
iv) Price escalation and other claims and/or variation in the contract work are included in contract revenue only when: a) Negotiations have reached at an advanced stage such that it is probable that customer will accept
the claim; and b) The amount that is probable will be accepted by the customer can be measured reliably.
v) Incentive payments, as per customer-specified performance standards, are included in contract revenue
only when: a) The contract is sufficiently advanced that it is probable that the specified performance standards will
be met; and b) The amount of the incentive payment can be measured reliably.
4. Joint Venture Projects
a) In respect of Joint Venture Contracts in the nature of jointly controlled operations, the shares of profit or loss are accounted as and when dividend / share of profit or loss are declared by the entities.
b) In respect of Joint Venture Contracts wholly executed by the company pursuant to a Joint Venture Contract the assets, liabilities, income and expenditure are recognized under respective heads in
107
the financial statements.
c) Share of turnover attributable to the Company in respect of contracts executed by the other joint venture partners pursuant to Joint Venture Agreement, is accounted under Turnover in these financial statements.
5. Inventories and work in progress
Raw Materials, construction materials and stores & spares are valued at weighted average cost. Expenditure incurred during the work in progress of contracts up to the stage of completion is carried forward as work-in-progress. Cost includes direct material, work expenditure, labour cost and appropriate overheads.
6. Fixed assets and Depreciation
(i) Fixed Assets are stated at cost of acquisition, less accumulated depreciation thereon. Expenditure
which are capital in nature are capitalized at cost, which comprises of purchase price (net of rebates and discounts), import duties, levies, financing costs and all other expenditure directly attributable to bringing the asset to its working condition for its intended use. Capital Work in Progress comprises advances paid to acquire fixed assets and the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.
(ii) Depreciation is provided on straight line method at the rates prescribed in Schedule XIV of the Companies Act, 1956. Leasehold improvements are amortized over the period of lease.
7. Foreign Currency Transactions
Foreign exchange transactions are accounted at the rates prevailing on the date of transactions. Monetary assets and current liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates. The difference in translation of monetary assets and liabilities and realized gains and losses on foreign exchange transactions are recognized in the Profit and Loss Account.
8. Investments
Investments are classified as long term and current investments. Long Term Investments are carried at cost less provision for permanent diminution, if any, in value of such investments. Current investments are carried at lower of cost and fair value. Dividend income is accounted when the right to receive dividend is established.
9. Employee Benefits
Liability for employee benefits, both short and long term, for present and past service which are due as per the terms of employment are recorded in accordance with Accounting Standard (AS) 15 “Employee Benefits” issued by the Companies (Accounting Standard) Rules, 2006. i) Gratuity
In accordance with the Payment of Gratuity Act, 1972 the company provides for Gratuity covering eligible employees. The liability on account of Gratuity is provided on the basis of valuation of the liability by an independent actuary as at the year end. ii) Provident Fund
In accordance with applicable local laws, eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan to which both the employee and employer contributes monthly at a determined rate (currently up to 12% of an employee’s salary). These contributions are either made to the respective Regional Provident Fund Commissioner, or the Central Provident Fund under the State Pension Scheme, and are expenses as incurred. iii) Compensated Absences
Liability for compensated absence is treated as a long term liability and is provided on the basis of
108
valuation by an independent actuary as at the year end.
iv) Actuarial gains and losses are immediately recognized and taken to the profit and loss account and are not deferred.
10. Deferred Revenue Expenditure
Projects and Other amenities expenditure incurred upto March 31, 2010, the benefit of which is spread over more than one year is grouped under Prepaid Expenditure and is amortized over the period in which benefits would be derived.
11. Borrowing Costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such asset. A qualifying asset is one that requires substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
12. Leases
Assets taken on finance lease are capitalized at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost, so as to obtain a constant periodic rate of interest on outstanding liability for each period.
Operating leases in respect of office & other equipment, house for employees, Office buildings are cancelable / renewable by mutual consent on agreed terms. Lease payments under an operating lease are recognized as an expense in the Profit and Loss Account.
13. Earnings per Share (EPS)
In arriving at the EPS, the Company’s net profit after tax, computed in terms of the Indian GAAP, is divided by the weighted average number of equity shares outstanding on the last day of the reporting period. The EPS thus arrived at is known as ‘Basic EPS’. To arrive at the diluted EPS the net profit after tax, referred above, is divided by the weighted average number of equity shares, as computed above and the weighted average number of equity share that could have been issued on conversion of shares having potential dilutive effect subject to the terms of issue of those potential shares. The date/s of issue of such potential shares determine the amount of the weighted average number potential equity shares.
14. Taxation
i) Current Tax
Provision for Current tax is made based on the liability computed in accordance with the relevant tax rates and provisions of Income Tax Act, 1961.
ii) Deferred Taxes
Deferred Tax is accounted for by computing the tax effect of timing differences which arise during the year and reverse in subsequent periods. Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized.
15. Impairment of Fixed Assets
The carrying amount of assets, other than inventories is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the assets is estimated. The recoverable amount is the greater of the asset’s net selling price and value in use which is determined based on the estimated future cash flow discounted to their present values. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds
109
its recoverable amount. Impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
16. Provisions for Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.
Contingent liabilities are present obligations arising from a past event, when it is not probable / probability is remote that an outflow of resources will be required to settle the obligation and they are not recognized but are disclosed in the notes.
Contingent Assets are neither recognized nor disclosed in the financial statements. Provisions for Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.
B. NOTES TO ACCOUNTS
1. All amounts in the financial statements are presented in Rupees in Millions except per share data and as otherwise stated. Figures in brackets represent corresponding previous year figures in respect of Profit & Loss items and in respect of Balance Sheet items as on the Balance Sheet date of the previous year. Figures for the previous year have been regrouped / rearranged wherever considered necessary to conform to the figures presented in the current year.
2. Criteria for preparation of consolidated financial statements:
Gayatri Projects Limited the company has presented consolidated Financial statements by consolidating its own financial statements with those of its subsidiaries and joint ventures in accordance with Accounting Standard- 21(Consolidated Financial statements), Accounting Standard-23 (Accounting for Investments in Associates in consolidated Financial statements) and Accounting Standard – 27 (Financial reporting of Interests in joint ventures) notified in section 211 (3C) of the Companies Act, 1956.
The Financial statements of each of those Subsidiaries and Joint Ventures are prepared in accordance with the generally accepted accounting principles & accounting policies of Parent Company. The effects of inter-company transactions between consolidated companies/entities are eliminated in consolidation.
3. Disclosure of particulars regarding subsidiaries, Joint ventures and Associates.
Subsidiaries, Joint Ventures and Associates Included in Consolidated Financial statements in terms of AS-21, AS-23 and AS-27 are as follows
S.No Name of the Entity Nature of the
Entity
% of
Holding
Country of
Incorporation
1 Gayatri Energy Ventures Private Limited Wholly owned Subsidiary
100 India
2 Gayatri Infra Ventures Limited Subsidiary 70.59 India
3 IJM Gayatri Joint Venture Joint venture 40 India
4 Jaiprakash Gayatri Joint Venture Joint venture 49 India
5 Gayatri ECI Joint Venture Joint venture 50 India
6 Simplex Gayatri Consortium Joint venture 30 India
7 Gayatri – RCC Joint Venture Joint venture 60 India
8 Gayatri – GDC Joint Venture Joint Venture 70 India
9 Gayatri – BCBPPL Joint Venture Joint Venture 60 India
110
S.No Name of the Entity Nature of the
Entity
% of
Holding
Country of
Incorporation
10 Gayatri – RNS Joint Venture Joint Venture 60 India
11 Gayatri - JMC Joint Venture Joint Venture 75 India
12 Gayatri – Ratna Joint Venture Joint Venture 80 India
4. Principles of Consolidation
The Consolidated Financial statements relate to Gayatri Projects Limited, and its subsidiary Companies. The Consolidated Financial Statements have been prepared on the following basis.
4.1 The Financial Statements of the Company and its subsidiary companies have been combined on a line by
line basis by adding the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealized profits or losses as per Accounting Standard - 21 “Consolidated Financial Statements” issued by Institute of Chartered Accountants of India (‘AS-21’).
4.2 The excess of the Company’s cost of investment over its share of net assets in the associate on the date of
acquisition of investment is accounted for as goodwill. The excess of the Company’s share of net assets in the associate over the cost of its investment is accounted for as capital reserve.
4.3 Goodwill/Capital Reserve is included /adjusted in the carrying amount of the investment. 4.4 Significant accounting policies and notes to these consolidated financial statements are intended to serve as
a means of informative disclosure and a guide to better understanding the consolidated position of the Company. Recognizing this purpose, the Company has disclosed only such policies and notes from the individual financial statements, which fairly presents the needed disclosure. Further, in the opinion of the management, the accounting policies and notes could be better viewed when referred from the individual financial statements.
5. Contingent Liabilities not provided for
(Rs. in Millions)
Sl. Particulars 2009-10 2008-09
1 Guarantees given by Banks towards performance & contractual commitments a) Issued on behalf of Company b) Guarantees given to Related Parties c) Letter of Credit
4450.97 823.25
--
4124.88 3.14
---
2 Claims against the Company not acknowledged as debt 15.57 14.52
3 Corporate guarantees given to/taken from Group companies 3356.60 1669.60
4 Disputed Liability of Sales Tax, Service Tax and Seigniorage Charges
280.76
361.04
6. Accounting for taxes on Income
As per Accounting Standard 22 on Accounting for Taxes on Income, the provision for Deferred Tax Liability has been calculated and accounted. Details of Deferred Tax Asset provided for the year is given as under
(Rs. in Millions)
Particulars 2009-10 2008-09
Deferred Tax Liability as at beginning of the year 193.35 184.75
Deferred Tax Liability at the end of the year 162.73 193.35
Deferred Tax Asset for the year 30.62 8.60
111
7. Earning Per Share (EPS)
Basic Earning per share calculated as per Accounting Standard 20 on Earning per share. For the purpose of computing
(Rs. in Millions)
Particulars 2009-10 2008-09
Profit After Tax for calculation of Basic EPS (Rs.in Millions) 511.79 320.77
Profit After Tax for calculation of Diluted EPS (Rs.in Millions) 511.79 320.77
Weighted average No. of equity shares as denominator for calculating Basic EPS. (No. in Millions)
10.67 10.10
Add : Adjustment for FCCB
Weighted average No. of equity shares as denominator for calculating Diluted EPS. (No. in Millions)
13.39 12.69
Basic EPS (Rs.) 47.98 31.74
Diluted EPS (Rs.) 38.23 25.28
8. Related party transactions as per Accounting Standard 18 Details of related parties:
Entities in which KMP are interested Key Management Personnel Deep Corporation Pvt. Ltd Mr. T.V.Sandeep Kumar Reddy Indira Constructions Pvt. Ltd Mr. J.Brij Mohan Reddy Gayatri Tissue & Papers Ltd Mrs.T.Indira Reddy Gayatri Sugars Ltd
Gayatri Hi-Tech Hotels Ltd Joint Ventures
Gayatri Housing Ventures Pvt. Ltd Simplex Gayatri Consortium Gayatri Hotels & Theaters Pvt. Ltd MEIL-GAYATRI-SVS-IIT consortium GSR Sugars Pvt.Ltd Gayatri Thermal Power Corporation Ltd Amaramavathi Thermal Power Pvt.Ltd. Gayatri Bio-Organics Limited TSR Foundation Dr.T.Subbarami Reddy (HUF)
(Rs. in Millions)
Sl Description 2009-10 2008-09
Joint
Ventures
Entities in
which
KMP are
interested
KMP Joint
Ventures
Entities in
which
KMP are
interested
KMP
1 Equity contribution … … … … 0.50 …
2 Contract Receipts 25.71 713.29 … … 804.75 …
3 Contract payments … 40.91 … … 3.36 …
4 Office Rent & Maintenance … 2.65 … … 1.78 …
5 Other Payments … 1.20 … … 1.20 …
6 Donations … 6.21 … … 13.36 …
7 Remuneration Paid … … 31.95 … … 15.60
8 Contract Advances/ Other Adv. 62.00 125.56 … … 419.02 …
9 Corporate Guarantees … … … 1229.60 …
112
Sl Description 2009-10 2008-09
Joint
Ventures
Entities in
which
KMP are
interested
KMP Joint
Ventures
Entities in
which
KMP are
interested
KMP
10 Closing balances – Debit 29.06 215.54 … 20.38 361.18 …
11 Closing balances – Credit 62.00 193.94 4.59 … 151.58 2.43
9. Segment Reporting
The Company’s operations predominantly consist of construction / project activities. Hence there are no reportable segments under Accounting Standard – 17. During the year under report of the Company’s business has been carried out only in India. The conditions prevailing in India being uniform, no separate geographical disclosures are considered necessary.
10. Managerial Remuneration:
Managerial Remuneration paid during the year: (Rs. in Millions)
Particulars
2009-10 2008-09
Salaries 26.40 15.60
Commission 4.80 Nil
Perquisites 0.75 Nil
Contribution to Provident Fund & Superannuation Fund
-- --
Total 31.95 15.60
11. Disclosure pursuant to Accounting Standard – 7 “Construction Contracts”
(Rs. in Millions)
Sl No Particulars 2009-10 2008-09
1. Contract revenue recognized for the year ended 12745.06 10272.06
2. Contract cost incurred and recognized profits, less losses 12132.70 9297.98
3. Amount of advances received till date, net of recoveries 2376.45 1886.69
4. Gross amount due from customers for contract works 2971.02 2054.43
12. Figures pertaining to the subsidiary companies and Joint ventures have been reclassified wherever
necessary to bring them line with the company’s financial statements. Schedules referred to above form an integral part of the accounts
113
ANNEXURE – V
Accounting Ratios
Rs. in Millions
Particulars Year Ended
March 31, 2010
Net Profit after Tax 511.79
Net Worth (Excluding Revlaluation Reserves) 3,788.87
Earning Per Shares (Rs.) (Basic)
Basic 47.98
Diluted 38.23
Net Asset Value Per Share (Rs.)
Basic 355.22
Diluted 283.03
Return on Net Worth (%) 13.51%
No. of Share at the end of Year 1,11,04,761
Weighted Average Number of Ordinary Shares for Basic Earning per Share (in Nos) 1,06,66,405
Weighted Average Number of Ordinary Shares for Diluted Earning per Share (in Nos) 1,33,86,821
114
ANNEXURE – VI
CAPITALISATION STATEMENT Amount (Rs. in Million)
Particulars Pre Issue As Adjusted
March 31, 2010 Post Issue*
Debt:
Short Term Debt 3924.57 [●]
Long Term Debt 13259.40 [●]
Total Debt: 17183.97 [●]
Shareholders Fund:
Share Capital 111.05 [●]
Equity Warrants / Share Appl. Money 39.20 [●]
Reserve 3639.22 [●]
Total Shareholders Fund 3789.47 [●]
Total Capitalisation 20973.44 [●]
Long Term Debt/ Equity Ratio 3.50 [●]
Total Debt/ Equity Ratio 4.53 [●]
* Will be updated in the Letter of Offer. Note: 1) Working capital loans and term loans payable within one year are considered as short term loans. 2) The term loans payable after one year is considered as long term loans.
Changes in Capital from 31-03-2010 till date of report Post March 31, 2010, the share capital of our company has increased to Rs 119.89 million comprising of 11,989,000 equity shares of Rs 10 each in the following manner:
� On May 6, 2010, Company has allotted 57,343 Equity shares against the conversion of 5 FCCB’S there by the paid up Equity Share capital of the company increased from Rs. 111.05 Millions to Rs. 111.62 Millions.
� On May 28, 2010 Company has allotted 229,375 Equity shares against the conversion of 20 FCCB’S there by the paid up capital of the company increased from Rs.111.62 Millions to Rs.113.91 Millions.
� On October 29, 2010 Company has allotted 597,521 equity shares against the conversion of 597,521
warrants, upon the receipt of Rs. 63.92 Millions being the balance amount i.e. 75% received upon conversion. Thereby the paid-up capital of the company has been increased from Rs. 113.91 Millions to Rs. 119.89 Millions.
� The outstanding 402,479 warrants have lapsed on March 13, 2011, and the sum received from the promoters towards 25% at the time of allotment i.e Rs.14.34 Millions has been forfeited by the company on March 14, 2011.
115
LIMITED REVIEW REPORT
The Board of Directors, Gayatri Projects Limited
B1, 6-3-1090, TSR Towers,
Rajbhavan Road, Somajiguda,
Hyderabad – 500 082.
1. We have reviewed the accompanying Standalone Balance Sheet of Gayatri Projects Limited (“the Company”) as at 30 September, 2010 and the Standalone Profit and Loss for the period ended on that date and the accompanying Schedules. These statements are the responsibility of the Company’s Management and have been approved by the Board of Directors. Our responsibility is to issue a report on these financial statements based on our review.
2. We conducted our review in accordance with the Standard on Review Engagements (SRE) 2400
“Engagements to Review Financial Statements”, issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatements. A review is limited primarily to inquiries of Company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and accordingly we do not express an audit opinion.
3. Based on our review, subject to Note 4 of II of Schedule No.18 regarding non-provisions for the losses incurred by joint ventures, nothing has come to our attention that causes us to believe that the accompanying Standalone Balance Sheet and Profit and Loss prepared in accordance with the Accounting Policies stated in the Schedule No.18 and other recognized accounting practices and policies contain any material misstatement.
4. This certificate is issued at the request of the Company and in accordance with the terms of engagement letter dated January 24, 2011 received from the Company, for the proposed rights issue under the SEBI Regulations.
For C.B. MOULI & ASSOCIATES
Chartered Accountants
Firm Regn.No.002140S
(MANI OOMMEN)
(Partner)
(M. No. 24046)
Place: Secunderabad Date : March 19, 2011.
116
GAYATRI PROJECTS LIMITED
UN-AUDITED BALANCE SHEET AS AT 30th SEPTEMBER, 2010
Rs. in Millions
AS AT AS AT
Particulars
Sch. 30th SEPTEMBER 2010 31st MARCH 2010
SOURCE OF FUNDS
Share Holders Funds
Share Capital 1 113.91 111.05
Equity Warrants 35.63 35.63
Reserves and Surplus 2 3,005.20 3,154.74 2,657.43 2,804.11
Loan Funds
Secured Loans 3 4,020.05 3,600.35 Unsecured Loans 4 2,409.38 6,429.43 2,485.31 6,085.66
Deferred Tax Liability 173.58 177.79
TOTAL 9,757.75 9,067.56
- -
APPLICATION OF FUNDS
Fixed Assets
Gross Block 5 3,197.47 3,002.96
Less: Depreciation 1,453.53 1,341.52
Net Block 1,743.94 1,661.44
Investments 6 2,284.57 1,283.38
Current Assets, Loans and Advances
Inventories 7 700.81 693.32
Sundry Debtors 8 3,336.65 3,149.07
Cash and Bank Balances 9 1,210.07 2,052.19
Loans and Advances 10 4,523.49 4,043.36
9,771.02 9,937.94
Less: Current Liabilities and Provisions 11
Liabilities 4,019.59 3,738.46
Provisions 22.19 76.74
4,041.78 3,815.20
Net Current Assets 5729.24 6,122.74
TOTAL 9757.75 9,067.56
117
GAYATRI PROJECTS LIMITED
UN-AUDITED FINANCIAL RESULTS FOR THE HALF-YEAR ENDED 30th SEPTEMBER 2010
Rs. in Millions
Half Year Ended
30th SEPTEMBER
2010
30th SEPTEMBER
2009
S.N
o Particulars
Sch
.
Unaudited Unaudited
1 (a) Net Sales/ Income from Operations 6,230.82 5,413.42
(b) Other Operating Income - -
2 Expenditure a. Increase/ {Decrease} in Stock in Trade 12 (73.55) (58.26) b. Consumption of Raw Material & Work
Expenditure 13
5,264.30 4,645.56 c. Purchase of traded goods - - d. Employees Cost 14 162.02 113.35 e. Depreciation 5 112.01 91.63 f. Other Expenditure 15 94.10 82.33
g. Total 5,558.88 4,874.61
3 Profit from Operations before Other Income,
Interest and Exceptional Items
671.94 538.81
4 Other Income 16 26.61 30.09
5 Profit from Operations before Interest and
Exceptional Items
698.55 568.90
6 Interest 17 296.88 238.90
7 Profit from Operations before Exceptional
Items
401.67 330.00
8 Exceptional Items - -
9 Profit(+)/ Loss (-) from Ordinary Activities
before tax (7-8)
401.67 330.00
10 Tax Expenses 132.77 100.34
11 Net Profit / Loss (-) from Ordinary Activities
after tax ( 9-10 )
268.90 229.66
12 Extraordinary Items (net of tax expenses) - -
13 Net Profit / Loss (-) for the Period(11-12) 268.90 229.66
14 Paid Up Equity Capital 113.91 111.05 (Face Value of the Share ) 10.00 10.00
15 Reserves excluding revaluation reserves as
per Balance Sheet of previous accounting year
2,804.12 2,056.50
16 Earning Per Share (EPS) a) Basic and diluted EPS before Extraordinary
Items for the period, for the year to date and for the previous year (not to be annualized)
18.17 17.90 b) Basic and diluted EPS after Extraordinary
Items for the period, for the year to date and for the previous year (not to be annualized)
18.17 17.90
17 Public Share Holding - Number of shares 52,95,732 50,08,789
- Percentage of holding. 46.49% 49.57%
18 Promoters and promoter group share holdings a) Pledged / Encumbered
118
Half Year Ended
30th SEPTEMBER
2010
30th SEPTEMBER
2009
S.N
o Particulars
Sch
.
Unaudited Unaudited
- Number of shares 56,04,245 - Percentage of shares (as a % of the total
shareholding of promoter and promoter group)
91.94%
- Percentage of shares (as a % of the total share capital of the company)
49.20%
b) Non-Encumbered - Number of shares 4,91,502 - Percentage of shares (as a % of the total
shareholding of promoter and promoter group)
8.06% - Percentage of shares (as a % of the total
share capital of the company)
4.31%
119
Schedules forming part of Balance Sheet (Rs. in Millions)
AS AT AS AT Particulars
30th SEPTEMBER 2010 31st MARCH 2010
SCHEDULE NO : 1 : SHARE CAPITAL Authorised Share Capital : 150,00,000 Equity Shares of Rs. 10/- each 150.00 150.00
150.00 150.00
Issued, Subscribed and paid-up capital : 11391479 (Prev.Year 111,04,761) Equity Shares of Rs. 10/- each, fully paid-up 113.91 111.05 a) 50,00,000 shares of Rs. 10/- each fully paid
b) 40,00,000 shares of Rs. 10/- each fully paid bonus shares in the ratio of 5:4 were allotted by capitalization of General Reserve
c) 10,00,000 shares of Rs. 10/- each fully paid shares were allotted to public at a premium of Rs. 285/- through Initial Public Offer.
d) 1,04,761 shares of Rs. 10/- each fully paid shares were allotted by way of conversion of FCCB at a premium of Rs. 368.3453
e) 10,00,000 shares of Rs. 10/- each fully paid shares were allotted at premium of Rs. 175/- through Preferential allotment
d) 286,718 shares of Rs. 10/- each fully paid shares were allotted by way of conversion of FCCB at a premium of Rs. 278/-
113.91 111.05
SCHEDULE NO : 2 RESERVES AND SURPLUS Securities Premium Account At the Commencement of the Year 590.45 415.45 Add : Additions for the year on account of Preferential allotment 79.70 175.00 670.15 590.45
General Reserve At the Commencement of the Year 680.00 610.00 Add : Transfer from Profit and Loss A/c. - 70.00
680.00 680.00 Profit and Loss Account Balance 1,655.05 1,386.98
3,005.20 2,657.43
SCHEDULE NO : 3
SECURED LOANS I] From Banks A)Term Loans i) Equipment Loans 224.45 276.55 ii) Vehicle Loans 2.53 3.77 iii) Term Loans 655.04 654.99 B] Working Capital Loan Account 2,944.47 2,594.43 II] From Others Equipment And Vehicle Loans 193.56 70.61
4,020.05 3,600.35
120
Schedules forming part of Balance Sheet (Rs. in Millions)
AS AT AS AT Particulars
30th SEPTEMBER 2010 31st MARCH 2010
SCHEDULE NO : 4 UNSECURED LOANS Short Term Loans from Banks 1,514.26 1,507.62 Foreign Currency Convertible Bonds (FCCB) 895.12 977.69
2,409.38 2,485.31
SCHEDULE NO : 5
FIXED ASSETS (Rs. in Millions)
GROSS BLOCK DEPRECIATION NET BLOCK
PARTICULAR
S As at
Additi
ons
Deleti
ons As at Up to
Adjuste
d
For
the
On
deletion Up to As on As on
01/04/20
10 During the year
30/09/20
10
31/03/2
010
for
deletion
s
Half-
year
for the
Half-
year
30/09/20
10
30/09/
2010
31/03/
2010
Land 1.17 - - 1.17 - - - - - 1.17 1.17
Plant & Machinery 1,826.28 97.96 - 1,924.24 536.33 - 45.43 - 581.76
1,342.4
8
1,289.95
Vehicles 132.15 38.66 - 170.81 65.17 - 7.64 - 72.81 98.00 66.98
Earth Moving Machinery 1,006.35 56.30 - 1,062.65 719.04 - 57.99 - 777.03 285.62 287.31
Office Sheds 7.60 - - 7.60 7.60 - - - 7.60 - -
Furniture & Fixtures 29.41 1.59 - 31.00 13.38 - 0.95 - 14.33 16.67 16.03
Capital Work in Progress - - - - - - - - - -
TOTAL : 3,002.96 194.51 - 3,197.47 1,341.52 - 112.01 - 1,453.53 1,743.94 1,661.44
Previous Year 2,747.85 255.50 0.40 3,002.96 1,141.17 - 200.57 0.22 1,341.52 1,661.44 1,606.69
121
Schedules forming part of Balance Sheet (Rs. in Millions)
AS AT AS AT
Particulars
30th SEPTEMBER 2010 31st MARCH 2010
Nos. Nos. SCHEDULE NO : 6 INVESTMENTS (Refer Note 4 of II of Sch.18) Shares in Companies : A) Trade Investments Long Term - Unquoted Shares - Subsidiary Companies
Equity shares of Rs. 10/- each, fully paid, in
Gayatri Infra Ventures Ltd (GIVL) 1250000 1,253.24 1250000 1,253.24
Equity shares of Rs. 10/- each, fully paid, in
Gayatri Energy Ventures Pvt.Ltd. 10050000 1,000.50 50000 0.50
Equity shares of Rs. 10/- each, fully paid, in HKR Roadways Ltd
37000 0.37 -
Long Term-Unquoted Shares-Associate Companies - -
Equity shares of Rs. 10/- each, fully paid in
Gayatri Thermal Power Corporation Ltd. 24500 0.25 24500 0.24
Equity shares of Rs. 10/- each, fully paid in Balaji
Highways Holdings Pvt. Ltd 49000 0.49 -
Equity shares of Rs. 10/- each, fully paid in Indore
Dewas Tollways Ltd 16660 0.16 -
Equity shares of Rs. 10/- each, fully paid in HKR Tollways Ltd
16660 0.16 -
B) Other Investments Long Term - Quoted Shares
Equity Shares of Rs. 10/- each fully paid in Gayatri Sugars Ltd
2931000 29.31 2931000 29.31
Equity Shares of Rs. 10/- each fully paid in Syndicate Bank Ltd
1728 0.09 1728 0.09
2,284.57 1,283.38
122
Schedules forming part of Balance Sheet (Rs. in Millions)
AS AT AS AT
Particulars
30th SEPTEMBER 2010 31st MARCH 2010
SCHEDULE NO : 7 INVENTORIES - Construction Materials, stocks and spares at cost 377.64 453.12 - Closing Work-in-progress 323.17 240.20
700.81 693.32
SCHEDULE NO : 8 SUNDRY DEBTORS (Un-secured) Over Six Months Considered Good 210.08 186.97 Others, Considered Good 3,126.57 2,962.10
3,336.65 3,149.07
SCHEDULE NO : 9 CASH AND BANK BALANCES Cash on Hand 12.19 13.96 Bank Balances: In Current Accounts With Scheduled Banks 422.53 1,381.93 In Deposit Accounts With Scheduled Banks Margin Money (Bank Guarantees/LCs) 600.61 453.37 Fixed Deposits 148.63 183.61 Interest Accrued on Deposits 26.11 19.32
1,210.07 2,052.19
SCHEDULE NO : 10 LOANS AND ADVANCES (Unsecured considered good) Advances to Associates 577.31 577.31 Advances to Suppliers, Sub-contractors and Others 2,958.59 2,718.65 Advances receivable in cash or kind or value to be received 14.01 13.09 Share Application Money 837.28 616.08 Prepaid Expenses 121.88 116.66 Deposits with Govt. Agencies and Others 14.42 1.57
4,523.49 4,043.36
SCHEDULE NO : 11 CURRENT LIABILITIES AND PROVISIONS a) Current Liabilities Sundry Creditors 1,586.47 1,505.34 Advances received from Contractee – Clients 2,347.78 2,147.00 Other liabilities 85.34 86.12
4,019.59 3,738.46
b) Provisions Taxation - 26.92 Dividend - 27.76 Dividend Tax 4.84 4.72 Employee Benefits 17.35 17.34
22.19 76.74
4,041.78 3,815.20
123
Schedules forming part of Profit & Loss Account
Rs. in Millions
HALF-YEAR ENDED HALF-YEAR ENDED
PARTICULARS 30th SEPTEMBER
2010
30th SEPTEMBER 2009
SCHEDULE NO : 12
INCREASE/DECREASE IN W.I.P.
Opening Work in Progress 240.21 221.31
Less : Closing Work in Progress 313.76 279.57
(73.55) (58.26)
SCHEDULE NO : 13
CONSUMPATION OF RAW MATERIAL & WORK
EXPENDITURE
Steel 219.08 269.79
Cement 139.11 163.87
Bitumen 573.61 387.81
Metal 215.28 180.64
Sand & Gravel 116.61 47.05
HSD Oils and Lubricants 303.17 250.41
Stores and Consumables 29.22 13.57
Other Materials 29.01 43.45
Departmental Recoveries 42.09 50.20
Work executed by sub contractors 1,136.21 1,600.46
Earth Work 820.13 625.19
Concrete Work 592.71 313.36
Transport Charges 66.08 87.94
Hire Charges 81.49 25.84
Road work 485.71 210.74
Repairs and Maintenance 107.46 77.32
Works Contract Tax / VAT 115.87 101.72
Royalties, Seigniorage and Cess 22.35 53.77
Insurance 2.60 7.93
Other Work Expenditure 166.51 134.50
5,264.30 4,645.56
124
Schedules forming part of Profit & Loss Account
Rs. in Millions
HALF-YEAR ENDED HALF-YEAR ENDED PARTICULARS
30th SEPTEMBER 2010 30th SEPTEMBER 2009
SCHEDULE NO : 14
EMPLOYEE COST
Salaries 123.53 91.72
Contribution to Provident Fund 2.54 1.43
Other Employee Benefits 17.35 12.40
Directors' Remuneration & Perquisites 18.60 7.80
162.02 113.35
SCHEDULE NO : 15
OTHER EXPENDITURE
Printing and Stationery 3.32 3.36
Telephones 4.55 4.59
Traveling and Conveyance 13.15 10.57
Advertisement Expenses 1.49 5.36
General Expenses 4.10 4.82
Consultancy Fee 22.88 18.92
Donations 5.75 7.68
Rent 14.00 11.27
Power and fuel 4.58 4.35
Rates and Taxes 8.53 5.11
Tender Expenses 2.27 0.03
Insurance 0.86 0.49
Auditors Remuneration - -
Other Administration Expenses 8.62 5.78
94.10 82.33
SCHEDULE NO : 16
OTHER INCOME
Interest Income 21.75 29.02
Miscellaneous Income 4.86 1.07
26.61 30.09
SCHEDULE NO : 17
INTEREST
Interest 232.48 189.48
Financial Charges 28.07 38.05
Bank Charges 36.33 11.37
296.88 238.90
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SCHEDULE NO : 18
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
I. SIGNIFICANT ACCOUNTING POLICIES
1. Basis for preparation of financial statements
The financial statements have been prepared to comply in all respects with Accounting Standards notified under Companies (Accounting Standards) Rules 2006 and the relevant provisions of the Companies Act, 1956. The accounts are prepared under historical cost convention and on the going concern basis, with revenue recognized, expenses accounted on their accrual and in accordance with applicable notified Accounting Standards and the accounting policies have been consistently applied by the Company.
2. Use of estimates
The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Although these estimates are based upon management best knowledge of current events and actions, actual results could differ from the estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.
3. Revenue recognition
i) Income is recognized on fixed price construction contracts in accordance with the percentage completion
basis, which necessarily involve technical estimates of the percentage of completion, and costs to completion, of each contract / activity, on the basis of which profits and losses are accounted. Such estimates, made by the Company and certified to the Auditors have been relied upon by them, as these are of technical nature.
ii) The stage of completion of contracts is measured by reference to the proportion that contract costs
incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract.
iii) Price escalation and other claims and/or variation in the contract work are included in contract revenue
only when: a) Negotiations have reached at an advanced stage such that it is probable that customer will accept
the claim; and b) The amount that is probable will be accepted by the customer can be measured reliably.
iv) Incentive payments, as per customer-specified performance standards, are included in contract revenue
only when:
a) The contract is sufficiently advanced that it is probable that the specified performance standards will be met; and
b) The amount of the incentive payment can be measured reliably.
v) Insurance claims are accounted for on cash basis. 4. Revenue receipts on Joint Venture Contracts
a) In work sharing Joint Venture arrangements, revenues, expenses, assets and liabilities are
126
accounted for in the Company’s books to the extent work is executed by the Company. b) In jointly controlled entities, the share of profits or losses is accounted as and when dividend/
share of profit or loss are declared by the entities.
5. Inventories and work in progress
Raw Materials, construction materials and stores & spares are valued at weighted average cost. Expenditure incurred during the work in progress of contracts up to the stage of completion is carried forward as work-in-progress. Cost includes direct material, work expenditure, labour cost and appropriate overheads.
6. Fixed assets and Depreciation
(i) Fixed Assets are stated at cost of acquisition, less accumulated depreciation thereon. Expenditure
which are capital in nature are capitalized at cost, which comprises of purchase price (net of rebates and discounts), import duties, levies, financing costs and all other expenditure directly attributable to bringing the asset to its working condition for its intended use. Capital Work in Progress comprises advances paid to acquire fixed assets and the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.
(ii) Depreciation is provided on straight line method at the rates prescribed in Schedule XIV of the
Companies Act, 1956. Leasehold improvements are amortized over the period of lease. 7. Foreign Currency Transactions
Foreign exchange transactions are accounted at the rates prevailing on the date of transactions. Monetary assets and current liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates. The difference in translation of monetary assets and liabilities and realized gains and losses on foreign exchange transactions are recognized in the Profit and Loss Account.
8. Investments
Investments are classified as long term and current investments. Long Term Investments are carried at cost less provision for permanent diminution, if any, in value of such investments. Current investments are carried at lower of cost and fair value. Dividend income is accounted when the right to receive dividend is established.
9. Employee Benefits
Liability for employee benefits, both short and long term, for present and past service which are due as per the terms of employment are recorded in accordance with Accounting Standard (AS) 15 “Employee Benefits” issued by the Companies (Accounting Standard) Rules, 2006. i) Gratuity
In accordance with the Payment of Gratuity Act, 1972 the Company provides for Gratuity covering eligible employees. The liability on account of Gratuity is provided on the basis of valuation of the liability by an independent actuary as at the year end. ii) Provident Fund
In accordance with applicable local laws, eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan to which both the employee and employer contributes monthly at a determined rate (currently up to 12% of an employee’s salary). These contributions are either made to the respective Regional Provident Fund Commissioner, or the Central Provident Fund under the State Pension Scheme, and are expenses as incurred. iii) Compensated Absences
127
Liability for compensated absence is treated as a long term liability and is provided on the basis of valuation by an independent actuary as at the year end.
10. Deferred Revenue Expenditure
Projects and Other amenities expenditure incurred up to March 31, 2010, the benefit of which is spread over more than one year is grouped under Prepaid Expenditure and is amortized over the period in which benefits would be derived.
11. Borrowing Costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such asset. A qualifying asset is one that requires substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
12. Leases
Assets taken on finance lease are capitalized at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost, so as to obtain a constant periodic rate of interest on outstanding liability for each period. Operating leases in respect of office & other equipment, house for employees, Office buildings are cancelable / renewable by mutual consent on agreed terms. Lease payments under an operating lease are recognized as an expense in the Profit and Loss Account.
13. Earnings per Share (EPS)
In arriving at the EPS, the Company’s net profit after tax, computed in terms of the Indian GAAP, is divided by the weighted average number of equity shares outstanding on the last day of the reporting period. The EPS thus arrived at is known as ‘Basic EPS’. To arrive at the diluted EPS the net profit after tax, referred above, is divided by the weighted average number of equity shares, as computed above and the weighted average number of equity share that could have been issued on conversion of shares having potential dilutive effect subject to the terms of issue of those potential shares. The date/s of issue of such potential shares determine the amount of the weighted average number potential equity shares.
14. Taxation
i) Current Tax
Provision for Current tax is made based on the liability computed in accordance with the relevant tax rates and provisions of Income Tax Act, 1961.
ii) Deferred Taxes
Deferred Tax is accounted for by computing the tax effect of timing differences which arise during the year and reverse in subsequent periods. Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized.
15. Impairment of Fixed Assets
The carrying amount of assets, other than inventories is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the assets is estimated. The recoverable amount is the greater of the asset’s net selling price and value in use which is determined based on the estimated future cash flow discounted to their present values. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
128
16. Provisions for Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.
Contingent liabilities are present obligations arising from a past event, when it is not probable / probability is remote that an outflow of resources will be required to settle the obligation and they are not recognized but are disclosed in the notes.
Contingent Assets are neither recognized nor disclosed in the financial statements. Provisions for Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.
II. NOTES TO ACCOUNTS
1. Contingent Liabilities not provided for
(Rs. in Millions)
S.No Particulars September
30, 2010
2009-10
1 Guarantees given by Banks towards performance & contractual commitments a) Issued on behalf of Company b)Guarantees given to Subsidiaries/Group Companies
4345.62 2961.89
4450.97 823.25
2 Corporate guarantees given to Group companies 55866.60 3356.60
3 Disputed Liability of Sales Tax, Service Tax and Seigniorage Charges
153.04
153.04
4 Estimated amounts of contracts remains to be executed on capital account and not provided for.
-
-
2. Share Capital
The Company has issued 308 FCCB Bonds of JPY 10000000 each aggregating to JPY 308,00,00,000 due in the year 2012 equivalent to Rs. 1017.32 Millions. The bonds are listed in the Singapore Stock Exchange. The Bonds are convertible into company’s equity shares at agreed exercise price of Rs. 288/- with a fixed rate of exchange on conversion of Rs. 0.3303 to JPY 1.00 and proceeds of FCCB issue are mainly used for investment in SPV companies. Out of the above, 25 bonds value of JPY 250 million were converted into 2,86,718 shares leaving a balance of 271 bonds. As a result of these conversions, the share capital has increased by Rs. 2.87 Millions and reserves by Rs. 79.71 Millions.
3. Deferred Tax
Deferred Tax Liability as at September 30, 2010 comprises of the following:
(Rs. in Millions)
Sl.
Particulars
As at
31/03/2010
For the period
between
01/04/2010 to
30/09/2010
As at
30/09/2010
A) Deferred Tax Asset on timing differences
due to :
Provision for Gratuity and Leave Encashment 2.30 -- 2.30
B) Deferred Tax Liability on timing differences
due to:
Depreciation 180.09 4.21 175.88
Net Deferred Tax Liability (B-A) 177.79 4.21 173.58
129
4. Joint Venture Losses not considered
a) IJM-Gayatri Joint Venture
The IJM – Gayatri Joint Venture is a joint venture in which IJM Corporation Berhad, Malaysia holds 60%
and Gayatri Projects Limited holds 40% share. The Joint venture has executed road works in Package I, II
& III and AP 13 of NHAI, APSH 7 and APSH 8 in the State of Andhra Pradesh. The joint venture incurred
excess of expenditure over income amounting to Rs. 1344.50 Millions due to several contractual failures
on part of the employer.
The JV has raised claims in excess of Rs. 3,000 Millions on the National Highways Authority of India and
Andhra Pradesh State Government, which are pending for consideration before the appropriate
authorities. There is substantial progress in the proceedings in the arbitration and the management is
reasonably confident of recovery of these claims. During the year under review in the matter of dispute out
of the work of the “Warangal-Khammam- Tallada Road work”, the committee of Arbitrators has awarded
a claim of Rs. 124.20 Millions in favour of joint venture.
The management has also obtained independent legal opinion from eminent counsel in this regard who
have opined on the recoverability of the claims. In view of this, the share of the losses of GPL (40%) in the
joint venture is not provided in the books of the Company. In the unlikely situation of not awarding the
entire amount of claims, GPL has to provide an amount of Rs. 537.80 Millions towards its share of 40% in
the IJM-Gayatri Joint Venture.
b) Gayatri – ECI JV Gayatri-ECI JV, a joint venture between ECI Engineering & Construction Company Limited and Gayatri
Projects Limited with a sharing ratio of 50:50. The joint venture is executing road projects in Assam,
namely AS-10, AS-11 and AS-27 awarded by NHAI.
The joint venture due to extraneous and law and order problems in the State could not progress the work as
planned and hence incurred losses of Rs. 296.30 Millions till year 2008-09. However due to changed
strategy of the company and over all improvement of the law and order situation, the progress of the work
has improved substantially and the joint venture has posted a profit of Rs. 23.49 Millions during the period
ended 30th
September, 2010 and to that extent the accumulated losses have been recovered. Since now the
substantial portion of the project work has started, the losses incurred in the earlier years can be recovered
from these profits. Hence, the losses in the joint venture are not considered by the parent company.
d) Other Joint ventures
Profit / (Loss) of all other joint ventures, other than the above, are recognized in the books. 5. Earning Per Share (EPS)
Basic Earning per share calculated as per Accounting Standard 20 on Earning per share. For the purpose of computing
(Rs. in Millions)
Particulars For the
Half Year
Ended
September
30, 2010
2009-10
Profit After Tax for calculation of Basic EPS (Rs. in Millions) 268.90 490.90
Profit After Tax for calculation of Diluted EPS (Rs. in Millions) 268.90 490.90
Weighted average No. of equity shares as denominator for calculating 11.31 10.67
130
Basic EPS. (No. in Millions)
Add : Adjustment for FCCB
Weighted average No. of equity shares as denominator for calculating Diluted EPS. (No. in Millions)
14.75 13.39
Basic EPS (Rs. ) 23.88 46.02
Diluted EPS (Rs. ) 18.17 36.67
6. Managerial Remuneration:
Managerial Remuneration paid during the Half-year: (Rs. in Millions)
Particulars
For the Half Year
Ended September
30, 2010
2009-10
Salaries 18.60 26.40
Perquisites -- 0.75
Commission -- 4.80
Sub-total : 18.60 31.95
Sitting Fee -- ---
Contribution to Provident Fund & Superannuation Fund
-- --
Total : 18.60 31.95
7. Segment Reporting
The Company’s operations predominantly consist of construction / project activities. Hence there are no reportable segments under Accounting Standard – 17. During the year under report of the Company’s business has been carried out only in India. The conditions prevailing in India being uniform, no separate geographical disclosures are considered necessary.
8. Previous Year's figures have been reworked, regrouped, rearranged and reclassified wherever necessary.
131
LIMITED REVIEW REPORT
The Board of Directors, Gayatri Projects Limited
B1, 6-3-1090, TSR Towers,
Rajbhavan Road, Somajiguda,
Hyderabad – 500 082.
1. We have reviewed the accompanying Consolidated Balance Sheet of Gayatri Projects Limited (“the Company”) as at 30 September, 2010 and the Consolidated Profit and Loss for the period ended on that date and the accompanying Schedules. These statements are the responsibility of the Company’s Management and have been approved by the Board of Directors. Our responsibility is to issue a report on these financial statements based on our review.
2. We conducted our review in accordance with the Standard on Review Engagements (SRE) 2400
“Engagements to Review Financial Statements”, issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatements. A review is limited primarily to inquiries of Company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and accordingly we do not express an audit opinion.
3. Based on our review, nothing has come to our attention that causes us to believe that the accompanying Consolidated Balance Sheet and Profit and Loss prepared in accordance with the Accounting Policies stated in the Schedule No.18 and other recognized accounting practices and policies contain any material misstatement.
4. This certificate is issued at the request of the Company and in accordance with the terms of engagement letter dated January 24, 2011 received from the Company, for the proposed rights issue under the SEBI Regulations.
For C.B. MOULI & ASSOCIATES
Chartered Accountants
Firm Regn.No.002140S
(MANI OOMMEN)
(Partner)
(M. No. 24046)
Place: Secunderabad Date : March 19, 2011.
132
GAYATRI PROJECTS LIMITED
UN-AUDITED CONSOLIDATED BALANCE SHEET AS AT 30th SEPTEMBER, 2010
Rs. in Millions
ASAT ASAT
Particulars
Sch. 30thSEPTEMBER,2010 31stMARCH2010
SOURCE OF FUNDS
Share Holders Funds
Share Capital 1 113.91 111.04
Equity Warrants/Share Appl. Money 72.82 39.20 Reserves and Surplus 2 4,449.72 4,636.45 3,639.23 3,789.47
Loan Funds
Secured Loans 3 16,588.01 10,495.04 Unsecured Loans 4 3,274.36 19,862.37 6,688.93 17,183.97
Minority Interest Liability 1,535.14 1,344.93
Deferred Tax Liability 155.48 162.73
TOTAL 26,189.44 22,481.10
APPLICATION OF FUNDS
Fixed Assets
Gross Block 5 10,803.56 4,378.73
Less: Depreciation 1,548.13 1,343.90
Net Block 9,255.43 3,034.83
Capital Work in Progress 8,416.52 10,761.60
Investments 6 356.68 432.31
Current Assets, Loans & Advances
Inventories 7 700.81 693.32
Sundry Debtors 8 4,061.39 2,971.01
Cash and Bank Balances 9 1,697.06 3,130.76
Loans and Advances 10 4,338.86 6,351.20
10,798.12 13,146.29
Less: Current Liabilities and Provisions 11
Liabilities 2,615.64 4,813.59
Provisions
23.09 80.94
2,638.73 4,894.53
Net Current Assets 8,159.39 8,251.76
Miscellaneous Expenditure 1.42 0.60
(to the extent not written off or adjusted)
TOTAL 26,189.44 22,481.10
133
GAYATRI PROJECTS LIMITED
UN-AUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE HALF-YEAR ENDED 30th
SEPTEMBER 2010
Rs. in Millions
Sl. Particulars
Sch. For the Half Year
Ended September
30, 2010
1 (a) Net Sales/ Income from Operations 6,910.59
(b) Other Operating Income -
2 Expenditure a. Increase/ {Decrease} in Stock in Trade 12 (73.55) b. Consumption of Raw Material & Work expenditure 13 4,854.31 c. Purchase of traded goods - d. Employees Cost 14 175.77 e. Depreciation 5 203.60 f. Other Expenditure 15 104.16 g. Total 5,264.29
3 Profit from Operations before Other Income, Interest and Exceptional Items 1,646.30
4 Other Income 16 36.31
5 Profit from Operations before Interest and Exceptional Items 1,682.61
6 Interest 17 444.15
7 Profit from Operations before Exceptional Items 1,238.46
8 Exceptional Items -
9 Profit(+)/ Loss (-) from Ordinary Activities before tax (7-8) 1,238.46
10 Tax Expenses 129.87
11 Net Profit / Loss (-) from Ordinary Activities after tax ( 9-10 ) 1,108.59
12 a Extraordinary/ Prior period Items (net of tax expenses) (0.84)
b Minority Interest (Net of Tax) (243.55)
13 Net Profit / Loss (-) for the Period(11-12) 864.20
14 Paid Up Equity Capital 113.91 (Face Value of the Share ) 10.00
15 Reserves excluding revaluation reserves as per Balance Sheet of previous
accounting year
3,639.23
16 Earning Per Share (EPS) a) Basic and diluted EPS before Extraordinary Items for the period, for the year to
date
58.59
b) Basic and diluted EPS after Extraordinary Items for the period, for the year to date 58.59
17 Public Share Holding
- Number of shares 52,95,732
- Percentage of holding. 46.49%
18 Promoters and promoter group share holdings
a) Pledged / Encumbered
- Number of shares 56,04,245
- Percentage of shares (as a % of the total shareholding of promoter and promoter group)
91.94%
- Percentage of shares (as a % of the total share capital of the company) 49.20%
b) Non-Encumbered
- Number of shares 4,91,502
- Percentage of shares (as a % of the total shareholding of promoter and promoter group)
8.06%
- Percentage of shares (as a % of the total share capital of the company) 4.31%
134
Schedules forming part of Consolidated Balance Sheet Rs. in Millions
ASAT ASAT
Particulars
30th
SEPTEMBER,2010 31st MARCH,2010
SCHEDULE NO : 1 : SHARE CAPITAL Authorised Share Capital : 150,00,000 Equity Shares of Rs. 10/- each 150.00 150.00 (Year ended March 31, 2010 - 150,00,000)
150.00 150.00
Issued, Subscribed and paid-up capital : 113,91,479 Equity Shares of Rs. 10/- each, fully paid-up 113.91 111.04 (Year ended March 31, 2010 111,40,761) a) 50,00,000 shares of Rs. 10/- each fully paid
b) 40,00,000 shares of Rs. 10/- each fully paid bonus shares in
the ratio of 5:4 were allotted by capitalization of General Reserve
c) 10,00,000 shares of Rs. 10/- each fully paid shares were
allotted to public at a premium of Rs. 285/- through Initial Public Offer.
d) 1,04,761 shares of Rs. 10/- each fully paid shares were
allotted by way of conversion of FCCB at a premium of Rs. 368.3453
e) 10,00,000 shares of Rs. 10/- each fully paid shares were
allotted at premium of Rs. 175/- through Preferential
allotment
f) 2,50,718 shares of Rs. 10/- each fully paid shares were
allotted by way of conversion of FCCB at a premium of Rs. 278
113.91 111.04
SCHEDULE NO : 2 RESERVES AND SURPLUS Securities Premium Account At the Commencement of the Year 899.29 916.62 Add : Additions for the year on account of Preferential Allotment 79.71 979.00 239.84 1,156.46 Less : Shares Issue Expenses
Capital Reserve (Capital Grant) 652.74 530.83 General Reserve At the Commencement of the Year 680.00 610.00 Add : Transfer from Profit and Loss A/c. - 680.00 70.00 680.00
Profit and Loss Account Balance 2,137.98 1,271.94
4,449.72 3,639.23
SCHEDULE NO : 3
SECURED LOANS I] From Banks A)Term Loans i) Equipment Loans 224.45 276.55 ii) Vehicle Loans 3.76 3.77 iii) Term Loans 655.04 1,654.99 iv) Long Term - Project Finance 12,566.72 5,894.68 B] Working Capital Loan Account 2,944.47 2,594.43 II] From Others Equipment And Vehicle Loans 193.57 70.62
16,588.01 10,495.04
135
Schedules forming part of Consolidated Balance Sheet Rs. in Millions
ASAT ASAT
Particulars
30th
SEPTEMBER,2010 31st MARCH,2010
SCHEDULE NO : 4 UNSECURED LOANS Short Term Loans from Banks 1,514.26 1,507.62 Foreign Currency Convertible Bonds (FCCB) 895.11 977.69 Other (Partners Capital Account) 864.99 4,203.62
3,274.36 6,688.93
SCHEDULE No: 5
FIXED ASSETS
(Rs. in Millions)
GROSS BLOCK DEPRECIATION NET BLOCK
PARTICULARS As at Additions
Adjustments
(+/-) As at Up to For the
Adjustments
(+/-) Up to As on As on
01/04/2010 During the Half- year 30/09/2010 31/03/2010 Half-year for the Half-year 30/09/2010 30/09/2010 31/03/2010
Land 1,331.43 - 1,331.43 - - - 1,331.43 1,331.43
Plant & Machinery 1,865.65 99.46 0.14 1,965.25 537.08 45.69 0.05 582.82 1,382.43 1,328.57
Vehicles 137.57 41.57 0.13 179.27 66.51 7.95 0.06 74.52 104.75 71.06
Earth Moving Machinery 1,006.35 56.30 - 1,062.65 719.03 57.99 0.01 777.03 285.62 287.32
Office Sheds 7.60 - - 7.60 7.60 - - 7.60 - -
Furniture & Fixtures 30.13 2.52 0.06 32.71 13.68 1.00 0.04 14.72 17.99 16.45
Capital Work in Progress - 6,224.65 6,224.65 - 91.44 - 91.44 6,133.21 -
TOTAL : 4,378.73 6,424.50 0.33 10,803.56 1,343.90 204.07 0.16 1,548.13 9,255.43 3,034.83
136
Schedules forming part of Consolidated Balance Sheet Rs. in Millions
AS AT AS AT
Particulars
30th SEPTEMBER, 2010 31st MARCH, 2010
SCHEDULE NO : 6 INVESTMENTS Shares in Companies : A) Trade Investments Long Term-Unquoted Shares-Associate Companies
Equity shares of Rs.10/- each, fully paid at Rs.90/-
premium in Western UP Tollway Ltd - 361.82
Equity shares of Rs.10/- each, fully paid in Gayatri
Thermal Power Corporation Ltd. 0.24 0.24
Equity shares of Rs.10/- each, fully paid in Jinbhuvish
Power Generations Pvt. Ltd 327.04 -
B) Other Investments Long Term - Quoted Shares
Equity Shares of Rs.10/- each fully paid in Gayatri
Sugars Ltd 29.31 29.31
Equity Shares of Rs.10/- each fully paid in Syndicate
Bank Ltd 0.09 0.09
Mutual Funds - 40.85
356.68 432.31
137
Schedules forming part of Consolidated Balance Sheet Rs. in Millions
AS AT AS AT
Particulars
30th SEPTEMBER,
2010 31st MARCH 2010
SCHEDULE NO : 7 INVENTORIES - Construction Materials, stocks and spares at cost 377.64 453.12 - Closing Work-in-progress 323.17 240.20
700.81 693.32
SCHEDULE NO : 8 SUNDRY DEBTORS (Un-secured) Over Six Months Considered Good 210.08 186.97 Others, Considered Good 3,851.31 2,784.04
4,061.39 2,971.01
SCHEDULE NO : 9 CASH AND BANK BALANCES Cash on Hand 13.94 14.67 Bank Balances: In Current Accounts With Scheduled Banks 853.11 2,234.62 In Deposit Accounts With Scheduled Banks Margin Money (Bank Guarantees/LCs) 600.61 453.37 Fixed Deposits 201.13 406.11 Interest Accrued on Deposits 28.27 21.99
1,697.06 3,130.76
SCHEDULE NO : 10 LOANS AND ADVANCES (Unsecured considered good) Advances to Associates 635.42 601.36 Advances to Suppliers, Sub-contractors and Others 773.24 3,320.80 Advances receivable in cash or kind or value to be received 1,022.31 13.82 Advance towards Share Application Money 442.55 15.52 Pre-operative/Prepaid Expenses 1,387.26 2,325.15 Deposits with Govt. Agencies and Others 78.08 74.55
4,338.86 6,351.20
SCHEDULE NO : 11 CURRENT LIABILITIES AND PROVISIONS a) Current Liabilities Sundry Creditors 1,909.99 2,323.43 Advances received from Contractee – Clients 599.77 2,376.45 Other liabilities 105.88 113.71
2,615.64 4,813.59
b) Provisions Taxation 0.90 31.12 Proposed Dividend - 27.76 Dividend Tax 4.84 4.72 Employee Benefits 17.35 17.34
23.09 80.94
2,638.74 4,894.53
138
Schedules forming part of Consolidated Profit & Loss Account Rs. in Millions
HALF-YEAR ENDED
PARTICULARS 30th SEPTEMBER, 2010
SCHEDULE NO : 12
INCREASE/DECREASE IN STOCK IN TRADE
Opening Work in Progress 240.21
Less : Closing Work in Progress 313.76
(73.55)
SCHEDULE NO : 13
CONSUMPTION OF MATERIAL & WORK EXPENDITURE
Steel 219.08
Cement 139.11
Bitumen 573.61
Metal 215.28
Sand & Gravel 116.61
HSD Oils and Lubricants 303.17
Stores and Consumables 29.22
Other Materials 29.01
Departmental Recoveries 42.09
Work executed by sub contractors 726.22
Earth Work 820.13
Concrete Work 592.71
Transport Charges 66.08
Hire Charges 81.49
Road work 485.71
Repairs and Maintenance 107.46
Works Contract Tax / VAT 115.87
Royalties, Seigniorage and Cess 22.35
Insurance 2.60
Other Work Expenditure 166.51
4,854.31
SCHEDULE NO : 14
EMPLOYEES COST
Salaries 137.28
Contribution to Provident Fund 2.54
Other Employee Benefits 17.35
Directors' Remuneration & Perquisites 18.60
175.77
139
Schedules forming part of Consolidated Profit & Loss Account Rs. in Millions
PARTICULARS HALF-YEAR ENDED
30th SEPTEMBER, 2010
SCHEDULE NO : 15
OTHER EXPENDITURE
Printing and Stationery 3.35
Telephones 4.63
Traveling and Conveyance 14.62
Advertisement Expenses 1.49
General Expenses 4.10
Consultancy Fee 24.01
Donations 5.75
Rent 15.74
Power and fuel 4.58
Rates and Taxes 8.75
Tender Expenses 4.12
Insurance 0.86
Auditors Remuneration 0.05
Other Administration Expenses 12.11
104.16
SCHEDULE NO : 16
OTHER INCOME
Interest Income 21.84
Miscellaneous Income 14.47
36.31
SCHEDULE NO : 17
INTEREST
Interest on: 377.71
Financial Charges 30.07
Bank Charges 36.37
444.15
140
SCHEDULE NO : 18
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
I. SIGNIFICANT ACCOUNTING POLICIES
1. Basis for preparation of financial statements
The financial statements have been prepared to comply in all respects with accounting standards notified under Companies (Accounting Standards) Rules 2006 and the relevant provisions of the Companies act, 1956. The accounts are prepared under historical cost convention and on the going concern basis, with revenue recognized, expenses accounted on their accrual and in accordance with applicable notified Accounting Standards and the accounting policies have been consistently applied by the Company.
2. Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amounts of income and expenses during the year of account. Although these estimates are based upon management best knowledge of current events and actions, actual results could differ from the estimates. Difference between the actual results and estimates are recognized in the period in which the results are known /materialized.
3. Revenue recognition
i) Income is recognized on fixed price construction contracts in accordance with the percentage completion
basis, which necessarily involve technical estimates of the percentage of completion, and costs to completion, of each contract / activity, on the basis of which profits and losses are accounted. The estimates made by the Company being technical in nature have been relied upon by the auditors.
ii) The stage of completion of contracts is measured by reference to the proportion that contract costs
incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract.
iii) An expected loss on construction contract is recognized as an expense immediately when it is certain
that the total contract costs will exceed the total contract revenue.
iv) Price escalation and other claims and/or variation in the contract work are included in contract revenue only when: a) Negotiations have reached at an advanced stage such that it is probable that customer will accept
the claim; and b) The amount that is probable will be accepted by the customer can be measured reliably.
v) Incentive payments, as per customer-specified performance standards, are included in contract revenue
only when: a) The contract is sufficiently advanced that it is probable that the specified performance standards will
be met; and b) The amount of the incentive payment can be measured reliably.
4. Joint Venture Projects
a) In respect of Joint Venture Contracts in the nature of jointly controlled operations, the shares of profit or loss are accounted as and when dividend / share of profit or loss are declared by the entities.
b) In respect of Joint Venture Contracts wholly executed by the company pursuant to a Joint Venture
141
Contract the assets, liabilities, income and expenditure are recognized under respective heads in the financial statements.
c) Share of turnover attributable to the Company in respect of contracts executed by the other joint venture partners pursuant to Joint Venture Agreement, is accounted under Turnover in these financial statements.
5. Inventories and work in progress
Raw Materials, construction materials and stores & spares are valued at weighted average cost. Expenditure incurred during the work in progress of contracts up to the stage of completion is carried forward as work-in-progress. Cost includes direct material, work expenditure, labour cost and appropriate overheads.
6. Fixed assets and Depreciation
i) Fixed Assets are stated at cost of acquisition, less accumulated depreciation thereon. Expenditure
which are capital in nature are capitalized at cost, which comprises of purchase price (net of rebates and discounts), import duties, levies, financing costs and all other expenditure directly attributable to bringing the asset to its working condition for its intended use. Capital Work in Progress comprises advances paid to acquire fixed assets and the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.
ii) Depreciation is provided on straight line method at the rates prescribed in Schedule XIV of the
Companies Act, 1956. Leasehold improvements are amortized over the period of lease. 7. Foreign Currency Transactions
Foreign exchange transactions are accounted at the rates prevailing on the date of transactions. Monetary assets and current liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates. The difference in translation of monetary assets and liabilities and realized gains and losses on foreign exchange transactions are recognized in the Profit and Loss Account.
8. Investments
Investments are classified as long term and current investments. Long Term Investments are carried at cost less provision for permanent diminution, if any, in value of such investments. Current investments are carried at lower of cost and fair value. Dividend income is accounted when the right to receive dividend is established.
9. Employee Benefits
Liability for employee benefits, both short and long term, for present and past service which are due as per the terms of employment are recorded in accordance with Accounting Standard (AS) 15 “Employee Benefits” issued by the Companies (Accounting Standard) Rules, 2006. i) Gratuity
In accordance with the Payment of Gratuity Act, 1972 the company provides for Gratuity covering eligible employees. The liability on account of Gratuity is provided on the basis of valuation of the liability by an independent actuary as at the year end. ii) Provident Fund
In accordance with applicable local laws, eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan to which both the employee and employer contributes monthly at a determined rate (currently up to 12% of an employee’s salary). These contributions are either made to the respective Regional Provident Fund Commissioner, or the Central Provident Fund under the State Pension Scheme, and are expenses as incurred.
142
iii) Compensated Absences
Liability for compensated absence is treated as a long term liability and is provided on the basis of valuation by an independent actuary as at the year end.
iv) Actuarial gains and losses are immediately recognized and taken to the profit and loss account and are not deferred.
10. Deferred Revenue Expenditure
Projects and Other amenities expenditure incurred upto March 31, 2010, the benefit of which is spread over more than one year is grouped under Prepaid Expenditure and is amortized over the period in which benefits would be derived.
11. Borrowing Costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such asset. A qualifying asset is one that requires substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
12. Leases
Assets taken on finance lease are capitalized at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and interest cost, so as to obtain a constant periodic rate of interest on outstanding liability for each period.
Operating leases in respect of office & other equipment, house for employees, Office buildings are cancelable / renewable by mutual consent on agreed terms. Lease payments under an operating lease are recognized as an expense in the Profit and Loss Account.
13. Earnings per Share (EPS)
In arriving at the EPS, the Company’s net profit after tax, computed in terms of the Indian GAAP, is divided by the weighted average number of equity shares outstanding on the last day of the reporting period. The EPS thus arrived at is known as ‘Basic EPS’. To arrive at the diluted EPS the net profit after tax, referred above, is divided by the weighted average number of equity shares, as computed above and the weighted average number of equity share that could have been issued on conversion of shares having potential dilutive effect subject to the terms of issue of those potential shares. The date/s of issue of such potential shares determine the amount of the weighted average number potential equity shares.
14. Taxation
i) Current Tax Provision for Current tax is made based on the liability computed in accordance with the relevant tax rates and provisions of Income Tax Act, 1961.
ii) Deferred Taxes
Deferred Tax is accounted for by computing the tax effect of timing differences which arise during the year and reverse in subsequent periods. Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized.
15. Impairment of Fixed Assets
The carrying amount of assets, other than inventories is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the assets is estimated. The recoverable amount is the greater of the asset’s net selling price and value in use
143
which is determined based on the estimated future cash flow discounted to their present values. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
16. Provisions for Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.
Contingent liabilities are present obligations arising from a past event, when it is not probable / probability is remote that an outflow of resources will be required to settle the obligation and they are not recognized but are disclosed in the notes.
Contingent Assets are neither recognized nor disclosed in the financial statements. Provisions for Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.
II. NOTES TO ACCOUNTS
1. Contingent Liabilities not provided for
(Rs. in Millions)
Sl. Particulars September
30, 2010
2009-10
1 Guarantees given by Banks towards performance & contractual commitments a) Issued on behalf of Company b) Guarantees given to Related Parties c) Letter of Credit
4345.62 2961.89
--
4450.97 823.25
--
2 Claims against the Company not acknowledged as debt 15.57 15.57
3 Corporate guarantees given to/taken from Group companies 55866.60 3356.60
4 Disputed Liability of Sales Tax, Service Tax and Seigniorage Charges
280.76 280.76
2. Accounting for taxes on Income
As per Accounting Standard 22 on Accounting for Taxes on Income, the provision for Deferred Tax Liability has been calculated and accounted. Details of Deferred Tax Asset provided for the Half- year is given as under
(Rs. in Millions)
Particulars As at
30/09/2010
As at
31/03/2010
Deferred Tax Liability as at beginning of the year 162.59 193.34
Deferred Tax Liability at the end of the year 155.48 162.73
Deferred Tax Asset for the year 7.11 30.61
3. Earning Per Share (EPS)
Basic Earning per share calculated as per Accounting Standard 20 on Earning per share. For the purpose of computing
144
(Rs. in Millions)
Particulars For the
Half Year
Ended
September
30, 2010
2009-10
Profit After Tax for calculation of Basic EPS (Rs.in Millions) 864.20 511.79
Profit After Tax for calculation of Diluted EPS (Rs.in Millions) 864.20 511.79
Weighted average No. of equity shares as denominator for calculating Basic EPS. (No. in Millions)
11.31 10.67
Add : Adjustment for FCCB
Weighted average No. of equity shares as denominator for calculating Diluted EPS. (No. in Millions)
14.75 13.39
Basic EPS (Rs.) 75.86 47.98
Diluted EPS (Rs.) 58.59 38.23
4. Segment Reporting
The Company’s operations predominantly consist of construction / project activities. Hence there are no reportable segments under Accounting Standard – 17. During the year under report of the Company’s business has been carried out only in India. The conditions prevailing in India being uniform, no separate geographical disclosures are considered necessary.
5. Figures pertaining to the subsidiary companies and Joint ventures have been reclassified wherever
necessary to bring them line with the company’s financial statements. 6. Previous Year's figures have been reworked, regrouped, rearranged and reclassified wherever necessary.
145
CERTAIN OTHER FINANCIAL INFORMATION (WORKING RESULTS)
Please refer to the section titled “Material Developments” on page 161 for the unaudited financial results of our
Company on a standalone basis for the nine months and quarter ended December 31, 2010, with repect to which
our Auditors have issued a limited review report dated February 14, 2011.
UNCONSOLIDATED WORKING RESULTS OF OUR COMPANY FOR THE PERIOD BETWEEN
THE JANUARY 1, 2011 AND FEBRUARY 28, 2011.
( `̀̀̀ in Millions)
Sales 2,662.36
Other Income 63.25
Estimated Gross Profit excluding Depreciation 209.33
Provision for Depreciation 38.68
Provision for Taxation 51.73
Estimated Net Profit 118.92
MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING FINANCIAL POSITION OF OUR
COMPANY.
Except as disclosed in the section titled “Material Developments” on page 161 of this Draft Letter of Offer there are no material changes and commitments, if any affecting financial position of our Company.
146
MARKET PRICE INFORMATION
Our Company initially listed the Equity Shares of our Company on the BSE w.e.f October 17, 2006 pursuant to an initial public offering. Our Company has pursuant to a letter dated June 7, 2010, applied to the NSE for admission of our Equity Shares to deal on the NSE. We have received in-principle approval for listing of the Rights Securities to be issued pursuant to this Issue from the BSE by letter dated [●]. We will make applications to the BSE for permission to deal in and for an official quotation in respect of the Rights Securities being offered in terms of this Draft Letter OF Offer.
The high, low and average market prices of the Equity Shares of our Company during the preceding three years were recorded, as stated below:
BSE
Fiscal Year High (`) Date of High Low (`) Date of Low
2010 432.95 Wednesday, December 30, 2009
65.00 Wednesday, April 01, 2009
2009 495.70 Friday, April 25, 2008 41.60 Monday, March 09, 2009
2008 677.25 Thursday, January 17, 2008
210.40 Tuesday, April 03, 2007
(Source: BSE)
Monthly high and low prices on the BSE for the six months preceding the date of filing of this Draft Letter of Offer is as stated below:
BSE
Month High (`) Date of High Low (`) Date of Low
February, 2011 235.85 Tuesday, February
01, 2011 206.30 Wednesday,
February 09, 2011
January, 2011 316.8 Monday, January 03,
2011 237.55 Monday, January 31,
2011
December, 2010 373.15 Thursday, December
02, 2010 268.45 Monday, December
13, 2010
November, 2010 398.10 Thursday, November
11, 2010 335.75 Monday, November
29, 2010
October, 2010 405.85 Thursday, October
14, 2010 375.75 Friday, October 29,
2010
September, 2010 401.10 Friday, September 17, 2010
386.15 Thursday, September 09, 2010
(Source: BSE)
The closing price of our Equity Shares as on January 24, 2011 (the trading day immediately following the day on which the Board resolution was passed approving the Issue) was ` 270.80 on the BSE. Week end prices of Equity Shares of our Company for the last four weeks on the BSE along with the highest and lowest price are as below:
BSE
Week ended on Closing Price Highest Price Lowest Price
March 18, 2011 217.35 221.50 216.00
147
BSE
Week ended on Closing Price Highest Price Lowest Price
March 11, 2011 212.55 220.20 212.55
March 4, 2011 218.30
223.50
215.10
February 25, 2011 216.15
229.30
211.65
The market capitalization of our Equity Shares as on December 31, 2010 was ` 3,805.31 million on the BSE based on a market price of ` 317.4. The Issue price of ` [●] has been arrived at in consultation between our Company and the Lead Manager.
148
PRINCIPAL TERMS OF LOANS AND ASSETS CHARGED AS SECURITY
The principal terms of loans and assets charged as security as of February 28, 2011 are as followed:
A. Working Capital Facility (Fund Based)
Name of
Bank
Nature of Loan
and
Object/Purpose
of the Loan
Nature of
Interest
Charge
Sanction
&
Disbursed
Amount
(`̀̀̀ in
millions)
O/s As At
February
28, 2011
(`̀̀̀ In
millions)
Repayment
to be made
in FY 2011
(`̀̀̀In
millions)
Rate of
Interest
on the
Loan as
per
latest
sanction
letter
Repayment
Bank of
Baroda
Clean overdraft and working capital
Monthly interest
1,440.00 1,240.36 Nil Base rate +4%, i.e. 13% p.a.
On demand
Security
1. Hypothecation of all construction materials, book debts, machinery and vehicles (not charged to any specific lender) on First pari-passu basis along with other working capital lending banks, under consortium arrangement, for both fund based and non fund based limits.
2. First pari-passu charge over the fixed assets in the name of guarantors, worth `2,522.3 million by way of equitable mortgage, along with the other working capital lending banks, under consortium arrangement.
3. First pari passu charge over the fixed deposit of `3.7 million in the name of the Company.
Canara
Bank
Clean overdraft and working capital
Floating interest
750.00 757.63 Nil Base rate + 4.75% p.a. (floating) presently 13.75%
On demand
Security
1. Hypothecation of all construction materials, book debts, machinery and vehicles (not charged to any specific lender) on first pari-passu basis along with other working capital lending banks, under consortium arrangement, for both fund based and non fund based limits.
2. First pari passu charge over the fixed assets in the name of guarantors, worth `2,850.3 million by way of equitable mortgage, along with the other working capital lending banks, under consortium arrangement.
3. Pari passu charge by way of security on fixed deposit of ` 3.7 million.
Indian
Overseas
Bank
Clean cash facility and working capital
Floating 460.00 464.85 Nil BPLR i.e. presently 13.25%
On demand
Security
1. Hypothecation of all construction materials, book debts, machinery and vehicles (not charged to any specific lender) on First pari-passu basis along with other working capital lending banks, under consortium arrangement, for both fund based and non fund based limits.
2. First pari passu charge over the fixed assets in the name of guarantors, worth `2,867.8 million by way of equitable mortgage, along with the other working capital lending banks, under consortium
3. Pari passu charge by way of security on fixed deposit of ` 3.7 million.
Andhra
Bank
Secured overdraft and working capital
Interest rate depending on the base rate
100.00 97.72 Nil Base rate +4.25% i.e. 13.25% (at present)
On demand
Security
1. Hypothecation of all construction materials, book debts, machinery and vehicles (not charged to any specific lender) on First pari-passu basis along with other working capital lending banks, under consortium arrangement, for both fund based and non fund based limits.
2. First pari passu charge over the fixed assets in the name of guarantors, worth `2,867.8 million by way of equitable mortgage, along with the other working capital lending banks, under consortium arrangement.
149
Name of
Bank
Nature of Loan
and
Object/Purpose
of the Loan
Nature of
Interest
Charge
Sanction
&
Disbursed
Amount
(`̀̀̀ in
millions)
O/s As At
February
28, 2011
(`̀̀̀ In
millions)
Repayment
to be made
in FY 2011
(`̀̀̀In
millions)
Rate of
Interest
on the
Loan as
per
latest
sanction
letter
Repayment
3. First pari passu charge over the fixed deposit of ` 3.7 million in the name of the Company.
Punjab
National
Bank
Cash Credit Interest rate depending on the base rate
500.00 496.68 Nil Base rate +4. 50% i.e. 13.50 % (at present)
On demand
Security
1. Hypothecation of all construction materials, book debts, machinery and vehicles (not charged to any specific lender) on First pari-passu basis along with other working capital lending banks, under consortium arrangement, for both fund based and non fund based limits.
2. First pari passu charge over the fixed assets in the name of guarantors, worth `2,867.8 million by way of equitable mortgage, along with the other working capital lending banks, under consortium arrangement.
Corporation
Bank
Over draft and working capital
Interest rate depending on the base rate. The bank reserves the right to revise the rate of interest based on gradation or other reasons at the sole discretion of the bank at any point of time.
70.00 70.31 Nil Base rate + 4.25% i.e. 12.50% p.a.
Running account repayable on demand subject to annual renewal.
Security
1. Hypothecation of all construction materials, book debts, machinery and vehicles (not charged to any specific lender) on First pari-passu basis along with other working capital lending banks, under consortium arrangement, for both fund based and non fund based limits.
2. First pari passu charge over the fixed assets in the name of guarantors, worth `2,867.8 million by way of equitable mortgage, along with the other working capital lending banks, under consortium.
3. First pari passu charge over the fixed deposit of `3.7 million in the name of the Company.
Federal
Bank
Cash credit and working capital
Interest based on the bank base rate
150.00 151.15 Nil Base rate + 4.50 (currently 13.00% p.a.)
Security
1. Hypothecation of all construction materials, book debts, machinery and vehicles (not charged to any specific lender) on First pari-passu basis along with other working capital lending banks, under consortium arrangement, for both fund based and non fund based limits.
2. First pari passu charge over the fixed assets in the name of guarantors, worth `2867.8 million by way of equitable mortgage, along with the other working capital lending banks, under consortium
3. Pari passu charge by way of security on fixed deposit of ` 3.7 million.
Syndicate
Bank
Clean over draft limit and for working capital
Based on the prime lending rate
100.00 100.09 Nil BPLR, presently 13.50 %
Repayment on demand
150
Name of
Bank
Nature of Loan
and
Object/Purpose
of the Loan
Nature of
Interest
Charge
Sanction
&
Disbursed
Amount
(`̀̀̀ in
millions)
O/s As At
February
28, 2011
(`̀̀̀ In
millions)
Repayment
to be made
in FY 2011
(`̀̀̀In
millions)
Rate of
Interest
on the
Loan as
per
latest
sanction
letter
Repayment
and floating rate of interest with monthly rests
Security
1. Hypothecation of all construction materials, book debts, machinery and vehicles (not charged to any specific lender) on First pari-passu basis along with other working capital lending banks, under consortium arrangement, for both fund based and non fund based limits.
2. First pari passu charge over the fixed assets in the name of guarantors, worth ` 2,522.3 million by way of equitable mortgage, along with the other working capital lending banks, under consortium
3. Pari passu charge by way of security on fixed deposit of ` 3.7 million.
IDBI Bank
Limited
ODI clean and working capital
Interest based on the BBR and payable monthly
350.00 344.61 Nil BBR + 4.00% (i.e. presently 13 %)
Repayment on demand
Security
1. Hypothecation of all construction materials, book debts, machinery and vehicles (not charged to any specific lender) on First pari-passu basis along with other working capital lending banks, under consortium arrangement, for both fund based and non fund based limits.
2. First pari passu charge over the fixed assets in the name of guarantors, worth `2867.8 million by way of equitable mortgage, along with the other working capital lending banks, under consortium
3. Pari passu charge by way of security on fixed deposit of ` 3.7 million.
Union Bank
of India
Cash credit and for working capital.
Interest to depend on the base rate.
80.00 58.50 Nil Base rate + 4.50% (i.e. presently 13.00%)
Repayment of demand.
Security
1. Hypothecation of all construction materials, book debts, machinery and vehicles (not charged to any specific lender) on First pari-passu basis along with other working capital lending banks, under consortium arrangement, for both fund based and non fund based limits.
2. First pari passu charge over the fixed assets in the name of guarantors, worth `2,867.8 million by way of equitable mortgage, along with the other working capital lending banks, under consortium
3. Pari passu charge by way of security on fixed deposit of ` 3.7 million.
B. Term loan
Name of
Bank
Nature of Loan
and
Object/Purpose of
the Loan
Nature of
Interest
Charge
Sanction
&
Disbursed
Amount
(`̀̀̀ in
millions)
O/s As
At
February
28, 2011
(`̀̀̀ in
millions)
Repayment
to be made
in FY 2011
(`̀̀̀ in
millions)
Rate of
Interest
on the
Loan as
per latest
sanction
letter
Repayment
Bank of
Baroda
Term loan and for purchase of various machineries / equipments / heavy
Interest based on the bank base rate
85.00 29.89
1.67 Base rate +3.0%
(i.e. 11.50%
Sixty monthly installments starting after
151
Name of
Bank
Nature of Loan
and
Object/Purpose of
the Loan
Nature of
Interest
Charge
Sanction
&
Disbursed
Amount
(`̀̀̀ in
millions)
O/s As
At
February
28, 2011
(`̀̀̀ in
millions)
Repayment
to be made
in FY 2011
(`̀̀̀ in
millions)
Rate of
Interest
on the
Loan as
per latest
sanction
letter
Repayment
carriers and loaders etc., required by the company for their business activities and for purchasing new construction material.
and monthly interest.
p.a.) six months from date of sanction or October 31, 2010, whichever is earlier.
Security
1. Demand promissory note. 2. Exclusive charge over the construction material / machinery equipment purchased out of the term loan, 3. Personal guarantee of T.V.Sandeep Kumar Reddy
Canara
Bank
Rupee term loan and For Procurement of New Machinery and Construction Equipment amount of `295.50 million, to be deployed initially at AP-4 (ORR Project, Hyderabad) Project awarded by Hyderabad Growth Corridor Ltd., in favour of MAYTAS – Gayatri Consortium and later to be utilized in other projects after completion of AP-4 project.
Floating interest
221.50 81.91 4.10 BPLR - 1% i.e. at present 12.25%
60 months i.e. 53 installments each of ` 4.1 million and 54th installment of ` 4.2 million with a repayment holiday of 6 months.
Security
1. Exclusive charge on machinery and construction equipment acquired / to be acquired valued `296.00 million. 2. Continuing security of EMT of open plot admeasuring 501.12 square yards situated at Plot No.4504, Phase IV, DLF
City, Gurgaon valued `27.5 million as per Valuation Report dated 15.01.2007 belonging to M/s.Maheshwari Hotels & Theatres Private Limited.
Canara
Bank
Term loan for the purpose of acquiring construction equipment worth ` 235.20 million
Floating interest
176.40 50.78 2.94 BPLR i.e. presently 12.0%
60 equal monthly installments starting from January 2010, to December 2014 including a moratorium period of 4 months.
Security
1. Exclusive first charge on the construction equipment proposed to be purchased out of the proposed term loan. 2. Continuing security of EMT of open plot admeasuring 501.12 Square yards situated at Plot No.4504, Phase IV, DLF
City, Gurgaon valued `27.5 million as per Valuation Report dated 15.01.2007 belonging to M/s.Maheshwari Hotels & Theatres Private Limited
152
Name of
Bank
Nature of Loan
and
Object/Purpose of
the Loan
Nature of
Interest
Charge
Sanction
&
Disbursed
Amount
(`̀̀̀ in
millions)
O/s As
At
February
28, 2011
(`̀̀̀ in
millions)
Repayment
to be made
in FY 2011
(`̀̀̀ in
millions)
Rate of
Interest
on the
Loan as
per latest
sanction
letter
Repayment
IDBI Bank
Limited
Medium term loan and to meet long term operative expenditure and other project related expenditure in respect of Gayatri-RNS JV project viz. “Improvement of Naranpur-Pandapada- Harichandanpur – Brahmanipal _ Duburi Road in the Districts of Keonjhar & Jajpur, Orissa
Interest to be based on the bank’s prime lending rate.
150.00 136.20 5.00 BPLR i.e. presently 12.75% p.a.
15 monthly installment of ` 5.0 million each commencing from end of the moratorium period and last and final installment of ` 75.00 million in December 2011. 27 months including moratorium of 12 months from the date of first disbursement.
Security
1. Exclusive first charge on entire current assets and movable fixed assets of GPL-RNS JV. 2. The escrow of receivables arranging out of the contract bills with Executive Engineer, Keonjhar, R & B Division,
Government of Orissa. 3. Post dated cheques from GPL for principal repayment.
Federal
Bank
Limited
Demand loan and towards meeting various business needs for acquisition/purchase of assets, furniture and fixtures.
Compound interest.
100.00 26.02 3.94 BPLR-1.75%, minimum of 13%
32 equal monthly installments commencing from the second month of first disbursement of the loan
Security
Hypothecation of construction machinery / equipment purchased out of the demand loan.
Oriental
Bank of
Commerce
Term loan and for procurement of new machinery and construction equipment.
Interest to be based on the bank’s prime lending rate.
196.00 36.51 3.20 1.50% below PLR, presently 12.50-1.50% = 11.00% with monthly rests.
Repayable in 54 equal monthly installments after an initial moratorium period of 6 months
Security
Exclusive hypothecation of machinery & equipments purchased amounting to ` 250.00 million by availing term loan from bank.
Bank of
Maharashtra
Term loan and to meet the ongoing capital expenditure
Interest to be based on the
500.00 505.05 125.00 BPLR – 0.50% presently
Four quarterly installment of
153
Name of
Bank
Nature of Loan
and
Object/Purpose of
the Loan
Nature of
Interest
Charge
Sanction
&
Disbursed
Amount
(`̀̀̀ in
millions)
O/s As
At
February
28, 2011
(`̀̀̀ in
millions)
Repayment
to be made
in FY 2011
(`̀̀̀ in
millions)
Rate of
Interest
on the
Loan as
per latest
sanction
letter
Repayment
already incurred and/or to be incurred by the company
bank’s prime lending rate at a monthly rest.
11.75% per annum
` 125.00 million each commencing from the end of the 15th month from the date of first disbursement and at an interval of every quarter thereafter. There also would be an initial moratorium period of 12 months.
Security
1. First pari passu hypothecation charge over fixed assets of the company with FACR of 1.25 : 1 2. Post dated cheques for payment of principal and interest as per repayment schedule.
Punjab
National
Bank
Purchase bill discounting to meet capital needs for completion of ongoing work orders
Subject to change in base rate.
500.00 419.08 117.25 Base rate + 2.50 i.e. 10.50% per annum subject to change from time to time.
Bullet payment from the end of twelve months from disbursement.
Tata Capital
Limited
Equipment loan to buy various construction equipments.
Based on the internal rate of return.
180.39 65.42 7.06 Internal rate of return i.e. presently
24 months to 36 months.
Security
1. Exclusive 1st charge i.e. Hypothecation of the assets purchased under these bills charged to the bank, 2. Post dated cheques for bill amount and interest on the due date of the bill
SREI
Equipment
Finance
Private
Limited
Term loan for corporate purposes
Based on the internal rate of return.
542.37 406.19 4.94 Internal rate of return i.e. presently @13% @
` 18,97,600 for 3 months and 13%
@ ` 47,44,000
30 months including initial moratorium period of 90 days.
154
Name of
Bank
Nature of Loan
and
Object/Purpose of
the Loan
Nature of
Interest
Charge
Sanction
&
Disbursed
Amount
(`̀̀̀ in
millions)
O/s As
At
February
28, 2011
(`̀̀̀ in
millions)
Repayment
to be made
in FY 2011
(`̀̀̀ in
millions)
Rate of
Interest
on the
Loan as
per latest
sanction
letter
Repayment
for 24 months.
Security
Primary security of equipment
Bank of
Baroda
General corporate purposes / Preliminary expenses of various projects.
Interest based on the bank base rate
and monthly interest.
500.00 504.78 Nil Base rate +3.0%
(i.e. 11.50%
p.a.)
Bullet payment at the end of 12 months.
Security
1. Demand promissory note. 2. Post dated cheques for principal and interest repayment.
Syndicate
Bank
Short Term Loan to meet Preliminary expenses for new power project
Based on the prime lending rate and floating rate of interest with monthly rests
500.00 504.59 Nil PLR Bullet payment at the end of 18 months from the date of first release.
Security Personal guarantee of T.V.Sandeep Kumar Reddy and Sri T.Subbarami Reddy
Punjab
National
Bank
Short Term Loan to meet project related expenses of various road projects on BOT basis.
BPLR 1000.00 1008.72 1000.00 11.50% p.a. (linked to BPLR)
Bullet payment at the end of 12 months from the date of disbursement.
Security
1. Post dated cheques for principal and interest repayment. 2. Personal guarantee of T.V.Sandeep Kumar Reddy and Sri T.Subbarami Reddy
Punjab
National
Bank
Term Loan for purchase of construction equipments.
Subject to change in base rate.
250.00 19.68 Nil Base rate + 2.5 i.e. 10.50% per annum subject to change from time to time
Repayable in 48 Equal Monthly Installments. Interest is to e paid as and shen levies.
Security Exclusive 1st charge on the construction equipment being purchased with the term loan
C. Vehicle Loans
In addition to the above we have availed of vehicle loans aggregating to the value of ` 52.21 million of which ` 24.12 million is outstanding as on February 28, 2011.
155
SECTION VII – LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATIONS AND OTHER DEFAULTS
Except as described below, there are no outstanding litigations, suits, civil or criminal prosecutions, proceedings before any judicial, quasi-judicial, arbitral or administrative tribunals, including pending proceedings for violation of statutory regulations or, alleging criminal or economic offences or tax liabilities or any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of Part 1 of Schedule XIII of the Companies Act) against our Company that would have a material adverse effect on our business. Further there are no defaults, nonpayment or overdue of statutory dues, institutional/bank dues and dues payable to holders of debentures, bonds and arrears of cumulative preference shares that would have a material adverse effect on our business.
Save as detailed herein there are no:
(a) pending legal proceedings which, if they result in an adverse outcome, would materially and
adversely affect the operations or the financial position of our Company;
(b) Matters which are pending or which have arisen in the immediately preceding ten years involving:
(i) Issues of moral turpitude or criminal liability on the part of our Company;
(ii) Material violations of statutory regulations by our Company
(iii) Economic offences where proceedings have been initiated against our Company.
In view of our Company, all outstanding civil, arbitral and tax related litigations and disputes of value more than ` 20 million are material to our Company. As on the date of this Draft Letter of Offer, we had the following Legal proceedings pending before various courts and authorities. In terms of the Schedule VIII Part E (XII) of the SEBI (ICDR) Regulations, the following legal proceedings have been disclosed:
A. Proceedings initiated against our Company:
Criminal Proceedings
There are no criminal proceedings initiated against our Company.
Civil Proceedings
1. The Chief Engineer Kakinada Port has filed a civil revision petition against Cemindia and our
Company amongst others before the Hon’ble High Court of Andhra Pradesh challenging the decree passed by the Principal Civil Judge Kakinada, (“Trial Court”). Pursuant to the aforesaid decree the Trial Court had upheld an award dated March 22, 2004 passed in favour of our Company by the relevant arbitral tribunal upholding our claims aggregating to ` 22.17 million in connection with a contract for execution of works at the Kakinada Port executed with our Company. The aforesaid proceedings are pending final hearing and disposal.
2. Apart from the aforementioned, 8 (Eight) civil proceedings initiated against our Company aggregating to approximately ` 23.78 million are pending final hearing and adjudication before various forums.
B. Proceedings initiated by our Company:
Criminal Proceedings
There are no criminal proceedings initiated by our Company.
Civil Proceedings
1. Our Company has instituted a suit (Original Suit No. 1825 of 2009) against ENSEFT Bitumenous Products Private Limited, (“ENSEFT”), and Another, before the Hon’ble High Court of Delhi
156
seeking an injunction against ENSEFT restraining them from invoking a bank guarantee aggregating to ` 25 million against our Company in connection with a purchase order for supply of Bitumen by ENSEFT. The Hon’ble High Court has pursuant to an order dated September 23, 2009 granted interim-relief to our Company and issued a temporary injunction against ENSEFT restraining them from invoking the aforesaid bank guarantee. The proceedings are pending further hearing and final disposal
2. Our Company has preferred an appeal vide a special leave petition (SLP. No. 4897/2007) before the Hon’ble Supreme Court of India, against one Sai Krishna Construction, challenging an order dated December 20, 2006 passed by the Hon’ble High Court of Andhra Pradesh, pursuant to which the Hon’ble High Court had appointed a sole arbitrator in connection with alleged arbitral proceedings initiated by Sai Krishna Construction in relation to a sub-contract between our Company and Sai Krishna Construction. The amount involved in the aforesaid proceedings is ` 26.59 million, and the proceedings are pending further hearing and final disposal.
3. Our Company has preferred an appeal against the Government of Andhra Pradesh and others (Civil Appeal No. 1443 of 2004 and SLP (Civil) No. 5834 of 2003) before the Hon’ble Supreme Court of India against the final judgment and order dated January 9, 2003 issued by the Hon’ble High Court of Judicature, Andhra Pradesh, (“Impugned Order”). The Impugned Order had set aside a petition filed by our Company under Article 226 of the Constitution of India whereby our Company had prayed two notices dated July 4, 2001 and January 19, 2001, respectively, issued by the Deputy Director of Mines and Geology, Visakhapatnam, whereby our Company was made liable to pay normal seigniorage and five times penalty thereon aggregating to ` 104.35 million towards mineral revenue, in connection with earth and soil excavated by our Company for filling works carried out in relation to one of our projects. The Hon’ble Supreme Court of India vide a their judgment dated October 20, 2008 set aside the Impugned Order and remitted the matter to the Andhra Pradesh State Government to reconsider the matter after supplying to the appellants copies of reports/inspection notes on which the aforesaid case rests. Our Company is awaiting the Andhra Pradesh State Government to initiate action pursuant to the aforesaid judgment issued by the Hon’ble Supreme Court of India. The aforesaid proceedings is pending further hearing and final disposal.
4. Apart from the aforementioned, 8 (Eight) civil proceedings initiated by our Company aggregating to approximately ` 20.82 million are pending final hearing and adjudication before various forums.
Arbitral Proceedings
1. Our Company has initiated arbitration proceedings against the Ondeo Degremont Limited, Banagalore, (“ODL”), in connection with a dispute arising out of a contract executed by our Company for a 270MLD water treatment plant at T.K.Halli, Bangalore, (“Contract”). Our Company has claimed that as a consequence of alleged delays by ODL and/or its principles, what was to be a 12-month contract for our Company became a 36 month venture, putting our Company to allegedly great loss. Further, it has been alleged that in the course of the Contract, the scope and nature of the Contract was greatly varied and, for all intends and purposes, it became a rate contract. Our Company has accordingly made a claim for the amount outstanding under the final account bill after making all adjustments, a claim for additional expenses incurred by our Company due to delay in the contract by ODL, claim for account of deemed export excise duty benefit receivable by our Company, and claim for loss of profit suffered by our Company. The total amount involved is ` 87.18 million. The Statement of Claim along with documents on behalf of our Company was submitted to the arbitral tribunal constituted on March 8, 2004. ODL in turn has preferred counter claims inter-alia alleging a loss on account of office and establishment, loss on account of overhead expenses, additional cost incurred for completing the incomplete works, on account Claimant’s failure to attend the works during the defects liability period, on account of delay in electro-mechanical works, on account of amounts paid/released in excess to the Claimant, on account of excess payments paid as escalation, on account of renewal of Bank Guarantees and insurance policies in connection with the aforesaid dispute. The principal value of the said
157
counter-claims is `45.73 million, whereas ODL has additionally claimed with interest `22.92 million. The aforesaid dispute is pending further hearing and final disposal.
Tax related Proceedings
1. Our Company has preferred an appeal before the Customs, Excise and Service Tax Appellate
Tribunal, (“CESTAT”), Bangalore, against the Commissioner of Customs and Central Excise, Hyderabad, (“Service Tax Commissioner”), against an order in original March 17, 2008, issued by the Service Tax Commissioner in connection with certain construction works caaried out by our Company for the Chattisgarh State Electricity Board, whereby a service tax demand to the tune of ` 12.42 million was confirmed against our Company along with interest payable thereon under Section 73(2) and and Section 75 of the Finance Act, 1994 and penalties of ` 100 per day, ` 1,000 and ` 5.61 million (the disputed amount aggregating to ` 19.74 million) was imposed on our Company. Our Company has sought that the tribunal waive the requirement for our Company to submit a pre-deposit in connection with the aforementioned order –in- original and that the operation of the aforementioned order in original to be stayed and the appeal be heard on merits. The aforesaid proceedings are pending further hearing and final disposal.
2. Our Company has prefereed 3 other appeals before the Sales Tax Appellate Tribunal Karnataka,
the CESTAT, Bangalore, and the CESTAT Kolkata, respectively, in connection with disputed sales tax liabilities of (i) ` 2.48 million, (ii) ` 4.98 million (along with penalties of ` 1,000 and ` 4.98 million (iii) ` 1.00 million (along with a penalty of ` 200 per day or 2% of such tax per month whichever is higher, ` 1,000 and `1.00 million), respectively. The aforementioned appeals are pending further hearing and final disposal.
C. Proceedings initiated against our Joint Ventures:
Criminal Proceedings
There are no criminal proceedings initiated against our Joint Ventures.
Civil Proceedings
1. The Chief Engineer (R&B) and Managing Director, Andhra Pradesh Road Development Corporation, (“APRDC”), has filed an application under section 34 (2) of the Arbitration and Conciliation Act, 1996 against our joint venture, IJM-Gayatri Joint Venture, (O.P No. 345 of 2007), before the Chief Judge, City Civil Court, Hyderabad, seeking to set aside an arbitral award dated October 26, 2006, (“Impugned Award”), passed by the arbitral tribunal comprising K. Vijaya Raghavan, P. V. Ramaraju, and N.K. Bahri, (“Tribunal”). Pursuant to the Impugned Award the Tribunal had allowed the claims aggregating to ` 177.54 million in favour of IJM-Gayatri Joint Venture in connection with disputes arising out of a contract dated March 12, 1999 with APRDC for the work of widening and strengthening of Tallada-Devarapalli Road. The aforesaid proceedings is pending further hearing and final disposal.
2. The Chief Engineer (R&B) and Managing Director, Andhra Pradesh State Highways, (“APSH”), has filed an application under section 34 (2) of the Arbitration and Conciliation Act, 1996 against our joint venture, IJM-Gayatri Joint Venture, (O.P No. 1470 of 2010), before the Chief Judge, City Civil Court, Hyderabad, seeking to set aside an award dated February 13, 2010, (“Impugned
Award”), passed by the arbitral tribunal comprising Md. Ghousuddin, N.K. Bahri and C.C. Bhatacharya, (“Tribunal”). Pursuant to the Impugned Award the Trbunal had allowed the claims aggregating to ` 123.09 million in favour of IJM-Gayatri Joint Venture in connection with disputes arising out of a contract dated March 8, 2000 with APSH for the work of widening and strengthening of Warangal-Khammam-Tallada Road. The aforesaid proceedings is pending further hearing and final disposal.
3. The Chief Engineer (R&B) and Managing Director, Andhra Pradesh State Highways, (“APSH”), has filed an application under section 34 (2) of the Arbitration and Conciliation Act, 1996 against
158
our joint venture, IJM-Gayatri Joint Venture, (O.P No. 346 of 2007), before the Chief Judge, City Civil Court, Hyderabad, seeking to set aside an award dated January 26, 2006, (“Impugned
Award”), passed by the relevant arbitral, (“Tribunal”). Pursuant to the Impugned Award the Trbunal had allowed the claims aggregating to ` 22.72 million in favour of IJM-Gayatri Joint Venture in connection with disputes arising out of a contract dated with APSH for the work of widening and strengthening of Tallada - Devarapalli Road. The aforesaid proceedings is pending further hearing and final disposal.
4. Apart from the aforementioned, 2 (two) civil proceedings initiated against our Joint Ventures aggregating to approximately ` 0.01 million are pending final hearing and adjudication before various forums.
D. Proceedings initiated by our Joint Ventures:
Criminal Proceedings
There are no criminal proceedings initiated by our Joint Ventures.
Civil Proceedings
1. Our joint venture, IJM-Gayatri Joint Venture, has filed an application under section 34 of the Arbitration and Conciliation Act, 1996 read with section 151 of the Code of Civil Procedure, 1908 against National Highways Authority of India, (“NHAI”), (OMP No. 147 of 2006), before the High Court of Delhi, New Delhi, seeking to set aside an arbitral award dated December 12, 2005, (“Impugned Award”), passed by the arbitral tribunal comprising Shri Jagdish Panda, L.R. Gupta and Justice S. S. Sodhi, (“Tribunal”), in the arbitration proceedings between IJM-Gayatri Joint Venture and NHAI. Pursuant to the Impugned Award our the Tribunal had rejected our Company’s claim amounting to approximately ` 1,477.40 million against NHAI in connection with a dispute with NHAI relating to a contract therewith in connection with rehabilitation and upgrading of a two lane road to 4/6 lane divided carriageway from Ongole to Chilakaluripet, Andhra Pradesh. Our Company has sought to set aside the Impugned Award on alleged grounds inter-alia including that the presiding arbitrator allegedly did not disclose his interest in connection with the contract in question, that the same was bad in law and sought to modify the basic agreement as envisaged between the parties to the said contract. The aforesaid proceedings is pending further hearing and final disposal.
2. 3 (Three) civil proceedings initiated by our Joint Ventures aggregating to approximately `
1,560.19 million are pending final hearing and adjudication before various forums.
Arbitral Proceedings
1. Our Joint Venture, IJM-Gayatri Joint Venture has initiated arbitral proceedings against the NHAI in connection with alleged disputes arising out of a contract with NHAI (Contract Package-I, NH-5) relating to widening to four lanes and strengthening of existing two lane road in the Chilakaluripet - Vijayawada Section of NH-5. IJM-Gayatri Joint Venture has inter-alia asserted claims for compensation of loss of profit due to prolongation of the said contract, claim for loss of productivity to plant and equipment due to prolongation of the said contract, claim for loss sustained due to locking of securities during the extended period of the said contract and other incidental claims, aggregating to `105.36 million. The aforesaid dispute is pending further hearing and final disposal.
2. Our Joint Venture, IJM-Gayatri Joint Venture has initiated arbitral proceedings against the NHAI in connection with alleged disputes arising out of a contract with NHAI (Contract Package-II, NH-5) relating to widening to four lanes and strengthening of existing two lane road of Chilakaluripet - Vijayawada Section of NH-5. IJM-Gayatri Joint Venture has inter-alia asserted claims for compensation of loss of profit due to prolongation of the said contract, claim for loss of productivity to plant and equipment due to prolongation of the said contract, claim for loss sustained due to locking of securities during the extended period of the said contract and other
159
incidental claims, aggregating to `134.22 million. The aforesaid dispute is pending further hearing and final disposal.
3. Our Joint Venture, IJM-Gayatri Joint Venture has initiated arbitral proceedings against the NHAI in connection with alleged disputes arising out of a contract with NHAI (Contract Package-III, NH-5) relating to widening to four lanes and strengthening of existing two lane road of Chilakaluripet - Vijayawada Section of NH-5. IJM-Gayatri Joint Venture has inter-alia asserted claims for compensation of loss of profit due to prolongation of the said contract, claim for loss of productivity to plant and equipment due to prolongation of the said contract, claim for loss sustained due to locking of securities during the extended period of the said contract and other incidental claims, aggregating to `99.64 million. The aforesaid dispute is pending further hearing and final disposal.
Tax related Proceedings
1. Our Joint Venture, Jaiprakash-Gayatri Joint Venture, has preferred an appeal against the Commissioner of Customes and Central Excise, Hyderabad, (“Sales Tax Commissioner”), before the CESTAT, Bangalore, in connection with an order in original dated March 24, 2009, whereby the Sales Tax Commissioner has confirmed an amount of ` 30.86 million of sales tax payable by the aforesaid Joint Venture, in connection with works contracts executed by the said Joint Venture, along with applicable interest, and penalties (i) at the rate of 2% per annum on servoice tax amounting to ` 29.11 million, (ii) ` 1,000, and (iii) ` 31.00 million and (iv) interest at applicable rates on amount of service tax determined. The aforesaid Joint Venture has prayed to have the aforesaid order-in-original set aside, its operation be stayed and the appeal be heard on its merits. The aforesaid dispute is pending further hearing and final disposal.
2. Further, our Joint Venture Gayatri BCBPPL Joint Venture, has preferred an appeal before the CSTAT, Banglaore against the Commissioner of Customs and Central Excise, Hyderabad in connection with an order in original dated March 25, 2009, whereby the Service Tax Commissioner has confirmed as amount of `10.88 Millions of Service Tax payable by the aforesaid Joint Venture, in connection with works contract executed by the said Joint Venture, along with applicable interest, and penalties (i) at the rate of 2% per month on service tax amounting to ` 9.99 Millions, (ii) ` 11.00 Millions and (iii) `5.000 and (iv) interest at applicable rates on amount of service tax determined. The aforesaid Joint Venture has prayed to have the aforesaid order-in-original set aside, its operation be stayed and the appeal be heard on its operation be stayed and the appeal be heard on its merits. The aforesaid disputed is pending further herewith and final disposal.
E. Proceedings by or against our Subsidiaries
No legal proceedings have been initiated by or against our Subsidiaries.
F. Past Defaults by our Company
We had issued 14% secured redeemable non-convertible debentures of ` 100 each of the aggregate value of ` 150 million on a private placement basis to the Unit Trust of India, (“UTI”) in May, 2001. We delayed payment of interest during 2001-02 and 2002-03 due to financial constraints. Consequently, UTI issued recall notice in January, 2003 and enforcement of guarantee notice in February, 2004. We cleared all our dues to UTI in September, 2004.
G. Contingent Liabilities Not Provided For
As of September 30, 2010, we had the following contingent liabilities that have not been provided for in our financial statements:
(` in millions)
Bank Guarantees 7,307.51
Corporate Guarantees given to Group Companies 55,866.60
Disputed Liability of Sales Tax, Service Tax and Siegniorage Charges 153.04
Total 63,327.15
160
GOVERNMENT AND OTHER APPROVALS
We have received the necessary permissions/approvals/no-objections/certifications/registrations,
(collectively “Authorizations”), from GoI and various governmental agencies required for our present
business and except as disclosed in this Draft Letter of Offer no further approvals are required for carrying
on our present business. The objects clause of the Memorandum of Association enables our Company to
undertake its existing activities.
Authorizations applied for and not obtained: As on the date of this Draft Letter of Offer there are no Authorizations required by us which, we have not applied for, renewed and/or obtained in connection with our business and/or operations, save as detailed hereinbelow:
i. Pursuant to a letter dated March 11, 2011 our Company has sought an approval from the FIPB in connection with the offer, issuance and allotment of Warrants to Non Residents. Accordingly, the offer, issuance and allotment of Rights Securities to Non Residents, will be subject to our Company obtaining the aforesaid approval from the FIPB in this regard and/or any further conditions that may be prescribed by the FIPB in connection with such approval.
ii. Our Company has pursuant to a letter dated June 7, 2010, applied to the NSE for admission of our
Equity Shares to deal on the NSE.
iii. Pursuant to a letter dated January 21, 2011 addressed to the trustees for the FCCBs, our Company has sought (a) a confirmation from the trustees that our Company can suspend the conversion of the outstanding FCCBs into Equity Shares from the Record Date fixed in connection with the Issue by our Company till the listing of the Rights Securities issued thereunder, and (b) a waiver from complying with certain conditions of the offering circular in connection with the FCCBs so as to ensure that our Company is in compliance with applicable statutory, regulatory and contractual requirements in connection with the FCCBs and the Issue.
161
MATERIAL DEVELOPMENTS
Save as disclosed hereinafter, there have been no developments since September 30, 2010 which effect the
operations, performance, prospects or financial condition of our Company:
1. The Board of Directors of our Company in its meeting dated October 21, 2010 approved to issue of secured redeemable non-convertible debentures of face value of ` 100,000/- (Rupees One hundred thousand) each aggregating upto aggregating to ` 1,000 million including a green shoe option, the notice of postal ballot for increase of authorized capital and issue of corporate guarantee to IL&FS on behalf of its subsidiary company u/s 372A of the Companies Act, 1956 for an amount not exceeding ` 1350.00 million;
2. On October 29, 2010 our Promoter T.V. Sandeep Kumar Reddy has exercised 298,760 warrants and
been allotted 298,760 Equity Shares thereupon at a warrant conversion price of `142.52 and our Promoter T. Indira Subbarami Reddy has exercised 298,761 warrants and been allotted 298,761 Equity Shares thereupon at a warrant conversion price of `142.52.
3. The Board of Directors pursuant to the meeting dated January 21, 2011 approved the investment
through our wholly owned Subsidiary Gayatri Energy Ventures Private Limited to the extent of ` 10,000 million (invested in tranches as and when required) in NCC Power Projects Limited/its affiliate/associate/subsidiary
4. On February 14, 2011, inter alia, the Board of Directors have approved following:
• the first tranche equity infusion of `3,640 million by Sembcorp Industries Pte Limited in Thermal Powertech Corporation India Limited, a step-down subsidiary of our Company, pursuant to which our equity shareholding (through our wholly owned subsidiary Gayatri Energy Ventures Private Limited) in Thermal Powertech Corporation India Limited was reduced from 100% to 51%.
• investment up to 50% (in tranches as and when required) in the equity share capital of Jinbhuvish Power Generations Private Limited through our Subsidiary Gayatri Energy Ventures Private Limited in connection with the establishment of a 600MW(2 x 300) thermal power project in the state of Maharashtra.
• to provide sponsor undertaking to our BOT Project, M/s. HKR Roadways Limited in favour of the consortium lenders.
5. On March 14, 2011, 402,479 outstanding warrants which were allotted to our Promoters, T. Sandeep
Kumar Reddy and T. Indira Subbarami Reddy have lapsed and the application monies received in connection therewith have been accordingly forfeited.
6. On February 14, 2011 our Board of Directors approved the standalone financial results as at and for the quarter and the nine month period ended December 31, 2010, as filed with the stock exchanges in accordance with clause 41 of the listing agreement as further detailed hereinafter:
162
LIMITED REVIEW REPORT
Review Report to M/s. Gayatri Projects Limited We have reviewed the accompanying statement of un-audited financial results of M/s.Gayatri Projects
Limited for the period ended 31st December, 2010 except for the disclosures regarding ‘Public Shareholding’ and ‘Promoter and Promoter Group Shareholding’ which have been traced from disclosures made by the management and have not been audited by us. This statement is the responsibility of the Company’s Management and has been approved by the Board of Directors/Committee of Board of Directors. Our responsibility is to issue a report on these financial statements based on our review. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2400, engagements to Review Financial Statements issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying statement of un-audited financial results prepared in accordance with applicable accounting standards and other recognized accounting practices and policies has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it contains any material misstatement.
For C.B. MOULI & ASSOCIATES
Chartered Accountants
Firm Regn.No.002140S
(MANI OOMMEN)
(Partner)
(M. No. 24046)
Place: Secunderabad Date : February 14, 2011
163
UN-AUDITED FINANCIAL RESULTS FOR THE NINE-MONTHS ENDED 31st DECEMBER 2010
Rs.in Millions
S.No. Particulars None-Months Ended Year Ended
31.12.2010 31.12.2009 31.03.2010
Unaudited Unaudited Audited
1 (a) Net Sales/ Income from Operations 10,068.77 8,752.68 12,524.86
(b) Other Operating Income - - -
2 Expenditure
a. Increase/ {Decrease} in Stock in Trade 129.41 (189.43) (18.89) b. Consumption of Raw Material 8,219.78 7,577.18 10,532.22 c. Purchase of traded goods - - - d. Employees Cost 243.73 180.90 280.44 e. Depreciation 170.60 149.15 200.57 f. Other Expenditure 157.76 143.10 208.11
g. Total 8,921.28 7,860.90 11,202.45
3 Profit from Operations before Other Income, Interest and
Exceptional Items 1,147.49 891.78 1,322.41
4 Other Income 39.13 35.19 42.05
5
Profit from Operations before Interest and Exceptional Items 1,186.62 926.97 1,364.46 6 Interest 541.48 373.99 554.42
7 Profit from Operations before Exceptional Items 645.14 552.98 810.04
8 Exceptional Items - - -
9 Profit(+)/ Loss (-) from Ordinary Activities before tax (7-8) 645.14 552.98 810.04
10 Tax Expenses 198.88 169.80 276.54
11 Net Profit / Loss (-) from Ordinary Activities after tax ( 9-10 ) 446.26 383.18 533.50
12 Extraordinary Items (net of tax expenses) - - -
13 Net Profit / Loss (-) for the Period(11-12) 446.26 383.18 533.50
14 Paid Up Equity Capital 119.89 111.05 111.05 (Face Value of the Share ) 10.00 10.00 10.00
15 Reserves excluding revaluation reserves as per Balance Sheet of
previous accounting year 2,804.12 2,056.50 2,056.50
16 Earning Per Share (EPS)
a) Basic and diluted EPS before Extraordinary Items for the period, for the year to date and for the previous year (not to be annualized) 30.33 29.02 36.67
b) Basic and diluted EPS after Extraordinary Items for the period, for the year to date and for the previous year (not to be annualized) 30.33 29.02 36.67
17 Public Share Holding - Number of shares 53,95,732 50,08,789 50,08,789
- Percentage of holding. 45.01% 45.10% 45.10%
18 Promoters and promoter group share holdings a) Pledged / Encumbered - Number of shares 59,95,217 54,29,245 - Percentage of shares (as a % of the total shareholding of promoter
and promoter group) 90.93% 89.06%
- Percentage of shares (as a % of the total share capital of the company) 50.01% 48.89%
b) Non-Encumbered - Number of shares 5,98,051 6,66,727 - Percentage of shares (as a % of the total shareholding of promoter
and promoter group) 9.07% 10.94% - Percentage of shares (as a % of the total share capital of the
company) 4.98% 6.00%
164
OTHER REGULATORY AND STATUTORY DISCLOSURES
Authority for the Issue The Board of Directors of our Company has pursuant to a resolution passed at their meeting held on January 21, 2011, authorized this offer of Rights Securities on a rights basis.
Our Company confirms that none of its Directors are associated with the securities market in any manner and except as disclosed in this Draft Letter of Offer, SEBI has not initiated any action against our Company or its Directors. The shareholders of our Company vide a resolution dated February 24, 2011 vide a postal ballot pursuant to a postal ballot notice dated January 21, 2011, have approved the reservation of Equity Shares and Warrants of our Company in connection with the Issue for holders of all outstanding FCCBs of our Company. Pursuant to a letter dated March 11, 2011 our Company has sought an approval from the FIPB in connection with the offer, issuance and allotment of Warrants to Non Residents. Accordingly, the offer, issuance and allotment of Rights Securities to Non Residents, will be subject to our Company obtaining the aforesaid approval from the FIPB in this regard and/or any further conditions that may be prescribed by the FIPB in connection with such approval. Prohibition by SEBI
Neither our Company, nor our Directors or companies with which our Directors are or were associated with as directors or promoters, have been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI.
Wilful Defaulters
Our Company, our Promoters, the relatives (as per Companies Act) of our Promoters and our Group Companies, have not been named by the RBI or any other statutory/regulatory authority as willful defaulters. Securities Related Business
There are no entities engaged in the securities related businesses with which any of our Directors are associated with in any manner.
Eligibility for the Issue
Our Company is an existing listed company registered under the Companies Act whose Equity Shares are listed on the BSE. Our Company has complied with the requirements of Part E of Schedule VIII of the SEBI (ICDR) Regulations, to the applicable extent, in terms of the disclosures made in this Draft Letter of Offer. Further, our Company confirms that it is in compliance with the following: (a) our Company has been filing periodic reports, statements and information in compliance with the
listing agreement for the last three years immediately preceding the date of filing this Draft Letter of Offer with SEBI;
(b) the reports, statements and information referred to in sub-clause (a) above are available on the
website of any recognized stock exchange with nationwide trading terminals or on a common e-filing platform specified by SEBI;
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(c) our Company has investor grievance-handling mechanism which includes meeting of the Shareholders’ or Investors’ Grievance Committee at frequent intervals, appropriate delegation of power by the Board of Directors as regards share transfer and clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances.
Our Company has complied with the provisions of Regulation 4 of the SEBI (ICDR) Regulations in connection with the general eligibility requirements for the Issue and confirms that:
1. Our Company, nor our Promoters, our Promoter Group, our Group Companies, Directors or person(s) in control of our Promoter have not been restrained, prohibited or debarred from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI;
2. None of our Promoters, Directors or persons in control of our Company was or also is a promoter,
director or person in control of any other company which has been restrained, prohibited or debarred from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI;
3. Our Company, our Directors, our Promoters, our Promoter Group, our Group Companies and the
relatives (as per Companies Act) of our Directors and our Promoters, have not been declared as willful defaulters by RBI or any other governmental authority and there have been no violations of securities laws committed by us in the past, and except as disclosed herein, no such proceedings are pending against them for alleged violation of securities laws;
4. Our Company is an existing company registered under the Companies Act, whose Equity Shares
are listed on the BSE and we have received an in-principle approval for listing of the Rights Securities to be issued pursuant to this Issue from the BSE vide their letter dated [●], and have chosen BSE to be the Designated Stock Exchange for the purposes of this Issue. We will make an application to the BSE for permission to deal in and for an official quotation in respect of the Rights Securities being offered in terms of this Draft Letter of Offer.
5. All existing partly paid-up Equity Shares of our Company have either been fully paid up or
forfeited and as on the date of this Draft Letter of Offer, there are no outstanding partly paid-up Equity Shares of our Company;
6. The aforesaid requirement of funds is proposed to be entirely financed by the Net Proceeds of the
Issue and our Company’s internal accruals / other sources as mentioned in the section entitled “Objects of the Issue” on page 47 of this Draft Letter of Offer. Thus, provisions of Regulation 4 (g) of the SEBI (ICDR) Regulations for firm arrangements of finance through verifiable means towards 75% of the stated means of finance, excluding the amount to be raised through the proposed Issue and internal accruals/ other sources, does not apply to our Company as our Company do not proposes to avail any borrowed funds for part financing the Object of the Issue.
Disclaimer Clause
AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO
SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THE DRAFT
LETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED / CONSTRUED
THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE
ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR
THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE, OR FOR THE
CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT
LETTER OF OFFER. THE LEAD MANAGER, EDELWEISS CAPITAL LIMITED HAS
CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE
GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL
AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME
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BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED
DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE
CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS PRIMARILY RESPONSIBLE
FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT
INFORMATION IN THE DRAFT LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED
TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS
RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE THE
LEAD MANAGER, EDELWEISS CAPITAL LIMITED HAS FURNISHED TO SEBI A DUE
DILIGENCE CERTIFICATE DATED MARCH 21, 2011 WHICH READS AS FOLLOWS:
1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO
LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES
WITH COLLABORATORS, ETC. AND OTHER MATERIAL IN CONNECTION WITH
THE FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE
SAID ISSUE;
2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE
ISSUER, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, AND
INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE
OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE
DOCUMENTS AND OTHER PAPERS FURNISHED BY THE ISSUER, WE CONFIRM
THAT:
(a) THE DRAFT LETTER OF OFFER FILED WITH THE BOARD IS IN
CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS
RELEVANT TO THE ISSUE;
(b) ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE AS ALSO
THE REGULATIONS GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED
BY THE BOARD, THE CENTRAL GOVERNMENT AND ANY OTHER
COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY
COMPLIED WITH; AND
(c) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE,
FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL
INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE
AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE
REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SECURITIES AND
EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL
REQUIREMENTS.
3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED
IN THE DRAFT LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND
THAT TILL DATE SUCH REGISTRATION IS VALID.
4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE
UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS – NOT
APPLICABLE.
5. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN
OBTAINED FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF
PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED
SECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION
SUBJECT TO LOCK-IN SHALL NOT BE DISPOSED / SOLD / TRANSFERRED BY THE
PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE
DRAFT LETTER OF OFFER WITH THE BOARD TILL THE DATE OF
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COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT LETTER OF
OFFER – NOT APPLICABLE.
6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE
BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE
FOR COMPUTATION OF PROMOTERS CONTRIBUTION, HAS BEEN DULY
COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH
THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER –
NOT APPLICABLE.
7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE
(C) AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES
AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE
CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT
PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY
BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’
CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD.
WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE
THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT
WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE
COMPANY ALONG WITH THE PROCEEDS Of THE PUBLIC ISSUE – NOT
APPLICABLE.
8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH
THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE
‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF
ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE
ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN
TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.
9. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO
ENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN
A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION (3) OF
SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE
RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM
ALL THE STOCK EXCHANGES MENTIONED IN THE DRAFT LETTER OF OFFER.
WE FURTHER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN
THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS
CONDITION. – NOTED FOR COMPLIANCE
10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF
OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE
SHARES IN DEMAT OR PHYSICAL MODE. 11. WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THE
SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND
DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN
ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE
TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.
12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE
DRAFT LETTER OF OFFER:
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(a) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME,
THERE SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES
OF THE ISSUER; AND
(b) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH
SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE
BOARD FROM TIME TO TIME.
13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO
ADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OF
INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS,
2009 WHILE MAKING THE ISSUE.
14. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE
HAS BEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS
BACKGROUND OR THE ISSUER, SITUATION AT WHICH THE PROPOSED
BUSINESS STANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE ,ETC. 15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE
WITH THE APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHANGE
BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION
NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE
DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED
WITH AND OUR COMMENTS, IF ANY. The filing of this Draft Letter of Offer does not, however, absolve our Company from any liabilities under Section 63 or Section 68 of the Companies Act or from the requirement of obtaining such statutory or other clearance as may be required for the purpose of the proposed Issue. SEBI further reserves the right to take up, at any point of time, with the Lead Manager any irregularities or lapses in this Draft Letter of Offer. Disclaimer Statement from our Company and the Lead Manager:
OUR COMPANY AND THE LEAD MANAGER(S), NAMELY EDELWEISS CAPITAL LIMITED
ACCEPT NO RESPONSIBILITY FOR STATEMENTS MADE OTHERWISE THAN IN THIS
DRAFT LETTER OF OFFER OR IN THE ADVERTISEMENT OR ANY OTHER MATERIAL
ISSUED BY OR AT THE INSTANCE OF OUR COMPANY AND THAT ANYONE PLACING
RELIANCE ON ANY OTHER SOURCE OF INFORMATION WOULD BE DOING SO AT HIS
OWN RISK.
INVESTORS WHO INVEST IN THE ISSUE WILL BE DEEMED TO HAVE BEEN
REPRESENTED BY OUR COMPANY AND THE LEAD MANAGER(S) AND THEIR
RESPECTIVE DIRECTORS, OFFICERS, AGENTS, AFFILIATES AND REPRESENTATIVES
THAT THEY ARE ELIGIBLE UNDER ALL APPLICABLE LAWS, RULES, REGULATIONS,
GUIDELINES AND APPROVALS TO ACQUIRE EQUITY SHARES OF OUR COMPANY, AND
ARE RELYING ON INDEPENDENT ADVICE / EVALUATION AS TO THEIR ABILITY AND
QUANTUM OF INVESTMENT IN THIS ISSUE. Disclaimer with respect to jurisdiction
This Draft Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Hyderabad only.
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Selling Restrictions
The distribution of this Draft Letter of Offer and the issue of our Rights Securities on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. Our Company is making this Issue of Rights Securities on a rights basis to its Eligible Equity Shareholders and will dispatch the Letter of Offer and Composite Application Form (“CAF”) to the shareholders who have an Indian address. No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the Rights Securities may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed, in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issue of the Rights Securities or the Rights Entitlements, distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Rights Securities or the Rights Entitlements referred to in this Draft Letter of Offer. Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in our Company‘s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to this date. Designated Stock Exchange
The Designated Stock Exchange for the purposes of this Issue will be the BSE. Disclaimer Clause of the BSE As required, a copy of this Draft Letter of Offer has been submitted to BSE. The Disclaimer Clause as intimated by BSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to filing with the BSE. Filing with SEBI
This Draft Letter of Offer has been filed with SEBI, Plot No. C4 A, ‘G’ Block, Bandra Kurla Complex Bandra (East), Mumbai and also with BSE. All the legal requirements applicable till the date of filing this Draft Letter of Offer with the BSE shall be complied with.
Impersonation
As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of sub-section (1) of section 68A of the Companies Act which is reproduced below: “Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing
for, any shares therein, or otherwise induces a Company to allot, or register any transfer of shares
therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a
term which may extend to five years”
Expert Opinion, if any
Except in the sections titled “Financial Statements” and “Statement of Tax Benefits” beginning on page 68
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and 55 of this Draft Letter of Offer, respectively, no expert opinion has been obtained by our Company in relation to this Draft Letter of Offer.
Expenses of the Issue
The estimated Issue related expenditure is as follows:
S.
No.
Activity Expense Amount*
(in ` million)
Percentage of
Total Estimated
Issue
Expenditure*
Percentage of Issue
Size*
1 Fees of the Lead Manager, Legal Advisor and Registrar
[●] [●] [●]
2 Advertising and marketing expenses
[●] [●] [●]
3 Printing and stationery, distribution, postage etc.
[●] [●] [●]
4 Other expenses (including but not limited to stock exchange and SEBI filing fee etc.)
[●] [●] [●]
Total Estimated Issue
Expenditure
[●] [●] [●]
*To be completed after finalization of the Issue Price
Date of listing on the BSE
The Equity Shares of our Company were listed on BSE in w.e.f October 17, 2006. Our Company has pursuant to a letter dated June 7, 2010, applied to the NSE for admission of our Equity Shares to deal on the NSE. Previous issues in the last three years
On August 1, 2007, our Company issued 308 FCCBs (zero coupon convertible bonds due 2012 convertible into Equity Shares) of the face value of JPY 10,000,000 each aggregating to an issue size of JPY 3,080,000,000. As on the date of this Draft Letter of Offer, 271 of the aforementioned FCCBs, are outstanding which would entitle the holders thereof to acquire a maximum of 3,108,031 Equity Shares excluding any reservations/adjustments at the relevant FCCB conversion price.
Option to Subscribe
Other than the present Issue, our Company has not given any person any option to subscribe to the Equity Shares of our Company.
Important
• This Issue is pursuant to the resolution passed by the Board of Directors at their meeting held on January 21, 2011.
• Eligible Equity Shareholders whose names appear as Beneficial Owners are eligible to subscribe to Rights Securities under the Issue, as per the list to be furnished by the depositories in respect of the shares held in the electronic form and on the Register of Members of our Company at the close of business hours on the Record Date i.e. [●], after giving effect to the valid share transfers lodged with our Company up to the Record Date.
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• Your attention is drawn to the section entitled “Risk Factors” on page 1 of this Draft Letter of Offer.
• Please ensure that you have received the CAF with the Abridged Letter of Offer.
• Please read this Draft Letter of Offer and the instructions contained therein and in the CAF carefully before filling in the CAF. The instructions contained in the CAF are each an integral part of this Draft Letter of Offer and must be carefully followed. An application is liable to be rejected for any non-compliance of the provisions contained in this Draft Letter of Offer or the CAF.
• All enquiries in connection with this Draft Letter of Offer or CAF should be addressed to the Registrar to the Issue, quoting the Registered Folio number/ DP and Client ID number and the CAF numbers as mentioned in the CAF.
• All information shall be made available to the Investors by the Lead Manager and the Company, and no selective or additional information would be available by them for any section of the Investors in any manner whatsoever including at road shows, presentations, in research or sales reports, etc.
• The Lead Manager and our Company shall update this Letter of Offer and keep the public informed of any material changes until the listing and trading commences.
Issue Schedule
Issue Opening Date: [●]
Last date for receiving requests for SAFs: [●]
Issue Closing Date: [●]
The Board may however decide to extend the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date. Allotment Advices / Refund Orders
Our Company will issue and dispatch allotment advice / share certificates/ demat credit and/or letters of regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any, within a period of 15 days from the date of closure of the Issue. If such money is not repaid within eight days from the day our Company becomes liable to pay it, our Company shall pay that money with interest as stipulated under section 73 of the Companies Act. Investors residing in the 72 cities specified by SEBI pursuant to its circular dated February 1, 2008, will get refunds through ECS only except where Investors are otherwise disclosed as applicable /eligible to get refunds through direct credit and RTGS provided the MICR details are recorded with the Depositories or our Company. In case of those Applicants who have opted to receive their Rights Entitlement in dematerialized form using electronic credit under the depository system, and advice regarding their credit of the Rights Securities shall be given separately. Applicants to whom refunds are made through electronic transfer of funds will be sent a letter through certificate of posting intimating them about the mode of credit of refund within 15 Business Days of closure of the Issue. In case of those Applicants who have opted to receive their Rights Entitlement in physical form, our Company will issue the corresponding share certificates under Section 113 of the Companies Act or other applicable provisions. Refund orders for a value of `1,500 and above would be sent by registered post / speed post to the sole / first Applicants ' registered address. Refund orders up to the value of `1,500 would be sent under certificate of posting. Such refund orders would be payable at par at all places where the applications were originally
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accepted. The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole / first Investor. Adequate funds would be made available to the Registrar to the Issue for this purpose. Investor Grievances and Redressal System
Our Company has adequate arrangements for redressal of Investor complaints. Well-arranged correspondence system developed for letters of routine nature. Our registrar and share transfer agent is handling the share transfer and dematerialization for our Company. Letters are filed category wise after having attended to. Redressal norm for response time for all correspondence including shareholders complaints is within 7 days. The contact details of the Registrar to the Issue are as follows: Karvy Computershare Private Limited Plot Nos. 17-24 , Vittal Rao Nagar, Madhapur , Hyderabad-500081 , Telephone: +91 40 4465 5000 Facsimile: +91 40 2343 1551; Email: gayatrirights@karvy.com Investors grievance mail: gayatrirights@karvy.com Website : http://karisma.karvy.com; Contact Person: Murali Krishna SEBI Registration No.: INR000000221 Status of Complaints
(a) No. of shareholders complaints outstanding as of December 31, 2010: Nil
(b) Number of shareholders complaints outstanding as of March 4, 2011 : NIL (c) Total number of complaints received during the period between January 1, 2011 and March 4,
2011: NIL (d) Total number of complaints received during current Financial Year (up to March 4, 2011):
13 (e) Status of the complaints as on March 4, 2011: No complaints pending (f) Time normally taken by it for disposal of various types of Investor grievances: Within 7 days Investor Grievances arising out of this Issue
Our Company’s Investor grievances arising out of the Issue will be handled by I.V. Lakshmi, Compliance Officer and Company Secretary and Karvy Computershare Private Limited, who are the Registrars to the Issue. The Registrar will have a separate team of personnel handling only post-Issue correspondence. The agreement between our Company and the Registrar will provide for retention of records with the Registrar for a period of at least one year from the last date of dispatch of Allotment Advice/ share certificate / warrant / refund order to enable the Registrar to redress grievances of the Investors. All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as folio no., name and address, contact telephone / cell numbers, email id of the first Investor, number and type of shares applied for, CAF serial number, amount paid on application and the name of the bank and the branch where the application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the Renouncee should be furnished.
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The average time taken by the Registrar for attending to routine grievances will be 7 days from the date of receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavour of the Registrar to attend to them as expeditiously as possible. Our Company undertakes to resolve the Investor grievances in a time bound manner. Investors may contact the Compliance Officer / Company Secretary in case of any pre-Issue/ post -
Issue related problems such as non-receipt of allotment advice/share certificates/ demat credit/refund
orders etc. His address is as follows: I.V. Lakshmi
Gayatri Projects Limited
B-1 T.S.R Towers 6-3-1090, Rajbhavan Road Somajiguda Hyderabad - 500082
Tel: +91 40 2331 4284 Fax No: +91 40 2339 8984/3/5 Email: cs@gayatri.co.in Changes in Auditors during the last three years
There has been no change in the Auditor’s of our Company during the last three years. Capitalisation of Reserves or Profits
Our Company has not capitalized any of its reserves or profits for the last five years. Revaluation of Fixed Assets
There has been no revaluation of our Company‘s fixed assets for the last five years. Minimum Subscription If our Company does not receive the minimum subscription of 90% of the Issue, or the subscription level falls below 90%, after the Issue Closing Date on account of cheques being returned unpaid or withdrawal of applications, our Company shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after our Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date), our Company will pay interest for the delayed period at 15% per annum as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.
Additional Subscription by the Promoters
Our Promoters and Promoter Group, have undertaken, vide their letters dated March 14, 2011, to fully subscribe for their Rights Entitlement. They reserve the right to subscribe for their Rights Entitlement either by themselves and/or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any member of the Company to any member of the Promoter Group. They also intend to apply for Rights Securities in addition to their Rights Entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining any approvals required under applicable law, to ensure that 100% of the Issue is subscribed. Such subscription for Rights Securities over and above their Rights Entitlement, if allotted, may result in an increase in their percentage shareholding above their current percentage shareholding. Further, such acquisition by them of additional Rights Securities shall (i) not result in a change of control of the management of our Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code.
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Presently our Company is complying with clause 40A of the Listing Agreement and the minimum public shareholding required to be maintained for continuous listing is 25% of the total paid up equity capital.
The Promoter and/or members of the Promoter Group intend to subscribe for any undersubscribed portion as per the provisions of applicable law. Allotment to the Promoter and/or members of the Promoter Group of any undersubscribed portion, over and above their Rights Entitlement, shall be completed in compliance with clause 40A of the Listing Agreements and other applicable laws prevailing at that time relating to continuous listing requirements and the minimum public shareholding of 25% of the total paid up equity capital required to be maintained for continuous listing shall be maintained. For further details of under subscription and allotment to the Promoter and Promoter Group, please refer to “Basis of Allotment” below under this section titled “Terms of the Issue” on page 193 of this Draft Letter of Offer.
In case the permission to deal in and for an official quotation of the Rights Securities is not granted by the BSE, our Company shall forthwith repay without interest, all monies received from the applicants in pursuance of this Draft Letter of Offer and if such money is not repaid within eight days after the day from which our Company is liable to repay it, our Company shall pay interest @ 15% per annum as prescribed under Section 73(2) / 73(2A) of the Companies Act, 1956.
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SECTION VIII – OFFERING INFORMATION
TERMS OF THE ISSUE
The Rights Securities, i.e. the Rights Equity Shares along with the Warrants proposed to be issued on rights basis, are subject to the terms and conditions contained in this Draft Letter of Offer, Letter of Offer, the Abridged Letter of Offer, the CAF, the provisions of the Memorandum and Articles of Association of our Company, the provisions of the Companies Act, FEMA, SEBI (ICDR) Regulations, guidelines, notifications and regulations for issue of capital and for listing of securities issued by GoI and/or other statutory authorities and bodies from time to time, terms and conditions as stipulated in the allotment advice or security certificate and rules as may be applicable and introduced from time to time. Authority for the Issue
This Issue is being made pursuant to a resolution passed by the Board of Directors of our Company under section 81(1) of the Companies Act at their meeting held on January 21, 2011. Pursuant to resolution passed at the meeting of the Rights Issue Committee constituted by our Board of Directors held on March 4, 2011, the Rights Issue Committee has determined a Rights Entitlement of one Rights Equity Share carrying one Warrant each for every two fully paid-up Equity Shares held on the Record Date. Pursuant to a meeting of the Board of Directors of our Company held on [●], the Board of Directors determined a price of ` [●] per Rights Equity Shares as the Issue Price and a Warrant Exercise Price of ` [●] per Warrant. Pursuant to a letter dated March 11, 2011 our Company has sought an approval from the FIPB in connection with the issuance and allotment of the Warrants to Non Residents. Accordingly, the issuance and allotment of the Rights Securities to Non Residents, will be subject to our Company obtaining the aforesaid approval from the FIPB in this regard and/or any further conditions that may be prescribed by the FIPB in connection with such approval. Basis for the Issue
The Rights Securities are being offered for subscription for cash to those existing Eligible Equity Shareholders, whose names appear as beneficial owners as per the list to be furnished by the Depositories in respect of the Equity Shares held in the electronic form and on the Register of Members of our Company in respect of the Equity Shares held in physical form at the close of business hours on the Record Date, i.e. [●], fixed in consultation with the Designated Stock Exchange. Rights Entitlement Ratio
As your name appears as beneficial owner in respect of the Equity Shares held in the Electronic Form or appears in the Register of Members as an Eligible Equity Shareholder as on the Record Date, i.e. [●], you are entitled to such number of Rights Securities shown in Block II of Part A of the CAFs. The same CAFs are being dispatched for the Rights Equity Shares and the Warrants. The Eligible Equity Shareholders shall be entitled to apply for one Rights Equity Share for every two Equity Shares held on the Record Date i.e. [●] along with one Warrant for every one Rights Equity Share. For Eligible Equity Shareholders wishing to apply through the ASBA process for the Issue, kindly
refer section titled “Procedure for Application through the Applications Supported By Blocked Amount
(“ASBA”) Process” on page 201 of this Draft Letter of Offer.
I GENERAL TERMS OF THE ISSUE
1. Market lot
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The Rights Securities of our Company are tradable only in dematerialized form, and the market lot is one. In case of holding of Equity Shares in physical form, our Company would issue to the allottees separate certificate for the Equity Shares allotted on rights basis with a split performance. Our Company would issue one certificate for the Equity share allotted and one certificate to the warrants allotted. However, our Company would issue split certificates on written requests from the shareholders/ warrant holders. Our Company shall not charge a fee for splitting any of the share certificates.
Applicants may please note that the Equity Shares and the Warrants of our Company can be traded on the BSE in dematerialized form only. Our Company has pursuant to a letter dated June 7, 2010, applied to the NSE for admission of our Equity Shares to deal on the NSE, our Equity Shares and Warrants would, subject to applicable regulatory permissions, be also traded on the NSE if NSE grants permission for admission of trading of our securities.
2. Nomination
In terms of Section 109A of the Companies Act, nomination facility is available for Rights Securities. The Investor can nominate any person by filling the relevant details in the CAF in the space provided for this purpose. In case of Eligible Equity Shareholders who are individuals, a sole Eligible Equity Shareholder or the first named Eligible Equity Shareholder, along with other joint Eligible Equity Shareholders, if any, may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Rights Securities. A person, being a nominee, becoming entitled to the Rights Securities by reason of the death of the original Eligible Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the Rights Securities. Where the nominee is a minor, the Eligible Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Rights Securities, in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale of the Rights Securities by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. When the Rights Securities are held by two or more persons, the nominee shall become entitled to receive the amount only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on request at the Registered Office of our Company or such other person at such addresses as may be notified by our Company. The Investor can make the nomination by filling in the relevant portion of the CAF. Only one nomination would be applicable for one folio. Hence, in case the Eligible Equity Shareholder(s) has already registered the nomination with our Company, no further nomination needs to be made for Rights Securities that may be allotted in this Issue under the same folio. In case the allotment of Rights Securities is in dematerialised form, there is no need to make a
separate nomination for the Rights Securities to be allotted in this Issue. Nominations registered with
respective Depository Participant (“DP”) of the Applicant would prevail. Any Applicant desirous of
changing the existing nomination is requested to inform its respective DP.
3. Joint Holders
Where two or more persons are registered as the holders of any equity shares they shall be deemed to hold the same as joint holders with the benefit of survivorship subject to the provisions contained in the Articles. 4. Additional Subscription by our Promoters and Promoter Group
Our Promoters and Promoter Group, have undertaken, vide their letters dated March 14, 2011, to fully subscribe for their Rights Entitlement. They reserve the right to subscribe for their Rights Entitlement either by themselves and/or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any member of the Company to any member of the
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Promoter Group. They also intend to apply for Rights Securities in addition to their Rights Entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining any approvals required under applicable law, to ensure that 100% of the Issue is subscribed. Such subscription for Rights Securities over and above their Rights Entitlement, if allotted, may result in an increase in their percentage shareholding above their current percentage shareholding. Further, such acquisition by them of additional Rights Securities shall (i) not result in a change of control of the management of our Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. Presently our Company is complying with clause 40A of the Listing Agreement and the minimum public shareholding required to be maintained for continuous listing is 25% of the total paid up equity capital. The Promoter and/or members of the Promoter Group intend to subscribe for any undersubscribed portion as per the provisions of applicable law. Allotment to the Promoter and/or members of the Promoter Group of any undersubscribed portion, over and above their Rights Entitlement, shall be completed in compliance with clause 40A of the Listing Agreements and other applicable laws prevailing at that time relating to continuous listing requirements and the minimum public shareholding of 25% of the total paid up equity capital required to be maintained for continuous listing shall be maintained. For further details of under subscription and allotment to the Promoter and Promoter Group, please refer to “Basis of Allotment” below under this section titled “Terms of the Issue” on page 193 of this Draft Letter of Offer. In case the permission to deal in and for an official quotation of the Rights Securities is not granted by the BSE, our Company shall forthwith repay without interest, all monies received from the applicants in pursuance of this Draft Letter of Offer and if such money is not repaid within eight days after the day from which our Company is liable to repay it, our Company shall pay interest @ 15% per annum as prescribed under Section 73(2) / 73(2A) of the Companies Act, 1956. If our Company does not receive the minimum subscription of 90% of the Issue, or the subscription level falls below 90%, after the Issue Closing Date on account of cheques being returned unpaid or withdrawal of applications, our Company shall refund the entire subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription amount by more than eight days after our Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date), our Company will pay interest for the delayed period at 15% per annum as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.
5. Notices
All notices to the Eligible Equity Shareholder(s) required to be given by our Company shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation and one Telegu national daily with wide circulation, and/or will be sent by ordinary post/registered post/speed post to the registered holders of the Equity Shares from time to time at the address registered with the registrar / depository.
6. Offer to Non-Resident Equity Shareholders/Applicants / Foreign Institutional investors
As per Regulation 6 of Notification No. FEMA 20/200-RB dated May 3, 2000, the RBI has given general permission to Indian companies to issue rights securities to non-resident shareholders including additional securities. Applications received from NRIs and non-residents for allotment of rights securities shall be inter alia, subject to the conditions imposed from time to time by the RBI under the FEMA Act in the matter of refund of application moneys, allotment of Rights Securities and issue of letter of allotment. The
Abridged Letter of Offer and CAF shall be dispatched to non-resident Eligible Equity Shareholders
at their Indian address only. The Board of Directors may at its absolute discretion, agree to such terms and conditions as may be stipulated by RBI while approving the allotment of Rights Securities, payment of dividend etc. to the non-resident shareholders. The Rights Securities purchased by non-residents shall be subject to the same conditions including restrictions in regard to the repatriation as are applicable to the original shares against which Rights Securities are issued on rights basis.
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CAFs will be made available for eligible NRIs at our Registered Office and with the Registrar to the Issue. In case of change of status of holders i.e. from Resident to Non-Resident, a new demat account shall be opened for the purpose. DETAILS OF SEPARATE COLLECTING CENTRES FOR NON-RESIDENT APPLICATIONS
SHALL BE PRINTED ON THE CAF.
8. No Offer in the United States
The rights and the securities of our Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the United States of America or the territories or possessions thereof (the “United States” or “U.S.”) or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the Securities Act (“Regulation S”), except in a transaction exempt from the registration requirements of the Securities Act. The rights referred to in this Draft Letter of Offer are being offered in India, but not in the United States. The offering to which this Draft Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any Rights Securities or rights for sale in the United States or as a solicitation therein of an offer to buy any of the said Rights Securities or rights. Accordingly, the Letter of Offer and the enclosed CAF should not be forwarded to or transmitted in or into the United States at any time. Neither our Company nor any person acting on behalf of our Company will accept subscriptions or renunciation from any person, or the agent of any person, who appears to be, or who our Company or any person acting on behalf of our Company has reason to believe is, either a “U.S. person” (as defined in Regulation S) or otherwise in the United States when the buy order is made. Envelopes containing a CAF should not be postmarked in the United States or otherwise dispatched from the United States or any other jurisdiction where it would be illegal to make an offer under this Draft Letter of Offer, and all persons subscribing for the Rights Securities and wishing to hold such Rights Securities in registered form must provide an address for registration of the Rights Securities in India. Our Company is making this issue of Rights Securities on a rights basis to its Eligible Equity Shareholders and the Abridged Letter of Offer and CAF will be dispatched to Eligible Equity Shareholders who have an Indian address. Any person who acquires rights and the Rights Securities will be deemed to have declared, represented, warranted and agreed, (i) that it is not and that at the time of subscribing for the Rights Securities or the Rights Entitlements, it will not be, in the United States when the buy order is made, (ii) it is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States, and (iii) is authorised to acquire the rights and the Rights Securities in compliance with all applicable laws and regulations. Our Company reserves the right to treat as invalid any CAF which: (i) does not include the certification set out in the CAF to the effect that the subscriber is not a “U.S. person’ (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the Rights Securities in compliance with all applicable laws and regulations; (ii) appears to our Company or its agents to have been executed in or dispatched from the United States; (iii) where a registered Indian address is not provided; or (iv) where our Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements; and our Company shall not be bound to allot or issue any Rights Securities or Rights Entitlement in respect of any such CAF. Our Company is informed that there is no objection to a United States shareholder selling its rights in India. Rights Entitlement may not be transferred or sold to any U.S. person.
9. Arrangements for disposal of odd lots
Since the market lot for our Company’s Equity Shares is one (1), there is no question of disposal of odd lots.
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II PRINCIPAL TERMS AND CONDITIONS OF THE RIGHTS SECURITIES
(A) RIGHTS EQUITY SHARES
Each Eligible Equity Shareholders shall be entitled to subscribe for one Rights Equity Share for every two Equity Shares held on the Record Date i.e. [●] along with one Warrant for every one Rights Equity Share allotted
TERMS OF THE EQUITY SHARES
1. Face Value
Each Rights Equity Share will have the face value of ` 10. 2. Issue Price
Each Rights Equity Share shall be offered at an Issue Price of ` [●] for cash, at a premium of ` [●] per Equity Share.
3. Terms of Payment
Applicants shall have to make full payment of ` [●] per Rights Equity Share at the time of making an application.
The payment towards the Rights Equity Shares offered will be applied as under:
` 10 per Rights Equity Share towards share capital of our Company.
` [●] per Rights Equity Share towards securities premium account of our Company.
A separate cheque/ demand draft/ pay order must accompany each application form.
All payments should be made by cheque/bank demand draft/ pay order drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub-member of the bankers clearing house located at the center where the CAF is accepted. Outstation cheques /money orders/postal orders will not be accepted and CAFs accompanied by such cheque/money orders/postal orders are liable to be rejected. The Registrar to the Issue will not accept any payments against applications, if such payments are made in cash.
Pursuant to the RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the Stockinvest scheme has been withdrawn and accordingly, payment through Stockinvest will not be accepted in the Issue.
Where an applicant has applied for additional shares and is allotted lesser number of shares than applied for, the excess application money shall be refunded. The excess application monies would be refunded within 15 days from the closure of the Issue, and if there is a delay beyond 8 days from the stipulated period (15 days from the closure of the Issue), our Company and every Director of our Bank who is an officer in default shall be jointly and severally liable to repay the money with interest for the delayed period at 15% per annum as stipulated under sub-sections (2) and (2A) of section 73 of the Companies Act, 1956.
4. Entitlement Ratio
The Rights Equity Shares are being offered to the existing Eligible Equity Shareholders in the ratio of one
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Rights Equity Share for every two Equity Shares held on the Record Date i.e. [●] along with one Warrant for every one Rights Equity Share allotted
5. Ranking
The Rights Equity Shares shall rank pari passu, in all respects including dividend, with our existing Equity Shares. 6. Mode of Payment of Dividend
We shall pay dividend to our Equity Shareholders as per the provisions of the Companies Act, and the provisions of our Company’s Articles of Association.
7. Listing and trading of Rights Equity Shares proposed to be issued
Our Company’s existing Equity Shares are currently traded on the BSE under the ISIN Code INE517H01010. The fully paid up Rights Equity Shares proposed to be issued on a rights basis shall be listed and admitted for trading on the BSE under the existing ISIN INE517H01010 for fully paid Rights Equity Shares of our Company. All steps for the completion of the necessary formalities for listing and commencement of trading of the Rights Equity Shares pursuant to the Issue shall be taken within seven working days of the finalization of the basis of allotment. The Company has made applications to the BSE seeking “in-principle” approval for the listing of the Rights Equity Shares pursuant to the Issue in accordance of the Listing Agreement and has received such approval from the BSE pursuant to letter no. [●] dated [●]. Our Company will apply to BSE for final approval for the listing and trading of the Rights Equity Shares. No assurance can be given regarding the active or sustained trading in the Rights Equity Shares or the price at which the Rights Equity Shares offered under the Issue will trade either after the listing 8. Rights of the Eligible Equity Shareholder
The Rights Equity Shares allotted in this Issue shall rank pari passu with the existing Equity Shares in all respects including dividend. Subject to applicable laws, the Eligible Equity Shareholders of our Company shall have the following rights:
• Right to receive dividend, if declared.;
• Right to attend general meetings and exercise voting powers, unless prohibited by law;
• Right to vote/ poll in person or by proxy.;
• Right to receive offers for rights shares and be allotted bonus shares, if announced;
• Right to receive surplus on liquidation;
• Right to free transferability of Rights Equity Shares; and
• Such other rights as may be available to a shareholder of a listed public company under the Companies Act, the Listing Agreement and Memorandum and Articles of Association.
9. Fractional entitlements
For Rights Equity Shares being offered under this Issue, if the shareholding of any of the Eligible Equity Shareholders is less than 2 Equity Shares or not in the multiple of 2 as on the Record Date, the fractional
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entitlement of such Eligible Equity Shareholders shall be ignored. Eligible Equity Shareholders whose fractional entitlements are being ignored would be given preference in allotment of one additional share each if they apply for additional shares. An illustration stating the Rights Entitlement for number of Equity Shares is set out below:
Number of Equity Shares Rights Entitlement
1 0
2 1
4 2
8 4
10 5
11 5
Those Eligible Equity Shareholders holding less than 2 Equity Shares and therefore entitled to zero Rights Equity Shares under this Issue shall be dispatched a CAF with zero entitlement. Such Eligible Equity Shareholders are entitled to apply for additional Rights Equity Shares and they would be given preference in allotment for one additional Rights Equity Share if they apply for the same. However, they cannot renounce the same in favour of third parties. A CAF with zero entitlement will be non-negotiable / non-renounceable. TERMS OF THE WARRANTS
Entitlement The Eligible Equity Shareholders/Renouncee(s) shall be entitled for allotment of one Warrant for every one Rights Equity Share allotted under the Issue. The Warrants will be issued along with the Rights Equity Shares and will be freely and separately traded thereafter. Separate ISIN for Warrants allotted Our Company shall also obtain a separate ISIN number for the Warrants. The ISIN number for these Warrants allotted shall be terminated upon these Warrants being converted into Equity Shares.
Warrant conversion The Warrant holder will be entitled to exercise his right to apply for 1 (one) Equity Share of ` 10 each at the Warrant Exercise Price for each Warrant held during the warrant exercise period. The Warrants can be freely and separately traded till the same are tendered for exercise. The market lot for the Warrants is one. Tenure of the Warrants
60 months from the date of allotment of the Warrants, i.e. Warrants which are not tendered to be converted into Equity Shares at the completion of the Warrant Exercise Period II (60 months), shall lapse and the relevant holder/s of such Warrants shall not be entitled to allotment of the attendant Equity Shares against such Warrants*.
* Please note that in the event our Company exercises a call option (as further detailed hereinbelow), all Warrants not
tendered for conversion into Equity Shares when so called upon at the Warrant Exercise Price, shall lapse.
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Warrant Exercise Period
The Warrant Exercise Period shall refer to the following: The first period for exercise of the Warrants will be a period that commences on the completion of the 30th month from the date of allotment of the Warrants and shall continue up to the completion of the 31st month from the date of allotment of the Warrants, (“Warrant Exercise Period I”). On completion of the 31st month, based on all requests received for conversion of the Warrants, the Warrant holders shall be allotted 1 Equity Share for every Warrant tendered to be converted into Equity Share at the Warrant Exercise Price within a period of 1 month from the completion of the Warrant Exercise Period I.
The second period for exercise of the Warrants will be a period that commences on the completion of the 58th month from the date of allotment of warrants and shall continue up to the completion of the 59th month from the date of allotment of Warrants, (“Warrant Exercise Period II”). On completion of the 59th month, based on all requests received for conversion of the Warrants, the Warrant holders shall be allotted 1 Equity Share for every Warrant tendered to be converted into Equity Share at the Warrant Exercise Price within a period of 1 month from the completion of the Warrant Exercise Period II. Further the Warrants which are not tendered to be converted into Equity Shares at the completion
of the Warrant Exercise Period II, shall lapse and the relevant holder/s of such Warrants shall not be
entitled to allotment of the attendant Equity Shares against such Warrants.
Call option
Our Board will have a call option commencing from the completion of the 31st month and up to the completion of the 58th month from the date of allotment of the Warrants calling upon the Warrant holders to convert the outstanding Warrants at the Warrant Exercise Price. This will be done by serving a public notice published in one English national daily newspaper with wide circulation, one Hindi national daily newspaper with wide circulation and one regional newspaper with wide circulation in the State of Andhra Pradesh, within such reasonable time as the Board or a committee thereof may deem fit. All Warrants not tendered for conversion into Equity Shares when so called upon at the Warrant Exercise Price, shall lapse.
Warrant Exercise Price The Warrant Exercise Price for each Warrant shall be fixed at ` [●]. The Warrant Exercise Price shall be payable in full on application for issue of attendant Equity Share pursuant to the exercise of such Warrants. In the event of any sub-division or consolidation of the face value of the Equity Shares of our Company, the share entitlement on each Warrant shall be proportionately increased/decreased such that the aggregate nominal value of the entitlement remains the same as the nominal value of the Equity Shares immediately prior to such subdivision or consolidation. The above would be subject to the approval of the shareholders and other relevant statutory and/or regulatory authorities.
Procedure for Exercise of Warrants
Warrant holders desirous of tendering their Warrants for conversion into Equity Share in the Warrant Exercise Period I or Warrant Exercise Period II, , or upon publication of the public notice in connection with the aforesaid call option as the case may be, would be required to submit an application form, as prescribed by our Company, (“Warrant Exercise Application Form”). The Warrant Exercise Application Form will be sent by our Company to all the Warrant holders along with the allotment advice dispatched under the Issue. The Warrant Exercise Application Form would also be available to all Warrant holders on request with the Registrar during the Warrant Exercise Period I and Warrant Exercise Period II, and/or upon publication of the public notice in connection with the aforesaid call option for a period of
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thirty days therefrom and can be downloaded from our Company’s website, namely, www.gayatriprojects.com.
• The Registrar to our Company, Karvy Computershare Private Limited, will before the Warrant Exercise Period I or Warrant Exercise Period II, as the case may be, open a special depository account with NSDL by the name of "Gayatri Projects Limited – Warrant Exercise Escrow Account" with a Depository Participant, ("Special Depository Account").
• Beneficial owners (holders) of Warrants who wish to tender their Warrants for exercise will be required to send their Warrant Exercise Application Form accompanied by a cheque / demand draft favouring “Gayatri Projects Limited – Warrant Account” payable at Hyderabad for the requisite amount along with a photocopy of the delivery instruction in "Offmarket" mode, or counterfoil of the delivery instructions in "Off-market" mode, duly acknowledged by the Depository Participant ("DP"), in favour of the Special Depository Account to the Registrar to our Company.
• Beneficial owners (holders) of Warrants having their beneficiary account with the CDSL must use the inter-depository delivery instruction slip for the purpose of crediting their Warrants in favour of the Special Depository Account with the NSDL.
• During the Warrant Exercise Period I or Warrant Exercise Period II, as the case may be, the Warrant holder should send the Warrant Exercise Application Form accompanied by the cheque or demand draft to the Registrar to the Issue - Karvy Computershare Private Limited.
• Equity Shares allotted on exercise of valid Warrants will be dispatched/credited to the applicant’s electronic account within 30 days from the date of expiry of the Warrant Exercise Period I or Warrant Exercise Period II, or the date of the public notice in connection with the aforesaid call option, as the case may be.
In case the Warrants along with the cheque/demand draft towards full payment of the Warrant Exercise
Price do not reach the Registrar by the end of the Warrant Exercise Period I or Warrant Exercise Period
II, or within 30 days from the date of the public notice in connection with the aforesaid call option, as
the case may be, the Warrants shall lapse.
Modification to the Terms of the Warrants The rights attached to the Warrants shall be varied only with the consent in writing of the holders of not less than three-fourths of the outstanding Warrants or with the sanction of a special resolution passed at a separate meeting of holders of outstanding Warrants.
Rights of Warrant holders
• Subject to the above, the Warrants shall be transferable and transmittable in the same manner and to the same extent and be subject to the same restrictions and limitations and other related matters as in the case of Equity Shares of our Company;
• The Warrants shall not confer upon the holders thereof any right to receive any notice of the meeting of the shareholders of our Company or Annual Report of our Company and or to attend/vote at any of the General Meetings of the shareholders of our Company held, if any;
• Save and except the right of subscription to our Company’s Equity Shares as per the terms of the issue of Warrants, the holders of the Warrants in their capacity as Warrant holders shall have no other rights or privileges;
• The Warrant holders inter-se, shall rank pari passu without any preference or priority of one over
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the other or others.
III PROCEDURE FOR APPLICATION
1. How to Apply
The CAF will be printed in black ink for all Eligible Equity Shareholders. In case the original CAFs are not received by the Applicant or is misplaced by the Applicant, the Applicant may request the Registrars to the Issue, for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address. In case the signature of the Equity Shareholder(s) does not agree with the specimen registered with our Company, the application is liable to be rejected.
The CAF consists of four parts:
Part A: Form for accepting the Rights securities offered and for applying for additional securities Part B: Form for renunciation Part C: Form for application by Renouncees Part D: Form for request for split application forms 2. Options available to the Eligible Equity Shareholders
The CAFs will clearly indicate the number of Rights Securities that the Eligible Equity Shareholder is entitled to. If the Eligible Equity Shareholder applies for an investment in the Issue, then he can: A. Apply for his Rights Entitlement in full; B. Apply for his Rights Entitlement in part (without renouncing the other part); C. Apply for his Rights Entitlement in full and apply for additional Equity Shares; D. Renounce his entire Rights Entitlement; or E. Apply for his Rights Entitlement in part and renounce the other part. Options A and B: Acceptance of the Rights Entitlement
The Equity Shareholders may accept their Rights Entitlement and apply for the Rights Securities offered, either (i) in full or (ii) in part, without renouncing the other part, by completing Part A of the CAF. For details in relation to submission of the CAF and mode of payment please refer to the sub-section titled “Submission of Application and Modes of Payment for the Issue” under this section titled “Terms of the
Issue” on page 190 of this Draft Letter of Offer. Option C: Acceptance of the Rights Entitlement and Application for Additional Equity Shares
You are eligible to apply for additional Rights Securities over and above your Rights Entitlement, provided that you have applied for all the Rights Securities offered to you without renouncing them in whole or in part in favor of any other person(s). Applications for additional Rights Securities shall be considered, and the allotment shall be made at the sole discretion of the Board/ Committee of the Board, subject to sectoral caps and in consultation if necessary with the Designated Stock Exchange and in the manner prescribed under “Basis of Allotment” on page 193 of this Draft Letter of Offer. If you desire to apply for additional Rights Securities, please indicate your requirement in the place provided for additional Rights Securities in Part A of the CAF. The Renouncee applying for all the Rights Securities renounced in their favor may also apply for additional Rights Securities. Where the number of additional Rights Securities applied for exceeds the number available for allotment, the allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange. Options D and E: Renunciation of the Rights Entitlement
This Issue includes a right exercisable by you to renounce the Rights Securities offered to you either in full
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or in part in favour of any other person or persons. Your attention is drawn to the fact that our Company shall not allot and/or register Rights Securities in favour of :
• More than three persons, including joint holders; • Partnership firms or their nominees; • Minors; • Hindu Undivided Families (HUFs); or • Trusts or societies (unless registered under the Societies Registration Act, 1860 or the Indian Trusts
Act, 1882 or any other law applicable to trusts and societies and is authorised under its constitution or bye-laws to hold equity shares of a company).
‘Part A’ of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid. Submission of the enclosed CAF to the Banker to the Issue at its collecting branches specified on the reverse of the CAF with the form of renunciation (‘Part B‘ of the CAF) duly filled in shall be conclusive evidence for our Company of the Renouncees applying for Rights Securities in ‘Part C‘ of the CAF to receive allotment of such Rights Securities. The Renouncees applying for all the Rights Securities renounced in their favour may also apply for additional Rights Securities. ‘Part A’ of the CAF must not be used by the Renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to renounce any Rights Securities in favour of any other person. Applications by Overseas Corporate Bodies By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs) Regulations, 2003. Accordingly, the existing Eligible Equity Shareholders of our Company who do not wish to subscribe to the Rights Securities being offered but wish to renounce the same in favour of Renouncee shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s). Renunciation by and/or in favor of Non Residents Any renunciation (i) from a resident Indian Equity Shareholder to a Non Resident, or (ii) from a Non Resident Equity Shareholder to a resident Indian, or (iii) from a Non Resident Equity Shareholder to a Non Resident, in light of RBI Master circular on Foreign Investment in India dated July 01, 2010, RBI Notification No. FEMA 20/2000-RB dates May 03, 2000 and RBI circular No. 38 dated December 03, 2003 would not require approval from RBI, if such renunciation is made on the floor of the exchange, provided that in case of any renunciation from a resident Indian Equity Shareholder to a Non Resident, the offer price for the Rights Securities should not be less than the price at which an offer is made to the resident Eligible Equity Shareholder. Any renunciation through a private arrangements would be subject to applicable pricing requirements prescribed by the RBI and/or seeking appropriate approvals from the RBI in this regard. However, the right of renunciation is subject to the express condition that the Board of Directors
shall be entitled, in its absolute discretion, to reject the request from the renouncees for the allotment
of Equity Shares without assigning any reason therefore.
Procedure for renunciation
To renounce all the Rights Securities offered to an Eligible Equity shareholder in favour of one Renouncee If you wish to renounce the offer indicated in ‘Part A’, in whole, please complete ‘Part B’ of the CAF. In case of joint holding, all joint holders must sign ‘Part B’ of the CAF. The person in whose favour renunciation has been made should complete and sign ‘Part C’ of the CAF. In case of joint Renouncees, all joint Renouncees must sign this part of the CAF.
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To renounce in part/or renounce the whole to more than one person(s)
If you wish to either accept this offer in part and renounce the balance or renounce the entire offer under this Issue in favour of two or more Renouncees, the CAF must be first split into requisite number of forms. Please indicate your requirement of Split Application Forms (“SAFs”) in the space provided for this purpose in ‘Part D’ of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the last date of receiving requests for SAFs, i.e. [●]. On receipt of the required number of SAFs from the Registrar, the procedure as mentioned in paragraph above shall have to be followed. In case the signature of the Eligible Equity Shareholder(s), who has renounced the Rights Securities, does not agree with the specimen registered with our Company, the application is liable to be rejected. Renouncee(s)
The person(s) in whose favour the Rights Securities are renounced should fill in and sign ‘Part C’ of the CAF and submit the entire CAF to the Bankers to the Issue on or before the Issue Closing Date along with the application money in full. A Renouncee cannot further renounce. Change and/or introduction of additional holders
If you wish to apply for Rights Securities jointly with any other person(s), not more than three, who is/are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above, shall have to be followed. However, this right of renunciation is subject to the express condition that the Board of Directors of our Company shall be entitled in its absolute discretion to reject the request for allotment from the Renouncee(s) without assigning any reason thereof.
Instructions for Options
The summary of options available to the Eligible Equity Shareholder is presented below. You may exercise any of the following options with regard to the Rights Securities offered, using the enclosed CAF:
Option Available Action Required 1. Accept whole or part of your Rights
Entitlement without renouncing the balance.
Fill in and sign Part A (All joint holders must
sign)
2. Accept your Rights Entitlement in full and apply for additional Rights Securities
Fill in and sign Part A including Block III relating to the acceptance of entitlement and Block IV relating to additional Rights Securities (All joint holders must sign)
3. Renounce your Rights Entitlement in full to one person (Joint Renouncees are
considered as one).
Fill in and sign Part B (all joint holders must
sign) indicating the number of Rights Securities renounced and hand it over to the Renouncee. The Renouncee must fill in and sign Part C (All
joint Renouncees must sign)
4. Accept a part of your Rights Entitlement and renounce the balance to one or more Renouncee(s)
Fill in and sign Part D (all joint holders must
sign) requesting for SAFs. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for SAFs. Splitting will be permitted only once. On receipt of the SAF take action as indicated below.
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Option Available Action Required
For the Rights Securities you wish to accept, if any, fill in and sign Part A. For the Rights Securities you wish to renounce, fill in and sign Part B indicating the number of Rights Securities renounced and hand it over to the Renouncee. Each of the Renouncee should fill in and sign Part C for the Rights Securities accepted by them.
5. Introduce a joint holder or change the sequence of joint holders
This will be treated as a renunciation. Fill in and sign Part B and the Renouncee must fill in and sign Part C.
Applicants must provide information in the CAF as to their savings bank / current account number and the name of the bank with whom such account is held, to enable the Registrar to print the said details in the refund orders after the names of the payee(s) in case of Equity Shares held in the physical form. Failure to comply with this may lead to rejection of the application. Bank account details furnished by the Depositories will be printed on the refund warrant in case of Equity Shares held in electronic form.
Please note that:
• ‘Part A’ of the CAF must not be used by any person(s) other than the Eligible Equity Shareholders to whom this Draft Letter of Offer has been addressed. If used, this will render the application invalid.
• A Request by the Applicant for the SAF should reach our Company on or before [●].
• Only the Eligible Equity Shareholders to whom this Draft Letter of Offer has been addressed shall be entitled to renounce and to apply for SAFs. Forms once split cannot be split further.
• SAFs will be sent to the Applicant (s) by post at the Applicant ‘s risk.
• While applying for or renouncing their Rights Entitlement, joint holders must sign in the same order and as per the specimen signatures registered with our Company.
• In the case of a renunciation, the submission of the CAF to the Bankers to the Issue at the collecting branches specified on the reverse of the CAF together with Part B of the CAF duly completed shall be conclusive evidence of the right of the person applying for the Equity Shares to receive allotment of such Equity Shares.
Applicants must write their CAF Number at the back of the cheque/demand draft
Availability of duplicate CAF
In case the original CAF is not received, or is misplaced by the Applicant, the Registrar to the Issue will issue a duplicate CAF on the request of the Applicant who should furnish the registered folio number/ DP and Client ID number and his/ her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the Registrar to the Issue within 8 days from the Issue Opening Date. Please note that those who are making the application in the duplicate CAF should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the applicant violates any of these requirements, he / she shall face the risk of rejection of both the CAFs. Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of duplicate CAF in transit, if any.
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Application on Plain Paper
An Eligible Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Issue on plain paper, along with Demand Draft, after deducting bank and postal charges payable at Hyderabad which should be drawn in favor of the “Gayatri Projects Limited- Rights Issue” incase of resident shareholders and shareholders applying on non repatriable basis or “Gayatri Projects Limited- Rights Issue-NR” incase of non resident shareholders applying on repatriable basis and the Eligible Equity Shareholders should send the same by registered post directly to the Registrar to the Issue. The envelope should be superscribed “Gayatri Projects Limited – Rights Issue” incase of shareholders applying on non repatriable basis or “Gayatri Projects Limited- Rights Issue-NR” incase of non resident shareholders applying on repatriable basis and should be postmarked in India. The application on plain paper, duly signed by the Applicants including joint holders, in the same order as per specimen recorded with our Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars:
• Name of Company, being Gayatri Projects Limited;
• Name and address of the Eligible Equity Shareholder including joint holders;
• Registered Folio Number/ DP and Client ID no.;
• Number of Equity Shares held as on Record Date;
• Number of Rights Securities entitled;
• Number of additional Rights Securities applied for, if any;
• Certificate numbers and distinctive numbers, if held in physical form.
• Total number of Rights Securities applied for;
• the total amount paid at the rate of ` [●] per Rights Securities;
• Particulars of Demand draft;
• In case of Equity Shares allotted in physical form, Savings/Current Account Number and name and address of the bank where the Eligible Equity Shareholder will be depositing the refund order; In case of equity shares allotted in demat code, the bank account details will be obtained from the information available with the depositories
• Except for applications on behalf of the Central or State Government, residents of Sikkim and the officials appointed by the courts, PAN number of the Applicant and for each Applicant in case of joint names, irrespective of the total value of the Rights Securities applied for pursuant to the Issue; subject to submitting sufficient documentary evidence in support of their claim for exemption, provided that such transactions are undertaken on behalf of the central and State Government and not in their personal capacity
• Signature of Eligible Equity Shareholders to appear in the same sequence and order as they appear in the records of our Company.
• In case of Non Resident Shareholders, NRE/ FCNR/ NRO A/c No. Name and Address of the Bank and Branch;
• If payment is made by a draft purchased from NRE/ FCNR/ NRO A/c No., as the case may be, an Account debit certificate from the bank issuing the draft, confirming that the draft has been issued by debiting NRE/ FCNR/ NRO Account.
• A representation that the Eligible Equity Shareholder is not a “U.S. Person” (as defined in Regulation S under the Securities Act);
• Additionally, Non Resident applicants shall include the representation in writing that:
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1. “I/We understand that the Rights Entitlement have not been, and will not be, registered
under the United States Securities Act of 1933, as amended (the “US Securities Act”) or any United States state securities laws, and may not be offered, sold, resold or otherwise transferred within the United States or to the territories or possessions thereof or to, or for the account or benefit of, “U.S. Persons” (as defined in Regulation S under the US Securities Act), except in a transaction exempt from, or in a transaction not subject to, the registration requirements of the US Securities Act. The Equity Shares referred to in this application are being offered in India but not in the United States of America. None of our Company, the Registrar, the Lead Manager or any other person acting on behalf of our Company will accept subscriptions from any person, or the agent of any person, who appears to be, or who our Company, the Registrar, the Lead Manager or any other person acting on behalf of our Company has reason to believe is, a resident of the United States and to whom an offer, if made, would result in requiring registration of this application with the United States Securities and Exchange Commission.
2. I/We am/are both an institutional investor and an “accredited investor” within the
meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the US Securities Act and we have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Equity Shares, and we are, and any accounts for which we are acting are each, able to bear the economic risk of our or its investment.
3. I/We will not offer, sell or otherwise transfer any of the Rights Securities which may be acquired by us in any jurisdiction or under any circumstances in which such offer or sale is not authorised or to any person to whom it is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance with any applicable laws or regulations. We satisfy, and each account for which we are acting satisfies, all suitability standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of our residence.
4. I/We understand and agree that the Rights Securities may not be reoffered, resold,
pledged or otherwise transferred except in an offshore transaction in compliance with Regulation S, or otherwise pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act.”
Please note that Eligible Equity Shareholders who are making an application otherwise than on a CAF (i.e., on plain paper as stated above) shall not be entitled to renounce their rights and should not utilize the CAF for any purpose, including renunciation, even if it is received subsequently. If the Eligible Equity Shareholder does not comply with any of these requirements, he/she shall face the risk of rejection of both the applications and the Application Money received shall be refunded. However, our Company and/or any Director of our Bank will not be liable to pay any interest whatsoever on the Application Money so refunded.
The Eligible Equity Shareholders are requested to strictly adhere to these instructions. Failure to do so could result in the application being rejected, with our Company, the Lead Manager and the Registrar not having any liability to such Eligible Equity Shareholders.
Please note that those who are making the application otherwise than on original CAF shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the Applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications. Our Company shall refund such application amount to the Applicant without any interest thereon.
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IV. Submission of Application and Modes of Payment for the Issue (other than ASBA
Applicants)
1. Resident Equity Shareholders/ Applicants
1. Applicants who are applying through CAF and residing at places where the bank collection centres have been opened for collecting applications, are requested to submit their applications at the corresponding collection centre together with cheque / bank demand draft drawn on any bank (including a co-operative bank), for the full application amount favouring “Gayatri Projects Limited -Rights Issue” and marked ‘A/c Payee only’.
2. Applicants who are applying through CAF and residing at places other than places where the bank
collection centres have been opened for collecting applications, are requested to send their applications together with a demand draft of amount after deducting bank and postal charges, favouring “Gayatri Projects Limited -Rights Issue” and marked ‘A/c Payee only’ payable at Hyderabad directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.
3. Applicants who are applying on plain paper, are requested to send their applications on plain paper
together with a demand draft of amount after deducting bank and postal charges, for the Rights Securities favouring “Gayatri Projects Limited -Rights Issue” and marked ‘A/c Payee only’ payable at Hyderabad directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.
2. Non-Resident Equity Shareholders / Applicants
Application with repatriation benefits
Non-Resident Equity Shareholders / Applicants, applying on a repatriation basis, are required to submit the completed CAF / application on plain paper, as the case may be, along with the payment made through any of the following ways: 1. By Indian Rupee drafts purchased from abroad and payable at Hyderabad or funds remitted from
abroad (submitted along with Foreign Inward Remittance Certificate); or 2. By Local cheque / bank drafts remitted through normal banking channels or out of funds held in
Non-Resident External Account (NRE) or FCNR Account maintained with banks authorized to deal in foreign currency in India, along with documentary evidence in support of remittance; or
3. FIIs registered with SEBI must remit funds from special non-resident rupee deposit account. 4. For Eligible Equity Shareholders / Applicants, applying through CAF, the CAF is to be sent at the
bank collection centre specified in the CAF along with cheques/drafts in favour of “Gayatri Projects Limited -Rights Issue-NR” and crossed ‘A/c Payee only’ for the amount payable.
5. For Eligible Equity Shareholders / Applicants, applying on a plain paper, the applications are to be
directly sent to the Registrar to the Issue by registered post along with drafts (after deducting bank and postal charges) in favour of “Gayatri Projects Limited-Rights Issue-NR” payable at Hyderabad and crossed ‘A/c Payee only’ for the amount payable so as to reach them on or before the Issue Closing Date.
6. For Eligible Equity Shareholders/ Applicants applying through CAF but not residing at places
where the collection centre is located, shall send the CAF to the Registrar to the Issue by registered post along with drafts of an amount after deducting bank and postal charges in favour of
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“Gayatri Projects Limited -Rights Issue-NR” payable at Hyderabad and crossed ‘A/c Payee only’ for the amount payable so as to reach them on or before the Issue Closing Date.
A separate cheque or bank draft must accompany each application form. Applicants may note that where payment is made by drafts purchased from NRE/FCNR accounts as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/FCNR account should be enclosed with the CAF. In the absence of the above the application shall be considered incomplete and is liable to be rejected. In the case of NRIs who remit their application money from funds held in FCNR/NRE Accounts, refunds and other disbursements, if any shall be credited to such account details of which should be furnished in the appropriate columns in the CAF. In the case of NRIs who remit their application money through Indian Rupee Drafts from abroad, refunds and other disbursements, if any will be made in U.S Dollars at the rate of exchange prevailing at such time subject to the permission of RBI. Our Company will not be liable for any loss on account of exchange rate fluctuation for converting the Rupee amount into U.S. Dollar or for collection charges charged by the applicant’s Bankers. Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of application in transit, if any Payments through Non Resident Ordinary Account (NRO account) will not be permitted. Application without repatriation benefits
For non-residents Eligible Equity Shareholders / Applicants applying on a non-repatriation basis, in addition to the modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained at Hyderabad or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Hyderabad. In such cases, the allotment of Rights Securities will be on non-repatriation basis. For Non Resident Equity Shareholders/Applicants, applying through CAF, the CAF is to be sent at the bank collection centre specified in the CAF along with cheques/demand drafts drawn after deducting bank and postal charges in favor of “Gayatri Projects Limited -Rights Issue” and crossed ‘A/c Payee only’ for the amount payable. For Eligible Equity Shareholders/Applicants, applying on a plain paper, the applications are to be directly sent to the Registrar to the Issue by registered post along with demand drafts after deducting bank and postal charges drawn in favor of “Gayatri Projects Limited -Rights Issue-” payable at Hyderabad so as to reach them on or before the Issue Closing Date. For Eligible Equity Shareholders/ Applicants applying through CAF but not residing at places where the collection centre is located, shall send the CAF to the Registrar to the Issue by registered post along with drafts of an amount after deducting bank and postal charges in favour of “Gayatri Projects Limited -Rights Issue” payable at Hyderabad for the amount payable so as to reach them on or before the Issue Closing Date. If the payment is made by a draft purchased from an NRO account, an Account Debit Certificate from the bank issuing the draft, confirming that the draft has been issued by debiting the NRO account, should be enclosed with the CAF. In the absence of the above, the application shall be considered incomplete and is liable to be rejected. New dematerialised accounts shall be opened for Eligible Equity Shareholders who have had that change in status from resident Indian to NRI. Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of application in transit, if any, on this account and applications received through mail after closure of the Issue are liable to
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be rejected. Applications through mails should not be sent in any other manner except as mentioned above. The CAF along with the application money must not be sent to our Company or the Lead Manager or the Registrar except stated otherwise. The Applicants are requested to strictly adhere to these instructions. Renouncees who are NRIs/FIIs/Non-Resident should submit their respective applications either by hand delivery or by registered post with acknowledgement due to the Registrar to the Issue only along with the cheque/demand draft payable at Hyderabad so that the same are received on or before the closure of the Issue.
Application by Mutual Funds
In case of a Mutual Fund, a separate application can be made in respect of each scheme of the Mutual Fund registered
with SEBI and such Applications in respect of more than one scheme of the Mutual Fund will not be treated as
multiple applications provided that the application clearly indicate the scheme concerned for which the
application has been made.
Applications made by asset management companies or custodians of a mutual fund shall clearly indicate
the name of the concerned scheme for which application is being made.
As per the current regulations, the following restrictions are applicable for investments by mutual funds:
No mutual fund scheme shall invest more than 10% of its net asset value in the Rights Securities of any
company provided that the limit of 10% shall not be applicable for investments in index funds or sector or
industry specific funds. No mutual fund under all its schemes should own more than 10% of any
company’s paid-up share capital carrying voting rights.
Investment by FIIs
In accordance with the current regulations, the following restrictions are applicable for investment by FIIs: The Issue of Rights Securities under this Issue to a single FII should not exceed 24% of the post-issue paid up capital of our Company. In respect of an FII investing in the Rights Securities on behalf of its sub-accounts the investment on behalf of such FII (including each sub-account) shall not exceed 10% of the total paid up capital of our Company. In accordance with foreign investment limits applicable to our Company, the total FII investment cannot exceed 24% of the total paid-up capital of our Company. With the approval of the board and the shareholders by way of a special resolution, the aggregate FII holding can go up to the permitted sectoral cap applicable tour Company. Investments by NRIs
Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3) (i) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. NRI Applicants should note that applications by ineligible Non-residents (including on account of restriction or prohibition under applicable local laws) and where a registered address in India has not been provided are liable to be rejected. Acceptance of the Issue
You may accept the Offer and apply for the Rights Securities offered, either in full or in part by filling Block III of Part A of the enclosed CAF and submit the same along with the application money payable to the Bankers to the Issue or any of the branches as mentioned on the reverse of the CAF before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board thereof in this regard. Applicants at centers not covered by the branches of Bankers to the Issue can send their CAF together with the cheque drawn on a local bank at Hyderabad /demand draft payable at Hyderabad to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected. Note:
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1. In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the
investment in Rights Securities can be remitted outside India, subject to tax, as applicable according to Income Tax Act, 1961.
2. In case Rights Securities are allotted on non-repatriation basis, the dividend and sale proceeds of
the Rights Securities cannot be remitted outside India.
3. The CAFs duly completed together with the amount payable on application must be deposited with the collecting bank indicated on the reverse of the CAFs before the close of business hours on or before the Issue Closing Date. Separate cheque or bank draft must accompany each CAF.
4. In case of a CAF received from non-residents, allotment, refunds and other distribution, if any,
will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to necessary approvals.
Last date of Application
The last date for submission of the duly filled in CAF is [●]. The Issue will be kept open for a minimum of 15 days and our Board or any committee thereof will have the right to extend the said date for such period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date. If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to the Issue on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/ Committee of Directors, the offer contained in this Draft Letter of Offer shall be deemed to have been declined and the Board/ Committee of Directors shall be at liberty to dispose off the Rights Securities hereby offered, as provided under the section entitled “Terms of the Issue – Basis of Allotment” on page 193 of this Draft Letter of Offer. APLLICANTS MAY PLEASE NOTE THAT THE RIGHTS SECURITIES CAN BE TRADED ON
THE STOCK EXCHANGE ONLY IN DEMATERIALISED FORM.
Basis of Allotment
Subject to the provisions contained in this Draft Letter of Offer, the Articles of Association of our Company and the approval of the Designated Stock Exchange, the Board will proceed to allot the Rights Securities in the following order of priority: (a) Full allotment to those Eligible Equity Shareholders who have applied for their Rights Entitlement
either in full or in part and also to the Renouncee(s) who has/ have applied for Rights Securities renounced in their favour, in full or in part.
(b) For Rights Securities being offered under this Issue, if the shareholding of any of the Eligible
Equity Shareholders is less than 2 Equity Shares or not in the multiple of 2 as on the Record Date, the fractional entitlement of such Eligible Equity Shareholders shall be ignored. Eligible Equity Shareholders whose fractional entitlements are being ignored would be given preference in allotment of one additional Rights security each if they apply for additional Rights Securities
(c) Allotment to the Eligible Equity Shareholders who having applied for all the Rights Securities
offered to them as part of the Issue and have also applied for additional Rights Securities. The allotment of such additional Rights Securities will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after making full allotment in (a) and (b) above. The allotment of such Rights Securities will be at the sole discretion of the Board/Committee of Directors in
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consultation with the Designated Stock Exchange, as a part of the Issue and not preferential allotment.
(d) Allotment to Renouncees who having applied for all the Rights Securities renounced in their
favour, have applied for additional Rights Securities provided there is surplus available after making full allotment under (a), (b) and (c) above. The allotment of such Rights Securities will be at the sole discretion of the Board/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not preferential allotment.
(e) Allotment to any other person as the Board may in its absolute discretion deem fit provided there
is surplus available after making full allotment under (a),(b) (c ) and (d) above. After taking into account allotment to be made under (a) and (b) above, if there is any undersubscribed portion, the same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of the Takeover Code which would be available for allocation under (c), (d) and (e) above. In the event of under subscription, our Promoters and either by themselves or through one or more entities controlled by them, intend to apply for additional Equity Shares in accordance with the undertaking and disclosures as mentioned hereinbelow. Our Promoters and Promoter Group, have undertaken, vide their letters dated March 14, 2011, to fully subscribe for their Rights Entitlement. They reserve the right to subscribe for their Rights Entitlement either by themselves and/or through one or more entities controlled by them, including by subscribing for Equity Shares pursuant to any renunciation made by any member of the Company to any member of the Promoter Group. They also intend to apply for Rights Securities in addition to their Rights Entitlement to the extent of any undersubscribed portion of the Issue, subject to obtaining any approvals required under applicable law, to ensure that 100% of the Issue is subscribed. Such subscription for Rights Securities over and above their Rights Entitlement, if allotted, may result in an increase in their percentage shareholding above their current percentage shareholding. Further, such acquisition by them of additional Rights Securities shall (i) not result in a change of control of the management of our Company; and (ii) be exempt from the applicability of Regulations 11 and 12 of the Takeover Code in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. Presently our Company is complying with clause 40A of the Listing Agreement and the minimum public shareholding required to be maintained for continuous listing is 25% of the total paid up equity capital. The Promoter and/or members of the Promoter Group intend to subscribe for any undersubscribed portion as per the provisions of applicable law. Allotment to the Promoter and/or members of the Promoter Group of any undersubscribed portion, over and above their Rights Entitlement, shall be completed in compliance with clause 40A of the Listing Agreements and other applicable laws prevailing at that time relating to continuous listing requirements and the minimum public shareholding of 25% of the total paid up equity capital required to be maintained for continuous listing shall be maintained. For further details of under subscription and allotment to the Promoter and Promoter Group, please refer to “Basis of Allotment” below under this section titled “Terms of the Issue” on page 193 of this Draft Letter of Offer. In case the permission to deal in and for an official quotation of the Rights Securities is not granted by the BSE, our Company shall forthwith repay without interest, all monies received from the applicants in pursuance of this Draft Letter of Offer and if such money is not repaid within eight days after the day from which our Company is liable to repay it, our Company shall pay interest @ 15% per annum as prescribed under Section 73(2) / 73(2A) of the Companies Act, 1956. Underwriting
This Issue is not being underwritten.
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Allotment / Refund
Our Company will issue and dispatch allotment advice/ share certificates/debenture certificates/demat credit and/ or letters of regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any, within 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day our Company becomes liable to pay the subscription amount (i.e. 15 days after the Issue Closing Date or the date of refusal by the BSE, whichever is earlier), our Company shall pay that money with interest at 15% p.a. for the delayed period as stipulated under Section 73 of the Companies Act. Applicants residing at the centers where clearing houses are managed by the RBI) will get refund through NECS only except where the Applicants are otherwise disclosed as applicable/eligible to get refunds through direct credit and RTGS provided the MICR details are recorded with the Depositories or our Company. In case of those Applicants who have opted to receive their Right Entitlement in dematerialized form by using electronic credit under the depository system, an advice regarding the credit of the Rights Securities shall be given separately. Applicants to whom refunds are made through electronic transfer of funds will be sent a letter through Certificate of posting intimating them about the mode of credit of refund within 15 days of the Issue Closing Date. In case of those Applicants who have opted to receive their Rights Entitlement in physical form, our Company will issue the corresponding share/debenture certificates under section 113 of the Companies Act or other applicable provisions if any. Any refund order exceeding ` 1,500 will be dispatched by registered post/ speed post to the sole/ first Applicant ‘s registered address. Refund orders up to the value of ` 1,500 would be sent under the certificate of posting. Such cheques or pay orders will be payable at par at all places where the applications were originally accepted and will be marked “Account Payee only” and would be drawn in the name of the sole/ first Applicant. Adequate funds would be made available to the Registrar to the Issue for this purpose. Payment of Refund
Mode of making refunds
The payment of refund, if any, would be done through any of the following modes: 1. NECS – Payment of refund would be done through NECS for applicants having an account at one
of the centres specified by the RBI, where such facility has been made available.
This would be subject to availability of complete Bank Account Details including MICR code wherever applicable from the depository. The payment of refund through NECS is mandatory for applicants having a bank account at any of the centres where NECS facility has been made available by the RBI (subject to availability of all information for crediting the refund through NECS), except where applicant is otherwise disclosed as eligible to get refunds through NEFT or Direct Credit or RTGS.
2. NEFT – Payment of refund shall be undertaken through NEFT wherever the Applicants ‘ bank has
been assigned the Indian Financial System Code (IFSC), which can be linked to a MICR, if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the Applicants have registered their nine digit MICR number and their bank
account number while opening and operating the demat account, the same will be duly
mapped with the IFSC Code of that particular bank branch and the payment of refund will
be made to the Applicants through this method.
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3. Direct Credit – Applicants having bank accounts with the bankers to the Issue shall be eligible to receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by our Company.
4. RTGS – Applicants having a bank account at any of the abovementioned centres specified by RBI
and whose refund amount exceeds ` 0.20 million, have the option to receive refund through RTGS. Such eligible Applicants who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be made through NECS. Charges, if any, levied by the refund bank(s) for the same would be borne by our Company. Charges, if any, levied by the Applicant’s bank receiving the credit would be borne by the Applicant.
5. For all other Applicants, including those who have not updated their bank particulars with the
MICR code, the refund orders will be dispatched under certificate of posting for value up to ` 1,500 and through Speed Post/ Registered Post for refund orders of ` 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole/first Applicant and payable at par.
For shareholders opting for allotment in physical mode, bank account details as mentioned in the
CAF shall be considered for electronic credit or printing of refund orders, as the case may be.
Refund orders will be made by cheques, pay orders or demand drafts drawn on the Refund Bank(s)
and payable at par at places where the applications were received and will be marked account payee
and will be drawn in the name of Sole/First Applicant. The bank charges, if any, for encashing such
cheques, pay orders or demand drafts at other centres will be payable by the Applicants.
Printing of Bank Particulars on Refund Orders
As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the Applicant’s bank account are mandatorily required to be given for printing on the refund orders. Bank account particulars will be printed on the refund orders/refund warrants which can then be deposited only in the account specified. Our Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud. Refund payment to Non-Resident
Where applications are accompanied by Indian rupee drafts purchased abroad and payable at Hyderabad, refunds will be made in convertible U.S. dollars equivalent to Indian rupees to be refunded. Indian rupees will be converted into U.S. dollars at the rate of exchange, which is prevailing on the date of refund. The exchange rate risk on such refunds shall be borne by the concerned applicant and our Company shall not bear any part of the risk. Where the applications made are accompanied by NRE/FCNR/NRO cheques, refunds will be credited to NRE/FCNR/NRO accounts respectively, on which such cheques were drawn and details of which were provided in the CAF. Export of letters of allotment (if any)/ share certificates/ demat credit to non-resident allottees will be subject to the approval of RBI.
Allotment advice / Share Certificates/ Demat Credit
Allotment advice/ share certificates/ demat credit or letters of regret will be dispatched to the registered address of the first named Applicant or respective beneficiary accounts will be credited within 15 days from the Issue Closing Date. In case our Company issues allotment advice, the relative share certificates will be dispatched within one month from the date of allotment. Allottees are requested to preserve such allotment advice (if any) to be exchanged later for share certificates.
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Option to receive Rights Securities in Dematerialized Form
Applicants to the Rights Securities of our Company issued through this Issue shall be allotted the Rights Securities in dematerialized (electronic) form at the option of the Applicant. Our Company signed a tripartite agreement dated March 9, 2006 with NSDL and the Registrar to the Issue, which enables the Applicants to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates. Our Company has also signed a tripartite agreement dated January 23, 2006 with CDSL and the Registrar to the Issue, which enables the Applicants to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates. In this Issue, the allottees who have opted for Rights Securities in dematerialized form will receive their Rights Securities in the form of an electronic credit to their beneficiary account as given in the CAF with a depository participant. Applicant will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Allotment advice, refund order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant‘s depository participant will provide to him the confirmation of the credit of such Rights Securities to the applicant‘s depository account. Applications, which do not accurately contain this information, will be given the Rights Securities in physical form. No separate applications for Rights Securities in physical and/or dematerialized form should be made. If such applications are made, the application for physical Rights Securities will be treated as multiple applications and is liable to be rejected. In case of partial allotment, allotment will be done in demat option for the Rights Securities sought in demat and balance, if any, will be allotted in physical form. Applicants may please note that the Rights Securities of our Company can be traded on the BSE only
in dematerialized form.
Procedure for availing the facility for allotment of Rights Securities in this Issue in the electronic form is as under: (i) Open a beneficiary account with any depository participant (care should be taken that the
beneficiary account should carry the name of the holder in the same manner as is exhibited in the records of our Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as with our Company). In case of Investors having various folios in our Company with different joint holders, the Investors will have to open separate accounts for such holdings. Those Eligible Equity Shareholders who have already opened
such beneficiary account (s) need not adhere to this step.
(ii) For Eligible Equity Shareholders already holding Rights Securities of our Company in dematerialized form as on the Record Date, the beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Rights Securities pursuant to this Issue by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the allotment of Rights Securities arising out of this Issue may be made in dematerialized form even if the original Rights Securities of our Company are not dematerialized. Nonetheless, it should be ensured that the depository account is in the name(s) of the Eligible Equity Shareholders and the names are in the same order as in the records of our Company.
(iii) Responsibility for correctness of information (including Applicant ‘s age and other details) filled
in the CAF vis-à-vis such information with the Applicant ‘s depository participant, would rest with the Applicant. Investors should ensure that the names of the applicants and the order in which they appear in CAF should be the same as registered with the applicant‘s depository participant.
(iv) If incomplete / incorrect beneficiary account details are given in the CAF the Applicant will get
Rights Securities in physical form.
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(v) Renouncees will also have to provide the necessary details about their beneficiary account for allotment of Rights Securities in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected.
(vi) Rights Equity Share allotted to an Applicant in the electronic account form will be credited
directly to the Applicant’s respective beneficiary account(s) with depository participant. (vii) Applicants should ensure that the names of the Applicants and the order in which they appear in
the CAF should be the same as registered with the Applicant’s depository participant. (viii) Non-transferable allotment advice/refund orders will be directly sent to the Applicant by the
Registrar to this Issue. (ix) The Rights Securities pursuant to this Issue allotted to Investors opting for dematerialized form,
would be directly credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any) would be sent directly to the Applicant by the Registrar to the Issue but the Applicant’s depository participant will provide to him the confirmation of the credit of such Rights Securities to the Applicant’s depository account.
(x) It may be noted that Rights Securities in electronic form can be traded only on the BSE having electronic connectivity with NSDL or CDSL.
(xi) Dividend or other benefits with respect to the Rights Securities held in dematerialized form would
be paid to those Eligible Equity Shareholders whose names appear in the list of beneficial owners given by the Depository Participant to our Company as on the date of the book closure.
General instructions for Investors a) Please read the instructions printed on the CAF carefully. b) Application should be made on the printed CAF, provided by our Company except as mentioned
under the head application on plain paper and should be completed in all respects. For details see “Application on Plain Paper” beginning on page 188 of this Draft Letter of Offer. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of this Draft Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the Investors, details of occupation, address, father‘s / husband‘s name must be filled in block letters.
c) The CAF together with cheque/demand draft should be sent to the Bankers to the Issue/Collecting Bank or to the Registrar to the Issue and not to our Company or Lead Manager to the Issue. Investors residing at places other than cities where the branches of the Bankers to the Issue have been authorised by our Company for collecting applications, will have to make payment by Demand Draft payable at Hyderabad of an amount net of bank and postal charges and send their CAFs to the Registrar to the Issue by REGISTERED POST. If any portion of the CAF is/are detached or separated, such application is liable to be rejected.
d) Except for applications on behalf of the Central or State Government, residents of Sikkim and the
officials appointed by the courts, PAN number of the Applicant and for each Applicant in case of joint names, irrespective of the total value of the Rights Securities applied for pursuant to the Issue, subject to the submission of sufficient documentary evidence to support the veracity of their claim for such exemption.
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e) Investors are advised that it is mandatory to provide information as to their savings/current account number and the name of our Company with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees for Equity Shares held in the physical form. Application not containing such details is liable to be rejected. For Eligible Equity Shareholders holding Equity Shares in dematerialized form, such bank details will be drawn from the demographic details of the Eligible Equity Shareholder in the records of the Depository.
f) All payments should be made by cheque/DD only. Application through the ASBA process as
mentioned above is acceptable. Cash payment is not acceptable. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon. Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with our Company.
g) In case of an application under power of attorney or by a body corporate or by a society, a certified
true copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under this Offer and to sign the application and a copy of the Memorandum and Articles of Association and / or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the above referred documents are already registered with our Company, the same need not be furnished again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue.
h) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order
and as per the specimen signature(s) recorded with our Company. Further, in case of joint Investors who are Renouncees, the number of Investors should not exceed three. In case of joint Investors, reference, if any, will be made in the first Applicant’s name and all communication will be addressed to the first Applicant.
Application(s) received from Non-Resident / NRIs, or persons of Indian origin residing abroad for
allotment of Rights Securities shall, inter alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the matter of refund of application money, allotment of equity shares, subsequent issue and allotment of equity shares, interest, export of share certificates, etc. In case a Non-Resident or NRI Eligible Equity Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF. The Abridged Letter of Offer and CAF shall be dispatched to non-resident Eligible
Equity Shareholders at their Indian address only.
i) All communication in connection with application for the Rights Securities, including any change in address of the Eligible Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/sole Applicant, folio numbers and CAF number. Please note that any intimation for change of address of Eligible Equity Shareholders, after the date of allotment, should be sent to the Registrar and Transfer Agents of our Company, in the case of Equity Shares held in physical form and to the respective depository participant, in case of Equity Shares held in dematerialized form.
j) Payment by cash: The Registrar will not accept any payments against any applications, if made in
cash. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.
k) SAFs cannot be re-split.
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l) Only the person or persons to whom Rights Securities have been offered and not Renouncee(s) shall be entitled to obtain SAFs.
m) Investors must write their CAF number at the back of the cheque /demand draft. n) Only one mode of payment per application should be used. The payment must be by cheque /
demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted.
o) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or post-
dated cheques and postal / money orders will not be accepted and applications accompanied by such cheques / demand drafts / money orders or postal orders will be rejected. The Registrar will not accept payment against application if made in cash.
p) No receipt will be issued for application money received. The Bankers to the Issue / Collecting
Bank/ Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.
q) An applicant which is a mutual fund can make a separate application in respect of each scheme of
the mutual fund registered with SEBI and such applications in respect of more than one scheme of the mutual fund shall not be treated as multiple applications provided that the application clearly indicate the scheme concerned for which the application has been made. The application made by the asset management company or custodian of a mutual fund shall clearly indicate the name of the concerned scheme for which the application is made.
Grounds for Technical Rejections
Investors are advised to note that applications are liable to be rejected on technical grounds, including the following:
• Amount paid does not tally with the amount payable for;
• Bank account details (for refund) are not given and the same are not available with the DP (in the case of dematerialized holdings) or the Registrar (in the case of physical holdings);
• Age of first Applicant not given while completing Part C of the CAFs;
• Except for applications on behalf of the Central or State Government, residents of Sikkimand the officials appointed by the courts, PAN number not given for application of any value;
• Submit the GIR number instead of the PAN;
• In case of application under power of attorney or by limited companies, corporate, trust, etc., relevant documents are not submitted;
• If the signature of the existing Eligible Equity Shareholder does not match with the one given on the CAF and for renouncee(s) if the signature does not match with the records available with their depositories;
• If the Applicant desires to have Rights Securities in electronic form, but the CAF does not have the Applicant’s depository account details;
• Application forms are not submitted by the Investors within the time prescribed as per the CAF and this Draft Letter of Offer;
• Applications not duly signed by the sole/joint Investors;
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• Applications by OCBs unless accompanied by specific approval from RBI permitting the OCBs to participate in the Issue;
• Applications accompanied by Stockinvest;
• In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Investors (including the order of names of joint holders), the Depositary Participant‘s identity (DP ID) and the beneficiary‘s identity;
• For applications by Investors that are located outside of the United States and that are not U.S. persons, such applications that do not include the certification set out in the CAF to the effect that the subscriber is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the securities in compliance with all applicable laws and regulations;
• For applications by Investors that are U.S. persons or which have evidence of being executed in/ dispatched from the U.S., such applications by Investors that have not provided to our Company a duly executed Applicant Representation Letter that our Company has accepted;
• Applications by ineligible Non-residents (including on account of restriction or prohibition under applicable local laws) and where a registered address in India has not been provided;
• Applications where our Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements;
• Multiple Applications;
• Duplicate Applications, including cases where an Applicant submits CAFs along with a plain paper application.
• Applications by renounces who are persons not contempt to contract under the Indian Contract Act, 1872, including minors; and
• Please read this Draft Letter of Offer and the instructions contained therein and in the CAF carefully before filling in the CAF. The instructions contained in the CAF are each an integral part of this Draft Letter of Offer and must be carefully followed. An application is liable to be rejected for any non-compliance of the provisions contained in this Draft Letter of Offer or the CAF.
Payment by Stockinvest
In terms of the RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the Stockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue. Disposal of application and application money
No acknowledgment will be issued for the application monies received by our Company. However, the Bankers to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto. In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares allotted, will be refunded to the Applicant within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day our Company becomes liable to repay it, (i.e. 15 days from the closure of the Issue), our Company and every Director of our Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under Section 73(2) and (2A) of the Companies Act. For further instructions, please read the CAF carefully.
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Procedure for Application through the Applications Supported by Blocked Amount (“ASBA”) Process
SEBI, by its circular dated August 20, 2009, introduced in rights issue application supported by blocked amount wherein the application money remains in the ASBA Account until allotment. Mode of payment through ASBA in rights issue became effective on August 20, 2009. Since this is a new mode of payment in Rights Issues, set forth below is the procedure for applying under the ASBA procedure, for the benefit of the shareholders.
This section is for the information of the ASBA Investors proposing to subscribe to the Issue through the ASBA Process. Our Company and the Lead Manager are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Draft Letter of Offer. Eligible Equity Shareholders who are eligible to apply under the ASBA Process are advised to make their independent investigations and to ensure that the CAF is correctly filled up and also ensure that the number of Rights Securities applied for by such Eligible Equity Shareholders do not exceed the applicable limits under laws or regulations.
This section is only to facilitate better understanding of aspects of the procedure which is specific to
ASBA Investors. ASBA Investors should nonetheless read this document in entirety.
The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided on http://www.sebi.gov.in/pmd/scsb.html. For details on designated branches of SCSB collecting the CAF, please refer the above mentioned SEBI link.
Eligible Equity Shareholders who are eligible to apply under the ASBA Process
The option of applying for Rights Securities in the Issue through the ASBA Process is only available to Eligible Equity Shareholders of our Company on the Record Date and who:
• are holding the Rights Securities in dematerialised form as on the Record Date and have applied towards
his/her Rights Entitlements or additional Rights Securities in the Issue in dematerialised form;
• have not renounced his/her Rights Entitlements in full or in part;
• are not a Renouncee;
• are applying through a bank account maintained with one of the SCSBs.
• Has not split the CAF;
CAF
The Registrar will dispatch the CAF to all Eligible Equity Shareholders as per their Rights Entitlement on the Record Date for the Issue. Those Eligible Equity Shareholders who wish to apply through the ASBA payment mechanism will have to select for this mechanism in Part A of the CAF and provide necessary details.
Eligible Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in Part A of the CAF only or in plain paper application and indicate that they wish to apply through the ASBA payment mechanism. On submission of the CAF after selecting the ASBA Option in Part A or plain paper applications indicating application through the ASBA payment mechanism, the Eligible Equity Shareholders are deemed to have authorized (i) the SCSB to do all acts as are necessary to make the CAF in the Issue, including blocking or unblocking of funds in the bank account maintained with the SCSB specified in the CAF or the plain paper, transfer of funds to the separate bank account maintained by our Company as per the provisions of section 73(3) of the Companies Act, on receipt of instruction from the Registrar to the Issue after finalization of the basis of Allotment; and (ii) the Registrar to the Issue to issue instructions to the SCSB to remove the block on the funds in the bank account specified in the CAF or plain paper, upon finalization of the basis of Allotment and to transfer the requisite funds to the separate bank account maintained by our Company as per the provisions of Section 73(3) of the Companies Act.
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Application in electronic mode will only be available with such SCSB who provides such facility. The Equity Shareholder shall submit the CAF/ plain paper application to the SCSB for authorizing such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB. However, no more than five (5) applications (including CAF and plain paper application) can be submitted per bank account in the Issue. In case of withdrawal / failure of the Issue, the Lead Manager, through the Registrar to the Issue, shall notify the SCSBs to unblock the blocked amount of the Equity Shareholder applying through ASBA within one (1) day from the day of receipt of such notification.
Mode of payment
The Equity Shareholder applying under the ASBA Process agrees to block the entire amount payable on application with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in a bank account maintained with the SCSB.
After verifying that sufficient funds are available in the bank account provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrars. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per Registrar’s instruction allocable to the Eligible Equity Shareholders applying under the ASBA Process from bank account with the SCSB mentioned by the Equity Shareholder in the CAF. This amount will be transferred in terms of the SEBI (ICDR) Regulations, into the separate bank account maintained by our Company as per the provisions of Section 73(3) of the Companies Act. The balance amount remaining after the finalization of the basis of allotment shall be either unblocked by the SCSBs or refunded to the investors by the Registrar on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Manager to the respective SCSB.
The Eligible Equity Shareholders applying under the ASBA Process would be required to block the entire amount payable on their application at the time of the submission of the CAF.
The SCSB may reject the application at the time of acceptance of CAF if the bank account with the SCSB details of which have been provided by the Equity Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF or (ii) more than five (5) applications (including CAF and plain paper application) are submitted per account held with the SCSB in the Issue. Subsequent to the acceptance of the application by the SCSB, our Company would have a right to reject the application only on technical grounds.
Options available to the Eligible Equity Shareholders applying under the ASBA Process
The summary of options available to the Eligible Equity Shareholders is presented below. You may exercise any of the following options with regard to the Equity Shares, using the respective CAFs received from Registrar:
Option Available Action Required 1. Accept whole or part of your Rights
Entitlement without renouncing the balance.
Fill in and sign Part A (All joint holders must
sign)
2. Accept your Rights Entitlement in full and apply for additional Rights Securities
Fill in and sign Part A including Block III relating to the acceptance of entitlement and Block IV relating to additional Rights Securities (All joint holders must sign)
The Equity Shareholder applying under the ASBA Process will need to select the ASBA option
process in the CAF and provide required necessary details. However, in cases where this option is not
selected, but the CAF is tendered to the SCSB with the relevant details required under the ASBA
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process option and SCSB blocks the requisite amount, then that CAF would be treated as if the Equity
Shareholder has selected to apply through the ASBA process option.
Additional Rights Securities
You are eligible to apply for additional Rights Securities over and above the number of Rights Securities that you are entitled too, provided that (i) you have applied for all the Rights Securities (as the case may be) offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Rights Securities shall be considered and allotment shall be made at the sole discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed under “Terms of
the Issue - Basis of Allotment” on page 193 of this Draft Letter of Offer.
If you desire to apply for additional Rights Securities please indicate your requirement in the place provided for additional Rights Securities in Part A of the CAF.
Renunciation under the ASBA Process
Renouncees cannot participate in the ASBA Process.
Application on Plain Paper
An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF and who is applying under the ASBA Process may make an application to subscribe to the Issue on plain paper. Eligible Equity Shareholders applying on the basis of a plain paper application are required to indicate their choice of applying under the ASBA Process.
The envelope should be super scribed “Gayatri Projects Limited – Rights Issue” and should be postmarked in India. The application on plain paper, duly signed by the Investors including joint holders, in the same order as per specimen recorded with our Company, must reach the Designated Branch / corporate branch of the SCSBs before the Issue Closing Date and should contain the following particulars:
• Name of the Company, being Gayatri Projects Limited;
• Name and address of the Equity Shareholder including joint holders;
• Registered Folio Number/ DP and Client ID no.;
• Number of Rights Securities held as on Record Date;
• Number of Rights Securities entitled to;
• Number of Rights Securities applied for;
• Number of additional Rights Securities applied for, if any;
• Total number of Rights Securities applied for;
• Total amount paid at the rate of ` [●]per Equity Share;
• Particulars of cheque/draft;
• Except for applications on behalf of the Central or State Government and the officials appointed by the courts, PAN number of the Applicant and for each Applicant in case of joint names, irrespective of the total value of the Rights Securities applied for pursuant to the Issue;
• Authorizing such SCSB to block an amount equivalent to the amount payable on the application in such bank account maintained with the same SCSB;
• A representation that the Equity Shareholder is not a “U.S. Person” (as defined in Regulation S under the Securities Act); and
• Signature of the Eligible Equity Shareholders to appear in the same sequence and order as they appear in the records of our Company.
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Option to receive Rights Securities in Dematerialized Form
ELIGIBLE EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE RIGHTS SECURITIES OF OUR COMPANY UNDER THE ASBA PROCESS CAN BE ALLOTTED ONLY IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE RIGHTS SECURITIES ARE BEING HELD ON RECORD DATE.
General instructions for Eligible Equity Shareholders applying under the ASBA Process
a. Please read the instructions printed on the respective CAF carefully. b. Application should be made on the printed CAF only and should be completed in all respects. The CAF
found incomplete with regard to any of the particulars required to be given therein, and/or which are not completed in conformity with the terms of this Draft Letter of Offer are liable to be rejected. The CAF / plain paper application must be filled in English.
c. The CAF / plain paper application in the ASBA Process should be submitted at a Designated Branch of the SCSB and whose bank account details are provided in the CAF and not to the Bankers to the Issue/Collecting Banks (assuming that such Collecting Bank is not a SCSB), to our Company or Registrar or Lead Manager to the Issue.
d. All applicants, and in the case of application in joint names, each of the joint applicants, should mention his/her PAN number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. Except for applications on behalf of the Central or State Government and the officials appointed by the courts, CAFs / plain paper applications without PAN will be considered incomplete and are liable to be rejected.
e. All payments will be made by blocking the amount in the bank account maintained with the SCSB. Cash payment is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.
f. Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. The Eligible Equity Shareholders must sign the CAF / plain paper application as per the specimen signature recorded with our Company /or Depositories.
g. In case of joint holders, all joint holders must sign the relevant part of the CAF / plain paper application in the same order and as per the specimen signature(s) recorded with our Company. In case of joint applicants, reference, if any, will be made in the first Applicant’s name and all communication will be addressed to the first Applicant.
h. All communication in connection with application for the Rights Securities, including any change in address of the Eligible Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/sole Applicant, folio numbers and CAF number.
i. Only the person or persons to whom the Rights Securities have been offered and not renouncee(s) shall be eligible to participate under the ASBA process.
Do’s:
a. Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are filled in. In case of non-receipt of the CAF, the application can be made on plain paper indicating application through the ASBA payment mechanism with all necessary details as indicated under the section entitled “Terms of the Issue – Application on Plain Paper” on page 188 of this Draft Letter of Offer.
b. Ensure that you submit your application in physical mode only. Electronic mode is only available with certain SCSBs and not all SCSBs and you should ensure that your SCSB offers such facility to you.
c. Ensure that the details about your Depository Participant and beneficiary account are correct and the beneficiary account is activated as Rights Securities will be allotted in the dematerialized form only.
d. Ensure that the CAFs / plain paper applications are submitted at the SCSBs and details of the correct bank account have been provided in the CAF.
e. Ensure that there are sufficient funds (equal to {number of Rights Equity Shares as the case may be applied for} X {Issue Price of Rights Equity Shares, as the case may be}) available in the bank account
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maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.
f. Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on application mentioned in the CAF / plain paper application, in the bank account maintained with the respective SCSB, of which details are provided in the CAF / plain paper application and have signed the same.
g. Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF /plain paper application in physical form or electronic mode.
h. Except for applications on behalf of the Central or State Government and the officials appointed by the courts, each applicant should mention their PAN allotted under the I. T. Act.
i. Ensure that the name(s) given in the CAF / plain paper application is exactly the same as the name(s) in which the beneficiary account is held with the Depository Participant. In case the CAF / plain paper application is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF / plain paper application.
j. Ensure that the Demographic Details are updated, true and correct, in all respects.
Don’ts:
a. Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB. b. Do not pay the amount payable on application in cash, by money order or by postal order. c. Do not send your physical CAFs / plain paper applications to the Lead Manager to Issue / Registrar /
Collecting Banks (assuming that such Collecting Bank is not a SCSB) / to a branch of the SCSB which is not a Designated Branch of the SCSB / Company; instead submit the same to a Designated Branch of the SCSB only.
d. Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this
ground. e. Do not instruct your respective banks to release the funds blocked under the ASBA Process.
Grounds for Technical Rejection under the ASBA Process
In addition to the grounds listed under “Grounds for Technical Rejection” beginning on page 200 of this Draft Letter of Offer, applications under the ABSA Process are liable to be rejected on the following grounds:
a) Application for Rights Entitlements or additional shares in physical form. b) DP ID and Client ID mentioned in CAF / plain paper application not matching with the DP ID and
Client ID records available with the Registrar. c) Sending CAF / plain paper application to the Lead Manager / Registrar / Collecting Bank (assuming that
such Collecting Bank is not a SCSB) / to a branch of a SCSB which is not a Designated Branch of the SCSB / Company.
d) Renouncee applying under the ASBA Process. e) Insufficient funds are available with the SCSB for blocking the amount. f) Funds in the bank account with the SCSB whose details are mentioned in the CAF / plain paper
application having been frozen pursuant to regulatory orders. g) Account holder not signing the CAF / plain paper application or declaration mentioned therein. h) Submitting the GIR number instead of the PAN. i) Application on split form
Depository account and bank details for Eligible Equity Shareholders applying under the ASBA
Process
IT IS MANDATORY FOR ALL THE ELIGIBLE EQUITY SHAREHOLDERS APPLYING UNDER
THE ASBA PROCESS TO RECEIVE THEIR RIGHTS SECURITIES IN DEMATERIALISED
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FORM. ALL ELIGIBLE EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS
SHOULD MENTION THEIR DEPOSITORY PARTICIPANT‟S NAME, DEPOSITORY
PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN
THE CAF / PLAIN PAPER APPLICATION. ELIGIBLE EQUITY SHAREHOLDERS APPLYING
UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF / PLAIN
PAPER APPLICATION IS EXACTLY THE SAME AS THE NAME IN WHICH THE
DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF / PLAIN PAPER APPLICATION IS
SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY
ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME
SEQUENCE IN WHICH THEY APPEAR IN THE CAF / PLAIN PAPER APPLICATION.
Eligible Equity Shareholders applying under the ASBA Process should note that on the basis of name of these Eligible Equity Shareholders, Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF / plain paper application, the Registrar to the Issue will obtain from the Depository demographic details of these Eligible Equity Shareholders such as address, bank account details for printing on refund orders and occupation (“Demographic Details”). Hence, Eligible Equity Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF / plain paper application.
These Demographic Details would be used for all correspondence with such Eligible Equity Shareholders including mailing of the letters intimating unblock of bank account of the respective Equity Shareholder. The Demographic Details given by Eligible Equity Shareholders in the CAF / plain paper application would not be used for any other purposes by the Registrar. Hence, Eligible Equity Shareholders are advised to update their Demographic Details as provided to their Depository Participants.
By signing the CAFs / plain paper applications, the Eligible Equity Shareholders applying under the ASBA Process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records.
Letters intimating allotment and unblocking or refund (if any) would be mailed at the address of the
Equity Shareholder applying under the ASBA Process as per the Demographic Details received from
the Depositories. Refunds, if any, will be made directly to the bank account in the SCSB and which
details are provided in the CAF / plain paper application and not the bank account linked to the DP
ID. Eligible Equity Shareholders applying under the ASBA Process may note that delivery of letters
intimating unblocking of bank account may get delayed if the same once sent to the address obtained
from the Depositories are returned undelivered. In such an event, the address and other details given
by the Equity Shareholder in the CAF / plain paper application would be used only to ensure dispatch
of letters intimating unblocking of bank account.
Note that any such delay shall be at the sole risk of the Eligible Equity Shareholders applying under
the ASBA Process and none of our Company, the SCSBs or the Lead Manager shall be liable to
compensate the Equity Shareholder applying under the ASBA Process for any losses caused due to
any such delay or liable to pay any interest for such delay.
In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Eligible Equity Shareholders (including the order of names of joint holders), the DP ID and the beneficiary account number, then such applications are liable to be rejected.
Transfer of Funds
The Registrar to the Issue shall instruct the relevant SCSB to unblock the funds in the relevant ASBA bank accounts for (i) transfer of requisite funds to the separate bank account maintained by our Company as per the provisions of section 73(3) of the Companies Act, (ii) rejected / unsuccessful ASBAs.
In case of failure or withdrawal of the Issue, on receipt of appropriate instructions from the Lead Manager through the Registrar to the Issue, the SCSBs shall unblock the bank accounts latest by the next day of receipt of such information.
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Utilisation of Issue Proceeds
The Board of Directors declares that: (i) All monies received out of this Issue shall be transferred to a separate bank account other than the
bank account referred to sub-section (3) of Section 73 of the Companies Act;
(ii) Details of all monies utilized out of the Issue referred to in clause (i) above shall be disclosed under an appropriate separate head in the balance sheet of our Company indicating the purpose for which such monies have been utilized; and
(iii) Details of all unutilized monies out of the Issue, if any, referred to in clause (i) above shall be disclosed under an appropriate separate head in the balance sheet of our Company indicating the form in which such unutilized monies have been invested.
Undertakings by our Company
Our Company undertakes: 1. The complaints received in respect of the Issue shall be attended to by the company expeditiously and
satisfactorily; 2. That all steps for completion of the necessary formalities for listing and commencement of trading at
all stock exchanges where the securities are to be listed are taken within 7 working days of finalization of basis of allotment;
3. The funds required for making refunds to unsuccessful applicants under the Issue as per the mode(s)
disclosed in this Draft Letter of Offer and/or the Letter of Offer shall be made available to the Registrar to the Issue;
4. That where refund are made through electronic transfer of funds, a suitable communication shall be
sent to the applicant/s under the Issue within fifteen days of the Issue Closing Date giving details of the bank where refunds shall be credited along with the amount and expected date of electronic credit of refund; and
5. Adequate arrangements shall be made to collect all ASBA applications and to consider them similar to
non-ASBA applications while finalizing the basis of allotment under the Issue.
Our Company accepts full responsibility for the accuracy of information given in this Draft Letter of Offer and confirms to the best of his knowledge and belief, there are no other facts or the omission of which makes any statement made in this Draft Letter of Offer misleading and further confirms that it has made all reasonable inquiries to ascertain such facts.
Important
Please read this Draft Letter of Offer carefully before taking any action. The instructions contained in the accompanying CAF are an integral part of the conditions of this Draft Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected. All enquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for SAFs must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Applicant as mentioned on the CAF and superscribed “Gayatri Projects Rights Issue” on the envelope and postmarked in India) to the Registrar to the Issue at the following address: I.V. Lakshmi
B-1, T.S.R. Towers, 6-3-1090, Raj Bhavan Road, Somajiguda, Hyderabad – 500082
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Telephone: +91 40 2331 4284 Fax: +91 40 2339 8984/3/5 It is to be specifically noted that this Issue of Equity Shares is subject to the risks as detailed in the section entitled “Risk Factors” beginning on page 1 of this Draft Letter of Offer. Issue to remain open for a minimum of 15 days and maximum of 30 days as may be determined by the Board.
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SECTION IX –STATUTORY AND OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts (not being contracts entered into in the ordinary course of business carried on by our Company or entered into more than two years before the date of this Draft Letter of Offer) which are or may be deemed material have been entered or are to be entered into by our Company. These contracts and also the documents for inspection referred to hereunder, may be inspected at the Registered and Corporate Office of our Company from 10:00 A.M. to 5:00 P.M. from the date of this Draft Letter of Offer until the Issue Closing Date, on Working Days. (A) Material Contracts 1. Engagement letter dated October 13, 2010 appointing Edelweiss Capital Limited to act as Lead
Manager to the Issue.
2. Issue Agreement dated March 7, 2011 between our Company and the Lead Manager to the Issue.
3. Agreement dated March 4, 2011 between our Company and the Registrar to the Issue.
4. Escrow Agreement dated [●] between our Company, the Lead Manager, [●].
(B) Documents 1. Certificate of incorporation of our Company dated September 15, 1989.
2. Memorandum and Articles of Association of our Company.
3. Board resolution and postal ballot notice dated January 21, 2011 authorizing this Issue.
4. Board resolutions dated September 24, 2009 appointing T.V Sandeep Kumar Reddy as the Managing Director and Brij Mohan Reddy as Vice Chairman of our Company respectively.
5. Consents of the Directors, Company Secretary and Compliance Officer, Auditor, Lead Manager to the Issue, Registrar to the Issue and the Legal Advisor to the Issue to include their names in this Draft Letter of Offer to act in their respective capacities.
6. Letter dated January 28, 2011 from the Auditor of our Company confirming the Statement of Tax Benefits as disclosed in this Draft Letter of Offer.
7. The Report of the Auditors dated March 19, 2011 in relation to the audited unconsolidated and consolidated financial statements of our Company as at and for the financial year ended March 31, 2010.
8. The Report of the Auditors dated March 19, 2011 in relation to the limited reviewed standalone
and consolidated financial statements of our Company as at and for the six months ended September 30, 2010.
9. Limited Review of the Auditors dated February 14, 2011 for the unaudited financial results on a
standalone basis for the nine months and quarter ended December 31, 2010. 10. Audited Reports of our Company for FY 2010, FY 2009, FY 2008, FY 2007 and FY 2006. 11. In-principle listing approval dated [●] from [●] BSE. 12. Due Diligence Certificate dated March 21, 2011 from the Lead Manager.
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13. Tripartite agreement with January 23, 2006 dated with CDSL and Karvy Computershare Private Limited.
14. Tripartite agreement with March 9, 2006 dated with NSDL and Karvy Computershare Private Limited.
15. Prospectus dated September 12, 2006 for the public issue of 1,000,000 equity shares of face value ` 10 each of our Company.
16. Application to FIPB dated March 11, 2011 in connection with issue of Warrants under the Issue.
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