disclosure document/information memorandum/ … · wadia international centre p b marg, worli...
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HINDUSTAN ZINC LIMITED
CIN: L27204RJ1966PLC001208 Reg. Off.: Yashad Bhawan, Near Swaroop Sagar, Udaipur, Rajasthan- 313004
Compliance Officer: Mr. Rajendra Pandwal Tel No: +91-0294-6604015; Fax No: +91- 2427739 ; E-mail: [email protected]
Website: www.hzlindia.com; Disclosure Document dated 24 September 2020
DISCLOSURE DOCUMENT/INFORMATION MEMORANDUM/ PRIVATE PLACEMENT OFFER LETTER
Disclosure Document for issue by way of private placement by Hindustan Zinc Limited (“HZL” or the “Company” or the “Issuer”) of up to 30000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures bearing face value of Rs. 10,00,000/- (Rupees Ten Lakhs Only) each aggregating upto Rs. 3000,00,00,000/- (Rupees Three Thousand Crores Only) with an option to retain oversubscription of up to 10000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of face value INR 10,00,000 each aggregating to a total issue size of Rs. 4000,00,00,000/- (Rupees Four Thousand Crores Only) (referred to as “Debentures” and the issuance of Debentures shall collectively be referred to as “Issue”). The Issue would be under the electronic book mechanism for issuance of debt securities on private placement basis as per the Securities and Exchange Board of India (“SEBI”) circular no. SEBI/HO/DDHS/CIR/P/2018/122 dated August 16, 2018 and any amendments thereto (“SEBI EBP Circular”) read with the “Updated Operational Guidelines for issuance of Securities on Private Placement basis through an Electronic Book Mechanism” issued by BSE vide their Notice No. 20180928-24 dated September 28, 2018 and any amendments thereto (“BSE EBP Guidelines”, together with the SEBI EBP Circular referred to as the “Operational Guidelines”). The Company intends to use the BSE BOND-EBP Platform (as defined in Section 1 titled “Definitions”) for this Issue.
GENERAL RISK Investment in debt and debt related securities involve a degree of risk and investors should not invest any funds in debt instruments, unless they understand the terms and conditions of the Issue, the risk factors set out under Clause 3 (Management’s Perception of Risk Factors) and unless they can afford to take the risks attached to such investments and only after reading the information carefully. For taking an investment decision, investors must rely on their own examination of the issue, the disclosure document and the risk involved. The Securities have not been recommended by SEBI nor does SEBI guarantee the accuracy or adequacy of this Private Placement Offer Letter.
ISSUER’S RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all information with regard to the Issuer and the Issue, which is material and relevant in the context of the Issue, that the information contained in this Information Memorandum is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
CREDIT RATING
The Debentures are rated by CRISIL as “CRISIL AAA/Stable” (pronounced as CRISIL Triple A rating with stable outlook). Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such Instruments carry very low credit risk. The rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating obtained is subject to revision, suspension or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. Please refer to Annexure IV to this Disclosure Document for rating letters by the Credit Rating Agency.
LISTING The Debentures are proposed to be listed on the BSE Limited (BSE). The Issuer shall comply with the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “SEBI LODR Regulations”) to the extent applicable to it on a continuous basis. BSEhas given its in-principle listing approval for the Debentures proposed to be offered through this Disclosure Document vide its letter dated 23 September 2020. Please refer to Annexure V to this Disclosure Document for the in-principle listing approvals.
ISSUE SCHEDULE
Issue / Bid Opening Date Issue / Bid Closing Date Pay-in Date Deemed Date of Allotment
28 September 2020 28 September 2020 29 September 2020 29 September 2020
The Issuer reserves its sole and absolute right to modify (prepone/postpone) the above issue schedule without giving any reason or prior notice. PARTIES TO THE ISSUE
ARRANGER TO THE ISSUE CREDIT RATING AGENCY REGISTRAR & TRANSFER AGENT DEBENTURE TRUSTEES
HDFC Bank Limited Peninsula Business Park, 4th Floor, Tower B, Senapati Bapat Marg, Lower Parel (W), Mumbai - 400013 Tel No: 022-33958120 Fax No: 022-30788584 Email: [email protected] Contact Person: Niranjan Kawatkar SEBI Reg. No: MB/INM000011252
CRISIL Limited CRISIL House, Central Avenue, Hiranandani Business Parks, Powai, Mumbai – 400 076 Ph: +91 22 3342 3000 Fax: +91 22 40405800
Link Intime India Private Limited C-101, 247 Park, L B S Marg, Vikhroli West, Mumbai 400 083 Tel: +91-22-4918 6200 Fax: +91-22-4918 6060 Website: www.linkintime.co.in Email: [email protected] CIN: U67190MH1999PTC118368
Axis Trustee Services Limited Axis House, 2nd Floor Wadia International Centre P B Marg, Worli Mumbai – 400025 Ph: 022 –2425 2525 Fax:022 - 2425 4200
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TABLE OF CONTENTS
DISCLAIMER OF THE ISSUER ................................................................................................................................... 2
1 DEFINITIONS ............................................................................................................................................ 6
2 ABOUT THE ISSUER .................................................................................................................................. 9
3 MANAGEMENT PERCEPTION OF RISK FACTOR ....................................................................................... 23
4 FINANCIAL INFORMATION ABOUT THE COMPANY ................................................................................. 35
5 DETAILS OF SHARE CAPITAL AND SHARE HOLDING PATTERN ................................................................. 47
6 DETAILS REGARDING DIRECTORS, PROMOTERS & AUDITORS OF THE COMPANY ................................... 50
7 DETAILS OF CHANGE IN AUDITORS SINCE LAST 3 YEARS: NONE ............................................................. 53
8 DETAILS WITH REGARD TO INTEREST OF DIRECTORS, LITIGATIONS ETC ................................................. 53
9 DISCLOSURE OF DEBT SECURITIES TO BE ISSUED .................................................................................... 60
10 DISCLOSURES PERTAINING TO WILFUL DEFAULT .................................................................................... 72
ANNEXURE I – TERM SHEET ................................................................................................................................. 73
ANNEXURE II - DECLARATION .............................................................................................................................. 84
ANNEXURE III – RATING LETTER AND RATING RATIONALE ................................................................................... 85
ANNEXURE IV – CONSENT LETTER FROM THE DEBENTURE TRUSTEE .................................................................... 94
ANNEUXRE V – BSE IN PRINCIPAL FOR LISTING .................................................................................................... 95
ANNEXURE VI: AUDITED FINANCIAL STATEMENTS ............................................................................................... 96
ANNEXURE VII: SUMMARY FINANCIAL POSITION (AUDITED) ............................................................................. 106
ANNEXURE VIII: INDICATIVE CASHFLOW SCHEDULE........................................................................................... 109
ANNEXURE IX– COPY OF BOARD RESOLUTION AND COMMITTEE OF DIRECTORS RESOLUTION ......................... 111
ANNEXURE X- OTHER INFORMATION AND APPLICATION PROCESS ................................................................... 115
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DISCLAIMER OF THE ISSUER
This Private Placement Offer Letter is neither a Prospectus nor a Statement in lieu of a Prospectus. The issue of Debentures is being made strictly on a private placement basis. This Private Placement Offer Letter is not intended to be circulated to more than 49 (forty-nine) persons. Multiple copies hereof given to the same entity shall be deemed to be given to the same person and shall be treated as such. It does not constitute and shall not be deemed to constitute an offer or an invitation to subscribe to the NCDs to the public in general. This Private Placement Offer Letter should not be construed to be a prospectus or a statement in lieu of prospectus under the Companies Act or any other prevailing rules and regulations.
This Private Placement Offer Letter has been prepared in conformity with the applicable SEBI Regulations and the Companies Act. Pursuant to Section 42 of the Companies Act, 2013 and Rule 14(3) of the PAS Rules, the Issuer shall file a copy of this Private Placement Offer Letter with the Registrar of Company, BSE Limited and Securities Exchange Board of India within a period of 30 (thirty) days of circulation of this Private Placement Offer Letter as applicable.
This Private Placement Offer Letter / Information Memorandum has been prepared to provide general information about the Issuer to potential investors to whom it is addressed and who are willing and eligible to subscribe to the Debentures. This Private Placement Offer Letter does not purport to contain all the information that any potential investor may require. Neither this nor any other information or document supplied in connection with the Debentures is intended to provide the basis of any credit or other evaluation and any recipient of this Private Placement Offer Letter should not consider such receipt a recommendation to purchase any Debentures. Each investor contemplating purchasing any Debentures should make its own independent investigation of the financial condition and affairs of the Issuer and its own appraisal of the creditworthiness of the Issuer. Potential investors should consult their own financial, legal, tax and other professional advisors as to the risks and investment considerations arising from an investment in these Debentures and should possess the appropriate resources to analyze such investment and the suitability of such investment to such investor's particular circumstances.
Potential Investors to Debentures must make their own independent evaluation and judgment before making the investment and are believed to be experienced in investing in debt and are able to bear the economic/commercial risk of investing in the Debentures. Potential investors should conduct their own investigation, due diligence and analysis before applying for the Debentures. Nothing in this Private Placement Offer Letter should be construed as advice or recommendation by the Issuer to subscribers to the Debentures. Potential investors should also consult their own advisors on the implications of application, allotment, sale, holding, ownership and redemption of these Debentures and matters incidental thereto.
The Issuer confirms that, as of the date hereof, this Private Placement Offer Letter (including the documents incorporated by reference herein, if any) contains all information that is material in the context of the Issue of the Debentures, is accurate in all material respects and does not contain any untrue statement of a material fact. It has not omitted any material fact necessary to make and the statements made herein are not misleading in the light of the circumstances under which they are made. No person has been authorized to give any information or to make any representation not contained or incorporated by reference in this Private Placement Offer Letter or in any material made available by the Issuer to any potential investor pursuant hereto and, if given or made, such information or representation must not be relied upon as having been authorized by the Issuer.
The Issuer reserves the right to withdraw the private placement of the Debentures Issue prior to the issue closing date(s) in the event of any unforeseen development adversely affecting the economic and regulatory environment or any other force majeure condition including any change in the applicable laws.
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This Information Memorandum / Private Placement Offer Letter and the contents hereof are restricted for only the intended recipient(s) who have been addressed directly and specifically through a communication by the Issuer Company and only such recipients are eligible to apply for the Debentures. All investors are required to comply with the relevant regulations/guidelines applicable to them for investing in this Issue. The contents of this Private Placement Offer Letter are intended to be used only by those investors to whom it is distributed. It is not intended for distribution to any other person and should not be reproduced by the recipient. The potential investors shall be required to independently procure all the licenses and approvals, if applicable, prior to subscribing to the NCDs and the Issuer shall not be responsible for the same.
No invitation is being made to any persons other than those to whom the Private Placement Offer Letter along with the documents annexed hereto being issued have been sent by or on behalf of the Issuer. Any application by a person to whom this Information Memorandum / Private Placement Offer Letter has not been sent by or on behalf of the Issuer shall be rejected without assigning any reason.
The person who is in receipt of this Private Placement Offer Letter shall maintain utmost confidentiality regarding the contents of this Private Placement Offer and shall not reproduce or distribute in whole or part or make any announcement in public or to a third party regarding the contents without the consent of the Issuer.
This Information Memorandum/ Private Placement Offer Letter does not constitute, nor may it be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.
Each person receiving this Private Placement Offer Letter acknowledges that:
Such person has been afforded an opportunity to request and to review and has received all additional information considered by it to be necessary to verify the accuracy of or to supplement the information herein; and
Such person has not relied on any intermediary that may be associated with issuance of Debentures in connection with its investigation of the accuracy of such information or its investment decision.
The Issuer does not undertake to update the Private Placement Offer Letter to reflect subsequent events after the date of circulation of this Private Placement Offer Letter and thus it should not be relied upon with respect to such subsequent events without first confirming its accuracy with the Issuer.
Neither the delivery of this Private Placement Offer Letter nor any issue of Debentures made hereunder shall, under any circumstances, constitute a representation or create any implication that there has been no change in the affairs of the Issuer since the date hereof.
This Private Placement Offer Letter does not constitute, nor may it be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. No action is being taken to permit an offering of the Debentures or the distribution of this Private Placement Offer Letter in any jurisdiction where such action is required. The distribution of this Private Placement Offer and the offering and issue of the Debentures may be restricted by law in certain jurisdictions. Persons into whose possession this Private Placement Offer Letter come are required to inform themselves about and to observe any such restrictions. The Private Placement Offer Letter is made available to investors in the Issue on the strict understanding that the contents hereof are strictly confidential and the details provided herein are strictly for the sole purpose of information to the potential investors.
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CAUTIONARY NOTE
Each invited potential Investor acknowledges and agrees that each of them, (i) are knowledgeable and experienced in financial and business matters, have expertise in assessing credit, market and all other relevant risk and are capable of evaluating, and have evaluated, independently the merits, risks and suitability of subscribing to or purchasing the ; (ii) understand that the Issuer has not provided, and will not provide, any material or other information regarding the Debentures, except as included in the Information Memorandum, (iii) have not requested the Issuer to provide it with any such material or other information, (iv) have not relied on any investigation that any person acting on their behalf may have conducted with respect to the Debentures, (v) have made their own investment decision regarding the Debentures based on their own knowledge (and information they have or which is publicly available) with respect to the Bonds or the Issuer (vi) have had access to such information as deemed necessary or appropriate in connection with purchase of the Debentures, (vii) are not relying upon, and have not relied upon, any statement, representation or warranty made by any person, including, without limitation, the Issuer, and (viii) understand that, by purchase or holding of the Bonds, they are assuming and are capable of bearing the risk of loss that may occur with respect to the Debentures, including the possibility that they may lose all or a substantial portion of their investment in the Debentures.
It is the responsibility of each potential Investor to also ensure that they will sell these Debentures in strict accordance with this Information Memorandum, the Transaction Documents and all other applicable laws, so that the sale does not constitute an offer to the public, within the meaning of the Companies Act, 1956 and/or the Companies Act, 2013. The potential investors shall at all times be responsible for ensuring that it shall not do any act deed or thing which would result this Private Placement Offer Letter being released to any third party (where such party is not an intended recipients from the Issuer) and in turn constitutes an offer to the public howsoever.
The distribution of this Information Memorandum or the Application Forms and the offer, sale, pledge or disposal of the Debenture may be restricted by law in certain jurisdictions. The sale or transfer of these Bonds outside India may require regulatory approvals in India, including without limitation, the approval of SEBI or RBI.
DISCLAIMER OF STOCK EXCHANGE
As required, a copy of this Private Placement Offer Letter shall be submitted to BSE Limited (hereinafter referred to as “BSE”/ “Stock Exchange”) for seeking listing of the NCDs. It is to be distinctly understood that such submission of the Private Placement Offer Letter with BSE or hosting the same on the website of BSE should not in any way be deemed or construed that the Private Placement Offer Letter has been cleared or approved by BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Private Placement Offer Letter; nor does it warrant that this Issuer’s securities will be listed or continue to be listed on the Stock Exchange; nor does it take responsibility for the financial or other soundness of this Issuer, its management or any scheme or project of the Issuer. Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Stock Exchange or any agency whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.
DISCLAIMER OF SEBI
This Information Memorandum shall be filed with or submitted to SEBI in accordance with Section 42 of the Companies Act, 2013 the rules made thereunder and other applicable law within 30 days from the date of this Information Memorandum. The Debentures have not been recommended or approved by
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SEBI nor does SEBI guarantee the accuracy or adequacy of this document. It is to be distinctly understood that this Information Memorandum should not in any way be deemed or construed to have been approved or vetted by SEBI. SEBI does not take any responsibility either for the financial soundness of any proposal for which the Issue is proposed to be made or for the correctness of the statements made or opinions expressed in this Information Memorandum.
DISCLAIMER OF THE RBI
RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the Issuer or for the correctness of any of the statements or representations made or opinions expressed by the Issuer and for discharge of liability by the Issuer.
DISCLAIMER OF ARRANGER
The Issuer has prepared this information based on the terms set out herein and the Issuer is solely responsible for its contents and such information has not been independently verified by the Arranger. The Arranger has neither scrutinized nor done any due-diligence for verification of the contents of this Disclosure Document. It is to be distinctly understood that it should not in any way be deemed or construed that the document has been prepared, cleared, approved or vetted by the Arranger; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this document; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Company. The Arranger or any of its directors, employees, affiliates or representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever nature and extent in connection with the use of any of the information contained in this document.
The investor should carefully read and retain this Information Memorandum. However, the investor should not construe the contents of this Information Memorandum as investment, legal, accounting, regulatory or tax advice, and the investor should consult with its own advisors as to all legal, accounting, regulatory, tax, financial and related matters concerning an investment in the Debentures. By accepting this Information Memorandum, you acknowledge that (a) the Arranger is not providing advice (whether in relation to legal, tax or accounting issues or otherwise), (b) you understand that there may be legal, tax, accounting or other risks associated with the potential transaction.
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1. DEFINITIONS
Company / Issuer/ We/ Us/HZL Hindustan Zinc Limited (HZL)
Board/ Board of Directors/ Director(s)
Board/ Committee of Directors of Hindustan Zinc Limited
Balance sheet date The last date of the financial year of the Company which is currently 31st March 2020
Book Closure/ Record Date The date of closure of register of Debentures for payment of interest and repayment of principal
Business Day A day which is not a public/banking holiday in Mumbai
CRISIL / CRISIL Ratings CRISIL Limited
Companies Act The Companies Act,1956 or the Companies Act of 2013, as may be applicable and as modified and amended from time to time including the rules made thereunder
CDSL Central Depository Services (India) Limited
Credit Rating ‘CRISIL AAA/ Stable’ by CRISIL
Coupon Payment Dates 29 September 2021
29 September 2022
29 September 2023
Depository A Depository registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996, as amended from time to time
Depository Participant /DP A Depository participant as defined under Depositories Act
Disclosure Document Disclosure Document for Private Placement of upto 30000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of Rs. 10,00,000/- (Rupees Ten Lakhs Only) each upto Rs. 3000,00,00,000/- (Rupees Three Thousand Crores Only) with an option to retain oversubscription up to 10000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of face value INR 10,00,000 each aggregating to a total issue size of Rs. 4000,00,00,000/- (Rupees Four Thousand Crores Only).
EBP/ BSE EBP Electronic Bidding Platform/ BSE Electronic Bidding
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Platform
FIIs Foreign Institutional Investors
Financial Year / FY Twelve months period ending March 31, of that particular year
FIs Financial Institutions
GOI Government of India
JORC Joint ore reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia
Material Adverse Effect “Material Adverse Effect” means an event, circumstance, occurrence or condition which has caused, as of any date of determination, or could reasonably be expected to cause a material adverse effect on or a material adverse change in the sole judgment of Trustee, acting on the instructions of the Majority Debenture Holders in (a) the financial condition, business or operation of the Issuer, environmental, social or otherwise or prospects of the Issuer; (b) the ability of the Company to enter into and to perform its obligations under Transaction Documents or any other related document to which Company is or will be a party; or (c) the validity or enforceability of the Transaction Documents or any other related document or the rights or remedies of the Debenture Holder(s) thereunder
NCDs/ Debentures Upto 30000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of Rs. 10,00,000/- (Rupees Ten Lakhs Only) each upto Rs. 3000,00,00,000/- (Rupees Three Thousand Crores Only) with an option to retain oversubscription up to 10000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of face value INR 10,00,000 each aggregating to a total issue size of Rs. 4000,00,00,000/- (Rupees Four Thousand Crores Only)
NRIs Non-Resident Indians
NSDL National Securities Depository Limited
BSE BSE Limited
OCBs Overseas Corporate Bodies
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PAN Permanent Account Number
Rating “CRISIL AAA/Stable” (CRISIL Triple A rating with stable outlook) by CRISIL Ltd.
Rs./ INR Indian National Rupee
RTGS Real Time Gross Settlement
SEBI The Securities Exchange and Board of India, constituted under the SEBI Act, 1992
SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time
SEBI Regulations Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide Circular No. LAD-NRO/GN/2008/13/127878 dated June 06, 2008 and Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2012 issued vide notification No. LAD-NRO/GN/2012-13/19/5392 dated October 12, 2012) as amended from time to time.
TDS Tax Deducted at Source
The Issue/ The Offer/ Private Placement
Private Placement of up to 30000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of Rs. 10,00,000/- (Rupees Ten Lakhs Only) each upto Rs. 3000,00,00,000/- (Rupees Three Thousand Crores Only) with an option to retain oversubscription up to 10000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of face value INR 10,00,000 each aggregating to a total issue size of Rs. 4000,00,00,000/- (Rupees Four Thousand Crores Only)
Trustee/ Debenture Trustee Axis Trustee Services Limited
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2. ABOUT THE ISSUER
2.1 Issuer general information
Hindustan Zinc Limited, India’s largest and world’s second largest zinc-lead miner is a company incorporated as per the laws of Republic Of India under the companies’ act, 1956 and is listed on BSE and NSE.
Name Hindustan Zinc Limited
Company Registration No.
L27204RJ1966PLC001208
Date of Incorporation 10th January 1966
Registered office Yashad Bhawan, Near Swaroop Sagar, Udaipur, Rajasthan- 313004
Corporate Office Yashad Bhawan, Near Swaroop Sagar, Udaipur, Rajasthan- 313004
Website www.hzlindia.com
Company Secretary & Compliance Officer
Mr. Rajendra Pandwal, Company Secretary, Hindustan Zinc Limited, Yashad Bhawan Udaipur - 313 004 Rajasthan, India
Phone No: + 91 294 6604015
Email ID: [email protected]
Chief Financial Officer Mr. Swayam Saurabh
Hindustan Zinc Limited Yashad Bhawan Udaipur - 313 004 Rajasthan Phone No: +91 294 6604037
Email Id: [email protected]
Debenture Trustee Axis Trustee Services Limited
The Ruby, 2ndFloor, SW 29 – Senapati Bapat Marg, Dadar – West, Mumbai – 400 028 Tel No.: (022) 6230 0603
Web: www.axistrustee.com
Email:[email protected], [email protected]
Registrar and Transfer Agents
Link Intime India Private Limited
CIN: U67190MH1999PTC118368
C-101, 247 Park, L B S Marg,Vikhroli West, Mumbai 400 083
Tel: +91-22-4918 6200
Fax: +91-22-4918 6060
Website Address: www.linkintime.co.in
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Email: [email protected]
Credit Rating Agency for the NCD
CRISIL Limited
Crisil House, Central Avenue,
Hiranandani Business Park, Powai, Mumbai – 400076
Tel: + 91 22 33423000
Fax: +91 22 40405800
Website Address: www.crisil.com
Statutory Auditors S.R. Batliboi & Co. LLP
Golf View Corporate Tower-B, Sector 42,
Sector Road, Gurgaon – 122002, Haryana
Tel: +91 124 6816000Fax: +91 124 4575200
Email: [email protected]
Website: www.ey.com
Legal Counsel Khaitan & Co.
One Indiabulls Centre, 10th &13th Floor, Tower 1, 841 Senapati Bapat Marg, Mumbai, Maharashtra 400 013
Tel: + 91-22-6636 5000
Fax: +91-22-6636 5050
Arranger HDFC Bank Limited
Peninsula Business Park, 4th Floor, Tower B, Senapati Bapat Marg,
Lower Parel (W), Mumbai - 400013
Tel No: 022-33958120
Fax No: 022-30788584
Email: [email protected]
Contact Person: Niranjan Kawatkar
2.2 Brief summary and overview of the Issuer and its line of business
Hindustan Zinc Limited (‘HZL’ or the ‘Company’) is India’s largest and world’s second largest zinc lead miner and fourth largest zinc-lead smelter based on production volumes and in the lowest cost decile in terms of all zinc mining operations worldwide. We have over five decades of rich experience in zinc-lead mining and smelting. Our operations include five lead-zinc mines, one rock phosphate mine, four hydrometallurgical zinc smelters, one lead smelters, one pyrometallurgical lead-zinc smelter, eight sulphuric acid plants, six captive power plants in northwest Indiaand processing and refining facilities for zinc, lead and silver at Pantnagar, located in the state of Uttarakhand in northern India. The silver refinery of HZL has been added to the London Bullion Market Association’s (LBMA) good delivery list for silver with effect from April 16, 2018. HZL is India’s third refiner to be listed on LBMA.. HZL is among the top 10 silver producers globally.
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Since our divestment in 2002, we have delivered multi-fold increase in the size of our operations and become a global market leader in zinc, lead and silver. During this time, we have transitioned from a primarily open-cast to a fully underground mining company with an emphasis on sustainable operations. HZL has an attractive, world-class portfolio of assets with two of its mines ranking among the top three largest underground zinc-lead mines globally. HZL is beocme an industry leader after completion of major mining expansion projects for 1.2 million MT per annum. . In addition to this, the company has debottlenecked smelting capacity to 1.123 million MT per annum to match-up to a higher mining capacity. The company is set for the next phase of growth in a phased manner over the coming years through focused exploration, smart technology interventions and disciplined execution of expansion projects.
Hindustan Zinc has been declared as a ‘Disclosure Champion’ in FTI Asia Disclosure Index 2019 with a perfect score of 10 and is among the top 23 companies in Asia and top 5 companies in India. The company has been ranked Ranked 1st in Asia-Pacific region and 5th globally in the metal and mining sector by Dow Jones Sustainability Index.
HZL is listed on both The National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) with market capitalization of ~ Rs. 96,000 Crores as on August 31, 2020.
Hindustan Zinc is a subsidiary of the BSE and NSE listed Vedanta Limited (ADRs listed on the NYSE), a part of London based diversified metals and mining major, Vedanta Resources Limited. Vedanta Limited is one of the world’s leading Oil & Gas and Metals company with significant operations in Oil & Gas, Zinc, Lead, Silver, Copper, Iron Ore, Steel, and Aluminium & Power across India, South Africa, Namibia, and Australia. For two decades, Vedanta has been contributing to India’s growth story, currently contributing 1 percent of India’s GDP. Vedanta Limited is majorly owned by Twin Star Holdings Limited, Finsider International Company Limited, Westglobe Limited and Welter Trading Limited which are in turn wholly-owned subsidiaries of Vedanta Resources Limited (formerly Vedanta Resources Plc) (Intermediate Holding Company). The ultimate controlling party of the Company is Volcan (Volcan Investments Limited and its wholly owned subsidiary Volcan Investments Cyprus Limited))
With a reserve base of 114.7 million MT and mineral resources of 288 million MT, we have a mine life of over 25 years. Moreover, we are the only integrated producer of zinc, lead and silver in India. We hold 77% market share in India’s primary zinc industry and is the 4th largest zinc-lead smelter gloablly and 6th largest silver producers globally.
2.3 Brief history and development of the Issuer since its incorporation
Important events in the development of Hindustan Zinc limited
Hindustan Zinc Limited was incorporated from the erstwhile Metal Corporation of India on 10 January 1966 as a Public Sector Undertaking. In 2001, as part of the Government's disinvestment program of loss-making PSUs, the company was put up for sale. In April 2002, Sterlite Opportunities and Ventures Limited (SOVL) made an open offer for acquisition of shares of the company; consequent to the disinvestment of Government of India's (GOI) stake of 26% including management control to SOVL and acquired additional 20% of shares from public, pursuant to the SEBI Regulations 1997. In August 2003, SOVL acquired additional shares to the extent of 18.92% of the paid-up capital from GOI by exercising call option clause in the shareholder's agreement
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between GOI and SOVL.
With the above additional acquisition, SOVL's stake in the company went up to 64.92%. Thus, GOI's stake in the company now stands at 29.54%. SOVL was merged with Sterlite Industries India Ltd in April 2011. Sterlite Industries merged with Sesa Goa Ltd to form Sesa Sterlite Limited in August 2013. Sesa Sterlite was renamed to Vedanta Limited in April 2015. Hindustan Zinc is now a direct subsidiary of Vedanta Limited.
Vedanta has exercised the second call option by a letter dated July 21, 2009 to acquire the GoI’s remaining ownership interest in HZL although the exercise is currently subject to dispute.
The company has no direct subsidiary and has not entered into any amalgamation or restructuring since its incorporation in 1966.
2.4 Present Vedanta Group Structure/ Corporate Structure:
*50.0% of the share in the RJ Block is held by a subsidiary of Vedanta Limited **KCM Control has been lost and this is under litigation
Note: Shareholding as on 31st March 2020.#
#Delisting of Vedanta Limited:
On 12 May 2020, Vedanta Resoucres Limited (“VRL”), sent a letter to the board of directors of Vedanta Limited wherein it inter alia expressed its intention to, either individually or along with one or more subsidiaries, acquire all fully paid up equity shares of Vedanta Limited (“Equity Shares”) that are held by public shareholders of Vedanta Limited (as defined under the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, as amended, to be referred to as “Public Shareholders”) and consequently voluntarily delist the Equity Shares in accordance with the Delisting Regulations from the National Stock Exchange of India Limited (“NSE’) and the BSE Limited (“BSE”, and together with NSE, the “Stock Exchanges”) by making an offer in accordance with the Securities and Exchange Board of India (Delisting of Equity Shares)
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Regulations, 2009, as amended (“Delisting Regulations”) (“Take Private Transaction”). On 18 May 2020, VRL sent a letter to Vedanta Limited communicating the floor price of the Take Private Transaction to be ₹87.50 per Equity Share (determined in accordance with the Delisting Regulations). Such floor price was certified by Price Waterhouse & Co LLP pursuant to its certificate dated 18 May 2020. The board of directors of Vedanta Limited, at its meeting held on 18 May 2020, approved the Take Private Transaction and inter alia authorised Vedanta Limited to seek the approval of its shareholders and the Stock Exchanges with respect to the Take Private Transaction in accordance with the Delisting Regulations. On 25 May 2020, Vedanta Limited dispatched a postal ballot notice along with an explanatory statement to its shareholders seeking their approval (via e-voting) in respect of the Take Private Transaction. The voting period commenced on 26 May 2020 (9:00 a.m. (Indian Standard Time (“IST”))) and expired on 24 June 2020 (5:00 p.m. (IST)). The shareholders of Vedanta Limited approved the Take Private Transaction with the requisite majority and the voting results were announced by Vedanta Limited on 25 June 2020 .
The Take Private Transaction remains subject to approval from the Stock Exchanges and any other regulatory and government authority in India and/or in other jurisdictions, as may be required, in relation to the Take Private Transaction.
2.5 Brief Overview of HZL’s Mines And Smelters:
Where we Operate
The following map shows the operational assets of HZL’s facilities:
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Asset Portfolio
(i) Mines
Summary of Mines Assets is as below:
Mines Reserve (million MT)
Resource (million
MT)
Reserve Grade Zn
(%)
Reserve Grade PB
(%)
Captive Power Plant
(MW)
Rampura Agucha Mine
39.1 45.8 12.6 1.6 -
Zawar Mining Complex
14.2 82.2 3.1 1.5 80
Sindesar Khurd Mine
37.3 79.1 3.6 2.3 -
Rajpura Dariba Mine
20.4 38.5 5.1 1.7 -
Kayad Mine 3.6 1.9 5.1 1.0 -
R&R summary
Particulars Tonnage Grade
million MT
Zn (%) Pb (%) (Ag) (g/t)
Reserve 114.7 6.9 1.8 69
Mineral Resource – Measured & Indicated
129.7 5.3 1.9 72
Mineral Resource – Inferred 158.6 5.7 2.2 67
(a) Rampura Agucha
The Rampura Agucha lead-zinc mine is located near Gulabpura in the North-west State of Rajasthan.
The good ore mineralogy of the mine provides a high metal recovery ratio and a low overall cost of production for zinc concentrate extracted from the mine. The mining and processing facilities are modern and in good condition.
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The ore body is currently mined by underground methods. The open pit operation ceased from the end of March 2018. The capacity of the mine and concentrator was expanded between 2003 and 2010 to 6.2 mtpa for mine and 6.5 mtpa for mill through the purchase of additional mining equipment, upgrades to the truck fleet, improvements to the operational efficiency of the plant and the installation of a new semi-autogenous mill and ball mill circuit.
As of March 31, 2020, HZL estimates the remaining mine life at Rampura Agucha to be 9 years based on (i) reserves; and (ii) planned production which is determined on the basis of a life-of-mine plan. According to JORC ,reserves and resources statement, the proven and probable reserves for the Rampura Agucha mine as of March 31, 2020 is 39.1 million tons with 12.6% zinc, 1.6% lead and 54 particles per million silver net off.
During fiscal year 2020, the Rampura Agucha underground mine produced 3.94 million tons of ore with 11.1% zinc and 1.6% lead. It produced 380,740 tons of zinc metal in concentrate and 33,398 tons of lead metal in concentrate. The main shaft has completed up to a depth of 950 meters as planned with completion of the north and south vent.
The mining lease of Rampura Agucha mine is valid up to March 2030.
Power is primarily supplied from the HZL’s captive thermal and solar power plants with two backup 5 MW generators on-site.
(b) Rajpura Dariba
Rajpura Dariba is an underground lead-zinc mine and processing facility located northeast of Udaipur in the Rajsamand district in the state of Rajasthan, northwest India.
HZL’s Rajpura Dariba’s mine lease is valid until May 2030.
Power for the mine is supplied largely from HZL’s 160 MW captive power plants at Dariba and through a contract with a state-owned entity.
As of March 31, 2020, HZL estimates the remaining mine life at Rajpura Dariba to be around 14 years based on (i) reserves; and (ii) planned production which is determined on the basis of a life-of-mine plan. According to JORC reserves and resources statement, the proven and probable reserves for the Rajpura Dariba mine as of March 31, 2020 is 20.4 million tons with 5.1% zinc, 1.7% lead and 54 particles per million silver net off
In fiscal year 2020, 1.04 million tons of ore at a feed grade of 4.85% zinc and 1.2% lead ore was mined at Rajpura Dariba mine which produced 37,272 tons of zinc metal in concentrate and 7,473 tons of lead metal in concentrate.
(c) Sindesar Khurd
The Sindesar Khurd mine is a large-scale underground mine deposit that was explored during 1992 to 1995. Mine production began at the Sindesar Khurd mine in April 2006 and HZL’s mining permit is valid until March 2049.The Sindesar Khurd mine lies on the same geological belt as the Rajpura Dariba mine. The mine is approachable from Rajpura Dariba mines by road.
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According to JORC reserves and resources statement, the proven and probable reserves for the Sindesar Khurd mine as of March 31, 2020 is 37.3 million tons with 3.6% zinc and 2.3% lead and 118 particles per million silver net off.
As of March 31, 2020, HZL estimates the remaining mine life at Sindesar Khurd to be around 7 years based on (i) reserves; and (ii) planned production which is determined on the basis of a life - of - mine plan. In fiscal year 2020, 5.07 million tons of ore at a grade of 3.37% zinc and 2.07% lead ore was mined at the Sindesar Khurd mine. From the ore produced at Sindesar Khurd mine, 160,122 tons of zinc metal in concentrate and 95027 tons of lead metal in concentrate was produced in fiscal year 2020.
(d) Zawar
Zawar consists of four mines namely, Mochia, Balaria, Zawar Mala and Baroi. The deposit is located near Udaipur city, in the state of Rajasthan in northwest India. The deposits lie within a 36.2 square kilometers mining lease granted by the state government of Rajasthan which is valid until March 31, 2030.
According to JORC reserves and resources statement, the proven and probable reserves for the Zawar mine as of March 31, 2020 is 14.2 million tons with 3.1% zinc and 1.5% lead and 21 particles per million silver net off.
In fiscal year 2020, 3.27 million tons of ore mined at a grade of 2.52% zinc and 1.94% lead, which produced 71,672 tons of zinc metal in concentrate and 53,675 tons lead metal in concentrate.
Power is supplied through a combination of an 80 MW thermal coal-based captive power plant commissioned in December 2008 and a 6 MW captive power plant.
As of March 31, 2020, HZL estimates the remaining mine life of the Zawar mine to be 4 years based on (i) reserves; and (ii) planned production which is determined on the basis of a life-of-mine plan. The focus of underground mine exploration at Zawar is to enhance the ore reserves to expand the mine life by 5 years and to identify new mineralized areas to enhance production capacity.
The focus of underground mine exploration at Zawar is to enhance the ore reserves to expand the mine life by 5 years and to identify new mineralized areas to enhance production capacity. A surface drilling program is underway to locate deeper resources below 100 meter reduce level up to 500 meter reduce level. Underground exploratory drilling is carried out on a grid of between 25 to 30 meters which is then infilled to 12.5 or 15 meters after completing the development for final delineation of ore bodies. Past exploration has outlined additional in-mine mineral resources which require further delineation to add to reserves and further extend the mine life.
(e) Kayad Mine
The Kayad lead - zinc mine is located in Ajmer, in the state of Rajasthan. The Kayad lead - zinc mine deposit was initially prospected by Airborne Mineral Survey and Exploration wing of Geological Survey of India and drilling commenced in August 1988 and was completed in December 1991. The detailed exploration of Kayad deposit was commenced by HZL in the month of June 1999 and continues with a total of 178 kilometers in 1,132 drill holes. According to the
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reserve report, the proven and probable reserves for Kayad mine as on March 31, 2020 was 3.6 million tons at 5.1% zinc and 1% lead and 15 particles per million silver net off. As of March 31, 2020, HZL estimates the remaining mine life of the Kayad mine to be over 3 years based on (i) reserves; and (ii) planned production which is determined on the basis of a life-of-mine plan.
A mine lease of 480.5 hectares was granted to Kayad mine by the state of Rajasthan and is valid until February 2048, subject to further renewal. We have obtained surface land rights over 49.8 hectares. We have also obtained mine plan approval from the Indian Bureau of Mines and received environmental clearance from the MoEF for an increase in lead - zinc ore production capacity from 1.0 mtpa to 1.2 mtpa. We have also obtained consents under various environmental laws to operate the mine, including from the State Pollution Control Board.
In fiscal year 2020, 1.13 million tons of ore at a grade of 6.86% zinc and 0.92% lead ore was mined at Kayad mine which produced 70,256 tons of zinc metal in concentrate and 7,377 tons of lead metal in concentrate.
A 33 KV power line was commissioned on February 2, 2012 to meet the constructional power requirements of the mine. Currently, most of the power is being taken from captive power plant in Zawar and some power is taken from state grid. A one megavolt amperes diesel generator is kept as a backup power supply for emergency operations in the event of power failure. For proper power distribution, a two megavolt amperes underground sub-station is commissioned in each of the north and south sections.
(ii) Smelters
The following table sets forth the total capacities as of March, 2020 at HZL’s Chanderiya, Debari, Zawar, Dariba and Pantnagar facilities:
Facility Capacity
Zinc Lead Silver Sulphuric Acid Captive Power
(tpa) (tpa) (tpa) (tpa) (MW)
Chanderiya 585,000 90,000 - 859,000 247.7
Dariba 240,000 120,000 - 710,500 174.2
Debari 88,000 - - 387,600 7.3
Pantnagar - - 800 - -
Zawar - - - - 80
Total 913,000 210,000 800 1,957,100 509.2
*The processing plant at Pantnagar is a refining and processing facility for zinc and lead ingots from zinc and lead cathodes produced at the Chanderiya and Dariba smelters. Therefore, their production capacities do not increase the total production capacity of HZL’s facilities.
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(a) Chanderiya
The Chanderiya facility is located approximately 120 kilometers east of Udaipur in the state of Rajasthan. The facility contains 4 smelters, 3 associated captive power plants and 3 sulphuric acid plants:
• an ISP™ pyrometallurgical lead-zinc smelter with a capacity of 105,000 tpa of zinc and 35,000 tpa of lead that was commissioned in 1991;
• two RLE hydrometallurgical zinc smelters with a capacity of 240,000 tpa each that were commissioned in May 2005 and December 2007. Pursuant to the improvement in operational efficiencies and debottlenecking of plant, zinc smelting capacity of both the plants increased from 170,000 tpa to present.
• an Ausmelt™ lead smelter with a capacity of 50,000 tpa that was commissioned in February 2006 which is further increased to 55,000 tpa in FY 2020
• associated 154 MW (2 captive plants of 77 MW each) and 80 MW coal-based captive power plants commissioned in May 2005 and April 2008, respectively;
• a 14.8 MW fuel based captive power plant transferred from Debari in March 2009 and which was originally commissioned at Debari in March 2003; and
• 3 sulphuric acid plants with a total capacity of 859,000 tpa of sulphuric acid.
Concentrate requirements for the facility are supplied by HZL’s mines. The 154 MW and 80 MW thermal power plant along with 13.7 MW WHRB (Waste Heat Recovery Boilers) power generation facility at Chanderiya provide all of the power for the facility. In addition two liquid fuel power generation capacity of 14.8 MW are also available. The captive power plants require approximately 100,000 metric tons of coal at 6,000 gross calorific value per month, which is currently met through imports and domestic sources. The impure silver obtained as a by-product from zinc-lead smelting at this smelter is refined at the Pantnagar plant.
(b) Dariba
The Dariba hydrometallurgical zinc smelter is located in the Rajsamand district of Rajasthan which was commissioned in March 2010 having capacity of 220,000 tpa which has increased to 234,000 tpa pursuant to debottlenecking of plant in fiscal year 2019 and further increased to 240,000 in fiscal year 2020The Dariba facility also includes a 306,000 tpa sulphuric acid plant. In July 2011, we commissioned a new 100,000 tpa lead smelter and pursuant to the improvement in operational efficiencies which was completed in March 2018, the capacity increased by 20,000 tpa to 120,000 tpa. It also includes a 98,500 tpa sulphuric acid plant. A majority of the power requirements of the facility is sourced from the 160 MW coal-based captive power plant and 14.2 MW WHRB power generation facility at Dariba. A new roaster was commissioned in April 2013 in the Dariba facility with an associated sulphuric acid plant capacity of 306,000 tpa. Zinc cathodes are sent to its refining facilities at Pantnagar in Uttarakhand state for refining and processing. The anode slime obtained as a residue from lead smelting at this smelter is refined and processed into silver ingots at the Pantnagar plant.
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(c) Debari
The Debari hydrometallurgical zinc smelter is located in the state of Rajasthan. The hydrometallurgical zinc smelter was commissioned in 1968, uses RLE technology and has a capacity of 80,000 tpa which was increased to 88,000 tpa in April 2008 pursuant to improvements made to its operational efficiencies. The Debari facility also includes a 387,600 tpa sulphuric acid plant. A majority of the power requirements of the facility is sourced from the coal-based captive power plant at Chanderiya and Zawar and 7.3 MW WHRB power generation facility. In addition, 2 liquid fuel based power generation capacity of 14.8 MW are also available.
(d) Haridwar
The zinc ingot processing and refining plant in Haridwar in the state of Uttarakhand was commissioned in July 2008. This plant processes and casts zinc ingots from zinc cathodes produced in the Chanderiya smelter and therefore its production capacity does not increase the total production capacity of HZL’s facilities. After expiry of tax holiday benefit, production activities have stopped at the smelter in fiscal year 2018.
(e) Pantnagar
The Pantnagar plant, which is located in the state of Uttarakhand in northwest India, includes a 518 tpa silver refinery that was commissioned in December, 2011, a zinc ingot and a lead ingot refining and processing plant that was commissioned in February 2012. Pursuant to the improvement in operational efficiencies and debottlenecking of existing facility which was completed in March 2019, the Silver smelting capacity increased by 282 tpa ( 82 tpa in 2018 and 200 tpa in 2019) to 800 tpa. The Pantnagar plant refines and processes zinc and lead ingots from zinc and lead cathodes that are produced by our Chanderiya and Dariba smelters and also refines the impure silver obtained as a by-product from lead smelting conducted at our Chanderiya and Dariba smelters. Therefore the Pantnagar plant does not increase the total zinc and lead production capacity of HZL’s facilities. Haridwar and Pantnagar facility is also used for nationwide distribution of finished goods as well as for exports.
2.6 Management and the board of directors
Hindustan Zinc Limited Board is chaired by Mrs. Kiran Agarwal. The other members of the Board are Mr. Navin Agarwal, Mr. Akhilesh Joshi, Mr. Anjani Kumar Agarwal, Mr. Arun Misra, Ms. Yatinder Prasad and Ms. Farida M. Naik
Kiran Agarwal - Non-Executive Chairman
Mrs. Kiran Agarwal was appointed on the Board with effect from March 2, 2019. She has done Journalism, from London School of Journalism. She is an avid reader, prolific writer and a woman of many facets. Her love for reading inspired her to write a series of books catering to Indian ethos.
She has been actively involved with her family business and sharing her acumen on various business developments in the family, and in setting up of Nand Ghar, an institution for the underprivileged where children get their wings to fly high, under right guidance and value based education.
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She is also Trustee of Vedanta Foundation.
Executive Director
Arun Misra – Whole Time Director & Chief Executive Officer
Mr. Arun Misra was appointed as CEO & Whole Time Director on 1st August , 2020. Mr. Misra joined the company as Deputy Chief Executive Officer with effect from November 20, 2019. He has done his Bachelor’s in Electrical Engineering, from IIT, Kharagpur, Diploma in Mining and Beneficiation from University of New South Wales Sydney and Diploma in General Management from CEDEP, France.
Arun Misra joins us from TATA Steel where he was working as Vice President – Raw Materials. He brings 31 years rich and diverse experience in leading various strategic operations positions in Tata Steel. He has been instrumental in successfully leading projects, plant and mining operations within Tata Steel. He is also the Vice President of Indian Institute of Mineral Engineers and has published several papers in their journals of national repute.
Navin Agarwal – Non-Executive Director
Mr. Navin Agarwal was appointed as Director on April 11, 2002. Mr Navin Agarwal is the Executive Chairman of Vedanta Ltd. and Executive Vice Chairman of Vedanta Resources Plc. He has been with the Vedanta group since its founding and has extensive experience in the natural resources industry.
Mr Agarwal plays a key role in the strategic and governance framework of the Vedanta Group and provides leadership for its long-term planning, business development and capital planning. He has been instrumental in the growth of the group through global organic projects as well as acquisitions. He is passionate about developing leadership talent for the group by identifying and nurturing future leaders.
Akhilesh Joshi- Independent Non Executive Director
Mr. Akhilesh Joshi is on the Board w.e.f. 1st August 2020. He is qualified B.E. Mining, First Class Mining Manager Certificate of Competency under MMR -1961 (UN restricted), Diploma from Paris School of Mines in Economic Evaluation of Mining Projects. He has exemplary track record of nurturing world`s one of largest integrated Zinc, Lead and silver producing organization with high performance culture that brings out the best in employees to propel strategic and meticulous execution and deliver extraordinary results. He is also on the Board of Rajasthan State Mines & Minerals Ltd.
Mr. Anjani Agrawal- Independent Non Executive Director
Mr. Anjani Agrwal is on the Board w.e.f. 1st August 2020. He is a qualified CA, CIA & INSEAD Alumni. His areas of expertise & interests include Corporate Governance, Strategic Risk Management, Sustainability strategy, GRC transformation, Sustainable Development Goals, Sustainability Reporting, Policy frameworks etc. He is also on the Board of Aditya Birla Sun Life Trustee Private Limited and Thinkthrough Consulting Private Limited.
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Ms. Yatinder Prasad– Non-Executive Director
Ms. Yatinder Prasad was appointed on the Board with effect from August 07, 2020. She is an IA&AS officer of 1993 batch. Currently she is Joint Secretary and Financial Advisor for Ministry of Tribal, along with Ministry of Coal and Ministry of Mines. During 2014-2019 period she was DG-Controller & Auditor General of India. She has done L.L.B., L.L.M., C.I.A., P.G.D.B.A.
She is also on the Board of National Scheduled Tribes Finance & Development Corporation and Tribal Cooperative Marketing Development Federation of India Ltd.
Farida M. Naik – Non-Executive Director
Ms. Farida M Naik was appointed on the Board on March 14, 2017. She is currently a Director in Ministry of Mines, Government of India. She has held various positions in different ministries and departments of Central Government, which includes her last stint as Joint Director of National Book Trust.
She is an alumnus of Sophia College, Mumbai from where she graduated in Psychology.
Senior Management Team
Arun Misra – Whole Time Director & Chief Executive Officer
Mr. Arun Misra was appointed as CEO & Whole Time Director on 1st August , 2020. Mr. Misra joined the company as Deputy Chief Executive Officer with effect from November 20, 2019. He has done his Bachelor’s in Electrical Engineering, from IIT, Kharagpur, Diploma in Mining and Beneficiation from University of New South Wales Sydney and Diploma in General Management from CEDEP, France.
Arun Misra joins us from TATA Steel where he was working as Vice President – Raw Materials. He brings 31 years rich and diverse experience in leading various strategic operations positions in Tata Steel. He has been instrumental in successfully leading projects, plant and mining operations within Tata Steel. He is also the Vice President of Indian Institute of Mineral Engineers and has published several papers in their journals of national repute.
Swayam Saurabh – Chief Financial Officer
Mr. Swayam Saurabh joined Hindustan Zinc on January 3rd, 2019. He is a qualified Chartered Accountant and a rank holder. He started his career with L&T, where he was hired as a part of the Finance Leadership program. Swayam brings 19 years of rich experience and has worked across roles in Business partnering, Finance transformation, Controllership, Financial Planning and Analysis and Internal audit. He was with Phillips, Singapore before joining HZL where he was heading the Finance function for Philips Personal Health for the APAC region.
Arun Vijaykumar – Director Projects
Mr. Arun Vijaykumar was appointed as Director Projects on November 19th , 2018. He holds a bachelor’s in engineering from Malaviya Regional Engineering College, Jaipur, Master of Business Administration from SP Jain Institute of Management and Research and has completed Global
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Leadership Program from Ross School of Business, Michigan .
Arun is a seasoned project management leader and has exposure to large scale and best-in-class project execution processes in India. In a career span of more than 25 years, Arun has been associated with reputed organizations like Reliance Industries Limited, Larsen & Toubro Ltd., ONGC, Indian Oil Corporation and Grasim Industries.
Kavita Singh – Chief Human Resources Officer
Ms. Kavita Singh was appointed as Chief Human Resources Officer on December 27th , 2018. She has done her MBA in Human Resources from Bharathidasan Institute of Management (BIM), Trichy and Bachelor’s in Applied Sciences from Rajasthan University. She has over 18 years of rich experience in working with large multinationals across sectors, geographies in regional, cluster and global roles and has worked in A P Moller Maersk Group, ICICI Prudential, TATA AIG and Reliance Infocomm in the past. With her strong business partnering and functional expertise, she has contributed significantly towards Leadership and Talent development.
Kuldeep Singh Solanki – Director - Exploration, HZL
Mr. Kuldeep Singh Solanki joined Hindustan Zinc on April 12th , 2012. He has done his Master of Science in Technology in the field of Applied Geology and Bachelor’s of Science in Geology from Mohanlal Sukhadia University, Udaipur. He has done a course on Advanced Geostatistics from University of the Witwatersrand, Johannesburg.
He started his career in Hindustan Zinc and was part of the first technical delegation sent to Konkola Copper Mines when it was taken over by Hindustan Zinc, to evaluate business opportunities.
In a career spanning over 28 years, he has also worked with Anglo Gold Ashanti. After joining Hindustan Zinc back in 2012, he was instrumental in converting the existing resource model to Kriged estimates which helped in improving business plan.
Vineet Bose – Head Legal
Mr. Vineet Bose joined Hindustan Zinc on February 8th , 2016. He has had a multifaceted career of 20 years. After graduating from Kanpur University with M.Com in Economics/Advanced Accountancy, he received his bachelor’s degree in Law from CLC, Delhi University and LLM in Business Laws from NLSIU, Bangalore and is also a qualified CWA and CA.
He started his professional career as an advisor at Ministry of Corporate Affairs, following it with a stint with BSNL’s Taxation team he went on to join the corporate litigation team of a premier law firm in Delhi in 2007. Thereafter, he joined Bharti Teletech Limited as DGM and moved to being the Team Leader of Indirect Taxation at Du Pont India.
Sunipa Roy – Deputy Chief Commercial Officer
Ms. Sunipa Roy was appointed as Deputy Chief Commercial Officer with effect from August 01, 2020. Sunipa Roy joins us from Vedanta Aluminium LTD. - Jharsuguda where she was working as Head – Value Added Products & Strategic Marketing. She has been instrumental in building VAP
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Capability, maximization of Sales etc. with 17 Years of rich and diverse experience. Sunipa has also been identified as a “Business Star” in the Group.
She has done her Bachelor’s in Metallurgical Engineering, from NIT, Durgapur and is with Group since 2003. She has also completed a PGPX program from UCLA Anderson School of Management.
Praveen Sharma – Technical Head Mining and Head - CDC & Exploration
Mr. Praveen Sharma joined Hindustan Zinc on January 1st, 2015 and is with Group since 1993. Praveen Sharma has 27 Years of rich and diverse experience in Underground Mechanized Mining Operations and worked in different cultures of India, Australia & Zambia. He worked as Statutory Mining Manager at Mt. Lyell Copper Mine, Tasmania, Australia.
He has done his Bachelor’s in Mining Engineering from Jai Narain Vyas University Jodhpur.
Harsha Shetty – Chief Marketing Officer
Mr. Harsha Shetty joined Hindustan Zinc on February 6th, 2019. Harsha has been associated with the group since 2003 and bring 17 Years of rich experience. His leadership has been instrumental in growing the Domestic Market, through the continuous improvement of domestic pricing and development of the Aluminium VAP in the Indian and global markets.
He has done his Bachelor’s in Engineering from Government College of Engineering, North Maharashtra University and has obtained MBA in Marketing from NMIMS, Mumbai. In addition to this, he has also qualified the CFA program from CFA Institute, Virginia.
3. MANAGEMENT PERCEPTION OF RISK FACTOR
These risks may include, among others, business aspects, equity market, bond market, interest rate, market volatility and economic, political and regulatory risks and any combination of these and other risks. Prospective investors should carefully consider all the information in this Information Memorandum, including the risks and uncertainties described below, before making an investment in the Debentures. All of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring.
3.1 Risk factors in relation to the Debentures
An investment in Debentures involves a high degree of risk. Investors should carefully consider each of the following risk factors and all the information set forth in this Information Memorandum before making an investment in our Debentures. The risks and uncertainties described in this section are not the only risks that the Issuer currently faces. Additional risks and uncertainties not presently known to the Issuer may also have an adverse effect on the Issuer’s business, results of operations and financial condition. If any or some combinations of the following risks or other risks that are not currently known occur, the business prospects, results of operations and financial condition of the Issuer could be adversely affected. The actual occurrence of such risks will also affect the trading price of the Debentures and the value of your investment could decline or be lost.
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Taxation: Potential purchasers and sellers of the Debentures should be aware that they may be required to pay taxes in accordance with the laws and practices of India.
Potential investors who are in any doubt as to their tax position should consult their own independent tax advisers. In addition, potential investors should be aware that tax regulations and their application by the relevant taxation authorities change from time to time. Accordingly, it is not possible to predict the precise tax treatment which will apply at any given time.
Interest Rate Risk: All securities where a fixed rate of interest is offered are subject to price risk. The price of such securities will vary inversely with changes in prevailing interest rates, i.e. when interest rates rise, prices of fixed income securities fall and when interest rates drop, the prices increase. The extent of fluctuation in the prices is a function of the existing coupon, days to maturity and the increase or decrease in the level of prevailing interest rates. Any increase in rates of interest is likely to have a negative effect on the price of the Debentures.
The Debentures may be illiquid: It is not possible to predict if and to what extent a secondary market may develop in the Debentures or at what price the Debentures will trade in the secondary market or whether such market will be liquid or illiquid. The fact that the Debentures may be so listed or quoted or admitted to trading does not necessarily lead to greater liquidity than if they were not so listed or quoted or admitted to trading.
Downgrading in credit rating: The Debentures have been rated by the Credit Rating Agency as having CRISIL AAA/ Stable Outlook rating for the issuance of Debentures for an aggregate amount of upto INR 8500 Crores. The Issuer cannot guarantee that this rating will not be downgraded. Such a downgrade in the credit rating may lower the value of the Debentures and may also affect the Issuer’s ability to raise further debts. The rating is subject to changes and contingent upon various actions and circumstances.
The Issuer has limited sources of funds to fulfill its obligations under the Debentures: If there is a shortfall in any amounts then due and payable pursuant to the terms of the Debentures, the Issuer may not have sufficient funds to make payments on the Debentures and the Debenture Holders may incur a loss on the Debenture amount and redemption premium. The ability of the Issuer to meet its obligations to pay any amounts due to the Debenture Holders under the Debentures will ultimately be dependent upon funds being received from internal accruals and/or borrowings and depending upon the profitability of the Issuer. The Issuer is therefore generally exposed to the credit risk of the relevant counterparties in respect of such payments.
The Debentures may not be a suitable investment for all investors: Potential investors should ensure that they understand the nature of the Debentures and the extent of their exposure to risk, that they have sufficient knowledge, experience and access to professional advisers such as legal, tax, accounting and other advisers to make their own legal, tax, accounting and financial evaluation of the merits and risks of investment in the Debentures and that they consider the suitability of the Debentures as an investment in the light of their own circumstances and financial condition. These risks may include, among others, equity market risks, bond market risks, interest rate risks, market volatility and economic, political and regulatory risks and any combination of these and other risks.
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Delays in court proceedings in India: If any dispute arises between the Issuer and any other party, the Issuer or such other party may need to take recourse to judicial proceedings before courts in India. It is not unusual for court proceedings in India to continue for extended periods. Disposition of cases may be further subject to various delays including multiple levels of appellate adjudication.
Exercise of powers by the Debenture Trustee is subject to equitable principles and supervisory powers of courts:The exercise by the Debenture Trustee of the powers and remedies conferred on it under the Debentures and the Debenture Documents or otherwise vested in it by law, will be subject to general equitable principles regarding the enforcement of security, the general supervisory powers and discretion of the Indian courts in the context thereof and the obtaining of any necessary governmental or regulatory consents, approvals, authorizations or orders.
The right of the Debenture Holders to receive payments under the Debentures will be junior to certain tax and other liabilities preferred by law on an insolvency of the Issuer: The Debentures will be subordinated to certain liabilities preferred by law such as claims of the Government of India on account of taxes and certain liabilities incurred in the ordinary course of the Issuer’s business (including workmen’s dues). Upon an order for winding-up in India, the assets of a company are vested in a liquidator who has wide powers to liquidate such company to pay its debt and administrative expenses. The investors are required to take independent advice with regards to the consequences of any of the events mentioned herein.
Receipt of coupon or principal is subject to the credit risk of the Issuer: Investors should be aware that the receipt of any coupon payment and principal amount at maturity is subject to the credit risk of the Issuer. Any stated credit rating of the Issuer reflects the independent opinion of the referenced rating agency as to the creditworthiness of the rated entity but is not a guarantee of credit quality of the Issuer. Any downgrading of the credit ratings of the Issuer by the rating agency may lower the value of the Debentures.
The Issuer is not required to maintain a Debenture Redemption Reserve (“DRR”)
Pursuant to a notification dated August 16, 2019 issued by Ministry of Corporate Affairs, Govt. of India, amending Section 71 of the Companies Act, 2013 and Rule 18 (7) of the Companies (Share Capital and Debentures) Rules, 2014, the Issuer is not required to maintain DRR for the Debentures as they are issued through a private placement. Hence, investors shall not have the benefit of reserve funds to cover the repayment of the principal and payment of interest on the Debentures.
3.2 Risks in relation to Indian Market, Economy and Political Situation
Future legal and regulatory obstructions: The central and state governments serve multiple roles in the Indian economy, including producers, consumers and regulators, which may have a significant influence on the Issuer. Future government policies and changes in laws and regulations in India, including applicable foreign exchange laws and comments, statements, policy changes or any adverse interpretation of applicable law by any regulator, including but not limited to the SEBI or the RBI, may adversely affect the Debentures. The timing and content of any new law or regulation is not within the Issuer’s control and such new law, regulation,
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comment, statement, policy change or adverse interpretation by any regulator could have an adverse effect on the market for and the price of the Debentures.
Further, the SEBI, the National Stock Exchange/BSE Limited, ROC or other regulatory authorities may require clarifications on this Offer Letter, which may cause a delay in the issuance of the Debentures or may result in the Debentures being materially affected or even rejected.
3.3 Risk factors in relation to the Issuer and Industry
This Information is are based on our current expectations, assumptions, estimates and projections about our company and our industry and statements are subject to various risks and uncertainties.
(a) Risks Relating to the Business of the Issuer
Licenses and Approvals
Our operations are subject to governmental, health and safety and environmental regulations, which require us to obtain and comply with the terms of various approvals, licenses and permits. Any failure to obtain, renew or comply with the terms of such approvals, licenses and permits in a timely manner may have a material adverse effect on our business, results of operations and financial condition
Numerous governmental permits, licenses, approvals and leases are required for our operations as the industries in which we operate and seek to operate are subject to numerous laws and extensive regulation by national, state and local authorities in jurisdictions of India and any other jurisdictions where we may operate in future. Our operations are also subject to laws and regulations relating to employment, the protection of health and safety of employees as well as the environment, including conservation and climate change.
Our exploration and mining activities depend on the grant or renewal of various exploration and mining licenses and other regulatory approvals that are valid for a specific period of time. In addition, such licenses and contracts contain various obligations and restrictions, including restrictions on assignment or any other form of transfer of a mining lease or on the employment of a person who is not an Indian national.
Any general suspension of mining activities by the government of a jurisdiction containing our mining operations could have the effect of closing or limiting production from our operations.
Furthermore, regulation of greenhouse gas emissions in the jurisdictions of our major customers and in relation to international shipping could also have an adverse effect on the demand for our products. Increasing regulation of climate change issues such as greenhouse gas emissions, including the progressive introduction of carbon emissions trading mechanisms and tighter emission reduction targets, may raise energy costs and costs of production over the coming years.
Any failure to comply with applicable laws, regulations or recognized international standards, or to obtain or renew the necessary permits, approvals and leases may result in the loss of the right to operate our facilities or continue our operations, the imposition of significant administrative
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liabilities, or costly compliance procedures, or other enforcement measures that could have the effect of closing or limiting production from our operations.
Any prolonged closure of our operations could have a material adverse effect on our businesses, results of operations, financial condition or prospects or may result in the recognition of an impairment of our assets.
Political, Legal, Regulatory and Social Risks
We are exposed to the political, legal, regulatory and social risks of the countries in which we operate. These risks potentially include expropriation and nationalization of property, instability in political, economic or financial systems, uncertainty arising from underdeveloped legal and regulatory systems, corruption, civil strife or labor unrest, acts of war, armed conflict, terrorism, outbreaks of infectious diseases, prohibitions, limitations or price controls on hydrocarbon exports and limitations or the imposition of tariffs or duties on imports of certain goods. Countries in which we have operations or intend to have operations have transportation, telecommunications and financial services infrastructures that may present logistical challenges not associated with doing business in more developed locales. Furthermore, we may have difficulty in ascertaining our legal obligations and enforcing any rights that we may have. Political, legal and commercial instability or community disputes in the countries and territories in which we operate could affect our operations. Some of our current and potential operations are located in or near communities that may regard such operations as having a detrimental effect on their environmental, economic or social circumstances.
Changes in local laws
Material changes in the regulations that govern our businesses, or the interpretation of recent legislation, could have a material adverse effect on our business, financial condition and result of operations
Asset concentration Risks
We have significant asset concentration risks, and any interruption in the operations at those assets could have a material adverse effect on our results of operations and financial condition
Our results of operations have been and are expected to continue to be substantially dependent on the reserves, production and the cost of production at certain of our key assets, and any interruption in the operations or exploration and development activities at those assets for any reason could have a material adverse effect on our results of operations and financial condition.
Capital Risks
Our business requires substantial capital expenditures and the dedication of management and other resources to maintain ongoing operations and to grow our business through projects, expansions and acquisitions, which projects, expansions and acquisitions are subject to additional risks that could adversely affect our business, financial condition and results of operations.
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If our planned expansions and new projects are delayed, or if we experience cost overruns in our projects, our results of operation and financial condition may be materially and adversely affected.
Competitive Risks
If we are unable to secure additional reserves of zinc that can be extracted at competitive costs or cannot extract existing reserves at competitive costs, our profitability and operating margins could decline.
We may not be able to accurately assess the geological characteristics of any reserves that we acquire, which may adversely affect our profitability and financial condition.
Our future production depends significantly upon our success in finding or acquiring and developing additional reserves adopting and using the appropriate technology. If we are unsuccessful, we may not meet our production targets which could adversely affect our results of operations and financial condition.
Operational Risks
Our operations are subject to risks that could result in decreased production, increased cost of production and increased cost of or disruptions in transportation, power generation and mining. We are subject to operating conditions and events beyond our control that could, among other things, increase our mining, transportation or production costs, disrupt or halt operations at our mines and production facilities permanently or for varying lengths of time or interrupt the delivery of our products to our customers.
• Third Party: We depend on third parties for the construction, delivery and commissioning of the power facilities, supply and testing of equipment and transmission and distribution of electricity that we generate, which is beyond our control.
• Price volatility and changes in tariff policy. As we sell the power we generate in the open market (rather than to captive schemes), we are exposed to spot prices, which are subject to factors beyond our control.
• Power purchase agreements. The power purchase agreements and other agreements that we have entered into, or may enter into may require us to guarantee certain minimum performance standards, such as plant availability and generation capacity, to the power purchasers.
• Power transmission. Lack of strong power transmission infrastructure could restrict our power generation volumes.
• Regulatory compliance. Power generation in India is a regulated industry. In particular, national and state regulatory bodies and other statutory and government mandated authorities may, from time to time, impose minimum performance standards upon us. Failure to meet these
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requirements could expose us to the risk of penalties, including, in certain instances, plant shut downs.
• Accidents at mines, smelters, and related facilities. Any accidents or explosions causing personal injury, property damage or environmental damage at or to our mines, , smelters, refineries, and related facilities may result in expensive litigation, imposition of penalties and sanctions or suspension or revocation of permits and licenses.
• Strikes and industrial actions or disputes. The majority of the total workforce is unionized. Strikes and industrial actions or disputes have in the past and may in the future lead to business interruptions and halts in production.
We are exposed to competitive pressures in our various business segments in which we operate which could result in lower prices or sales volumes of the products we produce, which may cause our profitability to suffer.
COVID-19
In December 2019, the COVID-19 disease, commonly known as “coronavirus”, was first reported in Wuhan, China. In January 2020, the World Health Organization declared the COVID-19 outbreak a “Public Health Emergency of International Concern” and on March 11, 2020 it was declared a pandemic. Between January 2020 and the date of this Disclosure Document, the COVID-19 disease has spread from China to many other countries, with the number of reported cases and related deaths increasing daily and, in many countries, exponentially, with India currently having the second highest number of COVID positive cases worldwide.
Several countries’ governments and numerous companies have imposed increasingly stringent restrictions to help avoid, or slow down, the spreading of COVID-19, restrictions on international and local travel, public gatherings and participation in meetings, as well as closures of universities, schools, stores and restaurants, with some countries imposing strict curfews. In India, the Government had imposed nationwide lockdown in various stages from March onwards and is currently in the stage of systematic lifting of lockdowns, however, various States in the country have been given the authority to assess the situation and impose further restrictions, which may affect the running of business.
The Company continues to monitor developments closely as the COVID-19 pandemic develops. The impact of the COVID-19 pandemic on the Company’s business will depend on a range of factors which the Company’s is not able to accurately predict, including the duration and scope of the pandemic, the geographies impacted, the impact of the pandemic on economic activity in India and globally, and the nature and severity of measures adopted by governments. These factors include, but are not limited to:
The deterioration of socio-economic conditions and disruptions to the Company’s operations, such as its supply chain, or manufacturing or distribution capabilities, which may result in increased costs due to the need for more complex supply chain arrangements, to expand existing facilities or to maintain inefficient facilities, or in a reduction of the Company’s sales volumes.
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Reductions or volatility in consumer demand for the Company’s products due to quarantine or other travel restrictions, economic hardship, retail closures or illness, which may impact the Company’s market share.
Significant volatility in financial markets (including exchange rate volatility) and measures adopted by governments and central banks that further restrict liquidity, which may limit the Company’s access to funds, lead to shortages of cash.
As of the date of this document, there is significant uncertainty relating to the severity of the near- and long-term adverse impact of the COVID-19 pandemic on the global economy, global financial markets and the Indian economy, and the Company’s is unable to accurately predict the near-term or long-term impact of the COVID-19 pandemic on its business.
Defects in title or loss
Our ability to mine the land on which we have been granted mining lease rights and to make use of our other industrial and office premises is dependent on the acquisition of surface rights. Surface rights and title to land are required to be negotiated separately with land owners, although there is no guarantee that these rights will be granted. Any delay outside of the ordinary course of business in obtaining or inability to obtain or any challenge to the title or leasehold rights to surface rights could negatively affect our business, financial condition or results of operations. In addition, there may be certain irregularities in title in relation to some of our owned and leased properties.
Update Costs
If we do not continue to invest in new technologies and equipment, our technologies and equipment may become obsolete and our cost of production may increase relative to our competitors, or such implemented technologies might not achieve the objective, which would have a material adverse effect on our results of operations, financial condition and prospects
Our profitability and competitiveness are in large part dependent upon our ability to maintain a low cost of production as we sell commodity products with prices we are unable to influence. Unless we continue to invest in newer technologies and equipment and are successful at integrating such newer technologies and equipment to make our operations more efficient, our cost of production relative to our competitors may increase and we may cease to be profitable or competitive. Newer technologies and equipment are expensive and the necessary investments may be substantial. Moreover, such investments entail additional risks including whether they will reduce our cost of production sufficiently to justify the capital expenditures to obtain them, or whether they will result in achieving the objective of using such technology.
Restrictive Covenants
We are subject to restrictive covenants for the credit facilities including term loans and working capital facilities provided to us . There are restrictive covenants in agreements which we have entered into with certain financial institutions for our borrowings These restrictive covenants among others, require us to maintain certain financial ratios and seek the prior permission of these financial institutions for various activities, including, among others, any change in our capital structure, issue of equity, preferential capital or debentures, raising any loans and deposits
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from the public, undertaking any new project, effecting any scheme of acquisition, merger, amalgamation or reconstitution, implementing a new scheme of expansion or creation of a subsidiary. If the covenants are not complied with we may be required to repay the amount borrowed from such lenders immediately. Such restrictive covenants may restrict our operations or ability to expand and may adversely affect our business, financial condition or results of operations.
We maintain insurance which we believe is typical in the respective industries in which we operate and in amounts which we believe to be commercially appropriate. Nevertheless, we may become subject to liabilities against which we may not have adequate insurance coverage or at all. Our insurance policies contain certain customary exclusions and limitations on coverage which may result in our claims not being honored to the full extent of the losses or damages we have suffered.
(b) Risks Relating to our Industry
Commodity Prices of the Company’s finished goods are linked to international benchmark i.e. LME (for zinc and lead) and LBMA (for silver) and are strongly influenced by global economic conditions and global demand supply for the products. Volatility in commodity prices and demand may adversely affect our earnings, cash flow and reserves.
HZL being a Mining and Smelting Company requires power to conduct its day to day operations, and to obtain this power it has two options - to either purchase Power from the Grid or to generate power itself through Captive Power capacity. Seeing the latter as a sustainable and cost effective solution, HZL, in order to support its Mining + Metallurgical operations, has installed, over the years, 474MW of Thermal Captive Power plants in Rajasthan. Thermal or Non Coking Coal is the primary Raw Material for functioning of these Captive Power Plants and hence its timely availability is crucial in achieving HZLs production targets.
Majority of this Coal requirement is met through imports which is procured from a number of major miners across the globe, while the balance requirement is satisfied through Fuel Supply Agreements (FSAs) with Coal India (CIL) Subsidiaries – SECL, WCL and NCL. In FY19-20, HZL consumed roughly 1.73 MnT of Thermal Coal, of which Imported Coal accounted for almost 72%.
HZL, currently has Fuel Supply Agreement (FSA) of 1.39 million tons of coal linkage by Ministry of Coal. However, due to limited coal availability, Coal India Limited has been supplying only 25% of the 1.39 million tons linkage quantity. Any shortfall in quantity receipt of Linkage Coal will have to made up through a higher percentage procurement of Imported Coal.
Changes in tariffs, royalties, cess, customs duties, export duties and government assistance may reduce our Indian market domestic premium, which would adversely affect our profitability and results of operations. Zinc, Lead and Silver are sold in the Indian market at a premium to the international market prices of these metals due to tariffs payable on the import of such metals.
Other Risks
As the domestic Indian market constitutes the major source of our revenue, the downturn in the rate of economic growth in India due to the unprecedented and challenging global market and
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economic conditions, or any other such downturn for any other reason, will be detrimental to our results of operations.
Terrorist attacks and other acts of violence involving India or other neighboring countries could adversely affect our operations directly, or may result in a more general loss of customer confidence and reduced investment in these countries that reduces the demand for our products, which would have a material adverse effect on our business, results of operations, financial condition and cash flows.
If natural disasters or environmental conditions in India, including floods and earthquakes, affect our mining and production facilities, our revenue could decline.
Currency fluctuations among the Indian Rupee, the US dollar and other currencies could have a material adverse effect on our results of operations
The Company’s businesses are subject to several risks and uncertainties including financial risks.
The Company’s documented risk management polices act as an effective tool in mitigating the various financial risks to which the business is exposed to in the course of their daily operations. The risk management policies cover areas such as liquidity risk, commodity price risk, foreign exchange risk, interest rate risk, counterparty and concentration of credit risk and capital management. Risks are identified through a formal risk management programme with active involvement of senior management personnel and business managers. Each significant risk has a designated ‘owner’ within the Company at an appropriate senior level. The potential financial impact of the risk and its likelihood of a negative outcome are regularly updated.
The risk management process is coordinated by the Management Assurance function and is regularly reviewed by the Company’s Audit Committee. The Audit Committee used to be aided by the Risk Management Committee, which met regularly to review risks as well as the progress against the planned actions. With effect from August 31, 2020, the Risk Management Committee has merged with the Audit Committee and has been renamed as Audit and Risk Management Committee. Key business decisions are discussed at the periodic meetings of the Executive Committee. The overall internal control environment and risk management programme including financial risk management is reviewed by the Audit and Risk Management Committee on behalf of the Board.
The risk management framework aims to:
• Improve financial risk awareness and risk transparency
• Identify, control and monitor key risks
• Identify risk accumulations
• Provide management with reliable information on the Group’s risk situation
• Improve financial returns
Treasury management
The Company’s treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyses exposures by degree
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and magnitude of risks. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.
Treasury management focuses on capital protection, liquidity maintenance and yield maximization. The treasury policies are approved by the Board and adherence to these policies is strictly monitored at the Executive Committee meetings. Day-to-day treasury operations of the Company are managed by the finance team within the framework of the overall Company’s treasury policies. A monthly reporting system exists to inform senior management about investments, currency and, commodity derivatives. The Company has a strong system of internal control which enables effective monitoring of adherence to Company’s policies. The internal control measures are effectively supplemented by regular internal audits.
The investment portfolio at the Company is independently reviewed by CRISIL Limited.
The company uses derivative instruments as part of its management of exposure to fluctuations in foreign currency exchange rates, interest rates and commodity prices. The company does not acquire or issue derivative financial instruments for trading or speculative purposes. The company does not enter into complex derivative transactions to manage the treasury and commodity risks. Both treasury and commodities derivative transactions are normally in the form of forward contracts which are subject to the company’s guidelines and policies.
Commodity price risk
The Company is exposed to the movement of base metal commodity prices on the London Metal Exchange and silver prices on London Bullion Market Association. Any decline in the prices of the base metals/silver that the Company produces and sells will have an immediate and direct impact on the profitability of the businesses. As a general policy, the Company aims to sell the products at prevailing market prices. Tthe Company aim to achieve the monthly average of the commodity prices for sales realization. Hedging is used primarily as a risk management tool and, in some cases, to secure future cash flows in cases of high volatility by entering into forward contracts or similar instruments. The hedging activities are subject to strict limits set out by the Board and to a strictly defined internal control and monitoring mechanism. Decisions relating to hedging of commodities are taken at the Executive Committee level and with clearly laid down guidelines for their implementation by the Company.
Whilst the Company aims to achieve average LME prices for a month or a year, average realized prices may not necessarily reflect the LME price movements because of a variety of reasons such as uneven sales during the year and timing of shipments.
Financial instruments with commodity price risk are entered into in relation to following activities:
• Economic hedging of prices realized on commodity contracts.
• Cash flow hedging on account of forecasted highly probable transactions
• The sales prices of zinc and lead are linked to the LME prices. The Company also enters into hedging arrangements for its Zinc and Lead sales to realize month of sale LME prices.
Interest rate risk
Floating rate financial assets are largely mutual fund investments which have debt securities as underlying assets. The returns from these financial assets are linked to market interest rate
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movements; however the counterparty invests in the agreed securities with known maturity tenure and return and hence has manageable risk. Additionally, the investments portfolio is independently reviewed by CRISIL Limited.
The Company is exposed to interest rate risk on short-term and long-term floating rate instruments.
Counterparty and concentration of credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.
The Company is exposed to credit risk for receivables, cash and cash equivalents, short-term investments and derivative financial instruments. Credit risk on receivables is limited as almost all credit sales are against letters of credit and guarantees of banks of good financial repute.
Moreover, given the nature of the Company’s business, trade receivables are spread over a number of customers with no significant concentration of credit risk. No single customer accounted for 10% or more of revenue on a % basis in any of the years indicated. The history of trade receivables shows a negligible provision for bad and doubtful debts. Therefore, the Company does not expect any material risk on account of non-performance by any of the Company’s counterparties.
For short-term investments, counterparty limits are in place to limit the amount of credit exposure to any one counterparty. For derivative and financial instruments, the Company attempts to limit the credit risk by only dealing with reputable banks and financial institutions having high credit-ratings assigned by international credit-rating agencies. Defined limits are in place for exposure to individual counterparties in case of mutual funds schemes and bonds.
Derivative financial instruments
The Company uses derivative instruments as part of its management of exposure to fluctuations in foreign currency exchange rates, interest rate and commodity prices. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. The Company does not enter into complex derivative transactions to manage the treasury and commodity risks. Both treasury and commodities derivative transactions are normally in the form of forward contracts and these are subject to the Company guidelines and board approved policies.
All derivative financial instruments are recognized as assets or liabilities on the statements of financial position and measured at fair value, generally based on quotations obtained from financial institutions or brokers. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and the resulting designation.
The fair values of all derivatives are separately recorded in the statements of financial position within current and non-current assets and liabilities. Derivatives that are designated as hedges are classified as current or non-current depending on the maturity of the derivative.
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The use of derivatives can give rise to credit and market risk. The Company tries to control credit risk as far as possible by only entering into contracts with reputable banks and financial institutions. The use of derivative instruments is subject to limits, authorities and regular monitoring by appropriate levels of management. The limits, authorities and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of the underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.
4. FINANCIAL INFORMATION ABOUT THE COMPANY
Note: Please note that the Issuer does not have any subsidiaries. Accordingly, all financial information provided below, has been provided on a standalone basis.
4.1 Abridged version of the Audited Standalone Financial Information (like Profit and Loss statement, Balance Sheet and Cash Flow statement) for at least last three years and auditor qualifications, if any:
Balance Sheet ( Rs. In Crs.)
S.
No.
Particulars As at March 31, 2020
As at March 31, 2019
As at March 31, 2018
ASSETS
Non-current assets
a) Property, plant and equipment 16,217 14,668 11,181
b) Capital work-in-progress 2,489 2,254 3,220
c) Intangible Assets 252 110 121
d) Financial assets
i) Loans 13 13 15
ii) Others 40 38 35
e) Deferred tax assets (net) 1,822 1,925 2,208
f) Other non-current assets 480 638 1,102
g) Income tax assets 849 1,240 907
Total Non-current assets 22,162 20,886 18,789
Current assets
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a) Inventories 1,835 1,544 1,379
b) Financial Assets
i) Investments 20,329 19,488 20,222
ii) Trade receivables 401 196 184
iii) Cash and cash equivalents 1,878 2 173
iv) Other Bank balances 40 21 1,791
v) Loans 2 3 1
vi) Others 6 4 11
c) Other current assets 322 314 382
Total Current assets 24,813 21,572 24,143
TOTAL 46,975 42,458 42,932
EQUITY AND LIABILITIES
Equity
a) Equity share capital 845 845 845
b) Other equity 39,465 32,760 35,087
Total Equity 40,310 33,605 35,932
Liabilities
Non-current liabilities
a) Financial liabilities
i) Other financial liabilities 22 19 69
b) Other non-current liabilities 1,068 945 792
c) Provisions 162 145 134
Total Non-current liabilities 1,252 1,109 995
Current liabilities
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a) Financial liabilities
i) Borrowings 611 2,538 -
ii) Trade payables
a) Total outstanding dues of Micro, Small and Medium Enterprises
36 52 18
b) Total outstanding dues to creditors other than Micro, Small and Medium Enterprises
1,452 1,122 929
iii) Other financial liabilities 1,487 1,401 3,094
b) Other current liabilities 1,694 2,397 1,713
c) Provisions 70 74 86
d) Current tax liabilities 63 160 165
Total Current liabilities 5,413 7,744 6,005
TOTAL 46,975 42,458 42,932
Profit & Loss Account ( Rs. In Crs.)
Particulars For the year
ended March 31, 2020
For the year ended March
31, 2019
For the year ended
March 31, 2018
Revenue from operations (gross of excise duty)
18,332 20,834 22,213
Other Operating income 229 284 306
Other income 1,934 1,782 1,716
Total Income 20,495 22,900 24,235
Expenses:
(Increase)/Decrease in inventories of finished goods and work-in-progress
(291) (64) 498
Employee benefits expense 689 905 776
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Finance costs 112 113 246
Depreciation and amortization expense 2,279 1,883 1,483
Power and fuel 1,704 1,758 1,653
Mining Royalty 2,353 2,628 2,647
Excise duty on sale of goods - - 437
Other expenses 5,259 5,221 4,238
Total expenses 12,105 12,444 11,978
Profit before exceptional item and tax 8,390 10,456 12,257
Exceptional Items - - 240
Profit before tax 8,390 10,456 12,497
Tax expense :
Current tax 1,428 2,220 2,647
Deferred tax charge 157 280 574
Total tax expenses 1,585 2,500 3,221
Profit for the year 6,805 7,956 9,276
Other comprehensive income
A) Items that will not be reclassified to profit or loss in subsequent period
(a) Remeasurements gain/(loss) of the defined benefit plans
(154) (36) 3
(b) Tax credit/(expense) 54 13 (1)
B) Items that will be reclassified to profit or loss in subsequent period
(a) Effective portion of gains on hedging instrument in cash flow hedges
- 95 (95)
(b) Tax credit/(expense) - (33) 33
(c) Net gain/(loss) on FVOCI investments - (150) (23)
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(d) Tax credit/(expense) - 17 3
Total other comprehensive income/ (loss) (100) (94) (80)
Total comprehensive income for the year 6,705 7,862 9,196
Cash Flow Statement (Rs. In Crs.)
Particulars For the year ended March 31, 2020
For the year ended March 31, 2019
For the year ended March 31, 2018
(A) CASH FLOW FROM OPERATING ACTIVITIES :
Net profit before tax 8,390 10,456 12,497
Adjustments to reconcile profit to net cash provided by operating activities:
Depreciation and amortization expense
2,279 1,883 1,483
Interest expense 112 113 246
Interest income (988) (801) (460)
Amortization of deferred revenue arising from government grant
(97) (69) (48)
Net gain on investments measured at FVTPL
(637) (550) (774)
Net Loss/(Gain) on sale of Property, Plant and Equipment
23 (48) (2)
Net Loss/(Gain) on sale of financial asset investments
(209) (314) (340)
Reversal of DMF provision - - (291)
Operating profit before working capital changes
8,873 10,670 12,311
Changes in assets and liabilities
(Increase)/Decrease in Inventories
(291) (165) 557
(Increase)/Decrease in Trade receivables
(205) (12) (48)
(Increase)/Decrease in Other current assets
(13) 73 20
40
(Increase)/Decrease in Other non current assets
- (59) (11)
Increase/ (Decrease) in Trade payables
313 227 124
Increase/(Decrease) in Other current liabilities
(920) 605 (135)
Increase/(Decrease) in non current liabilities
(1) 2 10
Cash flows from operations 7,756 11,341 12,828
Income taxes paid during the year
(1,135) (2,560) (3,028)
Net cash flows from operating activities
6,621 8,781 9,800
(B) CASH FLOW FROM INVESTING ACTIVITIES :
Purchases of Property, Plant and Equipment (including intangibles, CWIP and Capital Advances)
(3,637) (3,400) (2,733)
Interest received 523 `253 499
Deposits made during the year (4) - -
Purchase of current investments
(35,612) (41,660) (33,938)
Proceeds from sale of current investments
36,063 43,656 38,558
Proceeds from sale of Property, Plant and Equipment
19 59 10
Net cash flows (used) in investing activities
(2,648) (1,092) 2,396
(C) CASH FLOW FROM FINANCING ACTIVITIES :
Interest and other finance charges paid
(170) (208) (243)
Proceeds from short term borrowings
6,945 12,407 12,325
Repayment of short term borrowings
(8,869) (9,871) (20,225)
Payment of principal portion of lease liabilities
(4) - -
Dividend and tax paid thereon - (11,958) (10,469)
Net cash flows (used) in financing activities
(2,098) (9,630) (18,612)
Net increase /(Decrease) in Cash and cash equivalents
1,875 (1,941) (6,416)
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Cash and cash equivalents at the beginning of the year
23 1,964 8,380
Cash and cash equivalents at the end of the year
1,898 23 1,964
4.2 Abridged version of Latest Audited/Limited Review Half Yearly Consolidated (wherever available) and Standalone Financial Information (like profit & loss statement, and balance sheet) and auditors qualifications, if any: Information of Latest Audited Financials as on 30 June 2020, provided below on a standalone basis
42
43
44
45
4.3 Audited Annual Financial Results of The Issuer: Please refer to Annexure VI*
*The financials have been provided only on a standalone basis as the Company has no subsidiaries.
4.4 Key Operational and Financial Parameters for last 3 financial year (Standalone)
*since there is no long term debt and hence Gross Debt/Equity Ratio and Debt Service Coverage Ratio is not relevant. Notes: 1. Current Ratio=Current Assets/Current Liabilities
2. Interest coverage ratio = (PBT + Interest)/ Interest
3. Gross Debt/Equity = Total Long Term Debt/ Net worth 4. Debt Service Coverage Ratio= (PBT + Interest)/ (Interest + Current Maturities of Long Term
Borrowings) 5. Net Worth = Equity + Total Reserves & Surplus
4.5 Project cost and means of financing, in case of funding of new projects: N.A.
4.6 Any change in accounting policies during the last three years and their effect on the profits and
Sr. No. Particulars 2019-20 2018-19 2017-18
1 Net worth 40,310 33,605 35,932
2 Total Debt
3 - Long term Borrowing (Non- current) - - -
4 - Short term Borrowing 611 2,538 -
5 -Current Maturities of Long term borrowing - - -
6 Non current Liabilities (excluding 3) 1,252 1,109 995
7 Net Fixed assets (Including CWIP) 18,958 17,032 14,522
8 Non current Assets (excluding 7) 3,204 3,854 4,267
9 Cash and cash equivalents 1,878 2 173
10 Current Investments 20,329 19,488 20,222
11 Current Assets (Excluding 9 and 10) 2,606 2,082 3,748
12 Current Liabilities (Excluding 4 and 5) 4,802 5,206 6,005
13 Net Sales (Total Income) 20,495 22,900 24,235
14 EBITDA 8,849 10,747 12,373
15 EBIT 11,128 12,630 13,856
16 Finance cost 112 113 246
17 PBT 8,390 10,456 12,497
18 PAT 6,805 7,956 9,276
19 Dividend amounts (Including Tax) - 10,189 4,069
20 Current ratio (Note 1) 5 3 4
21 Gross debt/ equity ratio (Note 3)* NA NA NA
22 Interest Coverage ratio (Note 2) 76 93 52
23 Debt service coverage ratio (Note 4)* NA NA NA
46
the reserves of the company)
The company has adopted accounting standards (IND AS) notifed under Companies (Indian Accounting Standard) Rules 2015 w.e.f. April 01, 2017. This does not have a material impact on profit before tax of the Company in FY 17-18. In FY 18-19, pursuant to adoption of Amendment to IND-AS 23 Borrowing Cost, Company has capitalized interest cost of Rs. 103 Crores, impact on PBT Rs. 103 Crs, impact on reserves (PAT) Rs. 67 Crs. For FY 19-20 there has been no change in accounting policy.
4.7 Details of borrowing of the company as on 30th June 2020 :
(i) Details of Secured Loan Facilities as on 30th June 2020: Nil
(ii) Details of Unsecured Loan Facilities as on 30th June 2020:
Lender’s Name
Type of Facility Amt Sanctioned
(Rs. Crs.)
Principal Amt outstanding
( Rs. Crs.)
Repayment Date / Schedule
HDFC Bank WCDL 750 11 Repayable in Q2 FY 2021
ICICI Bank WCDL/Bill Discounting
150 19 Repayable in Q2 FY 2021
Mutual Funds/Banks
Commercial Paper
7,500 5,000 Repayable in FY 2020-21
Total 8,450 5,030
(iii) Details of NCDs as on 30th June 2020: Nil
List of Top Debenture Holders as on 30th June, 2020: Nil
(iv) Amount of Corporate Guarantee issued by the Issuer along with name of the Counterparty, on behalf of whom it has been issued as on 30th June 2020: Nil
(v) Details of Commercial Papers as on 30th June 2020
Amount (Rs. Crores)
Maturity Date
3,600 10th Aug 2020
1,400 26th March 2021
(vi) Details of Rest of the Borrowings (if any, including hybrid debt like FCCB, Optionally Convertible Debentures / Preference Shares) as on 30th June 2020: Nil
(vii) Details of all default/s and/or delay in payment of interest and principal of any kind of term loans, debt securities and other financial indebtedness including corporate guarantees issued by the Company, in the past 5 years: Nil
(viii) Details of any outstanding borrowings taken/ debt securities issued where taken / issued (i) for consideration other than cash, whether in whole or part, (ii) at a premium or discount, or (iii)
47
in pursuance of an option
(ix) Gross debt equity ratio of the company as on 30 June 2020:
Particulars Before the Issue of Debt Securities
After considering the proposed Issue of NCD
Debt / Equity Ratio* NA 0.12
*Notes:
Debt means Long term Borrowings and Current Maturity of Long Term Borrowings.
Equity means Share Capital of company plus Reserves and Surplus.
5. DETAILS OF SHARE CAPITAL AND SHARE HOLDING PATTERN
(a) Detail of Share Capital as on 30 June 2020
Capital Structure of the company in a tabular form
Particulas No. of Shares
Amount (Rs. In Crores)
a) Authorised Share Capital
Equity Shares of Rs. 2 each 500,00,00,000 1,000
Total 1000
Issued, Subscribed and Paid up Equity Capital 422,53,19,000 845
Total 845
(b) Changes in Capital Structure as on 30 June 2020, for the last 5 years: No Change
Date of Allotment
No. of Equity Shares
Face Value (Rs.)
Issue Price (Rs.)
Consideration (Cash, other than cash,
etc.)
Nature of Allotment
Cumulative
Remarks
No of equity shares
Equity Share Capital (Rs.)
Equity Share Premium (in Rs.)
NIL
(c) Details of any acquisition or amalgamation in the last 1 year: NIL
(d) Details of any reorganization or Reconstruction in the last 1 year: NIL
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(e) Details of the shareholding of the Company as on 30th June 2020:
Sr No
Particulars Total No of Equity Shares
No of shares in demat form
Total Shareholding as % of total no of equity shares
(A) Promoter & Promoter Group 2,74,31,54,310 2,74,31,54,310 64.92
(B) Public
B1 Institutions
A Mutual Funds 1,56,32,040 1,53,67,040 0.37
B Foreign Portfolio Investors 4,07,46,574 4,06,35,574 0.96
C Financial Institutions/ Banks
12,66,690 12,21,690 0.03
D Insurance Companies 9,06,54,448 9,06,54,448 2.15
(1) LIFE INSURANCE CORPORATION OF INDIA
8,32,97,689 8,32,97,689 1.97
E QUALIFIED INSTITUTIONAL BUYER
40,26,075 40,26,075 0.10
Sub Total B1 15,23,25,827 15,19,04,827 3.61
B2 Central Government/ State Government(s)/ President of India
1,24,99,65,771 29.58 1,24,99,65,771
(1) PRESIDENT OF INDIA 1,24,79,50,590 29.54 1,24,79,50,590
Sub Total B2 1,24,99,65,771 29.58 1,24,99,65,771
B3 Non-Institutions
A Individual share capital upto Rs. 2 Lacs
5,04,81,264 1.19 4,91,50,014
B Individual share capital in excess of Rs. 2 Lacs
23,57,328 0.06 23,57,328
C NBFCs registered with RBI 7,828 0.00 7,828
D Any Other 2,70,26,672 0.64 2,62,09,672
(1) NON RESIDENT INDIAN REPATRIABLE
1,57,483 0.00 1,57,483
(2)Trusts 1,38,511 0.00 1,38,511
(3) Non-Resident Indian (NRI)
18,67,112 0.04 11,77,112
(4) Clearing Members 10,45,220 0.02 10,45,220
(5) NON RESIDENT INDIAN NON REPATRIABLE
7,93,284 0.02 7,93,284
(6) Bodies Corporate 2,09,69,450 0.50 2,08,42,450
(7) IEPF 44,685 0.00 44,685
(8) HUF 20,03,827 0.05 20,03,827
(9) Foreign Nationals 7,100 0.00 7,100
Sub Total B3 7,98,73,092 1.89 7,77,24,842
B=B1+B2+B3 1,48,21,64,690 35.08 1,47,95,95,440
A+B 4,22,53,19,000 100.00 4,22,27,49,750
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(f) List of Top 10 Holders of Equity Shares of the Company as on 30th June 2020
Sr No
Name of the shareholders Total No of Equity Shares
No of shares in demat form
Total Shareholding as % of total no of equity shares
1. Vedanta Limited 2,743,154,310 2,743,154,310 64.92
2. President Of India - A/C Hindustan Zinc Ltd.
1,247,950,590 1,247,950,590 29.54
3. Life Insurance Corporation Of India
80423538 80423538 1.90
4. Ptc Cables Private Ltd 11267300 11267300 0.27
5. Janus Henderson Overseas Fund
8149485 8149485 0.19
6. General Insurance Corporation Of India
6000000 6000000 0.14
7. India Capital Fund Limited 4354000 4354000 0.10
8. Vanguard Total International Stock Index Fund
3821137 3821137 0.09
9. HDFC Life Insurance Company Limited
3714704 3714704 0.09
10. Janus Henderson Overseas Portfolio
3692019 3692019 0.09
(g) Details of shares pledged or encumbered by the Promoters (if any)
None of the Shares are pledged or encumbered by the promoters as on 30 June 2020. However, the promoters of the Issuer have created encumbrance over 626,192,276 Shares by way of Pledge and 2116,884,819 Shares by way of Non Disposal Undertaking on August 28, 2020.
(h) Details of Capital Structure of the Company as on 30th June 2020
Particulars No. of Shares Amount (Rs. In Crores)
a) Authorised Share Capital
Equity Shares of Rs. 2 each 500,00,00,000 1,000
Total 1000
Issued, Subscribed and Paid up Equity Capital 422,53,19,000 845
Total 845
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6. DETAILS REGARDING DIRECTORS, PROMOTERS & AUDITORS OF THE COMPANY
6.1 Details of current Directors of the Issuer as on June 30, 2020
Name, Designation and
DIN
Age Address Director of the Company
Since
Occupation Details of other
directorship
Mrs. Kiran Agarwal Chairman DIN 02227122
63 (22.01.1957)
113/114, Samudra Mahal, Dr. Annie Besant Road, Near Lotus Worli, Mumbai - 400018
02.03.2019 Professional Refer point 6.2
Mr. Navin Agarwal, Non- Executive Director DIN 00006303
59 (11.01.1961)
Vedanta, 75 Nehru Road, Vile Parle (E), Mumbai- 400099
11.04.2002 Industrialist Refer point 6.2
Mr. Sunil Duggal CEO & Whole-time Director DIN 07291685
58 (14.07.1962)
Hindustan Zinc Limited Yashad Bhawan UDAIPUR - 313 004.
01.10.2015 Reappointed – 01.10.2018
Service Refer point 6.2
Smt. Reena Sinha Puri Non- Executive Director DIN 07753040
56 (22.01.1964)
Joint Secretary & Financial Advisor Government of India, Ministry of Mines, Shastri Bhawan, NEW DELHI-110 001.
29.12.2016 Service Refer point 6.2
Ms. Farida M. Naik Non- Executive Director DIN 07612050
50 (10.07.1970)
Director Government of India Ministry of Mines Shastri Bhawan NEW DELHI-110 001.
14.03.2017 Service Refer point 6.2
Mr. A.R. Narayanaswamy Independent Non-Executive
68 (22.12.1951)
A-12, Archana CHS, Juhu Versova Link Road,
30.03.2009 Reappointed - 11.03.2015
Professional Refer point 6.2
51
Director DIN 00818169
Andheri (West) MUMBAI - 400 053.
and 11.03.2018
Mr. Arun L. Todarwal Independent Non-Executive Director DIN 00020916
63 (16.06.1957)
81, Shivner, 84, Nepean Sea Road, MUMBAI - 400 006.
11.03.2015 Reappointed – 11.03.2018
Professional Refer point 6.2
6.2 Details of other directorship as on 30 June 2020
S. No. Name of Director Name of the Company/ Body Corporate/Firms
Nature of Interest
1 Mrs. Kiran Agarwal NIL NIL
2 Smt. Reena Sinha Puri Bharat Aluminium Co. Limited Director
Coal India Limited Director
Central Coalfields Limited Director
3 Ms. Farida M. Naik NIL
4 Mr. Sunil Duggal
Federation of India Mineral Industries
Director
Skill Council for Mining Sector Director
Vedanta Limited Interim CEO
5 Mr. Navin Agarwal Vedanta Limited Executive Vice-Chairman
Vedanta Resources Limited., UK Executive Vice- Chairman
Hare Krishna Packaging Pvt. Ltd. Director
6 Mr. A.R. Narayanaswamy
Sterlite Technologies Ltd. Director
Sterlite Grid 1 Limited Director
Bharat Aluminium Co. Ltd. Director
Sterlite Power Grid Ventures Ltd. Director
Sterlite Grid 2 Limited Director
Vizag General Cargo Berth Private Ltd.
Director
IBIS Systems & Solutions Pvt. Ltd. Director
Jiangsu Sterlite Tongguang Fiber Co. Ltd., China
Director
Sterlite Power Transmission Limited
Director
7 Mr. Arun L. Todarwal
Sterlite Technologies Ltd. Director
Anuh Pharma Ltd. Director
SREI Mutual Fund Trust Pvt. Ltd. Director
Welspun India Ltd. Diretor
Welspun Global Brands Ltd. Director
Sterlite Grid 1 Ltd. Director
Sterlite Grid 2 Ltd. Director
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Lakecity Ventures Pvt. Ltd. Director
Sterlite Power Transmission Limited
Director
PTC Cables Private Limited Director
Sterlite Power Grid Ventures Limited
Director
IAPA (ASIA PACIFIC) PTE LTD (foreign company, Singapore)
Director
Welspun USA INC Director
6.3 Company to Disclose Name of The Current Directors Who Are Appearing In The RBI Defaulter List and/or ECGC Default List, If Any – NIL
6.4 Details of Change in Directors Since Last Three Years:
Name, Designation and DIN
Date of Appointment / Resignation
Director of the Company since (in case of resignation)
Remarks
Mr. Agnivesh Agarwal, Non-Executive Chairman (DIN 00038950)
22-02-2019 15.11.2015 Resignation due to preoccupancy
Mr. Sudhir Kumar, Non-Executive Independent Director (DIN 00267742
29-11-2018 30.11.2015 Completion of Tenure
Mrs. Kiran Agarwal, Non-Executive Chairman (DIN 02227122)
02-05-2019 02-05-2019 Appointment
Note:
1. As the current tenure of Mr. Sunil Duggal, CEO & WTD has expired on July 31, 2020 and board has appointed Mr. Arun Misra ( Dy. CEO as on 30th June 2020) as CEO & WTD w.e.f 1st August 2020.
2. The second tenure of Mr. A R Narayanswamy and Mr. Arun Todarwal as Independednt Directors has expired on July 31, 2020 and accordingly Board has approved appointment of Mr. Anjani Agarwal and Mr. Akhilesh Joshi as Independent Directors w.e.f. 1st August 2020.
3. The Governament of India appointed Mrs. Yatinder Prasad in place of Mrs. Reena Sinha Puri as nominee director w.e.f. August 7, 2020.
6.5 Remuneration of Directors
FINANCIAL YEAR AMT IN RS. CRORES
FY 2017-18 6.01
FY 2018-19 9.13
FY 2019-20 7.02
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6.6 Details of Promoters of the Company:
Details of Promoter & Promoter Group Holding in the Company as on 30th June 2020:
S. No
Name of the shareholders
Total no of equity shares
No of shares in demat form
Total shareholding as % of total no of equity
shares
No of shares
pledged
% of shares
pledged with
respect to
shares owned.
1 Vedanta Limited 2,74,31,54,310 2,74,31,54,310 64.92 Nil* Nil*
* The promoters of the Issuer have created encumbrance over 626,192,276 Shares by way of Pledge and 2116,884,819 Shares by way of Non Disposal Undertaking on August 28, 2020.
6.7 Details Regarding Auditors of The Company:
Details of Auditors of The Company:
Name Address Auditor since
S.R. Batliboi & Co. LLP
Chartered Accountants
Golf View Corporate Tower-B
Sector 42, Sector Road
Gurgaon – 122 002 Haryana
2016-17 onwards
7. DETAILS OF CHANGE IN AUDITORS SINCE LAST 3 YEARS: NONE
8. DETAILS WITH REGARD TO INTEREST OF DIRECTORS, LITIGATIONS ETC
8.1 Any financial or other material interest of the directors, promoters or key managerial personnel in the offer and the effect of such interest in so far as it is different from the interests of other persons: NIL
8.2 Details of any litigation or legal action pending or taken by any Ministry or Department of the Government or a statutory authority against any promoter of the offeree company during the last three years immediately preceding the year of the circulation of this Offer Letter and any direction issued by such Ministry or Department or statutory authority upon conclusion of such litigation or legal action shall be disclosed.
Appeal proceedings in the High Court of Bombay brought by SEBI to overrule a decision by the SAT that Vedanta has not violated regulations prohibiting fraudulent and unfair trading practices.
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In April 2001, SEBI ordered prosecution proceedings to be brought against Vedanta, alleging that it violated regulations prohibiting fraudulent and unfair trading practices, and also passed an order prohibiting Vedanta from accessing the capital markets for a period of two years. SEBI’s order was overruled by the SAT in 22 October 2001 on the basis of a lack of sufficient material evidence to establish that Vedanta had, directly or indirectly, engaged in market manipulation and noting that SEBI had exercised its jurisdiction incorrectly in prohibiting Vedanta from accessing the capital markets. In November 2001, SEBI appealed to the High Court of Bombay. No further action or procedures have taken place since 2001 and the next date of hearing has not yet been fixed.
In addition to the civil proceedings, SEBI also initiated criminal proceedings in 2001 before the Court of thse Metropolitan Magistrate, Mumbai, against Vedanta, Vedanta’s Executive Chairman, Mr. Anil Agarwal, Vedanta’s Director of Finance, Mr. Tarun Jain, and the chief financial officer of MALCO at the time of the alleged price manipulation. When SEBI’s order was overturned in October 2001, Vedanta filed a petition before the High Court of Bombay to defend those criminal proceedings on the grounds that the SAT had overruled SEBI’s order on price manipulation. An order has been passed by the High Court of Bombay in Vedanta’s favour, granting an interim stay of the criminal proceedings.
8.3 Related party transactions entered during the last three financial years immediately preceding the year of circulation of offer letter including with regard to loans made or, guarantees given or securities provided
Related Party Transactions for FY 2017-18, 2018-19, 2019-20 (Standalone)
Nature of transactions For the year ended March 31, 2020
For the year ended March 31, 2019
For the year ended March 31, 2018
Sale of Goods
Vedanta Limited - - 16
Sterlite Technologies Ltd - - -
Sterlite Power Transmission Ltd 2 1 -
Namzinc (PTY) Ltd - -
Fujairah Gold FZC 14 20 13
Total 16 21 29
Sale of property, plant and equipment
Vedanta Limited - - 1
Bharat Aluminium Company Limited - 0 0
Total - - -
Purchase of property, plant and equipment
Vedanta Limited 0 0 0
Bharat Aluminium Company Limited 0 0 0
Total 0 0 1
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Interest Income
Konkola Copper Mines Plc. - 0 -
Total - 0 -
Purchase of Goods
Vedanta Ltd 11 4 11
Bharat Aluminium Company Limited 18 21 25
Sterlite Technologies Ltd - - 1
Sterlite Power Transmission Ltd - 1 10
Total 29 26 47
Dividend
Vedanta Limited - 5,486 2,195
Government of India - 2,496 998
Total - 7,982 3,193
Other Expenses and other reimbursements
Vedanta Limited 68 111 104
Fellow Subsidiaries (0) 0 0
Total 68 111 104
Loan given and repaid during the year
- - -
Total - - -
Donations
Vedanta Foundation 0 0 0
Total 0 0 0
Contribution to :
Hindustan Zinc Limited Employee’s Contributory Provident Fund Trust
31 29 24
Hindustan Zinc Limited Employee’s Group Gratuity Trust
54 62 16
Hindustan Zinc Limited Superannuation Trust
3 3 2
Total 88 94 42
All the transactions entered by the Company with the related parties are at arm's length price.
The balances receivable/payable as at year end:
(Rs. in Crore)
Particulars As at March 31, 2020
As at March 31, 2019
As at March 31, 2018
Receivable From
Konkola Copper Mines Plc. 0 0 1
Vedanta Ltd. 15 0 10
Sterlite Power Transmission Limited - -
Fujairah Gold FZC 5 5 13
56
Black Mountain Mining(PTY)Limited 0 0 -
Talwandi Sabo Power Limited - 0 -
Total 20 5 24
Payable To
Bharat Aluminium Company Limited 6 4 5
Vedanta Ltd. 1 10 22
Sterlite Power Transmission Limited 0 2 3
Sterlite Technologies Limited - - -
Hindustan Zinc Limited Employee’s Contributory Provident Fund Trust
10 10 9
Hindustan Zinc Limited Employee’s Group Gratuity Trust
35 54 62
Hindustan Zinc Limited Superannuation Trust
0 0 -
Vedanta Ltd (Dividend payable) - - -
Government of India (Dividend Payable)
- - 1,646
Total 52 80 1,747
*Related party transactions & balances of "0" represents value less than Rs. 0.50 Crore
8.4 Summary of reservations or qualifications or adverse remarks of auditors in the last five financial years immediately preceding the year of circulation of offer letter and of their impact on the financial statements and financial position of the company and the corrective steps taken and proposed to be taken by the company for each of the said reservations or qualifications or adverse remark - NIL
8.5 Details of any inquiry, inspections or investigations initiated or conducted under the Companies Act or any previous company law in the last three years immediately preceding the year of circulation of offer letter in the case of company and all of its subsidiaries. Also if there were any prosecutions filed (whether pending or not) fines imposed, compounding of offences in the last three years immediately preceding the year of the offer letter and if so, section-wise details thereof for the company and all of its subsidiaries:
Fine for Deficieny in Minimum Nos. of Independent Directors
The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors except that with regard to the requirement of having at least one half of the Board of Directors comprising of Independent Directors in terms of Regulation 17 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company falls short by two Independent Directors (including one woman Independent Director). BSE Limited and National Stock Exchange (NSE) each, has imposed a fine of Rs. 18,05,400/-(inclusive of GST @ 18 %) for the same.
57
8.6 Details of acts of material frauds committed against the company in the last three years, if any, and if so, the action taken by the company - NIL
8.7 Details of default, if any, including therein the amount involved, duration of default and present status, in repayment of –
• statutory dues - NIL
• debentures and interest thereon - NIL
• deposits and interest thereon - NA
• loan from any bank or financial institution and interest thereon - NIL
8.8 Any material event/ development or change having implications on the financial / credit quality (e.g. any material regulatory proceedings against the Issuer/Promoters, tax litigations resulting in material liabilities, corporate restructuring event etc.) at the time of issue or subsequent to the issue which may affect the issue or the investor’s decision to invest / continue to invest in the debt securities.
Save for the event/ developments described below and what forms part of legal proceedings against promoters of the issuer company, there are no governmental, legal or arbitration proceedings which may have or have had during the 12 months prior to the date of this document a significant effect on the Company or its subsidiaries and/or the Company's or the subsidiary’s financial position or profitability.
Vedanta has commenced proceedings against the GoI, which has disputed Vedanta’s exercise of the call option to purchase its remaining 29.5 per cent ownership interest in Hindustan Zinc Limited
Under the terms of the shareholders’ agreement between the GoI and Vedanta Limited, Vedanta Limited was granted two call options to acquire all the shares in HZL held by the GoI at the time of exercise. Vedanta Limited exercised the first call option on 29 August 2003. Arbitration is on-going in relation to a dispute between the GoI and Vedanta Limited, with respect to Vedanta Limited’s exercise of its second call option to acquire the remaining shares in HZL held by the GoI, pursuant to the shareholders’ agreement between the parties. The GoI has refused to act upon the second call option, stating that Vedanta Limited’s second call option violates the provisions of the Indian Companies Act, 1956, by restricting the right of the GoI to transfer its shares. The next date of hearing by the arbitral tribunal is to be notified, as one of the members of the tribunal is suffering from a grave illness.
Separately, a writ petition was filed in March 2014 in the Supreme Court of India by the National Confederation of Officers Association questioning the decision of GOI to disinvest its 29.54% residual shareholding in HZL. The Supreme Court on January 19, 2016 ordered the status quo to be maintained with respect to the proposed disinvestment of government interest in HZL until further orders are passed by the court. The Supreme Court, on August 13, 2020 removed the status quo order in place to the extent that arbitration proceedings can continue with respect to claim call option rights under the shareholder agreement. The matter before the Supreme Court is tentatively to be listed in four weeks' time for final disposal.
Demands by the Department of Mines and Geology and Ministry of Mines
58
The Department of Mines and Geology of the State of Rajasthan issued several show cause notices in August, September and October 2006 to HZL, amounting to Rs. 334 Crore. These notices alleged unlawful occupation and unauthorised mining of associated minerals other than zinc and lead at HZL’s Rampura Agucha, Rajpura Dariba and Zawar mines in Rajasthan during the period from July 1968 to March 2006. HZL believes that the likelihood of this claim is not probable and thus no provision has been made in the financial statements. HZL had filed writ petitions in the High Court of Rajasthan in Jodhpur and had obtained a stay in respect of these demands. The High Court restrained the Department of Mines and Geology from undertaking any coercive measures to recover the penalty. In January 2007, the High Court issued another order granting the Department of Mines and Geology additional time to file their reply and also ordered the Department of Mines and Geology not to issue any order cancelling the lease. . An early hearing application was filed by the State but Court has passed an order stating that the application of state without Central Govt’s affidavit will not be entertained till the Central Govt files its affidavit Matter likely to be listed in due course.
The Department of Mines and Geology (DMG) of the State of Rajasthan initiated the royalty assessment process from January 2008 to 2019 and issued a show cause notice vide an office order dated January 31, 2020 amounting to Rs. 1,925 Crores. The Company has challenged (the show cause notice or / and) computation mechanism of the royalty on the ground that the state has not complied with the previous orders of Rajasthan High court where a similar computation mechanism was challenged and court had directed DMG to reassess basis the judicial precedents and mining concession rules. Pending compliance of previous orders, High court has granted a stay on the notice and directed DMG not to take any coercive action. Based on the opinion of external council, the Company believes that it has strong grounds of a successful appeal, and the chances of an outcome which is not if favour of the Company is remote. Matter will be listed in due course.
Demands for environment and health cess by the State of Rajasthan
The State of Rajasthan issued a notification in June 2008 notifying the Rajasthan Environment and Health Cess Rules, 2008, imposing environment and health cess on major minerals including lead and zinc. HZL and other mine operators resisted this notification and the imposition thereunder before the High Court of Rajasthan on the ground that the imposition of such cess and all matters relating to the environment fall under the jurisdiction of the Central government as opposed to the State government. In October 2011, the High Court of Rajasthan disposed the writ petitions and held the Rajasthan Environment and Cess Rules, 2008 that impose a levy of cess on minerals, as being constitutionally valid. HZL challenged this order by a special leave petition in December 2011 before the Supreme Court of India. The Supreme Court of India issued a notice for stay. Further direction was issued by the Supreme Court on March 23, 2012 not to take any coercive action against HZL for recovery of cess. An amount of Rs.150 per metric ton of ore produced (aggregating to Rs. 142 Crores) would be attracted under the Statute if it is held to be valid. The aforementioned notification was rescinded via notification dated January 6, 2017, and hence no further obligation exists after that date.
Claims for contributions towards the District Mineral Foundation
The District Mineral Foundation was introduced by the MMDRA Amendment Act, whereby all mining lease holders are required to pay contributions towards the District Mineral Foundation.
59
The contribution amounts were to be percentage of royalties as prescribed by the central government and were effective from January 12, 2015. In September 2015, a notification was issued by the Ministry of Mines prescribing the rate for the District Mineral Foundation contribution.
Subsequently, state rules were formulated for Rajasthan with effect from May 2016 and HZL received demand notices for the deposit of contributions to the District Mineral Foundation from January 12, 2015. In its order dated August 8, 2016, the High Court of Rajasthan stayed the demand retroactively for the period under challenge. On December 16, 2015, the Federation of Indian Mineral Industries also filed a writ petition before the High Court of Delhi, obtaining an order for no coercive action. The writ petition was subsequently transferred to the Supreme Court.
In October 2015, another notification was issued by the Ministry of Coal whereby rates were prescribed for certain minerals such as coal and lignite, although an additional provision also required for the application of such rates from the earlier date of the notification or the respective state rules. Vedanta Limited and Balco challenged the notifications for liability on account of fuel before the High Court of Delhi. The Supreme Court through order dated October 13, 2017, held that contribution to DMF in case of minerals other than coal shall take effect from September 17, 2015 and in the case of coal from October 20, 2015 or from the date on which the DMF was established by the state, whichever is later. Pursuant to the Supreme Court order, HZL has challenged the demand for payment between the disputed period i.e. from the date when the State of Rajasthan established DMF until the date when the High Court of Rajasthan has granted a stay. In parallel, BALCO has filed a petition before the High Court of Delhi challenging the constitutionality of section 9B(5) and section 9B(6) of the MMDR Act. HZL has also filed an intervention application in the said petition. HZL filed another writ petition in the same matter in November 2019 which has now been clubbed with the older writ. It will be listed before the High Court of Rajasthan for hearing in due course.
Proceedings related to the imposition of entry tax
The Company challenged the constitutional validity of the local statutes and related notifications in the state of Rajasthan pertaining to the levy of entry tax on the entry of goods brought into the state from outside.Nine judge constitution bench of the Supreme court of India in 2016 while upholding the constitutional validity of the levy maintained status quo with respect to all other issues which have been left open for adjudication by regular benches hearing the matters.Post the order of the nine judge bench, the regular bench of the Supreme Court proceeded with hearing the matters. The regular bench remanded the entry tax matters relating to the issue of discrimination against domestic goods from other States to the respective High Courts for final determination but retained the issue of jurisdiction on levy on imported goods, for determination by Supreme Court. The Company has filed writ petition before the Rajasthan High Court. The Company’s liability would amount to Rs. 200 Crores if the outcome of the writ is not in favour of the Company.
HZL Transfer of Mining Leases Issue
Directorate of Mines and Geology (DMG) on 25.02.2020 issued a notice stating that the mine leases were granted to Hindustan Zinc Limited (HZL) “the Company” whose ownership is
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transferred at the time of disinvestment by Central Government to Sterlite Opportunities and Venture Limited (SOVL) and further on merger of SOVL into Sterlite Industries India Limited (SIIL) and further merger of SIIL into Vedanta Limited. As the ownership is transferred, DMG has directed the Company to regularise the lease under section 12A(6) of the MMDR Act read with Mineral Transfer Rules 2016 applicable to captive mines, failing which the leases would be terminated. The Company has filed revision applications before the Central Government under Section 30 of the MMDR Act challenging the DMG’s order dated 25 February 2020. HZL also approached the Hon’ble Rajasthan High Court for necessary protection orders until the matter is heard by the Revisionary Authority, Ministry of Mines. The State of Rajasthan has been directed by the Revisionary Authority, Ministry of Mines not to take any coercive action till final disposal of the matter. The matter was listed on 17.07.2020 and the next date for listing of the matter is to be announced.
Land Tax
HZL received a demand notice on 19.04.2020 from the State Government issued on March 24, 2020 for land tax on lands used for RD Mines, SK Mines, Tailing dam and Dariba Smelter pursuant to the provisional assessment notice dated 31.01.2020. We moved to the Rajasthan High Court seeking a stay basis our objections filed to the provisional assessment, while also filing a representation before the Assessing authority challenging the demand on April 22.04.2020. Meanwhile, the State Government enacted the Finance Act, 2020 whereby the Act of 2006 imposing land tax was repealed and new land tax regime under the 2020 Act took effect from 30.03.2020. On 23.04.2020, the assessing authority withdrew the demand raised in its notice dated 24.03.2020 citing the repeal of the previous Act.
We have now challenged the Act of 2020 imposing land tax on mineral bearing land while appeals by various parties against orders of Rajasthan High Court and other High Courts are pending before the Supreme Court’s constitution bench on the question of competence of State Legislature to impose tax on mineral bearing land. The overall liability for land tax on mineral bearing land as per the new Act will be more than 101 crores. The matter will be listed in due course.
Tax Matters
The tax department had raised demands amounting to Rs 6503 Cr on account of remeasurement of certain tax incentives, under section 80IA and 80 IC of the Income tax Act. During the current year, based on the favorable orders from Income Tax Appellate Tribunal relating to AY 09-10 to AY 12-13, the Commissioner of Income Tax (Appeals) has allowed these claims for AY 14-15 to AY 15-16, which were earlier disallowed and has granted refund of amounts deposited under protest. Against the Tribunal order, department had filed an appeal in Hon’ble Rajasthan High Court in financial year 17-18 which is yet to be admitted. Management considers it is unlikely that appeal will be admitted by the High Court and there is a strong prima facie case that ITAT order will stand confirmed and department’s appeal would be dismissed.
9. DISCLOSURE OF DEBT SECURITIES TO BE ISSUED
9.1 The Issue
The Company proposes to issue upto 30000 Unsecured, Rated, Non-Cumulative, Redeemable
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Debentures of Rs. 10,00,000/- (Rupees Ten Lakhs Only) each upto Rs. 3000,00,00,000/- (Rupees Three Thousand Crores Only) with an option to retain oversubscription up to 10000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of face value INR 10,00,000 each aggregating to a total issue size of Rs. 4000,00,00,000/- (Rupees Four Thousand Crores Only).
9.2 Utilization of the Issue Proceeds
Proceeds of the issue may be utilised for reimbursement of capex (including sustaining capex) and/or capex (including sustaining capex) over a period of next 12 months and/or payment of operational creditors and/or augmentation of cash reserves. The funds will be used for purposes permitted by RBI for general lending by banks. Issuer undertakes not to use proceeds, either in part of full, for investment in any capital market, real estate, on lending, speculative purposes and other activities not permitted by Government / SEBI / RBI / Other regulatory guidelines for general lending by banks.
9.3 Coupon
5.35% p.a. payable annually on the Coupon Payment Dates, i.e. 29 Sept’ 2021, 29 Sept’ 2022 and 29 Sept’ 2023.
9.4 Rating:
The Company has obtained rating of CRISIL AAA/ Stable by CRISIL for this debenture issue
9.5 Discount/Effective Price to Investor
The Debentures are being issued at face value and no discount shall be offered on the Debenture. Hence the Investor shall pay 100% of the Issue Price.
9.6 Security
The Debentures are unsecured.
9.7 Projected cash flow per Debenture: Please refer to Annexure VIII
9.8 Description of Security
Unsecured Issuance and hence not applicable.
9.9 Debenture Trustee
The Company has appointed Axis Trustee Services Limited as the Debenture Trustee. All the rights and remedies of the Debenture holders shall vest in and shall be exercised by the Debenture Trustee. All investors are deemed to have irrevocably given their authority and consent to Axis Trustee Services Limited to act as their Debenture Trustee and for doing such acts and signing such documents to carry out their duty in such capacity. Any payment by the Company to the Debenture Trustee on behalf of the Debenture holders shall discharge the Company pro tanto to the Debenture holders. Resignation/retirement of the Debenture Trustee shall be as per terms of the trust deed to be entered into between the Company and the Debenture Trustee. A notice in
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writing to the Debenture holders in such an event shall be provided for the same.
The Debenture Trustee shall duly intimate the Debenture holders by issuing a release on occurrence of any of the following events:
(a) default by the Company to pay interest on the Debentures or redemption amount;
(b) Revision of credit rating assigned to the Debentures. (c) breach of financial covenants, if applicable, by the Company
Such information can also be placed on the websites of the Debenture Trustee, the Company and the Stock Exchange.
Axist Trustee Services Limited has given its written consent for its appointment as debenture trustee to the Issuer under Regulation 4(4) of the SEBI Regulations and for inclusion of its name in the form and context in which it appears in this Private Placement Offer Letter.
9.10 Application for the Debentures
How to Apply
• Applications for the Debentures must be made in the Application Form and must be completed in block letters in English by investors. Application Forms must be accompanied by either a demand draft or cheque or electronic transfer drawn or made payable in favour of “HINDUSTAN ZINC LIMITED” and cheque or draft should be crossed as “Account Payee only”. The full amount of the issue price for the Debentures applied for has to be paid along with the delivery of the fully completed and executed Application Form together with other applicable documents described below.
• Cheques/demand drafts/electronic transfer may be drawn on any scheduled bank and payable at Mumbai.
• The Company assumes no responsibility for any applications/cheques/demand drafts lost in mail or in transit.
• The Application form containing the details of the payment is annexed hereto as “Annexure III”
Who can apply
Application by Banks/ Corporate Bodies/ Mutual Funds/ Financial Institutions/ Trusts/ Statutory Corporations / Insurance Companies
The applications must be accompanied by certified true copies of (i) memorandum and articles of association/constitution/bye-laws/trust deed; (ii) resolution authorizing investment and containing operating instructions; (iii) specimen signatures of authorized signatories; and (iv) necessary form for claiming exemption from deductions on interest on application money. Application made by an asset management company or a custodian of Mutual Fund shall clearly indicate the name of the concerned scheme for which application is being made.
How to Bid
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All Eligible Investors are required to register themselves as a one-time exercise (if not already registered) with the EBP platform offered by BSE for participating in electronic book building mechanism. Eligible Investors should refer the operating guidelines for issuance of debt securities on private placement basis through an electronic book mechanism as available on the website of BSE. Eligible Investors will also have to complete the mandatory know your customer verification process. Eligible Investors should refer to the BSE EBP Guidelines in this respect.
• The details of the Issue shall be entered on the EBP platform by the Issuer at least 1 (one) Business Days prior to the Issue Opening Date, in accordance with the Operational Guidelines.
• The Issuer will be open for bidding for the duration of the bidding window that would be communicated through the Issuer’s bidding announcement on the EBP platform, at least 1 (one) Business Day before the start of the Issue Opening Date.
Some of the key guidelines in terms of the current Operational Guidelines on issuance of securities on private placement basis through an EBP mechanism, are as follows:
(a) Modification of Bid Eligible Investors may note that modification of bid is allowed during the bidding
period/window. However, in the last 10 minutes of the bidding period/window, revision of bid is only allowed for upward revision of the bid amount placed by the Eligible Investor.
(b) Cancellation of Bid Eligible Investors may note that cancellation of bid is allowed during the bidding
period/window. However, in the last 10 minutes of the bidding period/window, no cancellation of bids is permitted.
(c) Multiple Bids Eligible Investors may note that multiple bids are permitted. However, Eligible Investors should refer to the Operational Guidelines as prevailing on the date of the bid.
Application under Power of Attorney
A certified true copy of the power of attorney or the relevant authority as the case may be along with the names and specimen signatures of all authorised signatories must be lodged along with the submission of the completed Application Form. Further, modifications/additions in the power of attorney or authority should be delivered to the Company at its Registered Office.
Submission of completed Application Form
All applications duly completed accompanied by account payee cheques/drafts/application money/transfer instructions from the respective investor’s account to the account of the Issuer, shall be submitted at the Registered/Head Office of the Issuer.
Procedure and Schedule for Allotment and Issue of Certificates
On the Debentures being subscribed under this offer, the Debentures would be allotted by such persons as are authorized by the Board / Committee of Directors from time to time. The allotment
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would be intimated by way of a Letter of Allotment. The Company will execute and dispatch such Letter of Allotment or refund letter along with refund amount, not later than seven working Days after receipt of completed Application Form or the Deemed Date of Allotment, whichever is later.
After completion of all legal formalities, the Company will issue the Debentures certificate(s)/credit the DP account of the allottees against surrender of the Letter(s) of Allotment within three month(s) of the Deemed Date of Allotment or such extended period, subject to obtaining the approvals, if any.
Basis of Allotment
The Company has the sole and absolute right to allot the Debentures to any applicant.
Right to Accept or Reject Applications
The Company is entitled at its sole and absolute discretion to accept or reject any application, in part or in full, without assigning any reason. Application Forms that are not complete in all respects shall be rejected at the sole and absolute discretion of the Company.
Dispatch of Refund Orders
The Company shall ensure dispatch of refund orders by registered post or by way of RTGS within seven working days from the Deemed Date of Allotment.
Loss of Interest Cheques/Refund Cheques
Loss of interest cheques/refund cheques should be intimated to the Company along with request for duplicate issue. The issue of duplicates in this regard shall be governed by applicable law and any other conditions as may be prescribed by the Company.
Interest on Application Money
If applicable, Interest at applicable coupon rate will be paid on the application money to the applicants. Such interest will be paid for the period commencing from the date of realization of the cheque(s)/demand drafts (s) /RTGS up to but excluding the Deemed Date of Allotment. The interest payable on application money will be credited within 3 Working Days after the Deemed Date of Allotment. The letters of Allotment/Allotment advice/refund orders, as the case may be, will be sent by registered post/courier/hand delivery within seven days from the Deemed Date of Allotment to the first/sole applicant, at the sole risk of the applicant. The payment will be subject to tax deducted at source at the rates prescribed under the provisions of the IT Act or any other statutory modification or re-enactment thereof.
Tax exemption certificates, if applicable, in respect of non-deduction of tax on interest on application money must be submitted along with the Application Form. It is clarified that interest shall not be paid on invalid and incomplete Application Forms.
Interest at the applicable coupon will be paid only to the Debenture holders registered in the Register of Debenture holders or to the Beneficial Owners. All the applications for transfer shall be accepted only at the Registered Office of the Company.
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In the case of joint holders of Debentures, interest shall be payable to the first named Debenture holder. For the purpose of registering a transfer of Debentures prior to the Record Date, the Debenture certificate(s)/Letter(s) of the Allotment, a duly stamped transfer deed and all supporting documents must reach the Company at its Registered Office at least seven Working Days before the Record Date. The provisions of the Depositories would be complied with by the Registrar for facilitating payment by the Company on the respective payment date.
Tax as applicable under the IT Act or any other statutory modification or re-enactment thereof will be deducted at source on the interest payable on the Debentures. Tax exemption certificate/document/form, under Section 193 of the IT Act if any, must be lodged at the Registered Office/Head office of the Issuer, at least 15 days before the relevant interest payment becoming due.
Computation of Interest
Interest for each of the interest periods shall be calculated, on 'actual/ actual' (actual/366 in case of a leap year) basis, on the face value of principal outstanding on the Debentures at the coupon rate rounded off to the nearest Rupee.
Redemption Schedule
Redemption schedule is mentioned below:
Particulars Redemption Dates Redemption Price per
Debenture
20% of the issue price 29 September 2021 INR 2,00,000
20% of the issue price 29 September 2022 INR 2,00,000
60% of the issue price 29 September 2023 INR 6,00,000
Payment on Redemption
Payment of the redemption amount of the Debentures will be made by the Company to the beneficiaries as per the beneficiary list provided by the Depositories as on the Record date. The Debentures shall be taken as discharged on payment of the redemption amount by the Company to the beneficiaries as per the beneficiary list. Such payment will be a legal discharge of the liability of the Company towards the Debenture holders. On such payment being made, the Company will inform the Depositories and accordingly the account of the Debenture holders with the Depositories will be adjusted. The Company’s liability to the Debenture holder in respect of all their rights including for payment or otherwise shall cease and stand extinguished after the maturity date, in all events save and except for the Debenture holder’s right of redemption as stated above. Upon dispatching the payment instrument towards payment of the redemption amount as specified above in respect of the Debentures, the liability of the Company shall stand extinguished and the Company shall request Debenture Trustee to issue No Due Certificate and release the Security.
Delay in Listing
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In case of delay in listing application of the Debentures beyond 20 days from the deemed date of allotment, the Company will pay penal interest of 1% pa over the coupon rate from the expiry of 30 days from the deemed date of allotment till the listing of such Debentures to the investor.
Splitting and Consolidation
Splitting and consolidation of the Debentures is not applicable in the demat mode since the saleable lot is one Debenture.
Power of Company to exercise right to re-purchase and/or re-issue the Debentures
The Company will have the power, exercisable at its sole and absolute discretion from time to time, to re-purchase a part or all of its Debentures from the secondary markets, at any time prior to the Maturity date, subject to applicable law and in accordance with the prevailing guidelines/regulations issued by the RBI, the SEBI and other authorities. In the event of a part or all of its Debentures being repurchased as aforesaid or redeemed under any circumstances whatsoever, the Company shall have, and shall be deemed always to have, the power to reissue the Debentures either by reissuing the same Debentures or by issuing other debentures in their place. Further, in respect of such re-purchased/re-deemed Debentures, the Company shall have the power, exercisable either for a part or all of those Debentures, to cancel, keep alive, appoint nominee(s) to hold or reissue at such price and on such terms and conditions as it may deem fit and as permitted by law.
Eligible Holders and Mode of Transfer
The title to the Debentures shall pass by execution of duly stamped transfer deed(s) accompanied by the Debentures certificate(s) together with necessary supporting documents. The transferee(s) should deliver the Debenture certificates to the Company for registration of transfer in the Register of Debenture holders at the Registered Office. The Company on being satisfied will register the transfer of such Debentures in its Register of Debenture holders. The person whose name is recorded in the Register of Debenture holders shall be deemed to be the owner of the Debenture
Debentures
Request for registration of transfer, along with the necessary documents, and all other communications, requests, queries and clarifications with respect to the Debentures should be addressed to and sent to the Registered Office of the Company. No correspondence shall be entertained in this regard at any other branches or any of the offices of the Company. In the event the Debentures are issued in physical form, the Company shall use a common form of transfer.
The request from Registered Debenture holder(s) for splitting/consolidation of Debenture certificates will be accepted by the Company only if the original Debentures certificate(s) is/are enclosed along with an acceptable letter of request. No requests for split below the market lot will be entertained.
Transfer of debentures in dematerialized form would be in accordance to the rules/procedures as prescribed by the Depositories.
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Permission/ Consent from Prior Creditors
The Company hereby confirms that it is entitled to raise money through current issue of Bonds without the consent/ permission/ approval from the Bondholders/ Trustees/ Lenders/ other creditors of the Company.
Future Borrowings
The Company shall be entitled to borrow/ raise loans or avail of financial assistance in whatever form and also issue Debentures / Notes / other securities in any manner and to change its capital structure without the consent of Debenture holders/Debenture Trustee.
Further, the Company shall not be required to obtain debenture holders/ debenture trustee consent for creating pari passu charge on the assets for further borrowings. There are no restrictions on any further borrowings by the Company.
Succession
In the event of demise of a Registered Debenture holder being an Individual, the Company will recognize the executor or administrator of the demised Registered Debenture holder or the holder of succession certificate or other legal representative of the demised Registered Debenture holder as the Registered Debenture holder of such Debentures, if such a person obtains probate or letter of administration or is the holder of succession certificate or other legal representation, as the case may be, from a court in India having jurisdiction over the matter and delivers a copy of the same to the Company. The Company may in its absolute discretion, where it thinks fit, dispense with the production of the probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Debentures standing in the name of the demised Debenture holder(s) on production of sufficient documentary proof or indemnity. In case of joint holders, on demise of the first holder, the surviving joint holder shall be recognized as the Registered Debenture holder of such debentures on production of death certificate of the demised Debenture holder. In case a person other than individual holds the Debentures, the rights in the Debentures shall vest with the successor acquiring interest therein, including liquidator or any such person appointed as per the applicable law.
Issue of Duplicate Debenture Certificates
If any Debenture certificate(s) is/are mutilated or defaced, then, upon production of such certificates at the Registered Office, the same will be cancelled and a new Debenture certificate will be issued in lieu thereof. If any Debenture certificate is lost, stolen or destroyed then, upon production of proof thereof to the satisfaction of the Company and upon furnishing such indemnity as the Company may deem adequate and upon payment of any expenses incurred by the Company in connection thereof, new certificate(s) shall be issued.
Notices
The Company agrees to send notice of all meetings of the Debenture holders specifically stating that the provisions for appointment of proxy as mentioned in Section 105 of the Companies Act, 2013 shall be applicable for such meeting. The notices, communications and writings to the
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Debenture holder(s) required to be given by the Company shall be deemed to have been given if sent by registered post to the Registered Debenture holder(s) at the address of such Debenture holder(s) registered with the Registered Office of the Company.
All notices, communications and writings to be given by the Debenture holder(s) shall be sent by registered post or by hand delivery to the Company at its Registered Office or to such persons at such address as may be notified by the Company from time to time and shall be deemed to have been received on actual receipt of the same.
Rights of Debenture holders
The Debenture holder(s) shall not be entitled to any right and privileges of shareholders other than those available to them under the Act. The Debentures shall not confer upon the holders the right to receive notice(s) or to attend and to vote at any general meeting(s) of the shareholders of the Company.
Modifications of Rights
The rights, privileges, terms and conditions attached to all Debentures may be varied, modified or abrogated with the consent, in writing, of those holders of the Debentures who hold at least three-fourths of the outstanding amount of Debentures or with the sanction accorded pursuant to a resolution passed at a meeting of the Debenture holders, carried by a majority consisting of not less than three-fourths of the persons voting there upon a show of hands or, if a poll is demanded by a majority representing not less than three-fourths in value of the votes cast on such poll, provided that nothing in such consent or resolution shall be operative against the Company if the same are not accepted in writing by the Company.
Debenture Redemption Reserve (“DRR”)
In accordance with Section 71 of the Act and applicable rules and notifications thereafter, the company would not be crediting/transferring any amount to DRR in respect of the proposed Debenture issue.
Issue/Instrument specific Legislations
(a) Companies Act, 2013 and all rules and regulations framed thereunder
(b) Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 (as amended from time to time)
(c) Listing agreement with BSE for listing of privately placed Debentures
(d) Securities Contracts (Regulation) Act, 1956
(e) Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement), 2015
Governing Laws and Jurisdiction
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The Debentures are governed by and will be construed in accordance with the Indian law. The Company, the Debentures and Company’s obligations under the Debentures shall, at all times, be subject to the directions of the RBI and the SEBI. The Debenture holders, by purchasing the Debentures, agree that the Mumbai Courts shall have exclusive jurisdiction with respect to matters relating to the Debentures.
Effect of Holidays
If any Coupon Payment Date (except coupon falling due on Redemption Date) falls on a day that is not a Business day, the payment shall be made by the Issuer on the immediately succeeding Business Day and the interest amount will be interest accrued on the NCD’s until but excluding the Coupon payment date originally stipulated. However, the next interest period will continue to commence from the Coupon Payment Dates original stipulated.
If the Redemption Date (also being the last Coupon Payment Date) of the NCD’s falls on a day that is not a Business Day, the redemption proceeds shall be paid by the Issuer on the immediately preceding Business Day along with the interest accrued on the Bonds until but excluding the date of such payment.
In the event the Record Date falls on a day which is not a Business Day, the immediately preceding Business Day will be considered as the Record Date.
Tax Deduction at Source
Tax as applicable under the IT Act or any other statutory modification or re-enactment thereof will be deducted at source on the interest payable on the Debentures. Tax exemption certificate/document/form, under Section 193 of the IT Act if any, must be lodged at the Registered Office of the Issuer, at least 15 days before the relevant interest payment becoming due. Tax exemption certificate / declaration of non-deduction of tax at source on interest on application money, should be submitted along with the application form.
The Issuer shall be entitled to deduct appropriate taxes or other deductions as required to be withheld on the redemption amount or any other Debenture payments at the rates prevailing from time to time under the provisions of the IT Act or any other law, or any other statutory modification or re-enactment thereof. In case any Debenture holder wishes to avail a lower rate of withholding tax pursuant to the provisions of any tax treaty entered into by India with the country of residence of such Debenture holder, then such Debenture holder shall need to provide an appropriate representation / documentation to the satisfaction of the Issuer for claiming a lower rate of withholding tax under the respective tax treaty.
Record Date
The record date shall be 15 Days before each relevant payment date(s) including interest payments and /or principal repayments / payments on redemption for determining the beneficiaries of the Debentures.
In case the Record Date/Book Closure Date falls on Sunday/Saturday/Holiday, the working day prior to the said Sunday/Saturday/Holiday will be considered as the record date/book closure date.
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Other regulatory and statutory disclosures
Disclaimer in respect of Jurisdiction
This Issue is made in India to investors as specified under clause “Who Can Apply” of this Private Placement Offer Letter / Disclosure Document, who shall be specifically approached by the Company. This Private Placement Offer Letter / Disclosure Document does not constitute an offer to sell or an invitation to subscribe to Debentures offered hereby to any person to whom it is not specifically addressed. Any disputes arising out of this Issue will be subject to the exclusive jurisdiction of the courts of Mumbai. This Private Placement Offer Letter / Disclosure Document does not constitute an offer to sell or an invitation to subscribe to the Debentures herein, in any other jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction.
Company Disclaimer Clause
The Company certifies that the disclosures made in this Private Placement Offer Letter / Disclosure Document are generally adequate and in conformity with the SEBI Regulations. Further, the Company accepts no responsibility for statements made otherwise than in the Private Placement Offer Letter / Disclosure Document or any other material issued by or at the instance of the Company and anyone placing reliance on any source of information other than this Private Placement Offer Letter / Disclosure Document would be doing so at his own risk.
Issue of Debentures in Dematerialized Form
The Debentures will be issued in dematerialized form. The Company has made arrangements with the Depositories for the issue of the Debentures in dematerialised form. Investors will have to hold the Debentures in dematerialised form as per the provisions of The Depositories Act, 1996. The Depository Participant’s name, DP-ID and beneficiary account number must be mentioned at the appropriate place in the Application Form. The Company shall take necessary steps to credit the Debentures allotted to the depository account of the investor.
The Company will make the Allotment to investors on the Deemed Date of Allotment after verification of the Application Form, the accompanying documents and on realisation of the application money.
Transferability of Debentures
The Debentures shall be freely transferable subject to applicable law. Further, any dispute in regard to the sale, transfer or assignment of any Debentures or in respect to any principal/interest claim, shall be settled between the transferor(s) and the transferee(s), and the Company shall not be liable in this regard in any manner, whatsoever.
Debentures held in electronic form (dematerialized) form shall be transferred subject to and in accordance with the rules / procedures as prescribed by the NSDL or CDSL / depository participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The consent letter of Axis Trustee Services Limited is annexed hereto as Annexure V”
The rating rationale(s) adopted / credit rating letter issued by the rating agencies shall be
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disclosed
The NCDs are rated by CRISIL as “CRISIL AAA/Stable” (CRISIL Triple A rating with stable outlook. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such Instruments carry very low credit risk.
Please note that the rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating may be subject to revision or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The rating obtained is subject to revision at any point of time in the future. The rating agencies have a right to suspend, withdraw the rating at any time on the basis of new information etc.
The rating letter along with rating rationale as released by Rating Agency is attached at the end of this document.
A statement containing particulars of the dates of, and parties to all material contracts, agreements involving financial obligations of the issuer
Material Contracts - By very nature and volume of its business, the Company is involved in a large number of transactions involving financial obligations and therefore it may not be possible to furnish details of all material contracts and agreements involving financial obligations of the Company. However, the contracts referred to in Para A below (not being contracts entered into in the ordinary course of the business carried on by the Company) which are or may be deemed to be material have been entered into by the Company. Copies of these contracts together with the copies of documents referred to in Para B may be inspected at the Registered Office of the Company between 10.00 a.m. and 2.00 p.m. on any working day until the issue closing date
Para A:
(f) Letter appointing Registrar and Transfer Agents and copy of MoU entered into between the Company and the Registrar.
(g) Letter appointing Axis Trustee Services Limited as Trustees to the Debenture Holders.
Para B: Documents
(a) Memorandum and Articles of Association of the Company, as amended from time to time.
(b) Credit Rating Letters for the current Placements. (c) Letter from BSE conveying its in-principle approval. (d) Board Resolution approving the proposed private placement. (e) Committee of Directors Resolution for Issue and allotment of debentures (f) Consent letters of the Trustees to the Debenture holders. (g) Annual Reports of the Company for the last three years. (h) Auditor’s Report in respect of the Financials of the Company.
Name of the Recognized stock exchange where securities are proposed to be listed
The securities redeemable Non-Convertible debentures are proposed to be listed on the Bombay
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Stock Exchange (BSE), designated stock exchange. In-principal approval from the stock exchange has been obtained.
Details of utilization of the issue proceeds
Reimbursement of capex (including sustaining capex) and/or capex (including sustaining capex) over a period of next 12 months and/or payment of operational creditors and/or augmentation of cash reservesProceeds of the issue may be utilised for repayment / prepayment of existing debt, various capex / operational payments and for general corporate purposes.
The funds will be used for purposes permitted by RBI for Bank Finance. Issuer undertakes not to use proceeds, either in part of full, for investment in any capital market, real estate, on lending, speculative purposes and other activities not permitted by Government / SEBI / RBI / Other regulatory guidelines for Bank Finance.Issue proceeds will not be used for acquisition of Land or for investing in Capital Markets or any speculative activity.
10. DISCLOSURES PERTAINING TO WILFUL DEFAULT
a. Name of the Bank declaring the entity as a willful defaulter: NIL b. The year in which the entity is declared as a willful defaulter: N.A. c. Outstanding amount when the entity is declared as a willful defaulter: N.A. d. Name of the entity declared as a willful defaulter: N.A. e. Steps taken, if any, for the removal from the list of willful defaulters: N.A. f. Other disclosures, as deemed fit by the Issuer in order to enable investors to take informed
decisions: N.A. g. Any other disclosure as specified by SEBI: N.A.
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ANNEXURE I – TERM SHEET
# THE ISSUER RESERVES THE RIGHT TO CHANGE THE ISSUE CLOSING DATE AND IN SUCH AN EVENT, THE DATE OF ALLOTMENT FOR THE DEBENTURES MAY ALSO BE REVISED BY THE ISSUER AT ITS SOLE AND ABSOLUTE DISCRETION. IN THE EVENT OF ANY CHANGE IN THE ABOVE ISSUE PROGRAMME, THE ISSUER WILL INTIMATE THE INVESTORS ABOUT THE REVISED ISSUE PROGRAMME
Security Name HZL 5.35% 2023 Unsecured , Redeemable, Rated, Listed, Non-Convertible Debentures
Issuer/Company Hindustan Zinc Limited (“Issuer”/”Company”)
Sole Arranger HDFC Bank Limited
Type of Instrument Unsecured , Redeemable, Rated, Listed, Non-Convertible Debentures (“NCDs”/”Debentures”)
Nature of Instrument Unsecured
Seniority At par with other unsecured facilities of the company
Mode of Issue Private Placement under electronic book mechanism of BSE under SEBI Circular ref SEBI/HO/DDHS/CIR/P/2018/122 dated August 16, 2018 read with “Operational Guidelines for issuance of Securities on Private Placement basis through an Electronic Book Mechanism” issued by BSE vide their Notice No. 20180928-24 dated September 28, 2018 and/ or any subsequent guidelines as may be issued by BSE from time to time, in this regard.
The Issue will be through open book bidding on the EBP platform in line with EBP Guidelines vide SEBI circular SEBI/HO/DDHS/CIR/P/2018/122 dated August 16, 2018.
Eligible Investors/ Eligible Participants
All QIBs, and any non-QIB Investors specifically mapped by the Issuer on the BSE BOND – EBP Platform, are eligible to bid / invest / apply for this Issue.
All participants are required to comply with the relevant regulations/ guidelines applicable to them for investing in this Issue.
Listing (including name of stock market where it will be listed and timeline of listing)
Proposed to be listed on the WDM of the BSE.
Listing application shall be filed with BSE within 15 days from the Deemed Date of Allotment.
Delay in Listing In case of delay in listing of the NCDs beyond 20 days from the Deemed Date of Allotment, the Issuer will pay a penal interest of at least 1% p.a.
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over the Coupon Rate from the expiry of 30 days from the Deemed Date of Allotment till the listing of such NCDs to the investor.
Rating of the Instrument ‘CRISIL AAA/ Stable’ by CRISIL
Issue Size Upto 30000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of Rs. 10,00,000/- (Rupees Ten Lakhs Only) each upto Rs. 3000,00,00,000/- (Rupees Three Thousand Crores Only) with an option to retain oversubscription up to 10000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of face value INR 10,00,000 each aggregating to a total issue size of Rs. 4000,00,00,000/- (Rupees Four Thousand Crores Only)
Base Issue Size Upto 30000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of Rs. 10,00,000/- (Rupees Ten Lakhs Only) each upto Rs. 3000,00,00,000/- (Rupees Three Thousand Crores Only).
Option to retain oversubscription
The Issuer has an option to retain oversubscription up to 10000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of face value INR 10,00,000 each aggregating to Rs. 1000,00,00,000/- (Rupees One Thousand Crores Only) over and above the Base Issue Size.
Objects of the Issue and Utilization of Proceeds
The objects of the issue are reimbursement of capex (including sustaining capex) and/or capex (including sustaining capex) over a period of next 12 months and/or payment of operational creditors and/or augmentation of cash reserves. The funds will be used for purposes permitted by RBI for Bank Finance. Issuer undertakes not to use proceeds, either in part of full, for investment in any capital market, real estate, on lending, speculative purposes and other activities not permitted by Government / SEBI / RBI / Other regulatory guidelines for Bank Finance.
Coupon Rate 5.35% per annum
Accelaration Event/Step Up/ Step Down Coupon Rate
i) Upon occurrence of any of the following events (Acceleration Events), the Debenture Holders will have the right to recall the Outstanding Amount on the NCDs:
a) Credit rating of the Issuer / Debentures issued by the Issuer falls to “AA-” or any lower rating by any rating agency (In case of Credit Rating from multiple rating agencies, lowest rating available shall be considered for the above purpose.)
b) Withdrawal / Suspension of long term credit rating of Instrument which causes the Instrument to become unrated.
c) If the Debentures become unlisted
Upon happening of any Acceleration Event, any of the Debenture holders shall have the option to require the Company to redeem their respective Debentures, and, the Trustee shall issue the Early
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Redemption Notice based on the instructions from such Debenture holders. Upon issue of the Early Redemption Notice by the Trustee, the Company shall promptly, but not later than 15 (fifteen) business days (excluding the date of early redemption notice by Trustee) from the date of the Early Redemption Notice, redeem the respective Debentures and shall repay the outstanding principal amounts of the such Debentures to the relevant Debenture holders at whose instance the Early Redemption Notice is issued, along with all accrued Interest and any dues, if applicable.
ii) In the event of a rating downgrade of the Issuer / Debentures issued by the Issuer by any rating agency the coupon will be increased by 0.25 % p.a. for every notch rating downgrade. . (In case of Credit Rating from multiple rating agencies, lowest credit rating available shall be considered for the above purpose.)
iii) In the event a rating downgrade of the issuer / debentures issued by the issuer by any rating agency falls to “AA-“ or any lower ratings by any rating agency (In case of Credit Rating from multiple rating agencies, lowest rating available shall be considered for the above purpose.) and Debenture Holder subscriber chooses not to accelerate then the Coupon on the NCDs shall be increased by 0.25% p.a.for every notch rating downgrade as mentioned in clause (ii) above.
The increased Coupon Rate shall be effective on and from the date on which the downgrade / assignment of new rating occurs-by any of the rating agencies.
Provided that if at any time after the increase in Coupon Rate as set out hereinabove, the credit rating assigned to the Issuer / Debentures issued by the Issuer is revised upwards (reversing the earlier downgrade), the Coupon Rate for the Debentures, shall stand to be reduced by 0.25% p.a. for each such notch of upgrade of the credit rating of the Company / Debentures of the Company as it was increased for that notch downgrade in the credit rating, subject to the Coupon Rate not reducing below the original Coupon Rate.
At all times, the revised Coupon Rate shall apply on and from the date of such revision in credit rating.
For the avoidance of doubt, it is hereby clarified that the revision of Coupon Rate as aforesaid shall be determined on the basis of the lowest credit rating assigned by the Rating Agencies.
Coupon Payment Frequency
Annual
Coupon payment dates Wednesday, 29th September 2021.
Thursday, 29th September 2022.
Friday, 29th September 2023.
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Coupon Type Fixed
Coupon Reset Process Refer “Acceleration Event / Step Up/Step Down Coupon Rate” clause
Day Count Basis Actual/Actual
Interest payable on the NCD’s will be calculated on the basis of actual number of days elapsed in a year of 365 or 366 Days as the case may be.
Interest on Application Money
N.A
Additional Interest Amounts unpaid on due date will attract default rate at 2.00% per annum, from the date on which such payment is actually due to the date on which the relevant overdue amounts are repaid.
In case of delay in execution of the Debenture Trust Deed or other Transaction Documents, Issuer will pay additional interest (over and above the Coupon payable) at the rate of 2% p.a. of the principal amounts outstanding in respect of the Debentures till these conditions are complied with.
In case of delay in listing of debt securities beyond 20 days from Deemed Date of Allotment, the Issuer shall pay additional interest (over and above the Coupon payable) at the rate of 1% p.a. of the principal amounts outstanding in respect of the Debentures from expiry of 30 (Thirty) calendar days from the Deemed Date of Allotment till the listing of such debt securities.
Any breach of covenants / undertakings / conditions under the Transaction Documents will attract default rate at 2.00% per annum, from the date on which such breach has occurred till the breach is cured or the NCDs are redeemed fully, whichever is earlier.
The default interest payable by the Issuer shall be required to be paid on the immediately succeeding Coupon Payment Date.
Tenor Door to Door tenor 3 Years from the Date of Allotment
Redemption Date i. 20% i.e. Rs. 2, 00,000 per Debenture at the end of 1 year from the date of allotment ie. on Wednesday, 29th September 2021.
ii. 20% i.e. Rs. 2, 00,000 per Debenture at the end of 2 years from the date of allotment ie. on Thursday, 29th September 2022.
iii. 60% i.e. Rs. 6, 00,000 per Debenture at the end of 3 years from the date of allotment ie. on Friday, 29th September 2023.
Redemption Amount and Price
At Par. NCDs shall be redeemed as follows:
i. 20% i.e. Rs. 2, 00,000 per Debenture at the end of 1 year from the date of allotment ie. on Wednesday, 29 September 2021.
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ii. 20% i.e. Rs. 2, 00,000 per Debenture at the end of 2 years from the date of allotment ie. on Thursday, 29 September 2022.
iii. 60% i.e. Rs. 6, 00,000 per Debenture at the end of 3 years from the date of allotment ie. on Friday,29 September 2023.
Redemption Premium/Discount
N.A
Issue Price At par i.e. Rs. 10,00,000 per NCD
Discount at which security is issued and the effective yield as a result of such discount
N.A
Put Date N.A
Put Event N.A.
Put Option N.A
Put Price N.A
Call Date Refer Call Option clause below
Call Event The Credit Rating of the Debentures falls below AAA.
Call Option In case rating of the NCDs falls below AAA, issuer shall have the right but not the obligation to have the outstanding NCDs redeemed at Par alongwith accrued interest and and any other dues, if applicable. The issuer shall provide notice within but not later than 7 Business Days from the date of such rating downgrade. If the Issuer provides such a notice, then Company shall redeem such NCDs within 30 Business Days from the date of such notice.
Call Price At Par
Put Notification Time N.A
Call Notification Time N.A
Face Value Rs. 10 Lakh / NCD
Minimum Application and in multiples of Debt Securities thereafter
1 NCD and in multiples of 1 NCDs thereafter
Issue Timing
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1. Issue Opening Date
2. Issue Closing Date
3. Pay-in Date
4. Deemed Date of Allotment
28 September 2020
28 September 2020
29 September 2020
29 September 2020
Issuance mode of the Instrument
Demat only. The Issuer will issue the Debentures in dematerialized form in line with EBP Guidelines vide SEBI circular SEBI/HO/DDHS/CIR/P/2018/122 dated August 16, 2018 read with the “Updated Operational Guidelines for issuance of Securities on Private Placement basis through an Electronic Book Mechanism” issued by BSE vide notice no. 20180928-24 dated 28 September 2018 as amended.
Trading mode of the Instrument
Demat only.
Settlement mode of the Instrument
Settlement of the Issue will be done through Indian Clearing Corporation Limited (ICCL) and the account details are given in the Annexure X of this Disclosure Document
Depository(ies) NSDL/ CDSL
Business Day Convention
If the Redemption Date of the NCDs falls on a day that is not a Business Day, the redemption proceeds shall be paid by the Issuer on the immediately preceding Business Day along with interest accrued on the NCDs until but excluding the payment Date. If the Coupon payment date of the NCDs falls on a day that is not a Business Day, the Coupon shall be paid by the Issuer on the immediately succeeding Business Day. In the event the Record Date falls on a day which is not a Business Day, the immediately preceding Business Day will be considered as the Record Date, in accordance with the SEBI Circular No. CIR/IMD/DF/18/2013 dated October 29, 2013 and SEBI Circular No. CIR/IMD/DF-1/122/2016 dated 11th November 2016 as amended from time to time would be applicable.
Record Date The record date for the repayment of Principal shall be 15 (fifteen) calendar days prior to the date of redemption of such Debentures.
Form of issuance Dematerialized
Security Not Applicable. Unsecured.
Transaction Documents The Issuer has executed/shall execute the documents including but not limited to the following in connection with the issue:
1. Signed Disclosure Document / Letter complying with applicable SEBI regulations & certified by Issuer
2. Debenture Trustee Agreement and Trustee’s consent letter
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3. Debenture Trust Deed
4. Rating letter and rationale (Rating letter not older than 1 month and rationale not older than 6 months)
5. Board resolution and other corporate authorizations as may be applicable from the Issuer as per the provisions of Companies Act, 2013
6. Application form
7. Any other documents as required by the Arranger and the Debenture Trustee
Default in Payments In case of default in payment of Interest and/or principal redemption on the due dates, additional interest of atleast @ 2% p.a. over the coupon rate shall be payable by the Company for the defaulting period.
In case of delay in listing beyond 20 days from the Deemed Date of Allotment, the Issuer shall pay penal interest of 1% (one per cent) p.a. over the Coupon Rate to the Debenture Holders for the delayed period i.e. from the expiry of 30 days from the Deemed Date of Allotment till the listing of Debentures.
Conditions Precedent to Disbursement
Customary to facilities of this nature, at least one day before the Pay-in Date, the Issuer shall provide documents in form and substance satisfactory to the Debenture Trustee, including but not limited to:
1. The Issuer shall have obtained all necessary board/ shareholder resolutions under the provisions of the Companies Act, 2013 as are required in relation to the borrowing powers, issue of the NCDs and the execution of necessary documents in connection therewith.
2. Rating letters from CRISIL not being more than one month old from the issue opening date and rating rationale not older than 6 months from the issue opening date
3. Signed copy of Disclosure Document / Letter complying with applicable SEBI regulations & certified by Issuer
4. Consent letter from the Debenture Trustee
5. Any other conditions as the debenture holder(s) and/or the Debenture Trustee may require
6. In-principle approval from exchange to list the NCDs
7. Confirmation of payment of the stamp duty on debentures, by the Issuer to the concerned depository, as applicable for the place of execution of the Debenture Trust Deed
8. Undertaking from the Company:
• Stating that no Event of Default has occurred and is continuing.
• Stating that the funds will be used as per “Objects of the Issue and
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Utilization of Proceeds” clause of the term sheet.
• Stating that no Material Adverse Effect has occurred / is existing and there are no circumstances existing which could give rise, with the passage of time or otherwise, to Material Adverse Effect
Conditions Subsequent to Disbursement
The Issuer shall ensure that the following documents are executed/activities are completed as per agreed time frame:
1. Credit of demat account(s) of the investor(s) by NCDs allotted within 2 working days from the Date of Allotment;
2. Making listing application to Stock Exchange within 15 days from the Deemed Date of Allotment of Bonds;
3. The Issuer shall provide a copy of the executed and registered trust deed (to the satisfaction of the investors) to the investors and arrangers not later than 60 days from the Deemed Date of Allotment.
4. Submit certificate from practicing independent chartered accountant certifying that the funds have been utilized for the purposes as per clause “Objects of the Issue and Utilization of Proceeds”
5. Comply with all regulatory requirements
Besides, the Issuer shall perform all activities, whether mandatory or otherwise, as mentioned elsewhere in this Disclosure document.
Other Covenants The Issuer shall take prior written approval/consent/NOC by the Debenture Trustee acting on instructions from Majority Debenture Holders (which will be construed as at least 75% of the outstanding value under this issue. For the sake of clarity, this will be calculated exclusive of amounts mobilized through future re-issuance of the ISIN of the NCDs under these Debentures, if any) before undertaking any kind of delisting, merger, demerger , amalgamation, takeover or acquisition of the issuer, reconstruction, reorganization, consolidation etc.
Restricted Payment Condition
The Issuer will not declare any dividend on its share capital or pay interest on loans / quasi equity from Promoters, associate companies and/or strategic investors
a) If the Issuer fails to meet its obligations to pay interest and/or installments and/or other monies due to the debenture holders which shall have become due and as long as it is in such default; or
b) If an Event of Default has occurred and is continuing; or
c) Issuer is not in compliance of the Covenants as applicable to this issuance; or
The compliance to the Restricted Payment Conditions shall be certified by the Debenture Trustee.
Events of Default Each of the following shall constitute an “Event of Default” with respect to
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the Debentures and shall be set out in the Transaction Documents which shall include events customary to transactions of this nature, including but not limited to:
1. Default shall have occurred in the redemption of the Debentures as and when the same shall have become due and payable. Provided further that default in redemption due to technical reasons like system failure, unavailability of payment Systems shall be cured within a period of three business days.
2. Default by the Company in the payment of any installment of interest or the Principal amount of the Debentures. Provided further that default in redemption due to technical reasons like system failure, unavailability of payment systems shall be cured within a period of three business days.
3. Default shall have occurred in the performance of any other covenants, Undertakings, conditions or agreements on the part of the Company under the Transaction Documents.
4. If (i) the Company is unable to or admits in writing its inability to pay its debts as they mature, (ii) if any creditor proceedings for taking it into corporate resolution process or liquidation which is not dismissed on grounds of technicality or withdrawn by the applicant within 10 days of the application (not including any extension, express or implied in the hearing of a matter by any change in the cause-list).
5. Any information given by the Company in the Disclosure Documents/Information Memorandum, the Transaction Documents and/or other information furnished and/or the representations and warranties given/ by the Company to the Debenture-holder(s) / Beneficial Owner(s) for financial assistance by way of subscription to the Debentures is or proved to be misleading or incorrect in any Material respect or is found to be incorrect.
6. The Company shall have voluntarily become the subject of proceedings under Bankruptcy or insolvency law.
7. A receiver or liquidator, interim resolution professional or resolution professional is appointed or allowed to be appointed for all or substantially all part of the undertaking of the Company.
8. The Company ceases or threatens to cease to carry on its business or gives notice of its intention to do so.
9. The Company enters into any arrangement or composition with its creditors or commits any act of insolvency or any other act, the consequence of which may lead to the insolvency or winding up of the Company.
10. It is or becomes unlawful for the Company to perform any of its obligations under any Transaction Document which could have a Material Adverse Effect.
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11. Any Material Adverse Effect has occurred and/ or is subsisting.
12. If the transactions contemplated under this NCD Issue become illegal or unlawful or unenforceable, or if any of the documents entered into in relation to the Debentures or any part thereof ceases, for any reason, to be valid and binding or in full force and effect;
13. Termination of Transaction Documents.
14. The Issuer is included in RBI's willful defaulters
In case of event of default, Debenture holders / Debenture Trustees may
1. Accelerate the redemption of NCDs
2. Initiate recovery proceedings / exercise rights available to recover the outstanding amounts.
3. Exercise any rights available under the Transaction Documents; and
4. Exercise such other rights as may be available to the Debenture Trustee under Applicable Law.
Provisions related to Cross Default Clause
NA
Interest Tax, Service Tax, levies and duties
All rates of interest and other charges to be made by the Company as mentioned herein are exclusive of GST and/or any such levies/duties Such GST, other levies/duties, if any applicable (excluding Income tax), shall be payable by the Issuer to the investor over and above the rates mentioned hereinabove.
Income Tax or such other tax as may be required to be deducted at source under the Income Tax Act or any other applicable Act/Rules shall be deducted from the Interest payable by the company.
Clear Market Clause The Issuer undertake that it will not announce, raise or enter into discussions to raise or attempt to raise any finance from the market, by the way of Debentures from the date of acceptance of this offer till 30 days from the Deemed Date of Allotment
Material Adverse Effect “Material Adverse Effect” means an event, circumstance, occurrence or condition which has caused, as of any date of determination, or could reasonably be expected to cause a material adverse effect on or a material adverse change in the sole judgment of Trustee, acting on the instructions of the Majority Debenture Holders in (a) the financial condition, business or operation of the Issuer, environmental, social or otherwise or prospects of the Issuer; (b) the ability of the Company to enter into and to perform its obligations under Transaction Documents or any other related document to which Company is or will be a party; or (c) the validity or enforceability of the Transaction Documents or any other related document or the rights or remedies of the Debenture Holder(s)
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thereunder;
Other Expenses Any expenses that may be incurred towards executing of this transaction including NCD issuance, , custodial services, payment of stamp duty, EBP fees, fees for legal, accounting, due diligence and others shall be borne by the Issuer.
Role and Responsibilities of Debenture Trustee
The Debenture Trustee shall have the roles and responsibilities as set forth in Debenture Trust Agreement and Debenture Trust Deed.
Governing Law and Jurisdiction
Indian laws and courts / tribunals of Mumbai
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ANNEXURE II – DECLARATION
85
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ANNEXURE III – RATING LETTER AND RATING RATIONALE
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89
90
91
92
93
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ANNEXURE IV – CONSENT LETTER FROM THE DEBENTURE TRUSTEE
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ANNEUXRE V – BSE IN PRINCIPAL FOR LISTING
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ANNEXURE VI: AUDITED FINANCIAL STATEMENTS
1. Audited Financial Statements for the year ended 31st March 2020
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98
99
100
2. Audited Financial Statements for the year ended 31st March 2019
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102
103
104
3. Audited Financial Statements for the year ended 31st March 2018
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106
107
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ANNEXURE VII: SUMMARY FINANCIAL POSITION (AUDITED)
Please note that the summary of financial position for the last three years and for the period ended March 31, 2020 is contained on the following pages of the audited financial statements of the Issuer, which has been circulated along with this Information Memorandum:
Financial Year Summary of Financial Position
For the period ended March 31, 2020 Page Number 96
2019-20 Page Number 100
2018-19 Page Number 104
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ANNEXURE VIII: INDICATIVE CASHFLOW SCHEDULE
Issuer Hindustan Zinc Limited
Face Value (per security) 10,00,000/-
Issue Date/Deemed Date of Allotment 29 September 2020
Redemption Date i. 20% i.e. Rs. 2, 00,000 per Debenture at the end of 1 year from the date of allotment ie. on 29 September 2021.
ii. 20% i.e. Rs. 2, 00,000 per Debenture at the end of 2 years from the date of allotment ie. on 29 September 2022.
iii. 60% i.e. Rs. 6, 00,000 per Debenture at the end of 3 years from the date of allotment ie. on 29 September 2023.
Redemption Premium NA
Day Count Convention If the Redemption Date of the NCDs falls on a day that is not a Business Day, the redemption proceeds shall be paid by the Issuer on the immediately preceding Business Day along with interest accrued on the NCDs until but excluding the payment Date. If the Coupon payment date of the NCDs falls on a day that is not a Business Day, the Coupon shall be paid by the Issuer on the immediately succeeding Business Day. In the event the Record Date falls on a day which is not a Business Day, the immediately preceding Business Day will be considered as the Record Date.
SEBI Circular No. CIR/IMD/DF/18/2013 dated October 29, 2013 and SEBI Circular No. CIR/IMD/DF-1/122/2016 dated 11th November 2016 as amended from time to time would be applicable.
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CASH FLOW SCHEDULE*
If the Debentures are redeemed on the Schedule Redemption Date:
Cash Flows Dates of Actual Cash Flows
Dates For Calculation of Cash Flows
No. of Days in Coupon Period ( For Calculation of Amount)
Amount (Rs.) Per NCD of Face Value Rs. 10 lakh
1st Interest Payment Wednesday-29-Sep-2021
Wednesday-29-Sep-2021
365 53,500
2nd Interest Payment Thursday-29-Sep-2022
Thursday-29-Sep-2022 365 42,800
3rd Interest Payment Friday-29-Sep-2023
Friday-29-Sep-2023 365 32,100
1st Principal Payment Wednesday-29-Sep-2021
200,000
2nd Principal Payment Thursday-29-Sep-2022
200,000
3rd Principal Payment Friday-29-Sep-2023
600,000
* Note: The above-mentioned cash flows are illustrative and indicative. The actual due dates and the cash flow will be in accordance with the circular bearing reference number CIR/IMD/DF-1/122/2016 dated November 11, 2016 issued by SEBI, as modified, amended or supplemented from time to time. The cash flow schedule is for the entire Issue Size of INR 4000 crores (including the Base Issue and the oversubscription).
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ANNEXURE IX– COPY OF THE BOARD RESOLUTION AND THE COMMITTEE OF DIRECTORS RESOLUTION
112
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ANNEXURE X- OTHER INFORMATION AND APPLICATION PROCESS
The Debentures being offered as part of the Issue are subject to the provisions of the Act, the Memorandum and Articles of Association of the Issuer, the terms of this Disclosure Document, Application Form and other terms and conditions as may be incorporated in the Transaction Documents.
Mode of Transfer/ Transmission of Debentures
The Debentures shall be transferable freely. The Debenture(s) shall be transferred and/or transmitted in accordance with the applicable provisions of the Act and other Applicable Laws. The Debentures held in dematerialized form shall be transferred subject to and in accordance with the rules/procedures as prescribed by the Depository and the relevant DPs of the transferor or transferee and any other Applicable Laws and rules notified in respect thereof. It would be the responsibility of the Investors to ensure that they sell the Debenture in strict accordance with the terms and conditions of this Information Memorandum and Applicable Laws, so that the sale does not constitute an offer for sale to the public within the meaning of the Companies Act. The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, amounts due will be paid/redemption will be made to the person, whose name appears in the register of debenture holders maintained by the Registrar & Transfer Agent as on the Record Date, under all circumstances. In cases where the transfer formalities have not been completed by the transferor, claims, if any, by the transferees would need to be settled with the transferor(s) and not with the Issuer. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Debentures held in dematerialised form. The seller should give delivery instructions containing details of the buyer’s DP account to his DP.
Debentures held in Dematerialised Form
The Debentures shall be held in dematerialised form and no action is required on the part of the Debenture Holder(s) for redemption purposes and the redemption proceeds will be paid by cheque/fund transfer/RTGS to those Debenture Holder(s) whose names appear on the list of beneficiaries maintained by the Registrar & Transfer Agent. The names would be as per the Registrar & Transfer Agent’s records on the Record Date fixed for the purpose of redemption. All such Debentures will be simultaneously redeemed through appropriate debit corporate action.
The list of beneficiaries as of the Record Date setting out the relevant beneficiaries’ name and account number, address, bank details and DP’s identification number will be given by the REGISTRAR & TRANSFER Agent to the Issuer. If permitted, the Issuer may transfer payments required to be made in any relation by EFT/RTGS to the bank account of the Debenture Holder(s) for redemption payments.
Trustee for the Debenture Holder(s)
The Issuer has appointed Axis Trustee Services Limited to act as trustee for the Debenture Holder(s). The Issuer and the Debenture Trustee intends to enter into the Debenture Trust Deed inter alia, specifying the powers, authorities and obligations of the Debenture Trustee and the Issuer. The Debenture Holder(s) shall, without further act or deed, be deemed to have irrevocably given their consent to the Debenture Trustee or any of its agents or authorized officials to do all such acts, deeds, matters and things in respect of or relating to the Debentures as the Debenture Trustee may in its absolute discretion deem necessary or require to be done in the interest of the Debenture Holder(s). Any payment made by the Issuer to the Debenture Trustee on behalf of the Debenture Holder(s) shall discharge the Issuer pro tanto to the
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Debenture Holder(s). The Debenture Trustee will protect the interest of the Debenture Holder(s) in regard to the repayment of Principal Amount and Redemption Premium thereon and they will take necessary action, subject to and in accordance with the Debenture Trust Deed, at the cost of the Issuer. No Debenture Holder shall be entitled to proceed directly against the Issuer unless the Debenture Trustee, having become so bound to proceed, fails to do so. The Debenture Trust Deed shall more specifically set out the rights and remedies of the Debenture Holder(s) and the manner of enforcement thereof.
Sharing of Information
The Issuer may, at its option, but subject to Applicable Laws, use on its own, as well as exchange, share or part with any financial or other information about the Debenture Holder(s) available with the Issuer, with its subsidiaries and affiliates and other banks, financial institutions, credit bureaus, agencies, statutory bodies, as may be required and neither the Issuer nor its subsidiaries and affiliates nor their agents shall be liable for use of the aforesaid information.
Debenture Holder not a Shareholder
The Debenture Holder(s) shall not be entitled to any right and privileges of shareholders other than those available to them under the Act. The Debentures shall not confer upon the Debenture Holders the right to receive notice(s) or to attend and to vote at any general meeting(s) of the shareholders of the Issuer.
Modification of Debentures
The Debenture Trustee and the Issuer will agree to make any modifications in the Information Memorandum which in the opinion of the Debenture Trustee is of a formal, minor or technical nature or is to correct a manifest error.
Any other change or modification to the terms of the Debentures shall require approval by way of a Special Resolution (unless otherwise provided specifically in the Transaction Documents).
For the avoidance of doubt, any amendment to the terms and conditions of the Debentures or the Transaction Documents shall require approval by way of a Special Resolution (unless otherwise provided specifically in the Transaction Documents ), either by providing their express consent in writing or by way of a resolution at a duly convened meeting of the Debenture Holders.
Right to accept or reject Applications
The Board/ Committee of Directors reserves its full, unqualified and absolute right to accept or reject any application for subscription to the Debentures, in part or in full, without assigning any reason thereof.
Notices
Any notice may be served by the Issuer/ Debenture Trustee upon the Debenture Holders through registered post, recognized overnight courier service, hand delivery or by facsimile transmission addressed to such Debenture Holder at its/his registered address or facsimile number.
All notice(s) to be given by the Debenture Holder(s) to the Issuer/ Debenture Trustee shall be sent by registered post, recognized overnight courier service, hand delivery or by facsimile transmission to the Issuer or to such persons at such address/ facsimile number as may be notified by the Issuer from time to
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time through suitable communication. All correspondence regarding the Debentures should be marked “Private Placement of Debentures”.
Notice(s) shall be deemed to be effective: (a) in the case of registered mail, 3 (Three) calendar days after posting; (b) 1 (One) Business Day after delivery by recognized overnight courier service, if sent for next Business day delivery; (c) in the case of facsimile at the time when dispatched with a report confirming proper transmission or (d) in the case of personal delivery, at the time of delivery.
Issue Procedure
Only Eligible Investors as given hereunder may apply for the Debentures by completing the Application Form in the prescribed format in block letters in English as per the instructions contained therein. The minimum number of Debentures that can be applied for and the multiples thereof shall be set out in the Application Form. No application can be made for a fraction of a Debenture. Application Forms should be duly completed in all respects and applications not completed in the said manner are liable to be rejected. The name of the applicant’s bank, type of account and account number must be duly completed by the applicant. This is required for the applicant’s own safety and these details will be printed on the refund orders and/ or redemptions warrants.
The final subscription to the Debentures shall be made by the Eligible Investors through the electronic book mechanism as prescribed by SEBI under the SEBI Electronic Book Mechanism Guidelines by placing bids on the electronic book platform during the Issue period. In case the Eligible Investors are not registered on the EBP Platform, they will have to register themselves as investor on the said platform (as a one-time exercise) and also complete the mandatory KYC verification process. The Eligible Investors should also refer to the operational guidelines of the EBP in this respect. The disclosures required pursuant to the EBP Guidelines are set out hereinbelow:
Details of size of the Issue 30000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of Rs. 10,00,000/- (Rupees Ten Lakhs Only) each upto Rs. 3000,00,00,000/- (Rupees Three Thousand Crores Only) with an option to retain oversubscription up to 10000 Unsecured, Rated, Non-Cumulative, Redeemable Debentures of face value INR 10,00,000 each aggregating to a total issue size of Rs. 4000,00,00,000/- (Rupees Four Thousand Crores Only)
Electronic Book Platform BSE
Issue opening and closing date Issue opening date: 28 September 2020
Issue closing date: 28 September 2020
Minimum Bid Lot The minimum bid lot shall be 1 Debenture having face value Rs. 10,00,000 (Rupees Ten Lakhs) each.
Manner of bidding in the Issue Open Bidding
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Manner of allotment in the Issue The allotment will be done on time priority basis in line with the Operational Guidelines
Manner of settlement in the Issue Pay-in of funds through clearing corporation
Settlement cycle T+1 where T refers to the date of bid opening date/ issue opening date.
Mode of Allocation Uniform
Process flow of settlement:
Successful bidders shall make pay-in of subscription monies towards the allocation made to them, in the following bank accounts of ICCL on or before 10:30 a.m. on the Deemed Date of Allotment:
Name of the Bank- HDFC Bank Limited
Beneficiary Name: INDIAN CLEARING CORPORATION LTD
Account Number: ICCLEB
IFSC Code : HDFC0000060
Mode: NEFT / RTGS
Or Name of the Bank: ICICI Bank Limited
Beneficiary Name: INDIAN CLEARING CORPORATION LTD
Account Number: ICCLEB
IFSC Code : ICIC0000106
Mode: NEFT/RTGS
The fund pay-in by the successful bidders will be made only from the bank account(s), which have been provided/ updated in the electronic book mechanism system. Upon the transfer of funds into the aforesaid account and the Issuer confirming its decision to proceed with the allotment of the Debentures in favour of the Debenture Holder(s) to the Indian Clearing Corporation Limited, the Registrar & Transfer Agent shall provide the corporate action file along with all requisite documents to the Depositories by 12:00 hours and subsequently, the pay-in funds shall be released into the Issuer’s bank account, the details whereof are set out below:
Beneficiary Name : Hindustan Zinc Limited Credit Account No : 00010320004553 Bank : HDFC Bank Limited Branch : Tulsiyani Chambers, Mumbai Account Type : Current Account IFSC Code : HDFC0000001
It must be noted that all funds pay-in obligations need to be fulfilled in totality. Partial fund receipt against any given obligation will be treated as a default and debarment penalties will be applicable as specified
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by the EBP Guidelines.
Application Procedure
Eligible investors will be invited to subscribe by way of the Application Form prescribed in the Information Memorandum during the period between the Issue Opening Date and the Issue Closing Date (both dates inclusive). Subject to the EBP Guidelines, the Issuer reserves the right to change the issue schedule including the Deemed Date of Allotment at its sole discretion, without giving any reasons or prior notice. The Issue will be open for subscription during the banking hours on each day during the period covered by the Issue Schedule.
Fictitious Application
All fictitious Applications will be rejected.
Basis of Allotment
Notwithstanding anything stated elsewhere, Issuer reserves the right to accept or reject any application, in part or in full, without assigning any reason. Subject to the aforesaid, in case of over subscription, priority will be given to Investors on a first come first serve basis. The investors will be required to remit the funds as well as submit the duly completed Application Form along with other necessary documents to Issuer by the Deemed Date of Allotment.
Payment Instructions
The Application Form should be submitted directly. The full amount of Rs. 10,00,000 (Rupees Ten lakhs) per Debenture is payable along with the making of an application. Applicants can alternatively remit the application amount through RTGS on Pay-in Date in the bank account of Indian Clearing Corporation Limited appearing on Paragraph 8.9 (Mode of Payment) above.
Persons who may apply
The Persons to whom this Disclosure Document is being issued are the only persons eligible to apply for this private placement of Debentures subject to fulfilling their respective investment norms/rules and compliance with laws applicable to them by submitting all the relevant documents along with the Application Form. The class of investors to whom this Disclosure Document is being issued are:
a) Companies b) Scheduled Commercial Banks c) Co-operative Banks d) Financial Institutions including NBFCs e) Mutual Funds f) Insurance Companies g) Any body corporate h) Any other investor authorized to invest in these NCDs
All Investors are required to comply with the relevant regulations/guidelines applicable to them for investing in this issue of Debentures. Without prejudice to the aforesaid, where the selection of the eligible investors is required to be done pursuant to bidding mechanism on the Electronic Platform called
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the “EBP Platform” under the EBP Guidelines or any other successive arrangement/platform mandated by SEBI, only those Persons out of the aforesaid categories of investors, who are registered on the EBP Platform and are eligible to make bids for Debentures of the Issuer and to whom allocation is to be made by the Issuer pursuant to selection under the electronic book mechanism for issuance of securities on private placement basis in terms of the EBP Guidelines and the Electronic Book Providers shall be considered as “identified persons” for the purposes of Section 42(2) of the Companies Act, 2013 (as amended from time to time), to whom the Issuer shall make private placement of the Debentures and only such “identified persons” shall receive a direct communication from the Issuer with offer to subscribe to the Debentures and only such “identified persons” shall be entitled to subscribe to the Debentures.
Additionally, those arrangers/brokers/intermediaries etc. (as per the defined limits under the EBP Guidelines) specifically mapped by the Issuer on the EBP Platform are also eligible to bid/apply/invest for this Issue.
Hosting of the Information Memorandum on the website of the BSE should not be construed as an offer or an invitation to offer to subscribe to the Debentures and the same has been hosted only as it is stipulated under the SEBI Regulations read with the EBP Guidelines. Eligible Investors should check their eligibility before making any investment.
Note: Participation by potential investors in the issue may be subject to statutory and/or regulatory requirements applicable to them in connection with subscription to Indian securities by such categories of persons or entities. Applicants are advised to ensure that they comply with all regulatory requirements applicable to them, including exchange controls and other requirements. Applicants ought to seek independent legal and regulatory advice in relation to the laws applicable to them.
Procedure for Applying for Dematerialised Facility
(a) The Applicant must have at least one beneficiary account with any of the DP’s of the Depository prior to making the application.
(b) The Applicant must necessarily fill in the details (including the beneficiary account number and DP - ID) appearing in the Application Form under the heading “Details for Issue of Debentures in Electronic/Dematerialised Form”.
(c) Debentures allotted to an Applicant will be credited to the Applicant’s respective beneficiary account(s) with the DP.
(d) For subscribing to the Debentures, names in the Application Form should be identical to those appearing in the details in the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details maintained with the DP.
(e) Non-transferable allotment advice/refund orders will be directly sent to the Applicant by the Registrar and Transfer Agent to the Issue.
(f) If incomplete/incorrect details are given under the heading “Details for Issue of Debentures in Electronic/Dematerialised Form” in the Application Form, it will be deemed to be an incomplete application and the same may be held liable for rejection at the sole discretion of the Issuer.
(g) For allotment of Debentures, the address, nomination details and other details of the Applicant
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as registered with his/her DP shall be used for all correspondence with the Applicant. The Applicant is therefore responsible for the correctness of his/her demographic details given in the Application Form vis-à-vis those with his/her DP. In case the information is incorrect or insufficient, the Issuer would not be liable for the losses, if any.
(h) The redemption amount or other benefits would be paid to those Debenture Holders whose names appear on the list of beneficial owners maintained by the REGISTRAR & TRANSFER Agent as on the Record Date. In case of those Debentures for which the beneficial owner is not identified in the records of the REGISTRAR & TRANSFER Agent as on the Record Date, the Issuer would keep in abeyance the payment of the redemption amount or other benefits, till such time that the beneficial owner is identified by the REGISTRAR & TRANSFER Agent and conveyed to the Issuer, whereupon the redemption amount and benefits will be paid to the beneficiaries, as identified.
Depository Arrangements
The Issuer shall make necessary arrangement with the Depository for issue and holding of Debenture in dematerialised form.
Minimum Subscription
As the current issue of Debentures is being made on private placement basis, the requirement of minimum subscription shall not be applicable and therefore the Issuer shall not be liable to refund the issue subscription(s)/ proceed(s) in the event of the total issue collection falling short of the Issue Size or a certain percentage of the Issue Size.
Right to Accept or Reject Bids
The Issuer reserves its full, unqualified and absolute right to accept or reject any application for bid, in part or in full, without assigning any reason thereof in accordance with the Operational Guidelines.
Bids by the Arranger
The Arranger to the Issue may bid on behalf of Eligible Participants in the capacity of an arranger, as it shall be the only arranger mapped to the Issue on the BSE EBP. Multiple bids by the Arranger are permitted provided that each bid is on behalf of a different Investor.
The Arranger is allowed to bid on a proprietary, client and consolidated basis. At the time of bidding, the Arranger is required to disclose the following details to the EBP:
a. Whether the bid is proprietary bid or is being entered on behalf of an Eligible Participant or is a consolidated bid, i.e., an aggregate bid consisting of proprietary bid and bid(s) on behalf of Eligible Participants.
b. For consolidated bids, the Arranger shall disclose breakup between proprietary bid and bid(s) made on behalf of Eligible Participants.
c. For bids entered on behalf of Eligible Participants, the Arranger shall disclose the following:
i. Names of such Eligible Participants;
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ii. Category of the Eligible Participants (i.e. QIB or non-QIB); and iii. Quantum of bid of each Eligible Participant.
Provided that the Arranger shall not allowed to bid on behalf of any single Eligible Participant if the bid amount exceeds 5% (five percent) of the Issue Size as applicable, respectively or Rs. 15 Crore, whichever is lower (or such revised limits as may be specified in the Operational Guidelines from time to time).
Post-Allocation Disclosures by the EBP
Upon final allocation by the Issuer, the Issuer shall disclose the Issue Size, coupon rate, ISIN, number of successful bidders, category of the successful bidder(s), etc., in accordance with the SEBI/HO/DDHS/CIR/P/2018/05 dated January 5, 2018, and SEBI circular dated August 16, 2018 bearing reference number SEBI/HO/DDHS/CIR/P/2018/122, each as amended. The EBP shall upload such data, as provided by the Issuer, on its website to make it available to the public.
List of Beneficiaries
The Issuer shall request the REGISTRAR & TRANSFER Agent to provide a list of beneficiaries as at the end of each Record Date. This shall be the list, which will be used for payment or repayment of redemption and redemption premium monies.
Application under Power of Attorney
A certified true copy of the power of attorney or the relevant authority as the case may be along with the names and specimen signature(s) of all the authorized signatories of the Investor and the tax exemption certificate/document of the Investor, if any, must be lodged along with the submission of the completed Application Form. Further modifications/additions in the power of attorney or authority should be notified to the Issuer or to its agents or to such other person(s) at such other address(es) as may be specified by the Issuer from time to time through a suitable communication.
In case of an application made by companies under a power of attorney or resolution or authority, a certified true copy thereof along with memorandum and articles of association and/or bye-laws along with other constitutional documents must be attached to the Application Form at the time of making the application, failing which, the Issuer reserves the 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. Names and specimen signatures of all the authorized signatories must also be lodged along with the submission of the completed Application Form.
Documents to be provided by Investors
Investors need to submit the following documents, as applicable
(a) Memorandum and Articles of Association or other constitutional documents, (b) Resolution authorising investment, (c) Certified true copy of power of attorney, (d) Specimen signatures of the authorised signatories duly certified by an appropriate authority, (e) Copy of PAN card to be submitted, (f) Application Form (including RTGS details).
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Applications to be accompanied with Bank Account Details
Every application shall be required to be accompanied by the bank account details of the Applicant and the magnetic ink character reader code of the bank for the purpose of availing direct credit of redemption amount and all other amounts payable to the Debenture Holder(s) through NEFT/RTGS.
Succession
In the event of winding-up of the holder of the Debenture(s), the Issuer will recognize the executor or administrator of the concerned Debenture Holder(s), or the other legal representative as having title to the Debenture(s). The Issuer shall not be bound to recognize such executor or administrator or other legal representative as having title to the Debenture(s), unless such executor or administrator obtains probate or letter of administration or other legal representation, as the case may be, from a court in India having jurisdiction over the matter.
The Issuer may, in its absolute discretion, where it thinks fit, dispense with production of probate or letter of administration or other legal representation, in order to recognize such holder as being entitled to the Debenture(s) standing in the name of the concerned Debenture Holder on production of sufficient documentary proof and/or an indemnity.
Mode of Payment
All payments must be made through NEFT, RTGS, electronic fund transfer to the Indian Clearing Corporation Limited.
Effect of Holidays
If the Due Date for the Redemption Date falls on a day that is not a Business Day, the Redemption Amounts shall be paid on the immediately preceding Business Day along with interest accrued on the Debentures until but excluding the date of such payment.
Tax Deduction at Source
Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source. For seeking TDS exemption/lower rate of TDS, relevant certificate/document must be lodged by the debenture holders at the office of the transfer agents of the Company at least 15 (Fifteen) days before the relevant payment becoming due. Tax exemption certificate / declaration of non deduction of tax at source on interest on application money, should be submitted along with the Application form.
Letters of Allotment
The letter of allotment, indicating allotment of the Debentures, will be credited in dematerialised form within 2 (Two) Business Days from each Deemed Date of Allotment. The aforesaid letter of allotment shall be replaced with the actual credit of Debentures, in dematerialised form, within 15 (Fifteen) Business Days from each Deemed Date of Allotment. The Debentures will be first issued in physical form for the purposes of payment of stamp duty and once stamp duty is paid thereon, the dematerialised credit shall occur.
Deemed Date of Allotment
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All the benefits under the Debentures will accrue to the Investor from the specified Deemed Date of Allotment. The Deemed Date of Allotment for the Issue is 29 September, 2020 by which date the Investors would be intimated of allotment.
Record Date
In relation to any Due Date 15 (Fifteen) days prior to such Due Date. It is clarified that the Record Date will always be determined with reference to the original due date irrespective of whether the original due date falls on a Business Day or not.
Refunds
For Applicants whose applications have been rejected or allotted in part, refund orders will be dispatched within 7 (Seven) days from each Deemed Date of Allotment of the Debentures.
In case the Issuer has received money from Applicants for Debentures in excess of the aggregate of the application money relating to the Debentures in respect of which allotments have been made, the Registrar shall upon receiving instructions in relation to the same from the Issuer repay the moneys to the extent of such excess, if any.
Interest on Application Money
The Issuer shall be liable to pay to each Debenture Holder, interest on the Application Monies (subject to any tax deductible at source under Applicable Law) paid by the said Debenture Holder in the event that the Debenture Holder has remitted the Application Monies prior to the Deemed Date of Allotment, for which interest shall be calculated at the Rate of Return rate applicable for the Debentures issued on the Application Monies, for the period commencing from the date on which the said Debenture Holder has made payment of the Application Monies in respect of the Debentures and ending on the day prior to the Deemed Date of Allotment. The interest on the Application Monies shall be paid by the Issuer to the Debenture Holders within 7 (Seven) Business Days from the Deemed Date of Allotment.
Pan Number
Every Applicant should mention its PAN allotted under Income Tax Act, 1961, on the Application Form and attach a self-attested copy as evidence. Application forms without PAN will be considered incomplete and are liable to be rejected.
Payment on Redemption
Payment on redemption will be made by way of cheque(s)/redemption warrant(s)/demand draft(s)/credit through RTGS system/funds transfer in the name of the Debenture Holder(s) whose names appear on the list of beneficial owners given by the Depository to the Issuer as on the Record Date.
The Debentures shall be taken as discharged on payment of the redemption amount by the Issuer on maturity to the registered Debenture Holder(s) whose name appears in the Register of Debenture Holder(s) on the Record Date. On such payment being made, the Issuer will inform the Depository and accordingly the account of the Debenture Holder(s) with the Depository will be adjusted.
On the Issuer dispatching the amount as specified above in respect of the Debentures, the liability of the
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Issuer shall stand extinguished.
Disclaimer: Please note that only those persons to whom this memorandum has been specifically addressed may apply. However, an application, even if complete in all respects, is liable to be rejected without assigning any reason for the same. The list of documents provided above is only indicative, and an investor is required to provide all those documents/ authorizations/ information, which are likely to be required by the Issuer. The Issuer may but is not bound to revert to any investor for any additional documents/ information and can accept or reject an application as it deems fit. Investment by investors falling in the categories mentioned above are merely indicative and the Issuer does not warrant that they are permitted to invest as per extant laws, regulations, etc. Each of the above categories of investors is required to check and comply with extant rules/regulations/ guidelines, etc. Governing or regulating their investments as applicable to them and the Issuer is not, in any way, directly or indirectly, responsible for any statutory or regulatory breaches by any investor, neither is the Issuer required to check or confirm the same.