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Star Ferro and Cement Limited ‐Information Memorandum

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INFORMATION MEMORANDUM

STAR FERRO AND CEMENT LIMITED

(Incorporated as Public Limited Company on March 10, 2011, under the Companies Act, 1956, with the Registrar of Companies, West Bengal. The Corporate Identity Number assigned to our Company is U27310WB2011PLC160587.

Registered Office: 6, Lyons Range, 1st Floor, Kolkata - 700 001 (West Bengal) Tel: +91-33- 39403950, Fax: +91-33 - 2248 3539

Email: [email protected] Website: www.starferrocement.com Contact Person: Mr. Ravi Prakash Mundhra

NO EQUITY SHARES ARE PROPOSED TO BE SOLD OR OFFERED PURSUANT TO THIS INFORMATION MEMORANDUM

GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest in the equity shares of Star Ferro and Cement Limited unless they can afford to take the risk of losing part or all of their investment. Investors are advised to read the Risk Factors page of this Information Memorandum carefully before taking an investment decision in the shares of Star Ferro and Cement Limited. For taking an investment decision, investors must rely on their own examination of the Company including the risks involved.

ISSUER’S ABSOLUTE RESPONSIBILITY Star Ferro and Cement Limited having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all information with regard to Star Ferro and Cement Limited, which is material in the context of the issue of shares pursuant to the scheme, that the information contained in this Information Memorandum is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING The Equity Shares of Star Ferro and Cement Limited are proposed to be listed on the National Stock Exchange of India Limited (NSE), the Designated Stock Exchange and the BSE Limited (BSE).

REGISTRAR AND TRANSFER AGENT MAHESHWARI DATAMATICS PRIVATE LIMITED 6, Mangoe Lane (Surendra Mohan Ghosh Sarani), 2nd Floor Kolkata – 700 001 Phone No: (033) 2243-5809/5029 Fax: (033) 2248-4787 E-mail : [email protected] Website: www.mdpl.in

INFORMATION MEMORANDUM FOR LISTING OF 22,21,72,990 EQUITY SHARES OF ` 1/- EACH


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TABLE OF CONTENTS

TITLE PAGE NO.

SECTION – I GENERAL

DEFINITIONS, ABBREVIATIONS AND INDUSTRY RELATED TERMS 3

CERTAIN CONVENTIONS, USE OF MARKET DATA 4

FORWARD LOOKING STATEMENTS 5

SECTION – II RISK FACTORS

INTERNAL RISK 6

EXTERNAL RISK 8

SECTION – III SUMMARY

GENERAL INFORMATION 11

INDUSTRY OVERVIEW 14

BUSINESS OVERVIEW 17

OUR PROMOTERS AND THE MANAGEMENT OF THE COMPANY 22

CAPITAL STRUCTURE 31

OBJECTS AND RATIONALE OF THE SCHEME 35

SCHEME OF ARRANGEMENT 37

STATEMENT OF TAX BENEFITS 46

CURRENCY OF PRESENTATION 55

DIVIDEND POLICY 56

SECTION – IV FINANCIAL INFORMATION

FINANCIAL STATEMENT OF THE COMPANY 57

FINANCIAL AND OTHER INFORMATION OF COMPANIES UNDER THE SAME MANAGEMENT

167

SECTION – V LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS 173

GOVERNMENT APPROVALS 175

SECTION – VI REGULATORY AND STATUTORY DISCLOSURES

REGULATORY AND STATUTORY DISCLOSURES 176

MAIN PROVISION OF ARTICLES OF ASSOCIATION OF THE COMPANY 179

SECTION – VII OTHER INFORMATION

DOCUMENTS FOR INSPECTION 209

DECLARATION 210


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I. GENERAL

DEFINITIONS, ABBREVIATIONS, AND INDUSTRY RELATED TERMS

Unless the context otherwise indicates or implies, the following terms have the following meanings in this Information Memorandum and references to any statute or regulations or policies shall include amendments thereto, from time to time:

Term Description

SFCL or “Company” or “ Our Company” or “we” or “us” or “Our”

Star Ferro and Cement Limited, a Public Limited Company having its registered office at 6, Lyons Range, 1st Floor, Kolkata- 700 001 (West Bengal)

CPIL Century Plyboards (India) Limited, a Public Limited Company having its registered office at 6, Lyons Range, Kolkata- 700 001, West Bengal

Conventional and General Terms Term Description Act / Companies Act The Companies Act, 1956 and amendments thereto Articles / Articles of Association Articles of Association of the Company Appointed Date April 1, 2012 Auditors The Statutory Auditors of SFCL Board of Directors / Board Board of Directors of the Company BSE BSE Limited CDSL Central Depository Services (India) Limited Designated Stock Exchange The Designated Stock Exchange shall be National Stock Exchange of

India Limited Equity Share(s) or Share(s) Equity Share of the Company having a face value of `1/- unless

otherwise specified in the context thereof HUF Hindu Undivided Family Information Memorandum This document filed with the Stock Exchanges is known as and

referred to as the Information Memorandum. I. T. Act The Income Tax Act, 1961, as amended from time to time, except as

stated otherwise Memorandum/ Memorandum of Association

Memorandum of Association of the Company

NSDL National Securities Depository Ltd. NSE National Stock Exchange of India Limited Promoter Mr. Sajjan Bhajanka; Mr. Hari Prasad Agarwal; Mr. Sanjay Agarwal;

Mr. Prem Kumar Bhajanka & Mr. Vishnu Khemani Record date July 19, 2013 Registrar and Transfer Agents Maheshwari Datamatics Private Limited Scheme of Arrangement or “The Scheme” Scheme of Arrangement under Sections 391 to 394 of the Companies

Act, 1956 between Century Plyboards (India) Limited and Star Ferro and Cement Limited and their respective shareholders for demerger of ferro alloys and cement division of Century Plyboards (India) Limited to Star Ferro and Cement Limited

SEBI Securities and Exchange Board of India SEBI Act Securities and Exchange Board of India Act, 1992 as amended from

time to time SEBI (ICDR) Regulations SEBI (Issue of Capital and Disclosure Requirements) Regulations,

2009 notified by SEBI on August 26, 2009 SICA Sick Industrial Companies (Special Provisions) Act, 1995. Stock Exchanges

Shall refer to the NSE and BSE where equity shares of the SFCL are proposed to be listed.


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CERTAIN CONVENTIONS, USE OF MARKET DATA

Unless stated otherwise, the financial data in this Information Memorandum is derived from our financial statements prepared in accordance with Indian GAAP. Our last financial year commenced on April 1, 2012 and ended on March 31, 2013. In this Information Memorandum, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. All references to “India” contained in this Information Memorandum are to the Republic of India. All references to “Rupees” or “`” are to Indian Rupees, the official currency of the Republic of India. For additional definitions, please see the section titled “Definitions, Abbreviations and Industry Related Terms” of this Information Memorandum. Unless stated otherwise, industry data used throughout this Information Memorandum has been obtained from the published data and industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe that industry data used in this Information Memorandum is reliable, it has not been independently verified. The information included in this Information Memorandum about various other Companies is based on their respective Annual Reports and information made available by the respective companies.


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FORWARD LOOKING STATEMENTS

We have included statements in this Information Memorandum, that contain words or phrases such as “will”, “aim”, “will likely result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of such expressions that are “forward-looking statements”. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results and property valuations to differ materially from those contemplated by the relevant statement.

Important factors that could cause actual results to differ materially from our expectations include, among others: • General economic and business conditions in India and other countries; • Our ability to successfully implement our strategy, our growth and expansion plans and technological changes; • Changes in the value of the Rupee and other currency changes; • Changes in Indian or international interest rates; • Changes in laws and regulations in India; • Changes in political conditions in India; and • Changes in the foreign exchange control regulations in India. For further discussion of factors that could cause our actual results to differ, see the section titled “Risk Factors” on page 6 of this Information Memorandum. By their nature, certain risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under “Industry Overview” and “Business Overview”. We do not have any obligation to, and do not intend to, update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition.


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II. RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider all of the information in this Information Memorandum, including the risks and uncertainties described below. If any of the following risks actually occur, our business, financial condition and results of operations could suffer, the trading price of our Equity Shares could decline, and you may lose all or part of your investment.

INTERNAL RISK 1. If we are not able to obtain, renew or maintain the statutory and regulatory permits and approvals required

to operate our business it may have a material adverse effect on our business.

We are required to obtain and maintain certain approvals, licenses, registrations and permits in connection with our business and operations. There can be no assurance that we will be able to obtain and maintain such approvals, licenses, registrations and permits in the future. An inability to obtain or maintain such registrations and licenses in a timely manner, or at all, and comply with the prescribed conditions in connection therewith may adversely affect our ability to carry on our business and operations, and consequently our results of operations and financial condition.

2. Our Company has entered into related party transactions with the promoters and/or Directors and the

Group Companies.

The company has entered into transactions with the related group companies. Whilst the Company believes that all such transactions have been conducted on an “arm’s length basis”, there can be no assurance that the Company could not have achieved more favourable terms had such transactions not been entered into with related parties. Furthermore, it is likely that the Company may enter into related party transactions in the future. There can be no assurance that such transactions individually or in the aggregate, will not have an adverse effect on the Company’s business and results of operations.

3. As we grow our businesses, we shall rely increasingly on our subsidiaries and step down subsidiaries to generate earnings, and any decline in the earnings of our subsidiaries and step down subsidiaries and their ability to pay dividends to us could materially affect our results of operations.

We have 70.48% stake in our subsidiary – Cement Manufacturing Company Limited and 100%/ almost 100% stake in our four Step-down subsidiaries i.e. Megha Technical & Engineers Private Limited, Star Cement Meghalaya Limited, Meghalaya Power Limited and NE Hills Hydro Limited. These subsidiary/ Step-down subsidiaries are engaged in the businesses of manufacturing of cement and generation of power.. Hence, a material portion of our future revenue, cash flows and assets shall be attributable to our subsidiaries. We cannot assure you that our subsidiaries will generate sufficient earnings and cash flows to pay dividend or otherwise distribute sufficient funds to enable us to meet our obligations, pay interest and expenses or declare dividends. If we are unable to receive dividend payments from our subsidiaries, our earnings and cash flow would be materially and adversely affected.

4. The Ferro Alloy Industry is cyclical in nature and factors affecting the demand for, and requirement of processing ferro alloy products, in particular, global economic conditions, may adversely affect our business, financial condition, results of operations and prospects. The Ferro Alloy business is directly dependent on the steel industry which is cyclical in nature. Our operating margins and results of operations are influenced by a variety of factors relating to the steel industry, including but not limited to fluctuations in demand and supply of steel, both domestically and internationally, general economic conditions, changes in the international prices of steel and steel products, downturns in requirements of processed steel by traditional bulk end users or their customers, and slowdowns in our core buying industries. Historically, market prices for steel and steel products have been cyclical and sensitive to changes in supply and demand. Demand for steel and steel products is linked to economic activity, including growth in the economy, level of operating activities in core sectors as mentioned above. The supply of steel and steel products is dependent upon capacity additions, domestically and internationally, which involve long gestation periods. Significant capacity additions in the steel industry, if not matched by a corresponding growth in demand, may result in downward


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pressure on steel prices and consequently on ferro alloy prices also. Since the slowdown in global economic conditions in 2008, prices of steel and consequently that of ferro alloy have fallen significantly and also have been very volatile. Due to uncertainty in the supply and demand balances, market conditions and other factors relating to the steel industry, our business, prospects, financial condition and results of operation may be adversely affected.

5. Our ability to pay dividends in the future will depend upon future earnings, financial condition, cash flows,

working capital requirements, capital expenditures and lender consents and there can be no assurance that we will be able to pay dividends in the future. We currently intend to invest our future earnings, if any, to fund our growth. The amount of our future dividend payments, if any, will depend upon our future earnings, financial condition, cash flows, working capital requirements and capital expenditures.

6. Our failure to accurately forecast and manage inventory could result in an unexpected shortfall and/or surplus of products, which could harm our business. We monitor our inventory levels based on our own projections of future demand. Because of the length of time necessary to produce commercial quantities of our products, we must make production decisions well in advance of sales. An inaccurate forecast of demand for any product can result in the unavailability/surplus of products. This unavailability of products in high demand may depress sales volumes and adversely affect customer relationships. Conversely, an inaccurate forecast can also result in an over-supply of products, which may increase costs, negatively impact cash flow, reduce the quality of inventory, erode margins substantially and ultimately create write-offs of inventory. Any of the aforesaid circumstances could have a material adverse effect on our business, results of operations and financial condition. The conditions for storing / warehousing the same have to be controlled and constantly monitored, in order to maintain quality of our product. Any deficiency in the same would adversely affect our profitability and results of operations.

7. Under-utilisation of capacity may adversely affect our business, results of operations and financial condition. Use of production capacity is subject to several variables like availability of raw material, power, water, proper working of machinery, orders on hand, etc. It cannot be assured that we shall be able to utilize our existing manufacturing facilities to their full capacity or up to an optimum capacity, and non-utilisation of the same may lead to loss of profits or can result in losses, and may adversely affect our business, results of operations and financial condition.

8. If the Company is unable to adapt to technological changes, the Company’s business could suffer.

Our Company has implemented the latest technology for our Plant. Our Company’s future success will depend in part on the company’s ability to respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis. The development and implementation of such technology entails technical and business risks. Our Company cannot assure that it will successfully implement new technologies effectively or adapt the systems to emerging industry standards. If our Company is unable, for technical, legal, financial or other reasons, to adapt in a timely manner to changing market conditions, customer requirements or technological changes, our Company’s business, financial performance and the trading price could be adversely affected.

9. Our business is dependent on our manufacturing facilities. The loss of or shutdown of operations at our manufacturing facilities may have a material adverse effect on our business, financial condition and results of operations.

Our manufacturing facilities at EPIP Area, Byrnihat, Meghalaya are subject to operating risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output, raw material shortage or unsuitability, obsolescence, labour disputes, strikes, lock-outs, non-availability of services of our external contractors, our ability to respond to technological advances and emerging industry standards and practices in the industries we operate and propose to operate on a cost-effective and timely basis, earthquakes and other natural disasters, industrial accidents and the need to comply with the directives of relevant government authorities, and any other factors which may or may not be within our control. The occurrence of any of these risks


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could significantly affect our operating results. Although we take precautions to minimize the risk of any significant operational problems at our facilities, our business, financial condition, results of operations and the trading price of our Equity Shares may be adversely affected by any disruption of operations at our facilities, including due to any of the factors mentioned above.

10. Significant increase in prices or shortage of raw materials and finished goods could harm the results of operations and financial position of Our Company.

In the recent past, there have been fluctuations in the prices of critical raw materials. Such fluctuations in prices of raw material and our Company’s inability to negotiate at optimum market rates may affect our profitability. Similarly, the prices of finished products have also shown price variations, which may impact our profitability.

11. There are no long-term contracts with buyers which may affect our business. We do not have any long-term contracts with our customers and any change in the buying pattern of buyers can adversely affect the business of our Company. Although we have cordial business relations with our customers and have received continued business from them in the past, there is no certainty that the same will continue in the years to come and may affect our profitability.

12. Our Company is dependent on its management and any inability on their part to contribute to the business may affect its performance.

The success of our Company is dependent on the experience of its management. All the expansion strategies and their implementation have been envisaged by; and will be executed by the management with the assistance of our Key Managerial Personnel. Any failure of the management to successfully implement and contribute to the Company’s business would result in our Company not meeting its expansion plans and strategies. Further, if the management is not able to manage the operations of our Company in an efficient and effective manner, it will affect the profitability of our Company.

13. We have significant working capital requirements. Our business involves significant working capital. We meet our working capital requirements through internal accruals and debt. Any shortfall in our internal accruals and our inability to raise debt would result in us being unable to meet our working capital requirements, which in turn will negatively affect our financial condition and results of operations.

14. We face substantial competition in the Ferro Alloy industry, which may affect our revenues in case we are not able to obtain customers and orders. We will face significant competition from existing players and potential entrants in the Indian ferro Alloy industry. Further, we will face significant competition mainly from large vertically integrated and diversified companies in Ferro Alloy industry. Some of our Indian and International competitors are larger than us and have greater financial resources.

A. External Risk Factors

1. Failure to comply with environmental laws, rules and regulations may adversely affect our business

operations. A failure on our part to adequately comply with applicable environmental laws, rules and regulations, could hamper or adversely impact the operations of our Company, and consequently, could adversely affect the Company and its cash flows and profitability.


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2. Changes in Government Policies and political situation in India could adversely affect our business operations. Since 1991, successive Indian governments have pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained significant. Although the Central government has announced policies and taken initiatives that support the economic liberalization policies that have been pursued by previous governments, the rate of economic liberalization could change, and specific laws and policies affecting foreign investment and other matters affecting investment in our securities could change as well.

3. Terrorist attacks and other acts of violence or war involving India, and other countries could adversely affect the financial markets, result in a loss of business confidence and adversely affect the business, results of operations and financial condition. Terrorist attacks and other acts of violence or war may negatively affect the Indian stock markets and also adversely affect the global financial markets. These acts may also result in a loss of business confidence and have other consequences that could adversely affect the business, results of operations and financial condition.

4. Sensitivity to the economy and extraneous factors

The Company’s performance is highly correlated to the performance of the economy and the financial markets. The health of the economy and the financial markets in turn depends on the domestic economic growth, state of the global economy and business and consumer confidence, among other factors. Any event disturbing the dynamic balance of these diverse factors would directly or indirectly affect the performance of the Company.

5. Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares. Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed securities. These exchanges have also experienced problems that have affected the market price and liquidity of the securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted securities from trading, limited price movements and restricted margin requirements. Further, disputes have occurred on occasion between listed companies and the Indian stock exchanges and other regulatory bodies that, in some cases, have had a negative effect on market sentiment. If similar problems occur in the future, the market price and liquidity of our Equity Shares could be adversely affected.

6. Changes in taxation policies could adversely affect our business operations & results of operations. Statutory taxes and other levies may affect our margin in the event of our inability to factor such expense in our trading margin. Any increase in taxes and/ or levies, or the imposition of new taxes and/ or levies in the future, may have a material adverse impact on our business, results of operations and financial condition.

7. We are subject to risks arising from interest rate fluctuations, which could adversely affect our business, financial condition and results of operations. Changes in interest rates could significantly affect our financial condition and results of operations. If the interest rates for our existing or future borrowings increase significantly, our cost of servicing such debt will increase. This may adversely impact our results of operations, planned capital expenditures and cash flows.


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8. Any downgrading of India’s debt rating by an international rating agency could have a negative impact on our business and could materially affect our future financial performance and the trading price of our equity shares. Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may adversely impact our ability to raise additional financing, and the interest rates and other commercial terms at which such additional financing may be available. This could have an adverse effect on our business and future financial performance, our ability to obtain financing for capital expenditures and the trading price of our Equity Shares.


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III. SUMMARY

GENERAL INFORMATION Our Company is a Public Limited Company incorporated as Star Ferro and Cement Limited in Kolkata on March 10, 2011 under the Companies Act, 1956. Registered & Corporate Office: Star Ferro and Cement Limited 6, Lyons Range, 1st Floor, Kolkata- 700 001 (West Bengal) Tel: +91-33- 39403950 Fax: +91-33 - 2248 3539 Email: [email protected] Website: www.starferrocement.com

Corporate Identification Number: U27310WB2011PLC160587

Address of the Registrar of Companies: Nizam Palace, II MSO Building, 3rd Floor, 234/4 A.J.C. Bose Road, Kolkata-700020

Board of Directors: The Board of Directors as on the date of filing of the Information Memorandum

Mr. Sajjan Bhajanka Non-executive Chairman Liable to retirement by rotation Mr. Hari Prasad Agarwal Managing Director Not Liable to retirement by rotation Mr. Sanjay Agarwal Non-executive Director Liable to retirement by rotation Mr. Manindra Nath Banerjee Independent Director Liable to retirement by rotation Mr. Mangi Lal Jain Independent Director Liable to retirement by rotation Mr. Santanu Ray Independent Director Liable to retirement by rotation Mrs. Plistina Dkhar Independent Director Liable to retirement by rotation Authority of Listing The Hon’ble High Court at Calcutta, vide its order dated May 17, 2013 has approved the Scheme of Arrangement inter-alia providing for the demerger of Ferro Alloys and Cement Division of Century Plyboards (India) Limited (hereinafter referred to as “CPIL”) to Star Ferro and Cement Limited (hereinafter referred to as “SFCL”). For more details relating to the Scheme of Arrangement please refer to the Section titled "Scheme of Arrangement". In accordance with the Scheme for demerger, business and interests of CPIL in manufacture of ferro alloys and cement, including captive power plants attached thereto and comprising (i) ferro alloys and power plant at Byrnihat in the State of Meghalaya, (ii) 2,95,47,500 Equity Shares of `10/- each in Cement Manufacturing Company Limited (“CMCL”), a Company manufacturing cement at Lumshnong in the State of Meghalaya and (iii) 83,58,998 Equity Shares of `10/- each in Meghalaya Power Limited (“MPL”), a Company setting up a power plant for supplying power primarily to CMCL and shall mean and include all property, rights and powers and all debts, liabilities, duties and obligations of CPIL pertaining to the Ferro Alloys and Cement Division stands transferred to and vested with SFCL, w.e.f. April 1, 2012 (the appointed date under the Scheme) pursuant to Section 391 to 394 of the Companies Act, 1956. In accordance with the said scheme, the Equity shares of the Company to be issued pursuant to the Scheme shall be listed and admitted to trading on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). Such listing and admission for trading is not automatic and will be subject to fulfillment by the Company of listing criteria of NSE and BSE for such issues and also subject to such other terms and conditions as may be prescribed by NSE and BSE at the time of the application by the Company seeking listing. The Company has received in principle approvals from BSE and NSE in relation to listing of equity shares issued pursuant to the scheme of arrangement vide their letters ref. no. DCS/AMAL/SI/24(f)/147/2012-13 dated June 27, 2012 and NSE/LIST/172018-2 dated June 18, 2012 respectively. The


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Company has received exemption from the strict enforcement of the requirement of Rule 19(2)(b) (i)of the SCRR for the purpose of listing of shares of the Company from SEBI vide its letter No. CFD/DIL/SK/PM/24169/2013 dated September 23, 2013 Eligibility Criterion

There being no initial public offering or rights issue, the eligibility criteria of SEBI (ICDR) Regulations 2009 do not become applicable. However, SEBI has vide its Circular No. SEBI/CFD/SCRR/01/2009/03/09 dated September 3, 2009, requires SFCL to seek and obtain approval under sub-rule (7) of rule 19 of the Securities Contracts (Regulation) Rules, 1957 for relaxing strict enforcement of clause (b) to sub-rule (2) of rule 19 thereof. The Company has submitted its Information Memorandum, containing information about itself, making disclosure in line with the disclosure requirement for public issues, as applicable to BSE and NSE for making the said Information Memorandum available to public through their websites viz. www.bseindia.com and www.nseindia.com. The Company has made the said information memorandum available on its website viz www.starferrocement.com. The Company will also publish an advertisement in the news papers containing all details in line with the requirements as per the above mentioned circular. The advertisement will draw specific reference to the availability of this Information Memorandum on its website. Prohibition by SEBI

The Company, its Directors, its promoters, other Companies promoted by the promoters and companies with which the Company’s directors are associated as directors have not been prohibited from accessing the capital markets under any order or direction passed by SEBI. General Disclaimer from the Company

The Company accepts no responsibility for statement made otherwise than in the Information Memorandum or in the advertisements to be published in terms of SEBI Circular SEBI/CFD/SCRR/01/2009/03/09 or any other material issued by or at the instance of the Company and anyone placing reliance on any other source of information would be doing so at his or her own risk. All information shall be made available by the Company to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner. Auditors

Kailash B. Goel & Co. Chartered Accountant 70, Ganesh Chandra Avenue, 1st Floor Kolkata- 700 013 Telefax: +91-33-22151938 Email: [email protected] Contact Person: Mr. Arun Kumar Sharma (Partner) Membership no: 057329 Firm Regn. No.: 322460E Bankers to the Company Oriental Bank of Commerce 107/1, Park Street Kolkata - 700 016 Tel: +91-33-22267732/2829 Fax: +91-33 – 22177398 Contact Person: Mr. Ankit Srivastava


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Axis Bank Ltd 7, Shakespeare Sarani Kolkata - 700 071 Tel: +91-33-22899832/33/34 Fax: +91-33-22827611 Contact Person: Ms. Rajeswari Dutta State Bank of India Byrnihat Branch Meghalaya- 793101 Tel: +91-3638-263743 Fax: +91-3638-263207 Contact Person: Mr. Vikash Basisth Compliance Officer Mr. Ravi Prakash Mundhra Star Ferro and Cement Limited 6, Lyons Range, 1st Floor, Kolkata- 700 001 (West Bengal) Tel: +91-33- 39403950 Fax: +91-33 - 2248 3539 Email: [email protected] Registrar & Transfer Agents Maheshwari Datamatics Private Limited 6, Mangoe Lane (Surendra Mohan Ghosh Sarani), 2nd Floor, Kolkata – 700 001 Phone No: +91-33-2243-5809/5029 Fax: +91-33-2248-4787 E-mail: [email protected] Website: www.mdpl.in Contact Person: Mr. S. Rajagopal


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INDUSTRY OVERVIEW The information in this section is derived from various publicly available sources, government publications and other industry sources. This information has not been independently verified by us, and no representation is made as to the accuracy of this information. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and accordingly, investment decisions should not be based on such information.

INDUSTRY OVERVIEW THE FERRO ALLOYS INDUSTRY Ferro Alloys are alloys of Chromium, Manganese, Silicon etc. Ferro Alloys are used in steel making as an additive for imparting strength and quality required in a particular grade of Steel. Ferro Manganese, Silicon Manganese & Ferro Silicon are used in Steel making in different proportion depending upon the grade of the Steel. Ferro Chrome is used for manufacture of various grades of Stainless Steel and other chromium bearing Alloy Steel. Growth of Ferro Alloys Industry is directly linked to growth of Steel Industry. Consumption of Ferro Chrome is linked with growth of Stainless Steel and other Alloy Steel. Ferro Alloys are vital additives that are added in steel production for de-oxidation, grain size control, imparting specific properties to the finished steel and improvement in mechanical properties. Depending upon the process of steelmaking, product quality envisaged and the type of steel being made, the requirement of ferro alloys varies widely. Ferro Alloys consist of less than one percent of the total raw materials required for steelmaking but despite being a very low constituent, they play a vital role in steel making. Ferro-alloys are used in the manufacture of all grades of steel including stainless steel, alloy steel, castings and other engineering products. Ferro alloys are alloys of iron with a high proportion of elements such as manganese, silicon, chromium, and molybdenum. Each alloy is generally named after the added metal – for example, Ferro Chrome, Ferro Manganese, Ferro Silicon etc. Ferro alloys can be further classified as bulk and noble ferro alloys. India has one of the largest deposits of manganese ore and chrome ore in the world.

Capacity and Performance of the Ferro Alloy Industry

The Indian Ferro Alloy industry was established over 50 years ago. The installed capacity of the industry with a capital investment of ` 4,000 crores in 2002-03 was about 1.7 Mt of Bulk and Noble Ferro Alloys. In 2002-03, India produced 1,003,371 tonnes of Bulk Ferro Alloys and 12,763 tonnes of Noble Ferro Alloys and exported 182,605 tonnes of total ferro alloys earning `3,480 crores in foreign exchange. The performance has improved remarkable during the last seven years. The global economy in 2012 hovered at the bottom. Under the softened economic condition, demand for the raw materials seriously decreased. Ferroalloy, one of the most important raw materials for steel production, inevitably was affected by the bad environment. The prices went down while the cost rose up; the export volumes fell down under the high tariff, market players were in face of difficult condition. The robust 7.5% growth in global steel production strengthened the upstream demand for ferro alloys by 7% in 2007-08 and China recorded the highest demand for ferro alloys, followed by India and Russia. India, with a 5-7% share of the global ferro alloys industry, is among the ten largest producers of the material in the world. In India, majority of the ferro alloys furnaces are largely located in Orissa, Andhra Pradesh, West Bengal, Chhattisgarh and Goa due to proximity to mines. Most ferro alloy companies manufacture manganese or chrome alloys. Indian bulk ferro alloys supply constitutes of Ferro Chrome about 32%, Ferro Manganese and Silicon Manganese about 62% and rest others.


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India enjoys a natural advantage as it has the fifth-largest in chrome ore with a 100 million tones estimated reserve and the sixth-largest in manganese ore with an estimated 176 million tones reserve. Our country has abundant natural resources like Manganese, Chrome and Quartz ores which ensures continuous supply of high quality raw material at reasonable prices to the Indian Ferro alloy industry with tremendous growth opportunities to help India in emerging as the leading exporter of Ferro alloys for the world. Ferro Alloys, as the name indicates are the alloys of Chromium, Manganese, Silicon etc. Ferro Chrome is used for manufacture of various grades of Stainless Steel and other chromium bearing Alloy Steel. Ferro Alloys can be classified as bulk ferro alloys and noble ferro alloys. The latter are used in a small quantity. Noble ferro alloys are produced in India by Alumna Thermit process. Ferro Titanium, Molybdenum and Vanadium fall under the category of Noble Ferro Alloys.

CEMENT INDUSTRY

Despite slowdown seen in global as well as Indian economic scenario during FY 2012-13, Indian Cement Industry fared well during the first half of the year under review. As against growth of 6% in Fiscal 2011-12, first half of calendar year 2012 witnessed growth of 10%. Poor monsoon affected harvest to a great extent but helped cement industry. Monsoon season which is normally considered a low season for cement industry on account of poor construction activities, lack of rain has allowed construction companies to continue working as usual and pushed up demand for cement. However, second half of the year witnessed drastic fall in cement demand on account of slowdown in construction industry. The growth achieved during first half was largely set-off by slowdown in demand during second half of the year. Shortage of construction material like sand, bricks and water also affected pace of construction industry resulting into low demand of cement and lower capacity utilization by cement industry during second half. On capacity front, Indian Cement Industry added more than 35 Million during the year under review which accounts for 10% growth in the capacity over previous year. However, on account of sluggish demand during second half, capacity utilization remained low. On cost front, Cement industry witnessed challenges during the year under review. Freight, being one of the major cost drivers, has gone up considerably with an increase of more than 20% in railway freight. Series of hikes in the prices of diesel has led to considerable increase in cost of transportation of raw material and finished goods. Cost of Coal was also north bound during the year under review. Key Highlights 2012 -13

Consolidated cement production was 10,67,465 MT during the year as against 11,03,800 MT during the previous financial year.

Consolidated net sales was ` 59,497.13 Lacs during the year under review as compared to ` 56,495.95 Lacs during the financial year 2011-12.

Consolidated EBIDTA was 20.25% lower at `12,047.69 Lacs.

Consolidated profit before tax declined during the year 2012-13 to ` 4,897.67 Lacs as against ` 9,097.31 Lacs

in the year 2011-12.

Consolidated profit after tax was lower at ` 4,290.92 Lacs in FY 2012-13 as against ` 8,982.47 Lacs in FY 2011-12.

Average net sales realization has gone up by 15% over previous year. CEMENT SCENERIO IN NORTHEAST – A PROMISING FUTURE AHEAD India’s North Eastern region is still far behind as far as connectivity by Rail and Road is concerned as compared to other states of our country. However, NER so rich with natural resources has not been able to catch up with the pace of development which has taken place in rest of India. Important parameters like Per Capita Gross State Domestic Product


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(GSDP), Per Capita Electricity Consumption, Per Capita income of NER as compared to rest of India also suggests that a lot of efforts are still required to be put for the socio-economic development of the region. Keeping this wide gap into consideration, the Central Government, in the recent past, has been focusing on the development of NER and budgetary allocation for development of the region has seen increasing trend year after year. During the year under review there has been modest increase in Cement Demand in NER. However, we firmly believe that the demand of cement will again surpass the growth compared to national demand in coming years as many infrastructure projects have now started in real term. The Assam - Manipur Rail link work is in full swing. Central Government Hydel power project and Private sector both are also coming up as per plans. Major consumption area like housing, road, airport and rail will drive the demand the further. The demand supply gap of cement in NER shall reduce with the capacity expansion by your company. The one-third of its total demand was being catered by import of cement from other States like Chhattisgarh, Madhya Pradesh and West Bengal but same is now expected to reduce due to increased availability within the region. The major benefit of demand is expected to come to your company due to its strong presence in entire North Eastern Region.

POWER INDUSTRY

Despite various measures of reforms and policies being implemented by Central and State Governments on sustained basis for improvement in performance of Power Sector in India, no significant improvements could be seen during Financial Year 2012-13 and power supply position remained grim. During the year under review, installed capacity has gone up by 16,407 MW only as compared to 20,501 MW during FY 2011-12. Total Installed Capacity has gone up to 211 GW. However, as in previous years, during the year 2012–13 also, demand for electricity in India far outstripped availability, both in terms of peak demand and energy availability. During the first half of FY 2012-13 average monthly peak deficit was to the tune of 13246 MW which is 10% of peak demand during the same period. In terms of energy availability, during the first half of FY 2012-13, there was a deficit of 42,408 MU which accounts for 8.5% of energy requirement during the same period.

On the one side of short fall in availability of power, with rising needs of energy in India year after year, India as a country has emerged as the fourth largest energy consumer of the world after the US, China and Russia. However, per capita energy consumption still remains lower than that of developed countries.

Under backdrop of above, Indian Power Sector which is undergoing rapid transformation has plans of huge power generation capacities during the current five year plan 2012-2017 and Private Sector is slated to play a major role into this. The installed capacity base is likely to grow to 300 GW in next 10-12 years. Peak demand is expected to reach 218 GW by 2017 and 470 GW in 2027 from the current 119 GW.

To achieve these objectives and to ensure sustainable growth of power sector in India, recent steps undertaken by Government of India in form of bringing transparency in allocation of coal blocks to end users on the basis of competitive bidding, exemption of import duty on thermal coal, imposition of import duty on power equipments, tightening of frequency band to increase grid security in more stricter manner in transmission and distribution sector, allowing open access to consumers having load of more than 1 MW etc. will go a long way in the efforts towards bringing improvement in performance of Indian Power Sector.

Power Scenario in Meghalaya too remained grim during the year under review. Power generation in North Eastern States and more particularly in State of Meghalaya is Hydro Electric based and dependencies of Hydro Electric Power Generation units on unpredictable rains make it difficult to utilize their capacities of power generation. Meghalaya once used to be a state with surplus electricity, where the excess power generation was pushed to the neighboring states including Assam as against today’s huge deficit scenario on account of increase in energy requirement in industrial sector as also in domestic and commercial sector. Much awaited Myntdu-Leshka project which was commissioned fully in 2012-13 is yet to stabilize its operation towards achieving full efficiencies. State Government has initiated lot of steps to improve the availability of power in the State but its real impact is yet to be seen. Such shortages in availability of power in the State with demand increasing day by day provides ample opportunity to your company for its power plant.


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BUSINESS OVERVIEW

Our company is currently operating 27 MVA submersible arc furnaces at EPIP, Byrnihat. The company also has a captive power plant of 13.8 MW. India is one of the fastest growing economies in the world. Industrial output as represented by the index of industrial production (IIP) stands at 316.7, which is 17.6% higher as compared to the level in the month of April 2009. The revised annual growth for the period April- March 2009-10 stands at 10.4% over the corresponding period of the previous year. The annual growth for the mining, manufacturing and electricity sectors during April- March, 2009-10 over the corresponding period of 2008-09 have been 9.8%, 10.9% and 6% respectively, which moved the overall growth in the General Index to 10.4. The economic reforms initiated by the Government since 1991 have added new dimensions to industrial growth in general and steel industry in particular. Licensing requirement for capacity creation has been abolished, except for certain locational restrictions. Steel industry has been removed from the list of industries reserved for the public sector. Automatic approval of foreign equity investment up to 100% is now available. Price and distribution controls have been removed from January 1992, with a view to make the steel industry efficient and competitive. Restrictions on external trade, both in import and export have been removed. Import duty rates have been reduced drastically. Certain other policy measures such as reduction in import duty of capital goods, convertibility of rupee on trade account, permission to mobilize resources from overseas financial markets and rationalization of existing tax structure for a period of time have also benefited the Indian Steel Industry. With GDP growth of around 9%, Indian steel industry has also grown from total production of 14 million tons in 1991-92 to 64.88 million ton in 2009-10. To cater to the need of growing steel industry, Ferro alloy production should also increase to match the demand of domestic steel sector and international market, which will further enhance the demand supply gap. Power is one of the major inputs in manufacturing of Ferro alloy products and especially in manufacturing of Ferro Silicon. For growth of any industry, power is of vital importance. With enactment of The Electricity Act’2003 and The Electricity rules, 2005, private participation in the areas of power generation, transmission and distribution has been allowed. Power generation has been delicensed and captive generation is being freely permitted. Government of India has announced the North East Industrial and Investment Promotion Policy (NEIIPP), 2007, containing an extensive package of fiscal incentives in order to boost investment in the North East Region. While incentives like Excise Duty Refund, Income Tax Exemption, VAT remission, Transport Subsidy etc. have been extended, capital investment subsidy has been increased from 15% to 30% of the value of plant & machinery without any upper ceiling. The main raw materials for Ferro Silicon are Charcoal, Quartz and Mill Scale. While Quartz is sourced from nearby areas, which are located within a radius of 50-100 km, Mill Scale is procured from Steel Rolling Mills located at the vicinity of the plant at Byrnihat, Meghalaya and also at Guwahati, Assam, which are around 3-5 and 20-25 kms respectively. Charcoals procured from Tamil Nadu. PRODUCT & ITS USES Ferro-alloys are essential ingredients for production of various types of carbon and alloys steel as well as alloy iron. The basic element of a Ferro-alloy when added to steel tends to improve the physical properties, e.g. change in elasticity, ultimate tensile strength, hardness, etc. Sometimes addition of some elements in the form of Ferro-alloys is done deliberately to liquid steel and other alloys for developing abrasion resistance, wear resistance and corrosion resistance properties. The production / consumption of steel in any country may be directly related to the growth and increase in per capital income of the country. As such, for development and growth, steel is an essential commodity and therefore need of Ferro-alloys are interdependent. Apart from using Ferro-alloys for alloying the steel, they are also widely used for deoxidizing, desulphurisation & refining of steel. Smaller quantities of Ferro-alloys are used as reductant in order to produce other metals. Besides their use in plain carbon steel and alloy steel plants, a substantial quantity of Ferro-alloys is consumed by the foundries and electrode industries. In ceramic industries, Ferro-alloys are used in small quantities. Ferro-silicon, Ferro-manganese, Silico-manganese and Ferro-chrome are used in steel making in large quantities for producing various types of steel & alloy steels and these are called bulk or tonnage Ferro-alloys. Other Ferro-alloys like Ferro-nickel, Ferro-molybdenum, Ferro tungsten, Ferro-niobium, ferrotitanium, Ferro-vanadium, Ferro-zirconium which are used in smaller quantities are called high valued or special Ferro-alloys and these are used as the constituents


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for making & refining special types of alloy steels. Most of the bulk Ferro-alloys are produced in electric furnace and only 8.64% are produced in blast furnace. The special Ferro-alloys are produced mostly by aluminothermic, silicothermic and some other similar batch process. Physio-Chemical properties of Silicon Silicon is a metalloid having an atomic mass of 28.086, density of 2.37, melting point of 14140C, and boiling point of 22870C. In its electric properties, Silicon is a semi-conductor. Silicon reacts with Oxygen to form Silica (SiO2) whose melting point is 17100C. Silica can exist in several modifications – Quartz / Quartzite, Tridymite, Cristobalite and Silica Glass. The heat of formation of one mole of SiO2 is as follows: By reaction SiS+O2g = Sio2 ( - Quartz); H = -208,300 calories. By reaction Sis+O2g = Sio2 ( - Cristobalite); H = -205,600 calories. Silicon can also oxidize into Silicon Monoxide SiO by the reaction Sig + ½ O2g = Sio; H = -275,000 calories. Silicon Monoxide is volatile and can spontaneously decompose into Silicon and Silica at temperatures below 15000C. Solid Silicon Monoxide can be obtained in metastable state at room temperature by condensing its vapours. Silicon and Carbon form Carborundum (SiC) having a melting point above 27000 C. The heat of formation of Carborundum from the elements is: H = -28,000 calories. Silicon can fuse together with Iron in any proportion and forms a series of Iron Silicides. The system can contain various compounds, such as Fe5 Si3 (with 23.17 per cent Si) and FeSi (with 33.4 per cent Si), the latter being more stable in the liquid state. That Fe Si is stable may be seen from the high thermal effect of its reaction: Feiq + Siliq

= FeSiliq : H1873 = -29,000 calories. The melting points of standard grades of Ferro-Silicon do not exceed 13300C. For instance, an alloy of Iron with 43-50 per cent Si melts at 1220-13300C and that with 70-78 per cent Si at 1300-13300C. COMPOSITION OF FERRO-SILICON ------------------------------------------------------------------------------------------------------------------------------------------------ Composition, % ------------------- ---------------------------------------------------------------------------------------------------------------------------- Si C S P Al Mn Cr Ti Ca (Upper limit) ------------------------------------------------------------------------------------------------------------------------------------------------ At least 89 - 0.02 0.03 3.0 0.2 0.2 - - 74-80 0.1 0.02 0.03 1.3 0.3 0.2 0.2 1.0 74-80 - 0.03 0.05 2.5 0.4 0.4 - - 63-68 - 0.03 0.05 2.0 0.4 0.4 - - 41-47 - 0.03 0.05 2.0 0.6 0.5 - - 22-29 0.6 0.03 0.07 1.0 0.9 - - - 17-22 1.3 0.04 0.10 1.0 1.0 - - - Silicon increases the hardness, ultimate strength, elastic and yield limit and oxidation resistance of steel, but lowers the ductility. Siliceous steels are widely used for making springs and like parts. Siliceous transformer Iron (with around 4 per cent Si) is known to have relatively low per losses. Manufacturing process The process for the manufacture of ferro alloys viz. Ferro-silicon, Ferro manganese and Ferro Chrome by submersible


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Arc furnace technology is well established in India and all leading Ferro Alloys manufacturers are using the above technology. The process essentially comprises the following steps:

The components of the charge for making Ferro-Silicon are minerals having a high content of Silica such as Quartz and Quartzite, Reducers like Charcoal, Nangal Coal, RPC, Lame, Wood Chips, Hard Coke and Mill Scale for Iron content. The hearth top and outer walls of the furnaces are lined with carbon paste backed by various grades of Alumina bricks. Silicon Carbide Bricks are used at the Tap Holes in view of their excellent Spalling Resistance and Thermal Conductivity. Upon appropriate pre heating of the newly made furnace lining, the furnace is charged with a charge for making 70 - 75 per cent Ferro-Silicon, with the charge level and the electrical load being raised gradually. Normal operating conditions are established in 3 - 5 days from the beginning of charging.

The process of making Ferro-Silicon produces very little slag, which is tapped together with the metal through the same tap hole. Raw materials for this Product will be transported on daily basis from the yard to the storage and weighing terminals, with the help of pay loaders/tippers. Then the raw materials will be transported to the storage day bins by means of belt conveyors through Screens. They will be drawn from different storage bins into common weigh hoppers in a predetermined proportion with the help of an Industrial Computer - PLC based electronic weighing system, which will be located in the furnaces’ control room. The recipe will be set by the metallurgist from time to time based on the analysis of the raw materials. The weigh hoppers will be supported on hermetically sealed electronic load cells. The mix thus drawn into the weigh hoppers is commonly called burden or charge and will be discharged onto a series of belts. The charge will be transported by the designated conveyors and will be distributed into various charging hoppers located around the furnace on the top floor of the furnace building. The charging hoppers are connected to the furnace by chutes with intermediate gates, which will be pneumatically actuated. Whenever the furnace operator actuates the gates to open, charge is unloaded into the furnace. Tapping is done periodically about 10 - 12 times a day as per a specified schedule and based on the power consumption. The tap hole is opened with Oxygen Lancing and / or MS round via an arcing gun. The melt runs out through the hole and begins to pass on to the Ladles. The tapping time is around 10 minutes. A sample of any Alloy metal is taken for analysis during tapping. The liquid Alloy is cast in moulds in thin cakes through decanting of the ladle, which are broken to required sizes after solidification, weighed and packed. The average chemical composition of Ferro-Silicon proposed to be manufactured in the plant is given below:

Si 70 - 75%

C 0.10% max.

S 0.05% max.

P 0.05% max


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Al 1.50% max.

Mn 0.20% max.

Ti 0.2% max

Fe Balance

SUBSIDIARY/ STEP DOWN SUBSIDIARIES Our Company has one Subsidiary – Cement Manufacturing Company Limited and four Step down subsidiaries i.e. Megha Technical & Engineers Private Limited, Star Cement Meghalaya Limited, Meghalaya Power Limited and NE Hills Hydro Limited. Details of our group structure are as under: Details about our subsidiary are as under: CEMENT MANUFACTURING COMPANY LIMITED (“CMCL”) Cement Manufacturing Company Limited is the largest cement manufacturer in the North Eastern Region (‘NER’). CMCL plant enjoys significant advantages such as proximity to high quality raw materials, strong civil infrastructure and comprehensive package of fiscal benefits offered by the Government. CMCL brand, 'STAR CEMENT’, is the largest selling brand in NER with a presence in all the eight North Eastern states commanding a market share of 20%. CMCL have been awarded the most preferred cement by Assam Real Estate & Infrastructural Developers Association. CMCL along with its subsidiaries owns mines of around 910 hectares at Lumshnong, Meghalaya which have the proven reserve of around 690 million tons of Limestone.


CEMENT MANUFACTURING COMPANY LIMITED

MEGHA TECHNICAL & ENGINEERS PRIVATE LIMITED

NE HILLS HYDRO LIMITED

STAR CEMENT MEGHALAYA LIMITED

70.48%

99.96%

48.80%

51.00%

MEGHALAYA POWER LIMITED

100%

87.49%

12.51%


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The present cement manufacturing capacity of CMCL and its subsidiaries are as under: Name of the Company Plant Capacity Location Clinker( MTPA) Cement( MTPA) Cement Manufacturing Company Limited 0.80 0.60 Lumshnong, Meghalaya Cement Manufacturing Company Limited 1.60 Guwahati, Assam.Megha Technical & Engineers Private Limited 0.68 Lumshnong, Meghalaya Star Cement Meghalaya Limited 1.75 Lumshnong, Meghalaya Beside this, CMCL through its subsidiary Meghalaya Power Limited (“MPL”) operates 8 MW Power plant at Lumshnong, Meghalaya. Recently, Meghalaya Power Limited has also set up a 43 MW thermal power plant at Lumshnong, Meghalaya. MPL has already commissioned one boiler of the said 43 MW power plant in March 2013 and expects to start the 2nd boiler by September 2013. Presently most of the power generated is being sold to companies within the Group namely Cement Manufacturing Company Ltd., Megha Technical & Engineers Pvt. Ltd. and Star Cement Meghalaya Ltd. Further, CMCL through its subsidiary NE Hills Hydro Ltd. is also exploring possibilities of setting up hydro-electric power plant in the North-east. MAIN OBJECTS OF THE COMPANY The objects for which our Company has been established are set out in the Memorandum of Association. The main objects are set out are hereunder:

1. To carry on in India or elsewhere the business as manufacturers, processors, re-rollers, refiners, smelters, converters, producers, exporters, importers, traders, distributors, stockiest, buyers, sellers, agents or merchants in all kinds and forms of ferrous and non-ferrous metals, minerals, alloys, coke, limestone, dolomite, clinker and cement and/or any of their by-products, and any other items relating thereto and for this purpose to take on lease or otherwise acquire, erect, construct, establish, work operate and maintain factories, quarries, mines and workshop.

2. To carry on in India or elsewhere the business to generate, transmit, trade, supply and to act as agent, broker, consultant of electric power generated from various renewable or non-renewable sources and for this purpose, to establish, construct, erect, commission hydro, wind, atomic, solar and other power plants; to acquire concessions, facilities or licenses from electricity boards, government, semi governments or local authorities for generation, distribution, production, transmission or use of electric power and to take over along with all movable and immovable properties, the existing facilities on mutually agreed terms from aforesaid authorities.


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OUR PROMOTERS AND THE MANAGEMENT OF THE COMPANY Promoters

Mr. Sajjan Bhajanka

Mr. Sajjan Bhajanka, 61 years, is a commerce graduate having 35 years of experience in plywood, ferro-silicon and cement industries. He is presently Chairman and Executive Director of Century Plyboards (India) Ltd. Mr. Sajjan Bhajanka is responsible for financial management of the group. Mr. Bhajanka is associated with various economic, commercial and social organizations. He is the President of Federation of Indian Plywood & Panel Industry and All India Veneer Manufacturers Association, Chairman of the Research Advisory Committee of Indian Plywood Industries Research and Training Institute, Bangalore. He is also the President of Marwari Relief Society. He is also the Senior Vice-President of Bharat Chamber of Commerce and Life Member and President of School Managing Committee of Sri Sri Academy. He is Secretary of Kalyan Bharati Trust, which has promoted and is managing The Heritage School, Heritage Business School and Heritage Institute of Technology. He is also the President of Friends of Tribal Society one of the largest NGOs in India which runs 50,000 One Teacher School across the country. Passport No: Z2217648 Voter ID : WB/23/148/222558

Mr. Prem Kumar Bhajanka

. Mr. Prem Kumar Bhajanka, 55 years, is a commerce graduate. He has an experience of over 35 years in plywood industry and had established two plywood units Changlang Plywoods Pvt. Ltd. and Cent Ply Pvt. Ltd. in the North-east, besides being the promoter of another plywood unit Century Panels Pvt. Ltd. in Haryana. He is presently Managing Director of Century Plyboards (India) Ltd. and Meghalaya Power Ltd. Mr. Bhajanka has also been instrumental in establishing Cement Manufacturing Company Ltd., one of the biggest cement plants in North-east. Passport No: F3214811 Voter ID :TER0112649

Mr. Sanjay Agarwal

Mr. Sanjay Agarwal, 52 years, is a commerce graduate having 26 years of experience in various fields. He is the Managing Director & a Promoter Director of Century Plyboards (India) Ltd. Mr. Sanjay Agarwal has been actively involved in several socio-cultural activities. He had served as President of Marwari YuvaManch. He is the Senior Vice-President of MCC Chamber of Commerce and Industry, Executive Committee Member of Indian Chamber of Commerce and Royal Calcutta Golf Club. He is also an avid golfer. Ex-Governing Body Member of Calcutta Wine Club and present Governing Body Member of Bengal Rowing Club. He is the promoter trustee of Kalyan Bharti Trust which has set up 'The Heritage School' and 'Heritage Institute of Technology' at Kolkata. He is a member of Young Presidents Organization a prestigious organization of young entrepreneurs.

Passport No: Z2218429 Voter ID : XYR0375238


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Mr. Hari Prasad Agarwal

Mr. Hari Prasad Agarwal, 65 years, is a commerce graduate having 40 years of rich experience in various industries. He is presently Vice chairman and Executive Director of Century Plyboards (India) Ltd.

He is associated with several social and charitable organisations including St. John Ambulance, India Red Cross Society, Marwari Relief Society, Shree Bishudanand Hospital, Salt lake Sanskrit Sadan, Salt lake Shiksha Sadan, Shri Hari Satsang Samity, Friends of Tribal Society, Nagrik Swastha Sangha, All India Marwari Federation, Maharaja Agrasain Nyas, Shri Kashi Vishwanath Seva Samity and All India Senior Citizen Forum.

Passport No: K4918251 Voter ID : WB/21/142/132434

Mr. Vishnu Khemani

Mr. Vishnu Khemani, 61 years, is a science graduate. He is having an experience of over 25 years in plywood industry. He is presently Managing Director of Century Plyboards (India) Ltd. and has inspired the company to offer products at par with the very best in the world. Mr. Vishnu Khemani has been instrumental in establishing the success of the brand ‘Sharon’ in the plywood industry and the same has received several certifications and awards. Mr. Vishnu Khemani strongly believes that education is the stepping stone to a bright future. He has been instrumental in the construction and maintenance of Higher Secondary Schools in Gummidipundi, Tamil Nadu thus educating over 1200 students every year.

Passport No: F5009805 Voter ID : CJJ0959338


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Directors of the Company Name & DIN of

the Director Address Designation Date of

Appointment Directorship in other

Companies Mr. Sajjan Bhajanka DIN: 00246043

15, Belvedere Road, Kolkata, 700027

Non-Executive Chairman

10.03.2011 1. Adonis Vyaper Private Limited 2. Apnapan Viniyog Private Limited 3. Ara Suppliers Private Limited 4. Arham Sales Private Limited 5. Cement Manufacturing Company

Limited 6. Century MDF Limited 7. Century Plyboards (India) Limited 8. Emami Limited 9. Makui Properties Private Limited 10. Marwari Relief Society 11. Meghalaya Power Limited 12. Pacific Plywoods Private Limited 13. Puri Ports Limited 14. Shyam Century Ferrous Limited 15. Shyam Century Multi Projects

Private Limited 16. Sri Ram Merchants Private Limited17. Sri Ram Vanijya Private Limited 18. Star Cement Meghalaya Limited

Mr. Hari Prasad Agarwal DIN : 00266005

CF-256, Salt Lake, Sector - I, Kolkata- 700064

Managing Director

10.03.2011 1. Amul Boards Private Limited 2. Century Crop Sciences Private

Limited 3. Century Infotech Limited 4. Century International Impex

Limited 5. Century MDF Limited 6. Century Plantations Limited 7. Century Plyboards (India) Limited 8. Century Plyboards (Meghalya)

Limited 9. Century Sumeru Development

Limited 10. Century Sumeru Infrastructure

Limited 11. Landmark Veneers Private

Limited 12. Megha Technical & Engineers

Private Limited 13. NE Hills Hydro Limited 14. Pushpanjali Abasan Private

Limited 15. Shyam Century Cement Industries

Limited 16. Shyam Century Ferrous Limited 17. Shyam Century Metallic Limited

Mr. Sanjay Agarwal DIN : 00246132

4A, Ashoka Road, Kolkata – 700 027

Non-Executive Non Independent

10.03.2011 1. Adonis Vyaper Private Limited 2. Apnapan Viniyog Private Limited 3. Ara Suppliers Private Limited 4. Arham Sales Private Limited 5. Auroville Investments Private

Limited


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6. Cement Manufacturing Company Limited

7. Century Coats Limited 8. Century MDF Limited 9. Century Plyboards (India) Limited 10. Pacific Plywoods Private Limited 11. Puri Ports Limited 12. Rani Sati Vihar Private Limited 13. Shyam Century Ferrous Limited 14. Star Cement Meghalaya Limited 15. Star India Cement Limited 16. Sumangal Business Private

Limited 17. Sumangal International Private

Limited

Mr. Manindra Nath Banerjee DIN : 00312918

124, Jodhpur Park, Kolkata - 700 068

Independent

12.04.2013 1. Century Plyboards (India) Limited 2. Skipper Limited

Mr. Mangi Lal Jain DIN : 00353075

37 - B, Garcha Road, Kolkata - 700 019

Independent

12.04.2013

1. Century Plyboards (India) Limited 2. Cement Manufacturing Company

Limited 3. Megha Technical & Engineers

Private Limited 4. Auro Sundram Ply and Door

Private Limited 5. Star Cement Meghalaya Limited 6. Meghalya Power Limited 7. Zenith Exports Limited 8. NE Hills Hydro Limited

Mr. Santanu Ray DIN : 00642736

P-14, Block-B, Bangur Avenue, Kolkata - 700 055

Independent 12.04.2013

1. Century Plyboards (India)Limited

Mrs. Plistina Dkhar DIN : 01375361

2, Mawpon, PS. Nongstoin, Dist. West Khasi Hills, Meghalaya- 793119

Independent 12.08.2013 1. Century Plyboards (Meghalaya) Ltd. 2. Riangdo Veneers Pvt. Ltd. 3. Shyam Century Ferrous Ltd. 4. Megha Bidyut Pvt. Ltd.

Brief Profile of Directors: Mr. Sajjan Bhajanka Mr. Sajjan Bhajanka, 61 years, is a commerce graduate having 35 years of experience in plywood, ferro-silicon and cement industries. He is presently Chairman and Executive Director of Century Plyboards (India) Ltd. His vision has brought laurels to Centuryply and today it has diversified successfully in the manufacturing of cement, ferro alloy, power, shipping, Container Freight Stations, etc. Mr. Sajjan Bhajanka is responsible for financial management of the group. Mr. Bhajanka is also Chairman of Cement Manufacturing Co. Ltd and Director of Star Cement Meghalaya Ltd., Meghalaya Power Ltd., Century MDF Ltd, Emami Ltd. to name a few. Mr. Bhajanka is associated with various economic, commercial and social organizations. He is the President of Federation of Indian Plywood & Panel Industry and All India Veneer Manufacturers Association, Chairman of the Research Advisory Committee of Indian Plywood Industries Research and Training Institute , Bangalore. He is also the President of Marwari Relief Society, a 100 years old hospital with 250 Beds. He is also the Senior Vice-President of Bharat Chamber of Commerce and Life Member and President of School Managing Committee of Sri Sri Academy. He


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is Secretary of Kalyan Bharati Trust, which has promoted and is managing The Heritage School, Heritage Business School and Heritage Institute of Technology. He is also the President of Friends of Tribal Society one of the largest NGOs in India which runs 50,000 One Teacher School across the country. Mr. Hari Prasad Agarwal Mr. Hari Prasad Agarwal, 65 years, is a commerce graduate having 40 years of rich experience in various industries. He is presently Vice chairman and Executive Director of Century Plyboards (India) Ltd. Mr. Agarwal is also a Director of Landmark Veneers Pvt. Ltd., Megha Technical & Engineers Pvt. Ltd., Shyam Century Cement Industries Ltd., Amul Boards Pvt. Ltd., and Century MDF Ltd. amongst other companies. He is also associated with several social and charitable organisations including St. John Ambulance, India Red Cross Society, Marwari Relief Society, Shree Bishudanand Hospital, Salt lake Sanskrit Sadan, Salt lake Shiksha Sadan, Shri Hari Satsang Samity, Friends of Tribal Society, Nagrik Swastha Sangha, All India Marwari Federation, Maharaja Agrasain Nyas, Shri Kashi Vishwanath Seva Samity and All India Senior Citizen Forum. Mr. Sanjay Agarwal Mr. Sanjay Agarwal, 52 years, is a commerce graduate having 26 years of experience in various fields. He is the Managing Director &a Promoter Director of the leading plywood and Veneer manufacturing company, Century Plyboards (India) Ltd. His market winning sales strategies has helped the brand 'Centuryply' to gain top position in the plywood industry and also enabled the Company to figure in the list of Top 500 companies in India. Mr. Agarwal is also a Director of Cement Manufacturing Company Ltd., Meghalaya, the manufacturer of the 'Star Cement', the top selling cement brand in the North-east. Sri Agarwal is also a Director of Star India Cement Ltd., Star Cement Meghalaya Ltd. and Century MDF Ltd. amongst other companies. Mr. Sanjay Agarwal has been actively involved in several socio-cultural activities. He had served as President of Marwari Yuva Manch. He is the Senior Vice-President of MCC Chamber of Commerce and Industry, Executive Committee Member of Indian Chamber of Commerce and Royal Calcutta Golf Club. He is also an avid golfer. Ex-Governing Body Member of Calcutta Wine Club and present Governing Body Member of Bengal Rowing Club. He is the promoter trustee of Kalyan Bharti Trust which has set up 'The Heritage School' and 'Heritage Institute of Technology' at Kolkata. He is a member of Young Presidents Organization a prestigious organization of young entrepreneurs. Mr. Manindra Nath Banerjee Mr. Manindra Nath Banerjee, 76 years is a Master of Arts and has retired from Indian Administrative Service, Government of West Bengal. He had served in senior positions in various Central and State Government undertakings like Durgapur Steel Plant, Durgapur Projects Ltd., Howrah Municipal Corporation, West Bengal Small Industries Corporation, Krishna Glass, Kolkata Gas Corporation, Saraswati Press, Great Eastern Hotel and finally retired as Secretary from Government of West Bengal. He is presently a Director of Century Plyboards (India) Ltd and Skipper Ltd. Mr. Santanu Ray Mr. Santanu Ray is a Chartered Accountant having worked as a Manager and Consultant with Tata Steel, Avantis Pharma in France, B.K. Birla Group of Companies, Zydus Cadila and B. P. Poddar Group. Mr. Ray has vast experience in the field of research and education and has been the Chief Mentor at various business schools like B. P. Poddar Institute of Management & Technology, Bengal Institute of Business Studies, NSHM Knowledge Campus and ICFAI Business School. He is also a Director of Century Plyboards (India) Ltd. Mr. Santanu Ray has also held honorary positions with Association of Indian Management Schools, Women Empowerment Sub-committee, Confederation of Indian Industry, Education sub- committee, Bengal Chamber of Commerce & Industry and Technical Education sub-committee and Confederation of Indian Industry. Mr. Ray has also come out with several books, research papers, case studies and articles which have received acclamations both in India


27

and abroad. Mr. Mangi Lal Jain Mr. Mangi Lal Jain, aged about 82 years, is a Commerce Graduate and Chartered Accountant. He had also completed Hindi Sahitya Visharad from Hindi Sahitya Sammelan, Allahabad. He had served in top executive positions in various companies of repute including J.K. Steel & Industries Ltd., Hindustan Gas & Industries Ltd., Jayashree Textiles & Industries Ltd., Madhya Bharat Papers Ltd., Emami Paper Mills Ltd., Gulmohar Paper Ltd., Emami Ltd., Advance Medicare & Research Institute Ltd. Besides Star Ferro and Cement Ltd, Mr. Mangi Lal Jain is also an independent Director on the Board of several other companies like Century Plyboards (India) Ltd., Cement Manufacturing Company Ltd., Megha Technical & Engineers Pvt. Ltd., Auro Sundram Ply & Doors Pvt. Ltd., Star Cement Meghalaya Ltd., Meghalaya Power Ltd., NE Hills Hydro Ltd. and Zenith Exports Ltd. Mr. Mangi Lal Jain has been actively associated with several social service organizations like Rotary club of Serampore, World Community Service Committee of Rotary District, Bhartiya Vanvasi Kalyan Ashram, Friends of Tribals Society, Ekal Vidyalya Foundation of India, Vanbandhu Parishad Nyas, Ekal Abhiyan Trust and Ekal Sansthan. Mrs. Plistina Dkhar Smt. Plistina Dkhar, 53 years, is an undergraduate. She has an experience of over 27 years and has been associated with various companies. Ms. Dkhar is stationed at Meghalaya and had been instrumental in successful installation and operation of company’s ferro alloy and power plant at Meghalaya. She is also Director of Century Plyboards (Meghalaya) Ltd., Riangdo Veneers Pvt. Ltd., Shyam Century Ferrous Ltd. and Megha Bidyut Pvt. Ltd. Corporate Governance

The Company is in full compliance with Clause 49 of the Listing Agreement with the stock exchanges:

The Company believes in good Corporate Governance and emphasizes on transparency, accountability and integrity in all its dealings without compromising on any of its obligations. It seeks to focus on regulatory compliances, fair play, justice and aims at enhancement of long-term shareholder value.

The Company endeavors to improve on these aspects on an ongoing basis.

Details of the Board and its committees are as follows: Board of Directors (BOARD)

Composition of Board

The Board comprises of four Independent Directors, two Non-Executive Promoter Directors and one Executive Promoter Director, who is the Managing Director of the Company. The Chairman of the Board is a Non-Executive Promoter Director. The number of Non-Executive Independent Directors is now more than half the total strength of the Board. The composition of the Board: Name of Directors Category Retirement by Rotation Mr. Sajjan Bhajanka Non-Executive Chairman Liable to retirement by rotation Mr. Hari Prasad Agarwal Managing Director Not Liable to retirement by rotation Mr. Sanjay Agarwal Non-Executive Director Liable to retirement by rotation Mr. Manindra Nath Banerjee Independent Director Liable to retirement by rotation Mr. Mangi Lal Jain Independent Director Liable to retirement by rotation Mr. Santanu Ray Independent Director Liable to retirement by rotation Mrs.Plistina Dkhar Independent Director Liable to retirement by rotation


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Audit Committee

The Audit Committee was reconstituted as per Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956. The constitution of the Audit Committee is as follows:

Name of Members Designation Mr. Mangi Lal Jain Chairman Mr. Hari Prasad Agarwal Member Mr. Manindra Nath Banerjee Member Mr. Santanu Ray Member

Powers of Audit Committee a) To investigate any activity within its terms of reference. b) To seek information from any employee. c) To obtain outside legal or other professional advice. d) To secure attendance of outsiders with relevant expertise, if it considers necessary.

Role of Audit Committee

A brief description of the role of the Audit Committee as contained under Clause 49 of the Listing

Agreement is as follows:

1. Oversight of the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees.

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

4. Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to:

a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of Section 217 of the Companies Act, 1956

b. Changes, if any, in accounting policies and practices and reasons for the same c. Major accounting entries involving estimates based on the exercise of judgment by management d. Significant adjustments made in the financial statements arising out of audit findings e. Compliance with listing and other legal requirements relating to financial statements f. Disclosure of any related party transactions g. Qualifications in the draft audit report.

5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval.

6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.

7. Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal


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control systems.

8. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

9. Discussion with internal auditors any significant findings and follow up there on.

10. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board.

11. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-

audit discussion to ascertain any area of concern.

12. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of nonpayment of declared dividends) and creditors.

13. To review the functioning of the Whistle Blower mechanism, in case the same is existing.

14. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the

finance function or discharging that function) after assessing the qualifications, experience & background, etc. of the candidate.

15. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. Share Transfer cum Investor Grievance Committee

The Shareholders’ / Investors’ Grievance Committee comprises of the following Member/Director of the Company:

Name of Members Designation Mr. Manindra Nath Banerjee Chairman Mr. Hari Prasad Agarwal Member

The terms of reference of the Share Transfer cum Investor Grievance Committee shall be as under:

1. Review and approve transfer of shares including transmission, splitting of shares, changing joint holding into

single holding and vice versa, issue of duplicate shares in lieu of those torn, destroyed, lost or defaced or where the cages in the reverse for recording transfers have been fully utilized.

2. Review the process and mechanism of redressal of investor grievance and suggest measures of improving the system of redressal of investor grievances.

3. Review and resolve the investors complaints about transfer of shares, non-receipt of share certificate(s), non-receipt of interest dividend warrants, non-receipt of annual report and any other grievance/complaints with Company or any officer of the Company arising out in discharge of his duties.

4. Oversee the performance of the Registrar & Share Transfer Agent and also review and take note of complaints directly received and resolve them.

5. Oversee the implementation and compliance of the Code of Conduct adopted by the Company for prevention of

Insider Trading for Listed Companies as specified in the Securities & Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 as amended from time to time.


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Remuneration Committee

The Remuneration Committee comprises of the following Member/Director of the Company:

Name of Members DesignationMr. Mangi Lal Jain ChairmanMr. Santanu Ray Member Mr. Manindra Nath Banerjee Member

The terms of reference of the Remuneration Committee shall be as under:

1. Determine the Company's policy on specific remuneration package for Managing Director / Whole-time Directors including pension rights.

2. Decide the salary, allowances, perquisites, bonuses, notice period, severance fees and increment of Whole-time Directors.

3. Decide the amount of Commission payable to the Whole time Directors.

4. Review and suggest revision of the total remuneration package of the Whole-time Directors keeping in view the performance of the Company, standards prevailing in the industry, statutory guidelines etc.

5. To review the overall compensation policy, service agreements and other employment conditions to Executive Directors and senior executives just below the Board of Directors and make appropriate recommendations to the Board of Directors;

6. To review the overall compensation policy for Non-Executive Directors and Independent Directors and make appropriate recommendations to the Board of Directors;

7. To make recommendations to the Board of Directors on the increments in the remuneration of the Directors;

8. To assist the Board in developing and evaluating potential candidates for senior executive positions and to oversee the development of executive succession plans;

9. To review and approve on annual basis the corporate goals and objectives with respect to compensation for the senior executives and make appropriate recommendations to the Board of Directors;

10. To review and make appropriate recommendations to the Board of Directors on an annual basis the evaluation process and compensation structure for the Company’s officers just below the level of the Board of Directors; and

11. To provide oversight of the management’s decisions concerning the performance and compensation of other officers of the Company.


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CAPITAL STRUCTURE Share Capital Pre-Scheme of Arrangement:

(` in Lacs) Amount Authorised 10.00 10,00,000 Equity Shares of `1/- each Issued & Subscribed 5,00,000 Equity Shares of `1/- each fully paid-up 5.00 Paid-up 5,00,000 Equity Shares of ` 1/- each fully paid-up 5.00 Share Capital Post-Scheme of Arrangement:

(` in Lacs) Amount Authorised 2,300.00 23,00,00,000 Equity Shares of `1/- each Issued & Subscribed 22,21,72,990 Equity Shares of `1/- each fully paid-up 2,221.73 Paid-up 22,21,72,990 Equity Shares of ` 1/- each fully paid-up 2,221.73 Equity Build up of the Company

Date of Allotment

No. of Shares

Cumulative No. of Shares

Face Value

(`)

Issue Price

(`)

Cumulative Paid-up

Capital (`)

Nature of Allotment/ Remarks

Consideration

10.03.2011 5,00,000 5,00,000 1 1 5,00,000* On Incorporation

Cash

22.07.2013 22,21,72,990 22,21,72,990 1 1 22,21,72,990 Scheme of Arrangement

Other than Cash

* Cancelled subsequently pursuant to the Scheme of Arrangement Shareholding pattern of the Company before and after the Scheme of Arrangement:

Shareholding pattern before the scheme:

The entire equity capital consisting of 500,000 equity shares was held by Century Plyboards (India) Limited.


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Shareholding pattern after the scheme: Category

Code Category of shareholder

Number of

share-holders

Total number of

shares

Number of shares held in dematerialised

form

Total shareholding as a percentage of total number of shares

Shares pledged or otherwise encumbered

As a percentage of ( A+B)

As a percentage of ( A+B+C)

Number of

shares

As a percent-

age

(A)

(1) (a)

(b)

(c) (d)

(e)

Shareholding of Promoter and Promoter Group Indian Individuals/Hindu Undivided Family 21 122600297 122600297 55.18 55.18 3000000 2.45 Central Government/State Government(s) - - - - - - - Bodies Corporate 6 39329080 39329080 17.70 17.70 Nil Nil Financial Institutions/Banks - - - - - - - Any other (specify) - - - - - - -

Sub-Total (A)(1) 27 161929377 161929377 72.88 72.88 3000000 1.85 (2) Foreign (a) Individuals (Non-

Resident Individuals/Foreign Individuals) - - - - - - -

(b) Bodies Corporate - - - - - - - (c) Institutions - - - - - - - (d) Any other (specify) - - - - - - - Sub-Total (A)(2) - - - - - - -

Total shareholding of Promoter and Promoter Group (A) = (A)(1)+(A)(2) 27 161929377 161929377 72.88 72.88 3000000 1.85

(B)

(1) (a) (b)

(c)

(d)

(e)

(f)

(g)

(h)

Public Shareholding Institutions Mutual Funds/UTI - - - - - - - Financial Institutions/Banks - - - - - - - Central Government/State Government(s) - - - - - - - Venture Capital Funds - - - - - - - Insurance Companies - - - - - - - Foreign Institutional Investors 9 2646202 2646202 1.19 1.19 - - Foreign Venture Capital Investors - - - - - - - Any other (specify) - - - - - - -

Sub-Total (B)(1) 9 2646202 2646202 1.19 1.19 - -


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(2) Non-institutions (a) Bodies Corporate 351 25566781 25550281 11.51 11.51 - - (b) Individuals-

i. Individual shareholders holding nominal share capital up to ` 1 lakh 8212 6772786 5576300 3.05 3.05 - -

(c)

ii. Individual shareholders holding nominal share capital in excess of ` 1 lakh 24 25104211 25104211 11.30 11.30 - - Any other (specify)-

Non-Resident Individuals 45 35375 35375 0.02 0.02 - -

Trusts 6 108750 108750 0.05 0.05 Clearing Members 7 9508 9508 0.00 0.00 Sub-Total (B)(2) 8645 57597411 56384425 25.92 25.92 - -

Total public shareholding (B) = (B)(1)+(B)(2) 8654 60243613 59030627 27.12 27.12 - -

Total (A)+(B) 8681 222172990 220960004 100.00 100.00 3000000 1.35 (C) Shares held by

custodians and against which depository Receipts have been issued

(1) Promoter and Promoter Group - - - - - - -

(2) Public - - - - - - -

GRAND TOTAL (A)+(B)+(C) 8681 222172990 220960004 100.00 100.00 3000000 1.35

Details of shareholding of Promoter and Promoter Group Companies

Sl. No. Shareholders Name No. of shares % 1. Sajjan Bhajanka 2,45,71,570 11.06 2. Sanjay Agarwal 2,37,88,740 10.71 3. Divya Agarwal 1,67,49,750 7.54 4. Santosh Bhajanka 1,56,49,500 7.04 5. Prem Kumar Bhajanka 1,54,58,510 6.96 6. Vishnu Khemani 74,86,857 3.37 7. Sudha Khemani 34,23,510 1.54 8. Yash Bhajanka 32,97,170 1.48 9. Bhawna Agarwal 28,87,690 1.30 10. Hari Prasad Agarwal 24,35,760 1.10 11. Hari Prasad Agarwal & Others HUF 18,52,990 0.83 12. Sumitra Devi Agarwala 16,76,250 0.75 13. Rajesh Kumar Agarwal 14,22,000 0.64 14. Sonu Bhajanka 6,00,000 0.27 15. Payal Bhajanka 6,00,000 0.27


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16. Shraddha Agarwal 6,00,000 0.27 17. Nancy Bhajanka 1,00,000 0.05 18. Sri Ram Vanijya Pvt. Ltd. 85,02,180 3.83 19. Brijdham Merchants Pvt. Ltd. 77,43,990 3.49 20. Sumangal International Pvt. Ltd. 76,66,800 3.45 21. Sumangal Business Pvt. Ltd. 68,31,240 3.07 22. Sri Ram Merchants Pvt. Ltd. 67,39,870 3.03 23. Auroville Investments Pvt. Ltd 18,45,000 0.83

Total 16,19,29,377 72.88

Statement showing Shareholding of persons belonging to the category 'Public' and holding more than 1%

Sl. No. Name of the Shareholders No. of shares % of Equity 1. Brij Bhushan Agarwal 37,37,490 1.68 2. Mittu Agarwal 31,13,890 1.40 3. Eskay Business Pvt.Ltd. 29,37,904 1.32 4. Subham Agarwal 28,26,000 1.27 5. Sheetij Agarwal 27,67,394 1.25 6. Ponni Trexim Pvt. Ltd. 27,42,588 1.23 7. Brij Bhushan Agarwal 27,24,709 1.23 8. India Capital Markets Pvt. Ltd. 23,82,421 1.07

Statement showing details of locked-in shares NIL Top 10 shareholders of the company

Sl. No. Name of the Shareholders No. of shares % of Equity

1. Sajjan Bhajanka 2,45,71,570 11.06 2. Sanjay Agarwal 2,37,88,740 10.71 3. Divya Agarwal 1,67,49,750 7.54 4. Santosh Bhajanka 1,56,49,500 7.04 5. Prem Kumar Bhajanka 1,54,58,510 6.96 6. Sri Ram Vanijya Pvt. Ltd. 85,02,180 3.83 7. Brijdham Merchants Pvt. Ltd. 77,43,990 3.49 8. Sumangal International Pvt. Ltd. 76,66,800 3.45 9. Vishnu Khemani 74,86,857 3.37 10. Sumangal Business Pvt. Ltd. 68,31,240 3.07


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OBJECTS AND RATIONALE OF THE SCHEME a. CPIL is a well established concern carrying on and having interests in diverse lines of business directly and through

its subsidiaries. The original business of CPIL was manufacture of plywood, laminate and allied products, including veneer, which it commenced from its first unit at Bishnupur in the State of West Bengal in 1986. In terms of a Scheme of Amalgamation, CPIL acquired with effect from 1st April 2005, the ferro alloys business of one Shyam Century Ferrous Limited (“Shyam Century”) along with the investment of Shyam Century in its subsidiary company, namely Cement Manufacturing Company Limited (CMCL), a company carrying on the business of manufacture of cement. The units of both Shyam Century and CMCL are situated in the State of Meghalaya. This acquisition marked the first major diversification for CPIL in terms of nature of business and interests as also extension of its geographical area of operations. CPIL presently holds 2,95,47,500 Equity Shares of `10/- each of CMCL constituting 70.48% of the total Issued, Subscribed and Paid up Share Capital of CMCL.

b. The businesses and interests of CPIL have since evolved in more ways than one. At the time of acquisition of the ferro alloys business and interest in cement business as above, the size and reach of the original business of CPIL and size of such new business and interest were relatively small and manageable in one entity. The said businesses and interests have since grown from strength to strength pursuant to a series of acquisitions and capacity expansion projects.

c. The plywood, laminate and allied products business of CPIL was already well established in 2005 with a strong brand, i.e ‘Centuryply’ but was largely conducted from the eastern region of the country. With effect from 1st April 2007, CPIL acquired the veneer and plywood related business of Century Panels Private Limited, Sharon Veneers Private Limited and Sharon Wood Industries Private Limited in the States of Haryana and Tamil Nadu in terms of a Scheme of Amalgamation of the said Companies with CPIL. CPIL also acquired the local brands of the said companies as part of the amalgamation. In terms of another Scheme of Amalgamation Cent Ply Private Limited, a company having a plywood unit in the State of Assam, was amalgamated with CPIL with effect from 1st April, 2009.CPIL has also taken a stake in and holds 5,10,000 Equity Shares of `10/- each constituting 51% of the total Issued, Subscribed and Paid up Share Capital of Auro Sundram Ply & Door Private Limited, a Company running a plywood unit in the State of Uttarakhand. The said acquisitions as also internal growth has resulted in considerable scaling up of the size and reach of the plywood, laminate and allied products business with well established brands and strong distribution and marketing network across the length and breadth of the country.

d. There has been a considerable scaling up of the ferro alloys and cement businesses as well since 2005. The ferro alloys business in CPIL has particularly benefited from higher capacity utilisation including commissioning of a Power Plant in March 2006. Such power plant is in the nature of a captive power plant with the power generated from the same being consumed by the ferro alloys plant in the first instance and only surplus power being sold to other parties. The cement business under CPIL’s subsidiary, i.e. CMCL has witnessed phenomenal growth fuelled by a strong demand for cement and capacity addition over the years. CMCL in turn has three operating subsidiaries namely, Megha Technical & Engineers Private Limited (“MTEPL”), Star Cement (Meghalaya) Limited (“SCML”) and Meghalaya Power Limited (“MPL”).CMCL holds 2,73,36,400 Equity Shares of `10/- each of MTEPL constituting 99.96% of the total Issued, Subscribed and Paid up Share Capital of MTEPL; 2,04,00,406 Equity Shares of `10/- each of SCML constituting 100.00% of the total Issued, Subscribed and Paid up Share Capital of SCML; and 87,36,620 Equity Shares of `10/- each of MPL constituting 51.00% of the total Issued, Subscribed and Paid up Share Capital of MPL.

e. Whilst CPIL has also forayed into and acquired interests in other lines of business in addition to the above, the same are essentially related to the plywood, laminate and allied products business and/or are carried on and held incidentally thereto having a relatively small size of operations and turnover. The said plywood, laminate and allied products business on the one hand and ferro alloys and cement business on the other hand constitute the largest business segments of the consolidated CPIL and are poised to grow further. A capacity expansion project in the consolidated cement business from existing 1.2 Million Tonnes per annum to 4.4 Million Tonnes per annum is underway and is expected to be operational in a few months. Further, MPL, a subsidiary of CMCL, is in the process of establishing a 51 Mega Watt (“MW”) power plant for supplying power to CMCL, MTEPL and SCML out of which facility for 8 MW has already been commissioned and balance 43 MW is also expected to be commissioned shortly. Whilst 87,36,620 Equity Shares of `10/- each constituting 51% of the total Issued, Subscribed and Paid up Share Capital of MPL are held by CMCL, 83,58,998 Equity Shares constituting 48.80% of the total Issued,


36

Subscribed and Paid up Share Capital of MPL are held by CPIL.

f. The present day nature and size of the ferro alloys and cement business on the one hand and plywood, laminate and allied products business on the other hand, including geographical footprint of such plywood, laminate and allied products business, are such that the divergent considerations, factors, financials, risks and rewards applicable to the running, growth and development of such businesses are required to be addressed with greater focus at all levels. Such size and divergent nature of the said businesses are also such that they are required to be evaluated and looked at separately. At present any prospective investor, strategic partner or other stakeholder interested in investing in equity capital or participating and taking a stake in any other form in either business has to look at and pay for the other business as well since the businesses are largely held in or through one company , i.e CPIL. The said businesses have good potential for funding, running, growth and development thereof as independent businesses.

g. In view, inter alia, of the aforesaid and as part of an overall business reorganisation plan and in order to take the respective businesses to the next level of growth it is necessary to segregate and realign the businesses and interests of CPIL appropriately. In the circumstances it is considered desirable and expedient to reorganise and reconstruct CPIL by demerging the Ferro Alloys and Cement Division of CPIL, including its investments in CMCL and MPL, to SFCL in the manner and on the terms and conditions stated in the Scheme of Arrangement. SFCL is presently a wholly owned (100%) subsidiary of CPIL.

h. The demerger will simplify and rationalise the holding structure of various businesses and interests of CPIL and

result in creation of two more focussed entities, i.e. (a) CPIL having interests primarily in the plywood, laminate and allied products business and (b) SFCL having interests primarily in ferro alloys and cement business. Consequent to the demerger, the plywood, laminate and allied products business and ferro alloys and cement business will be capable of independent evaluation. The same will unlock shareholders value and enable independent funding of the said businesses as also suitable strategic, technological and/or financial alliance and participation of appropriate partners and stakeholders in such business.

i. The demerger will enable the plywood, laminate and allied products business and ferro alloys and cement business to be held, carried on and monitored by CPIL and SFCL respectively with independent management and administrative set-up and greater focus, attention and specialisation. The Scheme will facilitate the business considerations and factors peculiar to the respective businesses to be addressed more effectively and adequately by the respective Companies.

j. The demerger will enable the said businesses to be carried on more conveniently and advantageously and will unlock the capacity of each of the businesses to raise and access larger funds for running, growth and expansion thereof on the basis of their individual strengths and operating parameters and independent evaluation.


37

SCHEME OF ARRANGEMENT The Hon’ble High Court of Calcutta at Kolkata, vide its Order dated May 17, 2013, has approved the Scheme of Arrangement among Century Plyboards (India) Limited, Star Ferro and Cement Limited and their respective Shareholders, whereby the demerger of Ferro Alloys and Cement Division of Century Plyboards (India) Limited to Star Ferro and Cement Limited with effect from April 01, 2012 (i.e. the Appointed Date under the Scheme) under Sections 391 to 394 of the Companies Act, 1956. The Scheme is operative from the Appointed Date i.e., April 01, 2012. However it is effective from the date of filing of Form 42 of the Companies (Court) Rules, 1959 of the High Court in relation to the Scheme along with Form 21 with the Registrar of Companies, Kolkata, i.e., June 28, 2013. The full text of the Scheme of Arrangement is as under:

PART – I

1. Definitions: In this Scheme, unless repugnant to the meaning or context thereof, the following expressions shall have the following meanings: i. “Act” means the Companies Act, 1956 or any statutory modification or re-enactment thereof. ii. “Appointed Date” means the 1st day of April, 2012. iii. “CPIL” means Century Plyboards (India) Limited, a Company incorporated under the Act and having its

registered office at 6, Lyons Range, Kolkata 700 001in the State of West Bengal. iv. “SFCL” means Star Ferro And Cement Limited, a Company incorporated under the Act and having its

registered office at 6, Lyons Range, Kolkata 700 001in the State of West Bengal. v. “Ferro Alloys and Cement Division” means the undertaking of CPIL constituted in the business and interests

of CPIL in manufacture of ferro alloys and cement, including captive power plants attached thereto and comprising (i) ferro alloys and power plant at Byrnihat in the State of Meghalaya, (ii) 2,95,47,500 Equity Shares of `10/- each in Cement Manufacturing Company Limited (“CMCL”), a Company manufacturing cement at Lumshnong in the State of Meghalaya and (iii) 83,58,998 Equity Shares of `10/- each in Meghalaya Power Limited (“MPL”), a Company setting up a power plant for supplying power primarily to CMCL and shall mean and include all property, rights and powers and all debts, liabilities, duties and obligations of CPIL pertaining to the Ferro Alloys and Cement Division, including:

(a) all properties and assets, moveable and immoveable, freehold and leasehold, real and personal,

corporeal and incorporeal, in possession, or in reversion, present and contingent of whatsoever nature, wheresoever situate, as on the Appointed Date relating to the Ferro Alloys and Cement Division, including all lands admeasuring 26,714 square metres in Raja Bagan, EPIP, Industrial Area, Plot No.A-8, Byrnihat, District Ri-Bhoi in the State of Meghalaya, buildings, commercial and residential flats and offices, plant and machinery, electrical installations, vehicles, equipment, furniture, investments, including 2,95,47,500 Equity Shares of `10/- each in CMCL and 83,58,998 Equity Shares of `10/- each in MPL, sundry debtors, inventories, cash and bank balances, bills of exchange, deposits, loans and advances and other assets as appearing in the books of account of CPIL in relation to the Ferro Alloys and Cement Division, leases, tenancies and agency of CPIL pertaining to the Ferro Alloys and Cement Division, and all other interests or rights in or arising out of or relating to the Ferro Alloys and Cement Division together with all respective powers, charges, privileges, benefits, entitlements, industrial and other licenses, registrations, quotas, patents, copyrights, brand names, trademarks, other intellectual property rights, liberties, easements and advantages, subsidies, grants, taxes, tax credits (including but not limited to credits in respect of income tax, sales tax, value added tax, turnover tax, excise duty, service tax, etcetera), deferred tax benefits and other benefits appertaining to the Ferro Alloys and Cement Division and/or to which CPIL is entitled to in respect of


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the Ferro Alloys and Cement Division of whatsoever kind, nature or description held, applied for or as may be obtained hereafter together with the benefit of all respective contracts and engagements and all respective books, papers, documents and records relating to the Ferro Alloys and Cement Division;

(b) all debts, liabilities, duties and obligations of CPIL in relation to the Ferro Alloys and Cement

Division, including liabilities on account of secured loans, unsecured loans and sundry creditors and sales-tax, bonus, gratuity and other taxation and contingent liabilities of CPIL pertaining to the Ferro Alloys and Cement Division; and

(c) all employees of CPIL engaged in or in relation to the Ferro Alloys and Cement Division.

vi. “Record Date” means the date to be fixed by the Board of Directors of CPIL in consultation with SFCL for

the purpose of determining the members of CPIL to whom new shares in SFCL will be allotted pursuant to Clause 10 of the Scheme.

vii. “Effective Date” means the date or last of the dates on which certified copies of the order of the Hon’ble High

Court at Calcutta sanctioning the Scheme are filed with the Registrar of Companies, West Bengal by CPIL and SFCL.

viii. “Scheme” means this Scheme of Arrangement under Sections 391 to 394 of the Act in the present form or

with such modifications as sanctioned by the Hon’ble High Court at Calcutta. ix. Word(s) and expression(s) elsewhere defined in the Scheme will have the meaning(s) respectively ascribed

thereto. 2. Share Capital: The Authorised, Issued, Subscribed and Paid-up Share Capital of CPIL and SFCL as on the date of approval of this Scheme by the respective managements of the said companies, i.e, 31 March, 2012 is as under: i. CPIL Authorised Share Capital: (Amount in `) 65,05,00,000 Equity Shares of `1/- each 65,05,00,000/- 15,00,000 Preference Shares of `10/- each 1,50,00,000/- 50,000 Preference Shares of `100/- each 50,00,000/- -------------------- 67,05,00,000/- -------------------- Issued Share Capital: 22,35,52,990 Equity Shares of `1/- each fully paid up 22,35,52,990/- 5,00,000 9% Cumulative Redeemable Preference Shares of `10/- each fully paid up 50,00,000/- --------------------- 22,85,52,990/- --------------------- Subscribed and Paid up Share Capital: 22,21,72,990 Equity Shares of `1/- each fully paid up 22,21,72,990/- Add Amount paid up on forfeited Equity Shares 3,54,250/- 5,00,000 9% Cumulative Redeemable Preference Shares of `10/- each fully paid up 50,00,000/- --------------------- 22,75,27,240/- ---------------------


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ii. SFCL Authorised Share Capital: 10,00,000 Equity Shares of `1/- each 10,00,000/- Issued, Subscribed and Paid up Share Capital: 5,00,000 Equity Shares of `1/- each fully paid up 5,00,000/-

All the aforesaid Equity Shares issued by SFCL are held by CPIL and its nominees. Accordingly, SFCL is presently a wholly owned (100%) subsidiary of CPIL.

3. Objects and Reasons: i. CPIL is a well established concern carrying on and having interests in diverse lines of business directly and

through its subsidiaries. The original business of CPIL was manufacture of plywood, laminate and allied products, including veneer, which it commenced from its first unit at Bishnupur in the State of West Bengal in 1986. In terms of a Scheme of Amalgamation, CPIL acquired with effect from 1st April 2005,the ferro alloys business of one Shyam Century Ferrous Limited (“Shyam Century”) along with the investment of Shyam Century in its subsidiary company, namely Cement Manufacturing Company Limited (CMCL), a company carrying on the business of manufacture of cement. The units of both Shyam Century and CMCL are situated in the State of Meghalaya. This acquisition marked the first major diversification for CPIL in terms of nature of business and interests as also extension of its geographical area of operations. CPIL presently holds 2,95,47,500 Equity Shares of `10/- each of CMCL constituting 70.48% of the total Issued, Subscribed and Paid up Share Capital of CMCL.

ii. The businesses and interests of CPIL have since evolved in more ways than one. At the time of acquisition of

the ferro alloys business and interest in cement business as above, the size and reach of the original business of CPIL and size of such new business and interest were relatively small and manageable in one entity. The said businesses and interests have since grown from strength to strength pursuant to a series of acquisitions and capacity expansion projects.

iii. The plywood, laminate and allied products business of CPIL was already well established in 2005 with a

strong brand, i.e ‘Centuryply’ but was largely conducted from the eastern region of the country. With effect from 1st April 2007, CPIL acquired the veneer and plywood related business of Century Panels Private Limited, Sharon Veneers Private Limited and Sharon Wood Industries Private Limited in the States of Haryana and Tamil Nadu in terms of a Scheme of Amalgamation of the said Companies with CPIL. CPIL also acquired the local brands of the said companies as part of the amalgamation. In terms of another Scheme of Amalgamation Cent Ply Private Limited, a company having a plywood unit in the State of Assam, was amalgamated with CPIL with effect from 1st April, 2009.CPIL has also taken a stake in and holds 5,10,000 Equity Shares of `10/- each constituting 51% of the total Issued, Subscribed and Paid up Share Capital of Auro Sundram Ply & Door Private Limited, a Company running a plywood unit in the State of Uttarakhand. The said acquisitions as also internal growth has resulted in considerable scaling up of the size and reach of the plywood, laminate and allied products business with well established brands and strong distribution and marketing network across the length and breadth of the country. As compared to a gross turnover of ` 226.51 crores in the financial year 2005-2006, the said business of CPIL had an average gross turnover of ` 823.70 Crores in the last three financial years, i.e 2009- 2012.

iv. There has been a considerable scaling up of the ferro alloys and cement businesses as well since 2005. The

ferro alloys business in CPIL has particularly benefited from higher capacity utilisation including commissioning of a Power Plant in March 2006. Such power plant is in the nature of a captive power plant with the power generated from the same being consumed by the ferro alloys plant in the first instance and only surplus power being sold to other parties. As compared to a gross turnover of `14.15 crores in the financial year 2005-2006, the ferro alloys business of CPIL had an average gross turnover of ` 117.51 crores in the last three financial years, i.e 2009-2012. The said figures are inclusive of turnover from external sales of power. The cement business under CPIL’s subsidiary, i.e. CMCL has witnessed phenomenal growth fuelled by a strong demand for cement and capacity addition over the years. CMCL in turn has three operating subsidiaries namely, Megha Technical & Engineers Private Limited (“MTEPL”), Star Cement (Meghalaya) Limited


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(“SCML”) and Meghalaya Power Limited (“MPL”).CMCL holds 2,73,36,400 Equity Shares of `10/- each of MTEPL constituting 99.96% of the total Issued, Subscribed and Paid up Share Capital of MTEPL; 2,04,00,406 Equity Shares of ` 10/- each of SCML constituting 100.00% of the total Issued, Subscribed and Paid up Share Capital of SCML; and 87,36,620 Equity Shares of ` 10/- each of MPL constituting 51.00% of the total Issued, Subscribed and Paid up Share Capital of MPL. Whilst MTEPL is running a cement grinding unit in the State of Meghalaya, SCML is setting up a clinker plant in the said State and MPL is operating a 8 MW power plant. As compared to a gross turnover of ` 152.32 crores in the financial year 2005-2006, the consolidated cement business under CMCL had an average gross turnover of ` 534.23 crores in the last three financial years, i.e 2009-2012. The said ferro alloys business and cement business came together and are both carried on and conducted in the North East, i.e from the State of Meghalaya.

v. Whilst CPIL has also forayed into and acquired interests in other lines of business in addition to the above, the

same are essentially related to the plywood, laminate and allied products business and/or are carried on and held incidentally thereto having a relatively small size of operations and turnover. The said plywood, laminate and allied products business on the one hand and ferro alloys and cement business on the other hand constitute the largest business segments of the consolidated CPIL and are poised to grow further. A capacity expansion project in the consolidated cement business from existing 1.2 Million Tonnes per annum to 4.4 Million Tonnes per annum is underway and is expected to be operational in a few months. Further, MPL, a subsidiary of CMCL, is in the process of establishing a 51 Mega Watt (“MW”) power plant for supplying power to CMCL, MTEPL and SCML out of which facility for 8 MW has already been commissioned and balance 43 MW is also expected to be commissioned shortly. Whilst 87,36,620 Equity Shares of ` 10/- each constituting 51% of the total Issued, Subscribed and Paid up Share Capital of MPL are held by CMCL, 83,58,998 Equity Shares constituting 48.80% of the total Issued, Subscribed and Paid up Share Capital of MPL are held by CPIL.

vi. The present day nature and size of the ferro alloys and cement business on the one hand and plywood, laminate

and allied products business on the other hand, including geographical footprint of such plywood, laminate and allied products business, are such that the divergent considerations, factors, financials, risks and rewards applicable to the running, growth and development of such businesses are required to be addressed with greater focus at all levels. Such size and divergent nature of the said businesses are also such that they are required to be evaluated and looked at separately. At present any prospective investor, strategic partner or other stakeholder interested in investing in equity capital or participating and taking a stake in any other form in either business has to look at and pay for the other business as well since the businesses are largely held in or through one company, i.e CPIL. The said businesses have good potential for funding, running, growth and development thereof as independent businesses.

vii. In view, inter alia, of the aforesaid and as part of an overall business reorganisation plan and in order to take

the respective businesses to the next level of growth it is necessary to segregate and realign the businesses and interests of CPIL appropriately. In the circumstances it is considered desirable and expedient to reorganise and reconstruct CPIL by demerging the Ferro Alloys and Cement Division of CPIL, including its investments in CMCL and MPL, to SFCL in the manner and on the terms and conditions stated in this Scheme of Arrangement. SFCL is presently a wholly owned (100%) subsidiary of CPIL.

viii. The demerger will simplify and rationalise the holding structure of various businesses and interests of CPIL

and result in creation of two more focussed entities, i.e. (a) CPIL having interests primarily in the plywood, laminate and allied products business and (b) SFCL having interests primarily in ferro alloys and cement business. Consequent to the demerger, the plywood, laminate and allied products business and ferro alloys and cement business will be capable of independent evaluation. The same will unlock shareholders value and enable independent funding of the said businesses as also suitable strategic, technological and/or financial alliance and participation of appropriate partners and stakeholders in such business.

ix. The demerger will enable the plywood, laminate and allied products business and ferro alloys and cement

business to be held, carried on and monitored by CPIL and SFCL respectively with independent management and administrative set-up and greater focus, attention and specialisation. The Scheme will facilitate the business considerations and factors peculiar to the respective businesses to be addressed more effectively and adequately by the respective Companies.


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x. The demerger will enable the said businesses to be carried on more conveniently and advantageously and will unlock the capacity of each of the businesses to raise and access larger funds for running, growth and expansion thereof on the basis of their individual strengths and operating parameters and independent evaluation.

xi. The demerger will assist in the potential of the respective businesses being realized more fully and will have

beneficial results for the said Companies, their shareholders and all concerned. The Scheme is proposed accordingly.

PART – II (The Scheme)

1. Transfer of Undertaking:

4.1 With effect from the Appointed Date, the Ferro Alloys and Cement Division shall be demerged from CPIL and transferred to SFCL as a going concern for all the estate and interest of CPIL therein in accordance with and subject to the modalities for transfer and vesting stipulated herein.

4.2 In respect of such of the assets of the Ferro Alloys and Cement Division as are movable in nature or are otherwise capable of transfer by manual delivery, by paying over or by endorsement and delivery, the same may be so transferred by CPIL, without requiring any deed or instrument of conveyance for the same and shall become the property of SFCL accordingly and as an integral part of the Ferro Alloys and Cement Division transferred to SFCL.

4.3 In respect of such of the assets belonging to the Ferro Alloys and Cement Division other than those referred to in Clause 4.2 above, the same shall, be transferred to and vested in and/or be deemed to be transferred to and vested in SFCL pursuant to the provisions of Section 394(2) of the Act.

4.4 All debts, liabilities, duties and obligations of CPIL relating to the Ferro Alloys and Cement Division as on the

close of business on the day immediately preceding the Appointed Date and all other debts, liabilities, duties and obligations of CPIL relating to the Ferro Alloys and Cement Division which may accrue or arise from the Appointed Date but which relate to the period up to the day immediately preceding the Appointed Date shall also be transferred to SFCL, without any further act or deed, pursuant to the provisions of Section 394(2) of the Act, so as to become the debts, liabilities, duties and obligations of SFCL. It is clarified that it shall not be necessary to obtain the consent of any third party or other person who is a party to any contract or arrangement by virtue of which such debts, liabilities, duties and obligations have arisen in order to give effect to the provisions of this Clause.

4.5 The transfer and vesting of the Ferro Alloys and Cement Division of CPIL, as aforesaid, shall be subject to the existing charges, mortgages and encumbrances, if any, over the assets or any part thereof, provided however that such charges, mortgages and/ or encumbrances shall be confined only to the assets of Ferro Alloys and Cement Division of CPIL or part thereof on or over which they are subsisting on transfer to and vesting of such assets in SFCL and no such charges, mortgages, and/ or encumbrances shall extend over or apply to any other asset(s) of SFCL. Any reference in any security documents or arrangements (to which CPIL is a party) to any assets of CPIL shall be so construed to the end and intent that such security shall not extend, nor be deemed to extend, to any of the other asset(s) of SFCL. Similarly, SFCL shall not be required to create any additional security over assets of Ferro Alloys and Cement Division of CPIL acquired by it under this Scheme for any loans, debentures, deposits or other financial assistance already availed/to be availed by SFCL and the charges, mortgages, and/ or encumbrances in respect of such indebtedness of SFCL shall not extend or be deemed to extend or apply to the assets of Ferro Alloys and Cement Division so acquired by SFCL. It is clarified that the transfer of the Ferro Alloys and Cement Division of CPIL to SFCL shall not affect the subsisting charges, mortgages and encumbrances over the assets retained by CPIL or any part thereof and such charges, mortgages and encumbrances shall continue to be applicable in respect of such assets.

4.6 Subject to the other provisions of this Scheme, all entitlements, licenses, permissions, approvals, clearances, authorisations, consents, brands, trademarks, other intellectual property rights registrations and no-objection certificates obtained by CPIL for the operations of the Ferro Alloys and Cement Division and/or to which CPIL is entitled to in relation to the Ferro Alloys and Cement Division in terms of the various Statutes / Schemes / Policies, etcetera of Union and State Governments, shall be available to and vest in SFCL, without any further act or deed


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and shall be mutated by the statutory authorities concerned therewith in favour of SFCL. Since the Ferro Alloys and Cement Division will be transferred to and vested in SFCL as a going concern without any break or interruption in the operations thereof, SFCL shall be entitled to enjoy the benefit of all such entitlements, licenses, permissions, approvals, clearances, authorisations, consents, intellectual property rights, registrations and no-objection certificates as enjoyed by CPIL and to carry on and continue the operations of the Ferro Alloys and Cement Division on the basis of the same upon this Scheme becoming effective. Accordingly, all existing and future incentives, unavailed credits and exemptions, benefit of carried forward losses and other statutory benefits, including in respect of Income Tax, Excise (including Modvat/Cenvat), Customs, VAT, Sales Tax, Service Tax etcetera to which CPIL is entitled in relation to the Ferro Alloys and Cement Division in terms of the various Statutes / Schemes / Policies, etcetera of Union and State Governments shall be available to and vest in SFCL upon this Scheme becoming effective. Further, the experience, track record and credentials of the Ferro Alloys and Cement Division in manufacturing and supplying the products thereof to various authorities, agencies and clients prior to its transfer to SFCL shall be taken into account and treated and recognised as the experience, track record and credentials of such Ferro Alloys and Cement Division even after its transfer to SFCL, including for the purpose of eligibility, standing, evaluation and participation of SFCL in all existing and future bids, tenders and contracts of such authorities, agencies and clients.

4.7 It is clarified that all the taxes and duties payable by CPIL, relating to the Ferro Alloys and Cement Division,

from the Appointed Date onwards including all advance tax payments, tax deducted at source, tax liabilities or any refund and claims shall, for all purposes, be treated as advance tax payments, tax deducted at source, tax liabilities or refunds and claims of SFCL. Accordingly, upon the Scheme becoming effective, CPIL is expressly permitted to revise and SFCL is expressly permitted to file their respective, income tax returns including tax deducted at source certificates, sales tax/value added tax returns, excise returns, service tax returns and other tax returns, and to claim refunds/credits, pursuant to the provisions of this Scheme.

4.8 The ferro alloys and power plant is situated at Byrnihat in the State of Meghalaya. The shares of CMCL and

MPL held by CPIL are also situated in the State of Meghalaya, the registered offices of CMCL and MPL being situated in the said State. All the property and assets comprised in the Ferro Alloys and Cement Division are thus situated in the State of Meghalaya. SFCL shall be entitled to mutation in its favour, wherever required in the State of Meghalaya, in respect of the property and assets transferred to and vested in it pursuant to this Scheme.

5. Legal Proceedings:

All legal, or other proceedings by or against CPIL and relating to the Ferro Alloys and Cement Division, including proceedings under various tax laws, shall be continued and enforced by or against SFCL only. If proceedings are taken against CPIL, CPIL will defend on notice or as per advice of SFCL at the costs of SFCL and SFCL will indemnify and keep indemnified CPIL from and against all liabilities, obligations, actions, claims and demands in respect thereof.

6. Contracts and Deeds:

Subject to the other provisions contained in this Scheme all contracts, deeds, bonds, agreements and other instruments of whatsoever nature relating to the Ferro Alloys and Cement Division to which CPIL is a party subsisting or having effect immediately before the Effective Date shall remain in full force and effect against or in favour of SFCL and may be enforced as fully and effectually as if instead of CPIL, SFCL had been a party thereto.

7. Saving of Concluded Transactions:

The transfer and vesting of the properties and liabilities of the Ferro Alloys and Cement Division and the continuance of the proceedings by or against SFCL as per the provisions hereof shall not affect any transaction or proceeding relating to the Ferro Alloys and Cement Division already completed by CPIL on or before the Effective Date to the end and intent that SFCL accepts all acts, deeds and things relating to the Ferro Alloys and Cement Division done and executed by and/or on behalf of CPIL as acts deeds and things done and executed by and on behalf of SFCL.


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8. Employees: 8.1 SFCL undertakes to engage on and from the Effective Date all the employees of CPIL engaged in the Ferro

Alloys and Cement Division on the same terms and conditions on which they are engaged by CPIL without any interruption of service as a result of the transfer of the Ferro Alloys and Cement Division to SFCL. SFCL agrees that the services of all such employees with CPIL up to the Effective Date shall be taken into account for the purposes of all benefits to which the said employees may be eligible, including for the purpose of payment of any retrenchment compensation, gratuity and other terminal benefits.

8.2 The accumulated balances, if any, standing to the credit of the employees of the Ferro Alloys and Cement

Division in the existing Provident Fund, Gratuity Fund, Superannuation Fund and other funds of which they are members will be transferred to such Provident Fund, Gratuity Fund, Superannuation Fund and other funds nominated by SFCL and/or such new Provident Fund, Gratuity Fund, Superannuation Fund and other funds to be established and caused to be recognised by the concerned authorities by SFCL. Pending the transfer as aforesaid, the dues of the employees of the Ferro Alloys and Cement Division relating to the said funds would be continued to be deposited in the existing Provident Fund, Gratuity Fund, Superannuation Fund and other funds respectively.

9. Business in trust for SFCL: With effect from the Appointed Date and up to and including the Effective Date: 9.1 CPIL undertakes to carry on the business of the Ferro Alloys and Cement Division in the ordinary course of

business and CPIL shall be deemed to have carried on and to be carrying on all business and activities relating to the Ferro Alloys and Cement Division for and on account of and in trust for SFCL.

9.2 All profits accruing to CPIL(including taxes paid thereon) or losses arising or incurred by it relating to the

Ferro Alloys and Cement Division for the period falling on and after the Appointed Date shall for all purposes, be treated as the profits (including taxes paid) or losses, as the case may be of SFCL.

9.3 CPIL shall be deemed to have held and stood possessed of the properties to be transferred to SFCL for and on

account of and in trust for SFCL and, accordingly, CPIL shall not (without the prior written consent of SFCL) alienate, charge or otherwise deal with or dispose of the Ferro Alloys and Cement Division or any part thereof except in the usual course of business.

10. Issue of Shares by SFCL: 10.1 Upon the Scheme becoming effective and in consideration of the demerger and transfer of the Ferro Alloys and

Cement Division, SFCL shall, without further application, issue and allot to the shareholders of CPIL whose names shall appear in the Register of Members of CPIL as on a Record Date to be fixed by CPIL in consultation with SFCL, 1 (One) Equity Share of `1/- each in SFCL, credited as fully paid up for every 1 (One) Equity Share of ` 1/- each held by them in CPIL.

10.2 All the Equity Shares to be issued and allotted by SFCL to the Equity Shareholders of CPIL under this Scheme

shall rank pari passu in all respects with the existing Equity Shares of SFCL. Further such Equity Shares shall pursuant to circular issued by the Securities Exchange Board of India (SEBI) on 3 September 2009 bearing No. SEBI/CFD/SCRR/01/2009/03/09 and subject to compliance with requisite formalities be listed and/or admitted to trading on the relevant stock exchange(s) where the existing Equity Shares of CPIL are listed and/or admitted to trading.

10.3 In respect of the shareholding of the members in CPIL held in the dematerialised form, the Equity Shares in

SFCL shall, subject to applicable regulations, also be issued to them in the dematerialised form pursuant to clause 10.1 above with such shares being credited to the existing depository accounts of the members of CPIL entitled thereto, as per records maintained by the National Securities Depository Limited and / or Central Depository Services (India) Limited on the Record Date.


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10.4 In respect of the shareholding of the members in CPIL held in the certificate form, the Equity Shares in SFCL

shall be issued to such members in certificate form. Members of CPIL desirous of receiving the new shares in SFCL in dematerialised form should have their shareholding in CPIL dematerialised on or before the Record Date.

10.5 SFCL will take necessary steps to increase its authorised share capital suitably pursuant to the Scheme becoming effective to enable it to issue and allot the Equity Shares to the shareholders of CPIL as aforesaid.

10.6 The shares allotted pursuant to the Scheme shall remain frozen in the depositories system till listing/trading

permission is given by the designated stock exchange.

10.7 Shares in SFCL shall be allotted to the shareholders of CPIL as on the Record Date and existing capital of SFCL held by CPIL shall stand cancelled as provided in this Scheme. There shall be no change in the shareholding pattern or control in SFCL between the Record Date and listing which may affect the status of approval of the stock exchanges to this Scheme.

11. Cancellation of Existing Shares of SFCL:

All existing shares held by CPIL and its nominees in SFCL, i.e. 5,00,000 Equity Shares of `1/- each shall stand cancelled, without any further act or deed, upon the new Equity Shares being issued by SFCL to the shareholders of CPIL as on the Record Date in terms of clause 10.1 of this Scheme and until such cancellation shall continue to be held by the said shareholders.

12. Accounting:

12.1 The assets and liabilities of the Ferro Alloys and Cement Division shall be transferred to SFCL at their values as appearing in the books of account of CPIL as on the Appointed Date.

12.2 The difference between the value of the said assets and liabilities of the Ferro Alloys and Cement Division so recorded in the books of account of SFCL, as reduced by the aggregate face value of the Equity Shares issued and allotted by SFCL in terms of Clause 10 above shall be adjusted in reserves as provided herein. An amount equivalent to the Capital Investment Subsidy received by CPIL in relation to the Ferro Alloys and Cement Division and credited to Capital Reserves in the books of account of CPIL shall be credited to Capital Reserves in the books of SFCL. The difference between the book value of the assets and liabilities of the Ferro Alloys and Cement Division remaining after reducing therefrom Issued Share Capital and Capital Reserves as above shall be credited to the Capital Reserves in the books of accounts of SFCL and will be available for use as such in any manner permissible except for distribution by way of dividend.

12.3 In the books of account of CPIL the difference between the assets and liabilities of the Ferro Alloys and Cement Division, shall be first adjusted against the Capital Reserves of CPIL to the extent such reserves were created on receipt of Capital Investment Subsidy in relation to Ferro Alloys and Cement Division as above. The remaining difference shall be thereafter adjusted against General Reserves of CPIL.

12.4 Subject to the aforesaid, the Board of Directors of CPIL and SFCL shall be entitled to make such corrections

and adjustments as may in their opinion be required for ensuring consistent accounting policy or which may otherwise be deemed expedient by them in accounting for the demerger in the respective books of account of the said Companies.

13. Applications:

CPIL and SFCL shall, with all reasonable dispatch, make necessary applications to the Hon’ble High Court at Calcutta for sanction and carrying out of the Scheme. Any such application shall, upon constitution of the National Company Law Tribunal under Section 10FB of the Act, be made and/or pursued before the National Company Law Tribunal, if so required. In such event references in this Scheme to the Hon’ble High Court at Calcutta shall be construed as references to the National Company Law Tribunal as the context may require. CPIL and SFCL shall also take such other steps as may be necessary or expedient to give full and formal effect to the provisions of this Scheme.


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14. Modification and Implementation:

CPIL and SFCL (by their respective Board of Directors or Committee thereof or such other person or persons, as the respective Board of Directors may authorise) are empowered and authorised:

14.1 to assent from time to time to any modifications or amendments or substitutions of the Scheme or of any conditions or limitations which the Hon’ble High Court at Calcutta and / or any authorities under law may deem fit to approve or direct or as may be deemed expedient or necessary; and

14.2 to settle all doubts or difficulties that may arise in carrying out the Scheme and to do and execute all acts, deeds, matters and things necessary, desirable or proper for putting the Scheme into effect.

Without prejudice to the generality of the foregoing CPIL and SFCL (by their respective Board of Directors or such other person or persons, as the respective Board of Directors may authorise) shall each be at liberty to withdraw from this Scheme in case any condition or alteration imposed by any authority is unacceptable to them or as may otherwise be deemed expedient or necessary.

15. Scheme Conditional Upon:

The Scheme is conditional upon and subject to:

15.1 Approval of the Scheme by the requisite majority of the members of CPIL and SFCL; and

15.2 Sanction of the Scheme by the Hon’ble High Court at Calcutta pursuant to Section 391 of the Act.

Accordingly, the Scheme although operative from the Appointed Date shall become effective on the Effective Date, being the date or last of the dates on which certified copies of the order of the Hon’ble High Court at Calcutta sanctioning the Scheme are filed with the Registrar of Companies, West Bengal by CPIL and SFCL.

16. Remaining Business:

Save and except the Ferro Alloys and Cement Division of CPIL and as expressly provided in this Scheme of Arrangement nothing contained in this Scheme of Arrangement shall affect the rest of the business, assets, and liabilities of CPIL which shall continue to belong to and be vested in and be managed by CPIL.

17. Costs:

All costs, charges and expenses in connection with the Scheme, incurred up to the stage of the Scheme becoming effective shall be borne and paid by SFCL. Subsequent to the said stage or in the event the Scheme does not take effect or stands withdrawn for any reason whatsoever, each Company shall pay and bear their own costs.

18. Residual Provisions: 18.1 Even after this Scheme becomes operative, SFCL shall be entitled to operate all Bank Accounts relating to the

Ferro Alloys and Cement Division and realise all monies and complete and enforce all pending contracts and transactions in respect of the Ferro Alloys and Cement Division in the name of CPIL in so far as may be necessary until the transfer of rights and obligations of CPIL to SFCL under this Scheme is formally accepted by the parties concerned.

18.2 On the approval of the Scheme by the members of CPIL and SFCL pursuant to Section 391 of the Act, it shall

be deemed that the said members have also accorded all relevant consents under Sections 81(1-A), 100 or any other provisions of the Act to the extent the same may be considered applicable.

18.3 The demerger and transfer and vesting of the Ferro Alloys and Cement Division under this Scheme has been proposed in compliance with the provisions of Section 2(19AA) of the Income-Tax Act, 1961.


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STATEMENT OF TAX BENEFITS

To, The Board of Directors Star Ferro & Cement Limited 6, Lyons Range, 1st Floor Kolkata- 700 001 Dear Sirs, Statement of Possible Tax Benefits available to Star Ferro & Cement Limited and its shareholders We report that the enclosed statement states the possible tax benefits available to Star Ferro & Cement Limited ("the Company") and to the shareholders of the Company under the Income Tax Act, 1961 and Wealth Tax Act, 1957, as amended by Finance Act, 2013. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant provisions of the statute. Hence, the ability of the Company to derive the tax benefits is dependent upon their fulfilling such conditions, which based on business imperatives, the Company face in future, the Company may or may not choose to fulfill. The possible tax benefits discussed in the enclosed statement are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue. We do not express any opinion or provide any assurance as to whether:

i) The Company or its shareholders will continue to obtain these benefits in future; or

ii) The conditions prescribed for availing the benefits have been / would be met with.

The contents of the enclosed statement are based on information, explanations and representations obtained from the Company and on the basis of their understanding of the business activities and operations of the Company. Arun Kumar Sharma (Partner) Membership no: 057329 For and On behalf of Kailash B. Goel & Co. Chartered Accountants Firm Regn. No.: 322460E Place: Kolkata Date: July 24, 2013


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STATEMENT OF TAX BENEFITS 1. Special Tax Benefits available to the Company under the Income Tax Act, 1961

Nil 2. Special Tax Benefits available to the Shareholders of the Company Nil 3. General Tax Benefits available to the Company under the Income Tax Act, 1961 3.1 As per Section 32AC of the Income Tax Act, 1961, where an assessee, being a company,—

(a) is engaged in the business of manufacture of an article or thing and

(b) invests a sum of more than `100 crore in new assets (plant or machinery) as specified in Section 32AC, during

the period beginning from 1st April, 2013 and ending on 31st March, 2015, then, the assessee shall be allowed—

(i) for assessment year 2014-15, a deduction of 15% of aggregate amount of actual cost of new assets

acquired and installed during the financial year 2013-14, if the cost of such assets exceeds `100 crore;

(ii) for assessment year 2015-16, a deduction of 15% of aggregate amount of actual cost of new assets, acquired and installed during the period beginning on 1st April, 2013 and ending on 31st March, 2015, as reduced by the deduction allowed, if any, for assessment year 2014-15.

However there is a restriction on the transfer of plant or machinery for a period of 5 years. However, this restriction shall not apply in a case of amalgamation or demerger but shall continue to apply to the amalgamated company or resulting company, as the case may be. The benefit will be available from 1st April 2014, and will accordingly apply in relation to A.Y 2014-15 and subsequent years. 3.2 Under section 32 of the Act, the deduction for depreciation will be available at the prescribed rates on tangible

assets such as building, plant and machinery, furniture and fixtures, etc. and intangible assets such as patents, trademarks, copy rights, know how, licenses, franchise or any other business or commercial rights of similar nature.

3.3 Income earned by the Company by way of dividend referred to in Section 115-O of the Income Tax Act, 1961

received from domestic companies is exempt from tax under section 10(34) of the Act. However, as per section 94(7) of the Act, losses arising from sale / transfer of shares, where such shares are purchased within three months prior to the record date and sold within three months from the record date, will be disallowed to the extent such loss does not exceed the amount of dividend claimed exempt.

Any income received by the Company from distribution made by any mutual fund specified under section 10(23D) of the Act or from the administrator of the specified undertaking or from the administrator of specified company referred to in Section 10(35) of the Act, is exempt from tax in the hands of the Company under section 10(35) of the Act. However, as per section 94(7) of the Act, losses arising from the sale/ redemption of units purchased within three months prior to the record date (for entitlement to receive income) and sold within nine months from the record date, will be disallowed to the extent such loss does not exceed the amount of income claimed exempt.

3.4 Section 115BBD of Income-tax Act provides for taxation of gross dividends received by an Indian company from a

specified foreign company (in which it has shareholding of 26% or more in nominal value of the equity share capital) at the rate of 15% if such dividend is included in the total income for the Financial Year 2013-14 i.e. Assessment Year 2014-15.

3.5 As per section 94(8) of the Act, if an investor purchases units within three months prior to the record date for

entitlement of bonus, and is allotted bonus units without any payment on the basis of holding original units on the


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record date and such person sells/ redeems the original units within nine months of the record date, then the loss arising from sale/ redemption of the original units will be ignored for the purpose of computing income chargeable to tax and the amount of loss ignored shall be regarded as the cost of acquisition of the bonus units.

3.6 Income by way of interest, premium on redemption or other payment on notified securities, bonds, certificates

issued by the Central Government is exempt from tax under section 10(15) of the Act in accordance with and subject to the conditions and limits as may be specified in notifications.

3.7 Long-term capital gain on sale of equity shares or units of an equity oriented mutual fund will be exempt from tax

under section 10(38) of the Act provided that the transaction of such sale is chargeable to Securities Transaction Tax (“STT’). However, when the company is liable to tax on book profits under section 115JB of the Act, the said income is required to be included in book profits and taken into account in computing the minimum alternate tax under section 115 JB.

3.8 In the computation of long term capital gains (which is not exempt from tax), as per the provisions of section 48,

the actual cost of acquisition may be substituted by the indexed cost of acquisition i.e. the actual cost is scaled up by the prescribed index factor, resulting into reduced taxable income.

3.9 In accordance with the provisions of section 112 of the Act, long-term capital gains on transfer of capital assets

other than bonds or debentures (excluding capital indexed bonds issued by the Government), transfer of which is not subject to STT, is chargeable to tax at the rate of 20% plus applicable surcharge, education cess and secondary & higher education cess (‘Education Cess’).

However, where tax on long term capital gains arising on sale of listed securities or unit of mutual fund specified in section 10(23D) of the Act or zero coupon bond, calculated at the rate of 20% with cost indexation benefit exceeds the tax calculated at the rate of 10% without cost indexation benefit, then such gains are chargeable to tax at a concessional rate of 10% (plus applicable surcharge and Education Cess). According to the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains arising from the transfer of any long-term capital asset shall not be taxable, provided that the Company has at any time within a period of six months after the date of such transfer, invested the whole of capital gains in any long-term specified asset. However, if such long-term specified asset is transferred or converted into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier shall become chargeable to tax as long term capital gains in the year in which such long-term specified asset is transferred or converted into money. Section 54EC also provides for a ceiling of INR 5 million per financial year on investments in such long term specified asset. Further, if only a portion of capital gains is so invested, then the exemption is available proportionately. For the purpose of section 54EC, long term specified assets means any bond redeemable after three years and issued by:

i) National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988; or

ii) Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956.

3.10 Under Section 111A of the Act, short-term capital gain on sale of equity shares or units of an equity oriented

mutual fund shall be chargeable to tax at the rate of 15% (plus applicable surcharge and Education Cess) provided that transaction of such sale is chargeable to STT.

3.11 According to the provisions of section 115JAA(1A) of the Act, credit is allowed in respect of any Minimum

Alternate Tax (“MAT”) paid under section 115JB of the Act for any assessment year commencing on or after April 1, 2006. Tax credit which can be carried forward is equal to the difference between MAT paid by the Company for one assessment year and tax computed as per normal provisions of the Act for that assessment year. MAT Tax credit, which can be allowed shall be the difference of the tax paid for any assessment year under Section 115JB(1)


49

and the amount of tax payable as per normal provisions of the Act for that assessment year. MAT credit can be carried forward for the purpose of set off up to 10 years succeeding the year in which the MAT credit is allowable.

3.12 As per Section 35DDA, the Company is eligible for deduction in respect of payments made to its employees in

connection with their voluntary retirement for an amount equal to 1/5th of such expenses over 5 successive AYs subject to conditions specified in that section.

3.13 In case of loss under the head “Profit and Gains from Business or Profession” except loss from speculation

business, it can be set-off against incomes of other head of sources except income under the head “Income from salary” and the excess remaining loss, if any, after set-off can be carried forward for set-off - against business income of the next eight Assessment Years.

3.14 Under section 32(2) of the Act, the unabsorbed depreciation arising due to absence/ insufficiency of profits or gains

chargeable to tax can be carried forward. The amount is allowed to be carried forward and set off for the succeeding years until the amount is exhausted without any time limit.

3.15 As per the provisions of section 80G of the Act, the deduction will be available in respect of donations to various

charitable institutions and funds covered under that section, subject to fulfilment of the conditions specified therein. 4. Benefits available to all Shareholders 4.1 According to the provisions of section 10(34) of the Act, any income by way of dividends referred to in section

115-O (i.e. dividends declared, distributed or paid on or after 1 April 2003 by a domestic company) received on shares of the Company is exempt from tax. However, as per section 94(7) of the Act, losses arising from sale/ transfer of shares, where such shares are purchased within three months prior to the record date and sold within three months from the record date, will be disallowed to the extent such loss does not exceed the amount of dividend claimed exempt.

4.2 Shares of the company held as Capital assets for a period of more than twelve months preceding the date of transfer

will be treated as a long-term capital asset. Capital gains arising on transfer of long-term capital assets, being equity shares in a company, on which STT is paid, is exempt under section 10(38) of the Act whereas short-term capital gains arising from similar transaction shall be subject to tax under section 111A of the Act at the rate of 15% (plus applicable surcharge and Education Cess).

4.3 The benefit of exemption from tax under section 10(38) of the Act on long-term capital gains will not be available

where no STT is paid. In such cases, long-term capital gains on sale or transfer of listed securities would be chargeable to tax (plus applicable surcharge and Education Cess) at lower of 20% (with cost indexation benefit) or at a concessional rate of 10% (without considering cost indexation benefit) in accordance with the provisions of section 112 of the Act. In the computation of long term capital gains (which is not exempt from tax), as per the provisions of section 48, the actual cost of acquisition may be substituted by the indexed cost of acquisition i.e. the actual cost is scaled up by the prescribed Index factor, resulting into reduced taxable income.

4.4 As per section 54-EC of the Act, subject to the conditions specified therein, tax on capital gains arising from

transfer of long-term capital asset shall not be taxable, provided that the Shareholder has at any time, within a period of six months from the date of transfer, invested the whole of capital gains in any specified long-term asset. However, if such long-term asset is transferred or converted into money within a period of three years from the date of its acquisition, amount of capital gains exempted earlier shall become chargeable to tax as long term capital gains in the year in which such long-term asset is transferred or converted into money. Section 54EC also provides for a ceiling of INR 5 million per financial year on investments in such long-term specified asset. Where the whole of capital gains is not invested in long term specified asset, then exemption would be proportional to the amount of capital gains invested in long term specified asset.

For the purpose of section 54EC, long term specified assets referred to herein above means any bond redeemable after three years and issued by:


50

i) National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988;

ii) Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956.

4.5 According to the provisions of section 54-F of the Act and subject to the conditions specified therein, long-term

capital gains arising to an individual or a Hindu undivided family on transfer of shares of the company on which STT is not payable, shall not be chargeable to tax, provided that the net consideration is utilized for either of the following:

i) Purchase of a residential house within a period of one year before or two years after the date of transfer of such

long term capital assets; or

ii) Construction of a residential house within a period of three years after the date of transfer of the long-term capital asset.

Such benefit will not be available if the individual-

owns more than one residential house, other than the new residential house, on the date of transfer of the shares; or

purchases another residential house within a period of one year after the date of transfer of the shares; or

constructs another residential house within a period of three years after the date of transfer of the shares; and

the income from such residential house, other than the one residential house owned on the date of transfer of

the original asset, is chargeable under the head “Income from house property”. Further, if only a portion of the net consideration is so invested, then the exemption is available proportionately. However, if the residential house in which investment is made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such residential house is transferred. 4.6 As per the provision of Section 71(3), if there is a loss under the head “Capital Gains”, it cannot be set-off with the

income under any other head. As per section 74 of the Act, short term capital loss suffered during the year is allowed to be set-off against short-term capital gains as well as long term capital gains of the same year. Balance loss, if any, can be carried forward for eight years for claiming set-off against subsequent years’ short term as well as long-term capital gains of subsequent years. Long-term capital loss suffered during the year is allowed to be set-off against long-term capital gains. Balance loss, if any, can be carried forward and set-off against long-term capital gains only.

4.7 Under section 36(1)(xv) of the Act, STT paid by a shareholder in respect of taxable securities transactions entered

into in the course of its business, would be allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head “Profits and gains of business or profession”

5. Benefits available to Non - Resident Shareholders 5.1 Under section 10(34) of the Act, income by way of dividends referred to in section 115-O received on the shares of

the Company would be exempt from income tax in the hands of shareholders. 5.2 Under section 10(38) of the Act, long term capital gains arising to a shareholder on transfer of equity shares in the

Company would be exempt from tax where the sale transaction has been entered into on a recognized stock exchange of India and is liable to securities transaction tax.

5.3 As per section 54-EC of the Act, subject to the conditions specified therein, tax on capital gains arising from

transfer of long-term capital asset shall not be taxable, provided that the Shareholder has at any time, within a


51

period of six months from the date of transfer, invested the whole of capital gains in any specified long-term asset. However, if such long-term asset is transferred or converted into money within a period of three years from the date of its acquisition, amount of capital gains exempted earlier shall become chargeable to tax as long term capital gains in the year in which such long-term asset is transferred or converted into money. Section 54EC also provides for a ceiling of INR 5 million per financial year on investments in such long-term specified asset. Where the whole of capital gains is not invested in long term specified asset, then exemption would be proportional to the amount of capital gains invested in long term specified asset.

For the purpose of section 54EC, long term specified assets referred to herein above means any bond redeemable after three years and issued by:

i) National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988;

ii) Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956.

5.4 According to the provisions of section 54-F of the Act and subject to the conditions specified therein, long-term

capital gains arising to an individual or a Hindu undivided family on transfer of shares of the company on which STT is not payable, shall not be chargeable to tax, provided that the net consideration is utilized for either of the following:

i) Purchase of a residential house within a period of one year before or two years after the date of transfer of such

long term capital assets; or

ii) Construction of a residential house within a period of three years after the date of transfer of the long-term capital asset.

Such benefit will not be available if the individual-

i) owns more than one residential house, other than the new residential house, on the date of transfer of the shares; or

ii) purchases another residential house within a period of one year after the date of transfer of the shares; or

iii) constructs another residential house within a period of three years after the date of transfer of the shares; and

iv) the income from such residential house, other than the one residential house owned on the date of transfer of

the original asset, is chargeable under the head “Income from house property”. Further, if only a portion of the net consideration is so invested, then the exemption is available proportionately. However, if the residential house in which investment is made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such residential house is transferred. 5.5 Under section 111A of the Act and other relevant provisions of the Act, short -term capital gains arising on transfer

of equity shares in the Company would be taxable at a rate of 15 percent (plus applicable surcharge, education cess) where such transaction of sale is entered on a recognized stock exchange in India and is liable to securities transaction tax.

5.6 Under section 112 of the Act and other relevant provisions of the Act, long term capital gains, (other than those

exempt under section 10(38) of the Act) arising on transfer of shares in the Company, would be subject to tax at the rate of 20 percent (plus applicable surcharge, education cess) after indexation. The amount of such tax should however be limited to 10% (plus applicable surcharge, education cess) without indexation, at the option of the shareholder, if the transfer is made after listing of shares.


52

5.7 As per the provisions of Section 90, the Non Resident shareholder has an option to be governed by the provisions of the tax treaty, if they are more beneficial than the domestic law wherever India has entered into Double Taxation Avoidance Agreement (DTAA) with the relevant country for avoidance of double taxation of income.

5.8 Non-Resident Indian (“NRIs”) (as defined in Section 115C(e) of the Act) shareholders who have subscribed to

shares in an Indian company in convertible foreign exchange, can exercise the option of being governed by the provisions of Chapter XII-A of the Act, which inter alia entitles them to the following benefits:

a. In accordance with and subject to the provisions of section 115D read with section 115E of the Act, long term

capital gains arising on transfer of shares in an Indian company acquired out of convertible foreign exchange, are taxable at the rate of 10% (plus applicable surcharge and education cess). Cost indexation benefit and deduction under Chapter VI-A, will not be available but with protection against foreign currency fluctuation under the first proviso to section 48 of the Act.. Further, income from investment or income from long term capital gains of an asset other than Specified Asset as defined in 115C(f) (which includes shares, debentures, deposits of Indian Company and other prescribed securities/ assets) will be chargeable to tax at the rate of 20%.

b. In accordance with and subject to the provisions of section 115F of the Act, long term capital gains arising on

sale of shares in an Indian company held by a NRI shareholder and purchased out of convertible foreign exchange shall not be chargeable to income tax, if the entire net consideration is invested for a period of three years in any savings certificates specified under section 10(4B) or specified assets as defined in section 115C(f) (which includes shares, debentures, deposits of Indian Company and other prescribed securities/ assets) of the Act. In case the whole of sales consideration is not invested in prescribed savings certificates or specified assets, proportionate capital gains would be liable to tax.

Such exemption is available provided investment in savings certificates/ specified assets are made within a period of six months from the date of transfer of shares. However, if such savings certificates or specified assets are transferred or converted (otherwise than by way of transfer) into money within three years from the date of acquisition, the amount so exempted will be chargeable to tax under the head ‘Capital Gains’ in the year when such assets/ certificates are transferred.

c. As per section 115G of the Act, a NRI Shareholder would not be required to file a return of income under

section 139(1) of the Act, where the total income consists only of investment income and/or long-term capital gains as defined under section 115C of the Act and tax deductible at source has been deducted from such income as per provisions of Chapter XVIIB of the Act.

d. According to the provisions of section 115H of the Act, where, a NRI shareholder in any previous year,

becomes assessable as a resident in India in any subsequent assessment year, he may furnish a declaration in writing to the assessing officer, along with his return of income for that assessment year filed under section 139 of the Act, to the effect that the provisions of the Chapter XII-A shall continue to apply to him in relation to such investment income derived from specified assets for that year and subsequent assessment years until such assets are converted into money. However, this option is not available in respect of shares in an Indian company.

e. As per the provision of section 115I of Act, an NRI Shareholder may elect not to be governed by the

provisions of Chapter XII-A for any assessment year by furnishing his return of income for that assessment year under section 139 of the Act, declaring therein that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the Act.

6. Benefits available to Foreign Institutional Investors (‘FIIs’)

6.1 In accordance with section 10(34), dividend income declared, distributed or paid by the Company (referred to in section 115-O) will be exempt from tax in the hands of Foreign Institutional Investors (FIIs). Capital gains arising in the hands of FIIs on sale of shares are governed by Section 115AD of the Act. According to the provisions of section 115AD of the Act, long-term capital gains arising on transfer of shares held by FIIs are


53

taxable at the rate of 10% (plus applicable surcharge and education cess). Short term capital gains on transfer of shares are taxable at the rate of 15% (plus applicable surcharge and education cess) provided that the transaction is subject to levy of STT. In other cases, Short Term capital gains would be liable to tax at 30% (plus applicable surcharge and education cess). Cost indexation benefits are not available to FIIs. Further, the provisions of the first proviso of section 48 of the Act will not apply.

6.2 In accordance with section 10(38), any income arising from the transfer of a long term capital asset being an

equity share in a company is not includible in the total income, if the transaction is chargeable to STT.

6.3 In accordance with and subject to the provisions of section 115AD read with section 196D(2) of the Act, no deduction of tax at source is applicable on payment in respect of capital gains arising to a FII from the transfer of the equity shares in an Indian company.

6.4 Under section 54EC of the Act, long term capital gain arising on the transfer of shares of the Company other

than the sale referred to in section 10(38) of the Act is exempt from tax to the extent the same is invested in certain notified bonds within a period of six months from the date of such transfer (up to a maximum limit of ` 5.0 million) for a minimum period of three years.

6.5 As per the provisions of Section 90, the Non Resident shareholder has an option to be governed by the

provisions of the tax treaty, if they are more beneficial than the domestic law wherever India has entered into Double Taxation Avoidance Agreement (DTAA) with the relevant country for avoidance of double taxation of income.

6.6 In the case of all non-resident shareholders, the aforesaid tax rates are subject to the benefits, if any, available

under the double taxation avoidance agreements signed by India with the country of which the non-resident shareholder may be a tax resident, subject to fulfilment of conditions prescribed there under.

7. Benefits available to Mutual Funds Under section 10(23D) of the Act, exemption is available in respect of income (including capital gains arising on transfer of shares of the Company) of a Mutual Fund registered under the Securities and Exchange Board of India Act, 1992 or such other Mutual fund set up by a public sector bank or a public financial institution or authorized by the Reserve Bank of India and subject to the conditions as the Central Government may specify by notification. 8. Venture Capital Companies/Fund In terms of section 10(23FB) of the I.T. Act, income of:- Venture Capital company which has been granted a certificate of registration under the Securities and Exchange Board of India Act, 1992 and notified as such in the Official Gazette; and Venture Capital Fund, operating under a registered trust deed or a venture capital scheme made by Unit trust of India, which has been granted a certificate of registration under the Securities and Exchange Board of India Act, 1992, set up for raising funds for investment in a Venture Capital Undertaking, is exempt from income tax, Exemption available under the Act is subject to investment in domestic company whose shares are not listed and which is engaged in certain ‘specified’ business/ industry. 9. Benefits under the Wealth Tax Act, 1957: Shares in an Indian company are excluded from the definition of ‘asset’ as defined in section 2(ea) of the Wealth Tax Act, 1957. Accordingly, shares of the Company are not liable to wealth tax in the hands of the shareholders.


54

10. Gift Tax Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, gift of shares will not attract gift tax in the hands of the shareholders. Under section 56(2)(vii) of the Income Tax Act, 1961, if an individual or HUF receives any property, which includes shares, without consideration, the aggregate fair market value of which exceeds ` 50,000, the whole of the fair market value of such property will be considered as income in the hands of the recipient. Similarly, if an individual or HUF receives any property, which includes shares, for consideration which is less than the fair market value of the property by an amount exceeding ` 50,000, the fair market value of such property as exceeds the consideration will be considered as income in the hands of the recipient. 11. Tax Deduction at source No income-tax is deductible at source from income by way of capital gains under the present provisions of the IT Act, in case of residents. However, as per the provisions of section 195 of the IT Act, any income by way of capital gains, payable to non residents (other than long-term capital gains exempt under section 10(38) of the IT Act), may be liable to the provisions of with-holding tax, subject to the provisions of the relevant tax treaty. Accordingly, income tax may have to be deducted at source in the case of a non- resident at the rate under the domestic tax laws or under the tax treaty, whichever is beneficial to the assessee, unless a lower withholding tax certificate is obtained from the tax authorities. As per section 196D, no tax is to be deducted from any income, by way of capital gains arising from the transfer of shares payable to Foreign Institutional Investor. __________________________________________________________________________________________ Notes:

1. The above statement sets out the provisions of law in a summary manner and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of shares. The above information is neither designed nor intended to be a substitute for professional tax advice.

2. The information provided above sets out the possible tax benefits available to the Company and its shareholders under the prevailing direct tax laws of India and does not cover any indirect tax law benefits or benefits under any other law. Several of these benefits are dependent on the Company and its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company and its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on the business imperatives, the Company may or may not choose to fulfil.

3. The tax benefits given above include amendments introduced by the Finance Act, 2013. Some or all of the tax

consequences described above may be modified by future amendments to the Act.

4. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in this Issue and reliance shall not be placed on the contents of this statement.

5. In respect of non-residents, the tax rates and consequent taxation mentioned above will be further subject to

any benefits available under the relevant Double Taxation Avoidance Agreement, if any, between India and the country in which the non-resident has fiscal domicile.

6. No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our

views are based on the existing provisions of law and its interpretation, which are subject to changes from time to time. We do not assume responsibility to update the views consequent to such changes.


55

CURRENCY OF PRESENTATION In this Information Memorandum all references to “Rupees” or “`” are to Indian Rupees, the legal currency of the Republic of India.


56

DIVIDEND POLICY The Company does not have any formal dividend policy vis a vis the equity shares. The declaration and payment of equity dividend in a company is recommended by our Board of Directors and approved by the shareholders, at their discretion, and will depend on a number of factors, including but not limited to our profits, capital requirements and overall financial condition. The Company has not paid any dividend on its equity shares so far.


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IV. FINANCIAL INFORMATION

AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2013 TO THE MEMBERS OF STAR FERRO AND CEMENT LIMITED Report on the Financial Statement We have audited the accompanying financial statements of Star Ferro And Cement Limited (“the Company”), which comprise the Balance Sheet as at March, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the period then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments; the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet of the state of affairs of the Company as at 31st March 2013; (ii) in the case of the Statement of Profit and Loss, of the Loss of the Company for the year ended on that date; and (iii) in the case of Cash Flow Statement, of the Cash flows of the Company for the period year on that date.


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Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government in terms of sub-

section (4A) of Section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order.

2. As required by section 227(3) of the Act, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were

necessary for the purpose of our audit;

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears

from our examination of those books. The Branch Auditor’s Report in respect of Ferro Alloy unit at

Meghalaya has been forwarded to us and has been appropriately dealt with.

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in

agreement with the books of account and with the audited return from the branch as submitted to us.

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the

Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) On the basis of written representations received from the directors as on March 31, 2013, and taken on record

by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as

a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For KAILASH B. GOEL & CO.

Firm Registration No.322460E Chartered Accountants

Place : Kolkata Date : 8th July, 2013

CA. Arun Kumar Sharma Partner Membership No. 57329


59

Annexure referred to in Paragraph (1) under the heading of “Report on Other Legal and Regulatory Requirements” of our report of even date.

1. (a) The Company has maintained proper records showing full particulars including quantitative details and

situation of Fixed Assets.

(b) The fixed assets of the company are physically verified by management according to a phased programme on a rotational basis, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. No material discrepancies were noticed on such verification.

(c) During the year the Company has not disposed off a substantial part of its Fixed Assets and therefore do not affect the going concern assumption.

2. (a) The inventory, except goods in transit and materials lying with third parties, which have been substantially

confirmed by them, has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the Management are reasonable and

adequate in relation to the size of the Company and nature of its business. (c) The Company is maintaining proper records of inventory. No material discrepancies have been noticed on

physical verification of Inventory as compared to book records. 3. (a) The Company has granted unsecured loan to a subsidiary company covered in the register maintained u/s 301

of the Companies Act, 1956. The maximum amount involved during the year was ` 200.00 lacs and the year end balance of loan given to such companies’ was ` NIL. The company has taken unsecured loan from four companies covered in the register maintained u/s 301 of Companies Act, 1956. The maximum amount involved during the year was ` 1860.00 lacs and the year end balance of loan taken from such companies were ` 760.00 lacs. (b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and condition on which loan has been given or taken are not, prima facie, prejudicial to the interest of the Company. (c) In respect of the aforesaid loan, the company is regular in receiving and paying of the principal amounts as stipulated and has been regular in the receipt and payment of interest. (d) There is no overdue amount of loan given or received to/from companies covered in the register maintained U/s 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal

control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and other services. During the course of our audit, no major weakness has been noticed in these internal controls.

5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered in the register maintained u/s 301 of the Companies Act, 1956 have been so entered.

(b) According to the information and explanations given to us, the transaction made in pursuance of such contracts and arrangements entered in the register maintained under section 301 of the companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time


60

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA of the Companies Act, 1956 and the Rules framed there under.

7. In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature

of its business.

8. We have broadly reviewed the accounts and records maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956. We are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine that they are accurate.

9. (a) The Company is generally regular in depositing with the appropriate authorities undisputed statutory dues

including Provident Fund, Income Tax, Sales Tax, VAT, Excise Duty, Cess and other material statutory dues applicable to it. There were no arrears as at 31st March, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues in respect of Provident Fund, Income Tax, Sales Tax, VAT, Excise Duty, Cess that have not been deposited on account of any dispute.

10. The Company has accumulated losses at the end of the financial year which is less than fifty percent of its net worth and it has incurred cash losses in the current financial year and immediately preceding financial year.

11. According to the information and explanation given to us and on the basis of the records examined by us, the

Company has not defaulted in repayment of dues to financial institutions or banks.

12. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions

of clause 4 (xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.

14. The Company is not dealing in or trading in shares, securities, debentures and other investments, therefore, the

provisions of clause 4 (xiv) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.

15. In our opinion and on the basis of information and explanations given to us, the Company has not given any

guarantee for loans taken by others from banks and financial institutions. 16. In our opinion and on the basis of information and explanations given to us, the term loans were applied for the

purposes for which the loans were obtained. 17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of

the Company, we report that no funds raised on short-term basis have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained u/s 301 of the Companies Act, 1956 during the year.

19. According to the information and explanation given to us, the Company has not issued any secured debentures

during the period covered by our report. Accordingly provisions of clause 4(xix) of the Companies (Auditor’s Report) Order, 2003 (as amended), are not applicable to the Company.

20. The Company has not raised any money through public issue during the year


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21. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For KAILASH B. GOEL & CO. Firm Registration No.322460E Chartered Accountants

Place: Kolkata Date: 8th July,2013



62

STAR FERRO AND CEMENT LIMITED Regd. Office : 6 Lyons Range, Kolkata - 700 001

BALANCE SHEET As at 31st March'2013

` in Lacs NOTES 31st March,2013 31st March,2012 A EQUITY AND LIABILITIES Shareholder's Funds Share Capital 2 5.00 5.00 Share Capital - Pending Allotment 2 2,216.73 - Reserves & Surplus 3 8,389.17 (0.10) 10,610.90 4.90 Non Current Liabilities Long Term Borrowings 4 1,036.37 - Other Long Term Liabilities 5 336.99 - Long Term Provisions 6 20.93 - 1,394.29 - Current Liabilities Short Term Borrowings 7 2,151.33 - Trade Payables 8 871.73 0.06 Other Current Liabilities 8 299.89 0.00 Short Term Provisions 6 8.89 - 3,331.84 0.06 TOTAL 15,337.03 4.96 B ASSETS Non Current Assets Fixed Assets Tangible Assets 9 3,439.47 - Intangible Assets 10 1.40 - Capital Work-in-Progress 19.59 - Non Current Investments 11 6,328.25 - Deferred Tax Assets (Net) 12 207.73 - Long term Loans and Advances 13 98.87 - Current Assets Inventories 15 2,822.96 - Trade Receivables 14 1,147.77 - Cash and Bank Balances 16 157.37 4.64 Short Term Loans and Advances 13 732.86 0.32 Other Current Assets 14 380.76 - TOTAL 15,337.03 4.96 Summary of significant accounting Policies 1.1

The accompanying notes form an integral part of the financial statements As per our Report of even Date For Kailash B. Goel & Co. For and on behalf of the Board of Directors Firm Registration No- 322460E Chartered Accountants

Sajjan Bhajanka, Chairman CA. Arun Kumar Sharma Partner

Membership No. 057329 Hari Prasad Agarwal, Managing Director Place: Kolkata, Date: 8th July, 2013


63


Statement of Profit and Loss for the year ended 31st March'2013 ` in Lacs NOTES 2012-13 2011-12 Income Gross Revenue from Operations 17 6,858.18 - Less : Excise Duty 372.81 - Net Revenue from Operations 6,485.37 - Other Income 18 0.39 0.20 Total Revenue ( I ) 6,485.76 0.20 Expenses Cost of Raw Materials Consumed 19 2,503.79 - (Increase)/Decrease in inventories of Finished Goods 20 (501.15) -

Employee Benefits Expense 21 377.22 - Other Expenses 22 4,118.98 0.23 Depreciation and Amortisation Expense 23 551.63 - Finance Cost 24 201.78 - Total Expenses ( II ) 7,252.25 0.23 Profit before Taxation (766.49) (0.03)Tax Expenses Current Tax - - Deferred Tax (207.73) - Total Tax Expenses (207.73) - Profit for the year (558.76) (0.03)

Earnings per equity share (nominal value of share ` 1/- (` 1/-)

Basic 30 (111.75) (0.01)Diluted 30 (0.25) (0.01)Summary of significant Accounting Policies 1

The accompanying notes form an integral part of the financial statements As per our Report of even Date For Kailash B. Goel & Co. For and on behalf of the Board of Directors Firm Registration No- 322460E Chartered Accountants

Sajjan Bhajanka, Chairman CA. Arun Kumar Sharma Partner Membership No. 057329 Hari Prasad Agarwal, Managing Director

Place: Kolkata Date: 8th July, 2013


64


Cash Flow Statement for the year ended 31st March'2013 (` in Lacs) 2012-13 2011-12 A CASH FLOW FROM OPERATING ACTIVITIES Net Profit before Tax (766.49) (0.03) Adjustments for: Depreciation/Amortisation 551.63 - Finance Cost 201.78 - (Profit)/Loss on Sale of Fixed Assets 0.18 - Interest Income (0.39) -

Operating Profit before Working Capital changes (13.29) (0.03) Adjustments for: (Increase) in Trade Receivables (659.63) - (Increase) in Loans & Advances and other assets 12.78 (0.02) (Increase) in Inventories (862.44) - Increase/(Decrease) in Trade Payables, Other Liabilities and Provisions 962.37 (0.31)

Cash Generated from Operations (560.21) (0.36) Direct Taxes Paid ( Net of Refunds ) (4.74) - Net Cash generated from Operating Activities (564.95) (0.36) B CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets (677.27) - Fixed Deposits/Margin Money (Given)/Refund (5.53) - Interest Received 0.39 -

Net Cash used in Investing Activities (682.41) - C CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from Borrowings 1526.11 - Repayment of Loans (44.24) - Capital Subsidy recd. (0.45) - Interest Paid (248.01) - Other Borrowing Cost Paid (6.73) -

Net Cash used in Financing Activities 1226.68 - Net Increase/(Decrease) in Cash and Cash Equivalents ( A + B + C) (20.68) (0.36) Cash and Cash Equivalents as on 1st April'2012 4.64 5.00 Add: transferred as per scheme of arrangement (refer note no.25) 167.59

172.23 5.00 * Cash and Cash Equivalents as on 31st March'2013 151.55 4.64

* Represents Cash and Bank Balances as indicated in Note-16, and excludes ` 5.82 lacs (` NIL) being Bank Balances with restricted use.


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Note: 1) As the Ferro Alloys and Cement Division of Century Plyboards (India) Limited (CPIL) has been demerged and transferred to the Company, the current year Cash Flow Statement is not comparable with the corresponding previous year Cash Flow Statement 2) The Cash Flow Statement for the current financial year has been reported after taking into consideration the financial statements of demerging Ferro Alloys and Cement Division of CPIL as on 01.04.2012. As per our Report of even Date

For Kailash B. Goel & Co. For and on Behalf of the Board Firm Registration No- 322460E Chartered Accountants

Sajjan Bhajanka, Chairman

CA. Arun Kumar Sharma Partner Hari Prasad Agarwal, Managing Director Membership No. 057329



66

Notes to Financial Statements as at and for the year ended 31st March, 2013

1 Basis of Preparation The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis and on the basis of going concern. The accounting policies applied by the Company are consistent with those used in the previous year.

1.1 Summary of Significant Accounting Policies (i) Use of Estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, actual results could differ from these estimates.

(ii) Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

(a) Revenue from sale of goods and services rendered is recognized upon passage of title which generally

coincides with delivery of materials and rendering of services to the customers. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenues. Excise duty deducted from revenue (Gross) is the amount that is included in the revenue (Gross) and not the entire amount of liability arising during the year. Sales figures are net of rebates, trade discounts and returns.

(b) Dividend Income is recognized when the shareholders' right to receive the payment is established by the balance sheet date.

(c) Interest income is recognized on a time proportion basis taking into account the amount outstanding and rate applicable.

(iii) Fixed Assets Fixed Assets are stated at cost or revalued amount, as the case may be, less accumulated depreciation / amortisation and impairment, if any, except freehold land which is carried at cost. Cost comprises the purchase price inclusive of duties (net of cenvat / VAT), taxes, incidental expenses and erection / commissioning expenses etc. up to the date, the asset is ready for its intended use. In case of revaluation of fixed assets, the original cost as written-up by the valuer, is considered in the accounts and the differential amount is transferred to revaluation reserve. Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular are capitalised and depreciated over the residual life of the respective assets.

(iv) Capital Work in Progress Capital work in Progress is carried at cost comprising direct cost and pre-operative expenses during construction period to be allocated to the fixed assets on the completion of construction.

(v) Expenditure during construction period In case of new projects and substantial expenses of existing factories, expenditure incurred including trial production expenses net of revenue earned, and attributable interest and financing cost, prior to commencement of commercial production are capitalised.

(vi) Impairment of Assets The carrying amounts of assets are reviewed at each balance sheet date to determine if there is any indication of


67

impairment based on external/internal factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount which represents the greater of the net selling price and ‘Value in use’ of the assets. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

(vii) Depreciation / Amortization (a) The classification of plant and machinery into continuous and non-continuous process is done as per

technical certification and depreciation thereon is provided accordingly. (b) Depreciation on fixed assets is provided under Written down Value method at the rates prescribed in

Schedule XIV of the Companies Act, 1956, or at rates determined based on useful lives of the respective assets, as estimated by the management, whichever is higher.

(c) Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis with reference to the date of addition / disposal.

(d) Intangible assets are amortized over a period of 5 years. (e) In case of impairment, depreciation is provided on the revised carrying amount of the assets over its

remaining useful life.

(viii) Foreign Currency Transactions Foreign currency transactions are recorded at the rate prevailing on the dates of the transactions and exchange differences are dealt within the Statement of Profit and Loss. Monetary foreign currency assets and liabilities are translated at the year end exchange rates. All exchange differences are dealt within the Statement of Profit and Loss, except to the extent that they are regarded as an adjustment to the interest cost and the resultant balance to the new projects, till the date of the capitalization, are carried to pre-operative expenses. Profit/Loss arising out of cancellation of forward contracts is taken to revenue in the year of cancellation.

(ix) Investments Investments that are readily realisable and intended to be held for not more than a year are classified as Current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and market value on individual investment basis. Long Term Investments are considered at cost, unless there is an "other than temporary" decline in value, in which case adequate provision is made for the diminution in the value of Investments.

(x) Inventories Raw Materials, stores and spares are valued at lower of cost and net realizable value. However, these items are considered to be realizable at cost if the finished products, in which they will be used, are expected to be sold at or above cost. Work in progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials & labour and a part of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost of Inventories is computed on weighted average/ FIFO basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

(xi) Government Grants and subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. When the grant or subsidy relates to an asset, it is deducted from the gross value of the asset concerned in arriving at the carrying amount of related asset. Government grants of the nature of promoter’s contribution are credited to capital reserve and treated as a part of the shareholders’ funds.


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(xii) Retirement and other employee benefits (a) Retirement benefit in the form of Provident Fund is a defined contribution scheme and is charged to the

Statement of Profit and Loss for the year when the contributions to the respective funds are due. The Company has no obligations other than the contribution payable to the respective funds.

(b) Gratuity liability, being a defined benefit obligation, is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

(c) Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation which is done as per projected unit credit method at the end of each financial year.

(d) Actuarial gains / losses are immediately taken to the statement of profit and loss and are not deferred.

(xiii) Earning per Share Basic Earning per Share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deductible preference dividend and attributable taxes) by the weighted number of equity shares outstanding during the year. For the purpose of calculating diluted earning per share, net profit or loss for the year attributable to equity share holders and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares.

(xiv) Excise Duty and Custom Duty

Excise duty on finished goods stock lying at the factories is accounted for at the point of manufacture of goods and accordingly, is considered for valuation of finished goods stock lying in the factories as on the balance sheet date. Similarly, customs duty on imported material in transit/lying in bonded warehouse is accounted for at the time of import/ bonding of materials.

(xv) Borrowing Costs Borrowing costs includes interest, amortization of ancillary costs incurred in connection with the arrangements of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing cost directly attributable to the acquisition, construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur.

(xvi) Taxation Tax expenses comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred income taxes reflect the impact of current year timing differences between taxable income for the year and reversal of timing differences of earlier years. The deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been substantively enacted as of the Balance Sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. If the company has carry forward unabsorbed depreciation and tax losses, deferred tax assets are recognized only to the extent there is virtual certainty supported by convincing evidence that sufficient taxable income will be available against which such deferred tax asset can be realized. The carrying amounts of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of deferred tax assets to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax


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asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendation contained in guidance note issued by the Institute of Chartered Accountants of India, the said assets is created by way of a credit to the Statement of Profit and Loss and shown as MAT credit entitlement. The company reviews the carrying amount of MAT at each Balance Sheet date and writes down MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the company will pay normal income-tax during specified period.

(xvii) Segment Reporting

a) Identification of segments: The company has identified that its business segments are the primary segments. The Company’s business are organized and managed separately according to the nature of products/services, with each segment representing a strategic business unit that offers different product / services and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the company operate.

b) Inter segment transfers: The Company generally accounts for intersegment sales and transfers at current market prices. c) Allocation of Common Costs:

Common allocable costs are allocated to each segment on case to case basis applying the ratio, appropriate to each relevant case. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segment on a reasonable basis, have been included under the head “Unallocated”.

The accounting policies adopted for segment reporting are in line with those of the Company’s accounting policies.

(xviii) Cash and Cash equivalents Cash and cash equivalents in the cash flow statement comprise of cash at bank and in hand and short-term investments with an original maturity of three months or less.

(xix) Provision A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions made in terms of Accounting Standard 29 are not discounted to their present value and are determined based on best estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(xx) Contingent Liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.


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2. Share Capital ` in Lacs 31st March,2013 31st March,2012 Authorised

10,00,000 (10,00,000) Equity Shares of ` 1/- each 10.00 10.00

Total 10.00 10.00 Issued

5,00,000 (5,00,000) Equity Shares of ` 1/- each 5.00 5.00

Total 5.00 5.00 Subscribed and Paid up

5,00,000 (5,00,000) Equity Shares of ` 1/- each # 5.00 5.00 Total 5.00 5.00

a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period Equity Shares 31st March, 2013 31st March, 2012 No of Shares ` in Lacs No of Shares ` in Lacs At the Beginning of the year 5,00,000 5.00 5,00,000 5.00

Issued during the year - - - -

Outstanding at the end of the year 5,00,000 5.00 5,00,000 5.00

b) Terms/Rights attached to the Equity Shares

The company has only one class of equity shares having par value of `1/- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in India rupees.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c) Details of Shareholders holding more than 5% shares in the company 31st March, 2013 31st March, 2012

No of Shares

% holding in the class

No of Shares % holding in

the class

Equity Shares of ` 1/- each fully paid-up

Century Plyboards (India) Ltd. 5,00,000 100.00% 5,00,000 100.00%

# The existing share capital to be cancelled upon allotment of shares pursuant to Scheme of Arrangement (Refer Note no 25) As per records of the Company, including its register of shareholders/members, the above shareholding represents legal ownerships of shares.

` in Lacs Share Capital - Pending Allotment 31st March, 2013 31st March, 2012

Shares to be allotted as per Scheme of Arrangement (Refer Note No 25)

2,216.73 -

Total 2,216.73 -


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3. RESERVES & SURPLUS ` in Lacs

31st March,2013 31st March,2012 Capital Reserve

Amount adjusted pursuant to scheme of arrangement (refer note no.25)

8,627.64 -

Add : Capital Investment Subsidy 320.39 -

Closing Balance 8,948.03 -

Surplus in the statement of Profit and Loss Balance as per the last Financial Statements (0.10) (0.07)

Add: Profit/(Loss) for the year (558.76) (0.03)

Net Surplus in the Statement of Profit and Loss (558.86) (0.10)

Total Reserves and Surplus 8,389.17 (0.10)

4. Long Term Borrowings Non Current Portion Current Maturities

` in Lacs ` in Lacs

31st

March,2013 31st

March,2012 31st

March,2013 31st

March,2012 Term Loans (Secured) Indian Rupee Loan from a Financial Institution

1,018.22 - 39.28 -

Other Loans and Advances (Secured) Hire Purchase :- - From banks 7.58 - 28.58 -

- From Bodies Corporate 10.57 - 19.85 -

1,036.37 - 87.71 -

Amount disclosed under the head " Other (87.71) -

Current Liabilities" ( Note - 8)

Net Amount 1,036.37 - - -

Notes:- 1. Rupee Term Loan of `1,057.50 lacs from NEDFI for Ferro Alloy Division at Byrnihat carries interest rate of PLR + 1% i.e. 12.75% p.a. The loan is secured by equitable mortgage of leasehold rights of land and first charge on fixed assets of the Company's Ferro Alloy Division at Byrnihat, Meghalaya and Second Charge on Current Assets of the said unit on pari passu basis. Term Loans from NEDFI is to be repaid in 27 quarterly instalments of ` 39.28 lacs each in first 26 quarters and balance in the last quarter with first instalment due on 01.01.2014.

2. Hire Purchase Finance of `66.58 lacs is secured by hypothecation of company’s vehicles and is repayable within three to four years having varying date of payment. Transferred pursuant to the Scheme (Refer note No.25)


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5. Other Long Term Liabilities ` in Lacs

31st March,2013 31st March,2012 Others - Other Liabilities 336.99 -

Total Amount 336.99 - 6. Provisions

Long Term Short Term ` in Lacs ` in Lacs

31st March,2013 31st March,2012 31st March,2013 31st March,2012 Provision for Employee Benefits Gratuity 20.93 - - -

Leave Encashment - - 8.89 -

Total Amount 20.93 - 8.89 - 7. Short Term Borrowings ` in Lacs

31st March,2013 31st March,2012 Loans repayable on demand :- Cash Credit from a bank (Secured) 1,191.33 - Short Term Loan ( Unsecured ) from Bodies Corporate 200.00 -

Loans from related parties (Unsecured) - From Bodies Corporate 760.00 -

Total Amount 2,151.33 -

Notes:- 1

Working Capital facility from a Bank is secured by first charge on the current assets of the Company's Ferro Alloy Division and second charge on the fixed assets of the Ferro Alloy Plant on pari passu basis. Further, the working capital facilities are also guaranteed by three directors of the company. The above cash credit is repayable on demand and carries interest rate of Base Rate + 3.25% p.a.

2 Short term loans from bodies corporate for ` 960 lacs are repayable on demand and carries interest rate of 11% to 13.3%

8. Other Current Liabilities ` in Lacs

31st March,2013 31st March,2012 Trade Payables - - - Dues to Micro and Small Enterprises (Refer Note no 28 ) - Dues to Others 871.73 0.06

871.73 0.06 Other Liabilities Current Maturities of Long Term Borrowings (Note-4) 87.71 - Interest accrued but not due 0.49 - Advances from Customers 72.79 - Statutory Dues 138.90 -

299.89 0.00 Total Amount 1,171.62 0.06


73

9 : Tangible Assets

(` in Lacs)

Land & Site Development

Factory Buildings

Plant & Machinery

Electrical Installations

furniture & Fixtures

Office Equipments

Computers Vehicles Total

Free Hold

COST OR VALUATION

At 1st April,2011 - - - - - - - - -

Additions - - - - - - - - -

Disposals - - - - - - - - - At 31st March,2012 - - - - - - - - -

Transferred pursuant to Scheme

of arrangement (Refer note 25) 86.17 1,172.90 3,547.42 910.35 33.41 8.92 22.17 664.56 6,445.90

Additions - 230.59 1,009.93 199.69 0.82 0.04 2.83 5.97 1,449.87

Disposals - - - - - 0.46 - 0.36 0.82

At 31st March, 2013 86.17 1,403.49 4,557.35 1,110.04 34.23 8.50 25.00 670.17 7,894.95

Depreciation

As at 1st April,2011 - - - - - - - - -

Charge for the Year - - - - - - - - -

Disposals - - - - - - - - -

At 31st March, 2012 - - - - - - - - -


of arrangement (Refer note 25) - 552.93 2,367.07 611.98 23.57 4.93 18.01 326.35 3,904.84

charge for the Year - 65.92 313.94 70.55 1.83 0.68 1.92 96.44 551.28

Disposals - - - - - 0.29 0.35 0.64

As at 31st March, 2013 - 618.85 2,681.01 682.53 25.40 5.32 19.93 422.44 4,455.48

Net Block

As at 31st March, 2012 - - - - - - - - -

As at 31st March, 2013 86.17 784.64 1,876.34 427.51 8.83 3.18 5.07 247.73 3,439.47


74

10 : Intangible Assets

(`in Lacs) Computer Software Total

COST OR VALUATION

At 1st April,'2011 - -

Addition - -

Disposals - -

At 31st March, 2012 - -


of arrangement (Refer note 25) - -

Addition 1.75 1.75

Disposals - -

As at 31st March, 2013 1.75 1.75

Amortisation

As at 1st April, 2011 - -

Charge for the Year - -

Disposals - - At 31st March, 2012 - - Transferred pursuant to Scheme of arrangement (Refer note 25) - -

Charge for the Year 0.35 0.35

Disposals - -

As at 31st March, 2013 0.35 0.35 Net Block

As at 31st March, 2012 - - As at 31st March, 2013 1.40 1.40 11. Non-Current Investments ( At Cost )

Face Value per share No of ` in Lacs

` Shares 31st March,2013 31st March,2012

A LONG TERM (TRADE- UNQUOTED)

(a) Investments in Subsidiaries

Cement Manufacturing Company Ltd. 10 29547500 2,954.75 -

(-) Meghalaya Power Ltd. 10 8358998 3,373.50 -

(-) 6,328.25 -


75

12. Deferred Tax Asset (Net) ` in Lacs

31st March,2013 31st March,2012 Deferred tax asset Business Loss Carried forward 234.99 - Impact of expenditure charged to the statement of profit and loss in the current year but allowed for tax purposes on payment basis

52.05 -

287.04 -

Deferred tax liability Fixed assets: Impact of difference between tax depreciation and depreciation/ amortization charged.

79.31 -

79.31 -

Net deferred tax asset 207.73 - 13. Loans and Advances

Non Current Current ` in Lacs ` in Lacs 31st March,2013 31st March,2012 31st March,2013 31st March,2012 Loans and Advances (Unsecured-Considered Good)

Capital Advances 38.02 - - -

Security Deposits 60.57 - 0.60 - Advances recoverable in cash or kind

- - 254.38 -

Other Loans and Advances Prepaid Expenses 0.28 - 26.32 0.30

Advance Income Tax - - 12.46 0.02 Balance with Statutory/Government Authorities

- - 439.10

98.87 - 732.86 0.32

14. Trade Receivables and Other Assets Non Current Current ` in Lacs ` in Lacs 31st March,2013 31st March,2012 31st March,2013 31st March,2012 14.1 Trade Receivables (Unsecured) Debts outstanding for a period exceeding six months from the date they are due for payment Considered Good - - 92.44 - Considered Doubtful - - 130.61 - - - 223.05 -


76

Provision for doubtful trade receivables - - 130.61 -

A - - 92.44 - Other Debts Considered Good - - 1,055.33

B - - 1,055.33 - Total ( A+B ) - - 1,147.77 - 14.2 Other Assets Unsecured, Considered Good Central/State Government Subsidies Receivable - - 380.76 - - - 380.76 - 15. Inventories ` in Lacs NOTES 31st March,2013 31st March,2012 (At Lower of Cost and Net Realisable Value) Raw Materials 19 156.27 - Finished Goods 20 1,045.47 - Stores & Spares Parts, etc 1,621.22 - 2,822.96 - 16. Cash and Bank Balances Current ` in Lacs 31st March,2013 31st March,2012 Cash and Cash Equivalents Balances with Banks On Current accounts 143.40 0.40 Deposits with Original Maturity of less than three months - 4.18 Cash on hand 8.15 0.06 151.55 4.64 Other Bank Balances Deposits with Original Maturity of more than 12 months 5.82 - 5.82 - 157.37 4.64


77

17. Revenue from Operations

` in Lacs 2012-13 2011-12 Revenue from Operations Sale of Products Finished Goods 6,830.58 - Other Operating revenue Miscellaneous Income 27.60 -

Revenue from Operations ( Gross ) 6,858.18 - Less: Excise Duty 372.81

Revenue from Operations ( Net ) 6,485.37 -

Note: Excise duty on sales amounting to ` 372.81 lacs (`.NIL lacs ) has been reduced from sales in the statement of profit & loss, while excise duty on increase/decrease in stock amounting to ` 58.91 lacs (` NIL lacs) has been considered as expense in note 22 of financial statements. ` in Lacs

2012-13 2011-12 Details of Products Sold

Finished Goods Sold Ferro Silicon 6,830.58 -

6,830.58 - 18. Other Income ` in Lacs

2012-13 2011-12 Interest Income on Fixed Deposits, Loans etc:- 0.39 0.20

0.39 0.20 19. Cost of Raw Materials Consumed

` in Lacs 2012-13 2011-12

Inventory at the beginning of the year - - Add: Stock transferred pursuant to scheme of arrangement (refer note no 25)

201.09 -

201.09 -

Add : Purchases 2,458.97 - 2,660.06 -

Less : Inventory at the end of the year 156.27 -

Cost of Raw Materials Consumed 2,503.79 -

Details of Raw Material consumed Charcoal 285.04 - Quartz 1,099.50 - Lam Coke 873.21 - Mill Scale 187.08 -


78

Coal (Steam & Chocolate) 45.62 -

Other Raw Material 13.34 - 2,503.79 -

Details of Closing Stock of Raw Materials Charcoal 30.35 -

Quartz 19.55 -

Lame Coke 39.95 -

Mill Scale 27.53 -

Coal (Steam & Chocolate) 33.68 -

Other Raw Material 5.21 - 156.27 -

20. (Increase)/Decrease in inventories

` in Lacs 2012-13 2011-12

Inventories at the beginning of the year Finished Goods - -

- -

Add: Inventories transferred pursuant to Scheme of arrangement ( refer note no.25) Finished goods 544.32 -

544.32 -

Inventories at the end of the year Finished Goods 1,045.47 -

1,045.47 - (501.15) -

Details of Finished Goods Ferro Silicon 1,035.61 - Silicon Manganese 9.86 -

1,045.47 -

21. Employee Benefits Expense ` in Lacs

2012-13 2011-12 Salaries, Wages, Bonus etc 329.49 - Contribution to Provident, Gratuity and other Funds 17.58 -

Employees Welfare Expenses 30.15 -

377.22 -


79

22. Other Expenses

` in Lacs 2012-13 2011-12

Stores & Spare parts consumed 450.58 - Power and Fuel 2,884.30 - (Increase)/decrease of excise duty on inventory 58.91 - Insurance 37.23 - Rent 18.04 - Rates & Taxes 35.36 - Repairs & Maintenance -Buildings 18.64 - -Plant & Machinery 117.00 - -Others 16.02 - Transport & Freight 385.45 - Commission, Discount & Incentives on Sale 9.31 - Advertisement, Publicity and Sales Promotion 2.53 - Communication Expenses 7.52 - Auditors' Remuneration 3.10 0.06 Loss on Fixed Assets Sold /Discarded (net) 0.18 - Miscellaneous Expenses 74.81 0.17

4,118.98 0.23

Payment to Auditors As Auditor Audit Fees 1.12 0.06

Payment to Branch Auditors Audit Fees 1.98 -

3.10 0.06 23. Depreciation and Amortisation Expense

` in Lacs

2012-13 2011-12

Depreciation on Tangible Assets 551.28 - Depreciation on Intangible Assets 0.35 -

551.63 - 24. Finance Cost

` in Lacs

2012-13 2011-12

Interest Expenses [net of Capitalisation `52.63 Lacs (`NIL)] 195.05 - Bank Charges 6.73 -

201.78 - 25. Scheme of Arrangement


80

a) Pursuant to the Scheme of Arrangement (“the scheme”) between Century Plyboards (India) Limited (CPIL), the Company and their respective shareholders as approved by the Hon’ble High Court at Kolkata vide its order dated 17th May, 2013, all the assets and liabilities of the Ferro Alloys and Cement division (i.e., business and interests in manufacture of Ferro alloys and cement, including captive power plant attached thereto) of CPIL have been transferred to and vested in the Company at their respective book values on a going concern basis with effect from 1st April, 2012 being the appointed date. Accordingly, the scheme of arrangement has been given effect to in these accounts. Hence the previous year’s figures are not comparable.

b) The details of the assets and liabilities transferred from CPIL are as under: ASSETS ` in lacs Non-current assets Fixed assets Tangible assets 2541.06 Capital work-in-progress 998.43Non-current investments 6328.25 Long-term loans and advances 72.08

9939.82 Current assets Inventories 1960.52 Trade receivables 488.14 Cash and bank balances 167.89 Short-term loans and advances 705.60 Other current assets 59.92

3382.07 TOTAL 13321.89 LIABILITES Non-Current liabilities Long-term borrowings 575.90

575.90 Current liabilities Short-term borrowings 1173.40 Trade payables 330.48 Other current liabilities 384.49 Short-term provisions 13.25

1901.62

TOTAL 2477.52

c) Pursuant to the scheme, the difference between book value of assets and liabilities transferred from the CPIL being ` 10844.37 lacs, has been Credited to the Shareholders’ Fund of the Company as under.

` in lacs

Share Capital – Pending allotment 2216.73

Capital Reserve 8627.64

10844.37 d) Pursuant to the said scheme, the company will issue and allot its Equity Shares to the shareholders of CPIL in ratio of 1 (one) Equity share of ` 1/- each of the Company as fully paid-up for every 1 (one) Equity Share of ` 1/- each held by them in CPIL. Pending allotment of these shares, the amount of ` 2216.73 lacs is disclosed as ‘Share Capital - pending allotment’. Consequent to the allotment of new shares as per the scheme, current share capital of the Company of ` 5 lacs will be cancelled and the Company ceases to be subsidiary of the CPIL.


81

26. Contingent Liabilities (` in Lacs) As at 31stMarch, 2013 As at 31st March, 2012

Contingent Liabilities not provided for in respect of :– (a) Bills discounted with banks 855.77 - 27. Excise duty debited to Statement of Profit and Loss is Net of Subsidy ` 362.33 Lacs (` NIL). 28. Based on the information / documents available with the Company, information as per the requirement of Section 22 of The Micro, Small and Medium Enterprises Development Act, 2006 are as under:

(` in Lacs) 2012-2013 2011-2012

(i) Principal amount remaining unpaid to any supplier at the end of accounting year (including retention money against performance).

--

--

(ii) Interest due on above. -- -- Total of (i) & (ii) -- --

(iii) Amount of interest paid by the Company to the suppliers in terms of section 16 of the Act.

-- --

(iv) Amount paid to the suppliers beyond the respective appointed date. -- --(v) Amount of interest due and payable for the period of delay in payments (which have

been paid but beyond the due date during the year) but without adding the interest specified under the Act.

-- --

(vi) Amount of interest accrued and remaining unpaid at the end of accounting year. -- --(vii) Amount of further interest remaining due and payable even in the succeeding years,

until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of this Act.

-- --

29. The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the provisions of The Payment of Gratuity Act, 1972. The scheme is funded with an insurance company. The following tables summarize the components of net benefit expenses recognized in the Statement of Profit & Loss and the funded status and amounts recognized in the balance sheet for the Gratuity.

(`in Lacs)

S. No 2012-13 2011-12

(i) Net Employee Expense/(benefit) Current service cost 3.84 -- Interest cost on benefit obligation 2.01 -- Expected return on plan assets Net Actuarial (gains)/losses recognized in the year (4.94) -- Total employer expense 0.91 --

(ii) Actual return on plan assets -- --

(iii) Benefit Asset / (Liability) Fair Value of Plan Assets -- -- Defined benefit obligation 20.93 -- Benefit Asset / (Liability) (20.93) --

(iv) Movement in benefit liability Opening defined benefit obligation -- -- Transferred pursuant to Scheme (Ref note no.25) 23.74 --


82

Interest cost 2.01 -- Current service cost 3.84 -- Benefits paid (3.72) -- Actuarial (gains) / losses 4.94 -- Closing benefit obligation 20.93 --

(v) Movement in fair value of plan assets Opening fair value of plan assets -- -- Expected Return on plan assets -- -- Contribution by employer -- -- Benefits paid -- -- Actuarial gains / (losses) on obligation -- -- Closing fair value of plan assets -- --

(vi) The major categories of plan assets as a percentage of the fair value of total plan assets

Funded with insurer 100% -- (vii) The Principal actuarial assumptions are as follows:

Discount rate 8% -- Expected Return on plan assets -- -- Salary Increase 5% --

Withdrawal rates (Varying between per annum depending upon the duration and age of the employees) 1%-2% --

(viii) Amount incurred as expense for defined contribution to Provident Fund is `10.42 Lacs (` NIL lacs).

(ix) The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. (x) The details for the current and previous periods are as follows

2012-2013 2011-2012 2010-2011 2009-2010 2008-2009

Defined Benefit Obligation 20.93 -- -- -- -- Plan Assets -- -- -- -- -- Surplus / (Deficit) (20.93) -- -- -- -- Experience adjustments on plan Liability 2.01 -- -- -- -- Experience adjustments on plan assets -- -- -- -- --

30. Earning per Share (EPS):

In terms of Accounting Standard - 20, the calculation of EPS is given below: -

2012-2013 2011-2012 Profit/(Loss) as per the Statement of Profit & Loss (` in Lacs) and available for Equity Shareholders -558.76 -0.03 Weighted average number of Equity Shares outstanding during the year 500000 500000 Nominal value of equity shares (`) 1 1 Basic earnings per share (EPS) (`) -111.75 -0.01 Weighted average number of equity shares to be issued pursuant to Scheme of demerger excluding shares to be cancelled on allotment (Ref note no.25) 222172990 -- Diluted earnings per share (`) -0.25 -0.01


83

31. Imports, Exports and foreign currency exposure.

There are no Imports, Exports, expenses and exposure in foreign currency during the current financial year as well as previous financial year.

32. Related Party Disclosures a) Name of the transacting parties: Subsidiary Companies Cement Manufacturing Company Limited

Megha Technical & Engineers Private Limited Meghalaya Power Limited

Enterprises Owned/ Influenced by Key Management Personnel or their relatives.

Brijdham Merchants Private Limited

Sri Ram Vanijya Private Limited

b) Details of transactions between the Company and related parties and the status of outstanding balance as at 31st March, 2013 are given hereunder:

Sl. No.

Type of Transactions Subsidiary Companies

Enterprises Owned / Influenced by KMP

2012-13 2011-12 2012-13 2011-12 1. Purchase Transaction

Cement Manufacturing Company Limited Megha Technical & Engineers Private Limited

1.20 2.64

- -

- -

- -

2. Sales Transaction Cement Manufacturing Company Limited

22.67

-

-

-

3. Loans & Advances Received Cement Manufacturing Company Limited Megha Technical & Engineers Private Limited Brijdham Merchants Private Limited Sri Ram Vanijya Private Limited

600.00

1060.00 - -

- - - -

- -

100.00 100.00

- - - -

4. Loans & Advances Given Megha Technical & Engineers Private Limited

200.00

-

-

-

5. Interest Paid Cement Manufacturing Company Limited Megha Technical & Engineers Private Limited Brijdham Merchants Private Limited Sri Ram Vanijya Private Limited

2.38

18.51 - -

- - - -

- -

0.06 0.06

- - - -

6. Interest Received Megha Technical & Engineers Private Limited

4.39

-

-

-

7. Outstanding Balances as at 31st March, 2013: -Loans received

Megha Technical & Engineers Private Limited Brijdham Merchants Private Limited Sri Ram Vanijya Private Limited -Investments Cement Manufacturing Company Limited Meghalaya Power Limited

560.00

- -

2954.75 3373.50

- - - - -

-

100.00 100.00 - -

- - - - -


84

33. The Company's segment information as at and for the Year ended 31st March, 2013 are as below: (` in Lacs) SL. No.

Ferro Alloys Power Unit Total

a. External sales 6830.58 (-)

- (-)

6830.58 (-)

Inter-segment sales - ( - )

3616.86 (-)

3616.86 (-)

Total Revenue (Gross) 6830.58 (-)

3616.86 (-)

10447.44 (-)

b. Segment Results -1090.24 (-)

526.44 (-)

-563.80 (-)

Unallocated Income/(-) Expenses (Net of unallocated Income/(-)Expenses

-0.91

(-0.03) Operating Profit/Loss (-)

-564.71 (-)

Finance Cost

201.78 (-)

Deferred Tax Charges/(-)Credit

-207.73

(-) Total Profit /(-) Loss after tax

-558.76 (-0.03)

a. Other Information Segment Assets 5677.49

(-) 3106.07

(-) 8783.56

(-) Unallocated Corporate/Other Assets

6553.47 (4.96)

TOTAL

15337.03

(4.96) b. Segment Liabilities 998.35

(-) 451.24

(-) 1449.59

(-) Unallocated Corporate/Other Liabilities

3276.54 (0.06)

TOTAL

4726.13 (0.06)

c. Capital Expenditure 1319.76 (-)

151.44 (-)

1471.20 (-)

d. Depreciation/Amortisation 263.32 (-)

288.31 (-)

551.63 (-)

Notes: (a) Business Segments: The business segments have been identified on the basis of the products of the Company.

Accordingly, the Company has identified following business segments: Ferro-Alloys - Ferro Silicon Power - Generation of Power

(b) Geographical Segments: The Company operates predominantly within the geographical limits of India and accordingly secondary segments have not been considered.


85

Unit Opening Stock ( c) Production Purchases Turnover (b) Closing Stock

Particulars

Quantity Amount Quantity Quantity Amount Quantity Amount Quantity Amount

Rs. in Lacs Rs. in Lacs Rs. in Lacs Rs. in Lacs

i) Ferro Silicon MT

899 534.77

9,463

- -

8,893 6,830.57

1,469

1,035.61

(-) (-) (-) ( - ) ( - ) ( - ) ( - ) ( - ) ( - )

ii) Silicon Manganese MT

39 9.55

-

- -

- -

39

9.86

(-) (-)

(-) ( - ) ( - ) ( - ) ( - ) ( - ) ( - )

iii) Power MW

- -

81,240 (a) -

- -

-

-

( - ) (-) (-) ( - ) ( - ) ( - ) ( - ) ( - ) ( - )

544.32

- -

8,893 6,830.57

1,045.47

(-) #VALUE! (-) #VALUE! (-) (-)


86

34 (b) Raw Materials Consumed:

Unit of Qty.

2012-13 2011-12 Quantity

Value

(` In Lacs) Quantity

Value

(` In Lacs) (i) Charcoal MT 6784.64 285.04 - - (ii) Quartz MT 17666.37 1099.50 - - (iii) Lame Coke MT 4764.64 873.21 - - (iv) Mill Scale MT 2867.82 187.08 - - (v) Coal (Steam & Chocolate) MT 796.90 45.62 - - (vi) Other Raw Material MT 281.44 13.34 - - Total 2503.79 - (c) Value of Imported and indigenous Raw-materials and stores, Spare parts etc and their percentage to total consumption

(` in Lacs) 2012-13 2011-12

Value % Value % Raw Materials -Imported -Indigenous

0.00

2503.79

0.00

100.00

Total 2503.79 100.00 0.00 100.00 Stores & Spare parts etc -Imported -Indigenous

0.00

450.58

0.00

100.00

Total 450.58 100.00 0.00 100.00 Note: It is not possible to identify the consumption of spare parts separately and hence consumption of stores and spare parts etc. is shown above. 35. Previous year’s figures including those given in brackets have been rearranged where necessary to confirm to

the current year’s classifications.

For Kailash B. Goel & Co. For and on behalf of the Board Firm Registration Number 322460E Chartered Accountants


CA Arun Kumar Sharma Partner Membership No.057329

Place : Kolkata Hari Prasad Agarwal, Managing Director

Date: 8th July, 2013


87

Statement Pursuant to Section 212 of the Companies Act, 1956, relating to Subsidiary Companies (as on 31st March, 2013)

Sl. Particulars Name of Subsidiaries Direct Subsidiary Ultimate Subsidiaries

Cement Manufacturing

Co. Ltd.

Meghalaya Power Ltd.

Megha Technical & Engineers Pvt. Ltd.

Star Cement Meghalaya Ltd.

NE Hills Hydro Ltd.

1 Financial year of the Subsidiary ended on 31st March, 2013 31st March, 2013 31st March, 2013 31st March, 2013 31st March, 2013 2 Date from which they became Subsidiary

1st April, 2012 1st April, 2012 1st April, 2012 1st April, 2012 1st April, 2012

3 Shares of the Subsidiary held by the Company/Direct Subsidiary as on 31st March, 2013 a) Number of Shares b) Face value of Shares c) Extent of Holding

2,95,47,500 Rs.10/-

70.48 %

1,70,95,618 Rs. 10/- 99.80%

2,73,36,400 Rs.10/- 99.96%

2,98,17,818 Rs.10/-

100%

70,000 Rs.10/-

100% 4 The net aggregate amount of the Subsidiary

Company’s profit/(loss) so far as it concerns the members of the holding company a) Not dealt with in the Holding

Company’s accounts i) For the financial year ended 31st

March, 2013 ii) Upto the previous financial years of

the Subsidiary company.

b) Dealt with in the Holding Company’s accounts

i) For the financial year ended 31st March, 2013

ii) For the previous financial years of the Subsidiary company since they became the Holding Company’s subsidiaries.

Rs. in Lacs

2162.71

28054.49

NIL

NIL

Rs. in Lacs

45.87

552.68

NIL

NIL

Rs. in Lacs

2731.26

10015.92

NIL

NIL

Rs. in Lacs

(1800.01)

NIL

NIL

NIL

Rs. in Lacs

NIL

NIL

NIL

NIL

Figures in brackets indicate loss.

For and on behalf of the Board Place: Kolkata Date: 8th July, 2013

Hari Prasad Agarwal Sajjan Bhajanka (Managing Director) (Chairman)


88

The Ministry of Corporate Affairs, Government of India vide its general circular no. 2/2011 dated 8th February, 2011, has granted exemption to all companies from attaching the Annual Reports and other particulars of its subsidiary companies along with the Annual Report of the company required u/s 212 of the Companies Act, 1956. Therefore, the said Reports of the subsidiary companies are not attached herewith. However, a statement containing information as required by Ministry of Corporate Affairs, while granting exemption, is given hereunder:

(Rs. in Lacs) (as on 31st March, 2013)

For and on behalf of the Board


Hari Prasad Agarwal Sajjan Bhajanka (Managing Director) (Chairman)

Sl. Particulars Name of Subsidiaries Direct Subsidiaries Ultimate Subsidiaries

Cement Manufacturing Co.

Ltd.

Meghalaya Power Ltd.

Megha Technical & Engineers Pvt. Ltd.

Star Cement Meghalaya Ltd.

NE Hills Hydro Ltd.

1 Capital 4192.14 1713.06 2734.64 2981.78 7.00 2 Reserves 49593.35 7385.47 19104.96 30215.12 -- 3 Total Assets 92261.20 30501.88 29225.39 80910.63 7.06 4 Total Liabilities 92261.20 30501.88 29225.39 80910.63 7.06 5 Details of Investments

( except investments in subsidiaries) - Adonis Vyaper Pvt. Ltd. - Apnapan Viniyog Pvt. Ltd. - Ara Suppliers Pvt. Ltd. - Arham Sales Pvt. Ltd. - Reliance Power Ltd - Ribhoi Engineering Co. Pvt. Ltd.

31.42 31.42 31.36 31.42 24.54

--

-- -- -- -- -- --

-- -- -- -- -- --

-- -- -- -- -- --

-- -- -- -- --

2.70

6 Gross Turnover 37393.71 4146.97 35173.46 1081.75 -- 7 Profit Before Taxation 3108.68 129.22 3850.59 (2064.29) -- 8 Provision for Taxation 40.13 75.09 (26.19) 489.64 -- 9 Profit / (Loss) after Taxation 3068.55 54.13 3876.78 (2553.93) -- 10 Proposed Dividend -- -- -- -- --


89

INDEPENDENT AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF STAR FERRO AND CEMENT LIMITED We have audited the accompanying Consolidated Balance Sheet of STAR FERRO AND CEMENT LIMITED (“ the Company “) and its subsidiaries, which comprise the Consolidated Balance Sheet as at 31st March 2013, the consolidated statement of Profit and Loss Account and the Consolidated Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial statements Management is responsible for the preparation of these consolidated statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Company in accordance with the Accounting principles generally excepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments; the auditor considers internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, and based on consideration of the report of the other auditor on the financial statement of the subsidiary as noted below, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India :

i. in the case of the Consolidated Balance Sheet, of the state of affairs of the Company and its subsidiaries as at 31st March 2013;

ii. in the case of the Consolidated Statement of Profit and Loss, of the Loss of the Company and Profit/ Loss of its subsidiaries for the year ended on that date; and

iii. in the case of Consolidated Cash Flow Statement, of the Consolidated Cash flows of the Company and its subsidiaries for the year ended on that date.


90

Other Matters

We did not audit the financial statements of a subsidiary (NE Hills Hydro Limited), whose financial statements reflect total assets worth of ` 7.00 Lacs as at 31st March, 2013. These financial statements and other financial information have been audited by other auditor whose report have been furnished to us, and our opinion is based solely on the report of the other auditor.

For KAILASH B. GOEL & CO. Firm Registration No.322460E Chartered Accountants




91


Consolidated Balance Sheet As at 31st March,2013 ` in Lacs

NOTES 31st March,2013 31st March,2012 A EQUITY AND LIABILITIES Shareholder's Funds Share Capital 3 5.00 5.00 Share Capital - Pending Allotment 3 2,216.73 - Reserves & Surplus 4 67,049.81 (0.10) 69,271.54 4.90 Minority Interest 25,379.55 - Non Current Liabilities Long Term Borrowings 5 76,490.96 - Deferred Tax Liability 7 409.32 - Other Long Term Liabilities 6 8,000.65 - Long Term Provisions 8 156.44 - 85,057.37 Current Liabilities Short Term Borrowings 9 9,113.96 - Trade Payables 10 7,231.59 0.06 Other Current Liabilities 10 9,914.68 - Short Term Provisions 8 22.58 - 26,282.81 0.06 TOTAL 2,05,991.27 4.96 B ASSETS Non Current Assets Fixed Assets Tangible Assets 11 1,16,448.76 - Intangible Assets 12 31.51 - Capital Work-in-Progress 12,888.73 - Non Current Investments 13 152.86 - Long term Loans and Advances 14 4,482.10 - Other Non Current Assets 15 22,722.63 - Current Assets Inventories 16 14,999.41 - Trade Receivables 15 4,271.36 - Cash and Bank Balances 17 2,714.61 4.64 Short Term Loans and Advances 14 17,735.48 0.32 Other Current Assets 15 9,543.82

TOTAL Summary of Significant Accounting Policies 2.1

2,05,991.27 4.96

The accompanying notes form an integral part of the financial statementsAs per our Report of even Date For Kailash B. Goel & Co. For and on Behalf of the Board of DirectorsFirm Registration No- 322460E Chartered Accountants


CA. Arun Kumar Sharma Partner Membership No.057329 Hari Prasad Agarwal, Managing DirectorPlace: Kolkata, Date: 8th July, 2013


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Consolidated Statement of Profit and Loss for the year ended 31st March,2013 ` in Lacs NOTES 2012-13 2011-12 Income Gross Revenue from Operations 18 69,378.85 - Less : Excise Duty 3,419.02 - Net Revenue from Operations 65,959.83 - Other Income 19 166.30 0.20 Total Revenue ( I ) 66,126.13 0.20 Expenses Cost of Raw Materials Consumed 20 11,939.83 - (Increase)/Decrease in inventories of Finished Goods and Work in Progress 21 (2,432.46) - Employee Benefits Expense 22 4,101.68 - Other Expenses 23 40,515.59 0.23 Depreciation and Amortisation Expense 24 5,029.09 - Finance Cost 25 2,858.86 - Total Expenses ( II ) 62,012.59 0.23 Profit before Tax and Exceptional Items 4,113.54 (0.03) Exceptional Items 26 (17.64) Profit before Taxation 4,131.18 (0.03) Tax Expenses Current Tax 1,417.72 - Less: MAT credit entitlement 1,417.72 - Net Current Tax Expense - - Deferred Tax 370.95 Total Tax Expenses 370.95 - Profit for the year before minority interest 3,760.23 (0.03) Minority Interest 1,268.21 Profit for the year 2,492.02 (0.03)

Earnings per equity share (nominal value of share ` 1/- (` 1/-) 35 Basic 498.40 (0.01) Diluted 1.12 (0.01) Summary of significant Accounting Policies 2.1

The accompanying notes form an integral part of the financial statements

As per our Report of even Date

For Kailash B. Goel & Co. For and on Behalf of the Board of Directors Firm Registration No- 322460E Chartered Accountants


CA. Arun Kumar Sharma Partner Hari Prasad Agarwal, Managing Director Membership No.057329 Place: Kolkata Date: 8th July, 2013


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Star Ferro and Cement Limited Consolidated cash flow statement for the year ended 31st March, 2013

PARTICULARS (` in lacs)

2012-2013 2011-2012 A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before Tax 4,131.18 (0.03) Adjustments for :

Depreciation 5,029.09 - Finance Cost 2,858.86 - (Profit) /Loss on Fixed Assets sold/discarded 8.59 - Preliminary Expenses Written Off 16.25 - Provision for Doubtful Debts (46.78) - Unspent Liabilities Written Back (10.24) - Unrealised Foreign Exchange Fluctuations Loss (19.48) - Interest Income (124.70) - Operating Profit before Working Capital Changes 11,842.77 (0.03) Adjustments for : Increase/(decrease) in Trade Payables, Other Liabilities and Provisions 5501.15 - (Increase)/decrease in Trade Receivables 3680.88 (0.02) (Increase)/decrease in Loans & Advances and other assets (24410.09) (0.31) (Increase)/decrease in Inventories (5264.88) (20492.94) (0.33) Cash Generated from Operations : (8650.17) (0.36) Direct Taxes paid (Net) (1266.08) - Net Cash Flow from Operating Activities (9916.25) (0.36) B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Investments 21529.42 -

Sale of Fixed Assets 110.63 - Fixed Deposits/Margin Money Refund 27.54 -

Interest Received 124.70 - Purchase of Fixed Assets (24030.91) - Net Cash Flow used in Investing Activities (2238.62) - C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Borrowings 24736.42 - Repayment of Loans (2443.11) - Interest Paid (Including Interest Capitalized) (9561.00) - Other Borrowing Cost Paid (324.13) -

Net Cash Flow from Financing Activities 12408.18 - Net Changes in Cash & Cash Equivalents (A+B+C) 253.31 (0.36)

Cash & Cash Equivalents on 1st April'2012 4.64 5.00 Add: transferred as per scheme of arrangement (refer note no.27) 167.59 - Add: Balance of Subsidiaries acquired as per the scheme (refer note no.27) 2199.90 - 2372.13 5.00 * Cash & Cash Equivalents on 31st March'2013 2625.44 4.64

* Represents Cash and Bank Balances as indicated in Note-17, and excludes ` 89.17 lacs (` NIL) being Bank Balances with restrictive use and maturity of more than three months. Note: 1) As the Ferro Alloys and Cement Division of Century Plyboards (India) Limited (CPIL) has been demerged and transferred to the Company, the current year Cash Flow Statement is not comparable with the corresponding previous year Cash Flow Statement.


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2) The Cash Flow Statement for the current financial year has been reported after taking into consideration the financial statements of demerging Ferro Alloys and Cement Division of CPIL as on 01.04.2012. As per our Report of even Date For and on Behalf of the Board

For Kailash B. Goel & Co. Firm Registration No- 322460E Chartered Accountants Sajjan Bhajanka, Chairman

CA Arun Kumar Sharma Hari Prasad Agarwal, Managing Director Partner Membership No. 057329 Place: Kolkata Date: 8th July, 2013


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Notes to Consolidated Financial Statements as at and for the Year Ended 31st March, 2013 1. Principles of consolidation

The Consolidated Financial Statements which relate to Star Ferro and Cement Limited (the Company) and its subsidiaries have been prepared on the following basis:

(a) The financial statements of the company and its subsidiaries are combined on a line-by-line basis by adding

together the book values of like items of assets, liabilities, income and expenditure, after fully eliminating intra group balances, intra group transactions and any unrealized profit / loss included therein, in accordance with Accounting Standards (AS-21), “Consolidated Financial Statements”.

(b) The excess/shortfall of cost to the company of its investments in the subsidiary companies, over the net assets at

the time of acquisition in the subsidiaries as on the date of investment is recognized in the financial statements as goodwill/capital reserve as the case may be.

(c) The subsidiary companies considered in the financial statements are as follows:

Name Country of Incorporation

% of Voting power as on 31.03.2013


Cement Manufacturing Company Limited India 70.48 - Megha Technical & Engineers Private Limited India 99.96 - Star Cement Meghalaya Limited India 100.00 - Meghalaya Power Limited India 99.80 - NE Hills Hydro Limited India 100.00 -

(d) The consolidated financial statements have been prepared using uniform accounting policies, except stated

otherwise, for like transactions and are presented, to the extent possible, in the same manner as the Company’s separate financial statements.

(e) In terms of Accounting Standard-21 notified under the Companies Accounting Standards Rules, 2006, Minority

interest has been computed in respect of non-fully owned subsidiaries and adjusted against the consolidated income of the group in order to arrive at the net income attributable to the shareholders’ of the Company.

(f) The subsidiaries has been acquired with effect from 01.04.2012 pursuant to the Scheme of arrangement approved

by the Hon’ble High Court at Kolkata

2. Basis of Preparation The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis and on the basis of going concern. The accounting policies applied by the Company are consistent with those used in the previous year.

2.1 Summary of Significant Accounting Policies

(i) Use of Estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, actual results could differ from these estimates.


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(ii) Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

a. Revenue from sale of goods and services rendered is recognized upon passage of title which generally coincides with delivery of materials and rendering of services to the customers. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company.

Hence, they are excluded from revenues. Excise duty deducted from revenue (Gross) is the amount that is

included in the revenue (Gross) and not the entire amount of liability arising during the year.

Sales figures are net of rebates, trade discounts and returns.

b. Dividend Income is recognized when the shareholders' right to receive the payment is established by the balance sheet date.

c. Interest income is recognized on a time proportion basis taking into account the amount outstanding and rate applicable.

(iii) Fixed Assets

Fixed Assets are stated at cost or revalued amount, as the case may be, less accumulated depreciation / amortisation and impairment, if any, except freehold land which is carried at cost. Cost comprises the purchase price inclusive of duties (net of cenvat / VAT), taxes, incidental expenses and erection / commissioning expenses etc. up to the date, the asset is ready for its intended use. In case of revaluation of fixed assets, the original cost as written-up by the valuer, is considered in the accounts and the differential amount is transferred to revaluation reserve. Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular are capitalised and depreciated over the residual life of the respective assets.

(iv) Capital Work in Progress

Capital work in Progress is carried at cost comprising direct cost and pre-operative expenses during construction period to be allocated to the fixed assets on the completion of construction.

(v) Expenditure during construction period

In case of new projects and substantial expenses of existing factories, expenditure incurred including trial production expenses net of revenue earned, and attributable interest and financing cost, prior to commencement of commercial production/completion of project, are capitalised.

(vi) Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date to determine if there is any indication of impairment based on external/internal factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount which represents the greater of the net selling price and ‘Value in use’ of the assets. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

(vii) Depreciation / Amortization (a) The classification of plant and machinery into continuous and non-continuous process is done as per technical

certification and depreciation thereon is provided accordingly.


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(b) Depreciation on fixed assets is provided under Written down Value method (except in case of fixed assets of power division of the subsidiary Megha Technical & Engineers Private Limited where straight line method is followed) at the rates prescribed in Schedule XIV of the Companies Act, 1956, or at rates determined based on useful lives of the respective assets, as estimated by the management, whichever is higher.

(c) Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis with reference to the date of addition / disposal.

(d) Intangible assets are amortized over a period 3 to 5 years depending on the useful life. (e) In case of impairment, depreciation is provided on the revised carrying amount of the assets over its remaining

useful life.

(viii) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate prevailing on the dates of the transactions and exchange differences are dealt within the Statement of Profit & Loss. Monetary foreign currency assets and liabilities are translated at the year end exchange rates. All exchange differences are dealt within the Statement of Profit and Loss, except to the extent that they are regarded as an adjustment to the interest cost and the resultant balance to the new projects, till the date of the capitalization, are carried to pre-operative expenses. Profit/Loss arising out of cancellation of forward contracts is taken to revenue in the year of cancellation

(ix) Investments

Investments that are readily realisable and intended to be held for not more than a year are classified as Current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and market value on individual investment basis. Long Term Investments are considered at cost, unless there is an "other than temporary" decline in value, in which case adequate provision is made for the diminution in the value of Investments.

(x) Inventories Raw Materials, stores and spares are valued at lower of cost and net realizable value. However, these items are considered to be realizable at cost if the finished products, in which they will be used, are expected to be sold at or above cost. Work in progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials & labour and a part of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost of Inventories is computed on weighted average/ FIFO basis.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.


Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. When the grant or subsidy relates to an asset, it is deducted from the gross value of the asset concerned in arriving at the carrying amount of related asset. Government grants of the nature of promoter’s contribution are credited to capital reserve and treated as a part of the shareholders’ funds.


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(xii) Retirement and other employee benefits (a) Retirement benefit in the form of Provident Fund is a defined contribution scheme and is charged to the

Statement of Profit and Loss of the year when the contributions to the respective funds are due. The Company has no obligations other than the contribution payable to the respective funds.




(xiii) Earning per Share Basic Earnings per Share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deductible preference dividend and attributable taxes) by the weighted number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, net profit or loss for the year attributable to equity share holders and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares.

(xiv) Excise Duty and Custom Duty Excise duty on finished goods stock lying at the factories is accounted for at the point of manufacture of goods and accordingly, is considered for valuation of finished goods stock lying in the factories as on the balance sheet date. Similarly, customs duty on imported material in transit/lying in bonded warehouse is accounted for at the time of import/ bonding of materials.


(xvi) Taxation

Tax expenses comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred income taxes reflect the impact of current year timing differences between taxable income for the year and reversal of timing differences of earlier years. The deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been substantively enacted as of the Balance Sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. If the company has carry forward unabsorbed depreciation and tax losses, deferred tax assets are recognized only to the extent there is virtual certainty supported by convincing evidence that sufficient taxable income will be available against which such deferred tax asset can be realized.


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The carrying amounts of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of deferred tax assets to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendation contained in guidance note issued by the Institute of Chartered Accountants of India, the said assets is created by way of a credit to the Statement of Profit and Loss and shown as MAT credit entitlement. The company reviews the carrying amount of MAT at each Balance Sheet date and writes down MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the company will pay normal income-tax during specified period.

(xvii) Segment Reporting a) Identification of segments: The company has identified that its business segments are the primary segments. The Company’s business are organized and managed separately according to the nature of products/services, with each segment representing a strategic business unit that offers different product / services and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the company operate. b) Inter segment transfers: The Company generally accounts for intersegment sales and transfers at current market prices. c) Allocation of Common Costs: Common allocable costs are allocated to each segment on case to case basis applying the ratio, appropriate to each relevant case. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segment on a reasonable basis, have been included under the head “Unallocated”.


(xviii) Cash and Cash equivalents Cash and cash equivalents in the cash flow statement comprise of cash at bank and in hand and short-term investments with an original maturity of three months or less.

(xix) Provision

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions made in terms of Accounting Standard 29 are not discounted to their present value and are determined based on best estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(xx) Contingent Liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.


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3. Share Capital ` in Lacs 31st March,2013 31st March,2012 Authorised 10,00,000 (10,00,000) Equity Shares of ` 1/- each 10.00 10.00 Total 10.00 10.00

Issued 5,00,000 (5,00,000) Equity Shares of ` 1/- each 5.00 5.00 Total 5.00 5.00

Subscribed and Paid up 5,00,000 (5,00,000) Equity Shares of ` 1/- each # 5.00 5.00 Total 5.00 5.00

a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period Equity Shares 31st March,2013 31st March,2012 No of Shares ` in Lacs No of Shares ` in Lacs At the Beginning of the year 5,00,000 5.00 5,00,000 5.00 Issued during the year - - - -

Outstanding at the end of the year 5,00,000 5.00 5,00,000 5.00


The company has only one class of equity shares having par value of ` 1/- per share. Each holder of equity shares is entitled to one vote per share.

The company declares and pays dividends in Indian rupees.


c) Details of Shareholders holding more than 5% shares in the company 31st March,2013 31st March,2012

No of Shares


No of Shares


Equity Shares of ` 1/- each fully paid-up Century Plyboards (India) Ltd. 500000 100.00% 500000 100.00%

# The existing share capital to be cancelled upon allotment of shares pursuant to Scheme of Arrangement (Refer Note no 27)

As per records of the Company, including its register of shareholders/members , the above shareholding represents legal ownerships of shares

` in Lacs Share Capital - Pending Allotment 31st March,2013 31st March,2012 Shares to be allotted as per Scheme of Arrangement (Refer Note No 27) 2,216.73 -

Total 2,216.73 -


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4. Reserves & Surplus ` in Lacs 31st March,2013 31st March,2012 Capital Reserve Balance as per the last Financial Statements - - Add: Amount adjusted pursuant to scheme of arrangement (refer note no.27) 8,627.64 - Add: Amount adjusted on acquisition of subsidiaries pursuant to the scheme (refer note no.27)

2,549.77

Add: Capital Investment Subsidy 15,270.22 - Closing Balance 26,447.63 -

General Reserve Balance as per the last Financial Statements - - Add: Amount adjusted on acquisition of subsidiaries pursuant to the scheme (refer note no.27)

2,607.87

Add : Transferred from statement of Profit and Loss - - Closing Balance 2,607.87 -

Surplus in the statement of Profit and Loss Balance as per the last Financial Statements (0.10) (0.07) Add: Amount adjusted on acquisition of subsidiaries pursuant to the scheme (refer note no.27)

35,502.39

Add: Profit for the year 2,492.02 (0.03) Net Surplus in the Statement of Profit and Loss 37,994.31 (0.10) Total Reserves and Surplus 67,049.81 (0.10)

5. Long Term Borrowings

Non Current Portion Current Maturities ` In Lacs ` in Lacs

31st March,2013 31st March,2012 31st March,2013 31st March,2012 Term Loans (Secured) Indian Rupee Loan from Banks 44,555.27 - 4,826.96 - Indian Rupee Loan from a Financial Institution

1,018.22 - 39.28 -

Foreign Currency Loan from Banks 23,928.06 - 2,267.92 --

Other Loans and Advances (Secured)

-

Buyers Credit from banks for Capital expenditure

6,957.16 - - -

Hire Purchase obligations :- - From banks 21.68 - 156.79 - - From Bodies Corporate 10.57 - 19.85 -

76490.96 - 7310.80 -

Amount disclosed under the head “Other Current Liabilities"

(7,310.80)

( Note - 10) Net Amount 76490.96 - - -


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Notes:- 1(a) Rupee Term Loan of `1,057.50 lacs (` NIL) from NEDFI for Ferro Alloy Division at Byrnihat carries interest rate of PLR + 1% i.e. 12.75% p.a. The loan is secured by equitable mortgage of leasehold rights of land and first charge on fixed assets of the Company's Ferro Alloy Division at Byrnihat, Meghalaya and Second Charge on Current Assets of the said unit on pari passu basis. Term Loans from NEDFI is to be repaid in 27 quarterly installments of ` 39.28 lacs each in first 26 quarters and balance in the last quarter with first installment due on 01.01.2014. (b) Rupee Term Loan of ` 984.51 lacs (` NIL) from a bank is repayable in 5 equal quarterly installments of ` 197.50 lacs each ending on June 2014.The Loan is secured by first charge on fixed assets (except specifically charged assets) of the subsidiary's cement plant at Lumshnong, Meghalaya. (c) Rupee Term Loan of ` 7000.00 lacs (` NIL) from a bank is repayable in 16 equal quarterly installments commencing from September 2013.The Loan is secured by first pari passu charge on current assets and on fixed assets of the subsidiary's cement plant at Lumshnong, Meghalaya. (d) Rupee Term Loans of ` 12,203.59 lacs (` NIL) and Foreign Currency loan of ` 1,615.30 lacs (` NIL) from banks are repayable in 28 unequal quarterly installments commencing from March 2013. The loans are secured by first pari passu charge on fixed assets of subsidiary's cement Grinding unit at Guwahati, Assam. (e) Rupee Term Loan of ` 572.96 lacs (` NIL) is repayable in 3 equal quarterly installments ending on December'2013.The Term loan is secured by first charge on Fixed Assets of the Subsidiary’s Cement Grinding Unit at Lumshnong , Meghalaya on Pari passu basis. (f) Rupee Term Loan of ` 25,932.26 lacs (` NIL) and foreign currency loan of ` 9,677.81 lacs from banks are repayable in 28 unequal quarterly installments commencing from March 2013. Term Loans are secured by first charge on the fixed assets of the subsidiary’s Cement clinker plant at Lumshnong, Meghalaya on pari passu basis. (g) Rupee Term Loan of ` 2,688.91 lacs (` NIL) and foreign currency loan of ` 12,191.36 lacs (` NIL) from a bank are repayable in 28 unequal quarterly installments commencing from March 2013. Foreign currency loan of ` 2,711.51 lacs from a bank is repayable in 28 unequal quarterly installments ending on March, 2017. These Term Loans are secured by first charge on the fixed assets of the subsidiary’s power plants at Lumshnong, Meghalaya on pari-passu basis. (h) Buyers credit of ` 2,478.54 lacs (` NIL) from banks have been availed against Letters of Credit (sub-limit to Term Loans) issued by banks which are secured by first charge on fixed assets of the subsidiary's Cement Grinding unit at Guwahati, Assam. (i) Buyers credit of ` 4,478.62 lacs (` NIL) from banks have been availed against letter of credit (sub-limit to Term Loans) issued by banks which are secured by first charge on fixed assets of the subsidiary’s cement clinker plant at Lumshnong, Meghalaya. (j) Hire Purchase Finance of ` 66.58 lacs (` NIL) is secured by hypothecation of company’s vehicles and is repayable within three to four years having varying date of payment. (k) Hire Purchase Finance of ` 67.31 lacs (` NIL) is secured by hypothecation of subsidiary’s vehicles / equipments and is repayable within three to four years having varying date of payment. (l) Hire Purchase Finance of ` 66.58 lacs (` NIL) is secured by hypothecation of subsidiary’s vehicles / equipments and is repayable within three to four years having varying date of payment. (m) Term Loans of ` 39,395.19 Lacs (` NIL) from Banks have been guaranteed by some of the Directors of the Company. 2. Buyers credit carries interest @ Libor plus 1% to 3.5% and repayable in 90-365 days.


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6. Other Long Term Liabilities ` in Lacs

31st March,2013 31st March,2012 Security Deposits 5,205.03 - Others 2795.62 - Total Amount 8000.65 0.00

7. Deferred Tax Liabilities

` in Lacs 31st March,2013 31st March,2012 Deferred tax liability Fixed assets: Impact of difference between tax depreciation and depreciation/ amortization charged for the financial reporting 1,023.61 -

1,023.61 - Deferred tax asset Business Loss Carried forward 234.99 - Impact of expenditure charged to the statement of profit and loss in the current year but allowed for tax purposes on payment basis 379.30 - 614.29 - Net deferred tax liabilities 409.32 -

8. Provisions

Long Term Short Term ` in Lacs ` in Lacs

31st March,2013 31st March,2012 31st March,2013 31st March,2012 Provision for Employee Benefits Provision for Gratuity 83.83 - - - Provision for Leave Encashment 72.61 - 22.58 - Total Amount 156.44 - 22.58 -

9. Short Term Borrowings ` in Lacs Loans repayable on demand :- 31st March,2013 31st March,2012 Cash Credit from banks (Secured) 3,765.50 - Short Term Loan from Bodies Corporate ( Unsecured ) 200.00 - Loans from related parties (Unsecured) - From Bodies Corporate 200.00 - Other Loans and advances FCNRB Demand Loan ( Secured ) 3,448.46 - Short Term Loan from a bank ( Secured ) 1,500.00 - Total Amount 9113.96 -

Notes:- 1 (a) Working Capital facility of `1191.33 lacs (` NIL) from a Bank is secure by first charge on the current

assets of the Company's Ferro Alloy Division and second charge on the fixed assets of the Ferro Alloy Plant on pari passu basis.

(b) Working Capital facilities of ` 4,555.34 Lacs (` NIL) from banks are secured by first pari passu charge on subsidiary's current assets and second pari passu charge on fixed assets of the Company's cement plant at Lumshnong, Meghalaya.


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(c) Working capital facilities of ` 2,229 lacs (` NIL) from banks are secured by first charge on subsidiary’s current assets of its Cement Grinding unit at Lumshnong, Meghalaya on pari passu basis.

(d) Cash credit of ` 738.29 lacs (` NIL) from a bank is secured by first charge on subsidiary’s current assets and second charge on fixed assets of its power plants at Lumshnong, Meghalaya.

Further, the working capital facilities for ` 6484.96 lacs (` NIL) are also guaranteed by some directors of the company.

The above cash credits are repayable on demand and carries interest rate of Base Rate + 3.25% p.a. 2 Short Term unsecured loan of `400 lacs (` NIL) is repayable on demand and carries interest @11% to

13.30% p.a. 10. Other Current Liabilities ` in Lacs

31st March,2013 31st March,2012 Trade Payables - Dues to Micro and Small Enterprises (Refer Note no 32) - - - Dues to Others 7,231.59 0.06

7,231.59 0.06 Others Liabilities Current Maturities of Long Term Borrowings (Note-5) 7,310.80 - Interest accrued but not due on Borrowings 1.21 - Advances from Customers 466.71 - Statutory Dues Payable 2,135.96 -

9914.68 - Total Amount 17146.27 0.06


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11 : Tangible Assets

Land & Site Development

Factory Buildings

Non-Factory

Buildings

Plant & Machinery

Electrical Installations

furniture & Fixtures

Office Equipments

Computers VehiclesMines &

Mines Developments

Total

Free Hold On Free- hold Land

Cost or Valuation At 1st April,2011 - - - - - - - - - - - Additions - - - - - - - - - - - Disposals - - - - - - - - - - - At 31st March, 2012 - - - - - - - - - - - Transferred pursuant to Scheme of arrangement (Refer note 27)

86.17 1,172.90 - 3,547.42 910.35 33.41 8.92 22.17 664.56 - 6,445.90

Transferred on acquisition of subsidiaries pursuant to the scheme (Refer note 27)

2,697.14 6,241.34 3,516.85 23,092.75 - 458.57 364.26 438.66 2,307.51 1,122.15 40,239.23

Additions 2,098.82 7,908.18 1,229.98 83,190.38 199.69 133.19 51.95 51.93 185.87 3.50 95,053.49 Disposals 38.14 - - 82.62 - 12.66 6.84 2.05 50.68 - 192.99 At 31st March, 2013 4,843.99 15,322.42 4,746.83 1,09,747.93 1,110.04 612.51 418.29 510.71 3,107.26 1,125.65 1,41,545.63 Depreciation As at 1st April, 2011 - - - - - - - - - - - Charge for the Year - - - - - - - - - - - Disposals - - At 31st March, 2012 - - - - - - - - - - - Transferred pursuant to Scheme of arrangement (Refer note 27)

- 552.93 - 2,367.07 611.98 23.57 4.93 18.01 326.35 - 3,904.84

Transferred on acquisition of subsidiaries pursuant to the scheme (Refer note 27)

- 2,469.58 605.07 10,892.62 - 253.40 132.75 321.74 958.91 - 15,634.07

Charge for the Year - 575.41 154.04 4,079.36 70.55 58.08 36.72 60.18 597.39 - 5,631.73 Disposals - - - 25.58 - 8.31 3.68 2.21 33.99 - 73.77 As at 31st March, 2013 - 3,597.92 759.11 17,313.47 682.53 326.74 170.72 397.72 1,848.66 - 25,096.87 Net Block As at 31st March, 2012 - - - - - - - - - - - As at 31st March, 2013 4,843.99 11,724.50 3,987.72 92,434.46 427.51 285.77 247.57 112.99 1,258.60 1,125.65 1,16,448.76

106

12 : Intangible Assets (` in Lacs)

Computer Software Total Cost or Valuation At 1st April,2011 - Addition - Disposals - At 31st March, 2012 - - Transferred pursuant to Scheme of arrangement (Refer note 27) - - Transferred on acquisition of subsidiaries pursuant to the scheme (Refer note 27) 86.69 86.69 Addition 40.45 40.45 Disposals 2.45 2.45 As at 31st March, 2013 124.69 124.69 Amortisation As at 1st April, 2011 - - Charge for the Year - - Disposals - - At 31st March, 2012 - - Transferred pursuant to Scheme of arrangement (Refer note 27) - - Transferred on acquisition of subsidiaries pursuant to the scheme (Refer note 27) 81.46 81.46 Charge for the Year 14.17 14.17 Disposals 2.45 2.45 As at 31st March, 2013 93.18 93.18 Net Block As at 31st March, 2012 - - As at 31st March, 2013 31.51 31.51

13 : Non-Current Investments (Fully Paid Up) ( At Cost )

Face Value per

share No of ` in Lacs

` Shares 31st

March,2013 31st

March,2012 A NON TRADE INVESTMENTS (a) Quoted Equity Shares

Reliance Power Ltd 10 8743 24.54 - (-)

Sub Total 24.54 -

B TRADE INVESTMENTS (a) Unquoted Equity Instruments

Ara Suppliers Pvt. Ltd. 10 323190 31.36 - ( - )

Arham Sales Pvt. Ltd. 10 323190 31.42 - ( - )

Adonis Vyapar Pvt. Ltd. 10 323190 31.42 -

( - )

Apnapan Viniyog Pvt. Ltd. 10 323190 31.42 - ( - )

Ribhoi Engineering Company Pvt Ltd. 10 27000 2.70 -

107

( - )

128.32 -

TOTAL 152.86 -

Aggregate Amount of Investments Quoted 24.54 - Unquoted 128.32 - Market Value of Quoted Investments 5.38 -

14. Loans and Advances

Non Current Current ` in Lacs ` In Lacs 31st

March,2013 31st

March,2012 31st

March,2013 31st

March,2012 Loans and Advances ( Considered Good) Capital Advances Secured 272.82 - - - Unsecured 3,900.79 - - - Doubtful ( Net of provision for doubtful advances) 63.98 - - - Security Deposits Unsecured 244.23 - 0.60 - Loans - Unsecured - To related parties - - 35.00 - - To other Bodies corporate - - 800.00 - Advances recoverable in cash or kind Unsecured - - 3,361.04 - Other Loans and Advances ( Unsecured -Considered Good ) Prepaid Expenses 0.28 - 414.87 0.30 Advance Income Tax (Net of Provisions ) - - 1,108.64 0.02 MAT Credit Entitlement - - 8,805.37 - Balance with Statutory/Government Authorities - - 3,209.96 - 4482.10 - 17735.48 0.32

15. Trade Receivables and Other Assets 15.1 Trade Receivables Non Current Current ` in Lacs ` in Lacs

31st

March,2013 31st

March,2012 31st

March,2013 31st

March,2012 Debts outstanding for a period exceeding six months from the date they are due for payment. Secured- Considered Good - - 27.15 - Unsecured- Considered Good - - 145.21 - Unsecured- Considered Doubtful - - 309.55 - - - 481.91 - Provision for doubtful trade receivables - - 309.55 -

A - - 172.36 -

108

Other Debts Secured- Considered Good - - 1,585.03 - Unsecured- Considered Good - - 2,513.97 -

B - - 4,099.00 - Total ( A+B ) - - 4,271.36 - 15.2 Other Assets Non Current Current ` in Lacs ` in Lacs

31st

March,2013 31st

March,2012 31st

March,2013 31st

March,2012 Unsecured, Considered Good

Central/State Government Claims/Subsidies Receivable 22,722.63 9,541.53 -

Other Receivable - - 1.87 - Unamortized Expenses ( To the extent not written off or adjusted)

- - 0.42 -

22,722.63 - 9,543.82 - 16. Inventories ` in Lacs NOTES 31st March,2013 31st March,2012 (At Lower of Cost and Net Realisable Value) Raw Materials 21 1,484.16 - Work in Progress 22 114.42 - Finished Goods 22 3,481.82 - Stores & Spares Parts, etc 9,919.01 -

14,999.41 - Note The above includes stock in Transit Raw Materials 48.76 - Finished Goods 208.03 -

17. Cash and Bank Balances

Current ` in Lacs

31st March,2013 31st March,2012 Cash and Cash Equivalents Balances with Banks On Current accounts 1,806.88 0.40 Deposits with Original Maturity of less than three months 150.51 4.18 Cheques/Drafts on hand 637.07 - Cash on hand 30.98 0.06 2625.44 4.64 Other Bank Balances Deposits with Original Maturity of more than 12 months 5.82 - Margin Money Deposits 83.35 - 89.17 - 2,714.61 4.64

18. Revenue from Operations ` in Lacs

2012-13 2011-12

109

Revenue from Operations Sale of Products Finished Goods 69,151.56 - Other Operating revenue - Scrap Sales 25.82 - Miscellaneous Income 201.47 - Revenue from Operations ( Gross ) 69,378.85 - Less: Excise Duty 3,419.02 - Revenue from Operations ( Net ) 65,959.83 - Note: Excise duty on sales amounting to ` 3419.02 lacs (` NIL ) has been reduced from sales in the statement of profit & loss and excise duty on increase/(decrease) in stock amounting to ` 252.07 lacs (` NIL) has been considered as income/ expense in note 23 of financial statements. ` in Lacs

2012-13 2011-12 Details of Products Sold

Finished Goods Sold Cement 62,252.56 - Ferro Silicon 6,830.58 - Power 68.42 -

69,151.56 - 19. Other Income ` in Lacs

2012-13 2011-12

Interest Income on Fixed Deposits, Loans, etc. 124.70 0.20

Insurance and Other Claims 0.36 - Unspent/Unclaimed liabilities written back 10.24 - Miscellaneous Receipts 31.00 -

166.30 0.20 20. Cost of Raw Materials Consumed

` in Lacs

2012-13 2011-12 Inventory at the beginning of the year - - Add: Stock transferred pursuant to scheme of arrangement (refer note no.27) 201.09 Add: Stock of subsidiaries transferred pursuant to scheme of arrangement (refer note no.27)

667.89

Add : Purchases 12,555.02 - 13,424.00 -

Less : Inventory at the end of the year 1,484.17 - Cost of Raw Materials Consumed 11,939.83 -

Details of Raw Material consumed Charcoal 285.04 - Quartz 1,099.50 - Lam Coke 873.21 - Mill Scale 187.08 - Coal (Steam & Chocolate) 45.62 - Fly Ash 6,345.83 - Limestone 1,885.55 - Iron Mill Scale & Fines 536.76 -

110

Gypsum 517.92 - Shale 128.65 - Other Raw Material 34.67 -

11,939.83 -

Details of Closing Stock of Raw Materials Charcoal 30.35 - Quartz 19.55 - Lam Coke 39.95 - Mill Scale 27.53 - Coal (Steam & Chocolate) 33.68 - Fly Ash 573.95 - Limestone 249.86 - Iron Mill Scale & Fines 128.91 - Gypsum 106.13 - Shale 13.93 - Clinker 246.41 - Other Raw Material 13.92 -

1,484.17 - 21. (Increase)/Decrease in inventories ` in Lacs 2012-13 2011-12 Inventories at the beginning of the year Finished Goods - - Work in Progress - - - - Add: Inventories transferred pursuant to Scheme of arrangement ( refer note no.27) 544.32 Finished goods Add: Inventories of subsidiaries transferred pursuant to Scheme of arrangement (refer note no.27) Finished goods 417.78 - Work in Progress 21.86 Trial Run Production Work In Progress 101.87 - Finished goods 77.95

1,163.78 - Inventories at the end of the year Finished Goods 3,481.82 - Work in Progress 114.42 - 3,596.24 - (Increase)/Decrease in inventories of Finished Goods/Work in Progress (2,432.46) - Finished Goods Ferro Silicon 1,035.61 - Silicon Manganese 9.86 - Cement 637.31 - Clinker 1,799.04 - 3,481.82 - Work in Progress Raw Mill 27.21 -

111

Fine Coal 32.37 - Crushed Lime Stone 54.84 - 114.42 - 22. Employee Benefits Expense

` in Lacs 2012-13 2011-12

Salaries, Wages, Bonus etc 3,792.44 - Contribution to Provident, Gratuity and other Funds 127.59 - Employees Welfare Expenses 181.65 -

4,101.68 - 23. Other Expenses ` in Lacs

2012-13 2011-12 Stores & Spare parts consumed 3,079.47 - Power and Fuel 15,220.52 - (Increase)/decrease of excise duty on inventory 252.07 - Insurance 188.21 - Rent 213.97 - Rates & Taxes 535.86 - Repairs & Maintenance - -Buildings 249.37 - -Plant & Machinery 677.72 - -Others 143.25 - Transport & Freight 12,248.53 - Commission, Discount & Incentives on Sale 4,072.31 - Advertisement, Publicity and Sales Promotion 1,606.74 - Communication Expenses 7.52 - Directors' Remuneration 201.00 - Auditors' Remuneration 23.31 0.06 Preliminary Expenses Written off 16.25 - Charity and Donations 341.48 - Loss on Fixed Assets Sold /Discarded 8.59 - Miscellaneous Expenses 1,429.42 0.17

40,515.59 0.23

Payment to Auditors As Auditor Audit Fees 12.47 0.06 In other Capacity Certificate and other Services 8.83 - Reimbursement of Expenses 0.03 -

Payment to Branch Auditors Audit Fees 1.98 -

23.31 0.06 24. Depreciation and Amortisation Expense ` in Lacs

2012-13 2011-12 Depreciation on Tangible Assets 5,631.73 - Depreciation on Intangible Assets 14.17 -

5,645.90 - Less: Transferred to pre-operative expenses 616.81 -

112

5,029.09 - 25. Finance Cost

` in Lacs 2012-13 2011-12

Interest Expenses ( net of Capitalisation `7,025.59 Lacs (` Nil) 2534.73 - Exchange difference to the extent considered as an adjustment to borrowing costs

317.40 -

Bank Charges 6.73 - 2,858.86 -

26. Exceptional Items ` in Lacs 2012-13 2011-12 Foreign Exchange Fluctuations 299.76 - Less: Exchange difference to the extent considered as an adjustment to borrowing costs ( Note - 25)

317.40 -

(17.64) - 27. Scheme of Arrangement a) Pursuant to the Scheme of Arrangement (“the scheme”) between Century Plyboards (India) Limited (CPIL), the Company and their respective shareholders as approved by the Hon’ble High Court at Kolkata vide its order dated 17th May, 2013, all the assets and liabilities of the Ferro Alloys and Cement division (i.e., business and interests in manufacture of Ferro alloys and cement, including captive power plant attached thereto) of CPIL have been transferred to and vested in the Company at their respective book values on a going concern basis with effect from 1st April, 2012 being the appointed date. Accordingly, the scheme of arrangement has been given effect to in these accounts. Hence the previous year’s figures are not comparable.

b) The details of the assets and liabilities transferred from CPIL are as under: Assets ` in lacs Non-current assets Fixed assets Tangible assets 2541.06 Capital work-in-progress 998.43 Non-current investments 6328.25 Long-term loans and advances 72.08

9939.82 Current assets Inventories 1960.52 Trade receivables 488.14 Cash and bank balances 167.89 Short-term loans and advances 705.60 Other current assets 59.92

3382.07 TOTAL 13321.89 LIABILITES Non-Current liabilities Long-term borrowings 575.90

575.90 Current liabilities Short-term borrowings 1173.40 Trade payables 330.48 Other current liabilities 384.49 Short-term provisions 13.25

1901.62 TOTAL 2477.52

113

c) Pursuant to the scheme, the difference between book value of assets and liabilities transferred from the CPIL being ` 10844.37 lacs, has been Credited to the Shareholders’ Fund of the Company as under.

` in lacs Share Capital – Pending allotment 2216.73 Capital Reserve 8627.64

10844.37 d) Pursuant to the said scheme, the company will issue and allot its Equity Shares to the shareholders of CPIL in ratio of 1 (one) Equity share of `1/- each of the Company as fully paid-up for every 1 (one) Equity Share of `1/- each held by them in CPIL. Pending allotment of these shares, the amount of ` 2216.73 lacs is disclosed as ‘Share Capital - pending allotment’. Consequent to the allotment of new shares as per the scheme, current share capital of the Company of ` 5 lacs will be cancelled and the Company ceases to be subsidiary of the CPIL. 28. Capital & Other Commitments Estimated amount of contracts remaining to be executed on Capital Account (net of advances) and not provided for ` 899.12 lacs (` NIL lacs) 29. Contingent Liabilities (` in Lacs)

As at 31st March, 2013

As at 31st March, 2012

Contingent Liabilities not provided for in respect of :–

(a) Demands / Claims by various Government Authorities and others not acknowledged as debt:

120.84

- (i) Excise Duty/Service Tax (iii) Income Tax 3278.31 - Total 3399.15 -

(b) Un-redeemed bank guarantees 587.36 - (c) Bills discounted with banks 988.87 - (d) Letters of credit issued by the banks 262.64 - (e) Custom Duty on import under EPCG Scheme against which Export obligation is to

be fulfilled 10525.38 -

(f) Guarantee provided to bank on behalf of Contractors 2477.30 - Note: Based on discussion with the solicitors/favourable decisions in similar cases/legal opinion taken by the company, the management believes that the company has a good chance of success in above mentioned cases and hence, no provision there against is considered necessary. 30. There is a diminution of `19.16 lacs (` NIL) in the value of a quoted investment based on the last quoted price. The above

investment being long term and strategic in nature, the said diminution, in the opinion of the management, is temporary in nature and hence no provision is considered necessary.

31. Excise duty debited to Statement of Profit and Loss is Net of Subsidy ` 5216.69 lacs (` NIL).

Raw Material consumption and Transport & Freight are Net of Subsidy of `338.34 lacs (` NIL) and ` 482.62 lacs (` NIL) respectively in respect of a subsidiary company.

32. Based on the information / documents available with the Company, information as per the requirement of Section 22 of The

Micro, Small and Medium Enterprises Development Act, 2006 are as under: (` in lacs)

Particulars 2012-2013 2011-2012(i) Principal amount remaining unpaid to any supplier at the end of accounting year (including

retention money against performance). -- --

(ii) Interest due on above. -- -- Total of (i) & (ii) -- --

(iii) Amount of interest paid by the Company to the suppliers in terms of section 16 of the Act. -- -- (iv) Amount paid to the suppliers beyond the respective appointed date. -- -- (v) Amount of interest due and payable for the period of delay in payments (which have been paid

but beyond the due date during the year) but without adding the interest specified under the Act.

-- --

(vi) Amount of interest accrued and remaining unpaid at the end of accounting year. -- -- (vii) Amount of further interest remaining due and payable even in the succeeding years, until such

date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of this Act.

-- --

114

33. The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled to Gratuity on terms not less favorable than the provisions of The Payment of Gratuity Act, 1972. The scheme is funded with an insurance company. The following tables summarize the components of net benefit expenses recognized in the Statement of Profit & Loss and the funded status and amounts recognized in the balance sheet for the Gratuity.

(` in Lacs) S.No 2012-13 2011-12

(i) Net Employee Expense/(benefit) Current service cost 35.23 -- Interest cost on benefit obligation 13.77 -- Expected return on plan assets (8.89) -- Net Actuarial (gains)/losses recognized in the year (15.95) -- Losses/(gains) on acquisition/divesture 6.21 Total employer expense 30.37 --

(ii) Actual return on plan assets -- --

(iii) Benefit Asset / (Liability) Fair Value of Plan Assets 95.93 -- Defined benefit obligation 179.76 -- Benefit Asset / (Liability) (83.83) --

(iv) Movement in benefit liability Opening defined benefit obligation 158.89 -- Interest cost 13.77 -- Current service cost 35.23 -- Benefits paid (10.65) -- Actuarial (gains) / losses (15.95) -- Liabilities assumed on acquisition/(settled on divesture) (1.52) Closing benefit obligation 179.76 --

(v) Movement in fair value of plan assets Opening fair value of plan assets 101.72 -- Expected Return on plan assets 8.88 -- Contribution by employer -- -- Benefits paid (6.93) -- Actuarial gains / (losses) on obligation (7.74) -- Closing fair value of plan assets 95.93 --

(vi) The major categories of plan assets as a percentage of the fair value of total plan assets

Funded with insurer 100% -- (vii) The Principal actuarial assumptions are as follows: --

Discount rate 8% -- Expected Return on plan assets 8.25% --

Salary Increase 5% --

Withdrawal rates (Varying between per annum depending upon the duration and age of the employees)

1%-2% --

Amount incurred as expense for defined contribution to Provident Fund is `120.43 lacs (` NIL lacs). (ix)The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion and

other relevant factors, such as supply and demand in the employment market. (x) The Company expects to contribute `38.06 lacs (` NIL) to Gratuity fund in 2013-2014. (xi) The details for the current and previous periods are as follows 2012-2013 2011-2012

Defined Benefit Obligation 179.76 --

115

Plan Assets 95.93 --Surplus / (Deficit) (83.83) --Experience adjustments on plan Liability 6.93 --Experience adjustments on Plan assets (-) --



2012-2013 2011-2012

Profit as per Statement of Profit & Loss (` in Lacs) and available for Equity Shareholders 2492.02 (0.03)

Weighted average number of Equity Shares outstanding during the year 500000 500000 Nominal value of equity shares (`) 1 1 Basic earnings per share (EPS) (`) 498.40 (0.01) Weighted average number of equity shares to be issued pursuant to Scheme of demerger excluding shares to be cancelled on allotment

222172990 -

Diluted earnings per share (`) 1.12 (0.01)

35. Derivative instruments and unhedged foreign currency exposure. The particulars of unhedged foreign currency exposures as on the balance sheet dates are as follows: As at 31.03.13 As at 31.03.12

Foreign Currency

Foreign Currency

Indian Rupees

Foreign Currency

Foreign Currency

Indian Rupees

FCNRB Term Loan USD 49.88 2,711.51 - - - FCNRB Demand Loan USD 50.00 2,719.47 - - - ECB-Term Loan USD 402.09 21,869.16 - - - Buyers Credit EURO 81.93 5,697.51 - - - Buyers Credit USD 52.53 2,856.87 - - - Buyers Credit GBP 0.22 18.11 - - - Letter of Credit CHF 0.85 49.09 - - - Letter of Credit EURO - - - - - 36. Related Party Disclosures a) Name of the transacting related parties: Key Management Personnel Mr. Sajjan Bhajanka (Chairman & Managing Director)

Mr. Rajendra Chamaria (Vice Chairman & Managing Director) Mr. Sanjay Agarwal (Joint Managing Director) Mr. Pankaj Kejriwal (Managing Director in subsidiary) Mr. Prem Kumar Bhajanka (Director in Subsidiaries) Mr. Atul Rasiklal Desai (COO) for the period 05.09.2012 to 04.03.2013 Mr. Sanjay Kr. Gupta (Chief Financial Officer)


Century Plyboards (India) Limited Brijdham Merchants Private Limited Sri Ram Vanijya Private Limited Star India Cement Limited

b) Details of transactions between the Company and related parties and the status of outstanding balances as at 31st March, 2013 are given hereunder:

(` in Lacs)

Sl. No. Types of Transactions Associates Enterprise Owned/Influenced by KMP/KMP 2012-13 2011-12 2012-13 2011-12

1 Purchase Transactions Century Plyboards (India) Limited - - 24.87 - 2 Sale Transactions Century Plyboards (India) Limited - - 9.81 - 3 Purchase of Capital Goods Century Plyboards (India) Limited - - 0.42 -

116

4 Loan Taken Brijdham Merchants Private Limited - - 100.00 - Sri Ram Vanijya Private Limited - - 100.00 - 5 Loan Given Century Plyboards (India) Limited - - 600.00 - 6 Interest paid Brijdham Merchants Private Limited - - 0.06 - Sri Ram Vanijya Private Limited - - 0.06 - - 7 Remuneration Paid Pankaj Kejriwal - - 42.00 - Rajendra Chamaria - - 66.00 - Sajjan Bhajanka - - 36.00 - Sanjay Agarwal - - 36.00 - Prem Bhajanka - - 36.00 - Atul Rasiklal Desai - - 84.03 - - Sanjay Kumar Gupta - - 35.80 - 8 Balance Outstanding: A Receivable/(Payable) Century Plyboards (India) Limited - - 0.09 -

D Loans & Advances paid Star India Cement Limited - - 35.00 -

E Loans & Advances received Brijdham Merchants Private Limited - - 100.00 - Sri Ram Vanijya Private Limited - - 100.00 -

E Guarantees Obtained - Sajjan Bhajanka - - 43604.85 Rajendra Chamaria - - 26358.75 Sanjay Agarwal - - 26358.75 Prem Kumar Bhajanka - - 13715.38

37. The Company's segment information as at and for the Year ended 31st March, 2013 are as below:

(` in lacs) Sl. No.

Ferro Alloys

Cement Power Total

A Revenue(Gross) External Sales 6,830.58

(-) 62,252.56

(-) 68.42

(-) 69,151.56

(-) Inter-segment Sales -

(-) -

(-) 7,880.58

(-) 7,880.58

(-) Total Revenue (Gross) 6,830.58

(-) 62,252.56

(-) 7,949.00

(-) 77,032.14

(-) B Result Segment Results (1,090.24)

(-) 7,232.39

(-) 1,058.80

(-) 7,200.95

(-) Unallocated Income/(-) Expenses (Net of unallocated

Income/(-) Expenses (including exceptional items) -230.91

(-0.03) Operating Profit 6,990.04

(-) Finance Cost 2,858.86

(-) Provision for Taxation 1,417.72

(-) Deferred Tax Charge /(-) Credit 370.95

(-) MAT Credit Entitlement (-) 1,417.72

(-) Net Profit (before minority interest) 3,760.23

(-0.03)

Other Information

117

a Total Assets Segment Assets 5,677.49

(-) 159,432.27

(-) 33,857.18

(-) 198,966.94

(-) Unallocated Corporate/Other Assets 7,024.33

(4.96)

205,991.27 (4.96)

b Total Liabilities Segment Liabilities 998.35

(-) 84,697.90

(-) 20,262.84

(-) 105,959.09

(-) Unallocated Corporate/Other Liabilities 5,381.09

(0.06) 111,340.18

(0.06) C Capital Expenditure * 1,319.76

(-) 26,669.97

(-) 5,716.45

(-) 33,706.18

(-) D Depreciation/Amortisation 263.32

(-) 3,839.11

(-) 926.66

(-) 5,029.09

(-) *Excluding ` 0.54 lacs (` NIL) for unallocated corporate assets.

Notes: (a) Business Segments: The business segments have been identified on the basis of the products of the Company. Accordingly,

the Company has identified following business segments: Ferro-Alloys - Ferro Silicon Power - Generation of Power Cement - Cement and Clinker


For Kailash B. Goel & Co. For and on Behalf of the Board Firm Registration Number 322460E Chartered Accountants




Date: 8th July, 2013

118

AUDITED STANDALONE FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 30, 2013 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OFSTAR FERRO AND CEMENT LIMITED Report on the Financial Statement

We have audited the accompanying interim financial statements of Star Ferro And Cement Limited (“the Company”), which comprise the interim Balance Sheet as at 30th June, 2013 and the interim Statement of Profit and Loss and interim Cash Flow Statement for the three-month period then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation of these interim financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the interim financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these interim financial statements based on our audit. We conducted our audit in accordance with the standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments; the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the interim financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the interim financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the interim Balance Sheet of the state of affairs of the Company as at 30th June, 2013; (ii) in the case of the interim Profit and Loss account, of the Loss of the Company for the three- month period ended on

that date; and. (iii) in the case of the interim Cash Flow Statement, of the Cash flows of the Company for the three- month period ended on

that date.

119

Other matters The accompanying interim financial statements have been prepared, and this report thereon issued, solely for the purpose of inclusion in the advertisement to be published by the Company in Newspapers in connection with the proposed listing of equity shares of the Company on the Bombay Stock Exchange and National Stock Exchange. Accordingly, this report should not be used, referred to or distributed for any other purpose without our prior written consent.

For KAILASH B. GOEL & CO.


Place: Kolkata Date: 1stOctober, 2013

CA. Arun Kumar Sharma Partner Membership No: 057329

120


Regd. Office : 6 Lyons Range, Kolkata - 700 001 Balance Sheet

As at 30th June' 2013 ` in Lacs NOTES 30th June,2013 A EQUITY AND LIABILITIES Shareholder's Funds Share Capital 2 5.00 Share Capital - Pending Allotment 2 2,216.73 Reserves & Surplus 3 8,101.51 10,323.24 Non Current Liabilities Long Term Borrowings 4 984.28 Other Long Term Liabilities 5 336.99 Long Term Provisions 6 25.55 1,346.82 Current Liabilities Short Term Borrowings 7 1,645.62 Trade Payables 8 934.06 Other Current Liabilities 8 201.04 Short Term Provisions 6 11.12 2,791.84 TOTAL 14,461.90 B ASSETS Non Current Assets Fixed Assets Tangible Assets 9 3,324.66 Intangible Assets 10 1.33 Capital Work-in-Progress 43.61 Non Current Investments 11 6,328.25 Deferred Tax Assets (Net) 12 344.12 Long term Loans and Advances 13 92.90 Current Assets Inventories 15 1,816.46 Trade Receivables 14 1,115.29 Cash and Bank Balances 16 128.97 Short Term Loans and Advances 13 878.14 Other Current Assets 14 388.17 TOTAL 14,461.90 Summary of significant accounting Policies 1.1

The accompanying notes form an integral part of the financial statements As per our Report of even Date For Kailash B. Goel & Co. For and on Behalf of the Board of Directors Firm Registration No- 322460E Chartered Accountants


CA. Arun Kumar Sharma Partner Hari Prasad Agarwal, Managing Director Membership No. 057329 Place: Kolkata Date: 1st October, 2013 Ravi Prakash Mundhra, Company Secretary

121


Regd. Office : 6 Lyons Range, Kolkata - 700 001 Statement of Profit and Loss for the period ended 30th June' 2013

` in Lacs

NOTES 01.04.2013 to

30.06.2013 Income Gross Revenue from Operations 17 3,399.60 Less : Excise Duty 129.86 Net Revenue from Operations 3,269.74 Other Income 18 0.08

Total Revenue ( I ) 3,269.82 Expenses Cost of Raw Materials Consumed 19 999.93 (Increase)/Decrease in inventories of Finished Goods 20 850.08 Employee Benefits Expense 21 124.40 Other Expenses 22 1,487.51 Depreciation and Amortisation Expense 23 121.98 Finance Cost 24 109.97

Total Expenses ( II ) 3,693.87 Profit before Taxation (424.05) Tax Expenses

Current Tax - Deferred Tax (136.39)

Total Tax Expenses (136.39) Profit for the year (287.66)

Earnings per equity share (nominal value of share Re 1/- ( Re 1/-) Basic 28 (57.53) Diluted 28 (0.13)

Summary of significant Accounting Policies 1.1

The accompanying notes form an integral part of the financial statements As per our Report of even Date

For Kailash B. Goel & Co. For and on Behalf of the Board of Directors Firm Registration No- 322460E Chartered Accountants



122


Regd. Office : 6 Lyons Range, Kolkata - 700 001 Cash Flow Statement for the period ended 30th June'2013

(` in Lacs) 01.04.2013 to 30.06.2013 A CASH FLOW FROM OPERATING ACTIVITIES Net Profit before Tax (424.05) Adjustments for: Depreciation/Amortisation 121.98 Finance Cost 109.97 Interest Income (0.08) Operating Profit before Working Capital changes (192.18) Adjustments for: (Increase) in Trade Receivables 32.48 (Increase) in Loans & Advances and other assets (144.84) (Increase) in Inventories 1006.50 Increase/(Decrease) in Trade Payables, Other Liabilities and Provisions (69.97) Cash Generated from Operations 631.99 Direct Taxes Paid ( Net of Refunds ) (1.56) Net Cash generated from Operating Activities 630.43 B CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets (24.03) Fixed Deposits/Margin Money (Given)/Refund 0.72 Interest Received 0.08 Net Cash used in Investing Activities (23.23) C CASH FLOW FROM FINANCING ACTIVITIES: Repayment of Loans (517.40) Capital Subsidy recd. (7.41) Interest Paid (109.28) Other Borrowing Cost Paid (0.79) Net Cash used in Financing Activities (634.88) Net Increase/(Decrease) in Cash and Cash Equivalents ( A + B + C) (27.68) Cash and Cash Equivalents as on 1st April'2013 151.55

* Cash and Cash Equivalents as on 30th June'2013 123.87

* Represents Cash and Bank Balances as indicated in Note-16, and excludes `5.10 lacs being Bank Balances with restricted use. As per our Report of even Date

For Kailash B. Goel & Co. For and on Behalf of the Board Firm Registration No- 322460E Chartered Accountants



123

STAR FERRO AND CEMENT LIMITED NOTES TO FINANCIAL STATEMENTS AS AT AND FOR THE PERIOD ENDED 30TH JUNE, 2013

1 Basis of Preparation

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by the

Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The

financial statements have been prepared under the historical cost convention on an accrual basis and on the basis of going

concern. The accounting policies applied by the Company are consistent with those used in the previous year.

1.1 Summary of Significant Accounting Policies

(i) Use of Estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates

and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent

liabilities, at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current

events and actions,actual results could differ from these estimates.

(ii) Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can

be reliably measured.

(a) Revenue from sale of goods and services rendered is recognized upon passage of title which generally coincides with

delivery of materials and rendering of services to the customers. The Company collects sales taxes and value added

taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company.

Hence, they are excluded from revenues. Excise duty deducted from revenue (Gross) is the amount that is included in

the revenue (Gross) and not the entire amount of liability arising during the year.

Sales figures are net of rebates, trade discounts and returns.

(b) Dividend Income is recognized when the shareholders' right to receive the payment is established by the balance sheet

date.

(c) Interest income is recognized on a time proportion basis taking into account the amount outstanding and rate applicable.

(iii) Fixed Assets

Fixed Assets are stated at cost or revalued amount, as the case may be, less accumulated depreciation / amortisation and

impairment, if any,except freehold land which is carried at cost. Cost comprises the purchase price inclusive of duties (net of

cenvat / VAT), taxes, incidental expenses and erection / commissioning expenses etc. up to the date, the asset is ready for its

intended use. In case of revaluation of fixed assets, the original cost as written-up by the valuer, is considered in the accounts

and the differential amount is transferred to revaluation reserve.

Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment

is expected to be irregular are capitalised and depreciated over the residual life of the respective assets.

(iv) Capital Work in Progress

Capital work in Progress is carried at cost comprising direct cost and pre-operative expenses during construction period to be

124

allocated to the fixed assets on the completion of construction.

(v) Expenditure during construction period

In case of new projects and substantial expenses of existing factories, expenditure incurred including trial production expenses

net of revenue earned, and attributable interest and financing cost, prior to commencement of commercial production are

capitalised.

(vi) Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date to determine if there is any indication of impairment

based on external/internal factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its

recoverable amount which represents the greater of the net selling price and ‘Value in use’ of the assets. In assessing the value in

use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current

market assessments of the time value of money and risks specific to the asset.

(vii) Depreciation / Amortization

(a) The classification of plant and machinery into continuous and non-continuous process is done as per technical certification

and depreciation thereon is provided accordingly.

(b) Depreciation on fixed assets is provided under Written down Value method at the rates prescribed in Schedule XIV of the

Companies Act, 1956, or at rates determined based on useful lives of the respective assets, as estimated by the management,

whichever is higher.

(c) Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis with reference to the date of

addition / disposal.

(d ) Intangible assets are amortized over a period of 5 years.

(e) In case of impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

(viii) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate prevailing on the dates of the transactions and exchange differences are dealt

within the Statement of Profit and Loss. Monetary foreign currency assets and liabilities are translated at the year end exchange

rates. All exchange differences are dealt within the statement of profit and loss, except to the extent that they are regarded as an

adjustment to the interest cost and the resultant balance to the new projects, till the date of the capitalization, are carried to pre-

operative expenses. Profit/Loss arising out of cancellation of forward contracts is taken to revenue in the year of cancellation.

(ix) Investments

Investments that are readily realisable and intended to be held for not more than a year are classified as Current investments. All

other investments are classified as long-term investments. Current investments are carried at lower of cost and market value on

individual investment basis. Long Term Investments are considered at cost, unless there is an "other than temporary" decline in

value, in which case adequate provision is made for the diminution in the value of Investments.

(x) Inventories

Raw Materials, stores and spares are valued at lower of cost and net realizable value. However, these items are considered to be

realizable at cost if the finished products, in which they will be used, are expected to be sold at or above cost.

Work in progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials & labour

125

and a part of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty.

Cost of Inventories is computed on weighted average/ FIFO basis.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and

estimated costs necessary to make the sale.


Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be

received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a

systematic basis to the costs, which it is intended to compensate.

When the grant or subsidy relates to an asset, it is deducted from the gross value of the asset concerned in arriving at the

carrying amount of related asset.

Government grants of the nature of promoter’s contribution are credited to capital reserve and treated as a part of the

shareholders’ funds.

(xii) Retirement and other employee benefits

(a) Retirement benefit in the form of Provident Fund is a defined contribution scheme and is charged to the Statement of

Profit and Loss for the year when the contributions to the respective funds are due. The Company has no obligations

other than the contribution payable to the respective funds.

(b) Gratuity liability, being a defined benefit obligation, is provided for on the basis of an actuarial valuation on projected

unit credit method made at the end of each financial year.

(c) Short term compensated absences are provided for based on estimates. Long term compensated absences are provided

for based on actuarial valuation which is done as per projected unit credit method at the end of each financial year.


(xiii) Earning per Share

Basic Earning per Share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after

deductible preference dividend and attributable taxes) by the weighted number of equity shares outstanding during the year.

For the purpose of calculating diluted earning per share, net profit or loss for the year attributable to equity share holders and the

weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares.

(xiv) Excise Duty and Custom Duty

Excise duty on finished goods stock lying at the factories is accounted for at the point of manufacture of goods and accordingly,

is considered for valuation of finished goods stock lying in the factories as on the balance sheet date. Similarly, customs duty on

imported material in transit/lying in bonded warehouse is accounted for at the time of import/ bonding of materials.

(xv) Borrowing Costs

Borrowing costs includes interest, amortization of ancillary costs incurred in connection with the arrangements of borrowings

and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the

interest cost.

Borrowing cost directly attributable to the acquisition, construction of an asset that necessarily takes a substantial period of time

to get ready for its intended use are capitalized as part of the cost of the respective assets. All other borrowing costs are

expensed in the period they occur.

126

(xvi) Taxation

Tax expenses comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax

authorities in accordance with the Indian Income Tax Act, 1961. Deferred income taxes reflect the impact of current year timing

differences between taxable income for the year and reversal of timing differences of earlier years.

The deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and

laws that have been substantively enacted as of the Balance Sheet date. Deferred tax assets and deferred tax liabilities are offset,

if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and

deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognized

only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such

deferred tax assets can be realized. If the company has carry forward unabsorbed depreciation and tax losses, deferred tax assets

are recognized only to the extent there is virtual certainty supported by convincing evidence that sufficient taxable income will

be available against which such deferred tax asset can be realized.

The carrying amounts of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying

amount of deferred tax assets to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that

sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is

reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable

income will be available.

Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that

the company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT)

credit becomes eligible to be recognized as an asset in accordance with the recommendation contained in guidance note issued

by the Institute of Chartered Accountants of India, the said assets is created by way of a credit to the statement of profit and loss

and shown as MAT credit entitlement. The company reviews the carrying amount of MAT at each Balance Sheet date and

writes down MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the company will pay

normal income-tax during specified period.

(xvii) Segment Reporting

a) Identification of segments:

The company has identified that its business segments are the primary segments. The Company’s business are organized and

managed separately according to the nature of products/services, with each segment representing a strategic business unit that

offers different product / services and serves different markets. The analysis of geographical segments is based on the areas in

which major operating divisions of the company operate.

b) Inter segment transfers:

The Company generally accounts for intersegment sales and transfers at current market prices.

c) Allocation of Common Costs:

Common allocable costs are allocated to each segment on case to case basis applying the ratio, appropriate to each relevant case.

Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segment on a reasonable basis, have

been included under the head “Unallocated”.


(xviii) Cash and Cash equivalents

127

Cash and cash equivalents in the cash flow statement comprise of cash at bank and in hand and short-term investments with

an original maturity of three months or less.

(xix) Provision

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow

of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions made in

terms of Accounting Standard 29 are not discounted to their present value and are determined based on best estimates required

to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current

best estimates.

(xx) Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence

or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not

recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability

also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.

The Company does not recognize a contingent liability but discloses its existence in the financial statements.

128


Notes to Financial Statements as at and for the period ended 30th June' 2013 2. Share Capital

` in Lacs 30th June,2013 Authorised 23,00,00,000 Equity Shares of Re. 1/- each 2,300.00 Total 2,300.00 Issued 5,00,000 Equity Shares of Re. 1/- each 5.00 Total 5.00 Subscribed and Paid up 5,00,000 Equity Shares of Re. 1/- each # 5.00 Total 5.00

a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period Equity Shares 30th June,2013 No of Shares ` in Lacs At the Beginning of the year 500,000 5.00 Issued during the year - - Outstanding at the end of the year 500,000 5.00


The company has only one class of equity shares having par value of Re1/- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in India rupees.


c) Details of Shareholders holding more than 5% shares in the company 30th June,2013 No of Shares % holding in the class Equity Shares of Re 1/- each fully paid-up Century Plyboards (India) Ltd. 500,000 100%

# The existing share capital to be cancelled upon allotment of shares pursuant to Scheme of Arrangement (Refer Note no 25)

As per records of the Company, including its register of shareholders/members , the above shareholding represents legal ownerships of Shares

` in Lacs Share Capital - Pending Allotment 30th June,2013 Shares to be alloted as per Scheme of Arrangement (Refer Note No 25) 2,216.73 Total 2,216.73

129


Notes to Financial Statements as at and for the period ended 30th June' 2013 3. RESERVES & SURPLUS

` in Lacs 30th June,2013 Capital Reserve Balance as per the last Financial Statements 8,948.03 Closing Balance 8,948.03 Surplus in the statement of Profit and Loss Balance as per the last Financial Statements (558.86) Add: Profit/(Loss) for the year (287.66)

Net Surplus in the Statement of Profit and Loss (846.52)

Total Reserves and Surplus 8,101.51

4. Long Term Borrowings Non Current Portion Current Maturities ` in Lacs ` in Lacs 30th June,2013 30th June,2013 Term Loans (Secured)

Indian Rupee Loan from a Financial Institution

978.94 78.56 Other Loans and Advances (Secured) Hire Purchase :-

- From banks

- 29.28 - From Bodies Corporate 5.34 20.27 984.28 128.11 Amount disclosed under the head " Other (128.11) Current Liabilities" ( Note - 8) Net Amount 984.28 - Notes:-

1 Rupee Term Loan of `1,057.50 lacs from NEDFI for Ferro Alloy Division at Byrnihat carries interest rate of PLR + 1% i.e. 12.75% p.a. The loan is secured by equitable mortgage of leasehold rights of land and first charge on fixed assets of the Company's Ferro Alloy Division at Byrnihat, Meghalaya and Second Charge on Current Assets of the said unit on pari passu basis. Term Loans from NEDFI is to be repaid in 27 quarterly instalments of ` 39.28 lacs each in first 26 quarters and balance in the last quarter with first instalment due on 01.01.2014.

2 Hire Purchase Finance of `54.89 lacs is secured by hypothecation of company’s vehicles and is repayable

within three to four years having varying dates of payment.

5. Other Long Term Liabilities ` in Lacs 30th June,2013 Others - Other Liabilities 336.99 Total Amount 336.99

130


Notes to Financial Statements as at and for the period ended 30th June' 2013 6. Provisions Long Term Short Term ` in Lacs ` in Lacs 30th June,2013 30th June,2013 Provision for Employee Benefits Gratuity 25.55 - Leave Encashment - 11.12 25.55 11.12 Other Provisions Provision for Taxation - - Total Amount 25.55 11.12

7. Short Term Borrowings ` in Lacs Loans repayable on demand :- 30th June,2013 Cash Credit from a bank (Secured) 733.32 Short Term Loan ( Unsecured ) from Bodies Corporate 200.00 Loans from related parties (Unsecured) - From Bodies Corporate 712.30 Total Amount 1,645.62 Notes:- 1 Working Capital facility of ` 733.32 lacs from a Bank is secure by first charge on the current assets of the Company's

Ferro Alloy Division and second charge on the fixed assets of the Ferro Alloy Plant on pari passu basis. Further, the working capital facilities are also guranteed by three directors of the company.

The above cash credit is repayable on demand and carries interest rate of Base Rate + 3.25% p.a. 2 Short term loans from bodies corporate for ` 912.30 lacs are repayable on demand and carries interest rate of 11% to

13.3%

8. Other Current Liabilities ` in Lacs 30th June,2013 Trade Payables 934.06 Other Liabilities Current Maturities of Long Term Borrowings (Note-4) 128.11 Interest accrued but not due 0.39 Advances from Customers 12.92 Statutory Dues 59.62 201.04 Total Amount 1,135.10

131


9 : Tangible Assets (Rs.in Lacs)

Land & Site

Devlopment Factory

Buildings Plant &

Machinery Electrical

Installations

furniture &

Fixtures Office

Equipments

Computers

Vehicles Total

Free Hold

COST OR

VALUATION At 31st

March'2013

86.17

1,403.49

4,557.35

1,110.04

34.23

8.50

25.00

670.17

7,894.95

Additions

-

-

0.75

5.71

0.02

0.13

0.49

-

7.10

Disposals

-

-

-

-

-

-

-

-

- At 30th

June'2013

86.17

1,403.49

4,558.10

1,115.75

34.25

8.63

25.49

670.17

7,902.05

Depreciation At 31st

March'2013

-

618.85

2,681.01

682.53

25.40

5.32

19.93

422.44

4,455.48 charge for the

Period

-

16.33

70.89

16.17

0.40

0.14

0.55

17.43

121.91

Disposals

-

-

-

-

-

-

-

-

- As at 30th June'2013

-

635.18

2,751.90

698.70

25.80

5.46

20.48

439.87

4,577.39

Net Block As at 30th June'2013

86.17

768.31

1,806.20

417.05

8.45

3.17

5.01

230.30

3,324.66


(Rs.in Lacs)

Computer Software Total

COST OR

VALUATION At 31st

March'2013

1.75

1.75

Addition -

-

Disposals -

-

As at 30th June'2013

1.75

1.75

Amortisation At 31st

March'2013

0.35

0.35 charge for the

Period

0.07

0.07

Disposals -

-


0.42

0.42


1.33

1.33

132

STAR FERRO AND CEMENT LIMITED Notes to Financial Statements as at and for the period ended 30th June, 2013

11. NON-CURRENT INVESTMENTS ( At Cost )


` Shares 30th June,2013

A LONG TERM (TRADE- UNQUOTED)

(a) Investments In Subsidiaries

Cement Manufacturing Company Ltd. 10 29547500 2,954.75

Meghalaya Power Ltd. 10 8358998 3,373.50

6,328.25

12. Deferred Tax Asset (Net) ` in Lacs 30th June,2013 Deferred tax asset Business Loss Carried forward 365.98 Impact of expenditure charged to the statement of 54.04 420.02 Deferred tax liability Fixed assets: Impact of difference between tax 75.90 75.90 Net deferred tax asset 344.12


Non Current Current ` in Lacs ` in Lacs 30th June,2013 30th June,2013

Loans and Advances (Unsecured-Considered Good) Capital Advances 30.93 - Security Deposits 61.57 0.60 Advances recoverable in cash or kind 0.24 326.74 Other Loans and Advances Prepaid Expenses 0.16 17.09 Advance Income Tax - 14.02 Balance with Statutory/Government Authorities - 519.69

92.90 878.14

133


Notes to Financial Statements as at and for the period ended 30th June, 2013 14. Trade Receivables and Other Assets Non Current Current ` in Lacs ` in Lacs 30th June,2013 30th June,2013 14.1 Trade Receivables (Unsecured)

Debts outstanding for a period exceeding six months from the date they are due for payment

Considered Good - 72.66 Considered Doubtful - 129.89 - 202.55 Provision for doubtful trade receivables - 129.89 A - 72.66 Other Debts Considered Good - 1,042.63 B - 1,042.63 Total ( A+B ) - 1,115.29 14.2 Other Assets Unsecured, Considered Good Central/State Government Subsidies Receivable - 388.17 - 388.17

15. Inventories

` in Lacs 30th June,2013

(At Lower of Cost and Net Realisable Value) Raw Materials 303.58 Finished Goods 195.39 Stores & Spares Parts, etc 1,317.49 1,816.46

16. Cash and Bank Balances Current ` in Lacs 30th June,2013

Cash and Cash Equivalents Balances with Banks On Current accounts 108.92 Cash on hand 14.95 123.87 Other Bank Balances Deposits with Original Maturity of more than 12 months 5.10 5.10 128.97

134


Notes to Financial Statements as at and for the period ended 30th June' 2013

17. Revenue from Operations ` in Lacs 01.04.2013 to 30.06.2013 Revenue from Operations Sale of Products Finished Goods 3,390.27 Other Operating revenue Miscellaneous Income 9.33 Revenue from Operations ( Gross ) 3,399.60 Less: Excise Duty 129.86 Revenue from Operations ( Net ) 3,269.74

Note:

Excise duty on sales amounting to `129.86 lacs has been reduced from sales in the statement of profit & loss, while excise duty on increase/decrease in stock amounting to ` (-)91.12 lacs has been considered as expense in note 22 of financial statements

` in Lacs 01.04.2013 to 30.06.2013 Details of Products Sold Finished Goods Sold Ferro Silicon 3,390.27 Silicon Mangenese - 3,390.27

18. Other Income ` in Lacs 01.04.2013 to 30.06.2013 Interest Income on Fixed Deposits, Loans etc:- 0.08 0.08

135


Notes to Financial Statements as at and for the period ended 30th June' 2013

19. Cost of Raw Materials Consumed ` in Lacs 01.04.2013 to 30.06.2013 Inventory at the beginning of the year 156.27 Add : Purchases 1,147.24 1,303.51 Less : Inventory at the end of the year 303.58 Cost of Raw Materials Consumed 999.93

Details of Raw Material consumed Charcoal 314.06 Quartz 119.08 Lam Coke 448.83 Mill Scale 84.34 Coal (Steam & Chocolate) 30.11 Other Raw Material 3.51 999.93

Details of Closing Stock of Raw Materials Charcoal 226.49 Quartz 38.48 Lam Coke - Mill Scale 33.08 Coal (Steam & Chocolate) 3.57 Other Raw Material 1.97 303.59

20. (Increase)/Decrease in inventories ` in Lacs 01.04.2013 to 30.06.2013 Inventories at the beginning of the year Finished Goods 1,045.47 1,045.47 Inventories at the end of the year Finished Goods 195.39 195.39 850.08 Details of Finished Goods Ferro Silicon 185.53 Silicon Mangenese 9.86 195.39

136


Notes to Financial Statements as at and for the period ended 30th June' 2013 21. Employee Benefits Expense

` in Lacs 01.04.2013 to 30.06.2013 Salaries, Wages, Bonus etc 111.94 Contribution to Provident, Gratuity and other 3.92 Employees Welfare Expenses 8.54 124.40

22. Other Expenses ` in Lacs 01.04.2013 to 30.06.2013 Stores & Spare parts consumed 200.41 Power and Fuel 1,042.33 (Increase)/decrease of excise duty on inventory (91.12) Insurance 27.38 Rent 7.69 Rates & Taxes 5.30 Repairs & Maintenance -Buildings 9.27 -Plant & Machinery 38.75 -Others 1.79 Transport & Freight 195.12 Commission, Discount & Incentives on Sale 7.00 Advertisement, Publicity and Sales Promotion 0.57 Communication Expenses 1.56 Directors' Remuneration 0.56 Miscellaneous Expenses 40.90 1,487.51

23. Depreciation and Amortisation Expense ` in Lacs 01.04.2013 to 30.06.2013 Depreciation on Tangible Assets 121.91 Depreciation on Intangible Assets 0.07 121.98

24. Finance Cost ` in Lacs 01.04.2013 to 30.06.2013 Interest Expenses [net of Capitalisation ` NIL ] 109.18 Bank Charges 0.79 109.97

137


NOTES TO FINANCIAL STATEMENTS AS AT AND FOR THE PERIOD ENDED 30TH JUNE, 2013

25. Scheme of Arrangement

a) Pursuant to the Scheme of Arrangement (“the scheme”) between Century Plyboards (India) Limited (CPIL), the Company and

their respective shareholders as approved by the Hon’ble High Court at Kolkata vide its order dated 17th May, 2013, all the assets

and liabilities of the Ferro Alloys and Cement division (i.e., business and interests in manufacture of Ferro alloys and cement,

including captive power plant attached thereto) of CPIL have been transferred to and vested in the Company at their respective

book values on a going concern basis with effect from 1st April, 2012 being the appointed date.

b) Pursuant to the said scheme, the company will issue and allot its Equity Shares to the shareholders of CPIL in ratio of 1

(one) Equity share of Re.1/- each of the Company as fully paid-up for every 1 (one) Equity Share of Re.1/- each held by them

in CPIL. Pending allotment of these shares, the amount of ` 2216.73 lacs is disclosed as ‘Share Capital - pending allotment’.

Consequent to the allotment of new shares as per the scheme, current share capital of the Company of ` 5 lacs will be

cancelled and the Company ceases to be subsidiary of the CPIL.

26. Contingent Liabilities (` in Lacs)

As at 30th June, 2013


(a) Bills discounted with banks 1841.68

27.Excise duty debited to Statement of Profit and loss is Net of Subsidy ` 236.15 Lacs .



01.04.2013 TO 30.06.2013

Profit/(Loss) as per the Statement of Profit & Loss (` In Lacs) and available for Equity Shareholders

(287.66)

Weighted average number of Equity Shares outstanding during the year 500000

Nominal value of equity shares (`) 1

Basic earnings per share (EPS) (`) (57.53)

Weighted average number of equity shares to be issued pursuant to Scheme of demerger excluding shares to be cancelled on allotment (Ref note no.25)

222172990

Diluted earnings per share (`) (0.13)

138

29. Related Party Disclosures

a) Name of the transacting parties:

Key Managerial Personnel Hari Prasad Agarwal, Managing Director

Subsidiary Companies Cement Manufacturing Company Limited

Megha Technical & Engineers Private Limited

Meghalaya Power Limited


Brijdham Merchants Private Limited

Century Plyboards (India) Limited

Sriram Vanijya Private Limited

b) Details of transactions between the Company and related parties and the status of outstanding balance as at 30th June, 2013 are given hereunder: Sl. No.

Type of Transactions Subsidiary Companies KMP / Enterprise Owned/Influenced by

KMP

01.04.2013 to 30.06.2013 01.04.2013 to

30.06.2013 1. Purchase Transaction

Cement Manufacturing Company Limited

0.32 -

2. Sales Transaction Cement Manufacturing Company Limited

9.64

-

3. Remuneration Paid Hari Prasad Agarwal

- 0.56

4. Loans & Advances Received Century Plyboards (India) Limited

-

12.30 5. Interest Paid

Megha Technical & Engineers Private Limited Brijdham Merchants Private Limited Sriram Vanijya Private Limited

13.21

- -

-

2.74 2.74

6. Outstanding Balances as at end of period: -Loans & Advances received

Megha Technical & Engineers Private Limited Brijdham Merchants Private Limited Sriram Vanijya Private Limited Century Plyboards (India) Limited -Investments Cement Manufacturing Company Limited Meghalaya Power Limited -Debtors Cement Manufacturing Company Limited -Creditors for Goods/Expenses Cement Manufacturing Company Limited Megha Technical & Engineers Private Limited Brijdham Merchants Private Limited Sriram Vanijya Private Limited Hari Prasad Agarwal

500.00

- -

2954.75 3373.50

9.64

0.16 13.21

- - -

-

100.00 100.00 12.30

- - - - -

2.74 2.74 0.56

139

30. The Company's segment information as at and for the Period ended 30th June, 2013 are as below:

(` in Lacs) SL. No.

Ferro Alloys Power Unit Total

a. External sales 3390.27 - 3390.27 Inter-segment sales - 1232.55 1232.55 Total Revenue (Gross) 3390.27 1232.55 4622.82 b. Segment Results -492.97 200.43 -292.54 Unallocated Income/(-) Expenses

(Net of unallocated Income/(-)Expenses

-21.54

Operating Profit/Loss (-) -314.08 Finance Cost 109.97 Deferred Tax Charges/(-)Credit -136.39 Total Profit /(-) Loss after tax -287.66 a. Other Information Segment Assets 4952.54 2817.41 7769.95 Unallocated Corporate/Other Assets 6691.95 TOTAL 14461.90 b. Segment Liabilities 1067.86 310.31 1378.17 Unallocated Corporate/Other Liabilities 2760.49 TOTAL 4138.66 Capital Expenditure 13.39 17.71 31.10 d. Depreciation/Amortisation 61.60 60.38 121.98

Notes:

(a) Business Segments: The business segments have been identified on the basis of the products of the Company. Accordingly,

the Company has identified following business segments:

Ferro-Alloys - Ferro Silicon

Power - Generation of Power

(b) Geographical Segments: The Company operates predominantly within the geographical limits of India and accordingly

secondary segments have not been considered.

31 (a) Raw Materials Consumed:

Unit of

Qty.

01.04.2013 to 30.06.2013 Quantity

Value

(` In Lacs) (i) Charcoal MT 1644.10 314.06 (ii) Quartz MT 7213.94 119.08 (iii) Lame Coke MT 2559.43 448.83 (iv) Mill Scale MT 1270.01 84.34 (v) Coal (Steam & Chocolate) MT 380.42 30.11 (vi) Other Raw Material MT 98.87 3.51 Total 999.93

140

(b) Value of Imported and indigenous Raw-materials and stores, Spare parts etc and their percentage to total consumption

(` in Lacs) 01.04.2013 to 30.06.2013

Value % Raw Materials -Imported -Indigenous

0.00

999.93

0.00

100.00

Total 999.93 100.00 Stores & Spare parts etc -Imported -Indigenous

0.00

200.41

0.00

100.00

Total 200.41 100.00 Note: It is not possible to identify the consumption of spare parts separately and hence consumption of stores and spare parts etc. is shown above.





Date: 1st October, 2013

Ravi Prakash Mundhra, Company Secretary

141

AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 30, 2013

INDEPENDENT AUDITORS’ REPORT

TO THE BOARD OF DIRECTORS OF STAR FERRO AND CEMENT LIMITED

Report on the Financial Statement

We have audited the accompanying interim financial statements of STAR FERRO AND CEMENT LIMITED (“the Company “) and its subsidiaries, which comprise the interim Consolidated Balance Sheet as at 30th June 2013, the interim consolidated statement of Profit and Loss and the interim Consolidated Cash Flow Statement for the three- month period then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial statements Management is responsible for the preparation of these interim consolidated statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Company in accordance with the Accounting Standards referred in sub–section (3C) of section 211 of the Companies Act,1956(“the Act”).This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the interim consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility

Our responsibility is to express an opinion on these interim consolidated financial statements based on our audit. We conducted our audit in accordance with the standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the interim consolidated financial statements, whether due to fraud or error. In making those risk assessments; the auditor considers internal control relevant to the Company’s preparation and fair presentation of the interim consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the interim consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion and to the best of our information and according to the explanations given to us, and based on consideration of the report of the other auditor on the interim financial statement of the subsidiary as noted below, the interim consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the interim Consolidated Balance Sheet, of the state of affairs of the Company and its subsidiaries as at 30th June, 2013;

(ii) in the case of the interim Consolidated Profit and Loss account, of the Profit of the Company and its subsidiaries for the three- month period ended on that date; and

(iii) in the case of interim Consolidated Cash Flow Statement, of the Consolidated Cash flows of the Company and its subsidiaries for the three- month period ended on that date.

142

Other matters We did not audit the financial statement of a subsidiary (NE Hills Hydro Limited), whose financial statement reflect total assets worth of Rs 7.00 Lacs as at 30th June, 2013. This financial statement and other financial information have been audited by other auditor whose report has been furnished to us, and our opinion is based solely on the report of the other auditor. The accompanying interim financial statements have been prepared, and this report thereon issued, solely for the purpose of inclusion in the advertisement to be published by the Company in Newspapers in connection with the proposed listing of equity shares of the Company on the Bombay Stock Exchange and National Stock Exchange. Accordingly, this report should not be used, referred to or distributed for any other purpose without our prior written consent. For KAILASH B. GOEL & CO.


Place: Kolkata Date: 1st October, 2013

CA. Arun Kumar Sharma Partner Membership No: 057329

143


Regd. Office : 6 Lyons Range, Kolkata - 700 001 Consolidated Balance Sheet

As at 30th June, 2013 ` in Lacs NOTES 30th June,2013 A EQUITY AND LIABILITIES Shareholder's Funds Share Capital 3 5.00 Share Capital - Pending Allotment 3 2,216.73 Reserves & Surplus 4 63,114.50 65,336.23 Minority Interest 24,034.44 Non Current Liabilities Long Term Borrowings 5 75,826.39 Deferred Tax Liability 7 156.25 Other Long Term Liabilities 6 6,935.37 Long Term Provisions 8 159.95 83,077.96 Current Liabilities Short Term Borrowings 9 9,341.45 Trade Payables 10 10,985.60 Other Current Liabilities 10 14,495.85 Short Term Provisions 8 36.24 34,859.14 TOTAL 207,307.77

B ASSETS Non Current Assets Fixed Assets Tangible Assets 11 112,809.57 Intangible Assets 12 33.00 Capital Work-in-Progress 15,041.01 Non Current Investments 13 452.86 Long term Loans and Advances 14 5,147.07 Other Non Current Assets 15 22,723.26 Current Assets Inventories 16 17,107.00 Trade Receivables 15 5,907.56 Cash and Bank Balances 17 895.59 Short Term Loans and Advances 14 19,071.71 Other Current Assets 15 8,119.14 TOTAL 207,307.77 Summary of Significant Accounting Policies 2.1


For Kailash B. Goel & Co. For and on Behalf of the Board of Directors

Firm Registration No- 322460E Chartered Accountants


CA. Arun Kumar Sharma Partner Hari Prasad Agarwal, Managing Director Membership No.057329 Place: Kolkata

Date: 1st October, 2013 Ravi Prakash Mundhra, Company Secretary

144


Regd. Office : 6 Lyons Range, Kolkata - 700 001 Consolidated Statement of Profit and Loss for the period ended 30th June, 2013

` in Lacs

NOTES 01.04.2013 to

30.06.2013 Income Gross Revenue from Operations 18 24,931.30 Less : Excise Duty 1,458.70 Net Revenue from Operations 23,472.60 Other Income 19 161.08 Total Revenue ( I ) 23,633.68 Expenses Cost of Raw Materials Consumed 20 4,069.07 (Increase)/Decrease in inventories of Finished Goods and Work in Progress 21 (1,728.63) Employee Benefits Expense 22 1,752.36 Other Expenses 23 15,552.82 Depreciation and Amortisation Expense 24 3,949.05 Finance Cost 25 2,633.16 Total Expenses ( II ) 26,227.83 Profit before Tax and Exceptional Items (2,594.15) Exceptional Items 26 2,939.35 Profit before Taxation (5,533.50) Tax Expenses Current Tax - Less: MAT credit entitlement - Net Current Tax Expense - Deferred Tax (253.05) Total Tax Expenses (253.05) Profit for the year before minority interest (5,280.45) Minority Interest (1,345.13) Profit for the year (3,935.32) Earnings per equity share (nominal value of share Re 1/- ( Re 1/-) 32 Basic (787.06) Diluted (1.77) Summary of significant Accounting Policies 2.1


For Kailash B. Goel & Co.

For and on Behalf of the Board of Directors

Firm Registration No- 322460E Chartered Accountants


CA. Arun Kumar Sharma

Partner

Hari Prasad Agarwal, Managing Director

Membership No.057329 Place: Kolkata

Date: 1st October, 2013 Ravi Prakash Mundhra, Company

Secretary

145


CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 30TH JUNE, 2013

PARTICULARS (` in lacs)

01.04.2013 to 30.06.2013 A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before Tax

(5,533.50) Adjustments for :

Depreciation 3,949.05 Finance Cost 2,633.16 Interest Income (33.67) Operating Profit before Working Capital Changes 1,015.04 Adjustments for : Increase/(decrease) in Trade Payables, Other Liabilities and Provisions 3871.36 (Increase)/decrease in Trade Receivables (1636.20) (Increase)/decrease in Loans & Advances and other assets 333.94 (Increase)/decrease in Inventories (2107.59) 461.51 Cash Generated from Operations : 1476.55 Direct Taxes paid (Net) (101.79) Net Cash Flow from Operating Activities 1374.76

B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Investments (300.00)

Sale of Fixed Assets 47.39 Fixed Deposits/Margin Money Refund (40.45)

Loans (Given)/Refunds (Net) (154.91) Interest Received 33.67 Purchase of Fixed Assets (3165.40) Net Cash Flow used in Investing Activities (3579.70)

C. CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Borrowings 6702.55 Repayment of Loans (3726.35) Interest Paid (Including Interest Capitalized) (2099.88) Other Borrowing Cost Paid (530.85)

Net Cash Flow from Financing Activities 345.47 Net Changes in Cash & Cash Equivalents (A+B+C) (1859.47)

Cash & Cash Equivalents on 1st April'2013 2625.44

* Cash & Cash Equivalents on 30th June'2013 765.97

* Represents Cash and Bank Balances as indicated in Note-17, and excludes `129.62 lacs being Bank Balances with restrictive use and maturity of more than three months.

As per our Report of even Date For and on Behalf of the Board

For Kailash B. Goel & Co. Firm Registration No- 322460E Chartered Accountants Sajjan Bhajanka, Chairman

CA Arun Kumar Sharma

Partner Hari Prasad Agarwal, Managing Director Membership No. 057329 Place: Kolkata Date: 1st October, 2013 Ravi Prakash Mundhra, Company Secretary

146

STAR FERRO AND CEMENT LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE PERIOD ENDED 30TH JUNE, 2013

1. Principles of consolidation The Consolidated Financial Statements which relate to Star Ferro and Cement Limited (the Company) and its subsidiaries have been prepared on the following basis: (a) The financial statements of the company and its subsidiaries are combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenditure, after fully eliminating intra group balances, intra group transactions and any unrealized profit / loss included therein, in accordance with Accounting Standards (AS-21), “Consolidated Financial Statements”. (b) The excess/shortfall of cost to the company of its investments in the subsidiary companies, over the net assets at the time of acquisition in the subsidiaries as on the date of investment is recognized in the financial statements as goodwill/capital reserve as the case may be. (c) The subsidiary companies considered in the financial statements are as follows:

Name Country of Incorporation


Cement Manufacturing Co. Limited India 70.48 Megha Technical & Engineers Private Limited India 99.96 Star Cement Meghalaya Limited India 100.00 Meghalaya Power Limited India 99.80 NE Hills Hydro Limited India 100.00 (d) The consolidated financial statements have been prepared using uniform accounting policies, except stated otherwise, for like transactions and are presented, to the extent possible, in the same manner as the Company’s separate financial statements. (e) In terms of Accounting Standard-21 notified under the Companies Accounting Standards Rules, 2006, Minority interest has been computed in respect of non-fully owned subsidiaries and adjusted against the consolidated income of the group in order to arrive at the net income attributable to the shareholders’ of the Company. (f) The subsidiaries were acquired with effect from 01.04.2012 pursuant to the Scheme of arrangement approved by the Hon’ble High Court at Kolkata

2. Basis of Preparation The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis and on the basis of going concern. The accounting policies applied by the Company are consistent with those used in the previous year. 2.1 Summary of Significant Accounting Policies (i) Use of Estimates The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, actual results could differ from these estimates. (ii) Revenue Recognition

147

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. (a) Revenue from sale of goods and services rendered is recognized upon passage of title which generally coincides with

delivery of materials and rendering of services to the customers. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenues. Excise duty deducted from revenue (Gross) is the amount that is included in the revenue (Gross) and not the entire amount of liability arising during the year. Sales figures are net of rebates, trade discounts and returns.

(b) Dividend Income is recognized when the shareholders' right to receive the payment is established by the balance sheet date. (c) Interest income is recognized on a time proportion basis taking into account the amount outstanding and rate applicable.

(iii) Fixed Assets Fixed Assets are stated at cost or revalued amount, as the case may be, less accumulated depreciation / amortisation and impairment, if any, except freehold land which is carried at cost. Cost comprises the purchase price inclusive of duties (net of cenvat / VAT), taxes, incidental expenses and erection / commissioning expenses etc. up to the date, the asset is ready for its intended use. In case of revaluation of fixed assets, the original cost as written-up by the valuer, is considered in the accounts and the differential amount is transferred to revaluation reserve. Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular are capitalised and depreciated over the residual life of the respective assets. (iv) Capital Work in Progress Capital work in Progress is carried at cost comprising direct cost and pre-operative expenses during construction period to be allocated to the fixed assets on the completion of construction. (v) Expenditure during construction period In case of new projects and substantial expenses of existing factories, expenditure incurred including trial production expenses net of revenue earned, and attributable interest and financing cost, prior to commencement of commercial production/completion of project, are capitalised. (vi) Impairment of Assets The carrying amounts of assets are reviewed at each balance sheet date to determine if there is any indication of impairment based on external/internal factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount which represents the greater of the net selling price and ‘Value in use’ of the assets. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. (vii) Depreciation / Amortization (a) The classification of plant and machinery into continuous and non-continuous process is done as per technical certification and depreciation thereon is provided accordingly. (b) Depreciation on fixed assets is provided under Written down Value method (except in case of fixed assets of power division of the subsidiary Megha Technical & Engineers Private Limited where straight line method is followed) at the rates prescribed in Schedule XIV of the Companies Act, 1956, or at rates determined based on useful lives of the respective assets, as estimated by the management, whichever is higher. (c) Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis with reference to the date of addition / disposal. (d) Intangible assets are amortized over a period 3 to 5 years depending on the useful life. (e) In case of impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. (viii) Foreign Currency Transactions

148

Foreign currency transactions are recorded at the rate prevailing on the dates of the transactions and exchange differences are dealt within the Statement of Profit & Loss. Monetary foreign currency assets and liabilities are translated at the year end exchange rates. All exchange differences are dealt within the statement of profit and loss, except to the extent that they are regarded as an adjustment to the interest cost and the resultant balance to the new projects, till the date of the capitalization, are carried to pre-operative expenses. Profit/Loss arising out of cancellation of forward contracts is taken to revenue in the year of cancellation. (ix) Investments Investments that are readily realisable and intended to be held for not more than a year are classified as Current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and market value on individual investment basis. Long Term Investments are considered at cost, unless there is an "other than temporary" decline in value, in which case adequate provision is made for the diminution in the value of Investments.

(x) Inventories

Raw Materials, stores and spares are valued at lower of cost and net realizable value. However, these items are considered to be realizable at cost if the finished products, in which they will be used, are expected to be sold at or above cost. Work in progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials & labour and a part of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost of Inventories is computed on weighted average/ FIFO basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. (xi) Government Grants and subsidies Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. When the grant or subsidy relates to an asset, it is deducted from the gross value of the asset concerned in arriving at the carrying amount of related asset. Government grants of the nature of promoter’s contribution are credited to capital reserve and treated as a part of the shareholders’ funds. (xii) Retirement and other employee benefits

(a) Retirement benefit in the form of Provident Fund is a defined contribution scheme and is charged to the Statement of

Profit and Loss of the year when the contributions to the respective funds are due. The Company has no obligations other than the contribution payable to the respective funds.




(xiii) Earning per Share Basic Earning per Share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deductible preference dividend and attributable taxes) by the weighted number of equity shares outstanding during the year. For the purpose of calculating diluted earning per share, net profit or loss for the year attributable to equity share holders and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares. (xiv) Excise Duty and Custom Duty Excise duty on finished goods stock lying at the factories is accounted for at the point of manufacture of goods and accordingly, is considered for valuation of finished goods stock lying in the factories as on the balance sheet date. Similarly, customs duty on imported material in transit/lying in bonded warehouse is accounted for at the time of import/ bonding of materials.

149


(xvi) Taxation

Tax expenses comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred income taxes reflect the impact of current year timing differences between taxable income for the year and reversal of timing differences of earlier years. The deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been substantively enacted as of the Balance Sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. If the company has carry forward unabsorbed depreciation and tax losses, deferred tax assets are recognized only to the extent there is virtual certainty supported by convincing evidence that sufficient taxable income will be available against which such deferred tax asset can be realized. The carrying amounts of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of deferred tax assets to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendation contained in guidance note issued by the Institute of Chartered Accountants of India, the said assets is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The company reviews the carrying amount of MAT at each Balance Sheet date and writes down MAT credit entitlement to the extent there is no longer convincing evidence to the effect that the company will pay normal income-tax during specified period. (xvii) Segment Reporting a) Identification of segments: The company has identified that its business segments are the primary segments. The Company’s business are organized and managed separately according to the nature of products/services, with each segment representing a strategic business unit that offers different product / services and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the company operate. b) Inter segment transfers: The Company generally accounts for intersegment sales and transfers at current market prices. c) Allocation of Common Costs: Common allocable costs are allocated to each segment on case to case basis applying the ratio, appropriate to each relevant case. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segment on a reasonable basis, have been included under the head “Unallocated”. The accounting policies adopted for segment reporting are in line with those of the Company’s accounting policies. (xviii) Cash and Cash equivalents Cash and cash equivalents in the cash flow statement comprise of cash at bank and in hand and short-term investments with an original maturity of three months or less. (xix) Provision

150

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions made in terms of Accounting Standard 29 are not discounted to their present value and are determined based on best estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. (xx) Contingent Liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

151

STAR FERRO AND CEMENT LIMITED Notes to Consolidated Financial Statements as at and for the period ended 30th June, 2013

3. Share Capital ` in Lacs 30th June,2013

Authorised 23,00,00,000 Equity Shares of Re. 1/- each 2,300.00 Total 2,300.00 Issued 5,00,000 Equity Shares of Re. 1/- each 5.00 Total 5.00 Subscribed and Paid up 5,00,000 Equity Shares of Re. 1/- each # 5.00 Total 5.00

a) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period Equity Shares 30th June,2013 No of Shares ` in Lacs At the Beginning of the year 500,000 5.00 Issued during the year - - Outstanding at the end of the year 500,000 5.00


The company has only one class of equity shares having par value of Re1/- per share. Each holder of equity shares is entitled to one vote per share.

The company declares and pays dividends in Indian rupees.


c) Details of Shareholders holding more than 5% shares in the company 30th June,2013 No of Shares % holding in the class Equity Shares of Re 1/- each fully paid-up CENTURY PLYBOARDS (INDIA) LTD. 500000 100.00%

# The existing share capital to be cancelled upon allotment of shares persuant to Scheme of Arrangement (Refer Note no 27)

As per records of the Company, including its register of shareholders/members , the above shareholding represents legal ownerships of shares

` in Lacs Share Capital - Pending Allotment 30th June,2013 Shares to be alloted as per Scheme of Arrangement (Refer Note No 27) 2,216.73 Total 2,216.73

152


4. RESERVES & SURPLUS ` in Lacs 30th June,2013 Capital Reserve Balance as per the last Financial Statements 26,447.64 Closing Balance 26,447.64 General Reserve Balance as per the last Financial Statements 2,607.87 Closing Balance 2,607.87 Surplus in the statement of Profit and Loss Balance as per the last Financial Statements 37,994.31 Add: Profit for the year (3,935.32) Net Surplus in the Statement of Profit and Loss 34,058.99 Total Reserves and Surplus 63,114.50

5. Long Term Borrowings Non Current Portion Current Maturities ` in Lacs ` in Lacs 30th June,2013 30th June,2013 Term Loans (Secured) Indian Rupee Loan from Banks 41,934.07 7,191.70 Indian Rupee Loan from a Financial Institution 978.94 78.56 Foreign Currency Loan from Banks 27,517.86 3,116.88 Other Loans and Advances (Secured) Buyers Credit from banks for Capital expenditure 4,992.08 - Hire Purchase obligations :- - From banks 398.10 316.67 - From Bodies Corporate 5.34 20.27 75826.39 10724.08

Amount disclosed under the head " Other Current Liabilities" (10,724.08) ( Note - 10) Net Amount 75826.39 - Notes:-

1(a) Rupee Term Loan of `1,057.50 lacs from NEDFI for Ferro Alloy Division at Byrnihat carries interest rate of PLR + 1% i.e. 12.75% p.a. The loan is secured by equitable mortgage of leasehold rights of land and first charge on fixed assets of the Company's Ferro Alloy Division at Byrnihat, Meghalaya and Second Charge on Current Assets of the said unit on pari passu basis. Term Loans from NEDFI is to be repaid in 27 quarterly instalments of ` 39.28 lacs each in first 26 quarters and balance in the last quarter with first instalment due on 01.01.2014

153

(b) Rupee Term Loan of `787.01 lacs from a bank is repayable in 5 equal quarterly installments of ` 197.50 lacs each ending on June 2014.The Loan is secured by first charge on fixed assets (except specifically charged assets) of the subsidiary's cement plant at Lumshnong, Meghalaya.

(c) Rupee Term Loan of ` 7,000.00 lacs from a bank is repayable in 16 equal quarterly installments commencing from September 2013.The Loan is secured by first pari passu charge on current assets and on fixed assets of the subsidiary's cement plant at Lumshnong, Meghalaya.

(d) Rupee Term Loans of ` 12,559.24 lacs and Foreign Currency loan of ` 1,615.30 lacs from banks are repayable in 28 unequal quarterly installments commencing from March 2013. The loans are secured by first pari passu charge on fixed assets of subsidiary's cement Grinding unit at Guwahati, Assam.

(e) Rupee Term Loan of ` 372.96 lacs is repayable in 3 equal quarterly installments ending on December'2013.The Term loan is secured by first charge on Fixed Assets of the Subsidiary’s Cement Grinding Unit at Lumshnong , Meghalaya on Pari passu basis.

(f) Rupee Term Loan of ` 25,767.00 lacs and foreign currency loan of ` 9,677.81 lacs from banks are repayble in 28 unequal quarterly installments commencing from March 2013. Term Loans are secured by first charge on the fixed assets of the subsidiary’s Cement clinker plant at Lumshnong, Meghalaya on pari passu basis.

(g) Rupee Term Loan of `2,639.56 lacs and foreign currency loan of `15,852.05 lacs from a bank are repayble in 28 unequal quarterly installments commencing from March 2013. These Term Loans are secured by first charge on the fixed assets of the subsidiary’s power plants at Lumshnong, Meghalaya on pari-passu basis.

(h) Buyers credit of `4,992.08 lacs from banks have been availed against letter of credit (sub-limit to Term Loans) issued by banks which are secured by first charge on fixed assets of the subsidiary’s cement clinker plant at Lumshnong, Meghalaya.

(i) Hire Purchase Finance of `54.89 lacs is secured by hypothecation of company’s vehicles and is repayable within three to four years having varying date of payment.

(j) Hire Purchase Finance of ` 96.33 lacs is secured by hypothecation of susidiary’s vehicles / equipments and is repayable within three to four years having varying date of payment.

(k) Hire Purchase Finance of ` 589.16 lacs is secured by hypothecation of subsidiary’s vehicles / equipments and is repayable within three to four years having varying date of payment.

(l) Term Loans of `61,268.91 Lacs from Banks have been guaranteed by some of the Directors of the Company. 2 Buyers credit carries interest @ Libor plus 1% to 3.5% and repayble in 90-365 days.

6. Other Long Term Liabilities ` in Lacs 30th June,2013

Security Deposits

4,902.22 Others 2033.15 Total Amount 6935.37

7. Deferred Tax Liabilities

` in Lacs 30th June,2013 Deferred tax liability

Fixed assets: Impact of difference between tax depreciation and depreciation/ amortization charged for the financial reporting

836.67

836.67 Deferred tax asset Business Loss Carried forward 365.98

Impact of expenditure charged to the statement of profit and loss in the current year but allowed for tax purposes on payment basis

314.44

680.42 Net deferred tax liabilities 156.25

154

8. Provisions

Long Term Short Term ` in Lacs ` in Lacs 30th June,2013 30th June,2013 Provision for Employee Benefits Provision for Gratuity 72.99 - Provision for Leave Encashment 86.96 36.24 Total Amount 159.95 36.24

9. Short Term Borrowings ` in Lacs

Loans repayable on demand :- 30th June,2013 Cash Credit from banks (Secured) 4,444.17 Short Term Loan from Bodies Corporate ( Unsecured ) 200.00 Loans from related parties (Unsecured) - From Bodies Corporate 212.30

Other Loans and advances FCNRB Demand Loan ( Secured ) 4,484.98 Total Amount 9341.45 Notes:-

1 (a) Working Capital facility of `733.32 lacs from a Bank is secure by first charge on the current assets of the Company's Ferro Alloy Division and second charge on the fixed assets of the Ferro Alloy Plant on pari passu basis.

(b) Working Capital facilities of ` 4,472.69 lacs from banks are secured by first pari passu charge on subsidiary's current assets and second pari passu charge on fixed assets of the Company's cement plant at Lumshnong, Meghalaya.

(c) Working capital facilities of `1,499.82 lacs from banks are secured by first charge on subsidiary’s current assets of its Cement Grinding unit at Lumshnong, Meghalaya on pari passu basis.

(d) Working capital facilities of `1,481.59 lacs from banks are secured by first charge on subsidiary’s current assets of its Clinker unit at Lumshnong, Meghalaya on pari passu basis.

(e) Cash credit of ` 741.72 lacs from a bank is secured by first charge on subsidiary’s current assets and second charge on fixed assets of its power plants at Lumshnong, Meghalaya.

Further, the working capital facilities for ` 6,705.83 lacs are also guranteed by some directors of the company. The above cash credits are repayable on demand and carries interest rate of Base Rate + 3.25% p.a.

2 Short Term unsecured loan of `412.30 lacs is repayable on demand and carries interest @11% to 13.30% p.a.

10. Other Current Liabilities ` in Lacs 30th June,2013 Trade Payables 10,985.60 10,985.60 Others Liabilities Current Maturities of Long Term Borrowings (Note-5) 10,724.08 Interest accrued but not due on Borrowings 3.64 Advances from Customers 265.29 Statutory Dues Payable 3,502.84 14495.85 Total Amount 25481.45

155

STAR FERRO AND CEMENT LIMITED 11 : Tangible Assets

(Rs.in Lacs)

Land & Site

Devlopment

Factory Building

s

Non-Factory Building

s Plant &

Machinery

Electrical Installat

ions

furniture &

Fixtures

Office Equipments

Compu

ters Vehicles

Mines & Mines

Devlopments Total

Free Hold

On Freehold

Land

COST OR

VALUATION At 31st

March'2013

4,843.99

15,322.42 4,746.83

109,747.93 1,110.04 612.51 418.29 510.71 3,107.26 1,125.65 1,41,545.63

Additions

75.06

-

-

74.44

5.71

7.26

14.65

17.01

159.97

-

354.10

Disposals

-

-

0.13

114.83

-

0.47

0.25

-

6.78

-

122.46 At 30th

June'2013

4,919.05

15,322.42

4,746.70

109,707.54

1,115.75

619.30

432.69

527.72

3,260.45

1,125.65

141,777.27

Depreciation At 31st

March'2013

-

3,597.92

759.11

17,313.47

682.53

326.74

170.72

398.07

1,848.31

-

25,096.87 Charge for the

Period

-

289.08

49.71

3,451.60

16.17

14.20

8.87

11.98

104.30

-

3,945.91

Disposals

-

-

-

70.98

-

-

-

-

4.10

-

75.08 As at 30th June'2013

-

3,887.00

808.82

20,694.09

698.70

340.94

179.59

410.05

1,948.51

-

28,967.70


4,919.05

11,435.42

3,937.88

89,013.45

417.05

278.36

253.10

117.67

1,311.94

1,125.65

112,809.57


(Rs.in Lacs)

Comput

er Softwar

e Total

COST OR

VALUATION

At 31st

March'2013

124.69

124.69

Addition

4.36

4.36

Disposals -

-


129.05

129.05

Amortisation At 31st

March'2013

93.18

93.18 Charge for the

Period

2.87

2.87

Disposals -

-


96.05

96.05


33.00

33.00

156


13 NON-CURRENT INVESTMENTS (Fully Paid Up) ( At Cost )


` Shares/units 30th June,2013 A NON TRADE INVESTMENTS (a) Quoted Equity Shares Reliance Power Ltd 10 8,743 24.54 (b) Units of Mutual Funds Baroda Pioneer Banking & Financial 10 23,065 300.00 Services (Treasury Advantage Fund - G) Sub Total 324.54 B TRADE INVESTMENTS (a) Unquoted Equity Instruments Ara Suppliers Pvt. Ltd. 10 323190 31.36 Arham Sales Pvt. Ltd. 10 323190 31.42 Adonis Vyapar Pvt. Ltd. 10 323190 31.42 Apanapan Viniyog Pvt. Ltd. 10 323190 31.42 Ribhoi Engineering Company Pvt Ltd. 10 27000 2.70 128.32 TOTAL 452.86 Aggregate Amount of Investments Quoted 324.54 Unquoted 128.32 Market Value of Quoted Investments 320.01

157


Non Current Current ` in Lacs ` In Lacs 30th June,2013 30th June,2013

Loans and Advances ( Considered Good) Capital Advances Secured 436.06 - Unsecured 4,391.94 -

Doubtful ( Net of provision for doubtful advances) 63.98 -

Security Deposits Unsecured 254.69 0.60 Loans - Unsecured - To related parties - 164.78 - To other Bodies corporate - 825.13 Advances recoverable in cash or kind Unsecured 0.24 4,981.67 Other Loans and Advances ( Unsecured -Considered Good ) Prepaid Expenses 0.16 358.24 Advance Income Tax (Net of Provisions ) - 1,210.43 MAT Credit Entitlement - 8,805.37 Balance with Statutory/Government Authorities - 2,725.49 5147.07 19071.71

15. Trade Receivables and Other Assets Non Current Current ` in Lacs ` in Lacs 30th June,2013 30th June,2013 15.1 Trade Receivables

Debts outstanding for a period exceeding six months from the date they are due for payment.

Secured- Considered Good - 27.34 Unsecured- Considered Good - 129.10 Unsecured- Considered Doubtful - 308.83 - 465.27 Provision for doubtful trade receivables - 308.83 A - 156.44 Other Debts Secured- Considered Good - 635.47 Unsecured- Considered Good - 5,115.65 B - 5,751.12 Total ( A+B ) - 5,907.56 15.2 Other Assets Unsecured, Considered Good

Central/State Government Claims/Subsidies Receivable 22,723.26 8,118.72

Unamortized Expenses ( To the extent not written off or adjusted) - 0.42

22,723.26 8,119.14

158

16. Inventories

` in Lacs 30th June,2013 (At Lower of Cost and Net Realisable Value) Raw Materials 1,969.64 Work in Progress 150.61 Finished Goods 5,174.26 Stores & Spares Parts, etc 9,812.49 17,107.00 Note The above includes stock in Transit Raw Materials - Finished Goods 263.65

17. Cash and Bank Balances Current ` in Lacs 31st March'2012 30th June,2013

Cash and Cash Equivalents Balances with Banks On Current accounts - 725.68 Deposits with Original Maturity of less than three months - 0.13 Cheques/Drafts on hand - 0.13 Cash on hand - 40.03 0.00 765.97 Other Bank Balances Deposits with Original Maturity of more than 12 months - 5.10 Margin Money Deposits - 124.52

0.00 129.62 - 895.59

159

18. Revenue from Operations

` in Lacs

01.04.2013 to

30.06.2013 Revenue from Operations Sale of Products Finished Goods 24,877.40 Other Operating revenue Scrap Sales 38.69 Miscellaneous Income 15.21 Revenue from Operations ( Gross ) 24,931.30 Less: Excise Duty 1,458.70 Revenue from Operations ( Net ) 23,472.60 Note:

Excise duty on sales amounting to `1458.70 lacs has been reduced from sales in the statement of profit & loss and excise duty on increase/(decrease) in stock amounting to `238.24 lacs has been considered as income/ expense in note 23 of financial statements.

` in Lacs

01.04.2013 to

30.06.2013 Details of Products Sold Finished Goods Sold Cement 62,252.56 Ferro Silicon 3,390.27 Power 68.42 65,711.25

19. Other Income ` in Lacs

01.04.2013 to

30.06.2013 Interest Income on Fixed Deposits, Loans etc:- 33.67 Miscellaneous Receipts 127.41 161.08

160

20. Cost of Raw Materials Consumed ` in Lacs

01.04.2013 to

30.06.2013 Inventory at the beginning of the year 1,484.17 Add : Purchases 4,554.28 6,038.45 Less : Inventory at the end of the year 1,969.38 Cost of Raw Materials Consumed 4,069.07 Details of Raw Material consumed Charcoal 314.06 Quartz 119.08 Lam Coke 448.83 Mill Scale 84.34 Coal (Steam & Chocolate) 30.11 Fly Ash 1,552.66 Limestone 980.27 Iron Mill Scale & Fines 365.17 Gypsum 115.74 Shale 55.28 Other Raw Material 3.53 4,069.07 Details of Closing Stock of Raw Materials Charcoal 226.49 Quartz 38.48 Lam Coke - Mill Scale 33.08 Coal (Steam & Chocolate) 3.57 Fly Ash 468.84 Limestone 196.16 Iron Mill Scale & Fines 23.47 Gypsum 73.66 Shale 24.88 Clinker 870.14 Other Raw Material 10.62 1,969.39

161

21. (Increase)/Decrease in inventories ` in Lacs 01.04.2013 to 30.06.2013 Inventories at the beginning of the year Finished Goods 3,481.82 Work in Progress 114.42 3,596.24 Inventories at the end of the year Finished Goods 5,174.26 Work in Progress 150.61 5,324.87 (Increase)/Decrease in inventories of Finished Goods/Work in Progress (1,728.63) Finished Goods Ferro Silicon 185.53 Silicon Mangenese 9.86 Cement 2,125.66 Clinker 2,853.21 5,174.26 Work in Progress Raw Mill 107.43 Fine Coal 11.68 Crushed Lime Stone 31.50 150.61

22. Employee Benefits Expense ` in Lacs 01.04.2013 to 30.06.2013 Salaries, Wages, Bonus etc 1,634.83 Contribution to Provident, Gratuity and other Funds 43.78 Employees Welfare Expenses 73.75 1,752.36

162

23. Other Expenses

` in Lacs 01.04.2013 to 30.06.2013 Stores & Spare parts consumed 1,387.17 Power and Fuel 6,778.73 (Increase)/decrease of excise duty on inventory 238.24 Insurance 121.24 Rent 86.59 Rates & Taxes 131.54 Repairs & Maintenance -Buildings 160.50 -Plant & Machinery 448.38 -Others 61.49 Transport & Freight 3,914.64 Commission, Discount & Incentives on Sale 1,034.03 Advertisement, Publicity and Sales Promotion 597.89 Communication Expenses 1.56 Directors' Remuneration 50.06 Charity and Donations 55.13 Miscellaneous Expenses 485.63 15,552.82

24. Depreciation and Amortisation Expense ` in Lacs 01.04.2013 to 30.06.2013

Depreciation on Tangible Assets 3,945.91 Depreciation on Intangible Assets 2.87 3,948.78 Less: Transferred to pre-operative expenses (0.27) 3,949.05

25. Finance Cost ` in Lacs

01.04.2013 to 30.06.2013

Interest Expenses ( net of Capitalisation `180.66 Lacs) 2102.31Exchange difference to the extent considered as an adjustment to borrowing costs 530.06 Bank Charges 0.79

2,633.16

26. Exceptional Items ` in Lacs 01.04.2013 to 30.06.2013 Foreign Exchange Fluctuations 3469.41

Less: Exchange difference to the extent considered as an adjustment to borrowing costs ( Note - 25) 530.06

2,939.35

163

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE PERIOD ENDED 30TH JUNE, 2013 27. Scheme of Arrangement a) Pursuant to the Scheme of Arrangement (“the scheme”) between Century Plyboards (India) Limited (CPIL), the Company and their respective shareholders as approved by the Hon’ble High Court at Kolkata vide its order dated 17th May, 2013, all the assets and liabilities of the Ferro Alloys and Cement division (i.e., business and interests in manufacture of Ferro alloys and cement, including captive power plant attached thereto) of CPIL have been transferred to and vested in the Company at their respective book values on a going concern basis with effect from 1st April, 2012 being the appointed date. b) Pursuant to the said scheme, the company will issue and allot its Equity Shares to the shareholders of CPIL in ratio of 1 (one) Equity share of Re.1/- each of the Company as fully paid-up for every 1 (one) Equity Share of Re.1/- each held by them in CPIL. Pending allotment of these shares, the amount of `2216.73 lacs is disclosed as ‘Share Capital - pending allotment’. Consequent to the allotment of new shares as per the scheme, current share capital of the Company of ` 5 lacs will be cancelled and the Company ceases to be subsidiary of the CPIL. 28. Capital & Other Commitments Estimated amount of contracts remaining to be executed on Capital Account (net of advances) and not provided for `861.05 lacs. 29. Contingent Liabilities (` in Lacs)

As at 30th June, 2013


(a) Demands / Claims by various Government Authorities and others not acknowledged as debt:

120.84 (i) Excise Duty/Service Tax

(iii) Income Tax 3278.31 Total 3399.15

(b) Un-redeemed bank guarantees 1502.22 (c) Bills discounted with banks 34.95 (d) Letters of credit issued by the banks 4.65 (e) Custom Duty on import under EPCG Scheme against which Export obligation is to be fulfilled 1373.82

(f) Guarantee provided to bank on behalf of Contractors 2477.30 Note: Based on discussion with the solicitors/favourable decisions in similar cases/legal opinion taken by the company, the management believes that the company has a good chance of success in above mentioned cases and hence, no provision there against is considered necessary. 30. There is a diminution of `4.53 lacs in the value of a quoted investment based on the last quoted price. The above investment being long term and strategic in nature, the said diminution, in the opinion of the management, is temporary in nature and hence no provision is considered necessary. 31. Excise duty debited to Statement of Profit and loss is Net of Subsidy `1186.08 Lacs. Raw Material consumption and Transport & Freight are Net of Subsidy of ` 959.31 lacs and ` 498.93 lacs respectively in respect of a subsidiary company. 32. Earning per Share (EPS): In terms of Accounting Standard - 20, the calculation of EPS is given below: -

01.04.2013 TO 30.06.2013

Profit as per Statement of Profit & Loss (` In Lacs) and available for Equity Shareholders (3589.96)

Weighted average number of Equity Shares outstanding during the year 500000 Nominal value of equity shares (Re.) 1 Basic earnings per share (EPS) (`) (787.06) Weighted average number of equity shares to be issued pursuant to Scheme of demerger excluding shares to be cancelled on allotment

222172990

Diluted earnings per share (`) (1.77)

33. Derivative instruments and unhedged foreign currency exposure.

164

The particulars of unhedged foreign currency exposures as on the balance sheet dates are as follows: As at 30.06.2013

Foreign Currency Foreign Currency Indian Rupees FCNRB Term Loan USD 47.25 2,820.80 FCNRB Demand Loan USD 50.00 2,984.98 ECB-Term Loan USD 465.92 27,815.10 Buyers Credit EURO 46.29 3,609.28 Buyers Credit USD 22.83 1,362.75 Buyers Credit GBP 0.22 20.05

34. Related Party Disclosures

a) Name of the transacting related parties:

Key Management Personnel Mr. Sajjan Bhajanka (Chairman & Managing Director) Mr. Rajendra Chamaria (Vice Chairman & Managing Director) Mr. Sanjay Agarwal (Joint Managing Director) Mr. Pankaj Kejriwal (Managing Director in subsidiary) Mr. Prem Kumar Bhajanka (Director in Subsidiaries) Mr. Brij Bhushan Agarwal (Director in Subsidiary) Mr. Hari Prasad Agarwal (Managing Director) Mr. Sanjay Kr. Gupta (Chief Financial Officer)


Century Plyboards (India) Limited Brijdham Merchants Private Limited Sriram Vanijya Private Limited

b) Details of transactions between the Company and related parties and the status of outstanding balances as at 30th June, 2013 are given hereunder:

(` in Lacs)

Sl. No.

Types of Transactions Associates

KMP / Enterprise Owned/Influenced by

KMP 01.04.2013 to 30.06.2013 01.04.2013 to 30.06.2013

1 Loan & Advance Taken Century Plyboards (India) Limited - 12.30

2 Interest paid Brijdham Merchants Private Limited - 2.74 Sriram Vanijya Private Limited - 2.74

3 Remuneration Paid Pankaj Kejriwal - 10.50 Rajendra Chamaria - 12.00 Sajjan Bhajanka - 9.00 Sanjay Agarwal - 9.00 Prem Bhajanka - 9.00 Hari Prasad Agarwal - 0.56 Sanjay Kumar Gupta - 8.77

4 Balance Outstanding: A Loans & Advances received Brijdham Merchants Private Limited - 100.00 Sriram Vanijya Private Limited - 100.00 Century Plyboards (India) Limited 12.30

B Guarantees Obtained Sajjan Bhajanka - 43103.21 Rajendra Chamaria - 24611.60 Brij Bhushan Agarwal - 43103.21 Sanjay Agarwal - 24611.60 Prem Kumar Bhajanka - 43103.21

C Creditors for Goods/Expenses Brijdham Merchants Private Limited - 2.74 Sriram Vanijya Private Limited - 2.74 Hari Prasad Agarwal - 0.56

165

35. The Company's segment information as at and for the Period ended 30th June, 2013 are as below: (` in lacs)

Sl. No.

Ferro Alloys

Cement Power Total

A Revenue(Gross) External Sales 3,390.27 21,487.13 - 24,877.40 Inter-segment Sales - - 4,934.22 4,934.22 Total Revenue (Gross) 3,390.27 21,487.13 4,934.22 29,811.62 B Result Segment Results -492.97 -376.10 950.03 80.96 Unallocated Income/(-) Expenses (Net of unallocated

Income/(-) Expenses (including exceptional items)

-2,981.30

Operating Profit -2,900.34 Finance Cost 2,633.16 Provision for Taxation - Deferred Tax Charge /(-) Credit -253.05 MAT Credit Entitlement (-) - Net Profit (before minority interest) -5,280.45 Other Information a Total Assets Segment Assets 4,952.54 1,63,357.64 33,188.36 2,01,498.54 Unallocated Corporate/Other Assets 5,809.23 207,307.77 b Total Liabilities Segment Liabilities 567.86 91,575.75 21,338.09 113,481.70 Unallocated Corporate/Other Liabilities 4,455.40 117,937.10 C Capital Expenditure 13.39 2,177.23 197.63 2,388.25 D Depreciation/Amortisation 61.60 3,132.79 754.66 3,949.05

166

Notes: (a) Business Segments: The business segments have been identified on the basis of the products of the Company.

Accordingly, the Company has identified following business segments: Ferro-Alloys - Ferro Silicon Power - Generation of Power Cement - Cement and Clinker






Date: 1st October, 2013 Ravi Prakash Mundhra, Company Secretary

167

FINANCIAL AND OTHER INFORMATION OF COMPANIES UNDER THE SAME MANAGEMENT The top five companies which are the part of our Promoter Group are as follows: 1. Century Plyboards (India) Limited (CPIL) 2. Cement Manufacturing Company Limited (CMCL) 3. Megha Technical & Engineers Private Limited (MTEPL) 4. Meghalaya Power Limited (MPL) 5. Star Cement Meghalaya Limited (SCML) 1. Century Plyboards (India) Limited (CPIL)

Century Plyboards (India) Limited was originally incorporated as a private limited company under the name and style of with the name Century Plyboards (India) Private Limited on 5th day of January, 1982 under the Companies Act, 1956. The Company was converted into Public Limited Company and a fresh Certificate of Incorporation consequent to change of name to Century Plyboards (India) Limited was issued by the Registrar of Companies on 5th day of June, 1996, to this effect. The shares of Century Plyboards (India) Limited are listed on the National Stock Exchange of India Limited (NSE) and the BSE Limited (BSE). Presently the registered office of Century Plyboards (India) Limited is situated at 6, Lyons Range, Kolkata – 700 001. The Company is primarily engaged in the business of manufacturing of a wide range of plywood and decorative veneers. Corporate Identity Number: L20101WB1982PLC034435 Shareholding Pattern The shareholding pattern of CPIL as on September 30, 2013 is as follows:

Particulars No. of shares % of Shareholding Promoter & Promoter Group 16,19,29,377 72.88 Others 6,02,43,613 27.12 Total 22,21,72,990 100.00

Board of Directors The Board of Directors of Century Plyboards (India) Limited comprises of: Sl. No. Name Designation

1 Mr. Sajjan Bhajanka Chairman 2 Mr. Hari Prasad Agarwal Vice Chairman 3 Mr. Sanjay Agarwal Managing Director 4 Mr. Prem Kumar Bhajanka Managing Director5 Mr. Vishnu Khemani Managing Director 6 Mr. Ajay Baldawa Executive Director 7 Mr. Mangi Lal Jain Independent Director 8 Mr. Santanu Ray Independent Director 9 Mr. Asit Pal Independent Director

10 Mr. Samarendra Mitra Independent Director 11 Mr. Manindra Nath Banerjee Independent Director 12 Mr. Sajan Kumar Bansal Independent Director

Change in Management There has been no change in the management of Century Plyboards (India) Limited in the last three years.

168

Financial Performance Financial performance of CPIL for the last three years is as follows:

(` in Lacs) Particulars Fiscal 2013 Fiscal 2012 Fiscal 2011

Total Income 1,13,846.00 1,12,246.39 89,291.21Profit after Tax 5,265.14 6,008.65 7,450.76Equity Capital 2,225.27 2,225.27 2,225.27Reserves & Surplus (excluding revaluation reserve) 22,579.40 28,810.90 25,389.63Net worth 24,804.67 31,036.17 27,614.90NAV per share 11.16 13.97 12.43 Earnings per share (EPS) (Basic) in ` 2.37 2.70 3.35 Earnings per share (EPS) (Diluted) in ` 2.37 2.70 3.35 No. of Equity Shares of `1/- each 2221,72,990 2221,72,990 2221,72,990

Particulars of high and low prices of the shares of Century Plyboards (India) Limited during the preceding six months is as under: BSE

Months High Price (`) Low Price(`) April, 2013 55.95 49.00 May, 2013 56.35 49.30 June, 2013 54.85 41.20 July, 2013 59.00 32.85 August, 2013 35.35 23.15 September, 2013 33.55 23.65

NSE

Months High Price (`) Low Price(`) April, 2013 55.00 49.65 May, 2013 56.10 50.00 June, 2013 54.50 40.95 July, 2013 58.75 31.85 August, 2013 34.00 23.20 September, 2013 35.50 23.15

Details of changes in capital structure during the six months preceding the date of filing of this Information Memorandum. Nil

Details of public or rights issue in the preceding three years. Nil

Information regarding significant adverse factors related to the group companies: (i) Century Plyboards (India) Limited has not become a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995 and is not under winding up; (ii) Century Plyboards (India) Limited has not made a loss in the immediately preceding year. Century Plyboards (India) Limited has not remained defunct and no application has been made to the Registrar of Companies for striking off the name of the company during the five years preceding the date of filing the Information Memorandum.

169

The Promoters have not disassociated themselves from Century Plyboards (India) Limited during the three years preceding the date of filing the Information Memorandum.

2. Cement Manufacturing Company Limited (CMCL) Cement Manufacturing Company Limited was incorporated as a public limited company under the name and style of Cements Manufacturing Company Limited on 2nd November, 2001 pursuant to Companies Act, 1956. It got its certificate for commencement of business on 19th September, 2002. On 10th November, 2004 the name changed to Cement Manufacturing Company Limited pursuant to a fresh certificate of incorporation. Presently the registered office of Cement Manufacturing Company Limited is situated at Village Lumshnong, Khaliehriat, Jaintia Hills, Meghalaya – 793 200. The Company is engaged in the business of manufacturing of Cements. Corporate Identity Number: U26942ML2001PLC006663

Shareholding Pattern The shareholding pattern of CMCL as on September 30, 2013 is as follows:

Particulars No. of shares % of Shareholding Promoter & Promoter Group 419,11,392 99.98 Others 10,000 0.02 Total 419,21,392 100.00

Board of Directors The Board of Directors of Cement Manufacturing Company Limited comprises of: Sr. No. Name Designation

1. Mr. Sajjan Bhajanka Chairman & Managing Director 2. Mr. Sanjay Agarwal Joint Managing Director 3. Mr. Rajendra Chamaria Vice Chairman & Managing Director 4. Mr. Pankaj Kejriwal Director 5. Mr. Brij Bhushan Agarwal Vice Chairman 6. Mr. Mangi Lal Jain Director 7. Mr. Prem Kumar Bhajanka Director 8. Mrs. Clara Suja Director

Change in Management There has been no change in the management of Cement Manufacturing Company Limited in the last three years. Financial Performance Financial performance of CMCL for the last three years is as follows:


Total Income 36,200.22 33,789.15 32,759.71Profit after Tax 3,068.55 4,047.56 8,345.83Equity Capital 4,192.14 4,192.14 4,192.14Reserves & Surplus (excluding revaluation reserve) 49,593.35 40,675.88 36,628.32Net worth 53,785.49 44,868.02 40,820.46NAV per share 128.30 107.03 97.37Earnings per share (EPS) (Basic) in ` 7.32 9.66 19.91

170

Earnings per share (EPS) (Diluted) in ` 7.32 9.66 19.91No. of Equity Shares of `10/- each 419,21,392 419,21,392 419,21,392

Cement Manufacturing Company Limited is not a Sick Industrial Company within the meaning of the SICA.

3. Megha Technical & Engineers Private Limited (MTEPL)

Megha Technical & Engineers Private Limited was incorporated as a private limited company on 13th day of December, 2002 under the Companies Act, 1956. Presently the registered office of Megha Technical & Engineers Private Limited is situated at Village Lumshnong, Khaliehriat, Jaintia Hills, Meghalaya – 793 200. The Company is engaged in the business of manufacturing and selling of cement and power. Corporate Identity Number: U27107ML2002PTC006976 Shareholding Pattern The shareholding pattern of MTEPL as on September 30, 2013 is as follows:

Particulars No. of shares % of Shareholding Promoter & Promoter Group 273,41,400 99.98 Others 5,000 0.02 Total 273,46,400 100.00

Board of Directors The Board of Directors of Megha Technical & Engineers Private Limited comprises of: Sr. No. Name Designation

1. Mr. Pankaj Kejriwal Managing director 2. Mr. Rajesh Kumar Agarwal Director 3. Mr. Hari Prasad Agarwal Director 4. Mr. Mangi Lal Jain Director 5. Mr. Edmund Carmel Suja Director

Change in Management There has been no change in the management of Megha Technical & Engineers Private Limited in the last three years.

Financial Performance Financial performance of MTEPL for the last three years is as follows:


Total Income 32,931.36 33,749.18 29,051.66Profit after Tax 3,876.78 5,201.65 3,643.23Equity Capital 2,734.64 2,734.64 2,734.64Reserves & Surplus (excluding revaluation reserve) 19,104.96 15,228.18 10,026.53Net worth 21,839.60 17,962.82 12,761.17NAV per share 79.86 65.69 46.66Earnings per share (EPS) (Basic) in ` 14.18 19.02 13.32Earnings per share (EPS) (Diluted) in ` 14.18 19.02 13.32No. of Equity Shares of `10/- each 273,46,400 273,46,400 273,46,400

Megha Technical & Engineers Private Limited is not a Sick Industrial Company within the meaning of the SICA.

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4. Meghalaya Power Limited (MPL)

Meghalaya Power Limited was incorporated as a public limited company on 4th day of October, 2002 under the Companies Act, 1956 and received its certificate to commence business on 8th February, 2007. Presently the registered office of Meghalaya Power Limited is situated at Village Lumshnong, Khaliehriat, Jaintia Hills, Meghalaya – 793 200. The Company is engaged in the business of generation and selling of thermal power. Corporate Identity Number: U40108ML2002PLC006921 Shareholding Pattern The shareholding pattern of MPL as on September 30, 2013 is as follows:

Particulars No. of shares % of Shareholding Promoter & Promoter Group 171,30,600 100.00 Others 20 Negligible Total 171,30,620 100.00

Board of Directors The Board of Directors of Meghalaya Power Limited comprises of: Sr. No. Name Designation

1. Mr. Prem Kumar Bhajanka Managing director 2. Mr. Sajjan Bhajanka Director 3. Mr. Mangi Lal Jain Director 4. Mr. Brij Bhushan Agarwal Director 5. Mr. Lamshwa Kyndoh Director 6. Mr. Rangbahduh Khonglah Director

Change in Management There has been no change in the management of Meghalaya Power Limited in the last three years. Financial Performance Financial performance of MPL for the last three years is as follows:


Total Income 4,146.76 3,485.71 3,561.74Profit after Tax 54.13 (286.52) 935.60Equity Capital 1,713.06 1,713.06 1,069.39Reserves & Surplus (excluding revaluation reserve) 7,385.47 7,324.04 5,035.88Net worth 9,098.53 9,037.10 6,105.27NAV per share 53.11 52.75 57.09Earnings per share (EPS) (Basic) in ` 0.32 (2.50) 8.75Earnings per share (EPS) (Diluted) in ` 0.32 (0.06) 2.69No. of Equity Shares of `10/- each 171,30,620 171,30,620 106,93,900

Meghalaya Power Limited is not a Sick Industrial Company within the meaning of the SICA.

5. Star Cement Meghalaya Limited (SCML) Star Cement Meghalaya Limited (SCML) was originally incorporated as a public limited company under the name and style of Meghalaya Logistics Limited on 22nd December, 2005 pursuant to Companies Act, 1956. It got its

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certificate for commencement of business on 13th January, 2006. On 12th March, 2007 the name changed to Star Cement Meghalaya Limited pursuant to a fresh certificate of incorporation. Presently the registered office of Star Cement Meghalaya Limited is situated at Village Lumshnong, Khaliehriat, Jaintia Hills, Meghalaya – 793 200. The Company is engaged in the business of manufacturing of Cements. Corporate Identity Number: U63090ML2005PLC008011 Shareholding Pattern The shareholding pattern of SCML as on September 30, 2013 is as follows:

Particulars No. of shares % of Shareholding Promoter & Promoter Group 298,17,818 100.00 Others - - Total 298,17,818 100.00

Board of Directors The Board of Directors of Star Cement Meghalaya Limited comprises of: Sr. No. Name Designation

1. Mr. Sajjan Bhajanka Director 2. Mr. Sanjay Agarwal Director3. Mr. Rajendra Chamaria Managing Director 4. Mr. Mangi Lal Jain Director5. Mr. Pankaj Kejriwal Director 6. Mr. Prem Kumar Bhajanka Director7. Mr. Brij Bhushan Agarwal Director 8. Mr. Ibaridor Katherine War Director

Change in Management There has been no change in the management of Star Cement Meghalaya Limited in the last three years.

Financial Performance Financial performance of SCML for the last three years is as follows:


Total Income 969.03 - -Profit after Tax (2,553.93) - -Equity Capital 2,981.78 2,265.74 1,416.25Reserves & Surplus (excluding revaluation reserve) 30,215.12 12,403.93 6,457.50Net worth 33,196.90 14,669.67 7,873.75NAV per share 111.33 64.75 55.60 Earnings per share (EPS) (Basic) in ` ‐ - - Earnings per share (EPS) (Diluted) in `. ‐ - - No. of Equity Shares of ` 10/- each 298,17,818 226,57,406 141,62,506

Star Cement Meghalaya Limited is not a Sick Industrial Company within the meaning of the SICA.

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V. LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS

Case Pending against Star Ferro and Cement Limited

As on the date there are no outstanding litigation pending against the Company.

Case Pending against Promoter

As on the date there are no outstanding litigation pending against the Promoter.

Case Pending against Director

As on the date there are no outstanding litigation pending against the Directors.

Material Litigations Involving Group Companies

1) Century Plyboards (India) Limited (CPIL): i. Three cases relating to Income Tax matters pending before High Court. The amount involved is ` 196.67

Lacs.

ii. Forty One cases relating to Sales Tax, VAT, Entry Tax and Commercial Tax pending before Commissioner (Appeals)/ appellate Authorities/ Court. The amount involved is ` 230.21 Lacs.

iii. Fifteen cases relating to Excise and Service Tax pending before CESTAT/ Commissioner (Appeals)/ Court. The amount involved is ` 766.68 Lacs.

iv. Fifty Nine cases relating to trademark infringement, recovery matters pending before various Courts of Law. The amount involved is ` 232.95 Lacs.

2) Cement Manufacturing Company Limited (CMCL):

i. Two cases relating to Income Tax matters pending before CIT – Appeal. The amount involved is ` 1601.23 Lacs.

ii. One case relating to railways pending before Secretary, Ministry of Railways. The amount involved is ` 8.09 Lacs.

iii. Five cases relating to Excise & Service Tax matter pending before CESTAT/ Commissioner. (Appeals). The amount involved is ` 95.19 Lacs (Approx).

iv. One civil case is pending before Guwahati High Court. The amount involved is ` 103.86 Lacs (Approx). 3) Megha Technical & Engineers Private Limited (MTEPL):

i. Three cases relating to Income Tax matters pending before CIT – Appeal. The amount involved is ` 1677.07

Lacs.

ii. Two cases relating to Excise Duty matters pending before Commissioner/ Additional Commissioner, Central Excise. The amount involved is ` 56.74 Lacs.

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iii. Two cases relating to railways pending before Secretary, Ministry of Railways. The amount involved is ` 19.43 Lacs.

4) Meghalaya Power Limited (MPL):

One case relating to shortfall in stamp duty in Registration of Land is pending before Sub-Registrar, Khlieriat (C) Sub-Division. The amount involved is ` 5.21 Lacs. 5) Star Cement Meghalaya Limited (SCML):

One case relating to shortfall in stamp duty in Registration of Land is pending before Sub-Registrar, Khlieriat (C) Sub-Division. The amount involved is ` 36.41 Lacs.

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GOVERNMENT APPROVALS Our Company (Corporate Identity Number U27310WB2011PLC160587) was incorporated as a public limited company on March 10, 2011 as “Star Ferro and Cement Limited” with its registered office at 6, Lyons Range, 1st Floor, Kolkata - 700 001 (West Bengal). Our Company received certificate of commencement of business on March 21, 2011 from the Registrar of Companies, Kolkata. With effect from the Appointed Date and upon the Scheme becoming effective, any statutory or other licences, permissions or approvals or consents held by Century Plyboards (India) Limited required to carry on operations in the Ferro Alloy Undertaking shall stand vested in or transferred to our Company, without any further act or deed, and shall, as may be required, be appropriately mutated by the statutory or other authorities concerned therewith in favour of our Company. The benefit of all statutory and regulatory permissions, factory licences, environmental approvals and consents including the statutory or other licences, tax registrations, permits, permissions or approvals or consents required to carry on the operations of the Ferro Alloy Undertaking shall vest in and become available to our Company pursuant to the Scheme. Any no-objection certificates, licences, permissions, consents, approvals, authorizations, registrations or statutory rights as are jointly held by the Ferro Alloy Undertaking and any other undertaking of Century Plyboards (India) Limited shall be deemed to constitute separate licences, permissions, no-objection certificates, consents, approvals, authorities, registrations or statutory rights of the Ferro Alloy Undertaking on the one hand and of Century Plyboards (India) Limited on the other.

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VI. REGULATORY AND STATUTORY DISCLOSURES

Authority for the scheme The Hon’ble High Court of Judicature at Calcutta, by its order dated May 17, 2013 has approved the Scheme of Arrangement between Star Ferro and Cement Limited and Century Plyboards (India) Limited and their respective shareholders. Prohibition by SEBI The Company, its directors, its promoters, other companies promoted by the promoters and companies with which the Company’s directors are associated as directors have not been prohibited from accessing the capital markets under any order or direction passed by SEBI. Disclaimer Statement by the Company The Company accepts no responsibility for statements made otherwise than in the Information Memorandum or in the advertisements to be published in terms of SEBI circular no. SEBI/CFD/SCRR/01/2009/03/09 dated September 03, 2009 or any other material issued by or at the instance of the Company and that any one placing reliance on any other source of information would be doing so at his own risk. Listing Application has been made to BSE and NSE for permission to deal in and for an official quotation of the Equity Shares of the Company. The Company has nominated National Stock Exchange of India Limited as the Designated Stock Exchange for the aforesaid listing of shares. The Company shall ensure that all steps for the completion of necessary formalities for listing and commencement of trading at all the Stock Exchanges mentioned above within such period as approved by SEBI. In Principle Approval from BSE & NSE The Company has received in-principle approval for Listing from BSE bearing no. DCS/AMAL/PS/IP/247/2013-14 dated September 17, 2013 and from NSE bearing no. NSE/LIST/215793-3 dated September 12, 2013. SEBI Relaxation of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957 The Securities and Exchange Board of India has given relaxation of Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957 to the company vide their letter CFD/DIL/SK/PM/24169/2013 dated September 23, 2013.

Disclaimer of BSE As required, a copy of the Draft Information Memorandum was submitted to BSE. The BSE has vide its letter dated June 27, 2012 approved the Scheme of Arrangement filed by Century Plyboards (India) Limited under clause 24(f) of the Listing Agreement. The BSE has vide its letter dated September 17, 2013 has given approval for listing of 22,21,72,990 Equity Shares subject compliance of conditions mentioned therein. Disclaimer of NSE As required, a copy of the Draft Information Memorandum was submitted to NSE. The NSE has vide its letter dated June 18, 2012 approved the Scheme of Arrangement filed by Orient Cement Limited under clause 24(f) of the Listing Agreement. The NSE has vide its letter dated September 12, 2013 as given approval for listing of 22,21,72,990 Equity Shares subject compliance of conditions mentioned therein.

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Filing Copy of this Information Memorandum has been filed with BSE and NSE. Demat Credit The Company has executed Agreements with NSDL and CDSL for admitting its securities in demat form. The ISIN allotted to the Company’s Equity Shares is INE935O01010. Shares have been allotted to those shareholders who have provided necessary details to the Company and/or who were holding their shares in SFCL in demat form as well as physical shares as on the Record Date. Expert Opinions Save as stated elsewhere in this Information Memorandum, we have not obtained any expert opinions. Previous Rights and Public Issues The Company has not made any public or rights issue since incorporation. Commission and Brokerage on previous issues Since the Company has not issued shares to the public in the past, no sum has been paid or has been payable as commission or brokerage for subscribing to or procuring or agreeing to procure subscription for any of the Equity Shares since its inception. Companies under the same management There is only one listed company under the same management within the meaning of erstwhile Section 370(1B) of the Companies Act viz. Century Plyboards (India) Limited and requisite details in respect of the said company have been provided under information on Group companies. Promise vis-a-vis Performance This is for the first time the Company is getting listed on the Stock Exchange. Outstanding Debenture or Bonds and Redeemable Preference Shares and Other Instruments Issued By the Issuer Company There are no outstanding debentures or bonds and redeemable preference shares and other instruments issued by the Company. Stock Market Data for Equity Shares of the Company Equity shares of the Company are not listed on any stock exchanges. The Company is seeking approval for listing of shares through this Information Memorandum. Disposal of Investor Grievances Maheshwari Datamatics Private Limited is the Registrars and Share Transfer Agents of the Company to accept the documents/requests/complaints from the investors/shareholders of the Company. All documents are received at the inward department, where the same are classified based on the nature of the queries/actions to be taken and coded accordingly. The documents are then electronically captured before forwarding in the respective processing units. The documents are thereafter processed and necessary action taken by professionally trained personals with a view to redress the matters accordingly.

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The Company also has set up a secretarial department to deal with all investor related matters and all necessary actions are initiated by trained and experienced personnel with a view to redress the investor related issues at the earliest to the satisfaction of the investors. Maheshwari Datamatics Private Limited maintains an age-wise analysis of the process to ensure that the standards are duly adhered to and Mr. Ravi Prakash Mundhra, the Company Secretary of the Company is vested with the responsibility of addressing the Investors Grievance in co-ordination with the Registrars & Share Transfer Agents.

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MAIN PROVISION OF ARTICLES OF ASSOCIATION OF THE COMPANY

CAPITAL AND INCREASE AND REDUCTION OF CAPITAL

3) The Authorised Share Capital of the Company is as mentioned in Clause V of the Memorandum of Association of the Company.

4) The Company in General Meeting may, from time to time, increase the Capital by the creation of new Shares. Such increase to be of such aggregate amount and to be divided into such shares of such respective amounts as the resolution shall prescribe. Subject to the provisions of the Act, any shares of the original or increased capital shall be issued upon such terms and conditions and with such rights and privileges annexed thereto, as the General Meeting resolving upon the creation thereof, shall direct, and if no direction be given, as the Directors shall determine, and in particular, such shares may be issued with a preferential or qualified right to dividends, or otherwise and in the distribution of assets of the Company, and with a right of voting at general meetings of the Company in conformity with Section 87 of the Act Whenever the Capital of the Company has been increased under the provisions of this Article, the Directors shall comply with the provisions of Section 97 of the Act.

5) Except in so far as otherwise provided in the conditions of issue of shares by these presents, any capital raised by the creation of new shares shall be considered as part of the existing capital, and shall be subject to the provisions herein contained, with reference to the payment of calls and installments, forfeiture, Hen, surrender, transfer and transmission, voting and otherwise.

6) Subject to the provisions of Section 80 of the Act, the Company shall have the power to issue Preference Shares which at or at the option of the Company are liable to be redeemed and the resolution authorising such issue shall prescribe the manner, terms and conditions of redemption.

7) On the issue of Redeemable Preference Shares under the Provisions of Article 6 hereof, the following provisions shall take effect:

(a) no such shares shall be redeemed except out of the profits of the Company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purpose of the redemption;

(b) no such shares shall be redeemed unless they are fully paid;

(c) where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits which would otherwise have been available for dividend, be transferred to a reserve fund, to be called the ‘Capital Redemption Reserve Account”, a sum equal to the nominal amount of the shares redeemed and the provisions of the Act relating to the reduction of the share capital of the Company shall except as provided in Section 80 of the Act, apply as if the Capital Redemption Reserve Account were paid-up share capital of the Company.

8) The Company may (subject to the provisions of Section 78, 80, 100 to 105 both inclusive, of the Act) from time to

time by Special Resolution reduce its capital, any Capital Redemption Reserve Account or Share Premium Account in any manner for the time being authorised by law, and in particular, capital may be paid off on the footing that it may be called upon again or otherwise. This Article is not to derogate from any power the Company would have if it were omitted.

9) Subject to the provisions of Section 94 of the Act, the Company in General Meeting may from time to time sub-divide or consolidate its shares, or any of them, and the resolution whereby any share is sub-divided, may determine that, as between the holders of the shares resulting from such sub-division, one or more of such shares shall have some preference or special advantage as regards dividend, capital or otherwise over or as compared with the other or others. Subject as aforesaid, the Company in General Meeting may also cancel shares which have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.

10) Whenever the Capital is divided into different classes of shares all or any of the rights and privileges attached to each class may, subject to the provisions of Sections 106 and 107 of the Act, be modified, commuted, affected or abrogated or dealt with by agreement between the Company and any person purporting to contract on behalf of that

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class, provided such agreement is ratified in writing by holders of at least three-fourths of nominal value of the issued shares of the class or is confirmed by a Resolution passed at a separate General Meeting of the holders of shares of that class and supported by the votes of the holders of at least three-fourths of those shares, and all the provisions hereinafter contained as to General Meetings shall mutatis mutandis apply to every such Meeting but so that the quorum thereof shall be members present in person or by proxy and holding three-fourths of the nominal amount of the issued shares of the class. This Article is not to derogate from any power the Company would have if it were omitted.

SHARES AND CERTIFICATES

11) The Company shall cause to be kept a Register and index of Members in accordance with Sections 150 and 151 of the Act. The Company shall be entitled to keep in any State or country outside India a branch Register of Members resident in that State or country.

12) The shares in the Capital shall be numbered progressively according to their several denominations, and except in the manner hereinbefore mentioned, no share shall be sub-divided. Every forfeited or surrendered share shall continue to bear the number by which the same was originally distinguished.

13) (a) Where at any time after the expiry of two years from the formation of the Company or at any time after the

expiry of one year from the allotment of shares in the Company made for the first time after its formation, whichever is earlier, it is proposed to increase the subscribed capital of the Company by allotment of further shares, whether out of unissued share capital or out of increased share, capital then such further shares shall be offered to the persons who on the date of the offer, are holders of the equity shares of the Company, in proportion as nearly as circumstances permit, to the capital paid-up on these shares on that date. Such offer shall be made by a notice specifying the number of shares offered and limiting a time not being less than fifteen days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined. After the expiry of the time specified in the notice aforesaid or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board may dispose of them in such manner as they think most beneficial to the Company. (b) Notwithstanding anything contained in the preceding sub-clause, the Company may (i) by a special resolution; or

(ii) where no such special resolution is passed, if the votes cast (whether on a show of hands or on a poll, as the case may be) in favour of the proposal contained in the resolution moved in that general meeting (including the casting vote, if any, of the Chairman) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, exceed the votes if any, cast against the proposal by members so entitled to voting and the Central Government is satisfied on an application made by the Board of Directors in this behalf, that the proposal is most beneficial to the Company, offer further shares to any person of persons, and such person or persons may or may not include the persons who at the date of the offer, are the holders of the equity shares of the Company.

(c) Notwithstanding anything contained in sub-clause (a) above, but subject, however, to section 81(3) of the Act, the Company may increase its subscribed capital on exercise of an option attached to the debentures issued or loans raised by the Company to convert such debentures or loans into shares, or to subscribe for shares in the Company.

14) Subject to the provisions of these Articles and of the Act, the Shares shall be under the control of the Directors,

who may allot or otherwise dispose of the same to such persons on such terms and conditions and at such times as the Directors think fit and subject to the sanction of the Company in General Meeting with full power to give any person the option to call for or be allotted shares of any class of the Company either at par or at a discount and for such time and at such consideration as the Directors think fit. The Board of Directors shall cause to be made the return as to allotment provided for in Section 75 of the Act.

15) In addition to and without derogating from the powers for the purpose conferred on the Board under Articles 13 and 14, the Company in General Meeting may, subject to the provisions of Section 81 of the Act, determine that any shares (whether forming part of the original capital or of any increased capital of the Company) shall be offered to such persons (whether members or not) in such proportion and on such terms and conditions-and either (subject to compliance with the provisions of Sections 78 and 79 of the Act) at a premium or at a discount as such General Meeting shall determine and with full power to give any person (whether a member or not) the option to call for or

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be allotted shares of any class of the Company, either (subject to compliance with the provisions of Sections 78 and 79 of the Act) at a premium or at par or at a discount as such General Meeting shall determine and with full power to give any person (whether a member or not) the option being exercisable at such times and for such consideration as may be directed by such General Meeting of the Company and the General Meeting may make any other provisions whatsoever for the issue, allotment or disposal of any shares.

16) Any application signed by or on behalf of an applicant for shares in the Company, followed by an allotment of any

share thereon shall be an acceptance of shares within the meaning of these Articles and every person who thus or otherwise accepts shares and whose name is on the Register shall for the purpose of these Articles, be a member.

17) The money (if any) which the Board shall, on the allotment of any share being made by them require or direct to be

paid by way of deposit, call or otherwise in respect of any shares allotted by them shall immediately on the insertion of the name of the allottee in the Register of Members as the name of the holder of such shares, become a debt due to and recoverable by the Company from the allottee thereof, and shall be paid by him accordingly,

18) Every member, or his heirs, executors or administrators shall pay to the Company the portion of the capital

represented by his share or shares which may, for the time being, remain unpaid thereon, in such amounts, at such time or times, and in such manner as the Board shall, from time to time in accordance with the Company’s regulations, require or fix for the payment thereof.

19) (a) Every member or allottee of shares shall be entitled, without payment, to receive one certificate specifying

the name of the person in whose favour it is issued, the shares to which it is related and the amount paid-up thereon. Such certificate shall be issued only in pursuance of a resolution passed by the Board and on surrender to the Company of its letter of allotment or its fractional coupons or requisite value, save in cases of issues against letters of acceptance of renunciation or in cases of issue of bonus shares. Every such certificate shall be issued under the seal of the Company, which shall be affixed in the presence of two Directors or persons acting on behalf of the Directors under a duly registered power of attorney, and the Secretary or some other person appointed by the Board for the purpose; and two directors or their attorneys and the Secretary or other person shall sign the share certificate, provided that if the composition of the Board permits it at least one of the aforesaid two Directors shall be a person other dun a Managing or Whole-time Director. Particulars of every share certificate issued shall be entered in the Register of Members against the name of the person to whom it has been issued, indicating the date of issue. (b) Any two or more joint allottees of a share shall, for the purpose of this Article, be treated as a single member, and the certificate of any share, which may be the subject of joint ownership, may be delivered to the person first named which shall be sufficient delivery to all of them. For any further certificate the Board shall be entitled, but shall not be bound to prescribe a charge not exceeding Rupee One. The Company shall comply with the provisions of Section 113 of the Act. (c) A Director may sign a share certificate by affixing his signature thereon by means of any machine, equipment or other mechanical or electrical means, such as engraving in metal or lithography, but not by means of a rubber stamp, provided that the Director shall be responsible for the safe custody of such machine, equipment or other material used for the Purpose.

20) (a) No certificate of any share or shares shall be issued either in exchange for those which are sub-divided or consolidated or in replacement of those which are defaced, torn or old, decrepit, worn out or where the cages on the reverse for recording transfers have been fully utilised, unless the certificate in lieu of which it is issued is surrendered to the Company. (b) When a new share certificate has been issued in pursuance of clause (a) of this Article, it shall state on the face of it and against the stub or counterfoil to the effect that it is issued in lieu of Share Certificate No.................... sub- divided/replaced/ on consolidation of shares. (c) If a share certificate is lost or destroyed, a new certificate in lieu thereof shall be issued only with the prior consent of the Board and on such terms, if any, as to evidence an indemnity as to payment of out-of-pocket

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expenses incurred by the Company in investigating evidence, as the Board may think fit. (d) When a new share certificate has been issued in pursuance of clause (c) of this Article, it shall state on the face of it and against the stub or counterfoil to the effect that it is ‘duplicate issued in lieu of share certificate No................ “. The word ‘Duplicate’ shall be stamped or punched in bold letters across the face of the share certificate. (e) Where a new share certificate has been issued in pursuance of clause (a) or clause (c) of this Article, particulars of every such share certificate shall be entered in a Register of Renewed and Duplicate Certificate indicating against the names of the persons to whom the certificate is issued, the number and date of issue of the share certificate in lieu of which the new certificate is issued, and the necessary changes be indicated in the Register of Members by suitable cross reference in the ‘Remarks” column. (f) All blank forms to be issued for issue of share certificates shall be printed and the printing shall be done only on the authority of a resolution of the Board. The blank forms shall be consecutively machine numbered and the forms and the blocks and engravings relating to the printing of such forms shall be kept in the custody of the Secretary or of such other person as the Bank may appoint for the purpose, and the Secretary or the other person as aforesaid shall be responsible for rendering an account of these forms to the Board. (g) The Managing Director of the Company for the time being or, if the Company has no managing Director, every Director of the Company shall be responsible for the maintenance, preservation and safe custody of all books and documents relating to the issue of share certificates except the blank forms of share certificates referred to in sub-Article (f). (h) All books referred to in sub-Article (g) shall be preserved in good order permanently.

21) If any share stands in the names of two or more persons, the person first named in the register shall, as regards receipt of dividends or bonus or service of notice and all or any other matter connected with the Company, except voting at meetings, be deemed the sole holder thereof, but the joint holders of a share shall be severally as well as jointly liable for the payment of all installments and calls due in respect of such shares for all incidents thereof according to the Company’s regulations.

22) Except as ordered by a Court of competent jurisdiction, or as by law required, the Company shall not be bound to recognize any equitable, contingent, future or partial interest in any share, or (except provided) any right in respect of a share other than an absolute right thereto, in accordance with these Articles, in the person from time to time registered as the holder thereof; but the Board shall be at liberty at their sole discretion to register any share, in the joint names of any two or more persons or the survivor or survivors of them.

23) The Company shall have power, subject to and in accordance with all the applicable provisions of the Act and the

rules made thereunder, to purchase any of its own fully paid shares or other specified securities whether or not they are redeemable and may make a payment out of its free reserves or securities premium account of the Company or proceeds of any shares or other specified securities provided that no buy back of any kind of shares or other specified securities shall be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities or from such other sources as may be permitted by Law on such terms, conditions and in such manner as may be prescribed by the Law from time to time in respect of such purchase.

UNDERWRITING AND BROKERAGE

24) Subject to the provisions of Section 76 of the Act, the Company may at any time pay a commission to any person

in consideration of his subscribing or agreeing to subscribe (whether absolutely on conditionally) for any shares in or debentures of the Company, but so that the commission shall not exceed in the case of shares, five per cent of the price at which the shares are issued, and in the case of debentures, two and a half per cent of the price at which the debentures are issued. Such commission may be satisfied by payment of cash or by allotment of fully or partly paid shares or partly in one way and partly in the other.

25) The Company may pay a reasonable sum for brokerage.

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INTEREST OUT OF CAPITAL

26) Where any shares are issued for the purpose of raising money to defray the expenses of the Construction of any

work or building, or the provision of any plant, which cannot be made, profitable for a lengthy period, the Company may pay interest on so, much of that share capital as is for the time being paid-up, for the period, at the rate and subject to the conditions and restrictions provided by Section 208 of the Act and may charge the same to capital as part of-the cost of construction of the work or building or the provision of plant.

CALLS

27) The Board may, from time to time and subject to the term on which any shares may have been issued and subject to the conditions of allotment, by a resolution passed at a meeting of the Board (and not by circular resolution) make such call as it thinks fit upon the members in respect of all moneys unpaid on the shares held by them respectively, and each member shall pay the amount of every call so made on him to the person or persons and at the times and places appointed by the Board. A call may be made payable by installments.

28) Fifteen days notice in writing of any call shall be given by the Company specifying the time and place of payment, and the person or persons to whom such call shall be paid.

29) A call shall be deemed to have been made at the time when the resolution authorising such call was passed at a

meeting of the Board.

30) A call may be revoked or postponed at the discretion of the Board.

31) The joint-holders of a share shall be jointly and severally liable to pay all calls in respect thereof

32) The Board may, from time to time at its discretion, extend the time fixed for the payment of any call, and may extend such time as to all or any of the members who from residence at a distance or other cause, the Board may deem fairly entitled to such extension, but no member shall be entitled to such extension save as a member of grace and favour.

33) If any member fails to pay any call due from him on the day appointed for payment thereof, or any such extension thereof as aforesaid, he shall be, liable to pay interest of the same from the day appointed for the payment the time of actual payment at such rate as shall from time to time be fixed by the Board, but nothing in this Article shall render it obligatory for the Board to demand or recover any interest from any such member.

34) Any sum, which may by the terms of issue of a share becomes payable on allotment or at any fixed date, whether

on account of the nominal value of the share or by way of premium shall for the purposes of these Articles be deemed to be a call duly made and payable, on the date on which by the terms of issue the same becomes payable and in case of non-payment, all the relevant provisions of these Articles as to payment Of interest and expenses, forfeiture or otherwise, shall apply as if such sum had become payable by virtue of a -call duly made and notified.

35) On the trial or hearing of any action or suit brought by the Company against any member or his representatives for

the recovery of any money claimed to be due to the Company in respect of his shares, it shall be sufficient to prove that the name of the member, in respect of whose shares, the money is sought to be recovered appears entered on the Register of Members as the holders at or subsequently to the date at which the money is sought to have become due on the shares in respect of which is alleged to have become due on the shares in respect of which such money is sought to be recovered; that the resolution making the call is duly recorded in the Minute Book; and that notice of such call was duly given to the member or his representatives used in pursuance of these Articles and that it shall not be necessary to prove the appointment of the Directors who made such call, nor that a quorum of Directors was present at the Board at which any call, nor that a quorum of Directors was present at the Board at which any call was made nor that the meeting at which any call was made duly convened or constituted nor any other matter whatsoever, but the proof of the matter aforesaid shall be conclusive evidence of the debt.

36) Neither the receipt by the Company of a portion of any money which shall from time to time be due from any member to the Company in respect of his shares, either by way of principal or interest, nor indulgence granted by

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the Company in respect of the payment of any such money, shall preclude the Company from thereafter proceeding to enforce a forfeiture of such shares as hereinafter provided.

37) (a) The Board may, if it thinks fit, agree to and receive from any member willing to advance the same, all or any

part of the accounts of his respective shares beyond the sums actually called up and upon the moneys so paid in advance or upon so much thereof, from time to time and at any time thereafter as exceeds the amount of the calls then made upon and due in respect of the shares on account of which such advances are made, the Board may pay or allow interest, at such rate as the member paying the sum in advance and the Board agree upon. The Board may agree to repay at any time an amount so advanced or may at any time repay the same upon giving to the member three months notice in writing. Provided that moneys paid in advance of calls on any shares may carry interest but shall not confer a right to dividend or to participate in profit. (b) No member paying any such sum in advance shall be entitled to voting rights in respect of the moneys so paid by him until the same would but for such payment become presently payable.

LIEN

38) The Company shall have a first and paramount lien upon all the shares (other than fully paid-up shares) registered in the name of each member (whether solely jointly with others) and upon the proceeds of sale thereof, for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares and no equitable interest in any shares shall be created except upon the footing, and upon the condition that Article 22 hereof is to have fun effect. Any such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall Operate as a waiver of the Company’s hen, if any, on such shares.

39) For the purpose of enforcing such lien, the Board may sell the shares subject thereto in such manner as they shall think fit, and for that purpose may cause to be issued a duplicate certificate in respect of such shares an may authorise one of their member to execute a transfer thereof on behalf of and in the name of such member. No sale shall be made until such period as aforesaid shall have arrived, and until notice in writing of the intention to sell shall have been served on such member or his representatives and default shall have been made by him or them in payment, fulfillment, or discharge of such debts, liabilities or engagements for fourteen days after such notice.

40) The net proceeds of any such sale shall be received by the Company and applied in or towards payment of such part of the amount in respect of which the lien exists as is presently payable and the residue, if any, shall (subject to a like lien ‘for sums not presently payable as existed upon the shares before the sale) be paid to the persons entitled to the shares at the date of the sale.

FORFEITURE OF SHARES

41) If any member fails to pay any call or installment on or before the day appointed for the payment of the same the

Board may at any time thereafter during such time as the call or installment remains unpaid, Serve notice on such member requiring him to pay the same, together with any interest that may have accrued and all expenses that may have been incurred by the Company by reason of such non- payment.

42) The notice shall name a day (not being less Than Thirty days from the date of the notice) and a place or places on and at which such call or installment and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of non-payment at or before the time, and at the place appointed the shares in respect of which such call was made or installment is payable will be liable to be forfeited.

43) If the requisitions of any such notice as aforesaid be not complied with, any shares in respect of which such notice has been given may at any time thereafter, before payment of all calls or installments, interest and expenses, due in respect thereof, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture

44) When any shares shall have been so forfeited, notice of the forfeiture shall be given to the member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture, with the date thereof, shall forthwith be made in the Register of Members, but no forfeiture shall be in any manner invalidated, by any omission or neglect

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to give such notice or to make any such entry as aforesaid.

45) Any share so forfeited shall be deemed to be the property of the Company, and the Board may sell, re allot or otherwise dispose of the same in such manner as it thinks fit.

46) The Board may, at any time before any share so forfeited shall have been sold, re- allotted or otherwise disposed of, annul the forfeiture thereof upon such conditions as it thinks fit.

47) A person whose share has been forfeited shall cease to be a member in respect of the forfeited share, but shall notwithstanding remain liable to pay, and shall forthwith pay to the Company, all calls, or installment, interest and expenses, owing in respect of such share at the time of the forfeiture, together with interest thereon, from the time of forfeiture until payment, at such rate as the Board may determine and the Board may enforce the payment thereof, to any party thereof, without any deduction or allowance for the value of the shares at the time of forfeiture, but shall not be under any obligation to do so.

48) The forfeiture of a share involve extinction, at the time of the forfeiture, of all interest and all claims and demands against the Company in respect of the share and all other rights, incidental to the share except only such of those rights as by these Articles are expressly saved.

49) A duly verified declaration in writing that the declarant is a Director of the Company, and that certain shares, in the Company have been duly forfeited on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the shares and such declaration and the receipt of the Company for the consideration, if any, given for the shares on the sale or disposition thereof shall constitute a good title to such shares; and the person to whom any such share is sold shall be registered as the member in respect of such share and shall not be bound to see to the application of the purchase money, nor shall his title to such share be affected by any irregularity or invalidity in the proceedings in reference to such forfeiture, sale or disposition.

50) Upon any sale, re-allotment or other disposal under the provisions of the preceding. Articles, the certificate or

certificates originally issued in respect of the relative shares shall (unless the same shall on demand by the Company have been previously surrendered to it by the defaulting member) stand cancelled and become null and void and of no effect, and the Directors, shall be entitled to issue a duplicate certificate or certificates in respect of the said shares to the person or persons, entitled thereto.

TRANSFER AND TRANSMISSION OF SHARES

51) The Company shall keep a book to be called the ‘Register of Transfers”, and therein shall be fairly and’ directly entered particulars of every transfer or transmission of any share.

52) The Instrument of Transfer shall be in writing and all the provisions of Section 108 of the Act, shall be duly complied with in respect of all transfer of shares and the registration thereof

53) Every such instrument of transfer shall be executed both by transferor and the transferee and the transferor shall be deemed to remain the holder of such share until the name of the transferee shall have been entered in the Register of Members in respect thereof. The Board shall not issue or register a transfer of any share in favour of a minor (except in cases when they are fully paid up).

54) The Board shall have power on giving seven days’ previous notice by advertisement in some newspaper circulating in the district in which the Office of the Company is situated to close the transfer books, the Register of Members or Register of Debenture holders at such time or times and for such period or periods, not exceeding thirty days at a time and not exceeding in the aggregate forty-five days in each year, as it may deem expedient.

55) Subject to the provisions of Section 111 & 111A of the Act, the Board of Directors may at its own absolute and uncontrolled discretion and without assigning any reason, decline to register or acknowledge any transfer of shares (notwithstanding the proposed transferee be already a Member), but in such case it shall within one month from the date on which the instrument of transfer was lodged with the Company, send to the transferee and the transferor notice of the refusal to register such transfer provided that registration of a transfer shall not be refused

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on the ground of the transferor being either alone or jointly with any other person or persons, indebted to the Company on any account whatsoever, except where the Company has lien on shares.

56) Every holder of shares in, or Debentures of the Company may at any time nominate, in the manner prescribed wider the Act, a person to whom his Shares in or Debentures of the Company shall vest in the event of death of such holder. Where the Shares in, or Debentures of the Company are held by more than one person jointly, the joint holders may together nominate, in the prescribed manner, a person to whom all the rights in the Shares or Debentures of the Company, as the case may be, held by them shall-vest in the event of death of all joint holders. Notwithstanding anything contained in any other law for the time being in force or in any disposition, whether testamentary or otherwise, or in these Articles, in respect of such Shares in or Debentures of the Company, where a nomination made in the prescribed manner purports to confer on any person the right to vest the Shares in, or Debentures of the Company, the nominee shall, on the death of the Shareholders or holder of Debentures of the Company or, as the case may be, on the death of all the joint holders become entitled to an the rights in the Shares or Debentures of the Company to the exclusion of all other persons, unless the nomination is varied or cancelled in the prescribed manner under the provisions of the Act. Where the nominee is a minor, it shall be lawful for the holder of the Shares or holder of Debentures to make the nomination to appoint, in the prescribed manner under the provisions of the Act, any person to become entitled to the Shares in or Debentures of the Company, in the event of his death, during the minority.

57) Any person who becomes a nominee by virtue of the provision of the above Article, upon production of such evidence as may be required by the Board and subject as hereinafter provided, elect, either :-

a) to be registered himself as holder of the shares or debentures, as the case may be; or

b) to make such transfer of the shares or debentures, as the case may, be, as the deceased shareholder or debenture holder, as the case may be, could have made.

If the nominee, so becoming entitled, elects himself to be registered as holder of the Shares or Debentures, as the case may be, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects and such notice shall be accompanied with death certificate of the deceased shareholder or debenture holder and the certificate(s) of Shares or Debentures, as the case may be, held by the deceased in the Company. Subject to the provisions of Section109B(3) of the Act and these Articles, the Board may register the relevant Shares or Debentures in the name of the nominee of the transferee as if the death of the registered holder of the Shares or Debentures had not occurred and the notice or transfer were a transfer signed by that shareholder or debenture holder, as the case may be. A nominee on becoming entitled to Shares or Debentures by reason of the death of the holder or joint holders shall be entitled to the same dividend and other advantages to which he would be entitled if he were the registered holder of the Share or Debenture, except that he shall not before being registered as holder of such Shares or Debentures, be entitled in respect of them to exercise, any right conferred on a member or Debenture holder in relation to meetings the Company. The Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the Shares or Debentures, and the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses, interest or other moneys payable or rights accrued or accruing in respect of the relevant Shares or Debentures, until the requirements of the notice have been complied with.

58) No share shall in any circumstances be transferred to any insolvent or persons of unsound mind.

59) Subject to the provisions of articles 56 and 57, any person becoming entitled to shares in consequence of the death, lunacy, bankruptcy or insolvency of any member, or the marriage of a female member, or by any lawful means other than by a transfer in accordance with these presents, may with the consent of the Board of Directors (which it shall not be under any obligation to give) upon producing such evidence that he sustains the character in respects of which he proposes to act under this article of his title, as the holder of the shares or elect to have some

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person nominated by him and approved by the Board of Directors, registered as such holder, provided nevertheless, that if such person shall elect to have his nominee registered he shall testify the election by executing to his nominee an instrument of transfer in accordance with the provisions therein contained and until he does so, he shall not be free from any liability in respect of the shares. This Article is referred to in these Articles as the Transmission Article.

60) A person entitled to a share by transmission shall, subject to the right of the Directors to retain such dividends or money as hereinafter provided, be entitled to receives and may give discharge for any dividends or other moneys payable in respect of the share.

61) Every instrument of transfer shall be presented to the Company duly stamped for registration accompanied by such evidence as the Board of Directors may require to prove the title of the transferor, his right to transfer the shares and generally under and subject to such conditions and regulations as the Board of Directors shall from time to time prescribe, and every registered instrument of transfer shall remain in the custody of the Company until destroyed by order of the Board of Directors.

62) For the purpose of the registration of a transfer, the certificate or certificates of the share or shares to be transferred must be delivered to the Company along with (same as provided in Section 108 of the Act) a properly stamped and executed instrument of transfer.

63) There shall be paid to the Company, in respect of the transfer or transmission of any number of shares to the same party, such fee, if any, as the Directors may require.

64) The Company shall incur no liability or responsibility whatsoever in consequence of its registering or giving effort to any transfer of shares made or purporting to be made by any apparent legal owner thereof (as shown or appearing in the Register of Members) to the Prejudice of persons having or claiming any equitable right, title or interest to or in the said shares, notwithstanding that the Company may have had notice of such equitable right, title or interest or notice prohibiting registration of such transfer, and may have entered such notice, or deferred thereto, in any book of the Company, and the Company shall not be bound or required to regard or attend or give effect to any notice which may be given to it of any equitable right title or interest, or be under any liability whatsoever for refusing or neglecting so to do, though it may have been entered or referred to in some book of the Company; but the Company shall nevertheless be at liberty to regard and attend to any such notice and give effect thereto, if the Board of Directors shall so think fit.

DEMATERIALISATION OF SECURITIES

64A) The provisions of this Article shall apply notwithstanding anything to the contrary contained in any other Articles.

1. For the purpose of this Article: “Beneficial Owner’ means a person or persons whose name is recorded as such with a depository, ‘SEBI’ means the Securities & Exchange Board of India; established under Section 3 of the Securities & Exchange Board of India Act, 1992 and “Depository’ means a company formed and registered under the Companies Act, 1956, and which has been granted a certificate of registration to act as depository under Securities & Exchange Board of India Act, 1992; and wherein the securities of the Company are dealt with in accordance with the provisions of the Depositories Act, 1996.

2. The Company shall be entitled to dematerialise its securities and to offer securities in a dematerialised form

pursuant to the Depositories Act, 1996.

3. Every holder of or subscriber to securities of the Company shall have the option to receive certificates for such securities or to hold the securities with a Depository. Such a person who is the beneficial owner of the securities can at’ any time opt out of a depository, if permitted by law, in respect of any securities in the manner provided by the Depositories Act, 1996 and the Company shall, in the manner and within the time prescribed, issue to the beneficial owner the required certificates for the Securities.

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If a person opts to hold his Securities with the depository, the Company shall intimate such depository the details of allotment of the Securities, and on receipt of the information, the depository shall enter in its record the name of the allottee as the beneficial owner of the Securities.

4. All securities held by a depository shall be dematerialised and be in fungible form. Nothing contained in

Sections 153, 153A, 153B, 187B, 187C and 372A of the Act shall apply to a depository in respect of the securities held by it on behalf of the beneficial owners.

5. (a) Notwithstanding anything to the contrary contained in the Act or these Articles, a depository shall be deemed

to be the registered owner for the purposes of effecting transfer of ownership of securities of the Company on behalf of the beneficial owner.

(b) Save as otherwise provided in (a) above, the depository as the registered owner of the securities shall not

have any voting rights or any other rights in respect of the securities held by it.

(c) Every person holding securities of the Company and whose name is entered as the beneficial owner of securities in the record of the depository shall be entitled to all the rights and benefits and be subject to all the liabilities in respect of the securities which are held by a depository and shall be deemed to be a Member of the Company.

6. Notwithstanding anything contained in the Act or these Articles to the contrary, where securities of the

Company are held in a depository, the records of the beneficiary ownership may be served by such depository on the Company by means of electronic mode or by delivery of floppies or discs.

7. Nothing contained in Section 108 of the Act or these Articles, shall apply to a transfer of securities effected by a

transferor and transferee both of whom are entered as beneficial owners in the records of a depository.

8. Notwithstanding anything contained in the Act or these Articles, where securities are dealt with by a depository, the Company shall intimate the details thereof to the depository immediately on allotment of such securities.

9. Nothing contained in the Act or these Articles regarding the necessity of having distinctive numbers for

securities issued by the Company shall apply to securities held with a depository.

10. The Register and Index of beneficial owners maintained by a depository under the Depositories Act, 1996 shall be deemed to be the Register and Index of Members and Security holders for the purposes of these Articles.

COPIES OF MEMORANDUM AND ARTICLES TO BE SENT TO MEMBERS

65) Copies of the Memorandum and Articles of Association of the Company and other documents referred to in Section 39 of the Act shall be sent by the Board to every Member at his request within 7 days of the request on payment of ` 1/- for each copy.

BORROWING POWERS

66) The Board may, from time to time, at its discretion subject to the provisions of Section 292 of the Act, raise or borrow, either from the Directors or from elsewhere and secure the payment of any sum or sums of money for the purpose of the Company; provided that the Board shall not without the sanction of the Company in General Meeting borrow any sum of money which together with money borrowed by the Company (apart from temporary loans obtained from the Company’s bankers in the ordinary course of business) exceed the aggregate for the time being of the paid up capital of the Company and its free reserves, that is to say, reserves not set aside for any specific purpose.

67) The Board may raise or secure the repayment of such sum or sums in such manner and upon such terms and conditions in all respects as it thinks fit and in particular, by the issue of bonds, perpetual or redeemable, debentures or debenture-stock, or any mortgage, or other security on the undertaking of the whole or any part of the property of the Company (both present and future), including its uncalled capital for the time being.

68) Any debentures, debenture-stock, bonds and other securities may be issued at a discount and otherwise

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debentures, debenture-stock, bonds and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued. Debentures, debenture-stock, bonds or other securities with a right of conversion into or allotment of shares shall be issued only with sanction of the Company in General Meeting.

69) Save as provided in Section 108 of the Act, no transfer of debentures shall be registered unless a proper

instrument of transfer duly stamped and executed by the transferor and transferee has been delivered to the Company together with the certificate or certificates of the debentures.

70) If the Board refuses to register the transfer of any debentures, the Company shall, within one month from the date

on which the instrument of transfer was lodged with the company, send to the transferee and to the transferor the notice of such refusal.

71) The Board shall cause a proper Register to be kept in accordance with the provisions of Section 143 of the Act of

all mortgages, debentures and charges specifically affecting the property of the Company, and shall cause the requirements of Sections 118 and 125 and 127 to 144 both inclusive of the Act in that behalf to be duly complied with, so far as they are ought to be complied with by the Board.

72) The Company shall, if at any time it issues debentures, keep Register and Index of Debenture holders in

accordance with Section 152 of the Act. The Company shall have the power to keep in any State or Country outside India a Branch Register of Debenture-holders, resident in that State or Country.

CONVERSION OF SHARE INTO STOCK AND RECONVERSION

73) The Company in General Meeting may convert any paid-up shares into stock; and when any shares shall have been converted into stock, the several holders of such stock may thenceforth transfer their respective interest therein, or any part of such interest, in the same manner and subject to the same regulations as, and subject to which the shares from which the stock arose might have been transferred, if no such conversion had taken place or as near thereto as circumstances will admit. The Company may at any time re-convert any stock into paid-up shares of any denomination.

74) The holders of stock shall, according to the amount of stock held by them have the same rights, privileges and advantages as regards dividends and voting at the meetings of the Company, and other matters as if they held the shares from which the stock arose; but no such privileges or advantages (except participation in the dividends and profits of the Company and in the assets of winding-up) shall be conferred by an amount of stock which would not, if existing in shares, have conferred that privilege or advantage.

MEETING OF MEMBERS

75) The company shall in each year hold a General Meeting as its Annual General Meeting in addition to any other meetings in that year. All General Meetings other than Annual General Meeting shall be Extraordinary General Meetings. The first Annual General Meeting shall be held within eighteen months from the date of incorporation of the company and the next Annual General Meeting shall be held within six months after the expiry of the financial year in which the first Annual General Meeting was field and thereafter an Annual General Meeting of the Company shall be held within six months after the expiry of each financial year, provided that not more than fifteen months shall elapse between the date of one Annual General Meeting and that of the next Nothing contained in the foregoing provisions shall be taken as affecting the right conferred upon the Register under the revisions of Section166(1) of the Act to extend the time within which any Annual General Meeting may be held. Every Annual General Meeting shall be called for on a time during business hours, on a day that is not a public holiday, and shall be held in the office of the company or at some other place within the city in which the office of the Company is situated as the Board may determine and the Notices calling the Meeting shall specify it as the Annual General Meeting. The Company may in any one Annual General Meeting fix the time for its subsequent Annual General Meeting. Every member of the Company shall be entitled to attend either in person or by proxy and the Auditor of the Company shall be entitled to attend and to be heard at any General Meeting which he attends on any part of the business, concerns him as Auditor. At every Annual General Meeting of the Company there shall be laid on the table the Directors’ Report (if not already attached in the Audited statement of Accounts)

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the proxy Register with proxies and the Register of Directors’ Share holdings of which latter Register shall remain open and accessible during the continuance of the meeting. The Board shall cause to be prepared the Annual List of Members, summary of the Share Capital, Balance Sheet and Profit and Loss Account and forward the same to the Registrar in accordance with Sections 159, 161 and 220 of the Act.

76) The Board may, whenever it thinks fit, call an Extraordinary General Meeting and it shall do so upon a requisition in writing by any member or members holding in the aggregate not less than one-tenth of such of the paid-up capital as at the date carries the right of voting in regard to the matter in respect of which the requisition has been made.

77) Any valid requisition so made by members must state the object or objects of the meeting proposed to be called and must be signed by the requisitionists and be deposited at the office provided that such requisition may consist of several documents in file form each signed by one or more requisitionists.

78) Upon the receipt of any such requisition, the Board shall forthwith call an Extraordinary General Meeting, and if

they do not proceed within twenty-one days from the date of the requisition being deposited at the office to cause a meeting to be called on a day not later than forty-five days from the date of deposit of the requisition, the requisitionists, or such of their number as represents either a majority in value of the paid-up share capital of the Company as is referred to in Section 169(4) of the Act, which ever is less, may themselves call the meeting, but in either case, any meeting so called shall be held within three months from the date of the delivery of the requisition as aforesaid.

79) Any meeting called under the foregoing Articles by the requisitionists shall be called in the same manner, as nearly as possible, as that in which meetings are to be called by the Board.

80) Twenty-one days’ notice at least of every General Meeting, Annual or Extraordinary and by whosoever called,

specifying the day, place and hour of meeting, and the general nature of the business to be transacted thereat, shall be given in the manner hereinafter provided, to such persons as are under these Articles entitled to receive notice from the Company. Provided that in the case of an Annual General Meeting with the consent in writing of all the members entitled to vote thereat and in the case of any other meeting, with the consent of members holding not less than 95 percent of such part of the paid-up share capital of the Company as gives a right to vote at the meeting any be convened by a shorter notice. In the case of an Annual General Meeting, if any business other than (i) the consideration of the Accounts, Balance Sheets and Reports of the Board of Directors and Auditors (H) the declaration of dividend, (iii) the appointment of Directors in place of those retiring (iv) the appointment of and fixing of remuneration of the Auditors, is proposed to be transacted then in that event there shall be annexed to the notice of the Meeting a statement setting out all materials facts concerning each such item of business including in particular, the nature of concern or interest, if any, therein of every director, and the Manager (if any). Where any such item of special business relates to or affects any other Company, the extent of shareholding interest in other company of every Director and the Manager, if any, of the Company shall also be set out in the Statement if the extent of such share holding interest is not less than 20 percent of the paid-up share capital of that other company Where any item of business consists of the according of approval to any document by the meeting, the time and place where the document can be inspected shall be specified in the statement aforesaid.

81) The accidental omission to give any such notice as aforesaid to any of the members, or the non-receipt thereof, shall not invalidate the holding of the meeting or any resolution passed at any such meeting.

82) No General Meeting Annual or Extra-ordinary shall be competent to enter upon, discuss or transact any business which has not been mentioned in the notice or notices upon which it was convened.

83) Five members present in person shall be quorum for a General Meeting.

84) A body corporate being a member shall be deemed to be personally present if it is represented in accordance with Section 187 of the Act.

85) If, at the expiration of half an hour from the time appointed for holding a meeting of the Company, a quorum shall not be present, the meeting if convened by or upon the requisition of members shall stand dissolved, but in any

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other case the meeting shall stand adjourned to the same day in the next week or, if that day is a public holiday, until the next succeeding day which is not a public holiday, at the same time and place, or to such other day and at such other time and place in the city or town in which the office of the Company is for the time being situate as the Board may determine and if at such adjourned meeting a quorum is not present at the expiration of half an hour from the time appointed for holding the meeting, the members present shall be quorum and may transact the business for which the meeting was called.

86) The Chairman (if any) of the Board shall be entitled to take the chair at every General Meeting whether Annual or Extraordinary. If there be no such Chairman of the Board, or if at any meeting he shall not be present within fifteen minutes of the time appointed for holding such meeting, or if he shall be unable or unwilling to take the Chair, then the directors present may choose one of their member to be the Chairman of the meeting. If no director be present or if all the directors present decline to take the chair, then the Members present shall elect one of their number to be Chairman.

87) No business shall be discussed at any General Meeting except the election of a Chairman, while the chair is vacant.

88) The Chairman with the consent of the members may adjourn any meeting from time to time and from place to

place in the city in which it is hold but, no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

89) At any General Meeting a resolution put to vote at the meeting shall be decided on a show of hands, unless a Poll is (before or on the declaration of the result of the show of hands) demanded by at least five members having the right to vote on the resolution and present in person or by proxy, or by the Chairman of the Meeting or by any member or members holding not less than one-tenth of the total voting power in respect of the resolution or by any member or members present in person or by proxy and holding shares in the Company conferring a right to vote on the resolution, being shares on which an aggregate sum has been paid-up on all the shares conferring that right, and unless a poll is demanded, a declaration by the Chairman that a resolution has on a show of hands, been carried unanimously, or by a particular majority, or lost, and an entry to that effect in the Minute Book of the Company shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against the resolution.

90) In the case of an equality of votes, the Chairman shall, both on a show of hands and at a poll (if any), have a casting vote in addition to the vote or votes to which he may be entitled as a member.

91) If a poll is demanded as aforesaid, the same shall, subject to Article 89 be taken at such time (not later than forty-eight hours from the time when the demand was made) and place in the city or town in which the Office of the Company is for the time being situate and either by open voting or by ballot, as the Chairman shall direct, and either at once or after an interval or adjournment or otherwise, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawal at any time by the person or persons who made the demand.

92) Where a poll is to be taken, the Chairman of the meeting shall appoint two scrutineers to scrutinize the vote given on the poll and to report thereon to him. One of the scrutineers so appointed shall always be a member (not being an officer or employee of the Company) present at the meeting provided such member is available and willing to be appointed. The Chairman shall have power at any time before the result of the poll is declared to remove a Scrutineer from office and fill vacancies in the office of Scrutineer from such removal or from any other cause.

93) Any poll duly demanded on the election of Chairman of a meeting or on any question of adjournment shall be taken at the meeting forthwith.

94) The demand for a poll except on the questions of the election of the Chairman and of an adjournment shall not prevent the continuance of a meeting for the transaction of any business other than the question on which the poll has been demanded.

VOTE OF MEMBERS

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95) No member shall be entitled to vote either personally or by proxy at any General Meeting or Meeting of a class of shareholders, either upon a show of hands or upon a poll in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or, in regard to which the Company has, and has exercised any’ right of lien.

96) Subject to the provisions of these Articles and without prejudice to any special privileges or restrictions as to voting for the time being attached to any class of shares for the time being forming part of the Capital of the Company, every member not disqualified by the last preceding Article shall be entitled to be present, and to speak and vote at such meeting, and on a show of hands every member present in person shall have one vote and upon a poll the voting rights of every member present in person or by proxy shall be in proportion to his shares of the paid-up equity share capital of the Company Provided, however, if any preference share-holder be present at any meeting of the Company, save as provided in clause (b) of sub-section (2) of Section 87, he shall have a right to vote only on resolutions placed before the meeting which directly affect the rights attached to his preference shares.

97) On a poll taken at meeting of the Company a member entitled to more than one vote, or his proxy or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he used or may abstain from voting.

98) A member of unsound mind or in respect of whom an order has been made by any Court having jurisdiction in lunacy may vote whether on a show of hands or on a poll, by his committee or other legal guardian; and any such committee or guardian may, on poll vote by proxy, if any member be a minor, the vote in respect of his share or shares shall be by his guardian, or any One of his guardians, if more than one, to be selected in case of dispute by the Chairman of the meeting.

99) If there be joint holders of any shares, any one of such person may vote at any meeting or may appoint another

person (whether a member or not) as his proxy in respect of such shares, as if he were solely entitled thereto by the proxy so appointed shall not have any right to speak at the meeting and, if more than one of such joint holders be present at any meeting that one of the said persons so present whose name stands higher on the Register shall alone be entitled to speak and to vote in respect of such shares, but the other or others of the joint-holders shall be entitled to be present at the meeting. Several executors or administrators of a deceased member in whose name shares stand shall for the purpose of these Articles to be deemed joint holders thereof.

100) Subject to the provisions of these Articles, votes may be given either personally or by proxy. A body corporate

being a member may vote either by a proxy or by a representative duly authorised in accordance with Section 187 of the Act, mid such representative shall be entitled to exercise the same rights and powers (including the rights to vote by proxy) on behalf of the body corporate which lie represents as the body could exercise if it were an individual member.

101) Any person entitled under Article 60, to transfer any share may vote at any General Meeting in respect thereof in the same manner, as if he were the registered holder of such shares, provided that forty eight hours at least before the time of holding the meeting or adjourned meeting, as the case may be at which he proposes to vote he shall satisfy the Directors of his right to transfer such shares and give such indemnity (if any) as the Directors may require or the Directors shall have previously admitted his right to vote at such meeting in respect thereof

102) Every proxy (whether a member or not) shall be appointed in writing under the hand of the appointee or his attorney, or if such appointer is a corporation under the common seal of such corporation’ or be signed by an officer or any attorney duly authorised by it, and any Committee or guardian may appoint such proxy. The proxy so appointed shall not have any right to speak at the meeting.

103) An instrument of proxy may appoint a proxy either for the purpose of a particular meeting specified in the instrument and any adjournment thereof or it may appoint for the purpose of every meeting of the Company, or of every meeting to be held before a date specified in the instrument and every adjournment of any such meeting.

104) A member present by proxy shall be entitled to vote only on a poll.

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105) The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority shall be deposited at the office not later than forty eight hours before the time for holding the meeting at which the person named in the instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the expiration of twelve months from the date of its execution.

106) Every instrument of proxy whether for a specified meeting or otherwise shall, as nearly as circumstances will

admit, be in any of the forms set out in Schedule IX of the Act.

107) A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the proxy of any power of attorney under which such proxy was signed, or the transfer of the share in respect of which the vote is given, provided that no intimation in writing of the death or insanity, revocation or transfer shall have been received at the office before the meeting.

108) No objection shall be made to the validity of any vote, except at any meeting or poll at which such vote shall be

tendered, and every vote whether given personally or by proxy, not disallowed at such meeting or poll shall be deemed valid for all purposes of such meeting or poll whatsoever.

108A) Notwithstanding any thing contained in the foregoing, the company shall transact such business, as may be

specified by the Central Government from time to time, through the means of postal ballot. In case of resolutions to be passed by postal ballot, no meeting need to be held at a specified time and space requiring physical presence of members to form a quorum. Where a resolution will be passed by postal ballot the company shall, in addition to the requirements of giving requisite clear days notice, send to all the members the following:

i) Draft resolution and relevant explanatory statement clearly explaining the reasons therefor. ii) Postal ballot for giving assent or dissent, in writing by members and

iii) Postage prepaid envelope (by Registered Post) for communicating assents or dissents on the postal ballot to the company with a request to the members to send their communications within 30 days from. The date of despatch of Notice. The Company shall also follow such procedure, for conducting vote by postal ballot and for ascertaining the assent or dissent, as may be prescribed by the Act and the relevant Rules made thereunder.

109) The Chairman of any meeting shall be the sole judge of the validity of every vote tendered at such meeting. The Chairman present at the taking of a poll shall be the sole judge of the validity of every vote tendered at such poll.

110) (1) The Company shall cause minutes of all proceedings of every General Meeting to be kept by making within

thirty days of the conclusion every such meeting concerned, entries thereof in books kept for purpose with their pages consecutively numbered.

(2) Each page of every such book shall be initialled or signed and the page of the record of proceedings of such meeting in such books shall be dated and signed by the Chairman of the same meeting within aforesaid period of thirty days or in the event of the death or liability that Chairman within that period, by a Director duly authorised by Board for the purpose. (3) In no case the minutes of proceedings of a meeting shall be attached to any such book as aforesaid by pasting or otherwise. (4) The minutes of each meetings shall contain a fair and correct summary of the proceedings thereat. (5) All appointments of Officers made at any meeting aforesaid shall included in the duties of the meetings. (6) Nothing herein contained shall require or be deemed to require inclusion in any such minutes of any matter which in the opinion of the Chairman of the meeting:-

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(a) is or could reasonably be regarded, as, deframatory of any person or (b) is irrelevant or immaterial to the proceeding, or (c) is detrimental to the interest of the Company.

The Chairman of the meeting shall exercise an absolute discretion in regard to the inclusion or non-exclusion of any matter in the minutes on the aforesaid grounds.

(7) Any such minutes shall be evidence of the proceedings recorded therein. (8) The book containing the minutes of proceedings of General Meetings shall be kept at the office of the Company and shall be open during business hours for such periods not being less in the aggregate than two hours in each day as the Directors determine, to the inspection of any member without charge.

DIRECTORS

111) (1) Until otherwise determined by a General Meeting of the Company and subject to the provisions of Section 252

of the Act, the number of Directors (excluding Debenture and Alternate Directors, (if any) shall not be less than three nor more than twelve. (2) The first Directors of the Company shall be as follows :

Sajjan Bhajanka Sanjay Agarwal Hari Prasad Agarwal

112) If at any time the Company obtains any loan or any assistance in connection there with by way of guarantee or

otherwise from any person, firm, body corporate, local authority or public body (hereinafter called “the institution”) or if at any time the Company issues any shares, debentures and enters into any contract or arrangement with the institution, whereby the institution subscribes for or underwrites the issue of the Company’s shares or debentures or provides any assistance to the Company in any manner and it is a term of the relative loan, assistance, contract or agreement that the institution shall have the right to appoint to one or more directors to the Board of the Company then subject to the provisions of Section 225 of the Act and subject to the terms and conditions of such loans, assistance, contract or arrangement, the institution shall be entitled to appoint one or more director or Directors, as the case may be, to the Board of the Company and to remove from office any director so appointed and to appoint another in his place or in the place of Director so appointed who resigns or otherwise vacates his office. Any such appointment or removal shall be made in writing and shall be served at the office of the Company. The director or directors so appointed shall neither be required to hold any qualification share nor be liable to retire by rotation and shall continue in the office for so long as the relative loan, assistance, contract or arrangement, as the case may be, subsists.

113) If it is provided by the Trust Deed, securing or otherwise in connection with any issue of debentures of the Company, that any person or persons shall have power to nominate a Director of the Company, then in the case of any and every such issue of debenture, the person or persons having such power may exercise such power from time to time and appoint a Director accordingly. Any Director so appointed is herein referred to as Debenture Director. A Debenture Director may be removed from office at any time by the person or persons in whom for the time being is vested the power under which he was appointed and another Director may be appointed in his place. A Debenture Director shall not be bound to hold any qualification share.

113A) If the Company at any time have a minimum paid up capital of Rupees Five Crore or such sum as may be

prescribed and at least one thousand or more small shareholders, then the company may, suo motu or upon requisition of not less than one tenth of the total number of small shareholders, proceed to appoint a nominee from amongst small shareholders as a Director of the Company. The small shareholders’ director shall before his appoint, file his consent, to act as a Director, in writing to the Company and the tenure of such appointment shall be Three years at a time without retirement by rotation, but shall be eligible for reappointment for another tenure. He shall, however, not be appointed as Managing Director or whole-time Director under any circumstances and shall be subject to same disqualifications and shall vacate his office on the same grounds as are applicable to other Directors, in pursuance of these Articles. The Company shall follow such Rules as may be prescribed by the Central Govt. in this behalf.

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113B) No small shareholders’ director appointed in accordance with the provisions of this Article shall hold office at the

same as “small shareholders’ director” in more than two companies 114) The Board may appoint an Alternate Director to act for a Director (hereinafter called “the Original Director”)

during his absence for a period of not less than three months from the State in which the meetings of the Board are ordinarily held. An Alternate Director appointed under this Article shall not hold office for a period longer than that permissible to the Original Director in whose place he has been appointed and shall vacate the office of the Original Director when he returns to that State. If the terms of office of the Original Director are determined before he so returns to that state, any provisions in the Act or in these Articles for the automatic reappointment of any retiring Director in default of another appointment shall apply to the Original Director and not to the Alternate Director.

115) Subject to the provisions of Sections 260 and 264 of the Act, the Board shall have power at any time and from time to time to appoint any other qualified person to be an Additional Director, but so that the total number of Directors shall not at any time exceed the maximum fixed under the Article 111. Any such Additional Director shall hold office only up to the date of the next Annual General Meeting.

116) Until otherwise determined by the Company in General Meeting, a Director shall not be required to hold any shares in the Capital of the Company as his qualification.

117) Without prejudice to the restrictions imposed by Section 226 of the Act, a Director who is required to hold qualification shares may act as a Director before acquiring such shares but shall, if he is not already qualified, obtain his qualification, and every Director other than a Director appointed by the Central or State Government shall file with the Company a declaration specifying the qualification shares held by him within two months from his appointment as a Director.

118) Subject to the provisions of Section 262, 264 and 284(6) of the Act, the Board shall have power at any time and from time to time to appoint any other qualified person to be a Director to fill a casual vacancy Any person so appointed shall hold office only up to the date to which the Director in whose place he is appointed would have held office if it had not been vacated by him.

119) (1) Subject to the provisions of the Act, a Managing Director, or Managing Directors or Director who is/are in the whole-time employment of the Company may be paid remuneration either by way of a monthly payment or at a specified percentage of the net profits of the Company or partly by one way and partly by the other. (2) Subject to the provisions of the Act, a Director who is neither in the wholetime employment nor a Managing Director, may be paid remuneration either (i) by way of monthly, quarterly or annual payment with the approval of the Central Government, or (ii) by way of commission if the Company by a special resolution authorised such payment. (3) The fees payable to a Director (including a Managing or whole-time Director, if any), for attending a Meeting of the Board or Committee thereof may be in accordance with and subject to the provisions of Section 309 of the Act or such other sum as the Company in General Meeting may from time-to time determine.

120) The Board may allow any pay to any director who is not a bonafide resident of the place where the meetings of the Board are ordinarily held and who shall come to such place for the purpose of attending any meeting, such stun as the Board may consider fair compensation for travelling, boarding, lodging and other expenses, in addition to his fee for attending such meeting as above specified; and if any Director be called upon to go or resided out of the ordinary place of his residence on the Company’s business, he shall be entitled to be repaid and reimbursed any travelling or other expenses incurred in connection with business of the Company.

121) The continuing Directors may act notwithstanding any vacancy in their body but if, and so long as their number is reduced below the minimum number fixed by the Article 111 hereof, the continuing Directors not being less than two, may act for the purpose of increasing the number of directors to that number or for summoning a General

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Meeting but for no other purpose.

122) (1) The office of a Director shall ipso facto be vacated if :-

(a) lie falls to obtain within the time specified in sub-section (1) of Section 270 of the Act, or at any time thereafter ceases to hold, the share qualification, if any necessary for his appointment; or

(b) he is found to be of unsound mind by a Court of competent jurisdiction; or

(c) he applies to be adjudicated an insolvent; or

(d) he is adjudged insolvent; or

(e) he is convicted by a Court in India of any offence and is sentenced in respect thereof to imprisonment for not less than six months; or

(f) he fails to pay any call in respect of shares of the Company held by him, whether alone or jointly with others, within six months from the last date fixed for the payment of the call; or

(g) he absent from three consecutive meetings of the Board or from all meetings of the Board for a continuous period of three months, whichever is the longer, without obtaining leave of absence from the Board; or

(h) he or any firm of which he is a partner or any private company of which he is a director, accepts a loan, or any guarantee or Security for a loan, from the Company in contravention of Section 295 of the Act; or

(i) he acts in contravention of Section 299 of the Act; or

(j) he has been removed from office in pursuance of Section 203 of the Act; or

(k) by notice in writing to the Company that he resigns his office; or

(l) any office or place of profit under the Company or under any subsidiary of the Company is held in contravention of Section 314 of the Act and by operation of that Section he is deemed to vacate the office.

(2) Notwithstanding any matter or thing in sub-clauses (d), (e) and (j) of clause (1), the disqualification referred to in those sub-clauses shall not take effect...

(a) for thirty days from the date of adjudication sentence or order; or (b) where an appeal or petition is preferred within the thirty days aforesaid against the adjudication,

sentence or conviction resulting in the sentenced, or order until the expiry of seven days from the date on which such appeal or petition is disposed of; or

(c) Where within the seven days aforesaid any further appeal or petition is preferred in respect of the adjudication, sentence, conviction or order, and the appeal or petition, if allowed, would result in the removal of the disqualification until such further appeal or petition is disposed of

123) (1) A Director or his relative, a firm in which such Director or relative is a partner, or any other partner in such

firm or a private company of which the Director is a member or a private company of which the Company is a member or director, may enter into any contract with Company for the sale, purchase or supply of any goods, materials, or services or for underwriting the subscription of any shares in, or debentures of the Company, provided that the sanction of the Board is obtained before or within three months of the date on which the contract is entered into in accordance with Section 297 of the Act.

(2) No sanction shall, however, be necessary for – (a) any purchase of goods and materials from the Company, or the sale of the goods or materials to the Company, by any such director, relative, firms partner or private company as aforesaid for cash at prevailing market prices; or (b) any contract or contracts between the Company on one side and any such Director, relative, firm, partner or private company on the other side for sale, purchase or supply of any goods, materials and services in which either the Company or the director, relative, firm, partner or private company, as the case may be, regularly trades or does business, where the value of the goods and materials or the cost of such services does not exceed ` 5,000/- (Rupees Five Thousand only) in the aggregate in any year comprised in the period of the contract or contracts.

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Provided that in the circumstances of urgent necessity, a Director, relative, firm, partner or private company as aforesaid may ‘without obtaining the consent of the Board enter into any such contract with the Company for the sale, purchase or supply of any goods, materials or services even if the value of such goods or the cost of such services exceeds ` 5000/- (Rupees Five Thousand only) in the aggregate in any year comprised in the period of the contract and the consent of the Board shall be obtained to such contract or contracts at a meeting within three months of the date on which the contract was entered into.

124) A director of the Company who is in any way, whether directly or indirectly concerned or interested in a contract or proposed contract or arrangement entered into or to be entered into by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board in the manner provided in Section 299(2) of the Act, provided that it shall not be necessary for a Director to disclose his concern or interest in any contract or arrangement entered into or to be entered into with any other company where any of the Directors of the Company either himself or alongwith his relatives holds or hold two per cent of the paid-up share capital in any such other company.

125) A General Notice given to the Board by the Directors, to the effect that he is a director or member of a specified body corporate or is a member of a specified firm and is to be regarded as concerned or interested in any contract or arrangement which may, after the date of the notice, be entered into with that body corporate or firm, shall be deemed to be a sufficient disclosure of concern or interest in relation to any contract or arrangement so made. Any such general notice shall expire at the end of the financial year in which it is given but may be renewed for a further period of one financial year at a time by a fresh notice given in the last month of the financial year in which it would have otherwise expired of such general notice and no renewal thereof, shall be of effect unless it is given at a meeting of the Board or the Director concerned takes reasonable steps to secure that it is brought up and read at the first meeting of the Board after it is given.

126) No director shall as Director take any part in the discussion of, or vote on any contract or arrangement entered

into by or on behalf of the Company, if he is in any way whether directly or indirectly concerned or interested in such contract or arrangement; nor shall his presence count for the purpose of forming a quorum at the time of any such discussion or vote; and if he does vote, his vote shall be void; provided however, that nothing herein contained shall apply to :-

(a) any contract of indemnity against any loss which the Directors or any one or more of them, may suffer by reason of becoming or being sureties or a surety for the Company.

(b) any contract or arrangement entered into or to be entered into with a public company or a private company which is a subsidiary of a public company in which the interest of the Director consists solely

(i) in his being:

(a) a director in such company, and

(b) the holder of not more than shares of such number or value therein as is requisite to qualify him for appointment as a Director thereof, he having been nominated as such Director by the Company

or

(ii) in his being a member holding not more than 2% of its paid-up share capital.

127) The Company shall keep a Register in accordance with Section 301(l) and shall within the time specified in section 301(2) enter therein such of the particulars as may be relevant having regard to the application thereto of Section 297 or Section 299 of the Act as the case may be. The Register aforesaid shall also specify, in relation to each Director of the Company the names of the bodies corporate and firms of which notice has been given by him under Article 125. The Register shall be kept at the office of the company and shall be open to inspection at such office, and extracts may be taken therefrom and copies thereof in the same manner, and on payment of the same fee as in the case of the Register of Members of the Company and the provision of Section 163 of the Act shall apply accordingly.

128) A Director may be or become a director of any company promoted by the Company or in which it may be interested as a vendor, shareholder, or otherwise, and no such director shall be accountable for any benefits received as director or shareholder of such company except in so far as Section 209(6) or Section 314 of the Act

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may be applicable.

129) At every Annual General Meeting of the Company, one-third if such of the Directors for the time being as are

liable to retire by rotation or if their number is not three or a multiple of three, the number nearest to one-third shall retire from office. The First Directors of the Company need not retire at the first Annual General Meeting.

130) Subject to Section 256(2) of the Act, the Directors to retire by rotation under Article 129 at every Annual General Meeting shall be those who have been longest in the office since their last appointment, but as between persons who became directors on the same day, those who are to retire, shall, in default of, and subject to any agreement among themselves, be determined by lot

131) A retiring Director shall be eligible for re-election

132) Subject to Sections 258 and 259 of the Act, the Company at the General Meeting at which a Director retires in manner aforesaid may fill up the vacated office by electing a person thereto.

133) (a) If the place of the retiring Director is not so filled up and the meeting has not expressly resolved not to fill the

vacancy, the meeting shall stand adjourned until the same day in the next week, at the same time and place.

(b) If at the adjourned meeting also, the place of the retiring Director is not filled up and that meeting also has not expressly resolved not to fill the vacancy, the retiring Director shall be so deemed to have been reappointed at the adjourned meeting unless:

(i) at that meeting or at the previous meeting the resolution for the reappointment of such Director has been put to the meeting and lost; (ii) the retiring Director has, by a notice in writing addressed to the Company or its Board expressed his unwillingness to be so reappointed; (iii) he is not qualified or is disqualified for appointment; (iv) a resolution whether special or ordinary, is required for the appointment or reappointment by virtue of any provisions of the Act; or (v) the provision to sub-section (2) of Section 263 of the Act is applicable to the case.

134) Subject to Section 259 of the Act, the Company may, by Ordinary Resolution, from time to time, increase or

reduce the number of directors, and may after their qualifications the Company (subject to the provisions of Section 284 of the Act) remove any Director before the expiration of his period of office and appoint another qualified person in his stead. The person so appointed shall hold Office during such time as the director in whose place he is appointed would have held the same if he had not been removed.

135) (1) No person not being a retiring Director, shall be eligible for appointment to the office of director at any

General Meeting unless he or some member intending to propose him has, not less than fourteen days before the meeting, left at the office of the Company a notice in writing under his hand signifying his candidature for the office of Director or the intention of such member to propose him as a candidate for that office.

(2) Every person (other than a director retiring by rotation or otherwise or a person who has left at the office of the Company a notice under Section 257 or the Act signifying his candidature for the office of a Director) proposed as a candidate for the office of a Director, shall sign and file with the Company, the consent in writing to act as a Director, if appointed.

(3) A person other than a Director reappointed after retirement by rotation of immediately on the expiry of his term of office, or an Additional or Alternate Director, or a person filling a casual vacancy in the office of a Director under Section 262 of the Act, appointed as a Director or reappointed as an Additional or Alternate Director, immediately on the expiry of his term of office, shall not act as a Director of the Company unless lie has within thirty days of his appointment signed and filed with the Registrar his consent in writing to act as such Director.

136) (a) The Company shall keep at its office a Register containing the particulars of its Directors, Managers,

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Secretaries and other persons mentioned in Section 303 of the Act and shall otherwise comply with the provisions of the said Section in all respects. (b) The Company shall in respect of each of its Directors also keep at its office a Register, as required by Section 307 of the Act, and shall otherwise duly comply with the provisions of the said Section in all respects.

137) (a) Every Director (including a person deemed to be a Director by virtue of the Explanation to sub-section (1) of

Section 303 of the Act, Managing Director, Manager, or Secretary of the Company, shall within twenty days of his appointment to any of the above offices in any other body corporate, disclose to the Company the particulars relating to his office in the other body which are required to be specified under sub-section (1) of Section 303 of the Act. (b) Every Director and every person deemed to be a Director of the Company by virtue of sub-section (10) of Section 307 of the Act, shall give notice to the Company of such matters relating to himself as may be necessary for the purpose of enabling the Company to comply with the provision of that section.

MANAGING DIRECTOR

138) Subject to the provisions of the Act and of these Articles, the Board shall have power to appoint from time to time

any of its member or members as Managing Director or Managing Directors of the Company for fixed term not exceeding five years at a time and upon such terms and conditions as the Board thinks fit and subject to the provisions of Article 140, the Board may by resolution vest in such Managing Director or Managing Directors such of the powers hereby vested in the Board generally as it thinks fit, and such powers may be made exercisable for such period or periods and upon such conditions and subject to such restrictions as it may determine. The remuneration of a Managing Director may be by way of monthly payment, fee for each meeting or participation in profits, or by any or all these modes, or any other notice not expressly prohibited by the Act.

139) The Managing Director or Managing Directors shall not exercise the powers to :- (a) make calls on share holders in respect of money unpaid on the shares in the Company. (b) issue debentures; and except to the extent mentioned in the resolution passed at the Board meeting under Section 292 of the Act, shall also not exercise the powers to; (c) borrow moneys, otherwise than on debentures, (d) invest the funds of the Company, and (e) make loans.

140) The Company shall not appoint or employ, or continue the appointment or employment of a person as its

Managing or whole-time Director who - (a) is an undischarged insolvent, or has at any time been adjudged as insolvent; (b) suspends, or has at any time suspended payment to his creditors, or makes, or has at any time made a composition with them; or (c) is, or has, at any time been convicted by a Court of an offence involving moral turpitude.

141) A Managing Director shall not while he continues to hold that office be subject to the retirement by rotation, in accordance with Article 129. If he ceases to hold the office of Director, he shall ipso facto and immediately cease to be a Managing Director.

PROCEEDINGS OF THE BOARD OF DIRECTORS

142) The Directors may meet together as a Board for the despatch of business from time to time, and shall so meet at

least once in every three months and at least four such meetings shall be held in every year. The Directors may adjourn and otherwise regulate their meetings as they think fit.

143) Notice of every meeting of the Board shall be given in writing to every Director for the time being in India, and at

his usual address in India; to every other Director.

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144) The Secretary shall, as and when directed by the, Directors to do so convene a, meeting of the Board by giving a notice in writing to every other Director.

145) The Board shall a point a Chairman of its meetings and determine the period for which he is to hold office. If no

Chairman is appointed, or if it any meeting of the Board the Chairman is not present within five minutes after the time appointed, for holding the same, the Directors present shall choose someone of their member to be the Chairman of, such meeting.

146) The quorum for a meeting of the Board shall be determined from time to time in accordance with the provisions

of the Section 287 of the Act. If a quorum shall not be present within fifteen minutes from the time appointed for holding a meeting of the Board it shall be adjourned until such date and time as the Chairman of the Board shall appoint.

147) A meeting of the Board of which a quorum be present shall be competent to exercise all or any of the authorities,

powers and discretions by or under these Articles for the time being vested in or exercisable by the Board.

148) Subject to the provisions of Sections 316, 327(4) and 386 of the Act, questions arising at any meeting shall be decided by a majority of votes, and in case of any equality of votes, the Chairman shall have a second or casting vote.

149) The Board may subject to the provisions of the Act, from time to time and at any time delegate any of its powers to a committee consisting of such Director or Directors as it thinks fit, and may from time to time revoke such delegation. Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulation that may from time to time be imposed upon it by the Board.

150) The meetings and the proceedings of any such Committee consisting of two or more members shall be governed by the provisions herein contained for regulating the meetings and proceedings of the Board so for as the same are applicable thereto, and are not superseded by any regulations made by the Board under the Article 149.

151) Save in those case where a resolution is required by Sections 262, 292, 297, 316, 372(4) and 386 of the Act, to be passed at a meeting of the Board, a resolution shall be as valid and effectual as if it had been passed at a meeting of the Board or Committee of the Board, as the case may be, duly called and constituted, if a draft thereof in writing is circulated, together with the necessary papers, if any, to all the Directors, or to all the members of the Committee of the Board, as the case may be, then in India (not being less in number than the quorum fixed for a meeting of the Board or Committee, as the case may be) and to all other Directors, or members of the Committee, at their usual address in India, and has been approved by such of them as are then in India, or by a majority of them as are entitled to vote on the resolution.

152) All acts done by any meeting of the Board or by a Committee of the Board or by any person acting as a Director

shall notwithstanding that it shall afterwards be discovered that there was some defect in the appointment of such Director or persons acting as aforesaid, or that they or any of them were disqualified or had vacated office or that the appointment of any of them had been terminated by virtue of any provisions contained in the Act or in these Articles, be as valid as if every such person had been duly appointed, and was qualified to be a Director and had not vacated his office or his appointment had not been terminated; provided that nothing in this Article shall be deemed to give validity to acts done by a Director after his appointment has been shown to the Company to be invalid or to have been terminated.

153) (1) The Company shall cause minutes of all proceedings of every meeting of the Board and Committee thereof to

be kept by making within thirty days of the conclusion of every such meeting entries thereof in the books kept for that purpose with their pages consecutively numbered. (2) Each page of every such book shall be initialed or signed and the last page of the record of proceedings of each meeting in such book shall be dated and signed by the Chairman of the said meeting or the Chairman of the next succeeding meeting. (3) In no case shall the minutes of proceedings of a meeting be attached to any such book as aforesaid by a pasting

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or otherwise. (4) The minutes of each meeting shall contain a fair and correct summery of the proceedings thereat. (5) All appointments of officers made at any of the meetings aforesaid shall be included in the minutes of the meetings. (6) The minutes shall also contain.

(a) the names of the Directors present at the meeting; and (b) in the case of each resolution passed at the meeting the names of the Directors, if any, dissenting from or not concurring in the resolution.

(7) Nothing contained in sub-clause (1) to (6) shall be deemed to require the inclusion in any such minutes of any matter which, in the opinion of the Chairman of the meeting (a) is, or could reasonably be regarded as defamatory of any person. (b) is irrelevant or immaterial to the proceedings; or (c) is detrimental to the interest of the Company. The Chairman shall exercise an absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in this sub-clause. (8) Minutes of meetings kept in accordance with the aforesaid provisions shall be evidence of the proceedings recorded therein.

154) The Board may exercise all such powers of the Company and do all such acts, and things as are not, by the Act, or any other Act, or by the Memorandum, or by the Articles of the Company, required to be exercised by the Company in General Meeting subject nevertheless to these Articles, to the provisions of the Act, or any other Act and to such regulations being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by the Company in General Meeting but no regulations made by the Company in General Meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made. Provided that the Board shall not, except with the consent of the Company in General Meeting (a) sell, lease or otherwise dispose of the whole, or substantially the whole of the undertaking of the Company, or where the Company owns more than one undertaking of the whole, or substantially the whole of any such undertaking. (b) remit, or give time for the repayment of any debt due by a Director. (c) invest, otherwise than in trust securities, the amount of compensation received by the Company in respect of the compulsory acquisition of any such undertaking as is referred to in clause (a), or of any premises or properties used for any such undertaking and without which it cannot be carried an or can be carried on only with difficulty or only after a considerable time. (d) borrow moneys where the moneys to be borrowed together with the moneys already borrowed by the Company (apart from temporary loans obtained from the Company’s bankers in the ordinary course of business, will exceed the aggregate of the paid up capital of the Company and its free reserves - that is to say, reserve not set apart for any specific purpose. Provided further that the powers specified in Section 292 of the Act shall, subject to these Articles, be exercised only at meetings of the Board, unless the same be delegated to the extent there ‘m stated; or (e) contribute to charitable and other funds not directly relating to the business of the Company or the welfare of its employees, any amounts the aggregate of which will, in any financial year, exceed twenty-five thousand rupees

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or five per cent of its average net profits as determined in accordance with the provisions of Sections 349 and 350 of the Act during the three financial years immediately proceeding, whichever is greater.

155) Without prejudice to the general powers conferred by the last preceding Article and so as not in any way to limit or restrict those powers, and without prejudice to the other powers conferred by these Articles, but subject to the restrictions contained in the last preceding Article, it is hereby declared that the Directors shall have the following powers; that is to say, power -

(1) To pay the costs, charges and expenses preliminary and incidental to the promotion, formation,

establishment and registration of the Company.

(2) To pay any charge to the capital account of the Company and Commission or interest lawfully payable there out under the provisions of Sections 76 and 208 of the Act

(3) Subject to Sections 292 and 297 of the Act to purchase or otherwise acquire for the Company any property, rights or privileges which the Company is authorised to acquire, at or for such price or consideration and generally on such terms and conditions as they may think fit and in any such purchase or other acquisition to accept such title as the Directors may believe or may be advised to be reasonably satisfactory,

(4) At their discretion and subject to the provisions of the Act to pay for any property, rights or privileges acquired by or services rendered to the Company, either wholly or partially, in shares, bonds, debentures, mortgages, or other securities of the Company, and such shares may be issued either as fully paid up or with such amount credited as paid up thereon as may be agreed upon all or any part of the property of the Company and its uncalled capital or not so charged;

(5) To secure the fulfillment of any contracts or engagement entered into by the Company by mortgage or charge of all or any of the property of the Company and its uncalled capital for the firm being or in such manner as they may think fit;

(6) To accept from any member, as far as may be permissible by law, a surrender of his shares or any part thereof, on such terms and conditions as shall be agreed;

(7) To appoint any person to accept and hold in trust for the Company and property belonging to the Company, in which it is interested, or for any other purposes; and execute such deeds and do all such things as may be required in relation to any trust, and to provide for the remuneration of such trustee or trustees;

(8) To institute, conduct, defend, compound or abandon any legal proceedings by or against the Company or its officers, or otherwise concerning the affairs of the Company, and also to compound and allow time for payment or satisfaction of any debts due, and of any claim or demands by or against the Company and to refer any differences to arbitration, and observe and, perform any awards made thereon;

(9) To act on behalf of the Company in all matters relating to bankrupts and insolvents;

(10) To make and give receipts, releases and other discharges for moneys payable to the Company and for the claims and demands of the Company

(11) Subject to the provisions of Sections 292, 295, 370 and 372 of the Act, to invest and deal with any moneys of the Company not immediately required for the purpose thereof upon such security (not being shares of this Company), or without security and in such manner as they think fit, and from time to time to vary the size of such investments. Save as provided in Section 49 of the Act, all investments shall be made and held in the Company’s own name;

(12) To execute in the name and on behalf of the Company in favour of any Director or other person who may incur or be about to incur any personal liability whether as principal or surety, for the benefit of the Company, such mortgages of the Company’s property (present or future) as they think fit, and any such mortgage may contain a power of sale and such other powers, provisions, covenants and agreements as shall be agreed upon.

(13) To determine from time to time who shall be entitled to sign, on the Company’s behalf, bills, notes, receipts, acceptances, endorsements, cheques, dividends, warrants, releases, contracts and documents and to give the necessary authority for such purpose;

(14) To distribute by way of bonus amongst the staff of the Company, share or shares in the profits of the

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Company, and to give to any officer or other person employed by the Company a commission on the profits of any particular business or transaction; and to charge such bonus or commission as part of the working expenses of the Company;

(15) To provide for the welfare of Directors or ex-Directors or employees or ex- employees of the Company and their wives, widows and families or the dependents or connections of such persons by building or contributing to the building of houses, dwellings or by grants of money, pension, gratuities, allowances, bonus or other payments, or by creating and from time to time subscribing or contributing to provident and other associations, institutions; funds or trusts and by providing or subscribing or contributing towards places of instructions and recreation, hospitals arid dispensaries, medical and other attendance and other assistance as the Board shall think fit; and to subscribe or contribute or otherwise to assist or to guarantee money to charitable, benevolent, religious, scientific, national or other institutions or objects which shall have any moral or other claim to support or aid by the Company, either by reason of locality of operation, or of public and general utility or otherwise;

(16) Before recommending any dividend, to set aside out of the profits of the Company such sums as they may think proper for depreciation or to Depreciation Fund, or to an Insurance Fund, or as a Reserve Fund, or Sinking fund, or any Special Fund to meet contingencies or to repay Debentures or Debenture stock, or for special dividends or for equalized dividends or for repairing, improving, extending and maintaining any of the property of the Company and for such other purpose (including the purposes referred to in the preceding clause), as the Board may, in their absolute discretion, think conducive to the interest of the Company, and subject to Section 292 of the Act, to invest the several sums so set aside or so much thereof as required to be invested upon such investments (other than shares of the Company) as they may think fit, and from time to time to deal with and vary such investments and dispose of any apply and expend all or any part thereof for the benefit of the Company, in such manner and for such purpose as the Board in their absolute discretion think conducive to the interest of the Company, notwithstanding that the matters to which the Board apply or upon which they expend the same, or any part thereof, may be matters to or upon which the capital moneys of the Company might rightly be applied or expended; and to divide the Reserve Fund into such special Funds as the Board may think fit, with full power to transfer the whole or any portion of a Reserve Fund or division of a Reserve Fund to another Reserve Fund or division of a Reserve Fund and with full power to employ the assets constituting all or any of the above Funds, including the Depreciation Fund, in the business of the Company or in the purchase or repayment of Debentures or Debenture-stock, and without being bow-id to keep the same, separate from the other assets and without being bound to pay interest on the same with power, however, to the Board at their discretion to pay or allow to the credit of such funds interest at such rate as the Board may think proper.

(17) Subject to the provisions of the Act to appoint, and at their discretion remove or suspend such general managers, managers, secretaries, assistants, supervisor, clerks, agents and servants of permanent, temporary or special services as they may for time to time think fit, and to determine their powers and duties and fix their salaries or emoluments or remuneration, and to require security in such instances and to such amount as they may think fit. Also, from time to time provide for the management and transaction of the affairs of the Company in any specified locality in India or elsewhere in such manner as they think fit; and the provisions contained in the four next following sub- clauses shall be without prejudice to the general powers conferred by this sub-clause;

(18) To comply with the requirements of any local law which in their opinion it shall, in the interest of the Company, be necessary of expedient of comply with;

(19) From time to time and at any time to establish any Local Board for managing any of the affairs of the Company in any specified locality in India or elsewhere and to appoint any persons to the members of such Local Boards and to fix their remuneration;

(20) Subject to Section 292 & 293 of the Act, from time to time and at any time, delegate to any person so appointed any of the powers, authorities and discretion for the time being vested in the Board, other than their power to make calls or to make loans or borrow or moneys, and to authorise the Members for the time being of any such Local Board, or any of them to fill up any vacancies therein and to act notwithstanding vacancies, and any such appointment or delegation may be made on such terms and

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subject to such conditions as the Board may think fit, and the Board may at any time remove any person so appointed, and may annul or vary any such delegation.

(21) At any time and from time to time by Power of Attorney under the Seal of the Company, to appoint any person or persons to be the Attorney or Attorneys of the Company, for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the Board under these presents and excluding the powers to make calls and excluding also, except in their limits authorised by the Board, the power to make loans and borrow moneys) and for such period and subject to such conditions as the Board may from time to time think fit; and any such appointment may (if the Board thinks fit) be made in favour of the members or any of the Members of any Local Board, established as aforesaid or in favour of any company, or the share holders, directors, nominees or managers of any company or firm or otherwise in favour of any fluctuating body of persons whether nominated directly by the Board and any such Power of Attorney may contain such powers for the .protection or convenience of persons dealing with such attorneys as the Board may think fit and may contain powers enabling any such delegates or attorneys as aforesaid to sub-delegate all or any of the powers, authorities and discretions for the time being vested in them;

(22) Subject to Sections 294, 294A, 297 and 300 of the Act, for or in relation to any of the matters aforesaid or otherwise for the purposes of the Company to enter into all such contracts, and to execute and do all such acts, deeds and things in the name and on behalf of the Company as they may consider expedient;

(23) Subject to the provisions of Companies Act, 1956, the Board may pay such remuneration to Chairman/Vice Chairman of the Board upon such conditions as they may think fit.

THE SECRETARY

156) The Directors may from time to time appoint, and at their discretion, remove the Secretary provided that where the Board comprises only three Directors, neither of them shall be the Secretary. The Secretary appointed by the directors pursuant to this Article shall be a whole-time Secretary. The Directors may also at any time appoint some person, who need not be Secretary, to keep the registers required to be kept by the Company.

THE SEAL

157) (a) The Board shall provide a Common Seal for the purposes of the Company, and shall have power from time to

time to destroy the same and substitute a new Seal in lieu thereof and the Seal shall never be used, except by the authority of the Board or a Committee of the Board previously given. (b) The Company shall also be at liberty to have an official Seal in accordance with Section 50 of the Act, for use in any territory, district or place outside India.

158) The seal shall never be used except by or under the authority of a resolution of the Board of Directors or a Committee of Board of Directors previously given and every deed or other instrument to which the Seal of the Company is required to be affixed shall be affixed in the presence of at least one Director or the Manager or the Secretary or such other person as the Board/Committee of the Board may appoint for the purpose, who shall sign every instrument to which the seal is so affixed in his presence, provided that the certificates of shares or debentures shall be sealed in the manner and in conformity with the provisions of the Companies (issue of Share Certificate) Rules, 1960 or any statutory modification thereof for the time being in force.

DIVIDENDS

159) The profits of the Company, subject to any special rights relating thereto created or authorised to be created by these Articles and subject to the provisions of these Articles shall be divisible among the members in proportion to the amount of capital paid-up on the shares held by them respectively.

160) The Company in General Meeting may declare dividends to be paid to members according to their respective rights, but no dividend shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend.

161) No dividend shall be declared or paid otherwise than out of the profits of the financial year arrived at after

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providing for depreciation in accordance with the provisions of Section 205 of the Act or out of the profits of the Company for any previous financial year or years arrived at after providing for depreciation in accordance with these provisions and remaining undistributed or out of both, provided that;

(a) if the Company has not provided for depreciation for any previous financial year or years, it shall, before declaring or paying a dividend for any financial year, provide for such depreciation out of the profits of the financial year or years.

(b) if the Company has incurred any loss in any previous financial year or years, the amount of the loss or any amount which is equal to the amount provided for depreciation for that year or those years whichever is less, shall be set off against the profits of the company for the year for which the dividend is proposed to be declared or paid or against the profits of the Company for any previous financial year or years arrived at in both cases after providing for depreciation in accordance with the provisions of sub-section (2) of Section 205 of the Act, or against both.

162) The Board may, from time to time, pay to the Members such interim dividend as in their judgment, the position of

the Company justifies.

163) Where capital is paid in advance of calls, such capital may carry interest but shall not in respect thereof confer a right to dividend or participate in profits.

164) All dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid on the shares during any portion or portions of the period in respect of which the dividend is paid, but if any share is issued on terms providing that it shall rank for dividend as from a particular date, such share shall rank for dividend accordingly.

165) The Board may retain the dividends payable upon shares in respect of which any person is under the Article 60 entitled to become a member or which any person wider that Article is entitled to transfer; until such a person shall become a member, in respect of such shares or duly transfer the same.

166) Any one of several person who are registered as joint-holders of any share may give effectual receipts for all dividends bonus and payments on account of dividends or bonus or other moneys payable in respect of such shares.

167) No member shall be entitled to receive payments of any interest or dividend in respect of his share or shares,

while any money may be due or owing from him to the Company in respect of such share or shares or otherwise howsoever, either alone or jointly with any other person or persons and the Board may deduct from the interest or dividend payable to any member all sums of money so due from him to the Company.

168) A transfer of share shall not pass the right to any dividend declared thereon before the registration of the transfer.

169) Unless otherwise directed, any dividend may be paid by cheque or warrant or by a pay-slip or receipt having the force of a cheque or warrant sent through the post to the registered address of the member or person entitled or in case of joint-holders to that one of them first named in the Register in respect of the joint-holdings. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. The Company shall not be liable or responsible for any cheque or warrant or pay-slip or receipt lost in transmission, or for any dividend lost to the member or person entitled thereto by the forged endorsement of any cheque or warrant or the forged signature of any pay-slip or receipt or the fraudulent recovery of the dividend by any other means.

170) No unclaimed dividend shall be forfeited by the Board unless the claim thereto becomes barred by law and the

company shall comply with the provision of Sections 205A to 205C of the Act in respect of all unclaimed or unpaid dividends.

171) Any General Meeting declaring a dividend may, on the recommendation of the Directors, make a call on the

members of such amount as the meeting fixes, but so that the call on each member shall not exceed the dividend

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and the dividend may, if so arranged between the Company and the member, be set off against the calls.

CAPITALISATION OF RESERVES

172) Any General Meeting may resolve that any moneys, investments, or other assets forming part of undivided profits of the Company standing to tile credit of the Reserves, or any Capital Redemption Reserve Fund, in the hands of the Company and available for dividend or representing premiums received on the issue of shares and standing to the credit of the Share Premium Account be capitalised and distributed amongst such of the members as would be entitled to receive the same if distributed by way of dividend and in the same proportions on the footing that they become entitled thereto as capital and that all or any part of such capitalised fund be applied on behalf of such members in paying up in full any unissued shares, debentures, or debenture-stock of the Company which shall be distributed accordingly or in or towards payment of the uncalled liability on any issued shares, and that such distribution or payment shall be accepted by such members in full satisfaction of their interest in the said capitalised sum. Provided that any sum standing to the credit of a Share Premium Account or a Capital Redemption Reserve Fund may, for the purposes of this Article, only be applied in the paying up of unissued shares to be issued to members of the Company as fully paid bonus shares.

173) A General Meeting may resolve that any surplus money arising from the realisation of any capital asset of the Company or any investments representing the same, or any other undistributed profits of the Company not subject to charge for income tax, be distributed among the members on the footing that they receive the same as capital.

174) For the purpose of giving effect to any resolution under the two last-preceding Articles hereof the Board may

settle any difficulty which may arise in regard to the distribution as it thinks expedient and in particular may issue fractional certificates, and may fix the value of distribution of any specific assets, and may determine that cash payment shall be made to any members upon the footing of the value so fixed in order to adjust the rights of all parties and may vest such cash or specific assets in trustees upon such trusts for the persons entitled to the Board. Where requisite, a proper contract shall be filed in accordance with Section 75 of the Act, and the Board may appoint any person to sign such contract on behalf of the person entitled to the dividend or capital fund, and such appointment shall be effective.

ACCOUNTS

175) (1) The company shall keep at the office or at such other place in India as the Board thinks fit, proper Books of Account in accordance with Section 209 of the Act, with respect to –

(a) all the sums of moneys received and expended by the Company and the matters in respect of which the receipts and expenditure take place.

(b) all sales and purchases of goods by the Company. (c) the Assets and liabilities of the Company.

(2) Where the Board decides to keep all or any of the Books of Account at any place other than the office of the Company the Company shall within seven days of the decision file with the Registrar a notice in writing giving, the full address of that other place. (3) The Company shall preserve in good order the Books of Account relating to the period of not less than eight years preceding the current year together with the vouchers relevant to any entry in such Books of Account. (4) Where the Company has a branch office, whether in or outside India, the Company shall be deemed to have complied with this Article if proper Books of Account relating to the transactions effected at the branch office are kept at the branch office and proper summarized returns made up to date at intervals of not more than three months are sent by the branch office to the Company at its offices at other place in India, at which the Company’s Books of Account are kept as aforesaid. (5) The Books of Account shall give a true and fair view of the state of affairs of the Company or branch office, as the case may be, and explain its transaction. The Books of Account and other books and papers shall be open to inspection by any Directors during business hours.

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176) The Board shall from time to time determine whether and to what extent and at what times and place and under

what conditions are regulations the accounts and books of the Company or any of them shall be open to the inspection of members riot being Directors, and no person (not being a member) shall have any right of inspecting any account or books or document of the Company except as conferred by law or authorised by the Board.

177) The Directors shall from time to time, in accordance with Sections 210, 211, 212, 215, 216 and 217 of the Act, cause to be prepared and to be laid before the Company in General Meeting, such Balance Sheets, Profit and Loss Account and Reports as are required by these Sections.

178) A copy of every such Profit and Loss Account and Balance Sheet (including the Auditors’ Report and every other

document required by law to be annexed or attached to the Balance Sheet), shall at least twenty-one days before the meeting at which the same are to be laid before the members, be sent to the members of the Company, to holders of debentures issued by the Company (not being debentures which ex-facie are payable to the bearer thereto; to trustees for the holders of such debentures and to all persons entitled to receive notice of General Meeting of the Company.

AUDIT

179) Auditors shall be appointed and their rights and duties regulated in accordance with Sections 224 to 233 of the Act.

180) The First Auditor or Auditors of the Company shall be appointed by the Board within one month of the date of registration of the Company and the Auditor or Auditors so appointed shall hold office until the conclusion of the First Annual General Meeting provided that the Company may, at a General Meeting, remove any such Auditor or all of such Auditors and appoint in his or their place any other person or persons who have been nominated for appointment by any member of the Company and of whose nomination notice has been given to the members of the company not less than fourteen days before the date of the Meeting provided further that if the Board fails to exercise its powers under this Article, the Company in General Meeting may appoint the first Auditor or Auditors. The aforesaid provisions shall mutatis mutandis apply to any Secretarial Auditor appointed under the relevant provisions of the Act.

DOCUMENTS AND NOTICES

181) (1) A document or notice may be served or given by the Company on any member, either personally or sending it by post to him to his registered address or (if he has no registered address in India) to the address, if any, in India supplied by him to the Company for serving documents or notices on him. (2) Where a document or notice is sent by post, services of the document or notice shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the document or notice, provided flat where a member has intimated to the Company in advance that documents or notices should be sent to him under a certificate of posting or by registered post with or without acknowledgment due and has deposited with the Company a sum sufficient to defray the expenses of the doing so; service of the documents or notice shall not be deemed to be effected unless it is sent in the manner intimated by the member and such service shall be deemed to have been effected in the case of Notice of a meeting, at the expiration of forty-eight hours after the letter containing the document or notice is posted and in any other case at the time at which the letter would be delivered in the ordinary course of post.

182) A document or notice advertised in a newspaper circulating in the neighborhood of the Office shall be deemed to be duly served or sent on the day on which the advertisement appears to every member who has no registered address in India and has not supplied to the Company art address within India for serving of documents on or the sending of notices to him.

183) A document or notice may be served or given by the Company on or given to the joint-holders of a share by serving or giving the document or notice on or to the joint- holders named first in the Register of Members in respect of the share.

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184) A document or notice may be served or given by the Company on or to the persons entitled to a share in

consequence of the death or insolvency of a member by sending it through post in a prepaid letter addressed to him or them by name or by the title of representatives of the deceased or assignee of the insolvent or by any like description, at the address (if any) in India supplied for the purpose by the persons claiming to be entitled, or (until such an address has been so supplied) by serving the document or notice in any manner which the same might have been given if the death or insolvency had not occurred.

185) Documents or notices of every General Meeting shall be served or given in the same manner hereinbefore on or to (a) every member (b) every person entitled to a share in consequence of the death or insolvency of a member, and (c) the Auditor for the time being of the Company.

186) Every person who, by operation of law, further or other means whatsoever, shall become entitled to any share, shall be bound by every document or notice in respect of such shares, previously to his name and address being entered on the Register of Members, shall have been duly served on or given to the person from whom he drives his title to such shares.

187) Any document or notice to be served or given by the Company may be signed by a Director or some person duly authorised by the Board of Directors for such purpose and the signatures thereto may be written, printed or lithographed.

188) All documents or notices to be served or given by members on or to the Company or any office thereof shall be served or given by sending it to the Company or Officer at the Office by post under a certificate of posting or by registered post, or by leaving it at the office.

WINDING UP

189) The Liquidator on any winding-up (whether voluntary, under supervision or compulsory) may, with the sanction of a Special Resolution but subject to the rights attached to any preference share capital, divide among the contributories in specie any part of the assets of the Company may with the like sanction; vest any part of the assets of the Company in trustees upon such trusts for the benefit or the contributories as the Liquidator, with the sanction shall think fit.

INDEMNITY AND RESPONSIBILITY

190) Every Officer or Agent for the time being of the Company shall be indemnified out of the assets of the Company

against all liability incurred by him in defending any proceeding, whether civil or criminal in which judgement is given in his favour or in which he is acquitted or discharged or in connection with any application under Section 633 of the Act, in which relief is granted to him by the Court.

SECRECY

191) Subject to the provisions of these Articles and the Act no member, or other person (not being a Director) shall be

entitled to enter the property of the Company or to inspect or examine the Company’s premises or properties of the Company without the permission of the Directors or to require discovery of or any information respecting any detail of the Company’s trading or any matter which is or may be in the nature or a trade secret, mystery of trade, or secret process or of any matter whatsoever which may relate to the conduct of the business of the Company and which in the opinion of the Directors it will be inexpedient in the interest of the Company to communicate.

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VII. OTHER INFORMATION

DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at the registered office of our Company on any working day between 11:00 a.m. and 1:00 p.m. from the date of filing of this Information Memorandum with the Stock Exchanges:

1. Memorandum and Articles of Association of SFCL, as amended till date.

2. Memorandum and Articles of Association of CPIL.

3. Certification of incorporation of SFCL

4. Annual Accounts and Reports of the Statutory Auditors of the Company as mentioned in this Information Memorandum including annual account for financial year 2012-13.

5. Quarterly Accounts and Reports of the Statutory Auditors of the Company as mentioned in this Information Memorandum including accounts for quarter ended June 30, 2013.

6. Annual Accounts of CPIL & SFCL for the financial years 2010-11 & 2011-12.

7. Scheme of Arrangement sanctioned by the Hon’ able High Court of Calcutta vide its order dated May 17, 2013.

8. Certified copy of the order dated May 17, 2013 sanctioning the Scheme.

9. Notice convening meeting of shareholders to consider scheme of arrangement along with statement under section 393 of the Companies Act, 1956 and other document accompanying the same.

10. Valuation report of Haribhakti & Co., Chartered Accountants on the exchange ratio of shares to be allotted in consideration of the amalgamation and fairness opinion thereon of Microsec Capital Limited.

11. Receipt/ proof of filing with ROC of the Scheme on June 28, 2013.

12. Letters issued by BSE and NSE according their no objection to the Scheme.

13. Tripartite Agreement between the Company, the RTA and NSDL dated June 07, 2013.

14. Tripartite Agreement between the Company, the RTA and CDSL dated May 10, 2013.

15. NSE letter No. NSE/LIST/215793-3 dated September 12, 2013 granting in-principle approval for listing.

16. BSE letter No. DCS/AMAL/PS/IP/247/2013-14 dated September 17, 2013 granting in-principle approval for listing.

17. SEBI letter No. CFD/DIL/SK/PM/24169/2013 dated September 23, 2013 granting relaxation from the applicability of Rule 19(2)(b) of the Securities Contract Regulation (Rules)1975 for listing of the shares of the Company.

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DECLARATION No statement made in this Information Memorandum shall contravene any of the provisions of the Companies Act 1956 and the rules made there under. All the legal requirements as also the Regulations, Guidelines, instructions, etc., issued by SEBI, Government or any other competent authority in respect of listing of securities have been duly complied with. For and on behalf of the Board of Directors of Star Ferro and Cement Limited Hari Prasad Agarwal Managing Director

Dated: 10th October, 2013